Title: Leer v. Chicago, M., St. P. & P. Ry. Co.
Citation: 308 N.W.2d 305
Docket Number: 50915
State: Minnesota
Issuer: Minnesota Supreme Court
Date: July 17, 1981

308 N.W.2d 305 (1981) William E. LEER, Appellant, v. CHICAGO, MILWAUKEE, ST. PAUL &amp; PACIFIC RAILWAY COMPANY, Respondent. No. 50915. Supreme Court of Minnesota. July 17, 1981. Rehearing Denied August 14, 1981. *306 Yaeger &amp; Yaeger, J. Howard Hill and William G. Jungbauer, Minneapolis, for appellant. Rider, Bennett, Egan &amp; Arundel, Roger R. Roe, Jr., and Kevin C. Dooley, Minneapolis, for respondent. Hvass, Weismann &amp; King and Reed K. Mackenzie, Minneapolis, for Minnesota Trial Lawyers Assn. Heard, considered and decided by the court en banc. SCOTT, Justice. The Dakota County District Court certified the following question to this court as important and doubtful:[1] The appellant, William E. Leer, was employed by respondent railroad as a switchman in its Wausau, Wisconsin, railroad yards. Although the facts are incomplete and in dispute at this stage of the litigation, it appears that on September 20, 1978, appellant was in the process of executing a railroad car switching movement when he sustained an on-the-job injury. As a result, appellant's leg was amputated above the knee. Appellant alleges in his complaint, based upon the Federal Employers' Liability Act (FELA), that the accident resulted from respondent's negligence, as follows: Appellant's action is against the respondent railroad. No members of the switching crew or other employees of the railroad are named as defendants. An investigator-employee of the railroad obtained statements of the other members of the switching crew on the day of the accident. Appellant served a demand for production of these statements upon respondent pursuant to Minn.R.Civ.P. 26.02(3) and 34.02,[2] along with the summons and complaint, on June 22, 1979. In respondent's reply to the request for production of documents, it identified the statements of four of its employees, but refused to produce them on the ground that the statements were protected by the attorney-client privilege.[3] The trial court *307 ruled in favor of respondent, and certified the above question. The resolution of the certified question therefore depends upon: (1) Whether the employees whose statements are the subject of this discovery procedure are parties under Minn.R.Civ.P. 26.02(3); and (2) Whether, in any event, the attorney-client privilege constitutes a bar to discovery. 1. Appellant argues that since the employees were not named parties their statements are discoverable under Rule 26.02(3). The relevant part of this rule states that "[u]pon request, a person not a party, or a party, may obtain without the required showing a statement concerning the action or its subject matter previously made by that person who is not a party." [4] (Emphasis added.) The Advisory Committee note to Rule 26.02(3) makes clear "that a party, without the necessity of seeking a routine motion, has the right to obtain statements made by non-party witnesses." Notwithstanding the fact that the employees were not named defendants, respondent argues that they are nonetheless parties since it is their negligence that appellant seeks to impute to respondent and since the employees could be named as parties at any time. In Minnesota, it has been a longstanding rule of construction that words are to be given their ordinary meaning. State v. Marsh, 158 Minn. 111, 196 N.W. 930 (1924). The meaning of the word "party," when used in the legal sense, is clear: "party" means only the named plaintiff or defendant. See Black's Law Dictionary 1010 (5th ed. 1979). It would seem self-evident that a statement by an employee who is neither a named plaintiff nor a defendant is a statement of "a person who is not a party," and is therefore discoverable. In Chappie v. SC (NEI), Inc., No. 711856 (Minn. 4th Dist.Ct., May 29, 1975), Judge Stone discussed this issue. He stated that: Judge Stone's view is especially instructive, since he served as a member of the 1975 Advisory Committee that recommended this rule change, which deviated from the federal rule. It should also be noted that section IV of the Minnesota Rules of Civil Procedure for the District Courts, entitled "Parties," provides meaningful guidance as to whether the corporate employees in this case should be considered parties. For example, Minn. R.Civ.P. 19.01 provides in part that "[a] person who is subject to service of process shall be joined as a party * * *." (Emphasis added.) Furthermore, Rule 19.02 is applicable when "[a] person * * * cannot be made a party." (Emphasis added.) These provisions make it clear that a "person" becomes a "party" when named in the action. We will continue to follow the construction suggested by our prior cases, as more recently enunciated in Larson v. Independent School District No. 315, 305 Minn. 358, 362, 233 N.W.2d 744, 747 (1975): For the above reasons, we conclude that in the factual setting presented here corporate employees who are not named parties in the litigation are not "parties" within the meaning of Minn.R.Civ.P. 26.02(3). 2. In Schmitt v. Emery, 211 Minn. 547, 2 N.W.2d 413 (1942), this court held that employee statements taken by an employer's claims agent were protected by the attorney-client privilege. Soon after Minnesota *308 decided Schmitt v. Emery, the United States Supreme Court decided Hickman v. Taylor, 329 U.S. 495, 67 S. Ct. 385, 91 L. Ed. 451 (1947). Hickman involved an accident in which a tugboat sank while towing a ferry. An attorney hired by the tugboat owner (a partnership) took the statements of the tugboat crew, who witnessed the accident. In an action against the company on behalf of an employee who drowned, the tugboat owners claimed the statements were protected by the attorney-client privilege and thereby refused to produce them. The court found that they were not privileged, stating: Id. at 508, 67 S. Ct. at 392. Hickman, having been decided under the federal rule, is not controlling, but was significant in its impact upon the adoption of the Minnesota Rules of Civil Procedure in 1952. Two works on Minnesota civil practice have concluded that Rule 26.02(3) embodies the Hickman decision.[6] Both the case at hand and Hickman portray the investigative scenario of an overwhelming percentage of personal injury litigation. Since Hickman, several cases have considered the attorney-client privilege in the employer/employee setting. One of these cases is Philadelphia v. Westinghouse Electric Corp., 210 F. Supp. 483 (D.C.Pa.1962). The Westinghouse court narrowed the issue to a determination of whether the employee was, at the time, seeking legal advice on behalf of the corporation. If not, employee statements are merely those of witnesses, and are not privileged. To determine whether the employee was seeking legal advice on behalf of the corporation, the court advanced the "control group" test. This test requires that the employee be in a position to control or take a substantial part in a decision about any action to be taken upon the advice of the attorney or that the employee be a member of a group having such authority. In the instant case, it is clear that the switching crew members are not within the "control group." A second test, "the subject matter test," was advanced in Harper &amp; Row Publishers, Inc. v. Decker, 423 F.2d 487 (7th Cir. 1970), aff'd per curiam by an equally divided court, 400 U.S. 348, 91 S. Ct. 479, 27 L. Ed. 2d 433 (1971). In this case, plaintiff sought to discover statements prepared by defense attorneys while debriefing employees (or former employees) after they testified before a federal grand jury. The court held that an employee, though not a member of his employer's control group, could be sufficiently identified with his employer so that his communication to the corporation's attorney would be privileged. Such a connection exists where the employee made the communication at the direction of his supervisor and where the subject matter upon which the lawyer's advice was sought by the corporation and dealt with in the communication was within the performance of the employee's duties. The court stated that it was Id. at 491. Because the "subject matter" and the "control group" tests have been widely criticized,[7] a third test, the "Weinstein *309 test" was adopted by the Eighth Circuit in Diversified Industries v. Meredith, Inc., 572 F.2d 596 (1978). The court adopted the suggestion of Judge/Professor Weinstein that the attorney-client privilege should be available to a corporation if all the following requirements are satisfied: Id. at 609. In deciding this case, certain conflicting policy considerations must be kept in mind. The purpose behind the attorney-client privilege is to promote open and honest discussion between clients and their attorneys. National Texture Corp. v. Hymes, 282 N.W.2d 890 (Minn.1979). On the other hand, Minnesota favors a liberal construction of the discovery rules so as to uncover all relevant matters before trial, even those inadmissible at trial. Anderson v. Florence, 288 Minn. 351, 362, 181 N.W.2d 873, 879 (1970). As recognized in Kahl v. Minnesota Wood Specialty, Inc., 277 N.W.2d 395 (Minn. 1977), the attorney-client privilege is a barrier to disclosure and tends to suppress relevant facts and, as such, must be strictly construed. After reflecting on these policy factors and considering the three alternative tests, we reverse the trial court. Under any of these tests, the scope of the attorney-client privilege does not encompass communications about events which are within the employee's knowledge solely because he witnessed an accident. We therefore hold that when an employee is merely a witness to an accident and not a party to a subsequent action, communications made with him in a general investigation do not create an attorney-client relationship. This result is consistent with Hickman, supra, and the three tests cited herein.[8] In so holding, we necessarily overrule Schmitt v. Emery, supra. Reversed. SIMONETT, Justice (concurring specially). The majority holds that, under Rule 26, "in the factual setting presented here," statements of corporate employees who are not named parties are freely discoverable on request. I concur in this result, and I join in part 2 of the court's opinion. But it seems to me a different result may obtain under Rule 26 if the employee is, say, an owner of a small, closely held business or professional corporation or partnership, and the employee is not just a witness but a *310 participant in conduct for which his corporation or partnership is vicariously liable. Rule 26 says a party is not entitled to another party's statement on request, but only after a required showing. To require such employee's statement to be surrendered on request if only his corporation is sued but not if he himself is sued would seem to give undue deference to the corporate veil. PETERSON, Justice (concurring specially). I join in the opinion of Justice Simonett. OTIS, Justice (dissenting). With respect to statements taken from those members of the switching crew whose negligence is alleged to have caused plaintiff's injuries, I cannot agree that their employer has no right to invoke the attorney-client privilege. As to them, the unanimous decision of the United States Supreme Court in Upjohn Co. v. United States, ___ U.S. ___, 101 S. Ct. 677, 66 L. Ed. 2d 584 (1981) is clearly pertinent, and in my opinion, highly persuasive. In Upjohn, the corporation found itself faced with the likelihood of a substantial tax liability arising out of the bribery of foreign officials by its employees abroad. This disclosure prompted the Chairman of the Upjohn Board of Directors to authorize the corporation's general counsel to make a thorough investigation. An essential, indeed critical, element of the inquiry was to elicit from the employees responsible for the alleged misconduct, information regarding their participation in the illegal payments. Questionnaires went to all foreign managers and responses were sent directly to general counsel. The Internal Revenue Service subpoenaed all Upjohn files relative to the investigaiton. Upjohn resisted on the grounds of the attorney-client privilege. The Supreme Court sustained that contention. The Court noted that: Id. 101 S. Ct. at 683, 685 (emphasis in original) (footnote omitted). In the case before us, this was precisely the purpose of counsel's interviewing those whose activity may have given rise to the railroad's liability, i. e. to defend the company in anticipation of potential litigation. The Supreme Court went on to point out that: Id. at 685-86 (quoting City of Philadelphia v. Westinghouse Electric Corp., 205 F. Supp. 830, 831 (E.D.Pa.1962) (emphasis in original) (citations omitted). The Chief Justice, expanding on the decision of the Court, would explicitly adopt this rule: Id. at 680 (Burger, J., concurring). I have difficulty distinguishing the principles set forth in Upjohn from those we have applied for almost 40 years since Schmitt v. Emery, 211 Minn. 547, 552, 2 N.W.2d at 413, 416 (1942). There we held: Consequently, I would adhere to precedent and affirm the trial court by answering the certified question in the affirmative insofar as employees who took part in the switching operation are concerned. I would agree that the role of employees not responsible for the activity out of which the injury occurred are bystanders whose status would be quite different from the employees with which the Upjohn decision was dealing. [1] Minn.R.Civ.App.P. 103.03 provides, in relevant part, as follows: An appeal may be taken to the Supreme Court: * * * * * * (i) If the trial court certifies that the question presented is important and doubtful, from an order which denies a motion to dismiss for failure to state a claim upon which relief can be granted or from an order which denies a motion for summary judgment. This certification did not arise from either of these types of order. Therefore, this action is clearly not appealable as of right per Minn.R. Civ.App.P. 103.03(i). See Price v. Amdal, 256 N.W.2d 461 (Minn.1977), noted in 4 Wm. Mitchell L.Rev. 245 (1978). However, we grant discretionary review pursuant to Minn.R.Civ. App.P. 105. [2] Minn.R.Civ.P. 26.02(3) provides in part: Upon request, a person not a party, or a party, may obtain without the required showing a statement concerning the action or its subject matter previously made by that person who is not a party. (Emphasis added.) Minn.R.Civ.P. 34.02 provides in part: The request may, without leave of court, be served upon the plaintiff after commencement of the action and upon any other party with or after service of the summons and complaint upon that party. [3] Minn.Stat. § 595.02(2) (1978) provides in part: An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him or his advice given thereon in the course of professional duty * * *. [4] The Minnesota rule differs from Rule 26(b)(3) of the Federal Rules of Civil Procedure with respect to witnesses' statements by providing for free discovery of any statements made by persons who are not parties to the litigation. [5] We need not discuss the work-product rule of the Hickman case, since the Minnesota rule differs from the federal rule. [6] See 11 P. Thompson, Evidence § 501.01 at 188 (1979) ("The Hickman decision is largely codified in Minn.R.Civ.P. 26.02.") 3 D. McFarland &amp; W. Keppel, Minnesota Civil Practice, § 1506, at 19 (1979). [7] The "control group" test is criticized as ignoring the realities of corporate life by applying the attorney-client privilege to statements of only the highest level of executives. See Note, Privileged Communications Inroads on the "Control Group" Test in the Corporate Area, 22 Syracuse L.Rev. 759, 767 (1971). On the other hand, the subject matter test is criticized as broadly protecting almost all employee communications. See Note, Attorney-Client Privilege in Corporate Clients; The Control Group Test, 84 Harv.L.Rev. 424, 432 (1970). [8] Recently, in Upjohn Co. v. United States, ___ U.S. ___, 101 S. Ct. 677, 66 L. Ed. 2d 584 (1981), the United States Supreme Court considered the scope of the attorney-client privilege in a corporate setting. In Upjohn, that corporation, through its general counsel, made an investigation of alleged illegal payments to foreign officials. As part of the investigation, Upjohn's general counsel interviewed and sent questionnaires to foreign managers. Through an administrative summons, the criminal investigation division of the Internal Revenue Service sought production of the completed questionnaires and the interview notes. Upjohn refused to produce them, arguing that the documents were both work product and protected by the attorney-client privilege. After criticizing the "control group" test, yet without adopting the "subject matter" or any other test, the Supreme Court held that the documents in question were protected by the attorney-client privilege. Upjohn is critically different from the instant case in that the communications in Upjohn regarded a matter within the scope of the employees' duties. In the instant case the witnessing of an accident was not within the scope of the employees' duties.