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…
When it comes to dictating customized procedures for retrieving inadvertently disclosed privileged information, the proverb is, as The Rolling Stones would say, “You can’t always get what you want.”
Federal Rule of Evidence 502(b) and FRCP 26(b)(5)(B) provide a framework for handling the inadvertent disclosure of privileged information. FRE 502(b) puts the onus on the producing party to prove that the disclosure was actually inadvertent, and that it took reasonable steps to prevent disclosures and to correct the error.
Don’t like shouldering this burden? Then read FRE 502(d), which allows parties to enter an Order bypassing FRE 502(b) and declaring that the inadvertent disclosure does not constitute privilege waiver. But I digress.
So what if a party desires its own claw-back procedures and moves for a protective order that incorporates them—must the opposing party agree? Should the Court adopt those procedures over objection? More…