Whose Privilege Is It Anyway? The Applicability of the Attorney-Client Privilege to Communications with Former Employees

by Mac Zentner, Senior Associate

Introduction

The attorney-client privilege is one of the oldest and most valued privileges in American society, and its operation as an evidentiary shield preserves the confidential nature of the lawyer-client relationship.[1] In the corporate context, courts have rarely questioned whether corporations are able to invoke this privilege, but have struggled to determine the extent to which the privilege protects communications between a corporation’s lawyers and its current and former employees. Although a few courts have addressed whether the privilege applies to former corporate employees, this issue remains unresolved for the majority of federal and state jurisdictions, including Louisiana.[2]

The Attorney-Client Privilege, Generally

The attorney-client privilege protects the client’s right to refuse to disclose (and to prevent any other person from disclosing) confidential communications between the client and the attorney.[3] In order to establish the attorney-client privilege, there are several elements that must be satisfied: (1) the client is the asserted holder of the privilege; (2) the communication is between the client and attorney (or their respective representatives);[4] (3) the communication is made in confidence and outside the presence of strangers; and (4) the communication is made for the purpose of obtaining legal assistance.[5] Although the various states’ privilege rules largely are similar to those under the federal common law, the exact scope of the privilege is somewhat different in a number of states.[6] Also, when federal courts apply federal law, they apply the privilege rules under the federal common law; when federal courts exercise diversity jurisdiction, however, they apply the privilege rules of the forum state under the Erie doctrine.[7]

Who Is the “Corporate Client”? The Law After Upjohn

In addition to individual clients, corporate entities also may assert the attorney-client privilege. Generally speaking, the privilege rules apply to corporate clients in the same manner as they do for individual clients and protect communications between the corporation’s lawyers and its employees.[8] The exact scope of the corporate privilege has not been without controversy, however, and courts have struggled to define it over the years.

In 1981, the United States Supreme Court in Upjohn Co. v. United States rejected the “control group” test that had been adopted by some jurisdictions. Under this test, the attorney-client privilege for corporations protected only communications between the senior officers who control a corporation (the so-called “control group”) and the corporation’s lawyers.[9] The Court instead ruled that the scope of the privilege depends on the subject matter of the communication, rather than who was making the communication.[10] In Upjohn, senior employees of Upjohn, a drug manufacturing company, became aware that one of the company’s foreign subsidiaries possibly had paid bribes to foreign government officials.[11] Subsequently, Upjohn’s office of general counsel began an internal investigation in which its lawyers sent out a questionnaire to its employees and interviewed 33 of them, including several who were no longer employed by the company.[12] When the Internal Revenue Service (“IRS”) requested the disclosure of the completed questionnaires and interview notes, Upjohn claimed privilege.[13]

The Supreme Court held that the communications were privileged and that the privilege applied not only to those high-level employees who possess the authority to act on the legal advice of the attorney, but also to any employee who can provide information that will assist the attorney in representing the corporation.[14] The Court declined to address, however, whether the privilege also applied to the communications with the former employees.[15] In a concurring opinion, Chief Justice Burger criticized the Court’s failure to confront this question and proposed his own test to determine whether the privilege should apply to communications with former employees.[16] It was not until 2015 in Hanover Ins. v. Plaquemines Parish that this issue was addressed under Louisiana law.

The Hanover Decision and Why It Matters

Although only a small number of courts after Upjohn have addressed whether the attorney-client privilege extends to communications with former employees, a Louisiana federal court recently confronted this issue in Hanover Ins. v. Plaquemines Parish.[17] In Hanover, the court utilized an “Erie guess” to predict how the Louisiana Supreme Court would decide the case.[18] It recognized that the only Louisiana case to have addressed this issue was Turner v. Lowery, in which the Louisiana Supreme Court issued a protective order preventing discovery of privileged communications between the party’s corporate counsel and any former employees relating to the subject matter of the lawsuit.[19]

The Hanover court noted that the court in Turner, in support of its decision to issue the protective order, had relied on the fact that both the Ninth and Fourth Circuit Courts of Appeal had adopted the test from Chief Justice Burger’s concurring opinion in Upjohn.[20] Because there was no other caselaw on point, the court in Hanover adopted the Burger concurrence and held that the Louisiana Supreme Court would extend the attorney-client privilege to communications with a former employee, at a minimum, when:

(1) [T]he former employee was employed by the corporation during the time relevant to the attorney’s current representation of the corporation; (2) the former employee possesses knowledge relevant to the attorney’s current representation of the corporation; and (3) the purpose of the communication is to assist the attorney in “(a) evaluating whether the employee’s conduct has bound or would bind the corporation; (b) assessing the legal consequences, if any, of that conduct; or (c) formulating appropriate legal responses to actions that have been or may be taken by others with regard to that conduct.”[21]

The court then determined that because each of the test’s requirements was met, the communications at issue were privileged.[22]

Conclusion

Although the Hanover decision is not binding on the Louisiana Supreme Court,[23] its holding nevertheless exists as significantly persuasive authority given the absence of state court jurisprudence addressing this issue.[24] Thus, it seems likely that the Louisiana Supreme Court would conclude that the attorney-client privilege extends to communications between a corporation’s attorneys and its former employees as long as the test promulgated in Hanover is satisfied.

[1] See Hunt v. Blackburn, 128 U.S. 464, 470 (1888) (explaining that the attorney-client privilege “is founded upon the necessity, in the interest and administration of justice, of the aid of persons having knowledge of the law and skilled in its practice, which assistance can only be safely and readily availed of when free from the consequences or the apprehension of disclosure”).

[2] Hanover Ins. Co. v. Plaquemines Parish Gov’t, 304 F.R.D. 494, 499–500 (E.D. La. 2015).

[3] See, e.g., Attorney-client privilege, Black’s Law Dictionary (10th ed. 2014).

[4] Furthermore, it is not required that the communication be made by the client, as the privilege protects communications both from the client to the lawyer and from the lawyer to the client. See, e.g., Kobluk v. U. of Minn., 574 N.W. 2d 436 (Minn. 1998) (holding that drafts of documents by lawyer sent to client for review were privileged).

[5] See Restatement (Third) of the Law Governing Lawyers § 68 (Am. Law Inst. 2000); see also La. Code Evid. art. 506 (2017).

[6] Restatement § 68 cmt. d.

[7] Fed. R. Evid. 501; Erie doctrine, Black’s Law Dictionary (10th ed. 2014) (“The principle that a federal court exercising diversity jurisdiction over a case that does not involve a federal question must apply the substantive law of the state where the court sits.”).

[8] Restatement § 73. See generally Upjohn Co. v. United States, 449 U.S. 383 (1981).

[9] Upjohn, 449 U.S. at 390.

[10] Id. (“[T]he privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.”).

[11] Id. at 386.

[12] Id. at 386–87, 394 n.3.

[13] Id. at 387–88.

[14] Id. at 391 (“In the corporate context, however, it will frequently be employees beyond the control group . . . who will possess the information needed by the corporation’s lawyers.”).

[15] Id. at 394 n.3.

[16] Id. at 402–03 (Burger, J., concurring) (“[T]he Court should make clear now that, as a general rule, a communication is privileged at least when, as here, an employee or former employee speaks at the direction of the management with an attorney regarding conduct or proposed conduct within the scope of employment. The attorney must be one authorized by the management to inquire into the subject and must be seeking information to assist counsel in performing any of the following functions: (a) evaluating whether the employee’s conduct has bound or would bind the corporation; (b) assessing the legal consequences, if any, of that conduct; or (c) formulating appropriate legal responses to actions that have been or may be taken by others with regard to that conduct.”).

[17] Hanover Ins. Co. v. Plaquemines Parish Gov’t, 304 F.R.D. 494 (E.D. La. 2015).

[18] Id. at 496–97 (“If the Louisiana Supreme Court has not ruled on this issue, then this Court must make an ‘Erie guess’ and determine as best it can what the Louisiana Supreme Court would decide.” (quoting Howe ex rel. Howe v. Scottsdale Ins. Co., 204 F.3d 624, 627 (5th Cir. 2000))).

[19] Id. at 497 (citing Turner v. Lowery, 703 So. 2d 1 (La. 1997)).

[20] Id. at 498; see also In re Allen, 106 F.3d 582, 606 (4th Cir. 1997); In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litig., 658 F.2d 1355, 1361 n.7 (9th Cir. 1981). The court also stated that although the Ninth and Fourth Circuit Courts of Appeals are the only two federal appellate courts that have considered this question, “it appears that every federal court, with the exception of a single district court decision in 1985, has held that the privilege extends to former employees in certain contexts.” Hanover, 304 F.R.D. at 498.

[21] Hanover, 304 F.R.D. at 499–500 (quoting Upjohn, 449 U.S. at 402–03 (Burger, J., concurring)).

[22] Id. at 500.

[23] See, e.g., Bradford R. Clark, Ascertaining the Laws of the Several States: Positivism and Judicial Federalism After Erie, 145 U. Pa. L. Rev. 1459, 1471–72 (1997).

[24] See State v. Foret, 628 So. 2d 1116, 1122 (La. 1993); see also La. Code Evid. art. 102 cmt. a. (2017) (“[T]he adoption of this Code facilitates the movement towards a uniform national law of evidence. . . . [and] Louisiana courts now have available a body of persuasive authority which may be instructive in interpreting the Louisiana Code.”).

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