# Diversified Industries, Inc. v. The Honorable James H. Meredith, Chief Judge of the United States District Court for the Eastern District of Missouri

> Court of Appeals for the Eighth Circuit · February 5, 1978 · 572 F.2d 596

URL: https://www.frixlaw.com/law-library/cases/9464641

## Case

- **Full name:** DIVERSIFIED INDUSTRIES, INC., Petitioner, v. the Honorable James H. MEREDITH, Chief Judge of the United States District Court for the Eastern District of Missouri, Respondent
- **Court:** Court of Appeals for the Eighth Circuit
- **Decided:** February 5, 1978
- **Citations:** 572 F.2d 596; 23 Fed. R. Serv. 2d 1473; 1978 U.S. App. LEXIS 13239
- **Precedential status:** Published
- **Opinion:** Concurring in part by Gibson
- **Judges:** Henley, Gibson, Bright, Lay, Heaney
- **Cited by:** 360 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9464641

## How later opinions describe it (automated extraction)

- holding that employee interviews conducted by outside firm relating to claim that corporation had a “slush” fund used to bribe purchasing agents were confidential communications and were protected by attorney- client privilege: while interviews could have been conducted by lay…
- finding that Diversified’s disclosure of documents in a nonpublic SEC investigation did not constitute a full waiver of the privilege because, holding otherwise, "may have the effect of thwarting the developing procedure of corporation to employ independent outside counsel to …
- explaining that, for a communication to an attorney to be privileged, “the attorney must have been engaged or consulted by the client for the purpose of obtaining legal services or advice services or advice that a lawyer may perform or give in his capacity as a lawyer, not in …
- holding that for policy reasons communications between a corporation and outside legal counsel for the purpose of corporate housecleaning retained attorney-client privilege despite disclosure to the SEC
- holding that voluntary disclosure of information to the SEC resulted only in a limited waiver and that the information remained privileged in subsequent private litigation

## Opinion text

GIBSON, Chief Judge,
concurring in part and dissenting in part.
The majority opinion describes the controversy that exists as to what communications, by which corporate agents, are protected by the attorney-client privilege. I am pleased to concur in Judge Heaney’s analysis and in the granting of the writ insofar as it relates to the reports from Wilmer, Cutler in December 1975. I also agree that the June report is unprotected.
The separate problems involved in holding corporate minutes to be protected have received little attention in reported decisions. See generally, Burnham, The Attorney-Client Privilege in the Corporate Arena, 24 Bus.Law. 901 (1969). In the present case the briefs of the parties do not address discoverability of the minutes as a separate issue. After carefully considering the nature of corporate minutes and the policies justifying the attorney-client privilege, I have concluded that I must dissent from the granting of the writ to protect the minutes of Diversified.
This privilege, as with all privileges, should be confined to the narrowest limits compatible with the purpose of and the justification for the privilege. The corporate minutes in this case are not communications to the law firm. They can be considered privileged only as memorializations of the report which contained protected material. However, corporations are required to keep minutes by statute. See, e. g. § 351.215 Mo.Rev.Stat.1969. Minutes are available for inspection by shareholders under penalty of monetary sanctions. See, e. g., § 351.215 Mo.Rev.Stat.1969; State ex rel. Aimonette v. C. & R. Heating & Service Co., 475 S.W.2d 409 (Mo.App.1971). This shareholder right is occasionally limited; for example, Alabama restricts the right to examination “for any proper purpose.” Garner v. Wolfinbarger, 430 F.2d 1093 , 1104 n.21 (5th Cir. 1970), cert. denied, 401 U.S. 974 , 91 S.Ct. 1191 , 28 L.Ed.2d 323 (1971). Surely few would question the propriety of a shareholder’s investigating whether the corporation or its agents have engaged in unlawful conduct. Therefore I conclude that if the plaintiff in this action were a shareholder of Diversified, he would be entitled to discover the minutes. See 5 W. Fletcher, Cyclopedia of Private Corporations § 2240 (rev. 1976).
If confidentiality of these communications is to be maintained, there are procedures available for doing so without disclosing them on the corporate minutes. Because corporate minutes are open to shareholder inspection, in my view publication therein of parts of the December report constituted a waiver of the privilege. Continued confidentiality is a predicate for operation of the privilege. That predicate is missing in this case.
At least one commentator has criticized Garner, supra, because the rationale of that case emphasized the identity of the opposing party in determining the extent of the privilege. He stated:
Since the availability of the privilege primarily turns on the nature and attributes of the adversary party, the corporation is deprived of any advance certainty that the communication will later be protected. Without the predictive certainty needed to induce disclosure by the client, *617 the privilege is effectively vitiated; none of the benefits flowing from disclosure will be realized, and counsel will be made less effective.
Note, The Attorney-Client Privilege and the Corporation in Shareholder Litigation, 50 So.Cal.L.Rev. 303, 322 (1977). This limitation on the practical utility of the privilege when applied to corporate minutes strengthens my conviction that the corporate minutes in this case are not privileged.
I do not mean that third parties have discovery rights identical with stockholders. It might be appropriate to require disclosure of other records or information to stockholders that would be privileged vis-a-vis third parties. However, in light of the statutory requirement that minutes be kept and the common law and statutory right of shareholder examination, I feel the minutes cannot be considered privileged.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9464641. Public record. Not legal advice.