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The Broad Shield of Attorney-Client Privilege for Corporate Employees (PA)

June 26, 2019

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On June 20, 2019, the Superior Court of Pennsylvania granted an interlocutory appeal filed by Republic Services Inc. and recognized the corporation’s privilege over communications solicited from its non-managerial employees by corporate counsel in preparation for trial.  The decision also protected work product created by corporate counsel related to such communications.  The case is titled<em> <a href="https://www.wcmlaw.com/wp-content/uploads/2019/06/Newsuan-v.-Republic-Services-et-al.-1.pdf">Newsuan v. Republic-Services et al.</a></em> and will have sweeping implications in how corporations defend future cases in Pennsylvania.

On August 17, 2015, Newsuan was working for Republic Services as a recycling center facility sorter when a front-end loader crushed her leg.  Newsuan then filed suit against the owners, supervisors and operators of the facility.  During discovery, Newsuan’s attorney requested all contact information and any documented statements from 16 employees who were working at the recycling facility on the date of the accident.  Counsel for Republic Services balked at this request claiming the contact information was privileged or irrelevant.

Newsuan moved to compel, and in opposition, Republic argued that all of the employees who were working the night of the accident had agreed to be represented by him.  Thus, Republic Services’ representation of these employees precluded Newsuan from accessing any of them <em>ex parte</em> and also invoked attorney client privilege with respect to communications made during his interviews with each employee.
<p style="text-align: justify;">The trial court initially denied the validity of an attorney-client relationship between corporate counsel and the employees.  In reaching this decision, the Court indicated corporate counsel had improperly telephoned the witnesses and offered legal services in violation of Pennsylvania Rule of Professional Conduct 7.3.  Additionally, corporate counsel failed to explain the potential conflict between his representation of Republic Services and each employee in violation of PA Rule of Professional Conduct 1.7.  Therefore, the trial deemed corporate counsel’s actions as an unfair discovery tactic and allowed Newsuan to obtain statements from the witnesses.</p>
<p style="text-align: justify;">We reported on the trial court's decision <a href="https://www.wcmlaw.com/2018/09/attorney-client-privilege-under-siege-in-philadelphia/">last September</a>, and predicted that an interlocutory appeal might follow.  And in fact, Republic did appeal.</p>
<p style="text-align: justify;">On appeal, the Court found that Republic Services did possess privilege “over the communications supplied at the behest of corporate counsel to assist him in advising Republic Services in the present litigation.”  The Superior Court indicated that corporate attorneys need to cultivate facts from lower level employees within a company when a corporation is faced with a legal problem.  In <em>Upjohn Co. v. U.S.</em>, 449 U.S. 383 (1981), the Court deemed that the attorney client privilege applied to communications made by a corporation’s lower level employees to corporate counsel for specifically this purpose.</p>
<p style="text-align: justify;">Here, corporate counsel for Republic Services obtained statements from the lower level employees for the singular purpose of providing legal advice to Republic Services.  The Court noted there was no indication that any employee sought legal consultation or needed legal advice during any of these interviews.  Furthermore, corporate counsel disclosed the purpose of the interview and that corporate counsel would represent each employee during the litigation.</p>
<p style="text-align: justify;">Surprisingly, the Court deemed the attorney-client relationship between corporate counsel and the witnesses invalid because corporate counsel had never disclosed the potential conflict of interest.  Nevertheless, the  corporate counsel’s agreement to keep conversations with each employee confidential satisfied the confidentiality requirement expressed in <em>UpJohn</em>.</p>
<p style="text-align: justify;">Unfortunately for Republic, the Court expressed that the privilege does not protect underlying facts, in part due to the failure of counsel to disclose the conflict of interest, and therefore allowed Newsuan to seek <em>ex parte </em>interviews with each employee regarding their factual observations of the incident and seek further discovery through depositions and interrogatories.</p>
<p style="text-align: justify;">Overall, the Court's ruling does extend the protections of attorney-client privilege to discussions between corporate counsel and individual employees, if 1) those discussions were held for the singular purpose of providing legal advice to the company, and 2) the corporate attorney discloses the potential conflict of interest to that employee.  The latter should be placed in writing, in the form of a conflict waiver.</p>
<p style="text-align: justify;">Thanks to Garrett Gittler for his contribution to this post.  Please email <a href="mailto:BGibbons@wcmlaw.com">Brian Gibbons</a> with any questions.</p>

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