The age-old privilege issue of an in-house lawyer providing business or legal advice has once again reared its head. Marriott’s legal department provided analysis and advice into the company’s strategic-plan memorandum, but a federal court ruled that the privilege did not protect the lawyer-drafted sections from discovery. RCHFU, LLC v. Marriott Vacations Worldwide Corp., 2018 WL 3055774 (D. Colo. May 23, 2018). You may read the decision here.
This case raises issues of legal standards and practical application, so let’s explore it.
Strategic Plan Memorandum
Marriott Vacation Club’s COO and its Senior VP sent a memorandum, titled “Ritz-Carlton Destination Club Proposed Strategic Plan,” to the Corporate Growth Committee. On the surface, this document seems purely business related with no privilege protection. While its confidentiality remained intact, the memo contains no privilege-related notices or alerts, and no lawyer appears to have written or received it.
But let’s take a closer look.
Business Advice or Legal Advice?
Marriott’s Vice-President and Senior Counsel submitted a sworn declaration, available here, stating that More…
It often happens that a company obtains information critical to its claim or defense from an entity with which it has a close business relationship. The question arises whether the attorney–client privilege protects the communications. Sure, some courts extend the privilege to a client or lawyer’s agent in various, restrictive situations.
But when a Texas company claimed privilege over its non-lawyer communications with its sole-source supplier, the court rejected the privilege, ruling that the company took this agency principle “entirely too far.” LL’s Magnetic Clay, Inc. v. Safer Med. of Montana, Inc., 2018 WL 5733178 (W.D. Tex. Aug. 2, 2018). You may read the decision here.
LL’s Magnetic Clay, Inc. sued Safer Medical for federal false advertising and various related state-law claims. Safer Medical’s employee—either before or during the lawsuit (it’s unclear)—contacted Tainio Biologicals, it sole source of product ingredients, to gather “technical documents” and “confirm key technical facts.”
Magnetic Clay subpoenaed—and Tainio produced—documents that included communications between Safer and Tainio regarding the relevant, technical information. Safer Medical saw these documents, and immediately sent a claw-back letter, claiming the privilege protected the documents from discovery because Tainio, its sole-source supplier, was functioning as its agent “whose assistance [was] necessary to enable the client’s attorneys to provide legal advice.”
Law and Ruling
The court correctly cited the privilege’s foundational elements—confidential communications for legal-advice purposes—but then said this: More…
Upon receipt of a notice to depose your corporate client’s representative(s) under FRCP 30(b)(6) or state-rule equivalent, the entity’s lawyers scramble to identify the right employees or agents to handle the job. From time-to-time, the identification process boomerangs to the entity’s lawyer because he or she is the only remaining corporate representative with the requisite knowledge.
So, what to do? Put the lawyer up for deposition? Assert a blanket objection on attorney–client privilege grounds? Object question-by-question?
One court faced with a motion to quash a 30(b)(6) notice held that the privilege does not automatically protect the corporate attorney’s knowledge from discovery, stating that a blanket objection produces “an unworkable circumstance.” But the court offered the corporate party some relief, which serves as guidance for the rest of us. United States v. Stabl Inc., 2018 WL 3758204 (D. Neb. Aug. 8, 2018). You may read the decision here.
“The first thing we do, let’s [depose] all the lawyers.” More…