Ipse Dixit Privilege Assertions Doom In-House adidas Lawyer’s Emails

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…

Tennessee Court Adopts Functional-Equivalent Doctrine

Can a non-employee, third-party consultant have a privileged communication with a company’s in-house counsel?  In a matter of first impression, the Tennessee Court of Appeals said yes, adopting the functional-equivalent doctrine to apply the privilege to consultants whose conduct and behavior comport with company employees.

The court issued the ruling over the consultant’s employer’s objection and even though the governing contract stated that the consultant is not “an agent, legal representative, or partner … for any purpose.”  Waste Admin. Servs., Inc. v. The Krystal Co., 2018 WL 4673616 (Tenn. Ct. App. Sept. 27, 2018) (Swiney, J.).  You may read the opinion here.

Functional-Equivalent Doctrine

Although many states, including Tennessee, have not fully defined the attorney–client privilege’s scope in the corporate counsel–employee context, a developing corollary is whether the privilege covers communications between a company’s lawyer, including in-house counsel, and its non-employee consultants.

Various courts apply the so-called functional-equivalent doctrine to uphold the privilege over a consultant’s communications with corporate counsel when that consultant is acting as the “functional equivalent” of an employee.  Courts reason that, in today’s corporate world, there is no good reason to deny the privilege when a company outsources employee functions to third-party specialists.  I previously discussed cases where courts applied the doctrine in C-Suite situations (see this post) and refused to apply the doctrine to public-relations firms (see this post).

Two Contracts—But Does it Matter?

So, what about Tennessee?  Krystal contracted with Waste Administrative Services (WASI) to provide (you guessed it) waste-management services.  A few years later, Krystal contracted with Denali Sourcing Services to examine and ultimately reduce its expenses.  Krystal and Denali memorialized their consulting relationship with a Statement of Work which noted that Denali was not “an agent, legal representative, or partner [of Krystal] for any purpose.”

The SOW did not expressly cover waste management, but generally covered procurement projects “submitted via email.”  Krystal’s CEO emailed Denali employee David Jungling asking him on “take the lead” on assessing Krystal’s relationship with WASI.  A question arose whether and how Krystal could terminate its WASI contract, and Jungling emailed Krystal’s CLO about the matter. More…

Non-Waiver Contract Saves GC from Disclosing Privileged Info to Grand Jury

Though the Fourth Circuit has not decided the issue, most federal courts reject a selective-waiver doctrine, meaning that waiver to one is waiver to all.  But one company under a federal criminal investigation permitted an in-house lawyer to disclose privileged information to U.S. Attorneys after the DOJ agreed to a non-waiver contract.

Did the contract prevent privilege waiver? The Fourth Circuit said yes, and precluded the DOJ from calling the in-house counsel to repeat the previously disclosed privileged information before a federal grand jury.  In re: Grand Jury 16-3817 (16-4) United States of America, 2018 WL 3156935 (CA4 June 27, 2018) (available here). Let’s discuss the nuances of this interesting opinion. More…