South Carolina Recognizes Trade-Secrets Privilege Reply

Answering the 4th Circuit’s certified question, the South Carolina Supreme Court, in a 4–1 decision, adopted a trade-secrets privilege—even though the state’s trade-secrets statute never mentions “privilege.”  The new privilege is qualified, meaning a party may obtain otherwise privileged trade secrets by proving a substantial need for the information.  Hartsock v. Goodyear Dunlop Tires N. Am., Ltd, 2018 WL 1938540 (S.C. Apr. 25, 2018).  You may read the opinion here.

Tragic Accident

While traveling on I–26 in Calhoun County, S.C., a Monaco RV’s tire “blew out,” allegedly causing the RV to cross the median and strike head-on a car in which Sarah Mills Hartsock was a passenger.  Mrs. Hartsock died as a result, and her husband sued Goodyear in federal court under diversity jurisdiction alleging that Goodyear’s tire was defective.

Federal Discovery Rules or State Privilege Law?

Goodyear sought a protective order to preclude plaintiff from obtaining “the design and chemical composition of the allegedly defective tire,” and specifically the tire liner’s butyl content.  The magistrate judge applied a federal-law balancing test, rather than state law, and denied the protective-order request. You may read the magistrate judge’s opinion here.

The district judge adopted the magistrate judge’s ruling without substantive comments, but granted an interlocutory appeal.  The issue before the 4th Circuit is whether federal discovery rules or South Carolina privilege law governs the trade-secrets-disclosure issue.  This issue begs the question that the federal appellate court certified to the South Carolina Supreme Court:

Does South Carolina recognize an evidentiary privilege for trade secrets?

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Article Argues for Adoption of Labor Relations Privilege

Alaska recently adopted a “union relations privilege” in Peterson v. State, 280 P.3d 559 (Alaska 2012), but only a small minority of states recognize an evidentiary privilege precluding from discovery communications between an employee and her union representative.  Other courts, federal and state, reject a labor-relations privilege or cast uncertainty laborrelationsabout the privilege’s viability.

In his recent law review article, Bringing Jobs Back to the American People: The Need for a Recognized Labor Relations Privilege in the Aftermath of the Economic Recession, 31 Hofstra Labor & Employment Law Journal 237, Christopher M. Muniz seeks to remove the uncertainty by arguing for the legislative adoption of a labor-relations privilege.  You may read the article here.

Muniz notes that, because most employees pursue grievances with the assistance of non-attorney union representatives, the attorney-client privilege does not protect the employee-representative communications from discovery in subsequent litigation.  He argues:

If a labor relations privilege is not recognized, it could temper open and honest communication between employees and their union representatives and would fail to serve the public interest in promoting judicial economy.  A labor relations privilege promotes the deeply rooted public policy established in the NLRA to advance industrial harmony by allowing employees to freely organize, bargain collectively and engage in protected concerted activity.

Muniz’s article contains a draft statute outlining the scope and contours of a labor-relations privilege.  I recommend this thoughtful article to lawyers arguing for or against an evidentiary privilege in the labor relations context.  My thanks to Mr. Muniz and the Hofstra Labor & Employment Law Journal for permission to link this article in this post.

11th Cir. Refuses to Adopt Plea-Negotiations Privilege for Financier Jeffrey Epstein’s Sex-Offense Plea Discussions

In a case involving former Bear Stearns financier Jeffrey Epstein, the 11th Circuit refused to adopt a rule-based or common-law evidentiary privilege precluding from discovery plea negotiations betweenEpstein prosecutors and a criminal defendant. Doe v. United States, 2014 WL 1509015 (CTA11 Apr. 18, 2014). You may access the opinion here.

Background

The U.S. Attorney’s office for the Southern District of Florida accepted prosecution of financier Jeffrey Epstein for allegedly sexually abusing several minor girls. You may read more about these charges in this New York Times story.

After “extensive plea negotiations” between Epstein’s lawyers, including Roy Black, and federal prosecutors, Epstein and the U.S. Government entered into a non-prosecution agreement under which the government would not pursue federal charges if Epstein pled guilty to state-law charges of solicitation of prostitution.

Two of Epstein’s victims later sued the federal government for not informing them of the plea negotiations as required by the Crime Victims’ Rights Act, 18 U.S.C. § 3771. The victims then moved to compel production of the correspondence between Epstein’s lawyers and prosecutors. Epstein and Black intervened to prevent disclosure, arguing that an evidentiary privilege precluded production of plea-negotiation correspondence.

FRE 410 Does not Create Privilege

Epstein first argued that Federal Rule of Evidence 410 created an evidentiary privilege protecting plea negotiations from disclosure. The Court quickly dismissed this argument because “Rule 410 governs the admissibility of plea negotiations, not the discoverability of them.” Privileges pertain to discoverability and Rule 410 is simply inapplicable.

No Common Law Plea-Negotiations Privilege

Epstein alternatively argued that the Court should recognize a federal common-law evidentiary privilege for plea negotiations. The Court acknowledged that FRE 501 empowers federal courts to continue the evolutionary development of evidentiary privileges, but also that courts generally disfavor “newly minted” privileges that contravene the principle that the public has a right to “every man’s evidence.”

The Court analyzed Epstein’s privilege request through the four factors enunciated in Jaffee v. Redmond, 510 U.S. 1, 10-15 (1996): whether the putative privilege (1) is rooted in the imperative need for confidence and trust; (2) serves the public interest; (3) promotes sufficiently important interests to outweigh the need for probative evidence; and (4) has any consensus among the states.

Noting that a prosecutor and a criminal defendant are adversaries and “do not enjoy a relationship of confidence and trust when they negotiate, the Court held that a plea-negotiations privilege did not meet any Jaffee criteria. In fact, the Court held that a plea-negotiations privilege would upset the admissibility balance of FRE 410, which permits introduction of plea negotiations into evidence in certain circumstances.