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.
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.
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…
We’ve heard this mantra from many judges: simply copying an in-house lawyer on an email does not render the email privileged. Need proof? Read these cases: EEOC v. BDO USA, LLP, 2017 WL 5494237 (CA5 Nov. 16, 2017); Andritz Sprout-Bauer, Inc. v. Beazer East, Inc., 174 FRD 609, 633 (M.D. Pa. 1997); United States v. Chevron Texaco Corp., 241 F. Supp. 2d 1065, 1076 (N.D. Cal. 2002).
But one case reveals that this truism is not always, well, true. In Morgan v. Butler, 85 N.E.3d 1188 (Ohio Ct. App. 2017), available here, the court ruled that the attorney–client privilege protected three emails sent from an Ohio EPA supervisor to non-lawyer EPA employees with copies to EPA in-house lawyers. And the story of how the EPA achieved this privilege victory is instructive for the rest of us. More…
The USDC for the ED Louisiana issued a short but instructive privilege opinion for in-house lawyers. The court found the in-house counsel privilege “more difficult” to apply, ruled that an executive’s cc’ing in-house counsel is insufficient, imposed a “primary purpose” standard, and generally rejected the privilege because there was “no indication” that the employee emailing the in-house lawyer was seeking legal advice. Texas Brine Co. v. Dow Chemical Co., 2017 WL 5625812 (ED La. Nov. 21, 2017). You may read the opinion here.
Dow Chemical challenged the privileged nature of several emails involving Texas Brine’s in-house lawyers, and the court recognized the difficulty in assessing in-house lawyers’ privilege assertions. The court found it “more difficult” to define the privilege’s scope because in-house counsel “serve multiple roles,” including non-legal ones, and have an “increased level of participation in the day-to-day operations of the corporation.”
The Primary Purpose or A Primary Purpose?
Because of a perceived increase in corporate counsel’s business roles, the court required the Texas Brine lawyers to prove that “the primary purpose” of the emails was to secure legal advice. The court explained this “test” as whether the in-house lawyer participated in the communication “primarily for the purpose of rendering legal advice.” Merely identifying a legal issue in the email is insufficient—the “lawyer’s role as a lawyer must be primary to her participation.” More…