Monday, March 23, 2009
Bringing Good Things To Light?: Action Against GE Healthcare Reveals That Illinois Still Uses The "Control Group" Test For Corporate Attorney-Client Privilege Claims
In Upjohn v. United States, 449 U.S. 383 (1981), the Supreme Court explicitly rejected the "control group" test for determining which communications between a lawyer and members of a corporation are protected from disclosure by the attorney-client privilege. And while Upjohn was not binding upon the application of state rules of evidence/privilege, many states subsequently reached the same result. But as the recent opinion of the United States District Court for the Northern District of Illinois in Resurrection Healthcare and Factory Mutual Insurance Company v. GE Healthcare, 2009 WL 691286 (N.D. Ill. 2009), makes clear, Illinois is not one of those states.
In GE Healthcare, Resurrection Healthcare (does anyone else find this name odd?) and Factory Mutual Insurance Company sued GE Healthcare (GEHC) in Illinois state court before GEHC removed the action to federal court based upon diversity jurisdiction. In their complaint, the plaintiffs claimed that GEHC employees, who were contracted to operate a bio-medical department in a Resurrection-affiliated hospital, negligently allowed mercury to spill on the hospital's floor and improperly disposed of the mercury after the spill was discovered. Before trial, the plaintiffs sought production of interviews of GEHC employees who were present at the hospital at the time of the spill; a written statement by one of those employees; and documentation of a site visit by another GEHC employee.
In addressing this issue, the Northern District of Illinois first noted that it had to apply Illinois privilege law pursuant to Federal Rule of Evidence 501 because the basis for federal court jurisdiction was diversity jurisdiction. It then found that:
In the corporate context, Illinois applies the "control group" test to determine whether communications by corporate representatives are cloaked with the privilege....Under this test, a communication is not privileged unless it is made by a member of the control group, which includes top management as well as "an employee whose advisory role to top management in a particular area is such that a decision would not normally be made without his advice or opinion, and whose opinion in fact forms the basis of any final decision by those with actual authority."
As noted, if the basis for the federal court's subject matter jurisdiction were federal question jurisdiction, the court could not have applied this "control group" test and instead would have applied a case-by-case balancing approach similar to the "subject matter" test, under which:
the attorney-client privilege is applicable to an employee's communication if: (1) the communication was made for the purpose of securing legal advice; (2) the employee making the communication did so at the direction of his corporate superior; (3) the superior made the request so that the corporation could secure legal advice; (4) the subject matter of the communication is within the scope of the employee's corporate duties; and (5) the communication is not disseminated beyond those persons who, because of the corporate structure, need to know its contents.
Whether you agree or disagree with the propriety of the "control group" approach, it certainly makes things simple(r). All that the Northern District of Illinois had to do was determine whether the GEHC employees at issue were members of the "control group" and whether the communications at issue originated in a confidence that they would not be disclosed, were made to an attorney acting in his legal capacity for the purpose of securing legal advice or services, and remained confidential. Using this test, the court found that some of the aformentioned interviews/statements/dcouments were privileged while other were not.