WA Supreme Court: Corporate Attorney-Client Privilege Does Not Extend to Postemployment Communications with Former Employees
The plaintiff in Newman suffered a permanent brain injury during a football game. He sued Highland School District for the negligence of Highland coaches who permitted him to play despite exhibiting symptoms of a concussion suffered at practice the day before the game. At the depositions of the coaches, some of who were no longer employed by Highland, counsel for Highland indicated that he had spoken with the former coaches prior to the deposition and was now representing them for purposes of the deposition.
Newman first sought to disqualify Highland counsel for conflict of interest. However, the superior court denied the motion, and the Supreme Court upheld the lower court’s ruling that while an attorney-client relationship existed during representation at the deposition, Highland counsel was not allowed to represent “non-employee witness[es] in the future.”
Newman then sought discovery of the communications between the former coaches and Highland’s counsel. Highland moved for a protective order asserting the communications should be shielded under the attorney-client privilege.
The issue here is “whether post-employment communications between former employees and corporate counsel should be treated the same as communications with current employees for purposes of applying the corporate attorney-client privilege.”
The pinnacle U.S. Supreme Court case regarding corporate attorney-client privilege is Upjohn Co. v. United States, 449 U.S. 383, 101 S. Ct. 677, 66 L. Ed. 2d 584 (1981). Upjohn provided a flexible framework for defining who the “client” is in regards to determining corporate attorney-client privilege, which may sometimes include non-managerial employees. However, the Court in Upjohn expressly declined to answer the question of whether the privilege extended to former employees.
Understanding the reason the attorney-client privilege exists is critical. As stated in Upjohn, certain communications between a client and their attorney is privileged “to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration justice.” Important to note, only certain communications may qualify for privilege, those communications made: (1) in confidence and (2) in the context of an attorney-client relationship.
The Court here based its decision on the principal-agent relationship. While employees may be required to disclose pertinent facts regarding their duties to corporate counsel for investigatory and litigation purposes, the court found that “former employees categorically differ from current employees.” Upon termination of an employee, the agency relationship generally ceases to exist. Just as the employee no longer has the ability to bind the corporation, the employee no longer has duties to the corporation (loyalty, obedience, confidentially). As such, the Court reasoned that a former employee is “no different from other third-party fact witnesses to a lawsuit, who may be freely interviewed by either party.”
While one can disagree with the bright-line test created by this ruling, as the dissenting justices clearly do, the Court has provided predictability of when privilege will apply and when it terminates in relation to corporate communications with employees. Corporate clients need to be aware of the fact that even though a former employee may have information regarding a litigation matter that occurred during the period of employment, communications with the former employee after termination will not be privileged. There may be options for maintaining a relationship with the former employee such that communications are still privileged – including attorney work-product or work product developed in anticipation of litigation. However, these are limited and do not protect documents sent to or received from those witnesses.
Should you have an investigative need, Issaquah Law Group is well-versed in handling all aspects of the investigatory process. If you require assistance with an investigation on potential or current litigation, please contact us.