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IN RE GRAND JURY

November 30, 2001

IN THE MATTER OF GRAND JURY (OO-2H).


The opinion of the court was delivered by: Rambo, District Judge.

MEMORANDUM

Before the court is the United States' motion to compel grand jury testimony and production of documents. The Government served the motion on counsel for the Target of the Grand Jury Investigation. The parties have briefed the issue, and the motion is ripe for disposition.

I. Background

As part of its on going Grand Jury investigation into "Corporation"*fn1 and its former "CEO,"*fn2 the Government subpoenaed "Attorney," who represented Corporation in two litigation matters that are now subjects of the Grand Jury investigation. In the first matter ("the Employee Litigation"), Attorney represented Corporation, "Non-Target Corporation," and CEO against a suit brought by a former Corporation "Employee." The suit alleged breach of contract and defamation of character. In the second matter ("the Brand Name Litigation"), Attorney represented Corporation along with seventeen other drug distributors in an antitrust suit against a prominent pharmaceutical manufacturer.

On August 15, 2001, Attorney appeared before the Grand Jury in Harrisburg, Pennsylvania. Prior to that hearing, Corporation waived its attorney-client privilege. At the hearing, however, Attorney refused to answer any questions about conversations he had with former Corporation "Vice President"*fn3 and CEO concerning both the Employee Litigation and the Brand Name Litigation. Attorney explained that the joint defense attorneyclient privilege covered both matters, and Corporation's waiver did not unilaterally extinguish the privilege for the non-waiving clients.

On August 21, 2001, the Government filed the present motion to compel Attorney to testify before, and produce documents to, the Grand Jury concerning the matters to which he refused to testify at the August 15, 2001 hearing. Based on the following discussion, the court will grant the Government's motion in part and deny it in part.

II. Discussion

A. The Employee Litigation

The Government seeks to compel Attorney's testimony concerning conversations between Attorney, Vice President, and possibly CEO about the settlement of the Employee Litigation. Additionally, the Government seeks production of notes taken by Attorney's "Associate" at an interview of Employee conducted pursuant to the terms of the Employee Litigation settlement. Attorney contends that these documents are covered by the attorney-client privilege. In response, the Government notes that Corporation waived the attorney-client privilege. Attorney, however, argues that the statements are part of a joint defense, and, therefore, Corporation cannot unilaterally waive that privilege on behalf of the non-waiving clients. Furthermore, the interview notes are privileged via the attorney work product doctrine.

1. Communications

Because evidentiary privileges contravene "the fundamental principal that the public has a right to every man's evidence," such privileges are strictly construed. University of Pennsylvania v. EEOC, 493 U.S. 182, 189, 110 S.Ct. 577, 107 L.Ed.2d 571 (1990) (citation omitted). As a result, the burden of establishing entitlement to a privilege rests on the party asserting the privilege. United States v. Schwimmer, 892 F.2d 237, 244 (2d Cir. 1989). The attorney-client privilege protects confidential communications made to an attorney in his or her professional capacity in those instances in which a strict relationship between the attorney and the client exists. Haines v. Liggett Group, Inc., 975 F.2d 81, 94 (3d Cir. 1992) (citations omitted).

This protection extends to communications between different persons or separate corporations when the communications are "part of an on-going and joint effort to set up a common defense strategy." Eisenberg v. Gagnon, 766 F.2d 770, 787 (3d Cir. 1985). In order to qualify for the joint defense privilege, the party asserting the privilege must show that: (1) the communications were made in the course of a joint defense; (2) the statements were designed to further the effort; and (3) the privilege has not been waived. Haines, 975 F.2d at 94 (quoting Matter of Bevill, Bresler & Schulman Asset Mgmt., 805 F.2d 120, 126 (3d Cir. 1986)).

In this case, the Government contends that Attorney has not established the existence of a joint defense. Additionally, the Government argues that even if there was a joint defense, Corporation waived that privilege. Both the Government and Attorney acknowledge that Attorney represented all parties in the Employee Litigation. Furthermore, both the Government and Attorney acknowledge that the communications at issue were made in furtherance of the parties' efforts in the Employee Litigation. Attorney, therefore, insists that Corporation cannot unilaterally disclose communications between one of the parties and common counsel without violating the joint defense privilege.*fn4 However, simply because communications take place during the course of a joint defense does not necessarily lead to the conclusion that they are automatically entitled to blanket protection under the joint defense privilege. Instead, the joint defense privilege covers the exchange of confidential communications between joint defendants. See Haines, 975 F.2d at 94 ("The joint defense privilege enables counsel for clients facing a common litigation opponent to exchange privileged communications . . . and to adequately prepare a defense without waiving [the] privilege." (citations omitted)). "Inherent to the privilege is the consultation of two or more individuals or entities with counsel." In re Sealed Case, 29 F.3d 715, 719 (D.C.Cir. 1994).

In this case, the statements between Vice President and Attorney fall outside of the joint defense privilege. These statements, which are essentially statements between Corporation and its counsel, do not involve the exchange of confidential information between two co-parties. In such a situation, the privilege is not a collective one, but rather belongs exclusively to the individual client. In this case, the client is Corporation — which has waived its privilege. Because the court finds that Corporation ...


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