Attorney-Client Privilege and Deposition Preparation of Former Employees

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1 The Attorney-Client Privilege Attorney-Client Privilege and Deposition Preparation of Former Employees Meloney Cargil Perry I. Introduction Representing corporations in litigation on a regular basis probably makes one no stranger to dealing with former employees. Former employees often possess information that is relevant, if not critical, to the outcome of a case. It is therefore common for corporate counsel to meet with former employees to discover what they know. And it is also common for corporate counsel to meet with former employees to prepare them for a deposition. Many corporate lawyers just assume that if they meet with a former employee about an issue that arose during the former employee s employment, any communications with the former employee are privileged. But this is not necessarily the case. Former employees are just that: former employees. Absent a consulting or contractual relationship with the corporation, former employees are no longer agents of the corporation, and they no longer act at the direction of management. This reality adds uncertainty to an area of law already permeated by a great deal of uncertainty. Submitted by the author on behalf of the FDCC Insurance Industry Section. The analysis, conclusions, and opinions expressed in these materials do not necessarily reflect the position of the law firm, Baker & McKenzie LLP, or its clients, and should not be construed as legal advice. The author acknowledges the contributions of Brandon P. Long, a former associate with the firm, who assisted in the preparation of this article. Brandon is now an associate with McAfee & Taft, a professional corporation, Tenth Floor, Two Leadership Square, 211 N. Robinson, Oklahoma City, OK 73102, (405) (brandon.long@ mcafeetaft.com). 303

2 FDCC Quarterly/Spring 2007 Meloney Cargil Perry is a partner with Baker & McKenzie in Dallas where she currently represents insurance companies in multiple jurisdictions. Her practice focuses on insurance class-action and bad-faith litigation. She earned her B.A. in English from Louisiana State University Shreveport and her J.D., cum laude, from Southern Methodist University. Even the most elementary legal research regarding the attorney-client privilege will quickly disclose the United States Supreme Court s opinion in Upjohn Co. v. United States, 1 and numerous articles discussing the oft-cited point that the attorney-client privilege is difficult to apply in the corporate context. Since a corporation is an artificial creature of the law, and not an individual, 2 a corporation can only speak through people. Unfortunately, however, the Supreme Court s opinion in Upjohn only addressed the already-difficult issue of whether communications with a current employee are privileged. The Court specifically declined to decide whether communications with a former employee are privileged much less, whether communications made for the purpose of preparing a former employee for a deposition are privileged. 3 Thus, the issue remains open. This article will consider that issue and analyze the case law that has addressed whether pre-deposition communications with a former employee are protected by the attorney-client privilege. As discussed below, the safe practice for any corporate attorney who needs to prepare a former employee for a deposition is to begin with the conservative and perhaps even incorrect assumption (at least in some jurisdictions) that everything said to the former employee will be discoverable U.S. 383 (1981). 2 Id. at Id. at 394 n

3 The Attorney-Client Privilege II. The Attorney-Client Privilege and Corporations 4 All attorneys possess some basic understanding about what is protected by the attorney-client privilege. Generally, it protects communications between an attorney and a client involving legal advice. The privilege applies where there is (1) [a] communication; (2) made between privileged persons; (3) in confidence; (4) for the purpose of seeking, obtaining, or providing legal assistance to the client. 5 Corporations, like individuals, can rely on the privilege when these elements are satisfied. 6 But the difficult question with corporate and other organizational clients is which individuals within the organization can speak on behalf of the organization to the attorney so that the privilege applies to their communications. 7 For years, courts have applied a variety of tests to determine whether an individual within an organization could speak on behalf of the organization so that the communication was privileged. In that regard, courts generally have applied one of the following tests: (1) the control group test; (2) the subject matter test; or (3) some variation of (1) and (2). 8 The control group test limits the privilege to communications from persons in the organization who have authority to mold organizational policy or to take action in accordance with the lawyer s advice. 9 By contrast, the subject matter test extends the privilege to communications with any lower-echelon employee or agent so long as the communication relates to the subject matter of the representation. 10 In Upjohn, 11 the Supreme Court rejected the control group test. Although the Court did not adopt a specific test, the Court implied that communications with a corporate employee are protected by the attorney-client privilege if the communications: (1) were made to the corporate counsel, acting as such; (2) were made at the direction of corporate superiors for the purpose of securing legal advice from counsel; (3) concerned matters within the scope 4 When a federal question is being litigated in the federal courts, the attorney-client privilege is a question of federal common law. Edna Selan Epstein, The Attorney-Client Privilege and the Work-Product Doctrine 19 (ABA 4th ed. 2001) [hereinafter Epstein]. In state-court cases and diversity cases that are filed in federal court, however, the attorney-client privilege is controlled by the forum state s law. Id. at 22; see also Fed. R. Evid. 501 (stating the general rule with respect to privileges). Unless otherwise indicated, this article applies and discusses the federal common law. 5 Restatement (Third) of The Law Governing Lawyers 68 (2000). 6 See Upjohn, 449 U.S. at (assuming that the privilege applies when the client is a corporation). 7 Epstein, supra note 4, at See id. 9 Restatement (Third) of The Law Governing Lawyers 73, cmt. d (2000). 10 Id U.S

4 FDCC Quarterly/Spring 2007 of the employees corporate duties; and if (4) the employees were sufficiently aware that they were being questioned so that the corporation could obtain legal advice. 12 The Court s decision, however, left several questions unresolved, including the question of whether communications between counsel and former employees are included within the privilege. 13 While the majority opinion in Upjohn declined to address the issue, Chief Justice Warren Burger s concurring opinion reflected his belief that the privilege should extend to communications with former employees: [A] communication is privileged at least when, as here, an employee or former employee speaks at the direction of the management with an attorney regarding conduct or proposed conduct within the scope of employment. 14 Despite Justice Burger s opinion, courts following and/or relying on Upjohn have reached varying conclusions and have adopted diverse approaches to resolve the issue. III. Interviewing a Former Employee One court has observed that: [v]irtually all courts hold that communications between company counsel and former company employees are privileged if they concern information obtained during the course of employment. 15 This statement, however, may be overbroad to some extent. The matter about which virtually all courts appear to agree is that communications that were privileged during employment do not lose their privileged status just because an employee leaves the company. 16 But what about communications that occur after employment terminates? Some courts extend the privilege to post-employment communications with former employees, while others have expressed concerns regarding such an extension Id. at Id. at 394 n Id. at 403 (Burger, C.J., concurring) (emphasis added). 15 Export-Import Bank of the U.S. v. Asia Pulp & Paper Co., 232 F.R.D. 103, 112 (S.D.N.Y. 2005) (citing Surles v. Air France, No. 00-Civ.-5004, 2001 U.S. Dist. LEXIS 10048, at *17-18 (S.D.N.Y. July 19, 2001)). 16 See Epstein, supra note 4, at 119 ( Whatever communications were privileged communications during the course of the former employee s employment should clearly remain privileged. No reason exists to terminate the privilege along with the termination of the employment. ); see also Amarin Plastics, Inc. v. Md. Cup Corp., 116 F.R.D. 36, 41 (D. Mass. 1987) (stating that [i]n some circumstances, the communications between a former employee and a corporate party s counsel may be privileged. ) (emphasis added). 17 See Philip F. Ackerman et al., Attorney-Client Privilege in Civil Litigation, Protecting and Defending Confidentiality 230 (Vincent S. Walkowiak ed., A.B.A. 3d ed. 2004) (collecting cases). 306

5 The Attorney-Client Privilege In the case of In re Allen, 18 the Fourth Circuit Court of Appeals extended the attorneyclient privilege to protect the notes and summaries prepared by an agency s attorney while interviewing a former employee. 19 The Ninth Circuit, in the matter of In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 20 emphasized that the attorney-client privilege covers communications with former employees because [f]ormer employees, as well as current employees, may possess the relevant information needed by corporate counsel to advise the client with respect to actual or potential difficulties, and because the attorney-client privilege is served by the certainty that conversations between the attorney and client will remain privileged after the employee leaves. 21 Additionally, in Miramar Construction Co. v. Home Depot, Inc., 22 the federal district court in Puerto Rico held that conversations between counsel and a former employee were protected by the attorney-client privilege insofar as the subject matter of the conversations concerned the duties of the former employee during his tenure with the corporation. 23 Other courts, however, have reached exactly the opposite conclusion. For example, in Clark Equipment Co. v. Lift Parts Manufacturing Co., 24 the federal district court for the Northern District of Illinois concluded that the Supreme Court s determination in Upjohn does not support extending the privilege to former employees. Since former employees are not the client, their willingness to provide information is unrelated to the directions of their former supervisors, they have no duty to their former employers to provide information, and it is impossible to distinguish a former employee from other third parties. 25 In Barrett Industrial Trucks, Inc. v. Old Republic Insurance Co., 26 the same federal district court concluded that the attorney-client privilege did not protect counsel s communications with former employees, which included discussions regarding the facts of the case, gathering relevant documents, and assisting in the preparation of discovery responses. 27 And in Connolly F.3d 582 (4th Cir. 1997). 19 Id. at F.2d 1355 (9th Cir. 1981). 21 Id. at F. Supp. 2d 182 (D.P.R. 2001). 23 See id. at ; see also Surles v. Air France, No. 00-Civ.-5004, 2001 U.S. Dist. LEXIS at *17-18 (S.D.N.Y. July 19, 2001) (refusing to compel the former employee to answer questions concerning his interview with counsel). 24 No. 82-C-4585, 1985 U.S. Dist. LEXIS (N.D. Ill. Oct. 1, 1985). 25 Id. at * F.R.D. 515 (N.D. Ill. 1990). 27 Id. at

6 FDCC Quarterly/Spring 2007 Data Systems, Inc. v. Victor Technologies, Inc., 28 the federal district court for the Southern District of California concluded that the attorney-client privilege did not protect a former employee s communications with counsel, including those communications made for the purpose of preparing the former employee for his deposition. It reasoned that the former employee could not bind the corporation, was not required to speak to the corporation s attorney, and was not the only person with relevant knowledge. 29 While many of these cases concerned the issue of whether an attorney s interview with a former employee is protected by the privilege, most of these cases (including the cases noted above that actually protected communications with the former employee) did not squarely decide if an attorney s deposition preparation with a former employee is protected. A survey of extant law, however, reveals that a majority of cases that have addressed this issue have refused to extend the privilege to deposition preparation. IV. Deposition Preparation of a Former Employee Perhaps the most instructive case decided thus far regarding whether the deposition preparation of a former employee is protected by the attorney-client privilege is Peralta v. Cendant Corp. 30 In Peralta, the federal district court in Connecticut was asked to determine whether the attorney-client privilege protected certain communications between a company s attorney and the company s former supervisor. 31 During the deposition of the former supervisor, the plaintiff s counsel asked the former supervisor about her pre-deposition communications with the company s attorney. The attorney objected on the basis of privilege. 32 Later, after a break in the deposition, plaintiff s counsel asked the former supervisor what, if anything, she had discussed with the company s attorney during the break. Again, the attorney objected on the basis of privilege. 33 After first analyzing the Supreme Court s holding in Upjohn and many of the cases cited above, the court concluded that the attorney-client privilege did not protect communications between counsel and the former supervisor to the same extent that it would protect communications between counsel and a current employee. 34 The court reasoned that the F.R.D. 89 (S.D. Cal. 1987). 29 Id. at 90, F.R.D. 38 (D. Conn. 1999). 31 Id. at Id. at Id. 34 Id. at

7 The Attorney-Client Privilege former supervisor was not required to speak at the direction of management (which is one factor relied on by the Upjohn Court), and the former supervisor had no continuing duty to provide the information sought in her deposition. 35 That determination notwithstanding, the court did find that any privileged information obtained by [the former supervisor while employed by the corporation], including any information conveyed by counsel during that period, remain[ed] privileged upon the termination of [the former supervisor s] employment. 36 Likewise, any communications between counsel and the former supervisor made for the purpose of learning facts related to the plaintiff s termination, of which the former supervisor was aware owing to her employment, were privileged regardless of when they occurred. 37 But significantly, the court refused to extend the privilege to the former supervisor s deposition preparation: To the extent that conversations between [counsel] and [the former supervisor] went beyond [the former supervisor s] knowledge of the circumstances of plaintiff s employment and termination, and beyond [the former supervisor s] other activities within the course of her employment with the defendant, such communications, if any, have not been shown to be entitled to defendant s attorney-client privilege. If, for example, [counsel] informed [the former supervisor] of facts developed during the litigation, such as testimony of other witnesses, of which [the former supervisor] would not have had prior or independent personal knowledge, such communications would not be privileged, particularly given their potential to influence a witness to conform or adjust her testimony to such information, consciously or unconsciously.... Further, with respect to the inquiry into [counsel] and [the former supervisor s] discussions during the break as to how a question should be handled, they have not been shown to be entitled to any privilege, and opposing counsel has the right to ask about matters that may have affected or changed the witness s testimony.... As to any communications between defendant s counsel and a former employee whom counsel does not represent, which bear on or otherwise potentially affect the witness s testimony, consciously or unconsciously, no attorney-client privilege applies Id. at Id. at Id. 38 Id. at (emphasis added). 309

8 FDCC Quarterly/Spring 2007 This reasoning is fairly consistent with the opinion of well-regarded commentator, Edna Selan Epstein, which states that post-employment communications should not be privileged because the former employee is... no longer an agent for the corporation and occupies a position no different than that of any stranger. 39 Other courts likewise have determined that the holding in Peralta which itself refused to wholly extend the privilege to communications with former employees sweeps too broadly. In Infosystems, Inc. v. Ceridian Corp., 40 the federal district court for the Eastern District of Michigan disagreed somewhat with the holding in Peralta. The defendant relied on Peralta to argue that certain communications between its counsel and its former employee were protected by the attorney-client privilege because the communications involved activities or knowledge acquired during his employment with the defendant. 41 The court disagreed, however, finding that the ruling in Peralta sweeps too broadly: The [Upjohn] Court was careful to note that the communications at issue in that case were made by Upjohn employees to counsel for Upjohn acting as such, at the direction of corporate superiors in order to secure legal advice from counsel.... Peralta s ultimate ruling, however, omits this direction of management element of the Upjohn decision.... The Court... concludes that counsel s communications with a former employee of the client corporation generally should be treated no differently from communications with any other third-party fact witness. 42 However, the Infosystems court acknowledged certain exceptions to this general rule. 43 Specifically, privileged communications that occurred during the period of employment remain privileged. 44 Moreover, if a former employee retains an agency relationship with the former employer, then the former employee s communications with counsel would be cloaked with privilege Epstein, supra note 4, at F.R.D. 303 (E.D. Mich. 2000). 41 See id. at Id. at (emphasis added). 43 Id. at Id. 45 Id. 310

9 The Attorney-Client Privilege Similarly, in United States v. Merck-Medco Managed Care, LLC, 46 the federal district court for the Eastern District of Pennsylvania was asked to decide whether communications between the defendant s counsel and the defendant s former employee, made during preparation for her deposition and between breaks in her deposition, were protected by the attorney-client privilege. 47 The court ultimately held that the privilege did not protect, inter alia, [d]escriptions and/or summaries of witness testimony provided to [the defendant s counsel] for [the former employee], and [c]onversations between [the defendant s counsel] and [the former employee] while she was under oath during the deposition. 48 The court reasoned that any such communications may have influenced the former employee s testimony; thus, the plaintiffs counsel was entitled to that information. 49 And finally, in Wade Williams Distribution, Inc. v. American Broadcasting Cos., 50 the federal district court for the Southern District of New York confronted the issue whether communications between the defendant s counsel and the defendant s former employee, which occurred the day before his deposition, were protected by the attorney-client privilege. 51 Interestingly, at the former employee s deposition, the former employee testified that the defendant s counsel was acting as his attorney for the purpose of the deposition and anything else related to this case. 52 The court held that the communications were not privileged despite the claim that the former employee was being represented by the defendant s counsel: That assertion... should... make no difference to the application of Peralta. The mere volunteered representation by corporate counsel of a former employee should not be allowed to shield information which there is no independent basis for including within the attorney-client F. Supp. 2d 554 (E.D. Pa. 2004). 47 Id. at See id. at 556, Id. at No. 00-Civ.-5002, 2004 U.S. Dist. LEXIS (S.D.N.Y. June 30, 2004). 51 Id. at *2. 52 Id. 53 Id. at *4-5; see also City of New York v. Coastal Oil New York, Inc., No. 96-Civ.-8667, 2000 U.S. Dist. LEXIS 1010, at *6-7 (S.D.N.Y. Feb. 8, 2000) (allowing the plaintiff to question a third party about the corporate counsel s activities that aided the witness in preparing to be deposed; the interrogation included information regarding what counsel did to refresh the witness s recollection, reminders of past testimony, references to the testimony of other witnesses, and any instructions about the witness s testimony). 311

10 FDCC Quarterly/Spring 2007 privilege. 53 The holdings of the courts in Peralta, Infosystems, Merck-Medco, and Wade Williams, which squarely addressed the relevant issue, are consistent with the opinions of several well-regarded treatises. 54 V. Conclusions and Practical Suggestions Safe practice by a company s attorney should assume that the attorney-client privilege does not protect communications between a party s counsel and its former employee, which bear on or potentially affect the former employee s testimony. Even if a bit conservative, acting under this assumption will provide the caution needed to avoid potential waiver issues. It can be safely assumed, however, that any privileged information obtained by the former employee while employed by the party, including any information conveyed by counsel during that period, remains privileged upon the termination of his or her employment. Thus, when required to meet with a former employee, a few prescriptions apply: Establish the former employee s precise dates of employment. Ascertain what discussions, if any, the former employee had with corporate counsel before the end of his or her employment. If it is determined that privileged communications occurred during the former employee s employment, remind him or her that those communications are privileged and that he or she should not reveal the substance of those communications to anyone but you and your client. Do not discuss with the former employee what you have learned about the case from your client, documents, witnesses, etc. unless you are prepared for the other side to learn what you know. If you must prepare a former employee for a deposition, explain the deposition process, but do not reveal your work product to the former employee. During the deposition, avoid discussing anything with the former employee that you are not prepared for the other side to learn. Again, assume at least initially that everything you tell the former employee is discoverable James Wm. Moore et al., Moore s Federal Practice 26.49[4] (3d ed. 2003) (stating information that was privileged during the former employee s employment remains privileged; however, communications going beyond the employee s knowledge of circumstances learned through his or her employment are not privileged); see also Epstein, supra note 4, at (stating or implying that the majority of cases that have examined the issue have concluded that the privilege does not attach to communications with former employees because the former employee s testimony will be molded by counsel for the employer). 312

11 The Attorney-Client Privilege For the sake of being thorough, it is necessary to conclude with the following caution. Some of the cases discussed in this article note the possibility that the work product doctrine might offer protection to these communications, even where the attorney-client privilege does not. These courts reason that work-product protection is necessary to prevent the discovery of counsel s mental impressions, opinions, and theories of the case. 55 But [w]ould not the revelation of attorney work product in the context of litigation to a deponent who, as a former employee, no longer had a community of interest with the employer constitute a waiver of the work product doctrine? 56 Because there are conflicting opinions on this subject, 57 the most conservative approach again is the most prudent. It assumes that the work product doctrine does not protect communications between a party s counsel and its former employee, which bear on or potentially affect the former employee s testimony. 55 See, e.g., Connolly Data Sys., Inc. v. Victor Techs., Inc., 114 F.R.D. 89, (S.D. Cal. 1987) (concluding the work product doctrine protected communications between counsel and a former employee because the disclosure of such communications would reveal counsel s mental impressions, opinions, and theories of the case). 56 Epstein, supra note 4, at Compare Clark Equip. Co. v. Lift Parts Mfg. Co., No. 82-C-4586, 1985 U.S. Dist. LEXIS , at *15 (N.D. Ill. Oct. 1, 1985) ( If counsel, in discussions with third parties, reveals his mental impressions, etc. to such third parties, any claim of work product privilege is waived by such non-privileged disclosure. ), with Morales v. United States, No. 94-Civ.-4865, 1997 U.S. Dist. LEXIS 6035, at *3-4 (S.D.N.Y. May 5, 1997) (concluding that pre-deposition communications with non-party witnesses were cloaked by work-product immunity because the purpose of the doctrine is to protect work product from knowledge of opposing counsel and his client, and reasoning that disclosure... to third persons does not waive work-product immunity as to opposing counsel and parties. ). 313

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