Many in the corporate world provide internal training or communicate ideas, plans, guidelines, and the like through PowerPoint presentations.  This includes in-house lawyers, who often use PowerPoint or some other presentation aid to advise employees on various legal-related issues.  And, of course, lawyers and non-lawyer employees circulate those slide decks to seek feedback and revisions, some legal and some perhaps not so legal.

The question arises whether the corporate attorney–client privilege protects PowerPoint presentations either prepared by in-house counsel or on which an in-house lawyer provided input.  One court, in a rather routine situation, said no—the privilege did not protect from discovery an in-house lawyer’s PowerPoint used to train employees on antitrust compliance because the slide deck pertained more to business than legal issues.  In re Diisocyanates Antitrust Litig., 2024 U.S. Dist. LEXIS 126413 (W.D. Pa. Mar. 28, 2024) (opinion available here).  Let’s discuss the reasons and look for clues for how to increase the chances of protecting those legal PowerPoints.

Antitrust Training Session

In February 2018, a major U.S.-based chemical company tasked its in-house antitrust counsel with providing antitrust compliance training to certain non-lawyer employees, including account managers, sales directors, and production managers.  The training specifically focused on antitrust-compliance issues that may arise from the company’s internal pricing program known as Credit Upon Proof of Sale, or “CUPS.”

The antitrust counsel created a PowerPoint to aid in delivering the CUPS training.  The PowerPoint, in part, instructed the attendees to “consult counsel” or to engage their supervisor, the company’s legal representatives, or the Office of Ethics and Compliance if they had questions or needed additional guidance.  In the PowerPoint’s notes section, typically used to prompt the presenter during the presentation, the antitrust lawyer recorded this—

This training is to raise awareness of the principles and framework in which business decisions will be evaluated by antitrust regulators.  It is not a substitute for specific legal guidance in any particular situation or geography.

Motion to Compel

In a later MDL proceeding wherein several plaintiffs alleged that the company, among others, conspired to fix certain prices in violation of antitrust laws, the plaintiffs moved to compel production of the company’s PowerPoint presentation used to conduct the February 2018 training.  Relying in part on the company’s privilege-log description of the slide deck as a “general guideline,” the plaintiffs argued that the PowerPoint, while perhaps based on legal advice, was nothing more than general instructional guidelines that were nothing more than business policies.

The company maintained its privilege objection and refuted the plaintiffs’ “general guideline” argument.  In support, the company submitted the sworn declaration, available here, of its Associate General Counsel for Corporate Transactions (the antitrust in-house lawyer was no longer with the company).  This AGC said the PowerPoint was a “training presentation” that contained the antitrust lawyer’s “legal advice as to how to adhere to” the CUPS program.

In Camera Review and a Ruling

The court could not make a privilege call based on the privilege log, the lawyers’ conferral efforts, and the AGC’s declaration, and therefore reviewed the slide deck in camera. The court noted the attorney–client privilege’s “laudable purposes” but construed the privilege narrowly because it “obstructs the truth-finding process.”  In reviewing the PowerPoint presentation, the court looked for a (1) communication (2) made between privileged persons (3) in confidence (4) for the purposes of obtaining or providing legal advice.

And upon review, the court found that the PowerPoint presentation was primarily a “generalized reference or instructional guide akin to a business policy covering its policies and practices such as its Code of Business Conduct.”  The court could not determine, either from the slide deck or the company’s supporting evidence, whether the attendees could “pose questions and receive particularized legal advice in return,” but said this—

What is clear is that the PowerPoint slide deck itself, which is the sole subject of this discovery dispute, does not communicate particularized legal inquiries or legal advice.

The nail in the coffin, though, came from the antitrust lawyer’s own presenter notes that the training’s purpose was to raise awareness about making business decisions with government regulators in mind and was not a substitute for “specific legal guidance.”

The court essentially found the privilege’s legal-advice component missing—based on the PowerPoint’s own language—and ordered the company to produce the entire PowerPoint presentation.

POP Analysis

The training session’s subject appears focused on regulatory compliance, which some courts, as described in this post, consider business-related rather than legal-related. Perhaps the court had this question in mind when reviewing the PowerPoint and finding little “legal advice” language.

When creating what should be a privileged communication, let’s “write for tomorrow,” meaning to consider the words you compose today as a judge will view them in camera tomorrow or, more accurately, months or years down the road. If conveying legal advice, say so explicitly within the PowerPoint, and instruct, within the deck, that the audience may not disseminate it without lawyer approval. While labels, such as “privilege and confidential,” certainly help, courts reviewing slide decks in camera search for the request for or delivery of specific legal advice. In short, make the legal advice explicit.

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Employers routinely investigate employee harassment or hostile-work-environment complaints yet inconsistently achieve privilege protection for those investigations.  For instance, a Florida employer failed to achieve privilege protection for notes of its investigator—who doubled as an attorney and HR Director—regarding an employee’s FMLA claim.  And a North Carolina law firm lost privilege protection for its outside counsel’s investigation of a harassment complaint because, the court found, the investigation was conducted for business reasons rather than legal.

By contrast, a Utah employer, Midwest Commercial Interiors, secured privilege protection for its outside counsel’s investigation of an employee’s harassment complaint.  Tingey v. Midwest Office, Inc., No. 1:22-cv-00145-TC-JCB, 2024 U.S. Dist. LEXIS 22445 (D. Utah Feb. 7, 2024).  And the judge’s opinion, available here, offers practical and persuasive lessons for the privilege victory and, when contrasted to the North Carolina situation, provides strategic lessons for those seeking access to the investigations.  Let’s discuss it.

Other Similar Incidents and a Mulligan

A former account manager at MWCI sued the company and several “Supervisor Defendants” after a co-employee allegedly “drugged and raped” her on a business trip to Georgia.  During discovery, the plaintiff requested information related to MWCI’s investigation into harassment claims of another employee, E.S.  MWCI sought a protective order, available here, but argued only that the investigation-related documents, prepared by outside counsel, were nondiscoverable because they were disproportionate to the case.  MWCI did not assert a privilege objection.

But at the end of oral argument, MWCI mentioned that the attorney–client privilege also sheltered outside counsel’s E.S. investigation from disclosure.  The judge, apparently in a gracious mood, gave MWCI a mulligan, which sometimes happens, to submit supplemental briefing on the privilege issue.

Declarations and a Response

And submit it did.  MWCI, clearly recognizing that it had the burden of proving that its lawyer conducted the investigation for legal-advice purposes, submitted the declaration of its partial owner.  The declaration, available here, stated succinctly that, when the E.S. allegations arose, the company turned to outside counsel “to investigate the allegations and to give us legal advice about what steps we should take to protect our employee and also the company.”

That’s pretty strong, but the outside lawyer’s declaration, available here, surpassed it.  As to the purpose of his retention, the lawyer said this—

The company “asked me to conduct an investigation in order to provide legal advice regarding the merits of the complaint, the company’s potential liability, and the corrective action that should be taken.”

In an area where declarations are often conclusory, this one was deliberately specific.  The lawyer generally explained his investigation, which included interviewing the complainant, the alleged perpetrator, an HR representative, and other employees.  He advised these interviewees that he was “conducting the investigation for the purpose of providing legal advice to the company.”

The plaintiff’s response, available here, unfortunately contained little evidentiary rebuttal.  The brief mentioned that MWCI maintained a policy mandating investigations of sexual-harassment complaints, an argument that won the day in the North Carolina decision but did not expound on that aspect.  There was no deposition testimony of MWCI employees discussing its traditional implementation of this policy; no evidence of the engagement letter between MWCI and its outside counsel, and no evidence that may have countered MWCI declaration testimony.

Ruling

The court appropriately applied federal privilege law in this federal-question case and held that the attorney–client privilege protects client-to-lawyer communications (and vice-versa) “made in order to obtain legal advice.”  And in the employee-investigation context, it relied upon this statement from a Seventh Circuit opinion—

When an attorney conducts a factual investigation in connection with the provision of legal services, any notes or memoranda documenting client interviews or other client communications in the course of the investigation are fully protected by the attorney–client privilege.

And relying upon MWCI’s sworn declarations—for there was no countering evidence—and an in camera review, the court easily found that MWCI proved that its investigation into E.S.’s allegations were legal-advice related.  To be sure, the court found that the privilege did not protect “purely logistical” communications, such as emails scheduling meetings to discuss the investigation; but it held that the investigation’s core—the interviews and substantive client–lawyer communications—were nondiscoverable.

Take-Aways

For employers, MWCI’s supplemental handling of its privilege objections offers a good model to follow.  It supplied testimony from an executive and the lawyer to describe the investigation’s purpose. And the declarations were specific, not conclusory.  For employees seeking OSI investigations, the North Carolina case supplies the better model.  While an insurance-coverage case, the opinion shows that evidence of a mandatory-investigation policy coupled with employee testimony about that policy may overcome even the declaration of outside counsel.

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The broad concept of at-issue privilege waiver is best illustrated by the advice-of-counsel waiver doctrine which, as its moniker signals, arises when a party claims that he relied on his lawyer’s advice before engaging in certain conduct.  The doctrine invokes the sword-and-shield imagery by precluding a party from using privileged legal advice as a sword to defend his adversary’s claim and simultaneously as a shield to prevent that adversary from assessing the legal advice’s validity.

Legal Advice of CounselCourts call this waiver, recognizing that the lawyer’s legal advice is privileged in the first instance, but the client chose to waive that privilege by raising the legal advice as a defense.  The question arises, however, which lawyers’ advice comes under the waiver’s scope. The court’s decision in Symbria, Inc. v. Callen, No. 20 C 4084, 2023 U.S. Dist. LEXIS 203978 (N.D. Ill. Oct. 11, 2023), available here, shows how courts differ on the scope and reveals that lawyers should be cautious before asserting an advice-of-counsel defense.  Let’s discuss it.

A Sale and Competition

United Methodist Homes and Services (UMHS) and other owners sold their interest in several healthcare entities associated with Illinois-based Symbria, Inc. through a Stock Purchase Agreement (SPA).  The SPA contained non-competition and non-solicitation provisions preventing UMHS from engaging in competing healthcare activities, taking Symbria clients, and soliciting Symbria employees.  John Callen, a former president of a Symbria entity, had an employment agreement with the entity that contained similar anti-competition and anti-solicitation clauses.

A few years after the sale, UMHS and Callen established healthcare entities, generally known as MedRehab, that Symbria claims violates their respective restrictive covenants.  The parties argued over the scope of those restrictive covenants, with UMHS filing a declaratory-judgment action in an Illinois state court and Symbria bringing a host of breach-of-contract, trade-secrets, and business-tort claims in an Illinois federal court.

Advice of Counsel and Discovery Dispute

UMHS and Callen received legal advice regarding the scope of the restrictive covenants at various stages of the sale and post-sale litigation.  First, they received legal advice from Deal Counsel during the SPA negotiations.  Second, they received legal advice on the covenants’ scope from Startup Counsel when UMHS and Callen formed the MedRehab entities.  And third, they received legal advice from their post-sale Litigation Counsel.

In their answer to the claims presented in the federal-court lawsuit, UMHS and Callen expressly invoked the legal advice of their Deal Counsel as an affirmative defense, stating in part as follows:

UMHS counsel provided a legal opinion regarding the obligations under the SPA agreement, and concluded that it could take equity positions in joint ventures doing business in states outside of Illinois, and that such action would not violate or breach the SPA.

The court recognized that “the issue defendants’ affirmative defense has injected into this case is whether they acted in good faith reliance on advice of counsel when they took equity positions in the MedRehab entities.”

UMHS knew that its advice-of-counsel defense waived the privilege over its communications with Deal Counsel and produced “hundreds of pages of communications and documents relating to opinions provided to UMHS” by Deal Counsel.  But Symbria wanted more—it claimed that UMHS’s “at issue waiver of the attorney–client privilege extends beyond their communications” with Deal Counsel “to their communications any lawyers about the restrictive covenants in the SPA.”

The issue before the court, then, was the scope of the advice-of-counsel waiver.  Did it extend to advice received from UMHS’s Startup Counsel? To its Litigation Counsel?

Choice of Law

To decide this scope-of-waiver issue, the court first had to decide which privilege law to apply—federal or state.  The court correctly noted that, under FRE 501, state privilege law governs civil cases regarding a defense for which state law supplies the rule of decision.  And here, Symbria’s claim for breach of the restrictive covenants arose under Illinois law, so Illinois privilege law applied.

Scope of Waiver

The choice-of-law decision proved somewhat pivotal to the parties’ arguments.  Symbria cited a federal-law decision for the proposition that the advice-of-counsel waiver extends beyond the lawyers’ opinions that a defendant discloses.  By relying on legal advice, that decision held, the defendant opens the door and “must produce not only other communications and opinions of the same attorney, but also privileged information from other counsel involving the same subject.”

But federal law and Illinois privilege law differed on this scope, and with Illinois privilege law governing, the federal decision was not controlling.  Illinois privilege law, the court found, “demonstrated a protective approach to the attorney–client privilege and work product doctrine” and did not extend advice-of-counsel waiver to subsequently retained counsel.

Ruling

Applying Illinois’ protective approach, the court held that UMHS’s advice-of-counsel defense waived the privilege over its communications with Deal Counsel, as UMHS conceded, but also over its communications with Startup Counsel.  The waiver did not, however, extend to UMHS’s Litigation Counsel.

The important consideration for the court was one of timing—at what point in time did UMHS rely and act upon legal advice. Thus, the court found—

Whether [UMHS] believed the SPA permitted them to set up the MedRehab entities depends on what they knew at that time, not what their current counsel, or any other lawyer, told them after the fact.

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Sandlot baseball stars like me know that “a tie goes to the runner.”  It’s an unwritten rule, for sure, and some say a myth. In baseball, this rule provides that, in a close play, most often at first base, if the runner and the baseball reach the base simultaneously, then the runner is safe.  It appears that some courts have taken this rule to the privilege-law sandlot, where the umpire-judge’s call is unfavorable to in-house lawyers.

Presumptions, Legal Advice, and Privilege

Whether the attorney–client privilege protects an in-house lawyer’s communications often turns on whether those communications relate to legal advice rather than non-legal advice.  And while many courts are skeptical whether communications between a company’s in-house lawyer and its employees relate to legal advice, others presume the legal-advice component when the in-house lawyer communicates with outside counsel.

Take, for example, an Oklahoma federal court’s summary of two rebuttable presumptions:

(1) if outside counsel is involved, the confidential communication is presumed to be a request for and the provision of “legal advice”; and (2) if in-house counsel is involved, the presumption is that the attorney’s input is more likely business than legal in nature. As a result, most of these courts apply “heightened” scrutiny to communications to and from in-house counsel in determining attorney-client privilege.

Lindley v. Life Inv’rs Ins. Co. of Am., 267 F.R.D. 382 (N.D. Okla. 2010), aff’d in part as modified, No. 08-CV-0379-CVE-PJC, 2010 U.S. Dist. LEXIS 41798 (N.D. Okla. Apr. 28, 2010). You may also check out my ABA Business Law Today article covering and explaining these presumption issues.

But not all courts apply this in-house/outside counsel legal-advice presumption.  Some apply no presumption and hold the privilege proponent to a preponderance-of-the-evidence burden while others—like New Mexico—impose a heightened burden on in-house lawyers.

New Mexico

For those of you who are regular POP readers or have attended my “Tales from the Privilege Crypt” seminars, you know that I often highlight the New Mexico Court of Appeals’ decision in Bhandari v. Artestia Gen. Hosp., 317 P.3d 856 (N.M. Ct. App. 2013).  There, the court held this—

A court faced with a situation where the primary purpose of a communication is not clearly legal or business advice should conclude the communication is for a business purpose, unless evidence clearly shows that the legal purpose outweighs the business purpose.

If, in baseball, a tie goes to the runner, then in New Mexico privilege law, a tie goes to business advice, meaning the in-house lawyer is privileged out.  Read more about this decision, which rejected the privilege for a General Counsel’s memorandum to the CEO, at GC’s “Talking Points” Memo to CEO Not Privileged—Leads to a Punitive Damages Verdict.

And Now a New Case

With this backdrop, let’s examine the New Mexico Court of Appeals’ decision in D.R. Horton, Inc. v. Trinity Universal Ins. Co., No. A-1-CA-39929, 2023 N.M. App. LEXIS 95 (Ct. App. Dec. 18, 2023), available here.  This case involved a dispute between Horton, the insured, and Trinity, the insurer, over Trinity’s duty to defend a series of underlying construction-defect claims.

One issue in the case was the legal significance of Horton’s alleged delay in providing the insurer with notice of the claims.  And relevant to the notice issue were communications between Horton’s in-house lawyers and its outside counsel.  The insurer wanted them, but Horton claimed that the attorney–client privilege precluded their disclosure.

Burden of Proof and In-House Counsel

In the court’s view, Horton’s privilege claim fell squarely within the business advice versus legal advice conundrum in Bhandari.  The court stated that the attorney–client privilege “does not protect communications derived from an attorney giving business advice or acting in some other capacity.”  And, citing Bhandari’s tie-goes-to-business privilege rule, the court required Horton to “clearly show” that the communications’ primary purpose was legal.

While Horton had some evidence that its in-house lawyers’ communications with its outside counsel were “solely legal,” it also produced an in-house lawyer’s affidavit saying this—

The decisions regarding the tenders of the defense of the Underlying Litigations and Arbitrations were a combination of business and legal considerations, and the business considerations were integrally intertwined with the legal considerations and therefore cannot be discussed without disclosing attorney-client privileged information.

Horton took the “integrally intertwined” approach, arguing that due to the complete mixture of business and legal, the legal purpose should shield all the communications.

Ruling

But “Bhandari forecloses that approach,” the court held.  While the court agreed that “the evidence presented established an admittedly mixed purpose,” Horton produced “no evidence to demonstrate that the legal purpose ‘clearly’ outweighs the business purpose.”  So, the court ruled, Horton failed to prove the privilege’s legal-advice component and should produce communications between in-house counsel and outside counsel.

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Sticky

I am thrilled to announce the publication of Privileges and Protections: Tennessee and Sixth Circuit Law. My former law partner turned law professor Kristi W. Arth and I completed this years-long journey and are delighted that LexisNexis/Matthew Bender added this treatise to its comprehensive collection of legal publications.

Todd Presnell and Kristi W. Arth

A first-of-its-kind publication, the 700+ page Privileges and Protections contains 16 chapters addressing over 40 evidentiary privileges or related protections plus an extensive examination of conflict-of-laws issues and of the historical origins and development of evidentiary privileges from English common law to federal common law to Tennessee statutory and common law.

Privileges and Protections is a combination legal treatise and desk-reference book.  Kristi and I structured each chapter to accomplish two objectives. First, each chapter provides quick privilege answers upfront for judges and lawyers with limited time to address an issue.  Second, each chapter backs up and supplies detailed information about the purpose, development, exceptions, and open questions related to that particular privilege for judges and lawyers who wish to devote more time and careful study to the privilege issue.

This book will serve as the go-to resource for trial judges, appellate judges, trial lawyers, transactional lawyers, in-house counsel, law professors, law students, and other legal professionals who need a practical guide for applying evidentiary privileges, an in-depth treatment of the history and the policy rationales underlying those same privileges, or recommendations for the further advancement of the many unanswered questions in this heavily litigated and complex area of law.

Kristi and I are honored that William C. Koch, Jr., a former Tennessee Supreme Court Justice and current Dean of the Nashville School of Law, authored the Foreword explaining why “the subject of evidentiary privileges is an acquired taste” and concluding this—

With the publication of Privileges and Protections: Tennessee and Sixth Circuit Law, the bench and bar now have a single, authoritative point of entry into the workings of evidentiary privileges.

We agree! And if you wish to have this new comprehensive resource on your bookshelf or at your fingertips through an eBook (epub or mobi files), please visit the LexisNexis site, accessible here, for ordering information.

I do not have the words to adequately express my gratitude to the many lawyers who provided support and encouragement throughout this endeavor.  The lawyers at my law firm, Bradley, have my deepest appreciation for researching discreet topics and editing my drafts.  And while I cannot mention everyone individually, I wish to highlight a select few.

Bob Parsley, a terrific lawyer and legal writer at Miller & Martin, provided invaluable support, editing, and advice during the early stages. John Day, a prolific writer and leader in the American College of Trial Lawyers, offered sage advice throughout my venture.  Jonathan Steen, an excellent lawyer and genuine “good guy,” supported my efforts for several years.  Matt Blackburn, now working as an AUSA, supplied instrumental research and writing contributions on a difficult area.  And David Greenwald, co-author of Testimonial Privileges, encouraged me even if he may not know it.

Most of all, I am eternally grateful for my friend and colleague Kristi Arth.  After years of legal research and writing and with 11 completed chapters and 2 in the works, I still did not see the finish line.  Kristi saw the value of this publication to the bench and bar and eagerly joined me in completing the work and making it the substantive treatise that I envisioned.  This book is as much hers as mine.

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