Morrison & Foerster Monthly News Volume 22, No. 2 February 2010
Employment Law
Commentary
Just Because It Looks Like Attorney-Client Privilege and
Sounds Like Attorney-Client Privilege Doesn’t Mean It Is
Attorney-Client Privilege
By Jessica Tipton
The attorney-client privilege is one of the oldest and most respected privileges. The
privilege was afrmed and seemingly expanded by the court in Upjohn Co. v. United
States, 499 U.S. 383 (1981), which held that, in a corporate setting, the attorney-client
privilege may extend to communications involving middle and lower level employees.
Though this nding appears to offer expansive protection under attorney-client privilege,
the reality is that opening up condential communications to large groups risks waiver of
the privilege. Recent decisions on the attorney-client privilege have examined the extent
of the privilege. While each decision examines a different aspect of the attorney-client
privilege, the take away from each is that proper steps must be taken to avoid waiver
of the privilege. Below are the most recent cases on this point and practical tips for
protecting condential communications.
Factual Findings in Condential Communications: Costco Wholesale
Corp. v. Superior Court
The California Supreme Court in Costco Wholesale Corp. v. Superior Court of Los
Angeles, 219 P.3d 736 (Cal. 2009) took an in-depth look at what communications are
afforded protection under the attorney-client privilege. In the underlying case, Costco was
charged with having misclassied its employees as “exempt,” and thus the employees
were entitled to the overtime they had not been paid. Costco hired outside counsel to
advise it on the proper classication of the employees. Outside counsel interviewed
a number of employees and wrote a 22-page memorandum detailing its ndings and
opinion on classication status. The memorandum was given to Costco’s in-house
counsel and appeared to be clearly privileged and condential.
Plaintiffs sought production of the condential memorandum during the litigation.
Allegedly, Costco had asserted an “advice of counsel” defense and potentially waived
the privilege. Costco denied ever asserting such a defense and maintained that the
memorandum was protected by attorney-client privilege and the work product doctrine.
The court appointed a referee to determine whether and to what extent the contents of the
memorandum were privileged or contained work product material.
After reviewing the memorandum, the referee determined that the majority of the
memorandum was in fact condential attorney-client communications because it
contained observations and mental impressions. Among the privileged information
were a number of factual ndings relating to job responsibilities. The referee concluded
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(Continued on p.2)
