November 2012 Vol. 9, No. 3

9.3.7

Attorney-Client Privilege, Waiver of

Case:

Resilient Floor Covering Pension Fund v. Michael’s Floor Covering, Inc. (N.D.Cal. 2012) 2012 WL 3062294

Issue:

Pension trust funds brought an ERISA enforcement action against the alleged successor of the sponsoring employer.  Did plaintiff waive the attorney-client privilege and work product production over a pre-litigation email sent by plaintiffs’ counsel to plaintiff-fund’s trustee that detailed plaintiffs’ counsel’s understanding of the facts of the case and the legal merits of potential claims, where the trustee forwarded counsel’s email to a non-party union official asking whether defense counsel had a conflict of interest and where, through a series of additional forwards, the email wound up in the hands of various union members and defense counsel himself? 

Holding:

Yes.  Applying the federal law of privilege in this federal question case, the Court found that plaintiffs had met their initial burden of establishing that the email was covered by the attorney-client privilege.  The email carried the headline “Attorney-Client Privileged/Attorney Work Product” and the substance of the email was a standard, candid attorney statement of the facts of the case as the attorney understood them and analysis of applicable law to those facts.  (2012 WL 3062294, *4.)

The plaintiffs did not, however, meet their burden of showing that the privilege had not been waived.  The Court found that plaintiffs had expressly waived the attorney-client privilege when the trustee forwarded the email to non-party union officials.  The common interest privilege did not apply even though the interests of the pension fund and the union were partially aligned in that some monies collected by the fund pay union pensions.  “[T]he parties are not aligned in a joint litigation effort” and the email, “which was forwarded for an entirely different reason (to inquire about a potential conflict of interest), is not indicative of any such relationship.”  (Id. at *5, parenthetical in the original.)

The Court similarly found that the email, which represented counsel’s legal analysis of a then-potential case, constituted protected work product.  (Id. at *6.)  The defense made only “minimal effort” to show a compelling need for the email.  Instead, the defense asserted that plaintiffs had waived work product protection by the manner in which the email had been forwarded.  (Ibid.)  The Court agreed.

Under the common interest exception to the federal work product doctrine, there is no waiver of work product protection where the non-party to whom work product is sent shares a common interest with the disclosing party that is adverse to the party seeking discovery, even where that common interest is financial or commercial in nature.  “Essentially, a court must determine if disclosure is consistent with the work product doctrine’s purpose of preserving the adversary system.”  (Ibid., citation omitted.)  While the Court found that the pension fund and the union shared a common financial interest in collecting benefit contributions from participating employers, the Court also found that the email “eventually left the sphere of common interest.”  (Id. at *7.)  The trustee forwarded counsel’s email with instructions to pass trustee’s concerns upstream with no request that the information in the email be kept confidential.  Trustee’s later “statement that he was ‘shocked’ that the e-mail escaped into the hands of the adversary and that this was not his intention is immaterial.”  The way the trustee forwarded the email “substantially increased the likelihood of – and in fact led to – disclosure to an adversary and was thus inconsistent with preserving the adversary system.”  (Ibid., internal citation to docket omitted.)

The Court found that waiver of protection over the email did not result in a subject matter waiver over all related privileged and protected materials.  “[T]here is no fairness justification for finding that the e-mail’s disclosure results in a waiver for all of Plaintiffs’ counsel’s opinions about this case.”  (Id. at *8.)  The typical justifications for finding subject matter waiver did not apply:  plaintiffs did not selectively disclose the email, would not make testimonial use of the protected materials, and did not raise reliance of counsel issues.  (Ibid.)

The defendant’s assertion of a counterclaim that the action had been brought in bad faith did not place plaintiffs’ counsel’s opinions at issue.  “Defendant cannot simply raise an issue and thereby claim entitlement to protected materials.  This sort of ‘reverse’ issue injection would destroy – not preserve – the adversary system by making it easy to circumvent the work product doctrine.”  (Ibid.)

The Court concluded that, while defendant could keep plaintiffs’ counsel’s email, and could ask about the email in a 30(b)(6) deposition, defendant was prohibited from inquiring about counsel’s opinions about the issues in the case beyond what was contained in the email.  (Id. at *8, note 3.)

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