Amicus Curiae Brief — Bernard M. Decker, United States District Judge v. Harper & Row Publishers, Inc.

Supreme Court brief1971

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| Sao C iHa Ste

Ix THE

OcroBER Ter M, 1970

No. ais

. .Honorasute Bernarv M. Decker,

Unrrep, ‘STATES Distri¢gt JUDGE, et al.,

. Petitioners,

; ©

Harper? & Row Pu BLISHERS, Inc., ‘et al.,

"Respondents.

ee WrIit-or CERTIORARI TO THE UNITED Srares .

-, Court OF App ALS FOR. THE SEvENTH CIRCUIT .

MOTION OF THE _ AMERICAN BAR ASSOCIATION -

FOR LEAVE.TO FILE A-BRIEF AS AMICUS |

CURIAE IN SUPPORT | OF RESPONDENTS |

The American Bar Association respectfully. moves under —

a paragraph 3 of Rule 42 of the Supreme Court Rules for

leave to file.a brief as amicus curiae in support of the ‘posi- a

tion of respondents i in this cause. The written consent of alf

respondents has been obtained. The consent of attorneys

for petitioners has been requested but has been denied.

An authoritative delineation of the scape of the attorney-

client. privilege available to corporate: clients will be an

_ everit of great impact on the administration of fastice and

the legal profession. The great bulk*ot business activity in.

: sthis country. is carried on: throngh cor porte enterpri isess

. The poliey formulated by thé Court will significantly affect

the futpre. representations of corporations and ‘the. indi-

viduals: who ‘are employees of those corporations.

‘The American Bar Association believes that the “control.

greup test” adopted by the trial court; and espoused oy

petitionerss would effectively deprive corporations of the °

attorney-client privilege ‘and delefer iously affect the legal

representation of.corperations and individuals in ‘their em- .

- ploy. It submits that. ‘the test formulated by the bourt of

appeals fairly. balances the need for the uninhibited com-

‘munication with counsel with the need: for freedom of dis-

covery in litigation. a

‘The Coart’s action in this cause will sig enificantly affect

the entire spectra of corporate attorney-client relation-

ships. Petitioners and respondents must. neeessarily focus

on the natrow aspect of ‘ the. privilege concerniny them is

directly. Thus the American Bar Association has reason

' to believe that the’ parties will: not adequately present the

- questions’ raised by the impact of the privilege in ‘areas

beyond the very ‘limited -aspect involved in. this cause.. The

Bar wishes to present.the policy considerafons it believes: .

crucial to a proper delineation of the privilege, ‘Particu-

larly those relating to its, impact on the Fifth Amendment |

rights of indixidual corporate employees and those relating —

to the -bar’s efficagy im secur ing voluntar y observanee of the

a we Keegan SSR ees warn .

The significance of this cause to the administration of.

_juistice and the bar’ is such that: it. is. afspropriate for the’

Court: to hear. argument from the American. Bar . Asso-

ciation, Pag i, pias :

2 eee ° * ee

es ee

Pays. | < one

} W HEREFORE. iin Ameri ican a Association prays

that this motion ‘be granted. 9

2 | a Rie teat ts Ss ss _ Respectfully submitted, |

ek : a “ a |

eis Ae * Davi JT. SEARLS

Harry\\ deans “=

Vinson, Evxrns, SraREs j

& ConnaLny. | =

Wi . . ° 2100 First City National

ts } " ’.. Bank Building |

“Houston, Texas 77002. - B.

Attorneys for Amicus Chriae,

American Bar Association °

a ofet

“Ray D. ae

310 South Michigan Avenue. > «

, Illinois 60604 te

: Chicag of area Son

f Chairman, Section. of Carpahition, =e

‘Banking and Basiabss Law -

> American Bar: Association

Joun C. Banter ” AS,

195 South Sierra Street

Reno, Nevada,89501 ;

_ Member, Board of Governors’. ~ -

American Bar Association

=_<

‘Ix Tif |

Saye nt le Ht Ste

7 Ocroser Teno, 1970

No. 113

Howonaste Benwanp M. Decker,

Unstirep States District Juvoe, et al.,. -

| Petitioners,

Harper & Row Pv BLISHERS, Ixc., et al.,

Respondents.

* 4

/ On Wait or CerTionaRiI TO THE Usene STATES

Count OP APPEALS Yor THE Sevestu’Cincorr

BRIEF OF THE AMERICAN BAR ASSOCIATION

AS AMICUS CURIAE | a

a a

Daviw T. Sears

Harry M. Reasoner

- Vixsox, Evxis, Searrs &

ConNALLy ~

2100 First City Matton

: Bank Bldg. A

L: Houston, Texas 77002

Of Counsel: Attorneys fot Amicus’Curiae,

| Ray D. Hewson American Bar Association

310 S. Michigan Avenue r

Chicago, Illinois 60604

Chairman, Section of Corporation,. ,

Banking and Tlusiness Law

American Bar Association

-, Jouw C. Bantierr

195 S. Sierra Street

Reno, Nevada 89501

Member, Board of Governors 4

American Bar, Association th Pe

‘

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INDEX

Pace

Opinions Below and Jurisdiction. ........ Tae a, Hise wossenceonseonserese 1

Question SINNER - ocictbcncsdsnatectompeonses POON. PR OED ak ETO oe

ene OO Cane tet 8

Interest of Amicus ee seoonsoesonsnscessonsenssozesoee 2

i Argument Even EEE ARE EERIE Se EOE Rod mS 2

(1) The court of appeals’ formulation hen the privilege isa -

balaneed ANd FAIT OME ..........-.oerereernedvoernesensversessssernssenesrserssers 2

42) The court faces the question whether it is in the interest.

of the administration of justice to mie corporations of |

the attorney-client privilege .....2......-cccccecessssessseneessesesseseencees 4

( 3) The attorney-client whens serves “the —_ e valuable

(4) The corporate attorney-client privilege j is an aid to achiev-

° ing voluntary-compliance with the law, by corporations .... 8

- (5) Recognition of the corporate attorney-client ie is

essential to protect the individual corporate eyployee’s ;

fifth amendment privilege against self-incrimination. ...... a

(6) Recognition of the attorney-client privilege is “essential

"ifthe adversary system is to function fairly ............. "aaa! li

(7) The “control group test” is based on a faulty conceptual

analysis of the RET Se ENE. 4A ACRES See Mn 4

EEL . AL eRe OP. LS al NINE Se 20

‘ __@ITATIONS 2s

_ . American Cynamid Company v v. Hereules Powder Company, .

_ 211 F. Supp. 85 monsndnsogesfhorresssesccensceoecee > =f

Becher v. United States, 5m. 2d 45 ) Oe Sone 18

_City of Philadelphia v. Westinghouse Electric Corporation,

210 F. Supp. 482. ........ iiidioedhantailpianiantiideiiibeieiimeseaatansine 4, 15, 17,. 19

Day -v. Ilmors Power Company, 50 IIL App.2d, 52, 199

eM TI peneseecctccasnscsccnsSensecosiensstcebenscsesscccel Ne tet siananunade 15

Gardner v. Broderick, 392 U.S. 273 .....202-.c0cccccceeeeese0e paaaieseascine 10

‘ ; ie ee ; ; ne

er ee

: . PaGE

Garrison v. General Motors Corporation, 213 F. Supp. 515 ....: 15

Garrity we New Jersey) 385 US. 493 ......ecersecescsrssseseverscessossseneees 10

Hickman v. Taylor, . »,. : a we faye) :

A | - Sate aaa Mer ROe sutaiebieageieoaamedias 18

+ IPT, B08 cijiinsiinstusspctssonsslpitastonncatlstailaanie snsipicasevedeietmate 18

SN Sie GO eircom, aispeicomnion ipusiea na 17, 18

75 F. Supp. 528 ........ RTE, Seen iabedboibecnalacauieiaee 18

Honeywell, Ine. wna Aireraft Corporation, 1970 Trade’ ,

* Cas. ¥ 73,122 .. RR MANE eae senyperier erent “<

Malloy v. Hogan, 378 U:S. T ........ soseeeessgguneeTTrcsssnsesatee dsonscnsonsongoes ll

Natta v. Hogan, 492 F.2d REA aetatil eel k a BPE 15

Securities and Exe ange Commission v. Texas Gulf Sulphur tah:

Company, 401 F.2d 833 12......0.sccsccseesee. goncocssnsccsscevebapensoanescnsies 8

Spevack v. Klein, 385.U.S. 511 eee Risseicsinstgalad etiagaaied 10

United States v. Dotterweic 9.

United States v. Louisville & % i ae

; Be Us OU: shitititacectintabdciest scinstiaiasatakemicidaisceaaaiaimmaiamanmaes Y be

Unfited States v. United Stioe Machinery Corparation 89 F. "7

0 SIS FE cccssitzcsrsscceretentersenideisnainetscscctiapeencniianndnidanaitaitinmainaes 4

United States v. Wise, 370 U.S. 405 EEE AED ED Set a SOME OT 9

. United States v. Zirpolo, 288 F. Supp. 993 ..........-secssseseseeeenes -- 10

‘ Zenith Radio Corporation v. RCA, 121 F. Supp. 792 ...:.....0.. 4

ABA Canons of Professional Ethies’No. wy Weinaitant aa

Berger, “Discussion of the Proposed Federal Rules of Evi-

wt a 6

Brief Amicus Curiae of the Association of the Bar of the City

- of New York and the New York County Lawyers’ Associa- -

0 CRB ccctaicesei groccccenstcoccosoccosecdsoooocesons Ancovcseccsceccccscoseesccsocsnccccsssqecceqese + WO

; Brief for Petitioner in H aie v. Taylor, 329 U.S. 4984 ........ 18

Brief for Respondents in Hickman v. Taylor, 329 v. S. 495 ...., 18

- 3B. Jones, The Law. of Evidence § 831 o.......c:ccceceesesnenee Saas “17

C. Me ‘Cormick, Ev idence ,

] [pee cst neuicaiticcdes tinea reie ie 11

GS BG cassisestithihienssesticsscdomstes OFS csckemcnbaaasietcnaiaytbaeaaindaadadatias 6

TD ‘Cnssccsecnpesccrcesnaassssatlendasdasactandameicntaelediea: sipstapapatiiaicmadiccioe 11, 17

‘

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; a Fe a La ; PAGE . ;

Joint Report of the ABA Special Committee. on Uniform’

Evidence Rulés for Federal Courts and the ABA Special

Committee on Federal Rules of Procedure............ dpsacioomnpenens 16

Model Code of Evidence rule 210(€) (ii) cesceccescssessessessessessessessee ‘17

Morgan, Foreword to Model Code of Evidened 27... “1

Proposed Rules of Evidence for the United States District... = =

Courts and Magistrates, 46 F.R-D.161, 249-53 oe ceceeeen 15, 16 '

“Record in Hickman v. Taylor, 329U.S. 495 cecccssseiseusssssssseeesee 18

Uniform Rule of Evidence 26(3) ceeccsscessessesssiesssssnn eS a

8 J. Wigmore, Evidence ee

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In Tar

Supe Court of the Hnited Sites

- OcroEr Term, 1970

No. 113

_ Honorasne. Suicin M. Deckee,

Untrep Srates District Junce, et al.,

Petitioners,

3 . > . a ghee

Vv. rin. *

Harper & Row Pus.isuers, Inc., et al.,

meponn ents.

On. et OF Fa a TO THE UNITED STATES

Court or APPEALS FOR THE SEVENTH Circurr

BRIEF OF THE AMERICAN BAR wintson ay F

AS AMICUS CURIAE ye

‘

OPINIONS BELOW AND JURISDICTION

Amicus adopts: petitioners Statementsof the mated

below and jurisdiction.

QUESTION PRESENTED»

Whether the attorney-client privilege protects the con-

fidentiality of communications between an attorney for a

corporation and an employee of ‘that corporation in situa-

_tions wliere, in the words of the court of appeals, “the

employee makes the communication at the direction of his

superiors in the corporation and where the subject matter

upon which the attorney’s advice is sought by the corpora-

tion and dealt with’in the communication is 4ke perform. |

ance by: the employee of the duties:of his employment” ?

STATEMENT OF THE CASE

"Amicus adopts respondents’ statement of the case.

om INTEREST OF AMICUS CURIAE

; \‘uthoritative delineation of the scope: ‘of the siete

client” priv ilege as applied.'to corporations will be a deter-

mination ef great import to the administration of justice

and to the legal profession’s role therein. Its« significance

will reach far beyond causes of the genre of this case.

_ Amicus submits that acceptance of the “control group test” — .

espoused by: petitioners would substantially. and. adversely

e affect the entire spectrum of corporate attorney-client re- |

lationships. Ynevitably,. and properly, petitioners and re-

spondents must focus'on the faets of this particular cause.

he interest of amicus is in focusing-on ‘the impact of |

the privilege in areas beyond the very limited aspect ‘in-

_jvolved in this cause and presenting the policy considera-

tions amicus believes erucial.- — ,

aoe. ARGUMENT

. (1) | The Court’ Of Appeals’ Formulation Of the

Privilege Is a Balanced and Fatt One’

The radical constriction of the privilege which. would

oceur with adoption. of the “control group test,” would

effectively deny the privilege to corporations —a result

both unsound and unnecessary. Even under the test for-

mulated by the, court of appeals, ‘application’ of. the privi-

lege would be extremely narrow. A corporation can claim

the’ privilege under that test only when the eight require-

P rn ee fe

, .

‘ ments of Wigmiore’s classic. forrtulation* are met, plus °

the following five additional requirements :

et) The communicant must be an employee

(2) who communicated with the corporation’ s attorneys

at the directic ion of*his superiors

(3) where the subject matter upon which the attorney’ 8 .

_ Advice j is sought by the corporation, and .

(4) dealt with in the communication, % ’

(5) is the performance by the sss ily of the duties of

_ his employment:

The’ court of appeals atiieaali avoided devising a test cov- —

“ering the ‘testimony of agents interrogated as mere wit-

nesses. App. 63a, 423 F.2d at 491-92. :

Of course, an adversary can extensively depces agents aS’

‘to whose communications ‘to attorneys the corporation is

“entitled to claim the privilege. The lltimate facts within :

the knowl ge of the agent are not covered by the privglege.

Furth , there are alternative discov ery devices. For exam-

ple, in ‘this case, grand jury testimony has ‘been made,

_ available. App. 8a-14a, 1969 CCH Trade Cas. 972,965 at

- 87,750-52. The vast array of mandatory corporate records,

if otherwise discoverable, cannot. be placed beyond the

reach of an adversary: by placing them. in: the hands of -

‘an: attorney. SP E Mea tee :

* There is spparentiy no dispute between the otis as to the |

. validity of Wigmore’s formulation of ‘the attorney-client privi-

lege:

(1) Where legal advice of any kind is sought,

(2) \from a professional legal adviser in his capacity as ‘such,

(3) the communications relating to that —-

(4) made in’corifidence, .

(5) by the client, Py *

(6) “are at his instance permanently protected,

' (7) from disclosure by. himself or by the legal adviser,

, (8) except the protection be waived.

A 8 J. WIGMORE, EVIDENCE § 2292 at 554 (MeNAUGHTON

ss “rev. 1961). | , ;

‘se

. _ @

i ederal district courts have been. able to upply tasviy: in

a cor ‘porate context.a test far broader than, the- one an-

_nuneiated by the court of appeals. See.Unitéed States’ v.

United Shoe Machinery Corporation, 89 EF. Supp. 357 (D-

Mass. 1950); Zenith Radios Corporatién v. RCA, 121 F..

; Supp: 792 (D. Del. 1954); American Cynamid Company v.

Hercules Powder Company, 211 F. ‘Supp. 85 (D. Del. 1962).

It would be a very: rare cause whefe a party could not

‘fairly present its case W ithout. examining the corporation’s

attorney or seizing his papers covering the small’area pro-

_ tected by the corporate attorney -client privilege formu-

lated by the court of appeals. Such cases do not merit the

cost to the administration of justice that the “eontral group.

test” would exact, ,

| (2) The Court Faces the Question Whether It Is In”

, the Interest Of the Administration Of Justice

‘To Deprive Corporations Of the Attorney-Client

. Privilege |

In urging the “control group test,” petitioners urge this

Court in: effect to deprive, corporations of the attorney-

client privilege ‘in significant corporate transactions. The

test limits the privilege’ S application to communications by

corporate agents who will play a substantial role in detér-

miging how the corporation will act on the resultant ad-

vice. In creating it, Judge Kirkpatrick recognized that, in

‘matters which are significant to the corporation, a -rela-

tively small group of corporate agents, such as the board

_ of directors,.controls what. action the corporation will take.:

. Almost inevitably, the corporate agents possessing relevant |

factual data are middle management or lower, operational

* executives, Contrary to the ‘basic purpose of the privilege

— the “engouragement of uninhibited. communication: with

attorneys as to the relevent facts —the “control group test”.

<7. oe (Ee ee

_— ,

/ isenot designed to protect. factual conimitnications by the

Si ‘- earporate agents possessing the infor ‘mation. It limits itself

to proyiding partial protection for the secondary aspect of |

the pr ivilege, the receipt of advi ice from attorneys by the .

' control group. © =. oS /

eth

The Court faces then,. not a mere — istics vari- —

ants of the attorney-client privilege in a,corporate context,

but the question whether th¢ admirfistration of justice would —

'. be served by ‘effectively depriving psc ae of the, at-

torney-client privilege.

This cause itself deals only with’ nemrenie: made in

aiticipation of litigation —a narrowgsegment of the pri-

vilege’s application in the eorponite context. However,

adoption of the “control troup test” would have drastic

impact over the entire range of corpggate attorney-client

relationships which involve almost gf

to work on the assumption: that all communications with

| non-control group personnel are discoverable, Since tlie size

of the control group diminishes, as the significance of a.

matter grows, thesize of the group cannot be known. in ad: ,

‘vance where_a matter of potentially substantial, significance

is involved. If litigation were to arise, it might develop that

the Significance of the matter was ‘such that the control

group would consist of only the board of directors. Thus,

- corporate attorneys could not - prudently rely on the at- ©

torney-client privilege in.any matter which ne the

potential of becoming significant.

* As we shall demonstrate, this radical revision of the-at-

torney- client privilege. would adversely affect the adininis-

tration of justice it this country by impeding effective coun-

seling of corporations and damaging the individual rights

of their agents. This consequence is too high a price. for_

P ‘

‘ry uspect of a corpo- °

ration’s daily operations. Corporate counsel would be forced |

07, . “i

_ making the confidag tial communications av _—- for dis.,

sovery.. ;

This | would prove to be iflusage once the new

rule was adopted. If corpoxite counsel were forced to oper-

* ‘ate aviphont the privilege, dishonest lawyers jrould simply

conceal the commurfieations ; prudent lawyers would make

certain that no such evidence was created. Debriefing meMio-

. randd such asthose involved jin this cause would sintply not .

be made. Awkward.as it wouhb he, prudent corporate

lawyers would simply not gather information that would

be harmful to their corporate clients in an adv versary pry. .

céeding. Because the logical ‘consequence of fhe “control

group test” would be cross-examination of corporate coun-

sel, fhey would be forced to limit their probing for facts,

lest their*testimony on cross-examination form the strong-

est evidence in support of an attack on their client.

° aes

(3) The Attorney-Client Privilege: lines the Same

Valuable Purpose Of Encouraging U

Commffiication In a Corporate Context As ll

: _ Does For Individuals — ?

The basic purpose of the attorney-client privilege is

“that of encouraging clients to lay the facts fully before —

‘their counsel.” See C. McCORMICK, EVIDENCE 6 96

at 195 (1954). To accomplish this “the apprehension

of compelled dixelosnre by the legal. advisers must be

removed.” 8°), “WIGMORE, EVIDENCE © 2291 at 545

(MeNaughton ré¢, 1961). The 4ommon law has: Jong reeog-

niged that fall nyd uninhibited distlosure.to one’s attorney

is xo crucial 40 the praper functioning of the adversary

system that it must hé treated as privileged e¥en though,

as with all privile eK, KOTUE burdan is thereby pl upon

diseove Ty proce soem, No lawyer can chetgh arne and th

; . ;

o ; ‘ 7 4

represemt a Clientwithout full knowledge of the client’s

side of the story. These considérations. are as applicable

in a corporate context a’ they are for individuals, This

Court recognized the corporation’s need of the privilege

over fifty years ago: _

The desirability of protecting confidential communj-

cations between attorney and client as a Muatier of *.

public policy is too well known and has been.too often-

recognized by text-books and courts to need extended

comment now. If such comimunications were required

to he made the subject of examination and publication,

such enactment would be a practical prohibition upon

professional advice and apsistanite,

U nited States v. Louisville d Nashville Railroad Company,

236 U.S. 318, 336 (1915) (An attempt by the United States

to obtain corporate files including communiéntions between

agents of the corporation and its attor.: ys).

Neither ‘the need for the ed of the attorney-

client’ privitege in the corporate context nor the validity

-of the’Court’s observation that abolition of ‘the privilege.

would amount to a practical prohibifton on the exchange

of information has been diminished since Louisville. Today

the American corporation must exist in a great welter ot

regulatory statutes whose observance requires legal advice

on virtually every aspect of ite affairs. Every transaction

involving corporate financing, its competitors, its custo-

* mers, its employees or foeign trade, is governed by complex

regulatory statutes Which, in most instances, in addition to

subjecting the corporation to severe risks, subject the cor-

porate agents to criminal penalties, If a corporation is to

comply with the law, it must have legal counsel frécty.

_ available at all levels of its operations.

B94 US. 976 (4969).

. & a :

8 9

(4) The Gorporate Attorney:Client Privilege Is An

the Law By Corporations.

‘As many students of jurisprudence have. pointed out,

the private bar is an extremely important factor in achiev-

' ing voluntary compliance with the lag, The prosecutorial

agencies and government administrative agencies could not

hope to achieve widespread compliance without the assist-

ance of the bar. Functioning properly, the bar instructs

its clientele as to the meaning of the law, alerts them to -

risks and pushes them toward compliance. See ABA Canons

of Professional Ethics No. 16. For -the bar to be able to -

perform this functiori, it must be free to extract decane its

clients full details of their conduct.

This is particularly crucial in day-to-day counseling at

the lower levels of corporate management. For example,

thosé who encounter difficulties with the antitrust laws are

usually middle or lower management personnel who are

actually involved in the marketing process, Prudent cor-

porate management will provide for extensive counseling

. of these personnel by corporate attorneys. As members of

this Court have many times observed, the application of

the antitrust laws can be bewilderingly complex. The secu-

rities. laws are another example, Conduct at many levels of

the corporate hefrarchy from field men on up can place

both the corporation and the individual in jeopardy. See,

.g., Securities and Exchange Comwission v. Texas Gulf

Sulphur Company, at F. 2d 833 (2d Cir. 1968), cert. denied

sub nom., Coates v. Securities and Exchange Commission,

. : 4

A layman could not hope to evaluate the significance of

factiwl variations and distinctions, shadings of difference

between various situations. He must be free to-lay his case

- entirely before the corporation’s lawyers — certainly in

most instances he cagpot-be expected-to afford his own coun-

sel to advise him. Yet, under the “control group test,” all of

these people would be stripped of the attorney-client privi-

lege. It would no longer be prudent for a corporation to have

_its lawyers carefully and regularly gather facts about its ~

operations. The gathering of such information might be

fatal in some unanticipated lawsuit. The sophisticated

lawyer would not wish to learn too yuch. The employee

would have to stumble warily along seeking to ask questions

which would enlighten him as to the law, while’at the same °

time concealing from the lawyer any evidence of what the

employee guessed might be violations of the law. Tue lawyer

. would have to suppress judgmenits as to thé uncertainty of

the légality of condiict for fear that the employee might

some day be forced to repeat his words before a jury. This“

clogged and inhibited commvnication would demoralize the

attorney-client relationship and cripple the bar's power to

counsel and guide.

(5) Recognition Of the Corporate Attorney-Client -

Privilege Is Essential “To Protect the Individual

Corporate,Employee’s Fifth Amendment Privi-

lege Against Self-Incrimination ©

Almost inevitably when a corporation is charged with

eithér civil or criminal violations of regulatory laws, crimi-

nal charges.could be brought against individual ¢ofporate

_employees on the. same theory underlying the complaint

against the corporation. See, e.g., United States v. Wise,

' 370 U.S, 405 (1962) ; United States v. Dotterweich, 320 U. 8.

277 (1943). | .

Refugal to recognize a reasonable corporate attorney-

client privilege, w d be Gestructive of the individual's

privilege against -incrimination. All communications

. .

e .

> . .

- , ,

4 ; . 10 °

e .

- . ° = @

by the individuals with lawyers for the sieviealins over -

_the past several years would be subject to discovery by

examination of the corporate counsel.-Thus, by seeking

advice from the corporation’s.attorneys on how to ebnduct

the corporation’s affairs, and making a full disclosure

in doing so, the individuals would have effectively waived

their Fifth Amendment privilege as to ony incriminating

testimony. ;

_ In eases where the corpdration’s counsel determined

that their need to develop information after charges were

brought justified the risk of discovery, it would lead to

economic pressure being placed upon thé individual to con-—

fide in a corporation’s attorney—even though such corimu-

nications would effectively amount to a waiver of the indi-

vidual’s privilege against self-incrimination. The individual

might be forced to choose between his loyalty to his em-

ployer (his livelihood) ‘and his Fifth Amendment rights.

This Court should avoid a formulation ef the privilege with

this inherent vice. Cf. Garrity v. New Jersey, 385 U.S. 493

(1967) ; Spevack v. Kleir, 385 U.S. 511 (1967) Gardner’ v)

Broderick, 392 U.S. 273 (1968).°

Clearly, those individuals who were sinibehisieitil and

affluent enough to obtain counsel .of their own. would be

advised by those counsel’simply not to discuss the matters

in’ question with the corporate counsel. Even those wit-

nesses who had been’ called before the -grand jury and

thereby" received some degree of immunity from further

prosecution (in those areas where there are applicable

imumanity statutes) might be advised by their counsel not

- to communicate with corporate’ attorneys. Areas might be

developed that were not covered by the grand jury’and as

to. which the corporate executives could not claim immunity

because of their grand, jury appearance. See United States

v, Zirpolo, 288 F. Supp. 993, 1002-07 (D.N.J. 1968). Cf.

Malloy v. Hogan, 378 U.S. 1 (1964). Those who had not

heen called before a grand j jury would simply have to refuse

to make any disclosures, Even Professor Morgan, who sees

the privilege as mvolving only a simple dichotomy between

truth and lies, recognizes that: “In situations where the

privilege against self-incrimination is involved, the reten-

tiow of the {attorney-client} privilege is justified.” Morgan, °

Foreword to MODEL CODE OF EVIDENCE 27 (1942).

As we have discussed, almost every significant aspect of

modern corporate agtivity invelves both potential liability

‘for the-éorporation and potential criminal liability for its

individual agents.

(6) Recognition Of the Attorney-Client Privilege

Is Essential If the Adversary aassanieat Is To

Function Fairly

If a lawyer is to represent properly a corporation in the

type of security, antitrust and regulatoryglitigation which

flourishes today, he t be able to make an untrammeled

factual investiffation£ So long as the attorney-client privi-

lege is recognized, he can-examine his cliénts vigorously

and exhaustively. His clients, of course, do not “know” the

facts, that is to’ say they do not appreciate the signifi-

eance of such data as they récollect; their instinct is to.

speak in guarded half-truths concealing what they believe

to be unfavorable. See C. MeCORMICK, EVIDENCE § 91 at

181-82 & § 100 at 202 (1954). The lawyer’s factual knowledge

or memoranda will not reflect the “truth,” but rather the

mosaic he has built from the incoherent, inconsistent and

flickering recollections and understandings of the agents

of. his client. As his understanding of the case deepens, his

judgment as to the accuracy. of various agents may alter;

his perception of what transpiréd’ may change radically.

Ultimately he will give advice based on his understanding

of the facts; if litigation ensues, he will attémpt to present

a coherent picture to“the finder of fact which casts the

facts in their most favorable. light. It is, of course, the

function of his adversary to marshall the faets and pre-

sent them in the worst light. Neither will ever leari all

_the facts. It is our society’s commitment, however,’ that

justice is mést likely to be achieved through forceful parti-

san representation by counsel.

Stripping the corporation of the attorney-client privi- ~

lege, as the “control group test” would effectively do, would

not lead to greater likelihood ‘of reaching the “truth.” By

inhibiting corporate counsel’s research, it woyld diminish

‘it. It would give the corporation’s adversaries powerful

and unfair forensic weapons which would lessen the like-

lihood of just results in litigation. The remarks of Mr.

Justice Jackson, joined by Mr. Justice Frankfurter, con-

eurring in Hickman VW. Taylor, illustrate the problems of

‘making witnesses of lawyers. These considerations apply

with far greater force when what is involved is communi-

cations not by mere witnesses, but by the very corporate

agengs alleged to have committed. the acts creating the al-

" leged liability of the corporation. Counsel for corporations’ -

adversaries would be all the more eager to engage in the

' practices Justice Jackson. feared and condemned:

I can conceive of no practice more Resserallidee to

the Bar than to require a lawyer to write out and de-

liver to his adversary an account of what@witnesses °

have told him. Even if his recollection were perfect,

the statement would be his language, permeated with.

his inferences. Every one who has tried it’ knows that

it is almost impossible so fairly-to record the expres-

sions and emphasis of a witness that when he testifies

in the environment of the court and under the influ-

- ence of the leading question there will not-be depar-

tures in some respects, Whenever the testimony of the

* | 13.

' witness would differ from the “exact” statement the

lawyer had delivered, the lawyer’s statement would be

whipped, out to impeach the witness. Counsel produc- .

ing his adversary’s “inexact” statement could lose

nothing by saying, “Here is a contradiction, gentle-

men of the jury. I do not’ know whether it is my ad-

versary or his witness who is not telling the truth,

but one is not.” Of cqurse, if this practice were adopted,

that scene would be repeated over and over again. The

lawyer who delivers such statements often would find

himself branded a deceiver afraid to take the stand to

support his own version of the witness’s conversation, i

with him, or else he will have.to go on the stand to-

détend his own credibility — perhaps against that of °

his chief witness, or possibly even his client.

Every lawyer dislikes to: take the witness ied and «

‘will do so only for grave reasons. This is partly be-

cause it is not,his role; he is almost invariably,a poor

- witness. But he. steps out of professional character to

do it. He regrets it; the profession discourages it. But °

the practice advoeated here is one which would force

him to be a’ witness, not as to what he has seen or .

done but as to other witnesses’ stories, and not- because

he wants to do so but in self-defense.

Aud what is the lawyer to. do’ who has interviewed ,

one whom he believes to be a biased, lying or hostile

witness to get his unfavorable statements and know

what to ‘meet? He must record and deliver such state-°

ments ‘even though he would not vouch for the eredi-

bility of the witness by calling him. Perhaps the other

side would not want to call him either, but the attor-—

“ney is open to the charge of suppressing ‘evidence at

the trial if he fails to call such a hostile witness even

_though he never regarded him as reliable pr truthful.

Hickman v, Taylor, 329 U.S. 495, 516-18 (1947),

As we have indicated, the unscrupulous advocate could

largely avoid the threats posed by the “control group

14 é | $).

test.” He could destroy documents, fabricate testimony,

etc., and gain new advantages over his conscientious ad-—

‘versary. The honest and prudent advocate, however, would

be put in a position of limiting examinations of his own

client’s agents, lest he thereby build a casé for his.adver- .

Sary, subjecting himself to cross-examination that would

be devastating to his client; or effectively destroying the

individual Fifth Amendment privilege of one of the: cor-

porate employ ees. He would no longer create factual mem-

oranda — either to record grand jury debriefing or as a

mnemonie device — unless confident he was w illing to ‘have

it discovered. In-sum, much of his energies in cofhseling:

‘would be taken by the purely negative and debilitating task

of avoiding the creation’ of ammunition for his existing. or

potential adversaries.

This diminution of the factual foundation of corporate |

representation, would impede possible _ settlements of -

causes. An attorney cannot properly evaluate a case and

recommend settlement until he has-the full factual picture

in his hand. Yet, his-development of the picture from non-

control group employees would necessarily be limited and.

cautious. Many prudent attorneys would doubtless prefer

to wait and see‘low much their adversaries discovered.

Thus, many proceedings ‘would be ae .

: I

(7) The “Control Group Test” Is Based On a Faulty,

Conceptual Analysis Of the Privilege

The “control. group test” was created by Sedge Kirkpat-

rick. City of Philadelphia v. W estinghouse Electric Corpo-

ration, 210 F. Supp*483 (E.D. Pa.), petition for. mandamus

denied sub nom., General Electic Company v. Kirkpatrick,

312 F.2d 742 (3d Cir. 1962), cert. dented, 372 U.S. 943

(1963); Nominally accepting Wigmore’s formulation of the

privilege, he held that it: was available_to corporations

| only if the employee making the communication to the at-

tor ney was in a position to take a substantial: part in a

decision abont any action which the corporation might take

upon advice. of the attorney.-210 F. Supp. at 485. Judge

Kirkpatrick’s formulation was a novel and radical inno-

vation. \

As we have discussed, the “control gr oup test” amounts - :

to the effective: deprivation - of the attor ney-client privilege

for corporations. Judge Kirkpatrick, however, gave no

articulate analysis or attention to the policy considerations

involved in this drastic change in the law. None of the

5 cluster of courts ‘which, followed Judge Kirkpatrick | in

adopting the test have ever given articulate: consideration,

. to the policy questions involved. ‘See Natta v. Hogan, 392°

F.2d 686 (10th Cir. 1968) (No party challenged the validity _

of the test) ; Honeywell, Inc. v. Piper Aircraft Corporation,

1970. Trade Cas. {73,122 (M.D. Pa. 1970). (The court chose .

the “control group test” over the court of appeals’ formu-

lation. However, it pointed out that, in any event, the party.

claiming the privilege had in most instances failed to make

a showing which would have entitled it\ to the privilege

-under the court of appeals’ formulation. 1970 Trade Cas. a

supra. at 88 424 & nl); Garrison v. General: Motors Cor-

poration, 213 F. Supp. 515 (S8.D. Cal. 1963) (‘Phe corpora-.

tion relied on. the “control group test” as. supporting ‘its

claim of privilege) ;, Day v. Illinois Power Company, 50 Ml.

App.2d52, 199 N.E.2d 802 (5th Dist. 1964).

} The preliminary draft of Pr oer Rules of Eviderice for

the United States -Distriet Courts and Magistrates, 46

F.R.D. 161, 249- a1 (March 1969) also follows: the “control

group ie: id However, the Advisory Committee's Note ‘-

merely, conclusorily follows City .of Philade Iphia. See 46

F.R.D. at 252-53. And ‘discussions, by. committee member's:

indicate that they relied heavily -on Judge Kirkpatrick

without independent analysis. See Bérger, “Discussion of

the Proposed Federal Rules of Evidence: Privileges,” 48

F.R.D. 39, 44, 45-46 (1969). Amicus hopes that, after the

« many criticisms leveled against the preliminary draft, the

portion a te the “control group. test” will not: be

adopted. See, e.g., Joinr Reforr or tur’ ABA Spwcrat

ees oN Unirorm Evivence Ruves ror -Feperat

Courts AND THE. ABA Spectra. ComMMITTEE ON Feperan

Rees oF Procepure (1970) (Filed by letter of Vincent L. :

McKusick to Honorable Albert B. Maris, Chairman, Stand-.—.

ing C ommittee on Rules of Practice and Procedure, March

30, 1970), wherein the Special Committees strongly urge

that Rule )- 03(a) (3) be revised to read substantially. as

-~.. follows: -

D 5 ; .- 2) :

(3) “representative of the client” is one (a). hav- - .

‘ing authority to obtain. professional legal services, or’

" to act on advice rendered pursuant, thereto, on behalf. '. 1.

of the client, or (b) authorized by the client to disclose

or furnish to the client’s lawyer.or a representative of

such lawyer confidential communications, data or infor- au

mation. ae a. <. . '

See also, the éviticisms cited i in the Joint Amicus Brief: of.

.New York € ounty Lawyers’ ‘Assogiation at 12-14.

As we. have sought to demonstrate, adoption of ‘the “con. -

/, trol group test? would have adverse effects on the’ admin-

Pee ‘istration of justice and would not have offsetting heneficent -

ty W ithout attempting to balance. these considera- {

| See

tions, Judge Winksntriett reached the “control sroup test”.

ona faulty conceptual analysis. He nominally accepted the ‘

lassie formulation of the privilege in beginning his ‘anal-

ysis. However, he then’ critically distorted: the “basic re-

quirement . . that the communication must be made by «

the;client. to e aie the lawyer to advise him.” 210 F, Supp.

at 484-85. He reasqned that under the privilege this meant

that the individual making’ the communication had to be

the individual seeking advice. Contrary - to, Judge Kirk-

patrick’s position that he was merely restating a’ funda-

_ mental requirement. of the privilege, this requirement wag.

a distortion of the privilege with no precedential support.

‘Tt has for centuries been the rule that a communication

made by a client’s agent to the client’s attorney falls within

the se ope of the privilege regardless- whether the agent or

client’ (whether individual, corporation, ete.) received the-. -

advice and acted upon.it. See 8 J. WIGMORE, Saab oar

§ 2317 at 618 (McNaughton rey. 1961); C. MeCORMIC(

EVIDENC 'E § 100 at 204 (1954); 3B. JONES, TH LAW

_.OF EVIDENCE § 831 at 1560 (Gard rev, 1958) ; UNIFORM -

* RULE OF EVIDENCE 26(3); MODEL ( CODE f.OF EVI-

“DENCE rule 210(¢) (ii) (1942). ae Te anti

. While. jaan Kirkpatrick's: devasnbatiot is ostensibly re-

lated only to corporations, under his’ logic an individual.

(or any other entity) would | automatically lose the privi-

lege for communications made by an agent to his attorney,

‘except where “he had. given his agdht-power_to make deci-

- sions regarding the hiigation. Such’ has never been: the law.

Joie Kirkpatrick STS vilied . oh ictiaie

Taylor, 329 U.S. 495 (1947) for this. propésition. However,

Hickman simply did not: address itself to the question of

communications’ by ‘an ‘agent regarding the performance of

the duties of his. employment, It involved the sinking of a

4-18 4 =

oe o.-

ae because of the negligent instructions issued to the tug’ *

; ae by a mewher of the partnership which owned it.

Wrongful death claims ‘were made by fhe families of a

e, dias of crew members who drowned. All of the surviving

employees whose statements were sought also hind claims

‘against the tug owners. (Record i in Hickman v; Taylor at

- 70a.) See. Hickman . Taylor, 75 ¥. Supp. 528,-530-31 (E.D.

_ Pa: 1947) (Opinion on the Merits), af’d, 170 F.2d 327 (3d

*«\Cir, 1948), cert, denied, 336.U.8. 906 (1949). These em-

__ployees were. properly cast’ in the role of adverse third

parties by the parties and by evety court which considered

the cause. See Brief for Petitioner iy Hickman v. Taylor at

14; 4F¢R.D. 479, 482 (ELD, Pa. 1945); 153 F.2d 212, 222

(3d Cir, 1945); 329 U.S. 495, 506 (1947). The respon-

dents in Hickman could not -have based a claim of privilege

on the eniployee's ageney relationship the privilege

js fiiapplicable where the. agent is being interviewed as.

“one whose interests are adverse to those of\the principal.

Becher v, United States, 5. F.2d 45, 49 (3 Cir.), cert.

denied, 267 USS. S02 ( —,

Farther in Hickman, the respondents argued that “at-

lorneys as a class should be ‘privileged.’ ” Brief for Re»

" spendents at 18) (é¢mphasis supplied). In denying ‘that

_ the attorneys’ entire trial preparation was privileged, the

Céurt did not have before it any claim of privilege based

on an agency relationship. 329 U.S. at 508, The question —

whether an agent’s communication at the behest of his

. principal regarding the -performance of his duties is priv-

ileged was not before the Court. The reliance on Hickman

Ay Judge Kirkpatrick, and by petitioners in this cause

_ (Brief for Petitioners at 28) is misplaced. Thus, the “eon- ~

trol group test” clearly is not dictated or a by the

precedential effect of Hickman, _ ; yy

Using his distorted ‘formulation of the privilege aw a

. premise; Judge Kirkpatrick then asked @hat he saw as the

criticat question: “In other words, was he [the corporate

.' employee] at the time, in contemplation of law, the eorpora-

tion seeking advice?” 210 F. Supp. at 485. Under Judge

Kirkpatrick's formulation of the privilege where the indivi-

dual communicating facts must be the same individual who

' will make the’ decjsion on how to act on the attorney's |

advice, the “Control group test” mechanically follows. If.

the corporation is forced to act through two agents in

- deajing with its attorney, one td communicate the facts and

another to make a decision based on the attorney's advice,

it must forfeit tht privilege, As we have demonsttated,

however, there is no historical ‘basis for thie gloss on the —

privilege. Prior to Judge Kirkpatrick, no court had sug-

gested that the mere creation of a duality between the

factual source of the client’s communication and the decision

making power of the client — a serteptate ‘of the privi-

lege.

The conceptual inadequacy of Judge Kirkpatrick's for- .

mulation is cléar. That is the sole articulated basis of his .

_ decision. He failed to analyze the policy considerations in-

volved. We submit that City of Philadelphia, and its pro-

geny following the “control group test,” are not entitled to

precedential réspect by the Court.

; ¢ eis Fe .

. CONCLUSION

The ican Bar Association urges the Court to affirm

the deci oye eee

Respectfully submitted,

Dive T. Seanis

Hazzy M. Resasowes

° Vixsox,,Evxixs, Spans &

ALLY ie

} Attorneys for Amicus Curiae,

| American Bar Association

Of Counsel: iS

Ray D. Henson

310 8. Michigah Avenue

Chicago, Illinois 60604

Chairman, Section of Corporation,

Ranking and Business Law

' American Bar Association -

ee 195 8S. Sierra Street *

Reno, Nevada 89501 -

; Member, Board of Governors

American Bar A

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