The Attorney-Client Privilege: Slicing The Lines of Distinction More Thinly

The significant cases decided in the attorney-client privilege area clearly reflect an evolution in judicial thinking. Unlike in the majority of decisions in the past, the current approach by the courts is to slice the line of distinction with respect to the elements of the attorney-client privilege more thinly. The case of DiPalma v. Medical Mavin, Ltd., No. Civ. A. 95-8094, 1998 WL 123009 (E.D. Pa. Feb. 10, 1998), is a good example. DiPalma concerned the sale of Dr. DiPalma's podiatric practice to another doctor and his wife, the LaLibertes. Dr. DiPalma's claims included claims against the buyer's attorney (Ryan) and his law firm; Ryan was also allegedly the lawyer and CEO of the defendant brokerage house, Medical Mavin.

The attorney-client privilege issue arose in the context of a motion by attorney Ryan and his law firm to terminate his deposition, due to its alleged needless length caused by plaintiff's counsel asking questions which elicited privileged information. Plaintiff's counsel sought, among other things, the content of conversations between attorney Ryan and the buyer's wife concerning the sale transaction and her execution of promissory notes which formed part of the transaction. It was acknowledged that no attorney-client relationship existed between the buyer's wife and attorney Ryan.

Pennsylvania Privilege Law

Pennsylvania privilege law applied in this diversity case. The defendants made two arguments for the applicability of the privilege:

  1. that the buyer's wife acted as her husband's agent with respect to the transaction and, therefore, any conversation she had with attorney Ryan was necessary for the provision of legal services to the buyer, and
  2. that the buyer and his wife shared a commonality of interest.

While the privilege may extend to an agent to whom disclosure of otherwise privileged communications is necessary for the client to obtain legal advice, the Court easily disposed of the defendants' first argument by finding that such a rationale does not apply when the information is communicated to a third party simply as a matter of convenience. Id. at *2. As the Court noted, "it is far from clear that Mrs. LaLiberte [buyer's wife] was an essential or necessary 'conduit' for the transmission of communications between Dr. LaLiberte [buyer] and his attorney." Id. at *3.

Common Interest Doctrine

From the perspective of a follower of privilege law, however, the much more interesting portion of the Court's analysis concerned the common interest doctrine. The common interest doctrine, as you may know, permits the disclosure of otherwise privileged or protected information without the finding of a waiver, in situations where the third party shares the same legal interest as the party holding the privilege. See, e.g., Northwood Nursing & Convalescent Home, Inc. v. Continental Ins. Co., No. Civ. A. 94-6706, 1995 WL 259437 (E.D. Pa. April 27, 1995) (finding no common interest between insured and insurer under the circumstances of the case). It is a concept aligned with the joint defense privilege but in a non-litigation setting. See, e.g., Haines v. Liggett Group, Inc., 975 F.2d 81, 94 (3d Cir. 1992).

True to the common interest doctrine, the Court held: "Thus, had Mrs. LaLiberte merely been present at and privy to conversations between Dr. LaLiberte and Mr. Ryan [attorney], her presence would not vitiate the privilege," citing In Re Grand Jury Investigation, 918 F.2d 374, 386 (3d Cir. 1990) (in the context of clergy-communicant privilege), and Schreiber v. Kellogg, No. Civ. A. 90-5806, 1992 WL 309632 (E.D. Pa. Oct. 19, 1992). The Court went on, however, to draw the finer, but very appropriate, distinction applicable in the case:

The commonality of interest concept is designed to preserve and not extend the privilege. Every communication between a lawyer and someone who has a commonality of interest with his client does not become privileged. DiPalma, 1998 WL 123009 at *3.

While the Court is correct in its analysis, it reflects a much more precise view of the law of attorney-client privilege than has sometimes been prevalent in the past.

A similar example of these finer distinctions has been evolving in the area of business versus legal advice. It is an issue that particularly haunts in-house counsel. Higgins v. Eichler, Nos. Civ. A. 96-6215 and 97-235, 1998 WL 181825 (E.D. Pa. April 16, 1998), involved that very issue:

Here, determination of whether the contested documents are privileged hinges on whether Defendants' in-house counsel, Glenn Madere, was acting as a lawyer in connection with the documents, and whether the communications sought to be protected were for the purpose of obtaining Madere's legal opinion, legal services or assistance in some legal proceeding. Although Madere served as Defendants' in-house counsel, he is also a corporate officer: Secretary and Vice-President. Thus it cannot be assumed that he acted, in every instance, as a lawyer, or that each document he prepared is automatically imbued with a legal purpose. Nor does the mere presence of Madere's handwritten notes on any document automatically confer privilege upon it. Id. at *1.

The Court decided that the defendants had not satisfied their burden in establishing the privilege and refused, based on "vague and conclusory assertions that a document is privileged" to order an in camera review. Id. at *2. The remainder of the opinion is a document-by-document determination of privilege and/or work product.

The Higgins case continues the trend of courts looking behind the status of attorney to determine in what capacity particular advice has actually given. See, e.g., Teltron v. Alexander, 132 F.R.D. 394, 396 (E.D. Pa. 1990) (where attorney served in both business and legal capacity, company must "clearly demonstrate that the advice to the protected was given in a professional legal capacity"); AMP, Inc. v. Fujitsu Microelectronics, Inc., 853 F. Supp. 808 (M.D. Pa. 1994), appeal dismissed, 47 F.3d 1180 (Fed. Cir. 1995) (document requested by in-house counsel serving business counsel function held not privileged); Massachusetts School of Law at Andover, Inc. v. American Bar Ass'n, 895 F. Supp. 88 (E.D. Pa. 1995) (attorney acting as consultant acted as business advisor rather than attorney; therefore, privilege did not apply). But see Kelly v. Ford Motor Co. (In Re Ford Motor Co.), 110 F.3d 954 (3d Cir. 1997) (fact that ultimate decision of corporate Policy and Strategy Committee was a business decision did not negate privilege if meeting was for purpose of seeking legal advice). The distinctions have particularly become much finer with respect to in-house counsel, as in Higgins.

Another example of finer distinctions occurred in In Re Grand Jury (Impounded), 138 F.3d 978 (3d Cir. 1998). The case involved a federal grand jury investigation into a kidnapping with an attorney as the primary target of the investigation. The issue before the Third Circuit, however, concerned a timeline prepared by the target for his attorney, which included all of his thoughts and notes concerning his relationship with the kidnapped individual. In affirming waiver of the work product protection, the Third Circuit considered the doctrine of inadvertent production. Certainly the five factors to be considered in determining whether disclosure was inadvertent and whether the privilege and/or work product protection is waived are now fairly established. See, e.g., Fidelity & Deposit Co. v. McCulloch, 168 F.R.D. 516 (E.D. Pa. 1996); McGreevy v. CSS Indus., Inc., No. Civ. A. 95-CV-8063, 1996 WL 412813 (E.D. Pa. July 17, 1996); United States v. Keystone Sanitation Co., 885 F. Supp. 672, 676-78 (M.D. Pa. 1994); Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 104 F.R.D. 103 (S.D.N.Y. 1985). In In Re Grand Jury, however, the Court considered whether the party asserting, in this case work product protection, had a responsibility to seek judicial intervention when opposing counsel refused to return the file. In other words, while the target of a grand jury investigation made a timely assertion of work product to the government -- satisfying one of the elements to be considered -- the question to the Third Circuit was whether that assertion was sufficient, in the face of the government's refusal to return the file and continue the use of the file:

We hold that the district court did not abuse its discretion determining that even though Capano [the target] timely notified the United States of his claim of the privilege and continued to assert it in subsequent communications, these assertions were insufficient to protect his rights. The United States was a direct adversary of Capano, and its continued use of the documents directly undermined the purpose of the attorney work product privilege of protecting confidential documents prepared in anticipation of litigation from a party's adversary. Capano's repeated admonitions to his adversary to return the protected documents did not prevent the continuing harm resulting from the disclosure. Judicial enforcement of the privilege was the only remedy that Capano could have obtained which would have foreclosed the United States from further use of the seized file. Without such judicial vindication, the United States was free to continue to utilize the documents, thereby negating their confidential character. Id. at 982.

The Third Circuit went on to indicate that merely asserting the privilege to an adversary is not sufficient to protect the privilege -- clearly placing the burden squarely on the party asserting the protection to act promptly, not merely to advise the adversary of the inadvertent production but, in the face of disagreement, to take steps in court to protect his/her rights.

In short, when a party's adversary has obtained possession of a party's work product and refuses to recognize the work product privilege, the party asserting the privilege must move expeditiously for relief particularly where, as here, the party asserting the privilege does not even claim that he had reason to believe that the adversarial party was not making use of the work product. Id. at 982.

In so holding, the Third Circuit has taken one step beyond those cases previously discussing inadvertent production: when an adversary does not concur with the demand to return the material, the responsibility for bringing the issue to the Court's attention is on the shoulders of the party seeking to protect its work product or privilege. While the opinion is probably correct in recognizing that the responsibility lies with the asserting party; nevertheless, it does reflect the finer distinctions in the law of privilege/work product.

In United States Fire Ins. Co. v. Asbestospray, Inc., No. Civ. A. 97-4020, 1998 WL 54424 (E.D. Pa. Jan. 21, 1998), the district court addressed the insurance companies' interpleader action seeking to deposit into court the remaining value of excess insurance policies they had issued to defendant Asbestos Spray and other asbestos manufacturers. The issue before the Court with respect to privilege/work product involved defendants' attempt to obtain information, inter alia, regarding the determination to commence the interpleader action. (The interpleader action was not commenced until after the insurance pool was substantially exhausted.)

The Court held that, while much of the sought material appeared to be attorney work product, plaintiffs had waived that protection as to the subject matter of this suit.

It is well settled that the attorney client privilege is waived to the extent that a party asserts reliance upon the advice of counsel that justifies actions leading to the litigation. See, e.g., Glennmede Trust Co. v. Thompson, 56 F.3d 476 (3d Cir. 1995) [parenthetical omitted]; Rhone-Poulenc Rorer, Inc. v. Home Indem. Co., 32 F.3d 851 (3d Cir. 1994) [parenthetical omitted]. The interpleader action asks this court not only to accept the deposit into court of the remaining value of excess insurance policies plaintiffs issued their insureds, but also to declare they are absolved from any further liability to pay asbestos personal injury claims. Certainly, the questions of why the plaintiffs waited until the insurance pool was substantially exhausted to file the interpleader, and the propriety of prior distributions, are relevant to the parties' claims and defenses. Thus, in the circumstances presented we find the plaintiffs by bringing the action waived any attorney client privilege concerning why the action was brought, its timing, the existence of any garnishments against the fund, plaintiffs' own calculations of projected liabilities of the fund, as well as the transfer of insurance proceeds. Id. at *3.

In Commonwealth v. Bartlett, 704 A.2d 659 (Pa. Super. 1997), alloc. granted in part, 710 A.2d 1139 (Pa. 1998), the Pennsylvania Superior Court affirmed the lower court's holding that the prosecution's witness was not required to assert his attorney-client privilege in front of the jury. In the context of a criminal trial, in which the defendant was convicted of first-degree murder, the defense had objected that the Commonwealth's witness was permitted to assert the privilege in an in camera discussion. In upholding the trial court, the Superior Court did note that defense counsel had requested and was granted the right to argue the point in his closing statement to the jury.

The United States Supreme Court this summer, in Swidler & Berlin v. United States, 118 S. Ct. 2081 (1998), held that the attorney-client privilege survives the death of the client. We in Pennsylvania, however, did not find the holding to be surprising, in light of the 1976 Pennsylvania Superior Court case of Cohen v. Jenkintown Cab Co., 238 Pa. Super. 456, 357 A.2d 689 (1976). Other than the lower court decision on appeal, the only decision addressing the issue in the country located by the Supreme Court was the Cohen case, which recognized that the privilege generally survives death (while conceding that there could be an interest of justice exception depending on the circumstances).

The case of Spencer v. Steinman, 179 F.R.D. 484 (E.D. Pa. 1998), tangentially considered the privilege, in the context of the propriety of contacting prior counsel -- which has been a fairly hot topic recently. Id. at *6. In holding that no violation of the Pennsylvania Rules of Professional Conduct, the Court focused on the fact that prior counsel was solely asked for his personal recollection of an event he allegedly witnessed; prior counsel was not asked for, and did not disclose, any confidential or privileged information.

In summary, the analysis in Pennsylvania state and federal privilege/work product cases this past year reflects a willingness by the courts to slice the lines of distinction in privilege and work product law more thinly.

*article courtesy of Wendelynne J. Newton of Buchanan Ingersoll, newtonwj@bipc.com.