Originally appeared in Legal Journal Newsletters on October 1, 2015.
—by Andrew Solow, Jennifer Taiwo and David Kerschner
Undoubtedly, the attorney-client privilege is integral to every attorney's practice, regardless of whether that attorney's practice focuses on litigation, regulatory or transactional work. Yet, despite the ubiquitous nature of the attorney-client privilege, attorneys generally understand far less about the nuances of the invocation of the attorney-client privilege than they should, particularly in the context of interacting with former employees of a corporate client. In the face of seemingly endless regulatory and compliance investigations, along with protracted product liability, antitrust, securities and other corporate litigations, the need to communicate with and prepare former employees for any kind of testimony is ever-increasing. As this need increases, so, too, does the practicing attorney's need for a solid and accurate understanding of when and precisely how the attorney-client privilege applies in the context of interactions with former employees. This article provides a refresher on the parameters of the attorney-client privilege and briefly discusses relevant case law addressing the application of the attorney-client privilege to interactions with former employees. It then sets forth the implications of misunderstanding the attorney-client privilege and presents guidelines to follow when dealing with former employees.
The Attorney-Client Privilege and Corporations in General
The attorney-client privilege protects communications: 1) between a client and his or her attorney; 2) that are intended to be, and in fact were, kept confidential; 3) for the purpose of obtaining or providing legal advice. United States v. Mejia, 655 F.3d 126, 132 (2d Cir. 2011); see also Fisher v. United States, 425 U.S. 391, 403 (1976). The purpose of this privilege is, of course, to encourage clients to make full disclosure to their attorneys. Fisher, 425 U.S. at 403.
In Upjohn Co. v. United States, 449 U.S. 383 (1981) the Supreme Court held that the attorney-client privilege applies to a corporation's attorney's communications with corporate employees: 1) when a communication is made to the corporation's counsel that is acting in their capacity as counsel (and not as business consultants, for example); 2) at the direction of corporate management for the purpose of securing legal advice from counsel; 3) concerning a subject within the scope of employment; and 4) when the employee knows that the purpose of the communication is for the corporation to procure legal advice. Upjohn at 394-95.
The Attorney-Client Privilege and Former Employees
In Upjohn, the Supreme Court did not fully outline how the attorney-client privilege applies to communications with former employees. In his concurrence, Chief Justice Burger offered his opinion that "a communication is privileged 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." Upjohn Co ., 449 U.S at 403 (Burger, C.J., concurring). Nevertheless, the Upjohn decision did not specifically address whether communications between a corporate counsel and former employees are, in fact, privileged.
Courts have varied in their application of the Upjohn criteria to former employees. In Peralta v. Cendant Corp., the court was asked "whether, under federal law, counsel for an employer can claim a privilege as to its attorney's communications in preparing an unrepresented former employee for deposition by opposing counsel, and/or such attorney's communications during the deposition about her testimony in that deposition." Peralta v. Cendant Corp., 190 F.R.D. 38, 40 (D. Conn. 1999). The Peralta court concluded that: 1) privileged information obtained by a former employee while employed by the corporation; and 2) communications between the former employee and corporation's counsel for the purpose of educating counsel about relevant facts known to the former employee are privileged.
However, communications that go beyond the scope of the know- ledge which the former employee acquired during the course of employment, even between a former employee and counsel at a deposition preparation session, may not garner the protections of the attorney-client privilege. Id . at 41. Therefore, the attorney-client privilege would not apply to information given y corporate counsel to a former employee regarding the testimony of other witnesses, or to discussions between the former employee and corporate counsel on how to answer questions.
The Peralta decision also noted that some communications between a former employee and the corporation's counsel may also be protected under the work-product doctrine. Recall that the work-product doctrine announced in Hickman v. Taylor will act to shield communications with former employees to the extent that such communications included the "mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation." Hickman v. Taylor, 329 U.S. 495 (1947). As a result, communications which take place in preparation for a deposition, for example, will be shielded from disclosure under the work-product doctrine if those communications involved legal opinions or conclusions that would reveal a party's legal strategy. The Peralta court explained that because the work-product doctrine aims to prevent disclosure to opposing counsel, not to the entire world, disclosure to third parties does not always waive work-product immunity. Consequently, in Peralta, the former employee was not directed to answer questions that would reveal corporate counsel's conclusions or opinions involving their strategy. Id. at 42. However, it is important to note that, generally, work-product protections do not prevent disclosure of underlying facts and may therefore limit what information is shielded from disclosure. See, e.g., Bowne of New York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 471 (S.D.N.Y.1993).
The Peralta decision has been widely cited to determine when a former employee's conversations with the former employer's counsel can be withheld as privileged. See, e.g., Winthrop Res. Corp. v. Commscope, Inc. of N. Carolina, No. 5:11-CV-172, 2014 WL 5810457, at *3 (W.D.N.C. Nov. 7, 2014); Price, 2008 WL 2388709, at *1; Wade Williams Distribution, Inc. v. Am. Broad. Companies, Inc. No. 00 CIV. 5002 (LMM), 2004 WL 1487702, at *1 (S.D.N.Y. June 30, 2004). For example, in U.S. ex rel. Hunt v. Merck-Medco Managed Care, LLC , a Pennsylvania District Court was asked to determine the admissibility of four types of statements: 1) Statements made by a corporation's counsel to a former employee regarding the nature of the case; 2) Statements made by a former employee to her former employer's counsel regarding her conversations with plaintiff; 3) Descriptions and/or summaries of witness testimony provided to a former employee by her former employer's counsel; and 4) Conversations between a corporation's counsel and a former employee while she was under oath during the deposition. 340 F. Supp. 2d 554, (E.D. Pa. 2004).
Citing Peralta, the court stated that, "the line to be drawn is not difficult: if the communication sought to be elicited relates to [a former employee's] conduct or knowledge during her employment ... , or if it concerns conversations with corporate counsel that occurred during her employment, the communication is privileged; if not, the attorney-client privilege does not apply." Id. at 558. The court allowed the former employee to be questioned about the four topics at issue in a manner consistent with the limitations set forth in Peralta.
Yet, the Peralta holding has not been universally accepted. For example, in Infosystems, Inc. v. Ceridian Corp., a Michigan district court stated that Peralta "sweeps too broadly" regarding the former employee's activities or knowledge acquired during their employment. 197 F.R.D. 303, 304-305 (E.D. Mich. 2000). In Upjohn, and in Chief Justice Burger's concurrence, the invocation of the privilege was based partially on the fact that the employee (or in the case of Burger's comments, the former employee) spoke at the direction of management. The Infosystems court's criticism stems from Peralta's apparent omission of this factor. Consequently, the court in Infosystems, declined to apply Peralta's holding broadly and noted that "counsel's communications with a former employee of the client corporation generally should be treated no differently from communications with any other third-party fact witness." Id. at 306.
Notwithstanding this conclusion, the Infosystems court did acknowledge that there are exceptions to this rule, such as "where the former employee retains a present connection or agency relationship with the corporation, or where the present-day communication concerns a confidential matter that was uniquely within the know- ledge of the former employee when he worked for the client corporation, such that counsel's communications with this former employee must be cloaked with the privilege in order for meaningful fact-gathering to occur." Id.
However, more recently, the District Court of Connecticut refused to revisit the Peralta holding in light of Infosystems, citing the number of recent Second Circuit decisions that continued to follow Peralta. Weber v. FUJIFILM Med. Sys., U.S.A., No. 3:10 CV 401 JBA, 2011 WL 3163597, at *7 (D. Conn. July 27, 2011).
Drawing the Line Between Privileged and Discoverable Communications
Apart from understanding the scope and function of the attorney-client privilege, as well as the existing legal precedent, attorneys should be mindful of the pitfalls that accompany blanket assumptions that their communications will be considered privileged. Assuming that communications with former employees will be shielded from disclosure is likely to result in less stringent practices to the detriment of the client. It inevitably means that less scrutinizing attorneys are more likely to fail to conform their supposedly privileged communications to the parameters courts have outlined, thereby subjecting matters intended as privileged communications to discovery. Instead, to ensure that the attorney-client privilege will cover their communications, attorneys should endeavor to follow the guidelines below.
Provide former employees with an adequate Upjohn warning. Upjohn warnings are instructions given to employees (regardless of whether they are current or former employees) at the outset of communications with the company's counsel where the employee is told that: 1) the attorney represents the company and not the employee individually; 2) the attorney-client privilege belongs to the company, not the employee; 3) the company reserves the right to waive the privilege and disclose the substance of the interview to third parties; and 4) the employee should not waive that privilege by disclosing — either inadvertently or intentionally — the content of the communications to third parties. Former employees need to be clear about the attorney's objective in speaking with them, which should be obtaining information that the former employee possesses as a result of their employment, and that the attorney represents the corporation, and not the former employee.
Understand the extent of the former employees' knowledge, activities and responsibilities, and the timing of their tenure at the corporation. If application of the attorney-client privilege to these communications with the former employee is ever questioned, the attorney must be able to provide a sufficient explanation of how the former employee's knowledge is critical information that the attorney needs to adequately represent the corporation.
Limit discussions with former employees to matters that were within the scope of the former employee's tenure at the corporation. Legal precedent demonstrates that there may be room for debate regarding whether the scope of the attorney-client privilege will encompass all discussions and fact-gathering that attorneys may engage in with a former employee in preparation for any kind of testimony, if those efforts are not focused on the proper, protected subject matter. Attorneys can take refuge in the attorney-client privilege, however, if they ensure that communications with former employees remain within the realm of subject matters that courts have clearly outlined as protected by the privilege.
Avoid scripting witnesses either verbally or with writings. Here, again, legal precedent demonstrates that the prudent course of action is to avoid communications of any kind that are not clearly within the protected realm of the attorney-client privilege. Given that some courts have adopted the view that former employees are indistinguishable from third parties with no interests in the outcome of a corporate client's litigation, a court could determine that an attorney has waived the attorney-client privilege through attempts to influence the witnesses' testimony with scripting. It is far more practical to avoid having to defend such communications in the first instance, rather than having to devise legal maneuvers to fit communications within the scope of the privilege after the communications have been challenged as discoverable.
Do not share work-product, litigation strategy or testimony from other witnesses with the former employee. This practice point also focuses on embracing a conservative approach to even presumably privileged communications. If work-product, litigation strategy and other witnesses' testimony are not shared with the former employee, the attorney forecloses the possibility of inadvertent disclosure should a court conclude that any aspect of such matters is not reasonably related to the scope of employment.
Overall, attorneys should think actively and intentionally about the attorney-client privilege and its application to their practice. With each of the above practice points in mind, attorneys can predictably and successfully draw a clear line between privileged and discoverable communications.
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