Amicus Brief — Upjohn Co. v. United States

MICHAEL , CLERK

IN THE

Supreme Court of the GQnited States

OctoBer Trrm, 1979

No. 79-886

THE UPJOHN COMPANY, et al.,

Petitioners

V

THE 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 CHICAGO BAR ASSOCIATION

AS AMICUS CURIAE

RicHarD WiLLIAM AUSTIN KeitH F.. Bopr

President JENNER & BLock

Chicago Bar Association One IBM Plaza, 42nd Floor

29 South LaSalle Street Chicago, Illinois 60611

Chicago, Illinois 60603 Dire Miata

MicHasen H. Kine 200 East Randolph Street

Ross, Harpies, O’K&ErF, Room 5900

Bascock & Parsons Chicago, Illinois 60601

One IBM Plaza, Suite 3100

Chicago, Illinois 60611

AAT LE LEE OLE EE, POLE EDT LION Ee EO CLS SEN ELLE, I. ARETE

La Salle Street Press — Chicago Printed in U.S.A.

INDEX

EMAAR oo cos as ooo Sede ees nese e ea eee

Interests of the Amicus Curiae « . .o00sssnaeSeawcerks

re rrr rT Teor Oe

Question Presented ...... po > ou oe eae oe

pe eee Peer Tyrer

Cnmsloeing. oocviocnncikcviancs uvadawescnen tee

CITATIONS

CASES:

A. B. Dick Co. v. Marr, 95 F.Supp. 83, 102 (S.D.N.Y.

1950), appeal dsm’d, 197 F.2d 498 (2d Cir. 1951),

cert, denied, 344 U.S. 878 (1952) ........... eee eee

American Dental. Ass’n, FTC Dkt. 9093 (ALJ proc.

onder, Beat. Fi, IOTt) 6 siie'vi iv vind neneeme eee

Burlington Industries, Inc. v. Exxon Corp., 65 F.R.D.

p Sek | rrr rr

Diversified Industries, Inc. v. Meredith, 572 F.2d 596

Cite Ce. 2907) Cem BOE): ios aed eke

Duplan Corp. v. Deering Milliken, Inc., 397 F.Supp.

REGS CEAIAS. TPT) sf sida se enacee es ona

Garrison v. General Motors Corp., 213 F.Supp. 515

(BD SOR). oss cances<ehesk eae san eee

General Motors Corp., FTC Dkt. 9074 (ALJ Proce.

Gnier, SOM. BA Toews svc 646s sidan eee eee

Harper & Row Publishing, Inc. v. Decker, 423 F.2d 487

(7th Cir. 1970), aff'd by an equally divided court, 400

U.S. 348 (1971) reh. denied, 401 U.S. 950 (1971) ....

In re Ampicillin Antitrust Tatigation, 81 F.R.D. 377

* GERERDD. TOFD sie ics bes ceed cece eee ae

il

A

In re Grand Jury Investigation (Sturgis), 412 F.Supp.

EE) ee

In re Grand Jury Investigation (United States), 599

ES

In re Grand Jury Proceedings (Duffy), 473 F.2d 840

kn che ah eee send eda dame avaw

In re Grand Jury Proceedings (FMC Corp.), 604 F.2d

ND casas cscs cheese devas eananes

In re Grand Jury Proceedings (Lawson), 600 F.2d 215

ax daw s Keke ds R44 ee wo oH aes

In re Grand Jury Proceedings (McCoy), 601 F.2d 152

ee

In re Grand Jury Subpoena, Nov. 16, 1974, 406 F.Supp.

EE MEIED chews vesecscrsesesansvscees

In re Grand Jury Subpoena Dated July 13, 1979, 478

F.Supp. 368 (H.D.Wisc. 1979) ............05seeees

In re Grand Jury Subpoena (General Counsel, John

Doe, Inc.), 599 F.2d 504 (2d Cir. 1979) .............

In re Rosenbaum, 401 F.Supp. 807 (S.D.N.Y. 1973) ....

In re Stolar, 397 F.Supp. 520 (S.D.N.Y. 1975) .......

Matter of Grand Jury Subpoena, 438 F.Supp. 1176

ee

Matter of Grand Jury Subpoena Served Upon Field,

eres, 2900 €66.0.N.Y. 1976) 2... neces cee

Natta v. Hogna, 392 F.2d 686 (10th Cir. 1968) ........

Perrignon vy. Bergen Brunswig Corp., T7 F.R.D. 455

en ere eb Abid ones essaveneeadss

Safeway Stores, Inc., FTC Dkt. 9053 (ALJ proce. order,

oe gs ass bow waa ews oH 06

SEC vy. Dresser Industries, Inc., CCH Fed. See.L.Rptr.

AE A) a

PAGE

ed) |

PAGE

Sylgab Steel € Wire Corp. v. Moco-Gateway Corp., 62

F.R.D. 454 (N.D. Ill. 1974), aff’d., 584 F.2d 330 (7th

BA er ery oy Sere errr ear me ae 3

United States v. United Shoe Machinery Corp., 89

F Ban. Got (DP). Matty LGGG) iia cscs cc eisnssvccns 4

United States v. Upjohn Co., 600 F.2d 1223 (6th Cir.

SE ns bcd eC EE abe eee a OW EEN TR 7

Virgima Electric & Power Co. v. Sun Shipbuilding &

D.D. Co., 68 F.R.D. 397 (.D.Va. 1975) ............ 4

STATUTES :

Federal Rules of Civil Procedure 30(b)(6) ........... 6

Federal Rules of Civil Procedure 33 ................. 6

IN THE

Supreme Court of the Qnited States

OctoBer Term, 1979

No. 79-886

THE UPJOHN COMPANY, et al.

Petitioners

v.

THE 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 CHICAGO BAR ASSOCIATION

AS AMICUS CURIAE

This memorandum of the Chicago Bar Association is

filed with the consent of all parties and in support of the

petition for a writ of certiorari on the issue of the attorney-

client privilege.

INTERESTS OF THE AMICUS CURIAE

The Chicago Bar Association is an association of more

than 14,000 lawyers and judges who practice in the metro-

politan Chicago, [llinois area. The diversity of their prac-

tices and the range of their interests in areas of concern

to the profession is limited only by the parameters of

modern business practice. Many of the Association’s mem-

bers are actively engaged in counseling and otherwise repre-

senting corporations and their employees with business

2

activity both within and without the State of Illinois and

its contiguous neighbors. The existing uncertainty with

respect to the scope of the attorney-client privilege has a

substantial disruptive influence on a lawyer’s ability to

discharge his professional responsibility in representing

and advising corporations.

STATEMENT

The facts and proceedings below are fully set forth in

the petition.

QUESTION PRESENTED

Whether communications between an employee of a cor-

poration and an attorney for the corporation, relating to

the subject matter of the employee’s duties and involving

legal services being performed for the corporation by the

attorney, both of whom treat the communication as neces-

sary and confidential, are protected from unauthorized dis-

closure by the attorney-client privilege.

3

ARGUMENT

This case presents an opportunity for the Court to re-

solve a clear conflict between the circuits on a question of

substantial practical application. The Sixth Circuit has

now adopted the “control group” test for determining the

extent of the attorney-client privilege, thus joining the

Third Cireuit (In Re Grand Jury Investigation, 599 F.2d

1224 (3rd Cir. 1979)) and perhaps the Tenth Circuit (see

Natta v. Hogna, 392 F.2d 686 (10th Cir. 1968)). The “sub-

ject matter” test, on the other hand, is the law in the Seventh

Cireuit (Harper & Row Publishing, Inc. v. Decker, 423 F.2d

487 (7th Cir. 1970), aff’d by an equally divided court, 400

U.S. 348 (1971), reh. denied, 401 U.S. 950 (1971); Sylgab

Steel G Wire Corp. v. Moco-Gateway Corp., 62 F.R.D. 454

(N.D. Ill. 1974), aff'd, 534 F.2d 330 (7th Cir., i1976)) and

in the Highth Circuit (Diversified Industries, Inc. v. Mere-

dith, 572 F.2d 596 (8th Cir., 1977) (en banc)).

Of the remaining six circuits, the weight of authority in

the Fourth, Ninth, and District of Columbia Circuits sup-

ports use of the “subject matter” test. Burlington Indus-

tries, Inc. v. Exuxon Corp., 65 F.R.D. 26 (D.Md. 1974) ;*

*This case is sometimes erroneously cited as a “control

group” decision. E.G., Note, Corporate Attorney-Client

Privilege—Diversified Industries, Inc. v. Meredith—The

Modified Harper & Row Test, 4 J.Corp.L. 226 (1978).

It clearly is not, for the court expressly held that the

privilege extended to intracorporate documents “which

are prepared at the direction of members of the control

group to aid counsel in rendering legal assistance to the

corporation, at the express or implied request of counsel,

and which are primarily legal in nature” (65 F.R.D. at

39), that the request to the attorney for legal advice

could also be “implied” (65 F.R.D. at 37), and that the

“direction” from a control group member to a lower-level

corporate employee could likewise be implicit. (65 F.R.D.

at 38.)

4

Duplan Corp. v. Deering Milliken, Inc., 397 F.Supp. 1146

(D.S.C. 1974), Perrignon v. Bergen Brunswig Corp., 77

F.R.D. 455 (N.D.Cal. 1978); In re Ampicillin Antitrust

Intigation, 81 F.R.D. 377 (D.D.C. 1978).* The Second Cir-

cuit recently declined to resolve the conflict in In re Grand

Jury Subpoena (General Counsel, John Doe, Inc.), 599

F.2d 504, 511 (2nd Cir., 1979). There are no recent cases

from the First Circuit, but the leading case of United States

v. United Shoe Machinery Corp., 89 F.Supp. 357 (D.Mass.

1950), held that communications from all corporate agents

are protected. A number of federal administrative decisions

have likewise adopted the “subject matter” test.** The

importance of predictability in matters relating to the

attorney-client privilege supports the granting of certiorari

to resolve the current conflict—regardless of the result.

In addition, it is the position of the Chicago Bar Asso-

ciation that the issue should be resolved by adoption of the

subject matter test. The purpose of the attorney-client

privilege is to encourage by confidentiality full and truthful

communication of the facts by the client to his attorney and

candid advice by the attorney to the client. Where the client

is a corporation, these purposes cannot be served by limiting

the attorney-client privilege to communications between

counsel and members of the “control group.” Generally, it

is operating employees outside of the control group who

have knowledge of the facts which the attorney needs to

learn. Similarly, the attorney’s legal advice and instruce-

tions, to be effective, must be communicated to the corporate

employees on the “firing line”.

*A contrary case from the Fourth Circuit is Virginia

Electric & Power Co. v. Sun Shipbuilding & D.D. Co.,

68 F.R.D. 397 (H.D.Va. 1975). Cf. Garrison v. General

Motors Corp., 213 F.Supp. 515 (S.D.Cal. 1963).

** Safeway Stores, Inc., FTC Dkt. 9053 (ALJ proce. order,

June 30, 1976); American Dental Ass’n, FTC Dkt. 9093

(ALJ proc. order, Sept. 27, 1977) ; General Motors Corp.,

FTC Dkt. 9074 (ALJ proce. order, Jan. 25, 1978).

4)

The control group test, therefore, is an artificial restric-

tion which cannot be justified by reason of the nature and

rationale of the attorney-client privilege. Indeed, this test

directly conflicts with the entire basis of the attorney-client

relationship by making the attorney’s fact gathering from

corporate employees and his advice to corporate employees

potentially available to adverse parties for use against his

client.

The practical implications of the “control group” test in a

business environment populated by corporations and in-

creasingly exposed to litigation are far reaching. The most

obvious and predictable result of an application of the

“control group” test may well be attorneys for corporations

parading to the witness stand to testify about what they

learned from corporate employees in the course of their

representation of the corporation.*

* Attempts to obtain attorney’s testimony or records are

increasing rapidly in number, particularly in Government

investigations. In addition to Upjohn, see, e.g., In re

Grand Jury Proceedings (FMC Corp.), 604 F.2d 798 (3d

Cir. 1979); In re Grand Jury Proceedings (McCoy), 601

F.2d 152 (5th Cir. 1979) ; In re Grand Jury Proceedings

(Lawson), 600 F.2d 215 (9th Cir. 1979) ; In re Grand Jury

Investigation (United States), 599 F.2d 1224 (3d Cir.

1979); In re Grand Jury Subpoena (General Counsel,

John Doe, Inc.), 599 F.2d 504 (2d Cir. 1979) ; In re Grand

Jury Proceedings (Duffy), 473 F.2d 840 (8th Cir. 1973) ;

In re Grand Jury Subpoena Dated July 13, 1979, 478

F.Supp. 368 (i.D.Wise. 1979); Matter of Grand Jury

Subpoena, 438 F.Supp. 1176 (S.D.N.Y. 1977) ; In re Grand

Jury Investigation (Sturgis), 412 F.Supp. 943 (E.D.Pa.

1976); Matter of Grand Jury Subpoenas Served Upon

Field, 408 F.Supp. 1169 (S.D.N.Y. 1976); In re Grand

Jury Subpoena, Nov. 16, 1974, 406 F.Supp. 381 (S.D.N-Y.

1975); In re Rosenbaum, 401 F.Supp. 807 (S.D.N-Y.

1975) ; In re Stolar, 397 F.Supp. 520 (S.D.N.Y. 1975).

6

‘\

The routine use of attorneys as witnesses against their

clients is of course unseemly and directly contrary to the

whole concept of the attorney-client relationship. The situa-

tion can only result in less effective legal representation for

the corporation.

This result cannot be justified on the ground that it is

the only feasible method for litigants to extract necessary

information from corporate adversaries. The federal rules

require the production of all relevant documents relating to

the subject matter of the litigation. Ali corporate employees

may be required to testify concerning their knowledge of the

facts. Interrogatories pursuant to Rule 33, Federal Rules

Civil Procedure, require the corporation to assemble and

provide all information in the possession of its employees.

Under Rule 30(b) (6), FRCP, a corporation may be required

to designate a witness or witnesses who must testify to

matters “known or reasonably available” to the corporation.

There has been no showing that these discovery procedures

are inadequate. Certainly there is no showing that the

discovery process cannot function without making the

attorney a witness against his client.

In a lawsuit the attorney has an obligation to determine

the facts. He must therefore go where the facts are found.

An antitrust case involving allegations of price fixing can

not be defended without the defendant’s attorney interview-

ing the sales personnel, nor prosecuted without the plain-

tiff’s attorney interviewing the purchasing agents. Simi-

larly, a product design defect case can not be defended

without the attorney interviewing the design engineers, nor

prosecuted without interviewing the corporate employees

who either bought, serviced or operated the allegedly de-

fective equipment. Rarely will such individuals be members

of the control group.

7

In a “control group” jurisdiction an attorney representing

a corporation can have little confidence that his efforts in

assembling information from his client may not ultimately

be used to his client’s detriment. Certainly the attorney

must have reservations about assuring his client the com-

munications will be kept confidential. In turn the corporate

employees must have reservations about what to tell the

corporation’s lawyer. The effect may well be longer, more

expensive, less efficient litigation since the lawyers repre-

senting the corporation may be forced to temper their

factual research from fear of being turned into third parties

for discovery purposes.

Compliance programs and similar internal examinations

cannot be conducted with confidence in their confidentiality

in a “control group” jurisdiction and therefore may well be

less frequently or thoroughly done. Discouraging self-

policing efforts is not of benefit to the public since the prac-

tice is generally considered beneficial, and perhaps is an

essential adjunct to official enforcement of laws governing

corporate conduct. The increasing frequency of such pro-

grams is indicated by the numerous reported decisions in-

volving such internal corporate investigations.* However,

since the alleged violations are generally neither committed

by nor known to members of the “control group,” adoption

of the “subject matter” test for application of the privilege

is essential to the continued viability of the practice. Other-

wise, as in Upjohn, counsel conducting such inquiries will

likely become witnesses against their clients.

* SEC v. Dresser Industries, Inc., CCH Fed.Sec.L.Rptr.

{97,172 (D.C.Cir. 1979); United States v. Upjohn Co.,

supra; Diversified Industries v. Meredith, supra; In re

Grand Jury Investigation (United States), supra; In re

Grand Jury Subpoena (General Counsel, John Doe, Inc.),

supra; In re Grand Jury Subpoena Dated July 13, 1979,

supra.

8

The net effect of an erosion of confidence by the corpora-

tion in the privileged nature of communications with its

lawyers will be to reduce significantly the ability of the

corporation to obtain the effective assistance of counsel.

A corporation should not be forced to use lawyers who are

unable to prepare properly. A lawyer should not be forced

to represent a corporation with his head in the sand. A

corporate client must trust its lawyers to learn the facts

necessary to properly advise it and the lawyer must be able

to give advice based on as complete knowledge as possible.

Corporate clients need full and frank legal advice as

much as natural persons. Judge Medina pointed out in

A.B. Dick Co. v. Marr, 95 F.Supp. 83, 102 (S.D.N.Y. 1950),

appeal dsm’d, 197 F.2d 498 (2d Cir. 1951), cert. denied, 344

U.S. 878 (1952) :

“Since [the] early statements [of the purposes of the

privilege], the necessity of protecting the attorney-

client relationship has become even more apparent; the

legal rights and duties of large corporations and those

who dispute with them would not be susceptible of

judicial administration in the absence of lawyers, nor,

in the absence of the privilege could lawyers properly

- represent their clients.”

The rejection of the “control group” test and the adoption of

the “subject matter” test will best effectuate these principles.

9

CONCLUSION

For the reasons set forth above, the petition for a writ

of certiorari should be granted.

Respectfully submitted,

The Chicago Bar Association

RicHarp WiLLiAmM AUSTIN

President

29 South LaSalle Street

Chicago, [llinois 60603

Micwaeu H. Kine

Ross, Harpigs, O’KEeErFr,

Bascock & Parsons

One TBM Plaza, Suite 3100

Chicago, Illinois 60611

Kurrn F.. Bope

JeNNER & BLock

One IBM Plaza, 42nd Floor

Chicago, Illinois 60611

Dante, A. EDELMAN

200 Kast Randolph Street

Room 5900

Chicago, [Illinois 60601

Dated: January 24, 1980