Privilege Developments 2008 — Part II

Gregory P. Joseph*

This is the second of two articles exploring important recent developments in the law of privilege and work product protection. (The first, which focused on privilege developments in the corporate setting, was published in the February 11, 2008 edition of the National Law Journal is available on the Recent Articles page at http://www.jha.com/us/articles/viewarticle.php?54.)

Privilege vs. Work Product — Opposite Burdens on Waiver. Normally, a party asserting a waiver bears the burden of proving it. In the privilege context, that is not necessarily correct. Many courts hold that a party asserting attorney-client privilege bears the burden of establishing that the privilege has been both claimed and not waived. But the opposite rule applies to work product disputes. The party asserting work product protection need not prove non-waiver — it is the party asserting waiver who bears the burden of proving it. See Kraus Indus. v. Moore, 2008 U.S. Dist. LEXIS 10065 (W.D. Pa. Feb. 11, 2008) (“unlike the attorney-client privilege, the party invoking the work product doctrine does not bear the burden of proving non-waiver”).

Advice of Counsel — Subject Matter Waiver. Reliance on advice of counsel as a defense triggers a waiver. In In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007), advice of counsel — “opinion counsel” — was asserted as a defense against a claim of willful infringement. The key question in Seagate: Did this reliance on advice of “opinion counsel” extend to trial counsel? The subject matter of the privileged communications with each was the same. But, as to both attorney-client privilege and work product protection, the Federal Circuit held that, “as a general proposition,” the waiver stops at opinion counsel and does not extend to trial counsel, although the opinion leaves room for trial judges to exercise their discretion “in unique circumstances” to come to another conclusion.

This result is consistent with proposed Federal Rule of Evidence 502 (which passed the Senate on February 27, 2008). Rule 502(a)(3) would limit the scope of subject matter waiver to circumstances in which the disclosed and undisclosed communications “ought in fairness be considered together.” Effectively preventing a party from defending itself by opening up its trial counsel’s files is hardly fair.

Waiver by Production to Congress. The courts are split whether production of documents to Congress waives attorney-client privilege and work-product protection. Conflicting cases are collected in Anaya v CBS Broadcasting, Inc., 2007 U.S. Dist. LEXIS 55164 (D. N.M. April 30, 2007). Anaya follows recent authorities requiring that some serious effort be made to protect the privilege, at a minimum by attempting to convince the Chair or the Congressional Committee to recognize the privilege. Because no effort at all had been made in Anaya, the Court held that it “need not decide, as some courts have, that to preserve the attorney-client privilege and/or the work-product protection, a party resisting discovery must go to the point of risking contempt of Congress.”

Disclosure of Draft Waives Privilege as to Final. The plaintiff in Masi v. DTE Coke Operations, LLC, 2007 U.S. Dist. LEXIS 72990 (E.D. Mich. Oct. 1, 2007), prepared a factual summary he called “My Story” that he delivered to his counsel to assist in the prosecution of his case. When discovery demands were served, plaintiff's counsel asserted privilege. But the plaintiff had provided a first draft to his union. Held: “When privilege is waived as to the first draft of a document, it is waived as to subsequent drafts as well.”

This categorical a rule is not necessarily intuitive. There could be substantial additions and changes to subsequent drafts, and there is no obvious reason why such material must lose privileged status. The issue is the judicial approach to subject matter waiver. The fairness approach of Proposed Federal Rule of Evidence 502(a)(3) has much to commend it.

Waiver by Use of Another’s Computer. It is well settled that an employee’s use of a corporate computer to transmit or receive privileged communications waives the privilege when the employee is on notice that the employer reserves the right to review the communications. See, e.g., United States v. Etkin, 2008 U.S. Dist. LEXIS 12834 (S.D.N.Y. Feb. 19, 2008) (employees do not have a reasonable expectation of privacy in the contents of their work computers when their employers communicate to them via a flash-screen warning when they log on a policy under which the employer may monitor or inspect the computers at any time).

What about use of a fiancé’s computer? Geer v. Gilman Corp., 2007 U.S. Dist. LEXIS 38852 (D. Conn. Feb. 12, 2007), held that the plaintiff did not waive the attorney-client privilege by using the computer and email of her fiancé, and by having her fiancé assist her in ministerial maters, such as proofreading her communications to her attorney. The Geer Court reasoned that the fiancé committed to maintain the material in confidence, had a limited role, and “can be considered an ‘agent’ of plaintiff, because by providing his computer and e-mail to plaintiff, he became a ‘conduit’ for plaintiff's communications with her attorney.”

Crime-Fraud Exception in Civil Actions. Most decisions addressing the crime-fraud exception arise in the criminal context. The Ninth Circuit, in In re Napster, Inc. Copyright Litig., 479 F.3d 1078 (9th Cir. 2007), addressed three issues in the civil context: (1) the standard of review, which it held to be de novo, not abuse-of-discretion; (2) the burden of proof on the party seeking to vitiate the privilege when it seeks outright disclosure, a burden the Court held to be a preponderance of the evidence, not simply a prima facie showing that the exception applied; and (3) that the party asserting the privilege is entitled to submit countervailing evidence to establish the existence of the privilege and inapplicability of the exception.

Waiver by Diary. The plaintiff produced redacted diary entries in response to a document request served on her in Harper v. Brinke, 2007 U.S. Dist. LEXIS 64482 (E.D. Tenn. Aug. 30, 2007). The defendant moved to compel the redacted portions, claiming that plaintiff waived her attorney-client privilege by memorializing the privileged communications in her diary. Harper holds that waiver effected, relying on United States v. Defonte, 441 F.3d 92, 95 (2d Cir. 2006) (“[the diarist] claims, and we have reason to believe, that she never consented to the journal being taken from her possession. Furthermore, there is no evidence that she shared or intended to share those entries with any third party. y”); Alexander v. FBI, 186 F.R.D. 154, 161 (D.D.C. 1999) ("the attorney client privilege applies to entries in a client's diaries that describe communications from attorneys or are based on such communications. This principle has been followed by each court to have addressed this matter.").

Legal Bills — To What Extent Privileged? Bills sent from lawyer to client are privileged to the extent that they reflect the specific nature of legal services rendered. Otherwise, a statement for legal services is not privileged. See Sobba v. Elmen, 2007 U.S. Dist. LEXIS 29172 (E.D. Ark. April 19, 2007), quoting Chaudhry v. Gallerizzo, 174 F.3d 394, 403 (4th Cir. 1999) ("Typically, the attorney-client privilege does not extend to billing records and expense reports."); see also Baker v. Dorfman, 2001 U.S. Dist. LEXIS 378 (S.D.N.Y. Jan. 23, 2001) ("The attorney-client privilege protects confidential client information that is contained in legal bills, but fee statements that do not contain detailed accounts of the legal services rendered are not protected from disclosure." (internal quotation omitted)); accord Pollard v. E.I. DuPont de Nemours & Co., 2004 WL 784489, at *4 (W.D. Tenn., Feb. 24, 2004); DiBella v. Hopkins, 285 F. Supp. 2d 394, 409 (S.D.N.Y. 2003).

Email & Privilege

Unprivileged Email in String Transmitted to Attorney. Email communications with counsel may append other emails that, standing alone, are not privileged. The Court in Barton v. Zimmer Inc. , 2008 U.S. Dist. LEXIS 1296 (N.D. Ind. Jan. 7, 2008), observed that “the very fact that non-privileged information was communicated to an attorney may itself be privileged, even if that underlying information remains unprotected.” It concluded that: “As applied to e-mails, this means that even though one e-mail is not privileged, a second e-mail forwarding the prior e-mail to counsel might be privileged in its entirety.... ‘In this respect, the forwarded material is similar to prior conversations or documents that are quoted verbatim in a letter to a party's attorney.’” (This is not to suggest that the unprotected email need not be produced in some form.)

Waiver by Failure to Log. Defendants withheld emails from production, did not log them pursuant to Fed.R.Civ.P. 26(b)(5), yet later invoked attorney-client privilege and the work product doctrine as defenses to production. In Nnebe v. Daus, 2007 U.S. Dist. LEXIS 32981 (S.D.N.Y. May 3, 2007), the Court ordered production of the emails on the ground that the defendants had waived their privilege claims by failing to include the emails on their initial privilege logs. In contrast, the opinion in C.T. v. Liberal School District, 2007 U.S. Dist. LEXIS 38177 (D. Kan. May 24, 2007), declined to find a waiver despite an inadequate privilege log, in the absence of any showing of bad faith and ordered a supplemental log.

The C.T. Court stressed, however, that every email string listed in the new privilege log must “list each e-mail within a strand as a separate entry. Otherwise, the client may suffer a waiver of the attorney-client privilege or work product protection (and the lawyer may later draw a claim from the client)’” (citation omitted).

Logging Email Does Not Preserve Privilege as to Attachments. The C.T. plaintiff’s privilege problems were not solved by the leniency of the Court in the decision described above. In its new privilege log, the plaintiff listed a series of emails but did not separately list the attachments. In a second opinion, the District Judge held that “any claim of privilege plaintiff might wish to raise as to those documents has been waived, and the attached documents, to the extent they are responsive to defendants' document requests, shall be produced. Plaintiff has had ample opportunity to list these attachments on ... the privilege logs....” C.T. v. Liberal School Dist. , 2008 U.S. Dist. LEXIS 5863 (D. Kan. Jan. 25, 2008).

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* Mr. Joseph, of Gregory P. Joseph Law Offices LLC in New York, is a fellow of the American College of Trial Lawyers and former Chair of the Litigation Section of the American Bar Association. He may be reached at gjoseph@josephnyc.com. © 2008 Gregory P. Joseph

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