In our complex corporate world of parents, direct and indirect subsidiaries, affiliates, mergers, acquisitions, and dissolutions, an increasingly litigated issue is whether a parent’s in-house counsel may have privileged communications with the subsidiary’s employees. The USDC for E.D. Missouri sustained a parent company’s privilege assertion over its in-house lawyers’ communications with a defunct subsidiary.
How? By invoking the joint–client doctrine. Robinson Mech. Contractors Inc. v. PTC Group Holding Corp., 2017 WL 2021070 (E.D. Mo. May 12, 2017). You may read the decision here. Let’s discuss.
When PTC Seamless Tube failed to pay Robinson Mechanical for construction work, Robinson sued Seamless and its parent, PTC Group Holding. Seamless filed for bankruptcy and, before its ultimate dissolution, transferred its documents, including privileged documents, to Holding. The Bankruptcy Court’s transfer order, available here, expressly stated that Holding’s review of Seamless’ privileged documents would not result in privilege waiver.
Robinson nevertheless moved to compel the documents, arguing that Seamless, now a dissolved entity which defaulted in the lawsuit and had no management, cannot assert the privilege. The Bankruptcy Court’s order, it argued, was simply a non-waiver provision and did not grant Holding—its parent—independent power to assert Seamless’ privilege.
Holding initially relied on the Bankruptcy Court’s order for its privilege claim, but then asserted the joint–client doctrine in supplemental briefing. Holding argued that it and Seamless were joint clients that shared in-house counsel. In support, Holding’s General Counsel filed a More…
The Clinton email scandal continues to rear its head in political news circles, but also in the much more exciting circles of FOIA and the deliberative-process privilege.
In a FOIA case seeking documents showing that Secretary Clinton sought approval to use private email for government business, a federal court upheld the State Dept.’s deliberative-process privilege. And without deciding whether Clinton’s email use was improper, the court held that the privilege’s government-misconduct exception did not apply. Judicial Watch, Inc. v. U.S. Dep’t of State, 2018 WL 387854 (D.D.C. Jan. 11, 2018). You may read the decision here.
Judicial Watch made a FOIA request to the State Dept. for (1) any “records of request” by Secretary Clinton seeking approval to use an iPad or iPhone for official government business, and (2) intra-agency documents related to “the use of unauthorized electronic devices.”
The State Dept. withheld certain documents under the deliberative-process privilege. This privilege generally permits a gov’t agency to withhold documents reflecting deliberations held prior to its decision, i.e., deliberative and pre-decisional. For more information on this privilege, see my post, Privilege Protects OLC Legal Memo Authorizing FBI’s Phone Records Collection.
Is there a Government-Misconduct Exception?
Judicial Watch did not challenge that the privilege protected the State Dept.’s withheld documents, but instead relied upon the putative government-misconduct exception to the privilege. This exception generally vitiates the privilege “when there is reason to believe the documents sought may shed light on government misconduct.” The exception’s basis is that shielding documents evidencing officials’ misconduct “does not serve the public’s interest in honest, effective government.” More…
We’ve heard this mantra from many judges: simply copying an in-house lawyer on an email does not render the email privileged. Need proof? Read these cases: EEOC v. BDO USA, LLP, 2017 WL 5494237 (CA5 Nov. 16, 2017); Andritz Sprout-Bauer, Inc. v. Beazer East, Inc., 174 FRD 609, 633 (M.D. Pa. 1997); United States v. Chevron Texaco Corp., 241 F. Supp. 2d 1065, 1076 (N.D. Cal. 2002).
But one case reveals that this truism is not always, well, true. In Morgan v. Butler, 85 N.E.3d 1188 (Ohio Ct. App. 2017), available here, the court ruled that the attorney–client privilege protected three emails sent from an Ohio EPA supervisor to non-lawyer EPA employees with copies to EPA in-house lawyers. And the story of how the EPA achieved this privilege victory is instructive for the rest of us. More…