Opinion ID: 2516664
Heading Depth: 2
Heading Rank: 2

Heading: attorney-client privilege in corporate setting

Text: While the attorney-client privilege typically protects communications between an individual client and his counsel, the privilege is also available to corporations. A v. Dist. Court, 191 Colo. 10, 20, 550 P.2d 315, 323 (1976). In Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981), the United States Supreme Court analyzed the scope of the attorney-client privilege in the corporate context. Although the application of the attorney-client privilege in the corporate setting is not directly at issue in this case, the Upjohn court's reasoning and its explanation of the purpose behind the attorney-client privilege  which we adopted in National Farmers and Gordon  directly impacts our decision in this case. Thus, we begin by outlining the scope of the attorney-client privilege in the corporate setting. In Upjohn the United States Supreme Court considered whether communications between a corporation's employees and the corporation's legal counsel were protected by the attorney-client privilege. The IRS sought disclosure of questionnaires circulated to managers and memorandums or notes of interviews between corporate counsel and employees of the corporation resulting from an internal investigation into questionable payments to foreign government officials. Upjohn, 449 U.S. at 386-88, 101 S.Ct. 677. Upjohn refused to produce the documents, arguing that they were protected by the attorney-client privilege. [4] Id. at 388, 101 S.Ct. 677. In the case below, the Sixth Circuit held that the attorney-client privilege did not apply [t]o the extent that the communications were made by officers and agents not responsible for directing Upjohn's actions in response to legal advice . . . for the simple reason that the communications were not the `client's.' United States v. Upjohn Co., 600 F.2d 1223, 1225 (6th Cir.1979). Thus, the Sixth Circuit adopted what had become known as the control group test. This test provides that in the corporate setting the attorney-client privilege only protects communications between corporate counsel and those officers, usually top management, who play a substantial role in deciding and directing the corporation's response to the legal advice given. Id. at 1226. Only these senior management, the Sixth Circuit reasoned, can be said to possess an identity analogous to the corporation as a whole and therefore be considered to communicate as the corporate client. Id. The Supreme Court granted certiorari to determine the scope of the attorney-client privilege in the corporate setting and held that the communications at issue were protected by the privilege. In fact, the Court emphatically rejected the control group test as too narrow; however, it explicitly refused to adopt a specific test to determine the parameters of the privilege in the corporate setting, instead relying on several factors to determine that the privilege applied in the case at issue. Id. at 395-96, 101 S.Ct. 677. The court concluded: (1) that the information, not available from higher management, was needed to supply a basis for legal advice; (2) that the communications concerned matters within the scope of the employees' corporate duties; (3) that the employees were aware that they were being questioned so that the corporation could obtain legal advice; and (4) that the communications were considered highly confidential when made and were kept confidential by the company. Id. at 394-95, 101 S.Ct. 677. However, while the Court declined to adopt a specific test to apply in the corporate context, the reasons the Court rejected the control group test inform our analysis of the applicability of the attorney-client privilege in the independent contractor setting. In rejecting the control group test, the Court first noted that [t]he first step in the resolution of any legal problem is ascertaining the factual background and sifting through the facts with an eye to the legally relevant. Upjohn, 449 U.S. at 390-91, 101 S.Ct. 677 (citing ABA Code of Professional Responsibility, Ethical Consideration 4-1). To do this, the Supreme Court reasoned that a corporate attorney may need `to glean information relevant to a legal problem from middle management or non-management personnel as well as from top executives.' Id. (quoting Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 608-09 (8th Cir.1978)). Thus, the Court concluded 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 391-92, 101 S.Ct. 677. In National Farmers, we applied Upjohn to determine whether the attorney-client privilege applied to protect a memorandum regarding a lease guaranty insurance policy against disclosure. Petitioner's outside counsel prepared the memorandum to inform the client's general counsel of the facts underlying the issuance of the policy and conclusions regarding whether a claim under the policy should have been paid. Nat'l Farmers, 718 P.2d at 1045-46. In preparing the memorandum, the attorneys conducted interviews with officers and employees of the corporation. Id. at 1049. Though we concluded that none of the factors on which the Upjohn court relied were present in National Farmers, our analysis in National Farmers adopted the factors set forth in Upjohn and applied them to determine whether the attorney-client privilege protected communications between a corporation's officers and employees and corporate counsel. Indeed, we adopted the Upjohn court's reasoning that the attorney-client privilege protects communications made to the attorney to enable him to give sound and informed legal advice. Nat'l Farmers, 718 P.2d at 1049 (citing Upjohn, 449 U.S. at 390-91, 101 S.Ct. 677); see also Gordon, 9 P.3d at 1123 (citing Upjohn, 449 U.S. at 390, 101 S.Ct. 677); Denver Post Corp. v. University of Colorado, 739 P.2d 874, 880-81 (Colo.Ct.App.1987) (holding that communications between the University of Colorado's counsel and former employees of the University concerning activities during their period of employment may be protected by the attorney-client privilege under the rationale presented in Upjohn, but holding that the University waived the privilege by disclosing the documents); Shriver v. Baskin-Robbins Ice Cream Co., 145 F.R.D. 112, 114 (D.Colo.1992) (citing Upjohn and ruling that communications between corporate counsel and company personnel are privileged so long as they concern matters within the scope of the employee's corporate duties). The Supreme Court's reasoning  and in turn our reasoning in National Farmers and Gordon  emphasizes the importance of applying the privilege to protect the ability of attorneys to garner needed information to provide sound legal advice. Thus, the purpose underlying the application of the attorney-client privilege in the corporate context informs our analysis of whether the privilege applies to protect communications between a governmental entity's counsel and its independent contractor.