Tagged: Attorney-Client Privilege

Corporate Counsel Is Not Your Counsel: Communications Between Shareholders and Corporation Counsel Are Not Necessarily Privileged

You founded, own, and run your company. So, it is natural to assume that your company’s lawyer is your lawyer, right? While the assumption may be natural, the courts are firm in differentiating an attorney’s responsibilities to a corporation versus an individual shareholder. One who disregards this distinction may find that communications believed to be confidential and privileged are subject to discovery in later litigation. “A lawyer employed or retained to represent an organization represents the organization as distinct from its directors, officers, employees, members, shareholders or other constituents.” NJRPC 1.13(a). Shareholders of a closely held corporation are no exception to this rule and are not entitled to any presumption of privilege distinct from the corporate entity. The New Jersey Appellate Division recently emphasized this point in Royzenshteyn v. Pathak, where two shareholder-owners of a closely held corporation unsuccessfully appealed a trial court order that compelled production of allegedly privileged communications between the plaintiffs and corporate counsel. In Royzenshteyn, the plaintiffs retained corporate counsel for a transaction that transferred majority ownership of their corporation to the defendants. That transaction was completed in 2015. Soon thereafter, the parties’ relationship soured, and, in 2018, the plaintiffs retained new counsel to file a lawsuit that challenged the 2015 transaction. During discovery, the plaintiffs asserted attorney-client privilege over communications...

Pushing the Limit: The District of Oregon Concludes that the Attorney-Client Privilege May Apply to Communications Not Involving Attorneys

In Ozgur v. Daimler Trucks N. Am. LLC, Judge Mosman, from the United States District Court for the District of Oregon, found that certain emails in the possession of Daimler Trucks North America LLC (“Daimler”) and that were sought by plaintiff were protected by the attorney-client privilege, as the communications were made for the purpose of obtaining legal advice, despite some of the emails not including an attorney as an author or recipient. In this action, plaintiff filed suit against Daimler for age discrimination in connection with his unsuccessful job application for a position opening posted by Daimler. The position that Daimler posted was already held by a foreign national whom Daimler sought to sponsor for a H1B1 visa so that he could remain in his position. In order to sponsor its employee, Daimler had to advertise the position and establish that there were no U.S. citizens who were willing and able to perform the position, then submit such proof to the Department of Labor. To assist in complying with the Department of Labor and immigration laws, Daimler retained outside immigration counsel. The emails disputed in this proceeding were communications involving outside counsel and Daimler employees, including a recruiting manager and a hiring manager. In determining whether the disputed emails were privileged, the court stated...

Unnecessarily Opening Doors — the Southern District of California Provides an Important Reminder of the Value of FRE 502(d) Clawback Agreements

Highlighting numerous preventable mistakes that resulted in the unintentional waiver of attorney-client privilege, a recent Southern District of California decision reinforces the importance of comprehensive clawback agreements specifically pursuant to FRE 502(d) and (e) to prevent analysis of waiver under either FRCP 26 or the common law waiver standard embodied in FRE 502(b). This blog has previously addressed the interplay between Rule 502 and parties’ clawback agreements and recently discussed the limitations of FRE 502(d) and the inability of litigants to use it to compel production of potentially privileged information without a privilege review. In Orthopaedic Hospital v. DJO Global, Inc. and DJO Finance, LLC, the District Court found a waiver of the attorney-client privilege with respect to a privileged document introduced at deposition and the testimony elicited in connection with the privileged document due to the producing party’s failure to “promptly” rectify the inadvertent production under FRE 502(b). The court refused to find a broader subject matter waiver as a result of the introduction of this privileged document. Critically, the parties had proceeded with discovery without having negotiated, entered into, and sought Court approval of a clawback order under FRE 502(d), instead proceeding under a Rule 26 protective order that incorporated the common law clawback standard of FRE 502(b). As we have discussed in...

Claw It Back: Updated Protections of New Jersey Rule of Evidence 530 on Inadvertent Disclosure

On July 1, 2020, Amended New Jersey Rule of Evidence 530 (Waiver of Privilege by Contract or Previous Disclosure) became effective. N.J.R.E. 530, which tracks Federal Rule of Civil Procedure 502, was amended as a result of the increasing use of electronic discovery in litigation and the associated concerns regarding the potential for the inadvertent disclosures. This blog has frequently addressed decisions involving F.R.E. 502, including in 2019, 2018, and 2012. Amended N.J.R.E. 530 includes significant revisions in paragraph(c), which includes provisions that apply “to disclosure of a communication or information covered by the attorney-client privilege or work-product protection.” N.J.R.E. 530(c). In particular, amended N.J.R.E. 530(c) addresses disclosures made during state proceedings or to state office or agency, N.J.R.E 530(c)(1); inadvertent disclosures, N.J.R.E. 530(c)(2); disclosures made in another forum’s proceeding, N.J.R.E. 530(c)(3); the controlling effect of a court’s order, N.J.R.E. 530(c)(4); and the controlling effect of a party agreement regarding disclosure, N.J.R.E. 530(c)(5). Under the amended Rule, it is clear that a court order regarding disclosure pursuant to N.J.R.E. 530(c)(4) has the potential to have a significant impact on other litigations, as the rule provides that a court order on privilege “is also not a waiver in any other federal or state proceeding.” However, an agreement “on the effect of disclosure in a state proceeding...

Sharing Communication with Public Relations Firm Destroys Privilege

The Southern District of New York recently held that sharing attorney-client privileged communications with a public relations firm destroys that privilege. Universal Standard brought a trademark infringement and unfair competition suit against Target. During the course of discovery, documents were produced consisting of emails between Universal Standard, its outside counsel, and BrandLink, a public relations firm. When Universal Standard sought to claw back the documents because they were privileged, Target refused. The court considered whether the fact that emails between Universal Standard and its counsel were also shared with BrandLink should result in a waiver, or whether the communications fall under one of several possible exceptions to the general rule that “disclosure to a third party by the party of a communication with his attorney eliminates whatever privilege the communication may have originally possessed.” First, the court considered whether BrandLink was “essential to allow communications between the attorney and the client, such as an interpreter or accountant.” This exception applies where the third party enables counsel to understand aspects of the client’s own communications that could not otherwise be appreciated, but not where the communications are merely important to the attorney’s ability to represent the client. Here, the emails involved discussions regarding a public relations strategy surrounding the filing of the lawsuit and whether to issue...

Inadvertently Produced Privileged Material May Generally Be Used for Purpose of Challenging Assertion of Privilege

A New York federal court has recently held that inadvertently produced privileged documents may be used by the receiving party for the limited purpose of challenging the claim of privilege to the extent that the receiving party became aware of the contents of those documents prior to the assertion of the privilege over those documents. In re Keurig Green Mt. Single Serve Coffee Antitrust Litig. In that case, the parties had entered into a stipulated protective order with a Federal Rule of Evidence 502(d) clawback provision, but the parties relied on two different provisions of the same order to support their arguments concerning whether the privileged document could be relied upon in challenging the claim of privilege. The order stated that “[i]f a party has inadvertently or mistakenly produced Privileged Material, and if the party makes a written request for the return, … the receiving party will also make no use of the information contained in the Privileged Material … regardless of whether the receiving party disputes the claim of privilege.” However, the order also stated that “[t]he receiving party may not use the Privileged Material … for any purpose whatsoever other than moving the Court for an order compelling production of the Privileged Material…” The Court relied on two prior decisions, both authored by...

New Jersey Supreme Court Formally Adopts and Defines the Scope and Application of the Common Interest Rule

In a matter of first impression, the New Jersey Supreme Court in O’Boyle v. Borough of Longport expressly adopted the common interest rule in New Jersey as articulated in LaPorta v. Gloucester County Board of Chosen Freeholders. Although previously addressed and analyzed by lower courts within New Jersey, the Court’s ruling clarifies the boundaries of the rule and offers guidance in resolving the scope of its application.

Think Before You Send: Communications to an Attorney Using Work Email May Not Be Protected Under the Attorney-Client Privilege

Generally, a confidential email sent to one’s personal attorney is protected under the attorney-client privilege. But what if the communication is sent using a business email account? Will a corporate policy entitling the company to access “all communications” sent on work computers undermine the privilege? Followers of this blog will recall, among other posts, our detailed recap of the extensive discussion of this issue at our Annual E-Discovery Conference in the wake of the New Jersey Supreme Court’s decision in Stengart v. Loving Care Agency, Inc., upholding the privilege where the employee used a company computer to communicate with her attorney via a personal password-protected internet based e-mail account, and sanctioning the employer’s attorneys for failing to turn over the protected communications. Readers may also recall our discussion of US v. Hamilton, where the United States Court of Appeals for the Fourth Circuit held that a husband waived the marital communications privilege when he sent messages from his work email account to his wife, but took no steps to protect their sanctity. Since those decisions, courts nationwide have continued to wrestle with these issues. Most recently, a Delaware Court held an employee waived the attorney client privilege where he used his work email account to email his lawyer with knowledge of the company’s policy establishing its right to access all communications on work computers.

Whither or Wither the A/C Privilege?

The attorney-client privilege is one of the most sacrosanct and inviolable, allowing full and frank dialogue between client and counsel. The recent decision in BSP Software LLC v. Motio, Inc., 1-12-cv-02100 (ND Ill. July 9, 2013) DN 141, Order has broad implications for this well-established privilege, and important lessons-learned for when it might be waived.