United States: Are Antitrust Compliance Programs Protected By Attorney-Client Privilege?

Last Updated: January 14 2015
Article by Melissa R. Ginsberg and Deirdre A. McEvoy

We've previously written about the components of effective antitrust compliance programs and the potential benefits corporations may achieve by adopting them. (Read some of our posts here and here.) In drafting compliance programs, however, corporations should be aware that the attorney-client privilege may not protect a compliance policy from disclosure in litigation.

This fall, in the In re Domestic Drywall Antitrust Litigation (MDL No. 2437), Judge Baylson (E.D. Pa.) ordered CertainTeed Gypsum, Inc., a defendant in an action alleging a conspiracy to fix prices of drywall in the U.S., to produce a copy of its antitrust compliance policy.

CertainTeed argued that its compliance program was privileged because it (1) was a communication, (2) between privileged persons, that (3) was maintained in confidence, and (4) was for the purpose of providing legal advice. CertainTeed also noted the policy benefits of applying the attorney-client privilege to encourage communications between attorneys and their clients that promote compliance with the law.

Despite these arguments, the court determined that the antitrust compliance policy was not privileged. First, the court found that the attorney-client privilege is "limited to legal advice leading to a decision by the client." CertainTeed's policy, however, was "general and [did] not contain any specific advice." The court explained that CertainTeed's compliance policy was "more akin to a reference or instructional guide" and was "primarily a business policy."

Second, the court rejected CertainTeed's argument that it maintained the policy in confidence because it "distributed the policy to more than 120 employees," made the policy available on an internal internet site, and did not label the document as confidential or privileged.

The policy implications of this decision are notable: corporations (and their attorneys) may be less comfortable providing antitrust guidance to employees when there is the possibility that compliance policies will be disclosed in future litigation. The risk that an antitrust compliance policy may be subject to disclosure is not, on its own, a reason to avoid developing and implementing one. As we've previously discussed, antitrust compliance programs have many benefits, including the increased ability to prevent criminal conduct and, if such conduct does occur, to assist the corporation in detecting such conduct early and implement appropriate remedial steps. Nonetheless, while drafting policies, corporations should keep in mind that they may be subject to disclosure and carefully consider several strategic decisions:

  • How detailed should the policy be? We've previously explained that effective antitrust compliance programs should be tailored specifically to the corporation, and should account for the nature of a company's business and the markets in which it operates. Tailored, practical programs are more effective. Specific guidance relevant to the corporation's business may also be helpful in establishing that the policy is a communication designed to provide concrete legal advice, rather than a general primer on antitrust law. While courts may be more likely to recognize tailored compliance programs as privileged, however, some corporations may determine that the risk of forced disclosure of a compliance program counsels them to avoid including specific advice that would otherwise be privileged.
  • Who should the policy be distributed to within the company? Compliance programs can't be effective unless employees know they exist and are able to easily access them. For that reason, it is important to distribute and provide training to employees about a corporation's antitrust compliance policies. Company-wide disclosure, however, may increase the likelihood that a court determines the policy is not privileged. For example, Judge Baylson found that CertainTeed did not maintain its policy in confidence because, among other reasons, it was distributed to more than 120 employees and made available on an internal website.
  • Whether to label the document as confidential or privileged? Placing a "confidential" or "privileged" legend on a document will not protect from disclosure a document that is not otherwise privileged. Nonetheless, the absence of such a legend may be one factor that a court considers in evaluating whether the corporation considered the document to be privileged.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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