Privilege Covers Google Consultant as “Functional Equivalent of Employee” 2

For jurisdictions following the Upjohn subject-matter test, the corporate attorney–client privilege protects an employee’s communications with corporate counsel so long as the communications are confidential and made for purposes of rendering legal advice.  One question arises whether the privilege extends to corporate communications with outside consultants.

The USDC for the Northern District of California recently encountered an interesting privilege situation involving Bill Campbell, the Board Chairman for Intuit, Inc. who simultaneously served in several roles with Google,google Apple, and other technology-based companies.  Prior to 2007, Campbell served, while Intuit chairman and without a Google contract, as an advisor to Google’s management team and Board of Directors.  In 2007, Campbell entered an agreement with Google that made him a part-time Google employee.

In In re High–Tech Employee Antitrust Litigation, 2013 WL 772668 (N.D. Cal. Feb. 28, 2013), the Court had to determine whether Campbell’s email communications with Google employees—most often sent through his Intuit email address—were protected by the corporate attorney–client privilege. Questions regarding Campbell’s role prior to 2007, when he had no formal agreement with Google, complicated the analysis.

The Court followed the leading functional-equivalent-employee cases of U.S. v. Graf, 610 F.3d 1148 (9th Cir. 2011) and In re Bieter, 16 F.3d 929 (8th Cir. 1994). These cases held that there is no legitimate reason to distinguish between a company’s employee and its consultant for attorney–client privilege purposes, and that the privilege extends to consultants who are “in all relevant respects the functional equivalent of an employee.”  The Court must examine the consultant’s role and determine whether he was the primary agent who communicated with counsel, whether he acted as a corporate agent in a significant capacity, whether he managed employees, or had substantial input into the development of the litigation-related issues.

In High–Tech, the Court found that Campbell was the functional equivalent of a Google employee even while he served as Intuit’s Board Chairman.  The Court found that Campbell advised Google’s management and Board of Directors on business strategy, organizational development, and internal business processes.  The Court also found significant Campbell’s important advisory role, noting that he emailed with Google executives regarding “confidential and highly sensitive matters related to Google’s compensation practices, policies, and strategies.”

But because of Campbell’s roles with Apple, Intuit, and other companies, the Court stopped short of issuing a blanket privilege protection for all of Campbell’s email communications.  Google still had to prove that the communications otherwise fell within the corporate attorney–client privilege, meaning it had to further prove the email communications were to Google in-house or outside counsel, were intended to be, and actually were, confidential, and were for purposes of Google’s counsel rendering legal advice.

Tips for Preventing or Limiting In-House Counsel Depositions 2

Deposing in-house lawyers was once considered taboo, but has now become a litigation trend.  And these depositions are not limited to an in-house corporate lawyer in business litigation over a deal gone bad; trial lawyers increasingly seek to depose in-house litigation managers as well.  When these deposition requests arise, lawyers should appropriately consider the significant attorney-client privilege issues that will inevitably become center stage.

Several questions arise in this situation.Business man pledging  Is there anything in-house and outside counsel can do to prevent the deposition from occurring?  How should counsel handle the privilege-related issues if the deposition goes forward? How can in-house counsel avoid becoming a deposition target in the first place?

Federal and state courts provide divergent views on the subject.  Some follow the so-called Shelton rule, originating in Shelton v. American Motors Co., 805 F.2d 1323 (8th Cir. 1986), which permits a protective order preventing in-house counsel depositions unless the party seeking the deposition shows (1) that no other means exist to obtain the information; (2) the information sought is relevant and non-privileged; and (3)  the information is crucial to the party’s case preparation.

Many courts, notably the Second Circuit, decline to follow Shelton and prefer to review all relevant facts and circumstances before deciding whether to permit a deposition, such as the deposition need, the lawyer’s role in the matter on which discovery is sought, and the risk of encountering privilege and work-product issues. In re Subpoena Issued to Dennis Friedman, 350 F.3d 65 (2d Cir. 2003).

In my recent article, Preventing or Limiting In-House Depositions, published by Inside Counsel, I explore the still-developing law on this important issue.  I also provide tips on how in-house counsel can lessen their chances of becoming a deposition target, how to address the privilege-related issues, and whether the in-house lawyer needs separate counsel.

You may access the article at this link.   My thanks to Inside Counsel for publishing the article and allowing access through this post.

Is Mediation Privilege Absolute or Qualified? 1

Many incorrectly assume that all evidentiary privileges are absolute, meaning that a party seeking privileged information may not override the privilege despite the level of need.  But several evidentiary privileges are qualified, meaning that a party may obtain privileged information upon a sufficient showing of need.  For example, the attorney-client privilege is absolute and inviolable once established.  But the work-product doctrine is qualified, and a party may obtain the protected information upon a showing of substantial need and an inability to obtain the material elsewhere.

What about the mediation privilege?  mediationThe Uniform Mediation Act, published by the National Conference of Commissioners on Uniform State Laws and accessible here, includes a qualified mediation privilege.  This uniform act provides that a mediation communication is privileged from discovery unless the party seeking discovery shows that the evidence is not otherwise available, that there is a need for the evidence that substantially outweighs the interest in protecting confidentiality, and that the mediation communication is sought or offered in a criminal proceeding or in a proceeding to rescind or reform or a defense to avoid liability on a contract arising out of the mediation. Unif. Med. Act § 6(b).  Some states have adopted the Uniform Mediation Act, including its qualified privilege, while others have adopted it with some modifications.  Other states forego the uniform act in favor of their own mediation rules or statutes.  And in these states, the privilege may arise by statute or in the common law, and may be absolute or qualified.

A recent Indiana Supreme Court decision highlights this distinction.  In Horner v. Carter, 981 N.E.2d 1210 (Ind. 2013), copy available here, a husband sought to modify a divorce settlement agreement and attempted to offer his mediation statements as evidence.  In rejecting evidence of mediation statements, the Court followed the Indiana Alternative Dispute Resolution Rules, accessible here, which include an absolute mediation privilege. Rule 2.11 provides:

Mediators shall not be subject to process requiring the disclosure of any matter discussed during the mediation, but rather, such matter shall be considered confidential and privileged in nature. The confidentiality requirement may not be waived by the parties, and an objection to the obtaining of testimony or physical evidence from mediation may be made by any party or by the mediators.

Interestingly, the Court noted the distinction between Indiana’s absolute privilege and the Uniform Mediation Act’s qualified privilege, and expressly “decline[d] to follow [the uniform act’s] approach to mediation confidentiality at this time.”  Perhaps Indiana will amend its mediation privilege rule to make it a qualified privilege, but at this time the privilege remains absolute.  Practitioners should note this decision, avoid assumptions of an absolute mediation privilege, and know where your state falls on the absolute vs. qualified issue.