Thursday, October 8, 2015
An opinion on attorney-client privilege from the New York Appellate Division for the First Judicial Department
This appeal arises from a discovery dispute in which the managers of a limited liability company and corporate counsel invoke the attorney-client privilege in opposition to document requests by one of the company's investors. The investor argues that it is entitled to the so-called fiduciary exception to the privilege because it is a beneficiary of the attorney-client relationship that exists between the company's managers and counsel. The managers and counsel, on the other hand, contend that because the investor had interests that were adverse to the company's interests, the fiduciary exception is inapplicable. Supreme Court found that the parties were not adverse, and ordered the production of all the documents claimed to be privileged.
We conclude that "adversity" is not a threshold issue in determining whether the fiduciary exception is applicable in a given case, but one of several factors to consider in making that determination, and that adversity cannot be determined without a review of the purportedly privileged communications. Therefore, we remand the matter for an in camera review of the withheld documents and a full analysis of whether the exception is applicable in this case. Absent a more deliberate review and analysis, the risk of disclosure of privileged communications is manifest.
The case was an appeal from a special referee's production order.
The court recognized the "fiduciary" exception and held
although defendants do not take issue with the motion court's finding of good cause — they focus on the determination that there never was an adversarial relationship between NAMA and Alliance — we conclude that the case must be remanded for the court to conduct a comprehensive good-cause analysis. The court, given its discretion under CPLR article 31, may not need to evaluate each factor listed in Garner. However, where a court finds that a shareholder has demonstrated good cause to apply the fiduciary exception and pierce the corporate attorney-client privilege, it must at least address those factors that support such a finding. This type of scrutiny is vital to ensure that courts do not arbitrarily order disclosure of corporate attorney-client communications...
The adversity question is therefore not one of timing, as defendants contend, but is answered by the communications' content. For this reason, we reject defendants' argument that, if NAMA were adverse to Alliance at some point, all subsequent communications between the Managers and the Attorneys would rest beyond the fiduciary exception's reach. Communications regarding defendants' alleged breach of fiduciary duties could have occurred at the same time as attorney-client communications regarding how to deal with NAMA (for example, during the California arbitration); it would frustrate the balancing of interests in attorney-client privilege cases to permit defendants to withhold communications that might reveal the alleged wrongful conduct simply because the parties were adverse at some point in the past. Thus, the motion court correctly stated that whether communications that occurred after an adversarial relationship developed are privileged depends on their content.
This is where a court's ability to conduct in camera review of the communications is crucial (see Spectrum Sys. Intl., 78 NY2d at 378 ["whether a particular document is or is not protected is necessarily a fact-specific determination, most often requiring in camera review"] [*12][internal citation omitted]; see also Stenovich, 195 Misc 2d at 102 [discussing court's in camera review of arguably privileged documents]). Absent a review of the communications (or at least a sampling thereof), it would be impossible to determine whether they involved advice concerning the instant litigation or "how to deal with" NAMA.
The matter was remanded for further proceedings. (Mike Frisch)
Monday, August 3, 2015
The South Dakota Supreme Court held that a trial court had violated the attorney-client privilege by allowing the deposition of a party's attorney and admitting his admissions at trial.
This case arose out of a foreclosure action brought by Voorhees Cattle Co. (Voorhees) against Dakota Feeding Co. (DFC). In its answer to the complaint, DFC filed a third party complaint against B and B Equipment, Inc. (B & B) for breach of contract; B & B counterclaimed alleging impossibility of performance and breach of contract by DFC...
As a result of the fraud allegations, counsel for Voorhees, Thomas M. Maher, sought to depose DFC’s counsel William Van Camp and subpoenaed his records concerning his representation of DFC. Van Camp moved to quash the subpoena and enter a protective order.
The court held a hearing on the motion on October 2, 2013. Van Camp argued that there was no applicable fraud exception to the attorney-client privilege and that he was acting as “an ordinary attorney” by performing due diligence on the transaction. Further, he stated that there is no statute or case law in South Dakota that allows an attorney to be deposed in ongoing litigation because of a fraud complaint such as this. Van Camp explained he was resisting the motion, in part because “they can conduct the discovery they want from my client, the discovery they want from DENR to see what information is there.”
The deposition was taken and admissions from that deposition were admitted at trial.
The court found that this was error
Even if the court found that the communications may not have been privileged or that waiver was an issue, it should have considered whether deposing opposing counsel was the appropriate means of acquiring the information sought. The court failed to consider the implications of allowing discovery without bounds by the extraordinary means of requesting admissions from opposing counsel regarding client communications, deposing opposing counsel, and issuing a subpoena for the production of materials from counsel’s case files. “Taking the deposition of opposing counsel not only disrupts the adversarial system and lowers the standards of the profession, but it also adds to the already burdensome time and costs of litigation.” Shelton v. Am. Motors Corp., 805 F.2d 1323, 1327 (8th Cir. 1986).
Opposing counsel “is [not] absolutely immune from being deposed.” Id. However, the circumstances under which opposing counsel may be deposed “should be limited to where the party seeking to take the deposition has shown that (1) no other means exist to obtain the information than to depose opposing counsel, (2) the information sought is relevant and nonprivileged; and (3) the information is crucial to the preparation of the case.” Id. (citation omitted). In this case, none of these considerations were taken into account. The court did not analyze the necessity for the discovery or consider reasonable alternative sources such as DFC’s principals or other witnesses such as the DENR employees that may have spoken with DFC’s attorney.
The judgment was nonetheless affirmed
Even though the privileged communications should not have been introduced, nor the deposition of the attorney and further discovery of attorney client privileged material allowed, those communications were germane to the claim by Voorhees, which is not being appealed because DFC satisfied the judgment against it. The communications did not prove, nor go to the heart of B & B’s claims...
The only issue between B & B and DFC decided by the jury was the amount of money owed B & B for the work done on the feedlot. As a result, the erroneous admission of the privileged communications was not unfairly prejudicial to DFC as against B & B. DFC’s claim that the error tainted the trial is not sufficient.
Sunday, November 30, 2014
A decision issued last week by the California Court of Appeals, Second District, Division Three holds
The question before us is whether the attorney-client privilege applies to intrafirm communications between attorneys concerning disputes with a current client, when that client later sues the firm for malpractice. We conclude that when an attorney representing a current client seeks legal advice from an in-house attorney concerning a dispute with the client, the attorney-client privilege may apply to their confidential communications. Adoption of the so-called "fiduciary" and "current client" exceptions to the attorney-client privilege is contrary to California law because California courts are not at liberty to create implied exceptions to the attorney-client privilege. In the unpublished portion of the opinion, we hold that the exceptions to the attorney-client privilege embodied in Evidence Code sections 958 and 962 do not apply to the circumstances presented here. Accordingly, we grant in part the petition of Edwards Wildman Palmer LLP and Dominique Shelton for a writ of mandate, and remand to the trial court for further proceedings.
The client had retained the law firm to pursue an invasion of privacy claim against the Daily Mail. As the court noted
The relationship between [client] Mireskandari and the Firm was short lived and, for the most part, contentious.
The court rejected the suggestion that internal counsel and the client were "joint clients" of the firm
Shelton and Mireskandari were not joint clients for purposes of section 962. Shelton and Mireskandari did not retain the Firm "upon a matter of common interest." Mireskandari retained the Firm and Shelton to represent him in the Daily Mail case; Shelton consulted with in-house counsel not as a party to that action, but to obtain advice on how best to address Mireskandari's complaints about billing and his threats to hold the firm responsible for any damages he suffered. Mireskandari and Shelton were not co-parties; they did not employ the same attorney to oppose claims of an adversary or pursue a claim as joint plaintiffs; they were not represented by the same attorney in a business transaction.
The court vacated an order that had permitted discovery into the firm's internal communications.
Thank you to my former student Daniel Woofter for sending me the case. His article from the Georgetown Journal of Legal Ethics is cited in the opinion. (Mike Frisch)
Monday, July 21, 2014
In a matter involving the application of the common interest rule in attorney-client privilege law, the New Jersey Supreme Court has held that
The common interest rule is designed to permit the free flow of information between or among counsel who represent clients with a commonality of purpose. It offers all parties to the exchange the real possibility for better representation by making more information available to inform decision-making in anticipation of litigation. Although the Court recognizes that any privilege, including the attorney-client privilege and work-product protection, restricts the disclosure of information and may intrude on the fact-finding function of litigation, the Court finds that the rule recognized in LaPorta strikes an acceptable balance of competing interests. The Court, therefore, expressly adopts the common interest rule as articulated in LaPorta. Common purpose extends to sharing of trial preparation efforts between attorneys against a common adversary. The attorneys need not be involved in the same litigated matter or anticipated matter. The rule also encompasses the situation in which certain disclosures of privileged material are made to another attorney who shares a common purpose, for the limited purpose of considering whether he and his client should participate in a common interest arrangement. (pp. 33-37)
The protected attorney work product disclosed by Sufrin to the municipal attorney remained privileged pursuant to the common interest rule. Sufrin and Longport shared a common purpose at the time of the disclosure because Longport had defended many civil actions filed against it by O’Boyle and anticipated further litigation from O’Boyle, and Sufrin was attempting to defend a civil action commenced by O’Boyle arising out of one client’s official position and others’ participation in civic affairs. Sufrin also disclosed his work product in a manner calculated to preserve its confidentiality. There is no evidence that the municipal attorney shared the material with anyone else, including O’Boyle. Once the municipal attorney declined to enter a joint defense strategy, he returned the privileged material, thereby minimizing even an inadvertent disclosure. Finally, although privileges may be overcome by a showing of particularized need under the common law right of access, O’Boyle failed to demonstrate a particularized need for the privileged material supplied to the municipal attorney. (pp. 37-39)
...we expressly adopt the common interest rule as previously articulated in LaPorta, supra, 340 N.J. Super. at 254, 262-63. We also hold that Sufrin, who represented a former municipal official and private residents in litigation filed by O’Boyle, shared a common purpose with Longport at the time he disclosed work product to the municipal attorney. Therefore, the joint strategy memorandum, and the CDs containing documents obtained and produced by the private attorney were not government records subject to production in response to an OPRA request by O’Boyle. Finally, O’Boyle failed to articulate a particularized need as required by the common law right of access to obtain the work product of the private attorney.
The litigation involved access to public records. (Mike Frisch)
Saturday, May 31, 2014
The Oregon Supreme Court held that a law firm's communications with in-house counsel were protected from disclosure from the now-former client.
The court reversed an order of production based on the so-called "fiduciary exception" to the attorney-client privilege
Friday, May 16, 2014
A busy day for attorney issues in the Maryland Court of Appeals.
In addition to three disbarments (two of which we have linked to), the court held
As evidenced by this Court’s holding in Benzinger, the testamentary exception has existed in Maryland for close to a century, despite never having been formally named. Nonetheless, it has been some time since this Court has spoken on the testamentary exception. For this reason, we reaffirm that in a dispute between putative heirs or devisees under a will or trust, the attorney-client privilege does not bar admission of testimony and evidence regarding communication between the decedent and any attorneys involved in the creation of the instrument, provided that evidence or testimony tends to help clarify the donative intent of the decedent.
Tuesday, April 15, 2014
Two points to make about confidentiality, just as all us ethics profs are about to (spoiler alert) examine on it. One is that I note that there is an interesting article in the current Litigation magazine (the ABA's journal by the Section on Litgation) on whether confidentiality and privilege survive death. It's not yet posted on their website, so look for it in print or anticipate it online. It notes that the successor law firm to Lizzie Borden's counsel circa 1892 is still safeguarding its (really, her) records. I foresee a poem about the privilege here, but what rhymes with "privilege"? One point six does not quite rhyme with ax.
The more accessible point is that Drury D. Stevenson (South Texas, Law) has posted to SSRN an article that, to me, follows in the tradition of the late Fred Zacahrias. Dru's title is Against Confidentiality and his abstract is:
Confidentiality rules form an important part of the ethical codes for lawyers, as a modern, expansive extension of the traditional attorney-client privilege doctrine. The legal academy, judiciary, and practitioners generally agree on the conventional wisdom that strict confidentiality rules are necessary to foster client-lawyer communication, thereby providing lawyers with information they need for effective representation. Yet this premise is demonstrably false – clients withhold information or lie to their lawyers despite the confidentiality rules, and the rules are mostly redundant with other ethical rules, evidentiary doctrines, and effective market mechanisms for protecting client privacy interests. At the same time, the confidentiality rules impose significant social costs – direct externalities, lemons effects, and even serious harm to third parties.
This Article argues that the lawyer confidentiality rules are ripe for repeal, revision, or rejection in the form of civil disobedience in certain cases. Using analytical tools from economics, including the Coase Theorem, this Article goes beyond previous criticisms of the rules to provide an extensive analysis of the social costs – and illusory benefits – of the ethical rules that compel lawyers to conceal client secrets. The rules undermine public trust in the legal system, and overall transparency and cooperation in society. In extreme instances, the rules facilitate wrongful convictions of innocent third parties and other serious harms. In relation to the other ethical rules, the confidentiality rules are generally in tension with, or redundant of, other rules designed to protect clients and third parties. The Article concludes with specific normative proposals for revising the rules, or challenging the existing rules as a way to force reforms.
April 15, 2014 in Abstracts Highlights - Academic Articles on the Legal Profession, Privilege | Permalink | Comments (0) | TrackBack (0)
Thursday, January 23, 2014
The Washington State Supreme Court has held that "an attorney hired by a corporate defendant to investigate or litigate an alleged negligent event may engage in privileged (ex parte) communications with the corporation's physician employee where the physician-employee has firsthand knowledge of the alleged negligent event and where the communications are limited to the facts of the alleged negligent event."
The ruling does not encompass health care provided before and after the event that resulted in litigation.
The court considered the application of the rule from a 1988 decision that barred ex parte communication between a doctor and his or her employer's attorney "where the employer is a corporation and named defendant whose corporate attorney-client privilege likely extends to the physician, at least as to certain subjects" and "balance[d] the values underlying the attorney-client privilege against those underlying the physician-patient privilege."
Justice Stephens concurred and dissented, finding the court's new rule an "unworkable" one that "erodes the sound policy decision" of the earlier case. (Mike Frisch)
Friday, December 20, 2013
Two attorneys who had represented opposing parties in civil litigation ended up in litigation against each other.
The Maryland Court of Appeals affirmed dismissal of the case, noting that "[t]o characterize Farmer and Mixter's relationship as acrimonious might be the understatement of the year. This court is sadly too familiar with the antics of these litigants from a dispute a few years ago..."
After the earlier case settled, Farmer "was so infuriated by Mixter's behavior that he sought sanctions against him." Sanctions were imposed but reversed on appeal.
Farmer then sent twenty letters to various Maryland lawyers that alleged "unprofessional behavior" and sought information for a bar complaint. Mixter responded with a suit for defamation. Famer sent more letters to attorneys and filed a bar grievance against Mixter.
The court here affirmed the the dismissal of the Mixter suit against Farmer and a second attorney who allegedly conspired with him based on absolute judicial privilege grounds
Because [Attorney Grievance Commission] complaints are not published and lawyers' exposure is protected to a reasonable degree, we are unwilling to overlook the absolute privilege accorded to the AGC process simply because appellant feels aggrieved by the situation.
Monday, December 9, 2013
The New Hampshire Supreme Court affirmed an order holding that an attorney's file is subject to disclosure in a probate matter.
The attorney was consulted twice, but not retained, for estate planning of a deceased couple. One of the brothers claims that the other brother exercised undue influence on the parents
...because the Attorney's file is relevant to an issue between the parties who claim through the same deceased client, we hold that the trial court did not unsustainably exercvise its discretion in allowing the file to be disclosed to the parties under [rules of evidence].
The court also sustained disclosure of correspondence between the attorney and one of the brothers. (Mike Frisch)
Thursday, October 24, 2013
An e-mail from Kean University's head basketball coach to the University's general counsel is protected by the attorney-client privilege, according to a decision issued today by the New Jersey Appellate Division.
The plaintiff in the litigation is the former athletic director, who was terminated "supposedly for failure to properly supervise subordinates in the athletic program, which led to the University being sanctioned" by the NCAA.
He sued for wrongful termination.
The e-mail had been in connection with a fundraising letter to defray costs of a team summer trip to Spain.
The court majority noted that the trial court found the e-mail to be privileged but found waiver. The court here agreed on privilege and reversed on the waiver issue.
The coach had provided the e-mail to the NCAA. The court concluded that the University, not the coach, had authority to waive the privilege.
A dissent concludes that the e-mail was not sent for the purpose of securing legal advice and thus was not privileged.
NJ.com reported on the NCAA actions. (Mike Frisch)
Wednesday, July 10, 2013
A significant decision today by the Massachusetts Supreme Judicial Court.
The issue and holding:
The issue presented on appeal is whether confidential communications between law firm attorneys and a law firm's in-house counsel concerning a malpractice claim asserted by a current client of the firm are protected from disclosure to the client by the attorney-client privilege. We conclude that they are, provided that (1) the law firm has designated an attorney or attorneys within the firm to represent the firm as in-house counsel, (2) the in-house counsel has not performed any work on the client matter at issue or a substantially related matter, (3) the time spent by the attorneys in these communications with in-house counsel is not billed to a client, and (4) the communications are made in confidence and kept confidential. Because these criteria were met in this case, we affirm the judge's order allowing the defendant law firm and its attorneys to invoke the attorney-client privilege to preserve the confidentiality of these communications.
The law firm was retained by a commercial lender to investigate title and foreclose on property secured by what the lender thought was a first mortgage. A third party claimed a superior interest in the property.
A year later, the client (through outside counsel) sent the law firm a draft complaint alleging malpractice and breach of contract.
The lawyers in the firm then consulted with the firm partner "designated to respond to ethical questions and risk management issues on behalf of [the firm]..."
The court underscored the importance of the ethics attorney function:
Where a law firm designates one or more attorneys to serve as its in-house counsel on ethical, regulatory, and risk management issues that are crucial to the firm's reputation and financial success, the attorney-client privilege serves the same purpose as it does for corporations or governmental entities: it guarantees the confidentiality necessary to ensure that the firm's partners, associates, and staff employees provide the information needed to obtain sound legal advice. See Hertzog, Calamari & Gleason v. Prudential Ins. Co. of Am., 850 F.Supp. 255, 255 (S.D.N.Y.1994) ("No principled reason appears for denying ... attorney-client privilege to a law partnership which elects to use a partner or associate as counsel of record in a litigated matter"). "[B]road protection of communications with law firm in-house counsel, including communication about the representation of a current client of the firm, ... would encourage firm members to seek early advice about their duties to clients and to correct mistakes or lapses, if possible, to alleviate harm." Chambliss, supra at 1724. As the United States District Court for the Southern District of Ohio recently noted:
"[I]ndividual lawyers who come to the realization that they have made some error in pursuing their client's legal matters should be encouraged to seek advice promptly about how to correct the error, and to make full disclosure to the attorney from whom that advice is sought about what was done or not done, so that the advice may stand some chance of allowing the mistake to be rectified before the client is irreparably damaged. If such lawyers believe that these communications will eventually be revealed to the client in the context of a legal malpractice case, they will be much less likely to seek prompt advice from members of the same firm."
The court rejected a differing result when the situation involves a current, rather than former, client:
In law, as in architecture, form should follow function, and we prefer a formulation of the attorney-client privilege that encourages attorneys faced with the threat of legal action by a client to seek the legal advice of in-house ethics counsel before deciding whether they must withdraw from the representation to one that would encourage attorneys to withdraw or disclose a poorly understood potential conflict before seeking such advice. The "current client" exception is a flawed interpretation of the rules of professional conduct that yields a dysfunctional result. See N.Y. St. Bar Ass'n Comm. on Prof. Ethics, Op. 789 (2005) ("We do not believe that the conflicts rules ... were intended to prohibit ethics consultation when it is most helpful: during the client representation"). As such, we decline to adopt it in Massachusetts.
Briefs were submitted by several amicus curiae, including the Association of Professional Responsibility Lawyers, the American Bar Association and the Attorneys' Liability Assurance Society, Inc.
The case is RFF Family Partnership, LP v. Burns & Levinson LLP. One should be able to access the decision through this link.
Law firm ethics counsel --every firm of sufficient size needs one. (Mike Frisch)
Tuesday, May 14, 2013
The New Jersey Supreme Court has held that the State's subpoena for an indicted defendant's application (with financial information) for court-appointed counsel was properly quashed.
The defendant is indicted for financial crimes. The State's investigation "suggested that defendant owned substantial assets."
The court modified an existing directive to permit disclosure for the purpose of investigating potential false statements of financial status in the future.
The court did not reach the issue whether the attorney-client privilege protect the form from disclosure. In the future, a fact-specific inquiry must be conducted "in accordance with settled principles governing the privilege. (Mike Frisch)
Monday, May 13, 2013
A recent Rhode Island Supreme Court decision is summarized on the court's web page:
Accordingly, the Court vacated the order of the Superior Court denying Sherwin-Williams’ motion for a protective order and remanded the case to the Superior Court.
Monday, January 28, 2013
The North Carolina Supreme Court has held that the consultations between members of the General Assembly and lawyers employed by the Attorney General and two outside law firms (Ogletree Dinkins and Jones Day) in matters involving redistricting plans are protected by the attorney-client privilege.
Justice Jackson, for the majority, concluded that the General Assembly did not intend to waive privilege in such matters:
..we are unwilling to infer such a sweeping waiver unless the General Assembly leaves no doubt about its intentions.
Justice Hudson dissented, and noted that the enactment at issue stripped confidentiality from redistricting law. Without confidentiality, there can be no privilege:
Defendants seek to protect much of their legislative redistricting work from public scrutiny under the cloak of the attorney-client privilege; however, the statutory language could not be clearer in indicating that the privilege is inapplicable here, making waiver irrelevant.
Tuesday, January 8, 2013
In a matter in which a county was represented in litigation by a law firm pursuant to an insurance contract, a majority of the Wisconsin Supreme Court has held that the law firm's invoices are public records subject to disclosure:
Because the liability insurance policy is the basis for the tripartite relationship between the County, the insurance company, and the law firm and is the basis for an attorney-client relationship between the law firm and the County, we conclude that the invoices that were produced or collected during the course of the law firm's representation of the County pursuant to the liability insurance policy come under the liability insurance policy. Wisconsin Stat. § 19.36(3) therefor governs the accessibility of the invoices...
The invoices——the billings for the law firm's legal work performed as the County's defense counsel and the insurance company's retained counsel——were produced or collected in the course of the law firm's representation of the County and the insurance company under the liability insurance policy between the County and the insurance company. Because the liability insurance policy is the basis for the tripartite relationship between the County, the insurance company, and the law firm, and is the basis for an attorney-client relationship between the law firm and the County, we conclude that the invoices were produced or collected during the course of the law firm's representation of the County and the insurance company pursuant to the liability insurance policy; the liability insurance policy is a contract entered into by
the County and the insurance company. Thus, the requirements of Wis. Stat. § 19.36(3) have been met and § 19.36(3) governs the accessibility of the invoices.
There are several dissents, including this from the dissent of Justice Prosser:
The majority opinion permits Wisconsin's public records law to breach privileged communications, contrary to sound public policy and the text of the public records statute. The majority's assurance that the opinion "does not alter the rules governing confidentiality, attorney-client privilege, or lawyers' work product, or any other rules protecting against disclosure," majority op., ¶15, is unpersuasive given the opinion's analysis and its other declarations. Because I believe the opinion has serious negative ramifications for the practice of law, I respectfully dissent...
The stakes in this dispute are obvious. The Star-Times already has information on the names of the County's lawyers, the number of hours they worked, and the amount they were paid——not by the County with County tax dollars, but by the County's insurer. What the Star-Times wants are "detailed descriptions of the nature of the legal services rendered" and "the substance of [the] lawyer-client communications."
Any court that determines that these matters of substance are not present in the subject invoices must be prepared to rule that the circuit court's findings were clearly erroneous.
Deciding this case without discussing the lawyer-client privilege in relation to the limiting language of the public records law (in Wis. Stat. §§ 19.31, 19.35(1), 19.36(1), and 19.85(1)(g)) casts a dark shadow over the lawyer-client privilege and other privileges in Chapter 905.
An appellate court should reduce uncertainty, not magnify it. The likely result of this case will be to force changes in billing practice. In the future, legal invoices related to an "authority" may be sanitized so that they provide insurers and public entity clients with no information except the hours worked and the amount owed as well as an invitation to discuss the details orally.
The suit was brought the Star-Times. (Mike Rrisch)
Monday, July 23, 2012
The Connecticut Supreme Court has reversed an order compelling a law firm to comply with a subpoena.
The law firm represents a plaintiff suing former counsel for legal malpractice:
The plaintiffs' malpractice claim concerns only the allegedly negligent representation by the defendants, which is separate from the plaintiffs' subsequent representation by [plaintiffs' counsel] Finn Dixon. Although the issue of damages will likely involve the reasonableness of the settlements entered into on Finn Dixon's advice, the fact finder should be able to assess damages without resorting to privileged communications...We decline to adopt the contrary rule urged by the defendants because it lacks precedential support and runs counter to our narrow construction of exceptions to the attorney-client privilege.
There is a dissent that would hold that the order compelling discovery is not appealable at this juncture. (Mike Frisch)
Tuesday, June 19, 2012
From the Ohio Supreme Court:
The Supreme Court of Ohio today issued a limited writ of mandamus ordering Ohio State University to provide ESPN with several documents related to the 2011 NCAA investigation of football coach Jim Tressel that the university had previously refused to provide to the network in response to public records requests.
However the court declined to order disclosure of most of the records sought by ESPN, finding that the requested documents fell within exceptions to the state Public Records Act for documents covered by attorney-client privilege and documents that may not be disclosed under the federal Family Educational Rights and Privacy Act (FERPA).
In today’s 7-0 per curiam opinion, the court also found that OSU officials had committed “per se” violations of the Public Records Act by failing to explain how ESPN could modify some of its record requests after the university had rejected them as “overbroad,” and by erroneously stating that the university was not required to disclose records related to an ongoing NCAA investigation. Because ESPN’s complaint did not ask the court to award statutory damages or order other remedial action based on those alleged violations, the court limited its ruling on those issues to making official findings that violations had occurred.
The court denied ESPN’s request for an award of attorney fees “(b)ecause Ohio State complied with the vast majority of its obligations under R.C. 149.43 in responding to ESPN’s records requests, and ESPN’s claims are largely without merit.”
The court noted that, in the weeks following a March 8, 2011 news conference at which Tressel admitted that he had failed to inform his superiors after learning about possible NCAA rule violations by OSU players, the university received 21 separate public records requests from ESPN and provided more than 700 pages of documents in response to those requests. The university declined to provide certain additional documents, including some communications between athletic department officials and the NCAA addressing the investigation of Tressel, documents identifying persons officially barred from access to student athlete pass lists, and communications to or from university officials that mentioned the name of Ted Sarniak, a Pennsylvania man who had been a friend and advisor to Terrelle Pryor, one of the football players implicated in the alleged rule violations.
In July 2011, ESPN filed an original action in the Supreme Court seeking a writ of mandamus to compel OSU to provide copies of all the requested documents. While that action, which is resolved by today’s decision, remained pending, the parties continued to negotiate, and OSU provided ESPN with some additional documents, but continued to deny access to others.
In rejecting ESPN’s argument that the exception to the Public Records Act for records that may not be disclosed under a state or federal law does not apply to FERPA, the court wrote: “ESPN argues that FERPA does not prohibit the disclosure of the requested records by educational agencies and institutions like Ohio State − it merely penalizes those educational agencies and institutions that have a policy or practice of permitting the release of those records without parental consent by withholding federal funding. ESPN’s contention lacks merit. ... ‘(A) participant who accepts federal education funds is well aware of the conditions imposed by the FERPA and is clearly able to ascertain what is expected of it. Once the conditions and the funds are accepted, the school is indeed prohibited from systematically releasing education records without consent.’”
“Ohio State received approximately 23 percent of its total operating revenues − over $919 million − in the 2010-2011 academic year from federal funds, and it is estimated that the university will receive the same amount of federal funds in the 2011-2012 academic year. Therefore, Ohio State, having agreed to the conditions and accepted the federal funds, was prohibited by FERPA from systematically releasing education records without parental consent. This result is consistent with the holdings of other state courts that have addressed this issue.”
“ESPN asserts that FERPA is inapplicable to the records responsive to its requests for documents related to Sarniak and the prior NCAA investigations because these records do not constitute ‘education records.’ ... ESPN relies on language from this court’s opinion in State ex rel. Miami Student v. Miami Univ. (1997), in which the court granted a writ of mandamus to compel the disclosure of student disciplinary proceedings for 1993 through 1996 by reasoning that because the cases, which involved infractions of student rules and regulations, were ‘nonacademic in nature,’ the records were not ‘education records’ subject to FERPA.”
“Following our decision in Miami Student, however, the United States Court of Appeals for the Sixth Circuit held (in United States v. Miami University, 2002) that student disciplinary records were education records subject to FERPA and permanently enjoined Miami University and Ohio State from releasing records in violation of FERPA. ... The court held that ‘[u]nder a plain language interpretation of the FERPA, student disciplinary records are education records because they directly relate to a student and are kept by that student’s university. Notably, Congress made no content-based judgments with regard to its “education records” definition.’”
“Upon consideration of our opinion in Miami Student and the Sixth Circuit Court of Appeals’ opinion in Miami Univ., we agree with the Sixth Circuit and hold that the records here generally constitute ‘education records’ subject to FERPA because the plain language of the statute does not restrict the term ‘education records’ to ‘academic performance, financial aid, or scholastic performance.’ Education records need only ‘contain information directly related to a student’ and be ‘maintained by an educational agency or institution’ or a person acting for the institution ... The records here − insofar as they contain information identifying student-athletes − are directly related to the students.”
Following its own in camera inspection of records that OSU had withheld as not disclosable under FERPA, the court determined that a few of those documents should have been provided to ESPN after personal student information had been redacted.
The court wrote: “An e-mail chain between Tressel, the Ohio State athletics department official in charge of compliance, attorneys, and other officials scheduling a meeting includes no personally identifiable information concerning any student-athlete. In e-mails to schedule a meeting to formulate a compliance plan for one of the student-athletes, aside from the name of the student-athlete and a person who agreed to attend the meeting, no personally identifiable information is included. Another document refers to one person’s request to obtain a disability-insurance policy on behalf of a student-athlete, and with those names redacted, the document would not contain personally identifiable information. There are also two letters from Ohio State’s athletics department compliance director to the parents of a student-athlete concerning preferential treatment. With the personally identifiable information concerning the names of the student-athlete, parents, parents’ addresses, and the other person involved redacted, FERPA would not protect the remainder of these records. ... Therefore, although the majority of the requested records were properly redacted before being provided to ESPN, ESPN is entitled to access to redacted copies of these few records that were completely withheld from it based on FERPA.”
“Ohio State properly withheld the remaining requested records based on attorney-client privilege. ... These records include requests from Ohio State officials for legal advice and interpretation, communications from or between the attorneys providing legal advice or information to Ohio State, and investigatory fact-finding related to the legal advice. ... ESPN’s contention that Ohio State cannot rely on attorney-client privilege to shield these records is unfounded because ‘an attorney does not become any less of an attorney by virtue of state agency employment.’ ... (T)here is no requirement in public-records mandamus cases that public offices or officials must ‘conclusively establish’ the privilege by producing agreements retaining agents or joint-defense agreements with attorneys representing other clients. Therefore, Ohio State properly withheld the remaining requested records based on the attorney-client privilege.”
The opinion is linked here. (Mike Frisch)
Thursday, March 15, 2012
The Montana Supreme Court has dismissed an appeal from a district court order denying attorney-client privilege and work product claims in a workers' compensation matter.
The worker had suffered a serious injury. The employer's insurer (Zurich) accepted liability for the claim. When disagreements arose over the level of impairment and other issues, an outside attorney prepared an opinion and evaluation letter for Zurich in advance of a mediation. The opinion letter was given to the adjuster handling the claim, who provided it to the employer.
The district court found that the document was not protected from discovery.
The court here noted that "[t]he intersection of workers' compensation law and the attorney-client privilege presents a unique issue." The employer is not a party and is not at risk in the matter: "It is thus improper for an insurer and an employer to collaborate on settlement of a worker's claim for benefits."
The court held that the common interests of insurer and employer were "not sufficient to extend the [attorney-client] privilege beyond the attorney-client relationship." Further, the disclosure of the letter to the employer was not for the purpose of seeking legal advice.
Justice Rice dissented and would hold that there is a sufficient "community of interest" between employer and insurer to reverse the district court's privilege detrmination.
The link is not working. The case is American Zurich Insurance v. Montana Thirteenth Judicial District Court. (Mike Frisch)
Wednesday, January 18, 2012
In a harrowing story--or just more of the same, in the recent attempted onslaught by regulatory agencies on attorney-client and work-product privilege--the new Consumer Financial Protection Bureau (CFPB) issued Bulletin 12-01 on January 4, 2012, to clarify its role in the production of records from banks and other financial institutions as part of CFPB oversight. The discovery power is claimed to include privileged documents. Although CFPB then proposes to keep the documents confidential, the bulletin is upfront that the bureau may have to share those documents outside its agency, including release to state attorneys general and other agencies, as needed. Fuller story here, at the Payment Law Advisor blog.
Although the bulletin assures readers that the agency intends to use non-privileged sources when it can, it really does not effectively assure them that any production of privileged documents would not constitute a general waiver to plaintiffs' attorneys and others. Of course, it does claim that discovery to themselves is not waiver to all--but that view may be problematic, at least arguably so, in that the specific congressional authorization for such a power (or such a protection) is not so easily found for the CFPB as it is for other regulatory agencies. Says the PLA blog:
The Bureau’s conclusion was based largely on provisions of the Financial Services Regulatory Relief Act of 2006, which applies to the federal banking agencies (the OCC, Federal Reserve, FDIC, and formerly, the OTS), allowing the agencies to receive privileged documents from supervised entities without effectuating a waiver of privilege. But the statute does not expressly apply to the CFPB, leaving the Bureau’s position on privilege questionable. The CFPB asserts that Congress intended it to be treated as a prudential regulatory agency with respect to waiver; but, its position has yet to be challenged in court.
To me, the lack of clear congressional authorization to add a layer of waiver protection on the discovery may be either harrowing news, as it could basically end the concept of attorney-client privilege in financial representations. Or it could be the trojan pony (I name him Tarpy, but his preppy barn friends call him Chase) that would make a court stop the initial grab of documents by the agency. I am not sure a court wants to allow an agency to end the centuries-old concept of privilege and the sanctity of the attorney-client relationship by a post-holiday bulletin (well, OK, by previous adminstrative regulations that a bulletin clarifies). More generally, we ethics writers and teachers have to seriously consider not just the usual buried-body and Upjohny cases on privilege but also the phenomenon that administrative agencies increasingly just don't believe in privilege anymore: they purport to act like a judge (just show me the documents in chambers; we're cool) then suggest they may have to show them to the Rhode Island and Hawaii attorneys general, but without a judicial finding that they were not privileged in the first place. You waived because you complied with a discovery demand, any decent opposing attorney would think.