Opinion ID: 1908395
Heading Depth: 3
Heading Rank: 2

Heading: The Privilege in the Corporate Setting

Text: As early as 1915, the Supreme Court assumed that the attorney-client privilege applied when the client is a corporation. United States v. Louis. & Nash. R. R., 236 U.S. 318, 35 S.Ct. 363, 59 L.Ed. 598 (1915) (defendant railroad company refused inspection of various documents created by special agents of Interstate Commerce Commission, claiming documents were privileged). See also Supreme Court Standard 503(a), relating to the attorney-client privilege, as cited in Diversified Industries, 572 F.2d at 605 (A `client' is a person ... or corporation ... who is rendered professional legal services by a lawyer, or who consults a lawyer with a view to obtaining professional legal services from him. (Emphasis added)). In the landmark case of Upjohn, supra, the Court laid to rest any remaining doubts that a corporation is entitled to claim the attorney-client privilege. Confusion still exists, however, regarding the scope of exactly which employees in a corporation may communicate with corporate counsel, either in-house or out-of-house, and still retain protection under the attorney-client privilege. Over the years, several theories have emerged. The first case to develop a specific test addressing the scope of protection in the corporate setting was United States v. United Shoe Machinery Corporation, 89 F.Supp. 357 (D.Mass.1950). The court essentially held that a confidential statement to counsel by any officer or employee of the corporation might well be privileged. United Shoe, 89 F.Supp. at 358-59. This broad theory of privilege in the corporate environment was severely curtailed in Radiant Burners in which the court held: [T]his personal privilege of the client must ... be claimed only by natural individuals and not by mere corporate entities. 207 F.Supp. at 773 (emphasis added). The Radiant Burners court essentially eliminated the attorney-client privilege for corporations. Later in Westinghouse Electric, supra, the control group test was created. 210 F.Supp. at 483. Under this test, the attorney-client privilege only protects communications directed to or from employees in the control group, which is comprised of those who play a substantial role in corporate decision-making. Westinghouse, 210 F.Supp. at 485. The Supreme Court in Upjohn rejected the control group test, finding it too narrow in scope in that it will frequently be employees beyond the control group ... who will possess the information needed by the corporation's lawyers. 449 U.S. at 391, 101 S.Ct. at 683, 66 L.Ed.2d at 592. The Court further stated that the control group test frustrates the very purpose of the privilege by discouraging the communication of relevant information by employees of the client to attorneys seeking to render legal advice to the client corporation. Upjohn, 449 U.S. at 392, 101 S.Ct. at 684, 66 L.Ed.2d at 593. Although the Court deliberately refrained from defining the scope of the attorney-client privilege in the corporate setting, its analysis reflects factors found in the subject-matter test. Amy L. Weiss, In-house Counsel Beware: Wearing the Business Hat Could Mean Losing the Privilege, 11 GEO. J. LEGAL ETHICS 393, 396-97 (1998). The subject-matter test is set forth in Harper & Row Publishers, Inc. v. Decker as follows: [A]n employee of a corporation, though not a member of its control group, is sufficiently identified with the corporation so that his communication to the corporation's attorney is privileged where the employee makes the communication at the direction of his superiors in the corporation and where the subject matter upon which the attorney's advice is sought by the corporation and dealt with in the communication is the performance by the employee of the duties of his employment. 423 F.2d 487, 491-92 (7th Cir.1970). The Florida Supreme Court recently established a new test to determine the scope of the attorney-client privilege as it applies to corporations. See Southern Bell Tel. & Tel. Co. v. Deason, 632 So.2d 1377 (Fla.1994). That court acknowledged that because a corporation can only act through its agents, unlike a natural person, and because a corporation relies much more heavily on its counsel for business advice than an individual, it is likely that the `zone of silence' will be enlarged by virtue of the corporation's continual contact with its legal counsel. Deason, 632 So.2d at 1383 (citation omitted). Concerned that a corporation could conduct its ordinary business through lawyers to hide its affairs from light of day, Tri-State Equip. v. United States, 77 A.F.T.R.2d 96-2198, 1996 WL 376340 (E.D.Cal.1996), the Deason court attempted to strike a balance between the competing interests of encouraging corporations to seek legal advice so they can best comply with the laws against the real concern of companies using their counsel to prevent discovery. Deason, 632 So.2d at 1383. See also Kelly, 9 A.F.T.R.2d at 890 (If documents are not privileged in the hands of a client, the fact that they are turned over to an attorney does not create a privilege.). The Deason court combined the tests established in Harper & Row and Diversified Industries [4] and arrived at the following criteria as to whether a corporation's communications are protected by the attorney-client privilege: (1) [T]he communication would not have been made but for the contemplation of legal services; (2) the employee making the communication did so at the direction of his or her corporate superior; (3) the superior made the request of the employee as part of the corporation's effort to secure legal advice or services; (4) the content of the communication relates to the legal services being rendered, and the subject matter of the communication is within the scope of the employee's duties; [and] (5) the communication is not disseminated beyond those persons who, because of the corporate structure, need to know its contents. Deason, 632 So.2d at 1383. Thus, it is clear that a corporation can be a client for purposes of the attorney-client privilege; what is unclear is exactly how far this protection extends regarding the corporation's employees and agents. While we decline to adopt a particular set of criteria for the application of the privilege in the corporate context until we are required to do so, the communications in the instant case are not protected under any of the tests.