Amicus Curiae Brief — Garner v. First American Life Insurance

IMRT ate te tate tmpten

™,

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URE

Decker +. Harper & Rew Pubdishers, ine.. 423 F-2d

487 (7th Cir). cert. granted, 237 UR. 1073 (1970),

aff'd by an evenly divided Court, 1K. Ct Tt

TE SET SA. AT It. Teed et

Hale +. Mentor, 90 UR EB ee eees

The Queen v. Cox, 1446 QBD. 153 (ies) ...........

Radiant Barners? ine. v. American Gas Ass'n, 320

F.2d 314 (7th Cir.), cert. denied, 375 U8. 928.1963)

United States +. Heh, 106 ¥.2d 37 (24 Cir.), cert

denied, 208 US. GAO (NOB)... eee

United States « . Louisville & Nashville RR, 236

=

United Mates +. White, 322 U8. 004...

Mines as met's:

Burnham, “The Attorney tient Privilege in the

Corporate Arena,” 26 Tus. Lawyer 901, 911 (1969)

i ERE I SEC ep a gE

ANY,

To. The United States Court of Appeals. For The

om

| A. L. GARNER, et.al,

FIRST AMERICAN LIFE. INSURANCE COMP

On Petition For a Writ of Certioreri

2

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—hetween the corporation and its attorneys. —

2, Whether « corporation may assert the attorney-

elient

privilege to protect confilential communications he-

tween the corporation and its attorneys against compulsory

diselosure in litigation commence! by parties who are not

ntoekholders of the corporation,

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up BRAT nHE Ht

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that. you would have to modify the opinion as ex-

pressed in Plaintiffs’ Uxhibit 51°”

Hi

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rr

py ii

dineover

in thei

of Firat Ameriean Lifé In-

, auc that there is no privilege as

with respeet to communieations he-

ret American Life Insurance Company and

the

not

priv

Court

the

stockholders

they

posi

that

:

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1 aan i i iba

iia Pine i

‘ik iy bait HE 1); Ht

SE o Paip aids i

Ih let athe pili

i at Hil) ih hil;

Hie ABI

of the ABA urged reversal

je interest in effeetive legal

f

publ

The brief filed on |

om the ground that the

representation whieh requires an attorney-elient privilege

also requires that the privilege extend to communications

between corporations and their attorneys without eom-

pulsory diselosure to complaining stockholders,

Counsel for the plaintiffs respomled in their brief

to the ABA position by suggesting that “any legitimate

corporate interest in non-diselosure of eounnunieations

with the corporation's attorneys can he protected by re-

quiring the showing of good enuse” (Argument Heading

B., Reply Brief for Appellants-Petitioners and Crons-

Appellees, A. L. Garner, et al, p. 11). After referring

specifically to the ABA brief, the plaintiffs replied:

“Implicit in this argument is the suggestion that if

the deeision of the lower court is sustained in this

ease, then a eorporation’s management will not feel

_ free to consult fully and frankly with the eorpora-

tion’s attorney beeanse of the fear of some future,

baseless suit.

\\ “The short answer to this contention is that the

eourts can adequately protect the eorporation in

situations where a stoekhokler-plaintiff fails to show

gool eause for the production of communieations with

eounsel,” (/bid.)

The Court of Appeals, summarizing its holding in the

language quoted in full at page 3 above, held that a eorpo-

ration was not barred from asserting the attorney-client

privilege merely heeause those demanding information

are stockhoklers, but that the availability of the privilege

was subject in such cases “to the right of the stoekholders

to show cause why it should not be invoked in the partie-

ilar instance,” and listed “many indicia that may eon-

tribute to a decision of presence or absence of good eause,”

The order of the District Court was vacated aml the

cause remanded for further proceedings

the interests sought to be

fostered by the attorney-client privilege. (Reply Brief,

p. 11, quoted above at p. 6), Petitioners’ present position

that review should be allowed principally questions

arising from the requirement of good eause is accordingly

less than persursive.

K.ven if petitioners had consistently opposed the

quirement of good cause, review of that portion of

decision helow should not he granted in the instant ease.

First, the instant ease is particularly inappropriate

to test any difficulties of administration whieh may be

ereated by the requirement of good eause, If petitionerr

. are eorreet that the evidence already developed in the

instant case confirms their allegations “concerning payoffs

to state ofiicials” and other similar eonduet (Petition,

pp. 6-7), the District Court should have little difieulty in

determining whether the instant plaintiffs have earried

their burden, Under such cireumstances a party might well

he entitled to disclosure under the usual exception to the

i LHe; in

fa a eth

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:

At vl Hi Hi

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a

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rte it

it

Rau te

for communications “about a

conmmitted,” United States v, Bob

, 14 OB.D. 153 (1884), regardicss

), cort, denied, 308 U.S. 58D (1980),

a steekholder.'

EE

to

@ (24

ir

Hi

in the instant ease, ¢.g., Dahlke v. Morrison, CCH Fed.

See. L. Rep. 192,400 (N.D. Ala. Oct. 3, 1969), and the ap-

pearance of a substantial body of preeedent on this point

is largely illusory. |

Third, the appointment of a Judicial Agent, in effect

a receiver, for respondent First American, and the Agent's

subsequent assertion of claims against the former officers

and direetors of First American, also renders the instant

ease less appropriate for review. The financial resourees

ordinarily SO ee ee eee

plaintiffs’ position on the merits are not available to the

instant a corporation by to

‘peuuiaedn aioe cane than in the

typical case in which a corporation is attempting to.

fend the correctness of the actions taken by its officers and

directors, rather than asserting claims against those

parties, 2

The appointment of the Judicial Agent has re-

moved from the instant case the question of whether the

officers and direetors of a corporation should be allowed to

invoke the attorney-client privilege if they are a

subject to suit, or whether the eorporatiop should be rep-

resented for those purposes “by a neutral party; ...”

suggested in Burnham, “The Attorney-Client Privilege in

the Corporate Arena,” 24 Bus. Lawyer 901, 011 (1969),

The respondent is now in the control of a court-appointed

Agent who has ratified the conporation’s assertion of the

attorney-client privilege. -

The amieus agrees with petitioners that the matters —

decided below are of great importance to the adminiatra-

tion of justice and to the legal profession, The -very

importance of these matters suggests to the amicus, how-

‘ever, that this Court should grant review in w more appro-

priate and typical case, and after the lower courts in the

itt

>

10 .

SUD inant cant ctncutuese Suave escematatel cagestancs

im the administration of the requirement of good cause,

rather than in the instant ease. e

Il. Phe decision below is correct in holding that o

corporation is net barred from invoking the attorney.

+ ~The Court of Appeals correctly held that mere owner-

ship of stock im a defendant corporation devs not entitle

a plaintiff to obtain disclosuss ©. the corporation's at-

tornes client communientions. Vtienors position in thks

Court that their stock ownership rhwuld automatically

entitle them to such diselosure cannot bw sustained and is

not a sufficient ground on which to xrant review,

Uniess a corporation is to he desi:i any attorney-client

privilege whatseever (as also usget Wy the petitioners),

some procedure must exist to. deterinine in a particular

case whether the interest of the plaintiff stockholder in

‘diselosure should overcome the interest in effective legal

representation which is the origin of the attorney-client

privilege, Petitioners’ argument to the contrary appears

to assume that the interests of n vingle stockholder plain-

tiff are always identicnl with the in‘ reets of the eorpora-

tion, The Court of Appeals explic‘iiy tecognined that sueh

‘an identity of interests might not oxist even if the only

interests to he aecorded legal reeagnition are the interests

of the stockholders, sinee the interests of nonparty stock

holders |

“may be affeeted by impinging on the privilege, some-

times injurionsly (though not neconmarily no—in some

wituations shareholders who are not plaintifixs may

benefit), The corporation is vulnerable to suit by

vharcholders whose interests or intention may he

inconsistent with these of ower sharcholders, even

others consisting « majority” i: A-!. n17, 490 F.2d at

1101 2.17), . 7 7

ceased ealetioueinealthtindamieaion

may be different from or contrary ta the interests of the |

particular stockholder or stockholders who have brought

suit agninet the corporation, and whieh interests may be

affeeted in particular cases by u foreed disclosure of other-.

wine confidential attorney-client communications °

- The opinion of the Court of Appeals not only shows

a thorough consideration of these various interests but

alo extablishes a sound procedure by whieh conflicts

between them may be resolved.

corporation is a elient which may invoke the attorney-

client privilege “in view of” uw reeent decision holding that

a corporation way not invoke the constitutional privilege

| against self-incrimination,

g But that decision; George t'ampbell Printing Corp. v.

Reid, 302 U.S, 286, 288, not change the prior law on

self-inerimination, At least sinve Hale vy, Henkel, 201 U.S.

43, 74-75, eited in the George Campbell decision, 302 U.B.

at 280, a corporation has not been entitled to elaim the .

floral constitutional privilege agninst self-inerimination,

T Even the Vinglish wisi aocksion <0 wtieh ystitionste y

o., 7 LT, Ch, 408, 50

L.7, 618, 614 8 gpm saeyt mage se gi ee v the power to

refune diselowure

“of eouvae, if the plaintiff's bona fides were in any way |

and the object uf the inspection were to trump up u eam, the eourt

—_— (Kun-

“fines the privilege against self-inerimination is a

purely personal one, it cannot be utilined by oF on

behalf of any organisation, such a» a eorporation.”

! supports

the uttorneyvliont privilege in stated in S Wigmore, Bvi-

denee 4 2201, p, 545 (MeNaughtion rev, 1061);

honew the law must prohibit such dinelonure exeept

on the client's consent,” |

No argument is nevwnsary 10 establish that organisations

of many types, including corporations, must and should

obtain legal adview,

Devisions by this Court have used substantially the

same language in supporting the availability of the priv-

13

ilege for both natural persons and

corporations. Compare

Connecticut Mutual Life | ec Ins. Co, v. Behactor, 96 US @,

involving @ natural person,’ with United States v, Lowia-

ville Nashoille I, 286 236 U8, 318, involving @ eorpora-

tion.*

The same t by analogy to the privilege

against welf intitaiadionageataametaniadie

also made to. the Court of Appeals in Radiant Burners,

Ine, v. American Gas Ass'n, 320 F.2d 314 (7th Cir.), cert

denied, 375 U.S. 929 (1963), whieh concluded that the

analogy was not proper lnenuse of the different reasons

for the two privileges:

“the attorney-elient privilege derives from a regard

for the rights of a client, personal or impersonal in

character, fostering a social policy coneerned with

facilitating the mane. i of justice,” 320 F.2d at 322-23.

(Emphasis added.)

Nor does the instant ease offer an opportunity to

resolve the issues presented by Decker v, Harper &

Publishers, Inc,, 423 ¥.2d 487 (7th Cir.), cert; granted,

U.S, 1073 (1970), aff'd by an evenly divided Court, 8B.

Ct, 351 (Jan, 12, 1971), other than by the Draconian solu-

tion of totally eliminating the attorney-client privilege for

corporations and other impersonal entities, At no point

in the proceedings below did any party or the amicus or

*“If 2 person cannot consult his legal adviser without being liable to

have the interview made nent Cy Sy an cnomination enforced by

the

the courts, the law he little short of , It would be a

tion upon professional advice and assistunce 04 U.S, at 487, (Kmphasis

been too dften recognized by text-huvke und courts tu need extended eom-

ment now, If sueh communications were red to he made the subject of

examination and publication, swch enactment would be a

14

the Court of Appeals make “any distinetion between the

client's communications tv the attorney and the attorney's

conmunientions to the client” (A-6 n.7, 320 F.2d at 1006

n.7), ov any dintinetion involving the status within the

corporation of the persons who had made aml received the

conmmunivntions to and from the attorneys, The “control

group” issue argued in the Decker ease in therefore not

presented in the instant case,

For the reason» stated, the petition for a writ of

vertiovari should he denied.

Respwetfully submitted,

Kowany L, Wain

President, American Bar

Association

Auuxanpen L, Nionois

Member, Board of Governors

America Bar Association

Attorneys for the American Bar

Association as amicus curiae

Of Counsel;

Onvu Sepnina

Cinucony M, Hanvuy

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