United States: Washington Supreme Court Creates Bright-Line Rule

Peter Jarvis and Calon Russell are partners in Holland & Knight's Portland office and Marissa E. Buck is an Associate in our Los Angeles office.

HIGHLIGHTS:

  • The Washington Supreme Court held that attorney-client privilege does not apply to communications between corporate counsel and former corporate employees, even if the communications concern what the employees said or did when they were employed by the company.
  • In Newman v. Highland School District No. 203, the five-justice majority indicated its support for the flexible approach to the application of the attorney-client privilege in the corporate context as laid out in the seminal U.S. Supreme Court case Upjohn Co. v. United States. However, the majority declined to extend the privilege to postemployment communications with former employees.

The Washington Supreme Court held in a 5-4 vote that attorney-client privilege does not apply to communications between corporate counsel and former corporate employees, even if the communications concern what the employees said or did when they were employed by the company.

Summary of the Decision

Newman v. Highland School District No. 203, 2016 WL 6126472 (2016) was an action for damages by Matthew Newman, a high school student who suffered a permanent brain injury playing in a high school football game. A key component of the case concerned whether and to what extent the coaches at Newman's school were aware of an alleged injury to Newman during a practice held prior to the game. Counsel for defendant Highland School District interviewed not only the coaches who were still employed at Newman's school but also the coaches who had since left the school. The question before the Washington Supreme Court was whether Highland's counsel could assert attorney-client privilege on behalf of Highland for communications between counsel and the former coaches.

The five-justice majority took what is, on a national basis, a minority position. It held that attorney-client privilege did not apply to communications between Highland's counsel and individuals who were former coaches at the time of those communications, even though any communications that Highland's counsel may have had while those coaches were still employees would remain subject to attorney-client privilege.

While the majority indicated its support for the flexible approach to the application of the attorney-client privilege in the corporate context as laid out in the seminal U.S. Supreme Court case Upjohn Co. v. United States, 449 U.S. 383 (1981), the majority held that "the privilege does not broadly shield counsel's postemployment communications with former employees." Newman, supra, at *1. The majority concluded that Upjohn does not justify making attorney-client privilege available for communications after the employment relationship had ended because the facts of that case involved attorney-client communications that took place during the employment relationship. The majority added that it did not see sufficient justification for extending the privilege to postemployment communications, even though counsel for an employer might need to know what the former employees knew and did when they were still employees. In short, the majority concluded that for attorney-client privilege purposes, a former employee should not be treated any differently than any other third-party fact witness to a lawsuit. Id. at *4.

The majority also stated that while an important purpose of the attorney-client privilege is to foster full and frank communications between counsel and the corporation, former employees do not serve this purpose to the same extent as current employees, and former employees are also more likely to have interests that may diverge from those of their former employer. As the majority put it, "everything changes when employment ends." Id. The majority noted, however, that a different result might apply if someone who was a former employee could nonetheless be said to be a current agent of the employer.

Due to the particular posture of this case on interlocutory appeal, the majority did not need to consider whether individual former coaches could assert their own attorney-client privilege during a period in which they were represented by Highland's counsel or whether defense counsel's representation of both Highland and individual coaches for a time might have created any conflicts of interest. The majority also was not asked to consider whether work product privilege might apply to the communications with former employees who were not subject to attorney-client privilege.

The Dissent

The four-justice dissent disagreed with the majority's adoption of a bright-line rule that severed the attorney-client relationship at the termination of employment. The dissent argued that such a rule is "at odds with the functional analysis underlying the decision in Upjohn and ignores important purposes and goals that the attorney-client privilege serves." Id. at *6. The dissent would have allowed attorney-client privilege for "postemployment communications consisting of a factual inquiry into the former employee's conduct and knowledge during his or her employment, made in furtherance of the corporation's legal services." Id.

The dissent also noted that Chief Justice Warren Burger had stated in his concurrence to Upjohn that attorney-client privilege should be available for communications with former employees and that the U.S. Court of Appeals for the Ninth Circuit had so held as a matter of federal law. Id. at **7-8.

Possible Implications

Newman v. Highland School District No. 203 appears to diverge sharply from most, if not all, post-Upjohn cases that have reached this issue. It therefore seems unlikely that this state court decision will lead to a reversal of federal court decisions that have held that attorney-client privilege is available to communications with former employees as a matter of federal law. It is also difficult to predict, however, whether or to what extent other states may join the Washington court's position.

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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