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Manager’s notes on meeting with outside counsel, testimony that she “partnered with legal” did not waive attorney-client privilege

By Kathleen Kapusta, J.D.

A manager’s handwritten notes on an email that was introduced by a former employee as an exhibit in the manager’s deposition, and which related to the manager’s communication with outside counsel regarding the employee’s termination, did not operate to waive the company’s attorney-client privilege, a federal magistrate judge in Ohio ruled (Yarberry v Gregg Appliances, Inc, August 19, 2013, Bowman, S). Nor did the manager’s testimony, in which she asserted that she “partnered with legal counsel,” waive the privilege.

On the first day that the employee was promoted to sales manager at a new retail location, he left the store around 9 p.m. and returned six hours later. He disarmed the alarm, entered the store, walked to the manager’s office, and placed something inside the safe. He also sent a number of bizarre emails and text messages to coworkers, spun around rapidly in a chair while shining a light in the air, and wandered around the store. He left the store at approximately 6 a.m. and did not report for work that day. The same day, he was involuntarily committed to a psychiatric facility where he underwent treatment for bipolar disorder.

Termination. Terminated two days later, he sued for unlawful disability discrimination. During discovery, the employer produced an email from his manager to a coworker that appeared to be a working draft of the employee’s termination letter. The email also contained his manager’s handwritten notes relating to her communication with the company’s outside counsel. The employee introduced this email as an exhibit during the manager’s deposition in which the manager testified that outside counsel assisted her in drafting the termination letter. When questioned about her notes and the substance of her talks with counsel, the employer’s defense attorney objected and asserted attorney-client privilege.

Subpoenas. Contending that he was entitled to depose the employer’s outside counsel, the employee sent the employer a subpoena for that deposition as well as a subpoena requiring the defense counsel’s firm to produce its files regarding any advice given to the employer regarding the employee’s employment. The employee argued that the employer voluntarily disclosed its attorney’s advice when it produced the email with the manager’s handwritten notes during discovery, allowed it to be marked as an exhibit during her deposition, and permitted her to answer questions about it. He further argued that he should be allowed to depose the outside counsel because his advice to the manager could serve as a defense to punitive damages as it placed the decision to terminate on counsel rather than the employer.

Manager’s email. The manager’s notes written on the email stated: “advised 2 proceed w/term but HR will send revised verbiage” and “TT Stuart…proceed w/term.” The employer contended that the notes indicated only that she communicated with counsel regarding the employee’s termination and the outcome, in her words, of those communications; thus, there was no basis for treating the notes as a transcript of the actual conversation. The employee, citing In re Grand Jury Proceedings Oct. 12, 1995, argued that the manager revealed both the counsel’s conclusions with respect to his termination, and the facts the employer provided to him, including that he had been involuntarily committed to a psychiatric hospital. In that case, a medical laboratory had prepared a 24-point marketing plan with the advice of an attorney. The lab’s representatives revealed certain details about two points of the plan to government investigators. Although the government argued that, based on this disclosure, the lab waived attorney-client privilege for the entire marketing plan, the Sixth Circuit found it waived the privilege only to the extent that it had divulged to the investigators the “substance of the attorney’s advice.” The appeals court ultimately determined that the lab had partially waived its privilege to the two marketing plan points for which the substance of the attorney’s advice, i.e. the “subject matter,” had been divulged. The other twenty-two marketing points, about which the laboratory had not divulged the attorney’s advice, remained privileged.

Applying those standards here, the court observed that the manager’s notes did not reveal the substance of the outside counsel’s advice, any facts upon which he based his advice, or his reasoning behind his advice. Thus, they did not operate to waive the employer’s attorney-client privilege.

Manager’s testimony. The employee next contended that the manager’s testimony relating to her communications with the outside counsel waived the attorney client privilege. Further, by claiming she “partnered with legal counsel,” the employee argued that the manager would be using her communications with counsel as a sword, suggesting to a jury that her actions were somehow legally justified. Finally, the employee argued that counsel’s advice to terminate the employee constituted business advice rather than legal advice and thus was not protected by the attorney-client privilege.

Although he cited several cases in which a court found that communications between counsel and an employer relating to an employee’s termination were not privileged, in those cases legal counsel was directly involved in the termination decision. Here, the record indicated only that the outside attorney provided legal counsel to the manager. There was no evidence that he was involved in the decision to terminate the employee. To the contrary, the evidence reflected that that the manager made the termination decision. The court noted that if the employer raised an advice of counsel defense at trial, or if privileged information relating to the outside counsel’s legal advice was presented or otherwise disclosed at trial, the employee could revisit the waiver of privilege issue at that time. Accordingly, the court quashed the subpoenas.