Faced with a damaging market-analyst report and a plummeting stock price, BlackBerry’s CLO entered crisis-management mode. He directed a fact investigation into the report and worked with PR consultants to publish an immediate press-release rebuke.
But in a subsequent securities-fraud class action, a court rejected the CLO’s privilege claims over these activities. The ruling came despite the CLO’s declaration that his efforts were to advise BlackBerry about various “legal avenues.” Pearlstein v. BlackBerry Ltd., 2019 WL 1259382 (SDNY Mar. 19, 2019).
This opinion, available here, contains valuable lessons for corporate legal counsel and those seeking to pierce privilege claims related to crisis-management efforts. So, let’s explore it.
Illegal Data, Damaging Report, and a Press Release
Not long after BlackBerry launched its Z10 smartphone in 2013, Detwiler Fenton & Co. issued a market-research report on April 11, 2013, stating that customer returns of the Z10 phones were exceptionally high. Read the WSJ report, available here, for the key language.
As it turns out, Detwiler based its report on information received from James Dunham, the former COO of Wireless Zone, which operates several Verizon Wireless outlets. Dunham later pled guilty to wire fraud. You may read more about this story here.
BlackBerry’s stock immediately declined, and BlackBerry went into crisis-management mode. The CLO directed his in-house legal team More…
Many times your best testifying subject-matter expert is right under your nose—your corporate client’s own employee. If properly handled, the attorney–client privilege protects from discovery in-house and outside counsel’s communications with the client’s employees. But if you turn an employee into a testifying expert, does the privilege evaporate?
Federal Rule of Civil Procedure 26(b)(4)(C), at least since 2010 and subject to minor exceptions, expressly protects lawyer–expert communications, whether an employee or third-party. But many state civil-procedure rules do not follow the federal model, and the issue remains subject to a mixture of evidence rules, civil-procedure rules, and common-law interpretations.
Texas has now spoken. The Texas Supreme Court held that the attorney–client privilege covers a lawyer’s communications with an employee–expert, including the lawyer’s revisions to the expert’s affidavit. In re City of Dickinson, 2019 WL 638555 (Tex. Feb. 15, 2019). You may read the opinion here.
Let’s discuss the Court’s reasoning, and how it may affect other states where the issue remains unanswered.
Privilege issues always arise after some event triggers litigation, and here it was Hurricane Ike, More…
Although subject to heightened scrutiny in most privilege analyses, in-house lawyers still have more than a puncher’s chance to secure privilege protection—so long as they prove the requisite privilege elements. But, as adidas America recently learned, companies cannot rely on conclusory statements or ipse dixit arguments to persuade a federal court that the privilege protects an in-house lawyer’s emails from discovery. LPD New York, LLC v. adidas America, Inc., 2018 WL 6437078 (EDNY Dec. 7, 2018). You may read the opinion, which offers a bevy of lessons for in-house counsel, here.
Procedure and No Substance
In this breach-of-contract and IP-related lawsuit over development of “Classic Tees” for certain NCAA blue-blood basketball programs, LPD New York, a fashion designer, sought production of adidas’ in-house lawyers’ emails involving adidas employees. Read LPD’s letter motion here.
Some of the emails LPD sought were from adidas employees to an in-house lawyer, other emails referenced adidas’ in-house lawyers, and other emails were between non-lawyer employees that copied an in-house lawyer. Yet, adidas’ primary arguments against production were procedural, not substantive. If the procedural arguments failed, then adidas simply argued that LPD’s motion was otherwise “unsupported by the law.”
That’s it. Read adidas’ response here.
Conclusory Statements Insufficient to Sustain Privilege Objection
In rejecting adidas’ privilege defenses, the court noted that, other than saying that LPD’s privilege position was “unsupported by the law,” adidas “provide[d] no further explanation, evidentiary showing, or legal analysis.” The court found that this “perfunctory assertion” constituted More…