Does Regulatory Advice Equal Legal Advice for Privilege Purposes? 1

Black’s Law Dictionary defines “regulation” as a “rule or order having force of law issued by executive authority of government.”  The corporate attorney–client privilege protects communications regulationseeking legal advice, so the question arises whether the privilege covers an employee’s communication seeking “regulatory advice” from its in-house lawyers.  One would think “yes”; after all, a regulation has the “force of law,” which sounds quite legal.

The USDC for Pennsylvania’s Eastern District recently provided an instructive opinion on this issue, rejecting an in-house lawyer’s privilege argument and ruling that the privilege covers communications seeking legal advice but not “regulatory advice for business purposes.”  FTC v. Abbvie, Inc., 2015 WL 8623076 (E.D. Pa. Dec. 14, 2015).  You may read the decision here.

Background

The FTC sued Abbvie, Inc. and Besins Healthcare, Inc. alleging that the two companies filed sham patent-infringement lawsuits against two other companies to delay the latter’s approval of generic drugs.  The FTC sought in discovery an August 9, 2011 email chain that contained an Abbvie employee’s request to Abbvie’s in-house counsel for consideration of a “regulatory strategy.”

Email to In-House Counsel

Abbvie asserted that the attorney–client privilege protected the email from discovery and submitted the in-house lawyer’s declaration in support.  The declaration, which you may access here, made this statement—

The redacted portion of the August 9, 2011 email (the topmost message in the chain) is an attorney–client privilege communication from [employee] to me in which [employee] requested my legal advice.  The redacted portions of this document are not, as the FTC contends, a “business discussion” containing “business advice.”

Regulatory Advice or Legal Advice?

The court held that Abbvie failed to meet its privilege burden and found the email unprotected and discoverable.  Noting that the privilege does not cover every communication between in-house counsel and corporate employees, the court specified that the privilege “does not apply if the client seeks regulatory advice for a business purpose.”

Emphasizing the privilege’s “legal advice” requirement, the court distinguished a lawyer’s provision of regulatory advice when it is more business than legal related.  The court noted that, in the corporate environment, virtually every corporate act has the potential of violating a regulation, but “the fact of extensive or pervasive regulation does not make the everyday business activities legally privileged from discovery.”

The regulatory–business–privilege phenomenon is particularly troublesome for companies in highly regulated industries.  The court found persuasive—and privilege dooming—that Abbvie, a highly regulated pharmaceutical company, “must consider regulatory matters in making nearly all of its business decisions.”

Declaration Insufficient

Abbvie attempted to prove, through its in-house lawyer’s sworn declaration, that its employee sent the email to the in-house lawyer for legal-advice purposes.  But the court found the conclusory declaration insufficient, noting that Abbvie provided no “supporting information that would allow the court to reach the same conclusion.”

And without any (unidentified) supporting information, the court found that the employee’s email seeking “regulatory strategy” from the in-house lawyer was business related, and held that Abbvie failed to demonstrate that the employee sent the email “for the purpose of securing legal advice rather than business advice.”