June 01, 2009
By Jeffrey S. Klein, Nicholas J. Pappas and Jason E. Pruzansky
Businesses frequently call upon their lawyers to advise them regarding sensitive employment issues which can, and often do, have profound implications for the company’s operations. Those situations may include plant closing or relocation of entire facilities, changes in compensation and benefit arrangements or disciplinary matters. In any subsequent litigation following adverse actions against employees, the lawyers’ advice frequently becomes the subject of discovery requests, and the parties to the litigation far too frequently turn to the courts to ascertain whether or not documents generated by or for the lawyer are privileged or must be disclosed. The continuing growth in the use of electronic data to disseminate and store such documents appears to have increased the frequency of disputes over such discovery requests.
Two cases decided by the United States District Court for the Southern District of New York illustrate the difficulties courts often have in deciding upon the validity of an assertion of privilege in the employment context. These two cases demonstrate that courts sometimes apply well established principles governing the attorney-client privilege in varying ways. In this article, we analyze the factors that govern the assertion of the privilege with respect to legal advice rendered by lawyers regarding employment law issues, and we suggest several protocols employment lawyers and their clients should consider in their efforts to preserve the attorney-client privilege.
The attorney-client privilege, one of the oldest common-law privileges, “exists for the purpose of encouraging full and truthful communication between an attorney and his client.…” In re von Bulow, 828 F.2d 94, 100 (2d Cir. 1987). Although there may be some variation from one jurisdiction to the next, by and large, the primary elements required to assert the attorney-client privilege are well established: “(1) a communication between client and counsel, which (2) was intended to be and was in fact kept confidential, and (3) [was] made for the purpose of obtaining or providing legal advice.” United States v. Construction Prods. Research, 73 F.3d 464, 473 (2d Cir. 1996). See also Bertalo’s Restaurant v. Exchange Ins. Co., 240 A.D.2d 452, 454 (N.Y. App. Div. 2d Dep’t 1997) (“In order to raise a valid claim of privilege, the party seeking to withhold the information must show that it was a confidential communication made between the attorney and the client in the context of legal advice or services.”) (citations omitted).
Because the privilege may exist only where the communication was intended to be and was in fact kept confidential, the privilege will be deemed waived if the holder of the privilege discloses or consents to the disclosure of any considerable part of the communication to a third party or other stranger to the attorney-client relationship. See, e.g., In re Grand Jury Proceedings, 2001 WL 11 67497, at *7 (S.D.N.Y. Oct. 3, 2001); In re Kidder Peabody Sec. Litig., 168 F.R.D. 459, 468 (S.D.N.Y.1996). However, communications concerning advice given by an attorney to a corporation will not lose their privileged status solely as a result of being shared among corporate employees who share responsibility for the subject matter of the communication. See, e.g., SR Int’l Bus. Ins. Co. Ltd. v. World Trade Ctr. Props., LLC, 2002 WL 1455346, at *5 (S.D.N.Y. July 3, 2002); Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437, 442 (S.D.N.Y. 1995).
Clarke v. J.P. Morgan
Employment lawyers frequently advise clients regarding prospective changes in employment policies, and communications regarding such changes predictably may become the subject of discovery in litigation. For example, in Clarke et al. v. J.P. Morgan Chase & Co., 2009 WL 970940 (S.D.N.Y. 2009), current and former information technology (“IT”) workers filed suit against J.P. Morgan Chase (“Chase”) accusing the bank of allegedly misclassifying their job statuses as being exempt from overtime wages and denying them overtime pay as required under the Fair Labor Standards Act and state wage laws.
In January 2008, approximately two months before Plaintiffs filed suit, Chase changed Plaintiffs’ jobs statuses to nonexempt and made them eligible to collect overtime. Id. at *1. In December 2007, one month before implementing the policy change, senior management sent an email regarding the upcoming change to those supervisors managing those employees to be impacted by the change. Id. Prior to the commencement of the litigation, Plaintiffs–whose positions were reclassified pursuant to the directive set forth in the email–obtained a copy of the email “in the course of their employment.” Id.
After learning that Plaintiffs had obtained a copy of the email,1 Chase filed a motion for an order compelling Plaintiffs to return or destroy all copies of the email on the grounds that it was protected by the attorney-client privilege and the work product doctrine.2 Id. In support of its privilege claim, Chase argued that the email:
- communicated the advice of in-house counsel that the jobs be reclassified;
- contained counsel’s legal reasoning;
- suggested a litigation context for counsel’s advice by referencing the fact that some of Chase’s competitors were involved in litigation regarding the alleged misclassification of IT workers; and
- communicated specific advice as to how the reclassification should be implemented. Id.
The court denied Chase’s motion noting that Chase could not demonstrate that it satisfied the elements supporting the assertion of the privilege. The court held that, as to the first element, the email could not properly be regarded as a “communication between client and counsel” because the email did not state that it was prepared by or was being sent from in-house counsel, that it contained privileged information, that any of the information contained therein had been obtained from counsel or was based on communications with counsel, or that counsel had been consulted. Id. at *2. The court reasoned that all the information contained in the email could have been understood to have come from senior management or the human resources department and not from an attorney. Id. at *3.
As for the second element, confidentiality, the court held that the way in which the email was written undermined any argument that a privileged communication was made with the expectation that its recipients maintain confidentiality. Id. The court also noted that because one or more of the Plaintiffs obtained the email in the ordinary course of employment, this bolstered the argument that the recipients of the email were not aware that it contained confidential legal advice. Id.
As for the third element, the court expressed doubts as to whether the primary purpose of the email was to “provide legal advice.” Given the manner in which the email was presented, the court noted that it reasonably could have been understood as having been sent for the purpose of “beginning an effectuation of a corporate policy change” and not for the purpose of providing legal advice. Id. at *4.
The court next addressed the issue of waiver and - citing to the recently enacted Fed. R. Evid. 502(b)(2) and (3) - held that even if the email contained a privileged communication, Defendant had waived the privilege by taking no steps to prevent the dissemination of the email.3 In addition, after learning that the email had been disseminated to Plaintiffs, Chase took more than two months, which the court described as “an inexplicably long time,” to demand its destruction or return. Id. at *6.4
Baptiste v. Cushman & Wakefield
Another context in which litigants frequently battle over the privileged status of legal advice rendered by employment lawyers involves the treatment of employees who have asserted claims of discrimination. For example, in Baptiste v. Cushman & Wakefield, Inc., 2004 WL 330235 (S.D.N.Y. 2004), a former employee sued her former employer claiming, inter alia, employment discrimination on the basis of age, race, color and gender. In discovery, Plaintiff produced an email authored by Dennis Waggner, Plaintiff’s former supervisor’s supervisor. Id. at *1. The email indicated that Waggner had spoken with Defendant’s outside counsel regarding the EEOC’s dismissal of Plaintiff’s administrative charge, her retention of new counsel, and counsel’s suggestion as to the proper way to treat the plaintiff. Id. The email also discussed Waggner’s views concerning Plaintiff’s job performance. Id.
Plaintiff testified at her deposition that the email in question was left anonymously on her desk in February 2003, before she began her disability leave from her employment with the defendant. Id. At the conclusion of the deposition, Defendant demanded that Plaintiff immediately return the email in question, arguing that it was protected by the attorney-client privilege. Id. at *4. Plaintiff refused to return the email on the grounds that it was not privileged because it was not labeled so, did not for the most part refer to legal advice, was not authored by an attorney, was circulated to non-attorneys, and contained primarily information incidental to business advice. Id. at *1. Plaintiff also contended that the Defendant waived any privilege by, inter alia, waiting until approximately two months after receipt of the email from Plaintiff to assert the privilege.
Despite Plaintiff’s assertions to the contrary, the court had “little difficulty” in concluding that the overwhelming majority of the email was in fact protected by the attorney-client privilege and therefore must be returned to the defendant. Id.at *2.5 The court held that it was “of no moment” that the email was not authored by an attorney or sent to an attorney because the email clearly was conveying advice given to Waggner by outside counsel. Id. Counsel’s advice pertained to, among other things, the effect of the EEOC proceeding on Plaintiff’s claims, counsel’s view on how the litigation would proceed, and how management should treat Plaintiff in light of the pending litigation. Id. The court also noted that Waggner’s conveying of counsel’s advice to other supervisory employees did not destroy the privilege since these supervisors shared responsibility for the subject matter of the communication. Id.
In contrast to Clarke, the court in Baptiste was not troubled by the fact that the communication was not labeled “privileged” noting that “the determination of whether a document is privileged does not depend on the technical requirement of a privilege legend.” Id. (citing In re Grand Jury Proceedings, 2001 WL 11 67497, at *10 (S.D.N.Y. 2001). The court also rejected Plaintiff’s claim that the defendant waived the privilege by waiting two months to demand the email’s return. Id. at *3. The Court excused this delay because the defendant was conducting an investigation during this period of time to determine how Plaintiff obtained the email and whether the defendant had a colorable claim that the email was privileged.
As evidenced by the holdings in Clarke and Baptiste, courts apply the attorney-client privilege based on the unique facts presented, and at times may reach conclusions that at first blush may appear inconsistent. While motion practice concerning the privileged status of particular documents may sometimes be unpredictable, employment lawyers and their clients may wish to consider adopting the following “best practices” and prophylactic measures in an effort to maximize the likelihood that a court will uphold the privilege, should the issue get litigated:
- Make the communication’s privileged status readily apparent by, whenever possible, addressing the communication directly to lawyers or having lawyers send the communication. The communication should contain a legend using the words “Attorney-Client Privilege,” “Confidential” and, where applicable, “Attorney Work Product.” Including the attorney’s title or firm name underneath the signature line of an email also may convey the fact that a communication contains advice of counsel to those recipients who may not recognize the sender. In addition, to the extent possible in-house corporate counsel should seek to direct their legal communications only to non-lawyer corporate employees who share responsibility for the subject matter of the communication, to avoid dissemination to persons who might not be aware of the confidentiality of the attorney’s advice;
- If a communication needs to be sent to non-lawyers, consider including a brief statement confirming the assertion of attorney-client privilege and the basis for it. For example, the attorney may simply note that the communication is in connection with a trial lawyer’s or in-house counsel’s investigation into allegations being made by an employee. If the communication is being sent from non-lawyers, it should reference any pertinent advice previously rendered by counsel or requests to counsel for advice;
- Seek to draft the communication in such a manner as to render self-evident, that the primary purpose of the communication is to disseminate legal advice as opposed to ordinary business advice;
- To avoid waiver of the attorney-client privilege, the communication should be kept confidential and should not be disclosed to third parties not necessary to the lawyers’ delivery of legal advice. Should the communication inadvertently be disclosed to a third party, counsel should demand that the document be returned or destroyed promptly after being put on notice of the inadvertent disclosure. See Fed. R. Civ. P. 26(b)(5)(B) (providing a procedure for making a claim of privilege for information already produced in discovery). See also Coleman v. Schwarzenegger, 2008 WL 2237046, at *3 n.4 (E.D. Cal. 2008) (noting that Rule 26(b)(5)(B) provides for the return of information produced during discovery that is subject to a claim of privilege or of protection as trial-preparation material).
- To aid in the recovery of inadvertently disclosed privileged documents, parties should seek to enter into a court-ordered stipulation with opposing counsel providing for the immediate return of inadvertently disclosed documents and further providing that the receiving party may not – in the context of motion practice concerning the inadvertently disclosed documents – assert as a ground for seeking an order compelling the production of the documents the fact or circumstances of the inadvertent disclosure.6
 Plaintiffs produced the email in a document production in December 2008.
 In contrast to the attorney-client privilege, the work product doctrine protects documents prepared “in anticipation of litigation” by a party or its representatives, Fed. R. Civ. P. 26(b)(3)(A), including those solicited by counsel “to perform investigative or analytical tasks to aid counsel in preparing for litigation,” Kayata v. Foote, Cone & Belding Worldwide, L.L.C., 2000 WL 502859 at *5 (S.D.N.Y. 2000).
 For example, as previously noted, the email did not flag that any of its contents were privileged and should not be shared with third parties.
 The Court also rejected Chase’s work product claim holding that the email was prepared in the ordinary course of business and not “in anticipation of litigation,” even if the reclassification itself might have been expected to result in litigation.
 Specifically, the Court found all but the last paragraph, which merely conveyed Waggner’s frustrations regarding Plaintiff’s conduct on the job, to be privileged.
 Entering into such a court-ordered stipulation may be especially prudent with the advent of Fed. R. Evid. 502(d), which provides that a federal court order governing waiver through disclosure of privileged or protected information is binding on all other courts and third parties. Fed. R. Evid. 502(d) applies to all cases filed on and after September 19, 2008, and to previously-filed cases in the discretion of the trial judge.
Reprinted with permission from June 1, 2009 edition of the New York Law Journal © 2009 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, firstname.lastname@example.org or visit www.almreprints.com.