Roy’s Analysis of Quirky Question # 155, Privilege Issues
Quirky Question # 155: A class action discrimination lawsuit was filed against our company. The proposed class included all African American employees who were employed during a specified time period. This group includes our former Vice President of Human Resources. We learned recently that the plaintiffs’ lawyers have met on several occasions with our former VP of HR. This troubles us since he was involved in numerous attorney-client privileged communications, both with in-house and outside counsel. Moreover, the early discovery that plaintiffs’ counsel served suggests that they have seen any number of documents that we generated to help us evaluate our workforce, our staff reductions, and whether there was any evidence of discrimination in our treatment of employees. Is it legit for the plaintiffs’ law firm to meet with our former VP of HR, even if he is in the protected class they are trying to represent?
Roy’s Analysis: Disappointingly, the problem you describe is not as rare as it should be. There are times when one of your former employees, including someone who has been privy to attorney-client communications, also is a member of a protected class. When a class action is commenced that encompasses that former employee, the stakes are raised.
In most instances, your former employee will respect the fact that the information to which he/she had access was privileged. They will understand that the privilege belongs to the corporation and requires that confidentiality be maintained. In some situations, however, your former employee may not be quite so respectful of his/her obligations to your company and may not maintain the confidentiality mandated by the attorney-client privilege. When a former employee like that meets an attorney willing to exploit the privileged information for that employee or for a class of similarly situated employees, you have a problem. Read more
In-House Counsel as Whistleblower, Kidwell vs. Sybaritic, Inc.
The Minnesota Supreme Court finally has ruled on Kidwell v. Sybaritic, Inc., Nos. A07-584 and 788 (June 24, 2010), the “in-house counsel as whistle-blower” case that was pending before it for more than 18 months. Unfortunately, the Court’s ruling has not brought clarity to this area of the law.
I previously discussed this case in a Blog entry in August 2008 (to see the earlier analysis, use the “View by Topic” bar to the left, scroll down to “Retaliation” and go to Quirky Question # 50). My analysis of the latest pronouncement from the Minnesota Supreme Court is set forth below. Please contact me if you have any questions. Regards, Roy
Reviewing Employee’s Email, Quirky Question # 144
Quirky Question # 144:
I’m confused. I thought we could review our employee’s email communications when sent out on our company’s equipment. Our electronic communications policy states clearly that we reserve the right to do so.
I also thought we could review even privileged communications between our soon-to-be ex-employee and his attorney, if these communications were sent on our email system. I’m now being advised that we cannot do so. Can you offer any guidance?
Roy’s Analysis:
Your question illustrates the ongoing legal evolution in areas where advancing technology intersects employment law or affects other facets of legal analyses – here, the attorney-client privilege. Like technology itself, the law is developing and changing quickly in areas affected by technological advancements.
With respect to the issue of whether a company may review email communications of its employees, including even email communications between your employee and his/her outside counsel, I have written on this subject twice before. (To find the earlier analyses, use the “View by Topic” bar on the upper right-hand side of this page and scroll down to the topic, “Attorney-Client Privilege.” There, you will see two articles, QQ # 111 and QQ # 18, both addressing this issue.) Happily, I am pleased to report that the advice I gave two years ago has been validated and reinforced by a recent decision from the Supreme Court of New Jersey.
The “confusion” you may be experiencing regarding this issue likely reflects the fact that this continues to be an area of the law where courts are providing mixed messages to litigants and their lawyers alike. Unsurprisingly, not all judicial decisions have adopted a uniform approach to the question of whether email communications to counsel, when sent on a company’s communications systems or computers, are protected by the attorney-client privilege.
One case that has received considerable recent attention and commentary is Stengart v. Loving Care Agency, Inc., et al., decided by the Supreme Court of New Jersey on March 30, 2010. (I previously discussed the intermediate appellate decision in this case – see QQ # 111.) Stengart is a thoughtful opinion and highlights many of the issues that you should consider in evaluating your unique fact pattern.
The Stengart facts were relatively straightforward. Stengart, an Executive Director of Nursing for Loving Care, had been with the organization since 1994. During her tenure with the organization, she had been provided a laptop computer for company business. With the computer she could send emails on the company’s email system. She also could access the Internet and access her own, password protected email account at Yahoo. Unbeknownst to Stengart, however, Loving Care had installed certain browser software on her computer that automatically copied each web page she viewed, and stored all of her web-based communications on her hard drive.
In late 2007, Stengart used her computer to access her private Internet email account to communicate with her counsel about her situation at work. Her lawyers also communicated with her using that Yahoo email account. Stengart later resigned her employment, at which time she turned in her company computer. She subsequently brought claims for constructive discharge, hostile work environment, retaliation, and gender, religion and national origin discrimination. In connection with her lawsuit, her former employer hired a computer forensic firm to image the computer’s hard drive. The computer forensics firm retrieved the information on the hard drive, including the email messages between Stengart and her attorneys.
Despite the fact that the retrieved files contained the communications between Stengart and her counsel, the law firm representing Loving Care reviewed the information obtained from the computer forensic firm. Further, it was not until they received discovery requests from Stengart’s counsel several months later that they even acknowledged they were in possession of the communications Stengart had had with her lawyers.
Loving Cove’s counsel attempted to justify their withholding and review of the attorney-client communication on several grounds, including the company’s electronic communications policy. That policy, provided in part that: a) the company reserved the right to access and review all information on the company’s media systems at any time; b) email messages, internet use and communication, and computer files were considered part of the company’s business; and c) these types of communications were not to be considered personal or private to any individual employees.
The policy, however, also permitted “occasional personal use,” and the types of activities the company proscribed had nothing to do with the conduct in which Stengart had engaged. Moreover, the policy was silent on the use of the company’s computer system to access private Internet-based email systems (e.g., Yahoo, Gmail, AOL, etc.). Similarly, the policy did not apprise the employees that all Internet communications were automatically stored by the company on the computer hard drive and later would be accessible to Loving Care.
The trial court found that Loving Care’s counsel had acted properly, holding that the company’s policy had put Stengart on notice that her emails would be considered company property. The intermediate appellate court reversed this holding. The New Jersey Supreme Court affirmed the holding of the intermediate appellate court, remanding to the trial court the question of what sanctions should be imposed on defense counsel, including potential disqualification from the case.
The Supreme Court of New Jersey focused on two primary areas in reaching this result – the adequacy of notice provided by the company’s communications policy and the important public policy considerations implicated by the attorney-client privilege.
With respect to Loving Care’s electronic communications policy, the court found that the policy was imprecise, failing to define a number of critical terms. Equally important, as referenced above, the policy did not apprise the employees that the company reserved the right to review communications sent on private, password protected Internet email systems. And, the company did not inform employees that these communications were being automatically archived and stored. Further, the court felt that the company’s grant of permission for “occasional personal use” made the policy ambiguous.
As for the attorney-client privilege, the court emphasized that it is a venerable privilege . . . enshrined in history and practice.” The New Jersey high court noted that the attorney-client privilege is designed to foster “free and full disclosure of information,” based on “full, candid and confidential exchanges” between a client and counsel.
Given these perspectives, the court found that Stengart had a “reasonable expectation of privacy in the e-mails she exchanged with her attorney . . .”She had not used the company’s email communication system, but rather had used a password protected Internet email account to send her messages. She had not saved her password to access her Yahoo email account anywhere on her computer. Further, the communications from counsel bore a standard confidentiality notice that emphasized the communication was confidential, personal, and covered by the attorney-client privilege. In light of all of these facts, the court concluded that Stengart had a reasonable expectation that her communications, despite having been sent on a company issued computer, would remain private.
In reaching this conclusion, the court emphasized that these types of situations were highly dependent on the individual facts of each case. Some of the variables the court referenced in its analysis included the following:
- the language of the company’s electronic communications policy
- whether a company’s electronic communications policy prohibited all personal email use
- whether the computer was used for conduct specifically prohibited by the policy (e.g., communicating sexually explicit material)
- whether the computer was used for illegal conduct (e.g., transmitting child pornography)
- whether the communications described illegal conduct (e.g., embezzlement of a company’s funds or other illegal schemes)
- whether the employee used the company’s email system to communicate with counsel or whether, as in Stengart, the employee used a separate Internet based email system
- whether the system used by the employee was password protected
- whether the employee had carefully protected the password used to access the Internet email account
- where the computer was located (e.g., an employee working from a home office), and
- whether the messages sent on a company computer through an Internet account even used the company’s communications systems.
Notwithstanding the court’s discussion of these factors, it is clear that in New Jersey, the employee’s expectations of privacy and the priority given to preserving carefully the attorney-client privilege will be weighed heavily in any judicial analysis. Unless there are some unusual circumstances involved, communications between an employee and his/her counsel should not be reviewed by the company or its outside counsel. Conducting this review exposes the company and its outside counsel to the risk of sanctions, including, without limitation, disqualification from the representation.
As noted above, the law in this area continues to evolve. The Stengart court referenced a number of other recent decisions from other courts in other jurisdictions, not all of which have analyzed the issues in the same way. In my view, however, the prudent course for a company’s in-house lawyers and its outside counsel alike is to give the attorney-client privilege the deference it deserves and stay clear of communications potentially covered by the attorney-client privilege.
As I described in my prior analysis of this case, this does not mean that a company is precluded from reviewing carefully the contents of a current or former employee’s computer. This review may be critical in a variety of factual contexts and the information contained on the computer may prove very important (e.g., in a sexual harassment case where the computer contains numerous bawdy and inappropriate email communications). To the extent a company has any reason to believe at the inception of the review that the computer also may contain communications between an employee and counsel, however, special precautions should be put into place. This could involve utilizing a separate law firm to review the arguably privileged materials, with strict, written instructions that the privileged materials are not to be shared with the company. Or, the computer forensic firm could be given clear instructions not to provide any privileged communications to the company that retained it. (Again, in my view, that instruction should be in writing, and must be scrupulously followed once given.) Taking these precautions will insulate both the company and its inside and outside counsel from potentially embarrassing sanctions Likewise, even if the company did not anticipate these types of communications at the inception of the computer review, if discovered during the course of an analysis of the computer, these communications should not be reviewed.When appropriate, consider full disclosure to opposing counsel and judicial involvement.
Finally, a review of the Stengart opinion does highlight some measures companies could take if they want to try to preserve their rights to review even privileged communications. For example, the electronic communications policies would have to be clear and explicit. They would have to inform the company’s employees that all communications, including otherwise privileged communications, are subject to review. They would have to advise the employees that even Internet accessed and password protected email communications may be preserved and reviewed. They would have to prohibit personal use of the company’s email systems by the employees.
From my perspective, however, these types of policy provisions likely are not worth it. They may generate resentment by the employees. They will be difficult to enforce (and the failure to enforce them may itself undermine the policies). And, even if these steps are taken, a court still may repudiate the company’s approach because of the paramount importance of the attorney-client privilege.
Searching a Former In-House Counsel’s Computer, Quirky Question # 111
Quirky Question # 111:
We fired one of our in-house counsel. He now has sued us for a variety of claims, all of which we think are bogus. At the time his employment ended, we required him to turn in his company-owned computer. We are reviewing it and finding that it contains a treasure trove of information useful to our defense of his case. First, it contains evidence that corroborates our justification for the discharge decision – he just was not competent. Second, it contains his ruminations about his litigation strategy, as well as memos he prepared for his own lawyer regarding his potential claims. Given that he composed all of these memos on his company-issued computer and left the memos on the computer when he departed, we assume that we can access and use this material? Any problems with our assumption?
Roy’s Analysis:
Your question regarding your entitlement to review the computer records of your former in-house counsel, including records reflecting his communications with his own attorney, is complicated and implicates several different issues. As you described, you discharged your former in-house counsel and he now has sued your company for various claims you believe to be “bogus.” You also described the fact that your review of your former in-house counsel’s computer revealed three different types of information you consider to be helpful to the defense of his lawsuit: a) information that you believe corroborates your justification for terminating him (i.e., information demonstrating that he was not competent; b) information reflecting your former employee’s reflections about his litigation strategy; and c) information contained in memoranda your former in-house counsel prepared for his own attorney. In my view, these three categories of information call for different treatment.
Two prefatory comments also are relevant. First, the fact that your former employee was your in-house counsel is important, but not to the issues critical to your analysis. (Courts have mixed views regarding litigation by former in-house counsel, especially when their litigation involves any confidential communications relating to their responsibilities as in-house counsel. I have addressed these issues in a prior Blog posting; see “Attorney-Client Privilege” in the View By Topic bar on the upper right-hand side of this page to review QQ # 50.) Second, one key to the analysis of your situation is the language of your company’s electronic communications policies (assuming your company has such policies in place). You do not reference the policies in your question and my comments are limited that fact. With that caveat in mind, here are a few thoughts.
You identified three different categories of information. As referenced above, your treatment of the different types of information does not need to be (and should not be) uniform. With respect to the information relating to your former employee’s performance as one of your in-house counsel, your company should not be reticent to gather, organize and use this data. If the information demonstrates that your former in-house attorney was performing poorly, you will be able to use that data in the litigation he initiated.
With respect to the second category of information you have identified on the company computer used by your former employee – his reflections about his claims and/or litigation strategy – I would urge greater caution. Here, I would be sensitive to two issues. First, I would want to know what your company’s policies stated with regard to personal use of the company-issued computers. Did your policy provide that anything and everything created or stored on the company’s computers was subject to review and/or search by the company? Or, was your company’s policy less intrusive? A third option, of course, is that your company’s policies did not address this issue at all. With respect to either of the latter two contexts, I would encourage your company not to review these materials, at least not without prior judicial approval. The mere fact that your employee stored some of his personal ideas, or as you characterized them, his “ruminations,” about his claims on a company-issued computer does not necessarily mean that your firm has an unfettered right to review and use this data. My concern is that, absent a very clear policy stating that your company reserved the right to review all data of any kind placed on a company computer, a court might find your review of this information too intrusive. Second, a corollary to the last point is that the information relating to an assessment of the claims and the former in-house counsel’s analysis of his potential lawsuit, may reflect communications he had with his own attorney. Here, too, a court may well find your review of this data to be inappropriate.
The last observation spills over into the third category of information you identified in your question – information reflecting your former employee’s communications with his attorney. I addressed this issue in one of the early questions covered in this Blog in the context of email communications with counsel (see “Attorney-Client Privilege” by selecting that topic and review QQ # 12). As I previously described, there were relatively few judicial decisions analyzing how a former employee’s communications with his or her attorney via use of a company’s email system should be handled. The case previously discussed, a 2007 decision out of New York, found for the employer, concluding that the company had a right to review even privileged communications if sent through the company’s email system. Notwithstanding that decision, I suggested a more cautious and conservative approach.
Another issue raised by the fact pattern you described is a practical one. How can you sort through all of this material, some of which you have a legitimate right to review and some of which you do not, without reading the impermissible materials? In reality, you can’t. Even if you quickly skimmed or skipped over this material, there would be an appearance of impropriety that a court may be reluctant to let pass. Therefore, as described further below, you need to ensure that the review is not conducted by anyone who will be involved in defending the claims brought by your former in-house counsel. This specifically includes anyone employed by your outside counsel’s firm and anyone in your own Law Department.
A recent decision from the Superior Court of New Jersey, Stengart v. Loving Care Agency, Inc., No. A-3506-08T1 (June 26, 2009), validated my previous conservative recommendations and provides some guidance to the question you posed. In Stengart, the court considered the issue of whether an employee’s emails with her attorney, sent from the employee’s personal, password-protected, Web-based email account, but via her employer-issued laptop computer, were the employer’s property. The District Court found that they were, holding that the employer’s electronic communications policy, set forth in its employee handbook, provided the employer the right to create a forensic image of the computer hard-drive and review the information on the hard-drive, including information that otherwise would have been encompassed by the attorney-client privilege. The appellate court reversed.
The court of appeals spent some time reviewing the factual record to assess whether the communications policy relied on by Loving Care Agency had ever been finalized, adopted, and published to its workforce. The appellate court also considered provisions of the policy (assuming that it had been adopted) that seemed inconsistent with the broad employer claim that it was entitled to review all information on the hard-drive, particularly the portions of the policy authorizing employees to utilize the computers for limited “personal use.” The court also found ambiguities regarding whether the communications policy extended to password-protected, web-based email accounts, that an employee accessed via the company-owned laptop. The appeals court noted that even if it affirmed the lower court’s determination on these two issues (with which it clearly disagreed), it nevertheless “reject[ed] the company’s ownership of the computer as the sole determinative fact in determining whether an employee’s personal emails may become the company’s property.”
As the New Jersey court noted, “Although plaintiff’s emails to her attorney related to her anticipated lawsuit with the company, the company had no greater interest in those communications than it would if it had engaged in the highly impermissible conduct of electronically eavesdropping on a conversation between plaintiff and her attorney while she was on a lunch break.” The court further found that there was “no legitimate business interest” served by the company’s claims that all private communications on a company computer were company property.
Finally, the Stengart appellate court was deeply troubled by the company’s intrusion into the attorney-client privilege. (In Stengart, the company had imaged the hard-drive and outside counsel had reviewed all of the privileged communications without apprising the ex-employee of its actions. These facts only were revealed in discovery.) Noting that the attorney-client privilege was “venerable” and had been “recognized in the English common law prior to our Nation’s birth,” the court stressed that the privilege was basic to the relationship of trust and confidence between client and attorney. Given the importance of the attorney-client privilege, the court observed, “In weighing the attorney-client privilege, which attaches to the emails exchanged by plaintiff and her attorney, against the company’s claimed interest in ownership of or access to those communications based on its electronic communications policy, we conclude that the latter must give way.” The court therefore found that the company policy “is of insufficient weight when compared to the important societal considerations that undergird the attorney-client privilege.” Given the actions of the employer’s outside counsel in reviewing the employee’s privileged communications, and the obligations imposed on counsel when they receive or obtain access to privileged communications, the court remanded the issue of whether the employer’s outside counsel should be disqualified from further participation in the litigation and/or should be subjected to some other sanction.
The principles of the Stengart case apply with equal force to your situation. In my estimation, it would be imprudent to review the attorney-client privileged communications between your former in-house counsel and his lawyer. If these communications already have been reviewed, those who engaged in the review likely will be precluded from participation in the defense of the litigation. Whether any other actions need to be taken with respect to those individuals can’t be discerned from the facts set forth in the question.
To the extent that the materials relating to your former employee’s reflections on the litigation and/or his privileged communications have not been reviewed as yet, your position will be stronger. You then could explore at least two alternative options. The hard drive could be reviewed by a forensic computer expert, simply for the purpose of sorting through the data and categorizing the information. Alternatively, the information could be reviewed by an independent outside law firm, with the understanding that this firm will neither be involved in the defense of the litigation nor communicate with you regarding the content of the privileged data. The role of this firm would be to organize the data for the purposes of providing your company the information that it is entitled to receive (material falling into your first category of data) and to isolate from your company the information you should not review. Finally, I recommend that you immediately notify your ex-employee and his lawyer that you have this data in your possession and that you will not be reviewing it pending a judicial determination. At that point, either your ex-employee could move for the return of the information or you could seek guidance from the court regarding how this information should be handled.
Litigation by In-House Counsel, Quirky Question # 50
Quirky Question # 50:
We are a small to mid-size company, with a relatively small legal department. We have a General Counsel. He, in turn, supervises two other attorneys. The General Counsel joined our company about two years ago, and frankly, his relationship with C-level executives has not been ideal. His relationship with the CEO has been particularly strained. The CEO has advised me (Head of HR) on several occasions that she just does not trust the General Counsel. She has expressed doubts about his judgment, his advice, and, critically, his loyalty to the Company.
The CEO recently asked me to initiate the process to remove the General Counsel from our firm. I don’t know whether this leaked out, but soon thereafter, the General Counsel began sharing with me his concerns about whether our company is complying with the law in a number of areas squarely within his area of expertise. He advised me that he informed the CEO and CFO of his evaluation but they appear to be ignoring his advice. I feel as though I’m caught in the middle.
Assuming that we follow through with our plans to terminate the General Counsel, do we have any risks? My assumption is that everything he has been told in the course of his job is protected by the attorney-client privilege and could not be revealed in any lawsuit against the company. Similarly, I assume that he could not contend that he was fired in retaliation for bringing the supposedly illegal activities to our executives’ attention, inasmuch the concerns he articulated are squarely within his job responsibilities as our chief legal officer. Am I missing anything?
Roy’s Analysis:
The issues presented in this Quirky Question recently have received attention from the courts in Minnesota. In the case of Kidwell v. Sybaritic, Inc., No. A07-0584 (Minn. Ct. App. June 3, 2008), the intermediate appellate court in Minnesota addressed several issues paralleling those presented in this inquiry.
Kidwell was the General Counsel of the corporate defendant for a relatively abbreviated time period (about10 months). Sybaritic terminated Kidwell’s employment a few weeks after he sent an email to the company’s top management expressing his concern that the company was engaging in various types of unlawful conduct. Following his termination, Kidwell sued his former employer under Minnesota’s Whistleblower statute. Following the jury trial, which Kidwell won, the case went up to the Court of Appeals.
The appellate court explored two related issues. First, the court examined the question of whether an in-house attorney may ever sue his or her employer under the state’s Whistleblower statute. Second, the court explored the question of whether communications made by in-house counsel relating directly to his or her job responsibilities fall within the scope of the Whistleblower statute. Kidwell persuaded the court as to the former issue but not the latter.
With respect to the first question examined by the court, the Court of Appeals noted that some jurisdictions had adopted the “attorney-client defense,” i.e., the notion that because in-house counsel would have to reveal information encompassed by the attorney-client privilege to pursue a whistleblower or retaliation claim against the company, such claims are absolutely barred. The court observed, however, that “the majority view . . . appears to reject the attorney-client defense and to permit such claims, though sometimes with the proviso that in-house attorneys may pursue such claims so long as they do not run afoul of the duty of confidentiality . . ..” The Minnesota Court of Appeals elected to follow that “majority” view, holding that a claim under the Whistleblower statute is not “per se barred by the so-called attorney-client defense.”
Having concluded that even in-house counsel may avail themselves of the Whistleblower statute’s protections, the court then evaluated whether Kidwell had presented evidence sufficient to prove that he made a good faith report of a violation (or suspected violation) of law. Although the appellate court considered several alternative arguments on this issue, the argument that carried the day for the corporate employer was well-established precedent standing for the proposition that “a former employee may not maintain an action under the Whistleblower Act if the alleged report is a communication that was made to fulfill the employee’s job responsibilities.” The court observed that if an employee makes a report as part of his or her job duties, rather than to “expose an illegality,” the requirements of the Whistleblower statute have not been satisfied. As the court stressed, “an employee does not engage in protected conduct under the Whistleblower Act if the employee makes a report in fulfillment of the duties of his or her job.”
Applying the Sybaritic holding to the‘Quirky Question’ presented below, it is clear that, in Minnesota at least, your General Counsel would be allowed to pursue a claim under the Whistleblower statute. Your “assumption that everything he has been told in the course of his job is protected by the attorney-client privilege and could not be revealed in any lawsuit against the company” is erroneous. It is possible that your about-to-be former General Counsel could file a retaliation claim based on the statute. In advance of such litigation, you may want to remind your in-house attorney of his duty of confidentiality. Of course, if such a lawsuit were initiated, you may want to consider immediately requesting the court to impose a Protective Order to preserve the confidentiality of your otherwise privileged information.
Although your in-house lawyer may not be barred from suing, the other facts you reveal should provide you greater solace. As you noted, the concerns being raised by your in-house attorney fall “squarely within” his areas of expertise and job responsibilities. Given that fact, it would not appear that he would be able to persuade a court that the purpose of his (supposedly good faith) report to you was to “expose an illegality,” rather than simply fulfilling the duties of his job. If your in-house counsel later elected to institute a lawsuit, I would quickly highlight the Sybaritic holding and inquire how he could file a lawsuit on these issues consistent with his Rule 11 obligations.
Finally, the holding of Sybaritic (assuming that, if appealed further, is not reversed) should increase companies’ general comfort level regarding essential (but potentially damaging) information entrusted to other types of employees. For example, a Human Resources Director provided with statistical data about the composition of a company’s workforce should be precluded from bringing a Whistleblower claim based on recommendations regarding hiring or firing decisions. Likewise, a member of the Audit Committee who is informed about areas of concern and who conveys those facts to management should be precluded from basing a Whistleblower claim on the information revealed in the course of his/her job duties. There undoubtedly are numerous situations where key employees are provided damaging information about a company, but as these examples illustrate, the Sybaritic holding should provide companies some protection against Whistleblower claims by individuals who are merely fulfilling their job responsibilities when reporting on wrongful or illegal conduct.
Supplement to Quirky Question # 50, Litigation Initiated by In-House Counsel:
In QQ # 50, I addressed the situation of whether an in-house attorney who claimed that he was fired for whistle-blowing activities could bring a claim against his employer, even if by doing so he would need to reveal information encompassed by the attorney-client privilege. Since posting that analysis, I came across an analogous case, Nesselrotte v. Allegheny Energy, Inc., No. 06-01390 (W.D. Pa. July 22, 2008).
In Nesselrotte, an in-house counsel, fired by her employer, sued for sex discrimination, age discrimination and retaliation. In the twenty-day period between the notice of her termination and her last day of employment, Nesselrotte copied and removed numerous documents from her employer, including many which were designated as “confidential” or “privileged.” Nesselrotte attempted to justify her removal of these privileged materials on the basis of Rule 1.6(c)(4) of the Pennsylvania Rules of Professional Conduct. Among other grounds for disclosing privileged communications, that rule provides a lawyer the right to reveal information relating to the representation of a client if necessary “to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client . . . or to respond to allegations in any proceeding concerning the lawyer’s representation of the client.”
The court didn’t buy Nesselrotte’s argument. The court rejected the notion that a lawyer may rely on Rule 1.6 to justify the removal and/or copying privileged or confidential documents. As the court emphasized, “[T]he proper avenue for a former employee (even an attorney) to obtain privileged and/or confidential documents in support of his or her claims is through the discovery process, . . . not by self-help.” The Judge observed, “the Court declines to hold that Rule 1.6(c)(4) of the Pennsylvania Rules of Professional Conduct trumps the attorney client privilege in the context of this case, where an attorney employed self-help by removing without authorization privileged and confidential documents seemingly in breach of her former employer’s Ethics Code and Confidentiality Agreement.”
The Nesselrotte case is interesting but seemingly turned largely on the imprudent decision of the in-house attorney to steal the documents that she felt would be beneficial to her case. Had she instead elected to obtain access to the privileged documents she felt were pertinent to her claims through appropriate discovery mechanisms, the court would have had to resolve the more challenging issue of whether an attorney suing for sex and age discrimination could obtain access to materials that were otherwise covered by the attorney-client privilege and/or work product doctrine. Assuming that the court permitted access to these materials through discovery, the court then would have to make the more difficult determination regarding how these materials could be used in hearings or at trial.
The judiciary in different states have reached different conclusions on the rights of in-house counsel to sue their employers and their ability to support their litigation with otherwise privileged and confidential information. To the extent that you confront a claim of this kind, it is critical for you to understand the position of your state courts on these issues.
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