Friday, September 17, 2010

Pa. Supreme Court Takes Another Shot at Attorney-Client Privilege

'Gillard v. AIG' is the latest in a series of worldwide rulings covering attorney-client privilege

An attorney arguing for an insured in a case about attorney-client privilege said the Pennsylvania Supreme Court had its chance in 1998 to take control of whether communications from an attorney to a client were privileged and instead let the legislature re-enact an 1887 statute codifying that the privilege extends only to communications from a client to an attorney.

Now it is that statute that the court must strictly construe in finding AIG should produce documents that were drafted by an attorney for the insurance company client, the attorney for William Gillard argued in Gillard v. AIG Tuesday.

It's the second time this year the court was faced with the privilege issue, but in the first case, Nationwide v. Fleming, only four justices decided the case and they were split, leaving a Superior Court's decision that attorney-client privilege is a one-way street stand. Nationwide also involved an issue of waiver, which Gillard does not, allowing the justices in Gillard to look only at the merits.

All seven justices heard Tuesday's arguments in Gillard, in which the lower courts relied on the Nationwide decision in determining communication from an attorney to the insurance company client is not privileged.

In response to the argument by Gillard's attorney, Claire Neiger of Michael T. Sosnowicz & Associates in Darby, Pa., Chief Justice Ronald D. Castille asked whether this was a matter of practice and procedure that was within complete control of the court and not the legislature. He asked Neiger why the court couldn't simply ignore the codification of the privilege and say the legislature violated separation of powers by regulating something within the court's powers to regulate.

Neiger responded that the court could do that, but it would be going against its prior decisions.

"In 1998, you had the opportunity to pull back and you didn't," Neiger said.

Before Neiger was able to finish her next argument that this issue was better handled under the common law attorney work-product doctrine, Castille asked her whether she would like it if her communications with her clients were made public.

"I would hope I would have the sense to craft it in a way" that it would be protected, Neiger said, adding that attorneys are "clever."

"I don't know why an attorney has to be clever," Justice Joan Orie Melvin said later.

Neiger had argued that some communications from attorneys to clients are protected as long as they reference information the client had previously provided. She said Philadelphia Common Pleas Judge Jacqueline Allen followed that guideline in determining in Gillard that some documents were discoverable and others were not.

The argument for the other side is that attorneys sometimes want to be proactive in writing opinion letters to clients on new legislation or issues facing the company and they argue that should be protected.

The court recognized at the start of argument the slew of amici filers on behalf of AIG, including the Philadelphia, Allegheny and Pennsylvania Bar Associations, the U.S. Chamber of Commerce and the Association of Corporate Counsel.

AIG's attorney, David Rosenberg of Weber Gallagher Simpson Stapleton Fires & Newby in Pittsburgh, said it shouldn't be lost on the court that all of these attorney groups are coming out in favor of privilege being a two-way street.

He said for hundreds of years the court has recognized as privileged communication both from and to the attorney. It was in 1887 that the privilege was initially codified, but only in part. Both then and now the statute reads that an attorney cannot "be competent or permitted to testify to confidential communications made to him by his client."

Rosenberg said this language was not meant to limit hundreds of years of privilege protecting communications from the attorney to the client. He cited a 1900 case, National Bank of West Grove v. Earle, in which the Supreme Court found privilege to be a two-way street even after the 1887 enactment of the statute.

Castille said it seems hard to sort out what communication was from the attorney and what was from the client when some of the attorney communication might include client comments as well.

Rosenberg said the communications are intertwined and a finding that privilege is a one-way street creates too big of a risk to the client that something they say might be revealed. He said the Supreme Court has the power to clarify this issue.

"Attorneys and clients need clarification and direction," Rosenberg said.

Neiger said AIG makes it seem that the court hasn't dealt with this issue since 1900, but she said that was only a one-page opinion that was dicta. She said there are plenty of cases, however, that have followed strict statutory construction. Over time, Neiger said, corollaries to the privilege statute have arisen that allow for the protection of some attorney communication.

Justice Max Baer asked whether Neiger's construction would put an attorney in the position of determining during each conversation with a client whether what she said is discoverable. Neiger responded in the negative, saying those discussions are based on privileged facts from the client, not based on corporate interests of having opinion letters from attorneys be protected.

"All the attorney has to do is write in an opinion letter facts given by the client and it's not discoverable," she said.

Justice Debra Todd said she wanted to "quarrel" with Neiger's repeated comments that the case was about protecting corporate interests, as Neiger said was evidenced by the amici filers. Todd said the associations of attorneys signing on in support of AIG represent both plaintiffs and defendants.


In Nationwide, Justices J. Michael Eakin and Baer wrote to affirm the lower court while Justice Thomas G. Saylor and Castille wrote to overturn it. Justices Seamus P. McCaffery and Todd had to recuse themselves from the case because they sat on the lower court panel. Though the case was argued in March 2008, the court didn't issue a ruling until after interim Justice Jane Cutler Greenspan left the bench in January 2010, leaving only four justices to decide the case. Orie Melvin couldn't rule on the case because her brother represented one of the parties.

The same day the full court heard arguments in Gillard, the European Court of Justice decided in the closely watched Akzo Nobel case that attorney-client privilege does not extend to in-house attorneys in investigations of anti-competitive acts by corporations. Although Gillard didn't deal with in-house counsel, Nationwide did.

The Akzo Nobel ruling raised immediate ire from in-house counsel across the globe, including the ACC, which came out in favor of AIG and Nationwide.

In a statement Tuesday, ACC General Counsel Susan Hackett said the organization was dismayed by the ECJ ruling, which she said ignores the independence of in-house counsel.

"In-house counsel are top legal practitioners who are just as capable as their outside counsel counterparts," Hackett said. "The idea that professional independence stems from the type of office a lawyer works in, rather than from their moral and professional compass, evidences a deep misunderstanding of legal professionalism and lawyers."

By Gina Passarella


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