Big Apple Computer, Inc. v. Anderson Corp.

I. Is the memo covered under attorney client privelege (ACP)?

Reasons behind ACP

Facts

Upjohn

Jones

re Grand Jury

ACP is designed to protect explicitly or reasonably implied confidential info.

"The essence of the privelege is the protection of what was expressly made confidential or should have been reasonably assumed...by the attorney as so intended." p. 1356

Elements of ACP

Facts

1. Lionel Hutz prepared a memo for Jack Larson

2. Lionel Hutz is an in-house attorney for Big Apple

3. Jack Larson is a vice president for Big Apple

4. The memo contained Mr. Hutz's legal opinion...

5. ...about Big Apple's responsibilities regarding the maintenance provisions of a contract.

Upjohn

The purpose of gathering the information was to secure legal advice (394)

Jones

i. ACP requires (1072):

a. The asserted holder of the privelege is or sought to become a client

b. The person to whom the communication was made is:

A member (or a subordinate of a member) of the bar of a court ANDIn connection with the communication is acting like a lawyer.

c. The communication relates to a fact of which the attorney was informed:

By his client AND Without the presence of strangers AND(For the purposes of eitheran opinion of the lawORlegal servicesOR assistance in some legal proceeding)AND Not for the purposes of committing a crime or tort.

d. The privilege has been claimed and not waived by the client.

re Grand Jury

ACP related to corporations

Facts

6. The memo had several copyees, including Mr. Lanley

7. Mr. Lanley was the only copyee who was not a company officer.

8. Mr. Lanley was the only sales representative on the Anderson account.

10. The memo was not marked as confidential.

18. It is general practice at Big Apple to mark a confidential page as confidential...

19. ...though sometimes confidential memos do not get marked as confidential.

20. Mr. Hutz does not remember why he did not mark the memo as confidential....

20a. ...though it was meant to be confidential.

Upjohn

Jones

re Grand Jury

II. Did Mr. Lanley have the authority to waive that privelege?

Waiver

Facts

11. Mr. Lanely voluntarily shared the memo with Ms. Simmons...

12. ...in order to secure a contract.

15. Mr. Lanley did not give the memo to Ms. Simmons.

17. The current litigation regards the lease, not the maintenence provisions.

Upjohn

Jones

iv. Even if the corporation did have ACP, they waived it...

...by publicizing portions of the legal opinions in brochures and other printed material

re Grand Jury

Authority to waive

Facts

7. Mr. Lanley was the only copyee who was not a company officer.

8. Mr. Lanley was the only sales representative on the Anderson account.

9. Mr. Lanley needed a manager's authorization before making any agreements with Anderson.

Upjohn

Jones

re Grand Jury

V. Relevant Cases

1. Upjohn Co. v. United States

Court

1981

U.S. Supreme Court

Binding

Facts

Independant Auditors discovered questionable payments

Auditors informed Upjohn's general counsel, Gerard Thomas

Mr. Thomas sent questionairre to managers to gather information about the payments

The questionairre was marked, "Highly confidential"

Managers were not to share the memo except in ways that furthered the investigation.

Upjohn voluntarily issued a report to the Securities and Exchange Commission

This report was forwarded to the IRS

The IRS is investigating the tax consequences of the questionable payments

As part of the investigation, the IRS requested the questionaires

Upjohn refused to share the questionnaires, citing ACP

Reasoning

The ACP is neccesary to ensure proper legal counsel is available

A corporation is considered to be an individual in this instance

Control Test view:

If a person is " in a position to control or even take a substantial part in a decision about any action which the corporation may take upon the advice of the attorney, ....then, in effect, he is the corporation when he makes his disclosure to the lawyer and the privilege would apply." p. 683 quoting another case.

Control Test accepted with amendment because other employees may need to be informed of the decision, and...

... attorneys must be able to predict with reasonable certainty whether the information will be privileged.

"An uncertain privilege, or one which purports to be certain but result sin widely varying applictions by the courts, is little better than no privelege at all."

The purpose of gathering the information was to secure legal advice (394)

The purpose was widely communicated and known. (395)

Communication is privelege; facts known are not (for the non attorney) (396)

Holding

ACP does apply

2. United States v. Jones

A. Court

1982

Court of Appeals; 4th Circuit

Binding

B. Facts

i. The grand jury is subpoening records related to criminal activity...

ii. ...selling a tax shelter scheme.

iv. The clients are asserting attorney-client privilege.

C. Reasoning

i. ACP requires (1072):

a. The asserted holder of the privelege is or sought to become a client

b. The person to whom the communication was made is:

A member (or a subordinate of a member) of the bar of a court ANDIn connection with the communication is acting like a lawyer.

c. The communication relates to a fact of which the attorney was informed:

d. The privilege has been claimed and not waived by the client.

ii. ACP waiver:

"Any disclosure inconsistant with maintaining the confidential nature of the attorney-client relationship waives the attorney client privilege." (1072)ANDWhen a client voluntarily discloses to a third party.AND When the party reveals part of that communication in court.

iii. The corporation did not hire the attorneys as legal counsel

Rather, they hired the attorneys to write legally related promotional materials

iv. Even if the corporation did have ACP, they waived it...

...by publicizing portions of the legal opinions in brochures and other printed material

D. Holding

ACP does not apply

3. In re Grand Jury Proceedings

Court

1984

Fourth Circuit Court of Appeals

Binding

Facts

The client contacted a number of people (including Margolin)...

...in order to put together a prospectus for a joint venture.

The prospectus was never published.

Margolin, the lawyer, was only retained for two weeks

Margolin was subpoenaed to testify for a grand jury re. the proposed joint venture.

Margolin waived ACP, but his clients have not (?) (1354)

Reasoning

ACP is designed to protect explicitly or reasonably implied confidential info.

"The essence of the privelege is the protection of what was expressly made confidential or should have been reasonably assumed...by the attorney as so intended." p. 1356

Waiver of ACP

"...so strong is this requirement of confidentiality that it has been held that the privilege may be lost 'even if the disclsure is inadvertent" such as in some circumstances "eavesdroppers," and again, where if the privileged communication consisted of 'priveleged documents," the party did not "take reasonable steps to insure and maintaing confidentiality." 1356

Failing to protect confidentiality can bear on intent (1356)

"And a statement or communication made by a client to his attorney with the intent and purpose that it be communicated to others is not privileged." (1356)

Limit of ACP (1355)

"...the privilege applies only when the person claiming the privilege had as a client consulted an attorney for the purpose of securing a legal opinion or services and not "for the purpose of committing a crime or tort and in conection with that consultation has communicated information which was intended to be kept confidential."

Client role; lawyer role; legal opinion

Confidentiality intended.

ACP was waived

"The disclosure of any significant part of the communication waives the privilege and requires the attorney to disclose the details underlying the data which was to be published." 1356The attorney was preparing documents for a prospectus that was to be published.

Holding

ACP does not apply

The reason why ACP does not apply was that it was not intended to be confidential.

4. Indep. Petrochem. Corp. v. Aetna Casualty & Surety Co.

Court

1986

D.C. District Court

Not Binding

Facts

Plaintiff is a chemical company

Defendants are insurance companies who sold plaintiff liability insurance.

Plaintiff contracted with Martin Bliss to help a customer (NEPACCO) (1350)

Bliss disposed of waste products by spraying it for dust reduction. (1350)

The waste products included dioxin. (1350)

Dioxin can cause physical injury, sometimes after a long latency period. (1351)

Lawsuits are pending against the plaintiff for physical injury.

The insurance policy stated that:

"the company shall have the right and duty to defende any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false, or fraudulent..." (1351)

The company is suing the insurance company to pay for defense.

In February 1986, the court granted a summary judgement against the defense for court costs.

The court asked for briefs regarding indemnification of settlements/judgements

In December 1985, Hartford filed a motion of dismissal for abuse of discovery.

Hartford is a defendant

Browne has information re. development of case

Whether pl. gave timely notice of risk to ins. cos.

Whether pl. disclosed info.

Browne is a district manager

Plaintiff asserted ACP

For transcript of telephone call between Brown and counsel

For memo between Browne and counsel

Reasoning

Control Group Test from Upjohn

I'm confused about whether Upjohn rejected the control group test. Maybe it was modified to allow lower employees privileged communication when recieving advice. Wasn't intent of confidentiality the rule asserted in Upjohn?

Browne did not represent the company

He did not have a controlling stake in the dioxin decisions

He was not talking to attorney to gain legal advice

He did not regard the communication as confidential

Holding

ACP does not apply

5. Hewlett-Packard Co. v. Bausch & Lomb Inc.

Court

1987

N.D. California District Court

Not Binding

Facts

Defendant HP showed document to nonparty GEC...

In order to notify GEC of a potential lawsuit...

That may affect GEC if it bought the Houston division

Holding

Reasoning

HP had a duty to disclose the letter to GEC.

Substantial steps were taken to ensure confidentiality

Balanced the interests of waiving v. not waiving.

There is reason to believe that the plaintiff will not be helped much by waiver

Union Carbide Test asserts joint defendant exception to waiver

The point of the waiver is to keep the defendant from giving evidence from one part unfairly

Explicit/implicit confidentiality test

Selected v. partial disclosures (311)

Partial disclosures are advantegeous/sheilding disclosures

Selected disclosures are for a limited audiences

Disclosures for the sake of business ventures

"Unless it serves some significant interest courts should not create procedural doctrine that restricts communication between buyers and sellers, erectsbarriers to business deals, and increases the risk that prospective buyers will not have access to important information that could play key roles in assessing the value of the business or product thay are considering buying." (311)

17. The current litigation regards the lease, not the maintenence provisions.

ACP was not waived

6. United States v. Chen

Court

1996

US Court of Appeals Ninth Circuit

Not Binding

Facts

The Chens gave customs and the IRS different numbers for the value of imports...

...And made 90 million in tax evasion

Jau Hwan, Mr. Chen's sister, prepared the fraudulent invoices.

The Chens reported to Customs that they undervalued their goods

This was to shield them from suspicion. Now the IRS and customs were both getting fraudulent information.

Jau Hwan quit and reported the scheme to Customs

Customs requested an updated statement, knowing that it would be false.

Customs stated that any reasonable professional would know from the numbers alone that this was a fraudulent scheme

Lawyers were subpoened by a grand jury

Defendant asserted ACP

Government countered with Jau Hwa's disclosure.

Was Hwa's disclosure enough to waive ACP?

Lawyers asserted that they did not know that this was a fraudulent scheme.

No one had authorized Jau Hwa to take documents and waive ACP

Reasoning

Importance of ACP

"The attorney-client privilege is essential to preservation of liberty against a powerful government. People need lawyers to guide them through thickets of complex government requirements, and, to get useful advice, they have to be able to talk to their lawyers candidly without featr that what they say to their iown lawyers will be transmitted to the government." (1499)"This valuable social service of counseling clients and bringing them into compliance with the law cannot be performed effectively if clients are scared to tell their lawyers what they are doing, for fear that their lawyers will be turned into government informants."(1500)

ACP requires that the lawyer be acting in the role of a lawyer (1501)

The power to waive ACP is limited to management (1503)

Holding

ACP was not waived

7. Alexander v FBI

Court

2000

D.C. District Court

Not Binding

Facts

The FBI improperly released documents to the White House

These documents held private information for hundreds of individuals

The plaintiffs are seeking evidence from communications between Norman Grumman employees and N.G. Counsel

N.G. Asserted ACP

The plaintiff stated that ACP was waived

Reasoning

Holding

IV. Facts of the case

1. Lionel Hutz prepared a memo for Jack Larson

2. Lionel Hutz is an in-house attorney for Big Apple

3. Jack Larson is a vice president for Big Apple

4. The memo contained Mr. Hutz's legal opinion...

5. ...about Big Apple's responsibilities regarding the maintenance provisions of a contract.

6. The memo had several copyees, including Mr. Lanley

7. Mr. Lanley was the only copyee who was not a company officer.

8. Mr. Lanley was the only sales representative on the Anderson account.

9. Mr. Lanley needed a manager's authorization before making any agreements with Anderson.

10. The memo was not marked as confidential.

11. Mr. Lanely voluntarily shared the memo with Ms. Simmons...

12. ...in order to secure a contract.

13. Ms. Simmons is an account representative with Anderson

14. Mr. Lanley and Ms. Simmons reached an agreement.

15. Mr. Lanley did not give the memo to Ms. Simmons.

16. No litigation between the parties was ongoing (or contemplated) at the time.

17. The current litigation regards the lease, not the maintenence provisions.

18. It is general practice at Big Apple to mark a confidential page as confidential...

19. ...though sometimes confidential memos do not get marked as confidential.

20. Mr. Hutz does not remember why he did not mark the memo as confidential....

20a. ...though it was meant to be confidential.

21. Ms. Naegle was a copyee of the memo and is a company officer

22. She has been asked about the memo...

23. ...and asserted attorney client privelege.

24. We are expecting a motion to compel her to testify re. the memo.

25. Can we be succesful in opposing the motion?

III. Form

1. 6-8 pages

2. Question Presented

3. Brief Answer

4. Statement of Facts

5. Analysis/Discussion