Communications by Corporate Counsel with Former Employees Are NOT Privileged: Washington Takes a Minority View
Seann Colgan | March 31, 2017
The Washington Supreme Court recently weighed-in on an issue that is of particular importance to in-house counsel conducting internal corporate investigations that may include interviews of former employees or defending depositions of former employees, namely:
Are postemployment communications between corporate counsel and former employees protected by attorney-client privilege?
In Newman v. Highland School District No. 203, Case No. 90194-5 (October 20, 2016), the Washington Supreme Court answered that question with a resounding NO. The court reasoned that the underlying purpose of attorney-client privilege is “to foster full and frank communications between counsel and the client (i.e., the corporation), not its former employees,” and that refusing to extend the privilege beyond the employee-employer relationship “preserves a predictable legal framework.”
The decision of the Court was rendered by a 5-4 majority. A vigorous dissent argued that “postemployment communications consisting of factual inquiry into the former employee’s conduct and knowledge during his or her employment, made in furtherance of the corporation’s legal services,” should be privileged.
The dissenting opinion is in line with the trend of federal court decision to consider this issue. The concurring opinion of Justice Burger in Upjohn Co. v. United States, 449 U.S. 383, 402–03 (1981) – the leading U.S. Supreme Court case addressing corporate attorney-client privilege – asserted as follows: “Because of the great importance of the issue, in my view the Court should make clear now that, as a general rule, a communication is privileged at least when, as here, an employee or former employee speaks at the direction of the management with an attorney regarding conduct or proposed conduct within the scope of employment.”
A number of lower federal court decisions have likewise held that such communications are privileged, at least under certain circumstances. E.g., In re Allen, 106 F.3d 582, 606 (4th Cir. 1997); In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litig., 658 F.2d 1355, 1361, n.7 (9th Cir. 1981); Peralta v. Cendant Corp., 190 F.R.D. 38, 41 (D. Conn. 1999). The majority opinion of the Washington Supreme Court, however (which, of course, was applying state, not federal, law), found these decisions unpersuasive.
Key Takeaways: Communications with Former Employees
Following Newman, corporate counsel must assume that any postemployment communications they have with former employees are not privileged. For example:
- Communications with a former employee during the course of an internal investigation concerning the former employee’s knowledge and actions during the period of his/her employment are not privileged. This was the exact situation in Newman, which involved communications in the course of interviews of former employees conducted by counsel for the defendant school district.
- Communications with former employees made in the course of preparing them for deposition are not privileged. This issue was not before the court. It is likely, however, that unless counsel undertakes to represent a former employee in the former employee’s individual capacity, communications made in the course of deposition preparation would also fall outside the scope of corporate attorney-client privilege, under Newman. (Note also, however, that individual representation of a former employee by corporate counsel may give rise to a conflict of interest, and thus may not be an option in a particular case.)
- Communications with former employees during a deposition are also not privileged. This may be the least intuitive takeaway, as attorneys who commonly defend depositions are used to providing advice to deponents during breaks in the action. In fact, however, even courts that extend attorney-client privilege to former employees hold that such communications are not privileged. E.g., Peralta, 190 F.R.D. at 41 (holding that predeposition communications with former employee were privileged, but discussions during a break in the deposition between counsel and former employee as to how a question should be handled, were not).
Best Practices for Communications with Former Employees in Washington
After Newman, corporate counsel cannot be too careful when communicating with former employees. Suggested guidelines for such communications are as follows:
- Advise the former employee at the outset of communications that you represent the corporation, and that he/she may wish to retain independent counsel, exactly as you would in interviewing a current employee. (Such communications are sometimes referred to as “Upjohn warnings.”)
- Confirm dates of the former employee’s employment. Newman did not change the rule that communications between corporate counsel and employees during the period of employment do not lose their privileged character after employment ends. Accordingly, advise the former employee that such communications are protected by privilege, and should not be disclosed.
- Do not discuss anything concerning pending or potential litigation with the former employee that you do not want revealed to the other side. In particular, do not discuss litigation strategy or facts learned from other witnesses, and do not share work product. While the work product doctrine might apply to some such communications even if the attorney-client privilege does not, the holding in Newman counsels a prudent approach.
- If you are preparing a former employee for deposition, limit your preparation instruction to explaining the deposition process and other information that you are willing to disclose to the other side.
- During a deposition of a former employee, avoid discussing anything that you do not want the former employee to immediately disclose under questioning from opposing counsel. This is that unusual situation in which, following a break, opposing counsel may obtain an answer to the question, ‘So, tell me what you two talked about over lunch.’
As the Washington Supreme Court stated in Newman, “everything changes when employment ends.” Counsel who may take for granted some extension of the attorney-client privilege to include communications with former employees in other jurisdictions have thus been put on notice: in Washington, no such privilege applies.