Does Advice-of-Counsel Defense Waive Privilege for In-House Lawyers? Reply

Aa a general rule, clients waive the attorney–client privilege when they assert an advice-of-counsel defense and, consequently, must produce their lawyer’s advice-related communications.  The waiver’s scope, however, is not as well-known.  Does the waiver apply to communications with outside counsel and in-house lawyers?

The Utah federal court faced this specific question and narrowly construed the scope of waiver.  The court held that a client’s advice-of-counsel defense waived the privilege over its communications with outside counsel, but that the waiver did not extend to its communications with in-house counsel.  Hoopes v. Owners Ins. Co., 2018 WL 1183374 (D. Utah Mar. 6, 2018).  You may read the decision here.

Bad-Faith Claim

A Geico insured struck an 11-year-old pedestrian on Main Street in Heber City, causing severe injuries to the minor. Geico paid its insurance limits, but the minor’s mother filed breach-of-contract and bad-faith claims against her uninsured-motorist carrier when it failed to promptly settle that matter.

The UIM carrier had retained outside counsel to investigate and opine on coverage and payment issues.  The carrier asserted the advice-of-counsel defense and agreed that the defense waived the privilege over its communications with outside counsel.  The carrier, however, refused to produce communications between its claims adjuster and in-house lawyer.

Sword and Shield

The mother moved to compel the claims-adjuster–in-house lawyer communications, essentially arguing that waiver is a broad concept and must include all advice-related communications, including those with in-house counsel. More…

Mardi Gras is Over: NOLA Court Rejects Privilege for GC’s Post-Accident Form

Mardi Gras ended early for one New Orleans agency.  Just days before Fat Tuesday, the USDC for EDLA ruled that the attorney–client privilege did not protect a public entity’s “Executive Summary” of a post-accident review.  The Court issued the ruling even though the entity’s GC created the Executive Summary form and the summary contained information to put the GC “on notice of a potential lawsuit and so that [she could] assess legal liability.”  O’Malley v. Public Belt RR Comm’n for the City of New Orleans, 2018 WL 814190 (ED LA Feb. 9, 2018).  You may read the decision here.

I [Can’t] Hear that Train a Comin’

Unlike the Folsom Prison inmate, Bryan O’Malley could not hear a moving locomotive and suffered injuries when it struck him while he was working for NOLA’s Public Belt Railroad Commission.  The Commission conducted a post-incident meeting and created an Executive Summary that included sections discussing the incident’s “primary cause” and “contributing cause.”

In a subsequent lawsuit, the Commission produced the Executive Summary with the “cause” sections redacted. O’Malley wanted an unredacted version, and moved to compel it.

A Good Deposition

O’Malley’s lawyer deposed the Commission’s Safety Manager, and gained valuable admissions.  Under direct questioning, the Manager effectively testified that the Commission managers’ “general procedure” is to meet after every accident and prepare an Executive Summary.  The Safety Manager never testified that the managers prepared the Summary so that lawyers can render legal advice to the Commission.  You may read the Manager’s testimony here.

GC Saves the Day?

Perhaps sensing trouble, the Commission’s General Counsel submitted a declaration stating that she prepared the Executive Summary form after becoming GC in 2014.  More…

Parent Corp. Successfully Invokes Privilege for Dissolved Subsidiary—Here’s How

In our complex corporate world of parents, direct and indirect subsidiaries, affiliates, mergers, acquisitions, and dissolutions, an increasingly litigated issue is whether a parent’s in-house counsel may have privileged communications with the subsidiary’s employees.  The USDC for E.D. Missouri sustained a parent company’s privilege assertion over its in-house lawyers’ communications with a defunct subsidiary.

How? By invoking the joint–client doctrine.  Robinson Mech. Contractors Inc. v. PTC Group Holding Corp., 2017 WL 2021070 (E.D. Mo. May 12, 2017).  You may read the decision here.  Let’s discuss.

Bankrupt Subsidiary

When PTC Seamless Tube failed to pay Robinson Mechanical for construction work, Robinson sued Seamless and its parent, PTC Group Holding.  Seamless filed for bankruptcy and, before its ultimate dissolution, transferred its documents, including privileged documents, to Holding.  The Bankruptcy Court’s transfer order, available here, expressly stated that Holding’s review of Seamless’ privileged documents would not result in privilege waiver.

Privilege Assertion

Robinson nevertheless moved to compel the documents, arguing that Seamless, now a dissolved entity which defaulted in the lawsuit and had no management, cannot assert the privilege.  The Bankruptcy Court’s order, it argued, was simply a non-waiver provision and did not grant Holding—its parent—independent power to assert Seamless’ privilege.

Holding initially relied on the Bankruptcy Court’s order for its privilege claim, but then asserted the joint–client doctrine in supplemental briefing.  Holding argued that it and Seamless were joint clients that shared in-house counsel.  In support, Holding’s General Counsel filed a More…