WELA ALERT:  WASHINGTON SUPREME COURT

Attorney-Client Privilege Does Not Extend to Communications between Corporation and Former Employee

The plaintiff suffered a brain injury during a high school football game. He filed a lawsuit against the school district three years later. School district counsel interviewed several former coaches and appeared on behalf of the coaches at their depositions. Plaintiff’s counsel moved to disqualify counsel based on conflict of interest. The Superior Court denied that motion but required the former coaches to have separate counsel. Plaintiff’s counsel then sought the communications between the school’s attorney and the former coaches. The school moved for a protective order based on attorney-client privilege, which the court denied. Discovery was stayed pending appeal.

On direct review, the Supreme Court affirmed the Superior Court, 5-4. Justice Stephens held that the attorney-client privilege does not shield communications between corporate counsel and former employees. The majority emphasized the narrowness of the privilege. The majority noted that Washington courts generally look to the factors in Upjohn Co. v. U.S., 449 U.S. 383 (1981) for guidance for whether the privilege should extend to a particular non-managerial employee. But the majority held that former employees are categorically different and the Upjohn factors don’t apply.

The majority reasoned that when the employment relationship ends the former employee can no longer bind the corporation and the employee’s duty of loyalty ends as well. An employer can’t force a former employee to disclose information. It held that a former employee is no different from any other third-party fact witness who may be freely interviewed by either party. Even though former employees may have information about the matters in litigation and may have done things while employees that could expose the corporation to liability, that does not justify extension of the attorney-client privilege to them. A bright line rule was appropriate here.

The majority agreed with the Superior Court that the attorney-client privilege did protect communications between the corporate counsel and the former employees during the depositions. The plaintiff did not appeal the order denying disqualification and did not appeal the Superior Court’s ruling regarding the communications during the depositions.

In dissent, Justice Wiggins would have applied the Upjohn factors to corporate communications with former employees. He admitted that Upjohn involved current employees, but concluded former employees have the same information of use to the corporation as current ones. The dissent would have protected communications with former employees that relate to the former employee’s conduct or knowledge, or communications with defendant’s counsel, during the employee’s employment.

The dissent argued that lower-level former employees still have the capacity to bind the corporation legally (which is not true under the WA Rules of Evidence). The dissent recognized its endorsement of the attorney-client privilege to former employees was contrary to the Restatement (Third) of the Law Governing Lawyers. The dissent would have reversed the Superior Court except as to the communications during depositions.

Blythe Chandler and Jeff Needle submitted a WELA amicus brief supporting the majority’s analysis.

Newman v. Highland School Dist. No. 203, — Wn.2d —, 381 P.3d 1188 (10/20/16).