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PAULA SCHAEFER, ASSOCIATE PROFESSOR, UNIVERSITY OF TENNESSEE COLLEGE OF LAW --
Massive. The word almost seems inadequate. Maybe colossal or astronomical would be better. Anyway, “a lot” of data has been gathered, breached, lost and leaked in recent months at a rate, it’s safe to say, surpassing any other time in our history. The unintended consequences are many, ranging from violations of privacy to loss of trade secrets to loss of life if a government intelligence agency’s clandestine operations are revealed.
In the legal world, the consequences could be the compromise of information protected by attorney-client privilege, which, in turn, can cause a ripple of other consequences. It could even mean winning or losing a multi-million-dollar case.
No matter how you slice it, the unauthorized release of company information is bad news for a company or any party in litigation, “but that does not tell us whether the privilege is waived for purposes of litigation,” Paula Schaefer, Associate Professor at the University of Tennessee College of Law in Knoxville, told The Advisory.
“The waiver issue arises when the company is later involved in litigation AND opposing counsel tries to use a disclosed document (e.g., attaches it to a motion, pulls it out in a deposition, etc.), Professor Schaefer said. “At that point, the company would need to seek a ruling from the court that privilege has not been waived even though the document had been disclosed to the public at some point in the past by someone without authority to do so.”
Formerly a litigator at both Shook, Hardy & Bacon and Bryan Cave, Schaefer said resolution of the issue could turn on whether the company establishes that the disclosure was “truly unauthorized” and that the company took “reasonable precautions” to prevent disclosure. “The biggest strike against the company in such a case would be that the documents were disclosed. For this reason, some judges may conclude the precautions taken to prevent disclosure were not reasonable so the privilege is waived. But other judges might look at the same facts and find the disclosure happened despite the company’s reasonable efforts and thus conclude that privilege is not waived.”
“I think it is difficult for a company to know with any degree of certainty whether a court would find privilege waived,” she said.
Wal-Mart v. Dukes
Professor Schaefer directed us to the March 2013 decision in Wal-Mart v. Dukes, 2013 U.S. Dist. LEXIS 42740, written by U.S. Magistrate Judge Jacqueline Scott Corley from the Northern District of California (pictured at left). In this highly publicized, high-stakes case, female employees sued Wal-Mart for discrimination. The women maintained they were paid and promoted less than their male counterparts. A memo written by Wal-Mart’s attorneys at Akin Gump in 1995 discussing the very crux of the case was leaked to The New York Times®. The paper relied on the memo for an article in 2010. Wal-Mart commented publicly on the document. A copy also was leaked to an attorney representing the employees. Seeing it was clearly marked as confidential, the plaintiffs’ attorney said he did not allow himself to read it and had the document locked up. Based on those two factors―and the “long-standing” authority that a leak to a third-party dissolves attorney-client privilege―the employees’ attorneys said the document was no longer protected. Akin Gump disagreed.
While The New York Times did not publish the memo, the newspaper did report several findings from the memo about compensation and promotional disparities between men and women at Wal-Mart. Attorneys for the employees argued that the mere fact of the disclosures proved that the retail giant did not safeguard the document like the “crown jewels.”
Given the disclosures were “unauthorized and involuntary,” Judge Corley determined, privilege was not waived. Wal-Mart submitted evidence under penalty of perjury that it took “extensive” measures to protect the document, she wrote. “Indeed,” Judge Corley held, “when [the plaintiff attorney] found the Memo on his desk, he did not read past the top of the first page because the Memo was so distinctively marked as confidential and attorney-client privileged.”
As for the plaintiffs’ argument that privilege was lost due to the third-party leak, the judge said that rule governs situations where a communication is leaked after privilege comes into existence―not when unauthorized disclosure by an unknown party discloses the information to a third party.
Plaintiffs also argued that Wal-Mart’s decision to comment on “the substance and merits of the Memo in The New York Times” waived privilege. Once the “proverbial cat is out of the bag,” they said, protection is gone.
Not moved by the feline liberation metaphor, Judge Corley said that while Wal-Mart did reveal a limited piece of the memo in its public comments, that was not enough to waive privilege. The judge wrote that “fairness must be the touchstone” in determining whether Wal-Mart's disclosure of certain findings in the memo compels the disclosure of the whole thing. Plaintiffs argued that it would be “manifestly unfair” to allow Wal-Mart to selectively disclose portions of the memo it believed were beneficial to its position but protect the rest.
Again, the judge was not moved. Wal-Mart did not attempt to use any portions of the memo in litigation, she said. Quoting from a decision in the famous murder trial of Claus von Bulow, Judge Corley held that as long as the initial disclosures “are and remain extrajudicial, there is no legal prejudice that warrants a broad court-imposed subject matter waiver.”
As Professor Schaefer indicated, unauthorized release of information is no slam dunk when it comes to the survival or demise of attorney-client privilege.
Disclaimer: The views and opinions expressed in this article are those of the individual sources referenced and do not reflect the views, opinions or policies of the organizations the sources represent.