Amicus Brief — Upjohn Co. v. United States

Supreme Court brief1981

Ask Donna

What actually matters in this document.

Text

ao ees come

‘agi Supreme Coun, U. &

EILED |

No, 79-886 ORG 21 1979

MICHABL RQPAK, JR, CLERK

In the Supreme Court of the

OCTOBER TERM, 1979

THE UPJOHN COMPANY, ET AL.,

PETITIONERS

UNITED STATES OF AMERICA, ET AL.,

RESPONDENTS

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

MEMORANDUM OF THE AMERICAN BAR

ASSOCIATION AS AMICUS CURIAE

LEONARD S. JANOFSKY, President,

American Bar Association,

1155 East 60th Street,

Chicago, Illinois 60637

(312) 947-4000

LEON JAWORSKI,

KEITH A. JONES,

Fulbright & Jaworski,

1150 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 452-6800

TABLE OF CONTENTS

INTEREST OF THE AMERICAN BAR

ASSOCIATION.

ARGUMENT

1. The attorney-client privilege, as applied

to corporate clients, should not be re-

stricted solely to communications made

by members of the corporation’s con-

trol group

2. Anattorney’s work product should be

accorded a qualified privilege against

administrative discovery .

CONCLUSION.

Page

TABLE OF AUTHORITIES

CASES

Chirac v. Reinecker, 24 U.S. (11 Wheat. ae

280 (1826) .

City of Philadelphia v. sacialinias Electric

Corp., 210 F.Supp. 483 (E.D. Pa. 1962) .

Connecticut Mutual Life Ins. Co. v. Schaefer,

94 U.S. 457 (1876) .

Diversified Industries, Inc. v. Meredith,

572 F.2d 596 (8th Cir. 1978) (en banc) .

Fisher v. United States, 425 U.S. 391 (1976) .

Harper & Row Publishers, Inc. v. Decker,

423 F.2d 487 (7th Cir. 1970), aff'd by an

equally divided vote, 400 U.S. 348 (1971) .

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

In re Grand Jury Investigation, 599 F.2d

1224 (3d Cir. 1979)

In re Grand Jury Proceedings, 473 F.2d

840 (8th Cir. 1973) . ;

In re Grand Jury Subpoena, 599 F.2d

504 (2d Cir. 1979) .

Natta v. Hogan, 392 F.2d 686 ea

Cir. 1968)

Radiant Burners, Inc. v. American Gas

Ass’n, 320 F.2d 314 (7th Cir.),

cert. denied, 375 U.S. 929 (1963)

Reisman v. Caplan, 375 U.S. 440 (1964) .

United States v. Brown, 478 F.2d 1038

(7th Cir. 1973)

United States v. Louisville & Nashville | R.R.,

236 U.S. 318 (1915)

United States v. Nobles, 422 U.S. 295 (1975) ;

United States v. Wise, 370 U.S. 405 (1962).

Page

iil

TABLE OF AUTHORITIES (continued)

RULES Page

a i Ga x dw os Wo ec Das 10

eh. PURSE sa oe a ek recckY oe ees 3

TREATISE

8 Wigmore, Evidence § 2291 (McNaughton rev.

See Na 5. eo, ee ee eee 4

OTHER

Note, The Attorney and His Client’s sesso

Pe wee hin ae Chen aa cb el es i or ee 8

Note, The Attorney-Client Privilege in the ecm

rate Setting: A Suggested Approach, 69

Mich. L. Rev. 360(1970) ..... oi gh ae

Miller, The Challenge to the Attorney- Client

Privilege, 49 Va. L. Rev. 262(1963) ...... 4

3u the Supreme Count of the United States

OCTOBER TERM, 1979

No. 79-886

THE UPJOHN COMPANY, ET AL.,

PETITIONERS,

UNITED STATES OF AMERICA, ET AL.,

RESPONDENTS

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

MEMORANDUM OF THE AMERICAN BAR

ASSOCIATION AS AMICUS CURIAE

The American Bar Association, with the consent of the

parties, submits this memorandum amicus curiae in support of

the petition for a writ of certiorari.

INTEREST OF THE AMERICAN BAR

ASSOCIATION

The petition for a writ of certiorari raises two issues of

peculiar significance to lawyers: (1) the scope of the attorney-

client privilege as applied to communications made to a lawyer

by the officers and employees of a corporate client; and (2) the

extent to which a lawyer’s work product on behalf of a client

may be subject to administrative discovery. Issues of confiden-

tiality such as these go to the heart of the relationship between

lawyer and client, and they bear importantly upon the lawyer’s

role in the administration of justice. Continued uncertainty

with respect to these issues will impede the efforts of lawyers to

provide responsible, effective representation and to give the

informed guidance necessary to ensure compliance with the law.

It therefore is of central concern to the organized bar, and to

the legal profession generally, that the questions presented in

the petition be given prompt, authoritative resolution and that

they be decided with the views, needs, and responsibilities of

the profession in mind.

ARGUMENT

1. The attorney-client privilege, as applied to corporate

clients, should not be restricted solely to communications made

by members of the corporation’s control group. The court of

appeals in this case held that the attorney-client privilege, as it

applies to corporate clients,’ protects only communications

made by those relatively senior corporate executives who decide

how the corporation will act in response to the advice of

counsel. In so holding, the court emphasized and enlarged a

continuing conflict among the circuits. Two other courts of

appeals previously had endorsed the “control group” test

adopted by the court below. See Jn re Grand Jury Investigation,

599 F.2d 1224, 1237 (3d Cir. 1979); Natta v. Hogan, 392 F.2d

686, 692 (10th Cir. 1968).? On the other hand, two courts of

‘It has long been understood that the attorney-client privilege applies

to corporate clients. See Radiant Burners, Inc. v. American Gas Ass’n, 320

F.2d 314, 323 (7th Cir.), cert. denied, 375 U.S. 929 (1963). See also,

e.g., United States v. Louisville & Nashville R.R., 236 U.S. 318, 336

(1915).

?Under the “control group” test, the attorney-client privilege extends

only to communications between counsel and corporate officers or

employees who have “the authority to control, or substantially participate

in, a decision regarding action to be taken on the advice of a lawyer or is

an authorized member of a group that has such power.’ Natta v. Hogan,

392 F.2d at 692. See also City of Philadelphia v. Westinghouse Electric

Corp., 210 F. Supp. 483, 485 (E.D. Pa. 1962).

appeals have rejected that test, adopting instead a less restrictive

view of the attorney-client privilege. See Diversified Industries,

Inc. v. Meredith, 572 F.2d 596, 609 (8th Cir. 1978) (en banc);

Harper & Row Publishers, Inc. v. Decker, 423 F.2d 487, 491-92

(7th Cir. 1970), aff'd by an equally divided vote, 400 U.S. 348

(1971).3

The very existence of a conflict, which results in litigants in

different circuits being subjected to different rules, is of course

sufficient cause for review of this case on certiorari. Sup. Ct. R.

19(1)(b). The conflict represented by this case, moreover,

stands in special need of resolution, for corporations with

nationwide activities at present are left with no adequate means

of determining in advance whether communications that offi-

cers and employees make to counsel will be afforded the

protection of the attorney-client privilege. Furthermore, as this

Court recognized in granting certiorari in Harper & Row,

correct delineation of the scope of the attorney-client privilege

as applied to corporate clients also is a matter of manifest

public importance affecting both the legal apts and the

administration of justice.

In addition, amicus submits that this case was decided

incorrectly by the court of appeals. The purpose of the

attorney-client privilege “‘is to encourage clients to make full

disclosure to their attorneys.”’ Fisher v. United States, 425 U.S.

391, 403 (1976). See also Radiant Burners, Inc. vy. American

Gas Ass'n, 320 F.2d at 322. Such full disclosure obviously is in

the interest of both lawyer and client. The competent attorney

cannot render sound legal advice or provide effective representa-

3Under the “subject matter” test adopted in Harper & Row, “an

employee of a corporation, though not a member of its control group, is

sufficiently identified with the corporation so that his communication to

the corporation’s attorney is privileged where 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 corporation and dealt with in the communication is the performance

by the employee of the duties of his employment.” Harper & Row

Publishers, Inc. v. Decker, 423 F.2d at 491-92. The Eighth Circuit in

Diversified Industries adopted a “modified Harper & Row test.” Diversi-

fied industries, Inc. v. Meredith, 572 F.2d at 608.

tion unless he has thorough knowledge of all relevant facts,

including both the actions his client has taken and the

information upon which his client acted. These facts can best,

and in most instances only, be learned directly from the client.

“If such communications were required to be made the subject

of examination and publication, such enactment would be a

practical prohibition upon professional advice and assistance.”

United States v. Louisville & Nashville R.R., 236 U.S. at 336.

See also Connecticut Mutual Life Ins. Co. v. Schaefer, 94 U.S.

457, 458 (1876). Consequently, this Court has long understood

that “it is indispensable for the purposes of private justice,”

Chirac v. Reinecker, 24 U.S. (11 Wheat.) 280, 294 (1826), that

“the apprehension of compelled disclosure by the legal advisers

. . . be removed.” 8 Wigmore, Evidence § 2291 at 545

(McNaughton rev. 1961).

The full disclosure promoted by the attorney-client privilege

also serves the larger societal interest of “encourag[ing]

adherence to the law.”’ Miller, The Challenges to the Attorney-

Client Privilege, 49 Va. L. Rev. 262, 270 (1963). This is

especially true with regard to corporate clients. If disclosures

may be made in confidence, counsel is better able to investigate

allegations of wrongdoing within the corporation, determine the

legal implications of past actions, and advise on how to avoid

future violations.

The narrow compass given to the attorney-client privilege by

the court of appeals below frustrates the privilege’s central

purpose of encouraging full disclosure to counsel. The “control

group” test adopted by the court of appeals directly inhibits

disclosure by exposing to discovery the very communications

that counsel would find to be of greatest assistance. “In

practice, [the “‘control group” test] results in protecting only

communications of top level executives which fails to take into

account the realities of corporate life.’ Diversified Industries,

Inc. v. Meredith, 572 F.2d at 608. A corporation’s senior

executives rarely will be in the best position to inform counsel

concerning specific factual details on which legal issues may

turn. First-hand knowledge of the relevant facts usually is

possessed by middle-level executives or operating personnel.

These are the employees from whom counsel must acquire the

information upon which his advice will be based, yet the

“control group” test discourages the corporation from asking

them to make a full disclosure.

Moreover, as a practical matter much of corporate counsel’s

day-to-day legal advice is rendered to employees considerably

below the level of senior management. This is so for at least two

reasons. First, it is more efficient, and more effective, to give

legal advice directly to those whose conduct is to be guided

thereby, and that frequently means operating personnel far

removed from the boardroom. Second, “ ‘middle management

executives who probably do not qualify for inclusion in the

control group .. . have responsibilities for making recommenda-

tions which are ratified verbatim by the higher echelon

management... .” In fact, middle management may include the

parties whose statements most need protection because these

men frequently are the real decision makers.” Note, The

Attorney-Client Privilege in the Corporate Setting: A Suggested

Approach, 69 Mich. L. Rev. 360, 373 (1970). To inhibit

disclosures by and communications with middle management

and operating personnel therefore strikes at the very heart of

the relationship between corporate counsel and his client.

The “control group” test operates indirectly as well as

directly to inhibit full disclosure of relevant facts to counsel.

“From the lawyer’s viewpoint, the underlying policy of assuring

a client that his communications will remain confidential will be

served only if the lawyer is able to predict, with reasonable

reliability, that a particular communication will be held by a

court to be privileged.” /d. at 375. But the consequence of the

‘control group”’ test is that each time an attorney is asked for

advice by a corporate client, he must first inquire into the

position, status, and responsibility of the corporate employee

making the request in order to determine whether the employee

is within the requisite control group. The answer may not

always be clear; the employee may have some authority but not

necessarily enough.* And a determination made when the

*The attorney thus is presented with a practical difficulty at the outset.

He may be forced to make an initial investigation into a matter having

little or nothing to do with the legal issue with respect to which his advice

request or communication occurs may not withstand the

passage of time: since the identity of the group empowered to

decide the corporation’s course of action depends not only

upon the nature but also upon the significance of the matter to

be decided, its membership cannot always be known with

certainty at the time facts are marshalled and advice given.

Thus, counsel may not rely with confidence on the availability

of the attorney-client privilege with respect to communications

on matters that may possibly grow in significance over time.°

This uncertainty over the scope of the privilege as applied to

particular communications could discourage even disclosures

that otherwise might later have been recognized as privileged.

The “control group” test confronts counsel with a painful

and unfair dilemma: he must either render advice and provide

representation on the basis of inadequate knowledge of the

facts or obtain such Knowledge at the risk of becoming a

discovery tool for opposing parties. The dangers of proceeding

without a full understanding of the facts are manifest. The

lawyer has an obligation to inquire fully into the corporate

actions and other facts that bear upon the advice he has been

requested to give. Yet, if the “control group” test applied, the

lawyer would need to advise the control group (assuming that it

could be identified) of the hazards of making inquiries that

would fall outside the protection of the attorney-client

privilege. As a consequence, he might be constrained to give

advice without the benefit of full and candid responses to such

inquiries. Such a procedure obviously is undesirable: it is not in

the interest either of the corporation or of society at large for

is sought. He may, in effect, be required to give two layers of advice, one

as to whether the ensuing communications will be privileged and another

on the merits of the legal problem at hand. This can and almost certainly

often will occur in situations requiring immediate legal advice on the

merits.

‘In contrast, the “subject matter” test adopted in Harper & Row

“creates a measure of predictability on which attorneys and corporations

can rely.” Note, The Attorney-Client Privilege in the Corporate Setting: A

Suggested Approach, 69 Mich. L. Rev. at 370.

the corporation to be forced to play blindman’s bluff with the

law.

Furthermore, under the “control group” test the conse-

quences for the lawyer who aggressively presses his inquiries

into the facts can be embarrassing in the extreme. His reward

for diligence, for example, may be that he later is required to

deliver to opposing parties damaging information that causes his

client to lose the action he was hired to win. The lawyer may

even be called to testify against his client. A practice of that

sort would be sadly “demoralizing to the Bar... .” Hickman v.

Taylor, 329 U.S. 495, 516 (1947) (Jackson, J., concurring).

There also is an element of unfairness to middle management

and operating personnel in the “control group” test. An

attorney’s investigation may result in communications by

employees that reveal possible civil or criminal violations that

they may have committed in the course of their employment,

and for which they may be individually liable. See, e.g, United

States v. Wise, 370 U.S. 405 (1962). Under the “control

group” test, the corporation or its counsel could be compelled

to disclose all communications of that nature made by officers

and employees other than senior executives; only communica-

tions made by members of the control group would be insulated

from such compelled disclosure. Thus the “control group” test

unfairly puts different employees on a different legal footing

with respect to the confidentiality of their admissions to

corporate counsel. Moreover, the knowledge that the govern-

ment could compel the corporation or its counsel to disclose

their potentially incriminating communications almost certainly

would dissuade lower-level employees who have information of

questionable activities from revealing such information to

counsel. As a consequence, the “control group” test could

directly frustrate the corporation’s efforts to discover the facts

and acquire the information that it needs in order to put an end

to any unlawful activities and place itself in full compliance

with the law.

The court of appeals below apparently believed that the

restrictive “control group” test was a necessary means of

facilitating discovery by opposing parties. But the denial of

confidentiality to communications between counsel and

lower-level officers and employees cannot be justified on that

ground. Retention of the attorney-client privilege for such

communications does not foreclose opposing parties from

pursuing all conventional avenues of discovery made available

under the federal rules, including questioning the same

corporate personnel. See, e.g., Note, The Attorney and His

Client’s Privileges, 74 Yale L.J. 539, 546-47 (1965). The

attorney-client privilege appropriately fosters and protects the

relationship between lawyer and client, but it does not bar

discovery of the facts.

In summary, the question presented by petitioners concern-

ing the proper scope of the attorney-client privilege is vitally

important in terms of the legal profession and its responsibili-

ties, and this question was wrongly decided by the court below.

Review by this Court plainly is warranted.

2. An attorney’s work product should be accorded a

qualified privilege against administrative discovery. The court of

appeals below held, without analysis or elaboration, that the

work product doctrine does not apply to an administrative

summons issued by the Internal Revenue Service. This holding,

which has obvious implications for other forms of administra-

tive discovery as well, squarely conflicts with the conclusion of

the Seventh Circuit that “the work product doctrine does have

applicability to a proceeding for the enforcement of an Internal

Reveriue summons.”’ United States v. Brown, 478 F.2d 1038,

1041 (7th Cir. 1973). The resulting split of authority creates

different rules for litigants in different jurisdictions and raises

grave doubts about whether an attorney’s work product on

behalf of a corporation with geographically widespread activi-

ties can ever remain confidential.

There is no apparent basis or justification for the rejection of

the work product doctrine in this case. This Court has expressly

stated that evidentiary privileges may be asserted against a

summons issued by the Internal Revenue Service. Reisman v.

Caplan, 375 U.S. 440, 449 (1964). And it is well established

that the applicability of the qualified privilege against disclosure

of an attorney’s work product is not limited, as the court below

apparently believed, solely to actions governed by the Federal

Rules of Civil Procedure: the work product doctrine applies, for

example, in both criminal cases and grand jury proceedings. See,

e.g., United States v. Nobles, 422 U.S. 225, 238 (1975); In re

Grand Jury Subpoena, 599 F.2d 504 (2d Cir. 1979); In re

Grand Jury Proceedings, 473 F.2d 840, 842 (8th Cir. 1973).

The logic of the doctrine extends to administrative proceed-

ings as well. This Court described the basis for the work product

doctrine in Hickman v. Taylor:

Not even the most liberal of discovery theories can

justify unwarranted inquiries into the files and the

mental impressions of an attorney.

Historically, a lawyer is an officer of the court and

is bound to work for the advancement of justice

while faithfully protecting the rightful interests ot his

clients. In performing his various duties, however, it is

essential that a lawyer work with a certain degree of

privacy, free from unnecessary intrusion by opposing

parties and their counsel. Proper preparation of a

client’s case demands that he assemble information,

sift what he considers to be the relevant from the

irrelevant facts, prepare his legal theories and plan his

strategy without undue and needless interference.

That is the historical and the necessary way in which

lawyers act within the framework of our system of

jurisprudence to promote justice and to protect their

client’s interests. This work is reflected, of course, in

interviews, statements, memoranda, correspondence,

briefs, mental impressions, personal beliefs, and

countless other tangible and intangible ways. .. .

Were such materials open to opposing counsel on

mere demand, much of what is now put down in

writing would remain unwritten. An _ attorney’s

thoughts, heretofore inviolate, would not be his own.

Inefficiency, unfairness and sharp practices would

inevitably develop in the giving of legal advice and in

the preparation of cases for trial. The effect on the

legal profession would be demoralizing. And the

interests of the clients and the cause of justice would

be poorly served.

329 U.S. at 510-11 (emphasis added). These considerations and

concerns are present whether the discovery sought is civil or

administrative.

Assertion of the work product privilege in administrative

proceedings would not foreclose or significantly curtail the

government’s ability to conduct a searching inquiry into the

pertinent facts. The Internal Revenue Service, for example, has

ample authority to secure information from the corporation, its

employees, and others who may be in possession of records of

transactions or actual knowledge of the facts. Moreover, the

work product doctrine itself establishes only a qualified

privilege that may be overcome by a showing of necessity. See,

e.g., Hickman v. Taylor, 329 U.S. at 511-12; Fed. R. Civ. P.

26(b)(3). Thus, the government’s legitimate interest in knowing

the facts and reviewing the evidence can be given appropriate

recognition within the traditional confines of the work product

doctrine. See United States v. Brown, 478 F.2d at 1041. That

interest does not require or justify wholesale rejection of the

work product doctrine in administrative proceedings.

The novel decision below with respect to the work product

doctrine serves to compound the harshness of the “control

group” test that the court used to limit the attorney-client

privilege. The two holdings together appear to permit the

government to invade, without any showing of necessity,

practically all records maintained by counsel concerning his

confidential investigations into allegations of corporate wrong-

doing. The consequence of thus turning corporate counsel into

an interrogator for the government would be substantially to

discourage the socially beneficial practice of cofporate self-

inquiry. Accordingly, this Court should grant certiorari in order

to review both issues of privilege in this case.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted.