Advice Of Counsel Defense Results In Attorney Client Privilege Waiver

In antitrust litigation, court concludes that the reliance on the advice of counsel resulted in waiver of the attorney client privilege after conducting an in camera review; based on the defense, court notes that it "would be patently unfair for a party to assert that they relied upon the advice of counsel, yet deprive the opponent of the opportunity to understand why the advice was given, what other alternatives were looked at, why certain advice was rejected, and how the advice was interrelated to other business decisions," in In Re: Fresh and Process Potatoes Antitrust Litigation, _ F.Supp.2d _ (D. Idaho April 11, 2014) (No. 10MD02186)

Generally, the attorney client privilege protects communications involving advice to a client. See, e.g., Fisher v. United States, 425 U.S. 391, 403 (1976) ("Confidential disclosures by a client to an attorney made in order to obtain legal assistance are privileged. The purpose of the privilege is to encourage clients to make full disclosure to their attorneys.") (citations omitted). However, the privilege can be waived. A recent ruling in an antitrust case demonstrates the application of wavier based on assertion of the reliance on counsel defense.

The case was brought by direct purchases who accused potato growers and cooperates of conspiring to fix and inflate prices. One party filed a motion to compel production of documents.

The court noted that the holder of the privilege held the burden to meet an eight-part test:

(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) unless the protection be waived.

In re Grand Jury Investigation, 974 F.2d 1068, 1071 n.2 (9th Cir. 1992).

Advice Of Counsel Defense and the Ambiguous Waiver Terms

One issue was the scope of any reliance on advice of counsel defense. The defendants contended that they had organized some of the cooperatives to obtain certain securities and income tax benefits and "some uncertainty" about the scope of antitrust limitations under the Capper-Volstead Act. During the litigation, the defendants agreed to produce certain privileged communications under the following terms:

All documents reflecting communications with counsel and/or relating to advice from counsel regarding defendant’s belief that the conduct alleged in the Direct Purchaser Plaintiffs’ Second Amended Class Action Complaint. Stipulation at 1 (Dkt. 494.)

Fresh and Process Potatoes Antitrust Litigation, _ F.Supp.2d at _ (footnote omitted). The court was critical of the waiver language and in particular on "the sloppy and careless use of the phrase, 'and/or'." As the court noted:

The use of the ambiguous phrase “and/or” has been “frequently condemned as improper and confusing,” and at least one court has construed the phrase against the drafter. See Newlon v. Newlon, 220 S.W.2d 961, 963 (Ky. 1949). See also Moran v. Shern, 208 N.W.2d 348, 351 (Wis. 1973): “‘and/or,’ that befuddling, nameless thing, that Janus-faced verbal monstrosity, neither word nor phrase, the child of a brain of some one too lazy or too dull to express his precise meaning, or too dull to know what he did mean, now commonly used by lawyers in drafting legal documents, through carelessness or ignorance or as a cunning device to conceal rather than express meaning with view to furthering the interests of their clients.”; Raine v. Drasin, 621 S.W.2d 895, 905 (Ky. 1981): “error is achieved by use of the much condemned conjunctive-disjunctive crutch of sloppy thinkers, and/or.”

Fresh and Process Potatoes Antitrust Litigation, _ F.Supp.2d at _ .6 (quoting Blue Cross of Idaho Health Serv., Inc. v. Atlantic Mut. Ins. Co., Co., No. 1:09–CV–246–CWD, 2001 WL 162283 *14 .14 (D. Idaho Jan. 19, 2011)). Based on this broad language, the court concluded that the "according to the imprecise language, Defendants effected a waiver of all documents reflecting communications with counsel." The court further held that other documents were not protected by the privilege. The court used the following analogy:

There is a universe of documents—the donut—being withheld on the basis of the attorney-client privilege. The waiver cut out the middle of the donut—the donut hole—and those documents have, according to these Defendants, been produced. Now, Defendants seek to protect the rest of the donut from consumption. Contrary to Defendants’ assertion, the waiver did not affect the greater universe of documents withheld. It was silent as to those documents. Nor is the waiver being interpreted “too narrowly,” as Plaintiffs argue. Rather, the waiver merely classified certain attorney-client privileged documents (the donut hole) as subject to a limited waiver of the privilege. But, because of the defense of reliance upon the advice of counsel, Defendants may not exclude the rest of the attorney-client privileged documents (the donut) from production. All that should remain on Defendants’ plate are the sprinkles that fell off the donut—privileged communications not relevant to the parties’ claims or defenses.
It would be patently unfair for a party to assert that they relied upon the advice of counsel, yet deprive the opponent of the opportunity to understand why the advice was given, what other alternatives were looked at, why certain advice was rejected, and how the advice was interrelated to other business decisions. See Gorzengno v. Magquire, 62 F.R.D. 617, 621 (S.D.N.Y. 1973) (“It would be manifestly unjust to allow the application to be introduced in a vacuum, totally immunized from contextual analysis.”). Plaintiffs are entitled to understand and ask questions about the validity of counsel’s advice, and Defendants may not use the assertion of the privilege both “as a sword and a shield.” Id. The donut must be relinquished, and there should be no crumbs left on the plate other than the few sprinkles that fall off.

Fresh and Process Potatoes Antitrust Litigation, _ F.Supp.2d at _.

Case Law Support

In support of the waiver, the court cited to the following cases:

  • Aspex Eyeware, Inc., v. E’lite Optik, Inc., 276 F.Supp. 2d 1084, 1093 (D. Nev. 2003) (waiver of privilege based on advice of counsel defense)
  • Trans world Airlines, Inc. v. Hughes, 332 F.2d 602, 615 (2nd Cir. 1964), cert. denied, 380 U.S. 248 (1965) (attorney client privilege waived where the advice of counsel defense was raised in an antitrust case and attorney had submitted an affidavit to the Civil Aeronautics Board)
  • Tsai-Son Nguyen v. Excel Corp., 197 F.3d 200 (5th Cir. 1999) (executive deponents claiming during deposition that they relied upon advice of counsel to substantiate good faith defense to violation of federal law waived attorney-client privilege, and opposing counsel could depose the attorneys on whose advice deponents testified they relied)
  • Panter v. Marshall Field & Co., 80 F.R.D. 718 (N.D. Ill. 1978) (in an antitrust case, court held that defendant’s reliance upon advice of counsel defense waived the attorney-client privilege with respect to all communications, written or oral, to or from counsel concerning the merger transaction for which counsel’s advice was sought, and plaintiff was entitled to discovery of all relevant documents considered in forming counsel’s opinion)

The court had conducted an in camera review of some of the documents which reinforced its conclusion on the waiver of the privileged. The defendants were given 14 days to produce the documents.

Considering The "At Issue" Doctrine

Another group of defendants, who did not sign the situation, contended that they did not rely on advice of counsel and therefore did not waive the privilege. Instead, they claimed to have relied "upon publicly made statements, in forming their belief that the cooperatives were qualified as cooperative organizations protected by Capper-Volstead." Fresh and Process Potatoes Antitrust Litigation, _ F.Supp.2d at _.

Plaintiffs rely upon the “at-issue” doctrine. The “at-issue” waiver theory has been recognized by courts in the Ninth Circuit. Home Indem. Co. v. Lane Powell Moss and Miller, 43 F.3d 1322, 1326-26 (9th Cir. 1995). An implied waiver of the attorney-client privilege occurs when (1) the party asserts the privilege as a result of some affirmative act, such as filing suit; (2) through this affirmative act, the asserting party puts the privileged information at issue; and (3) allowing the privilege would deny the opposing party access to information vital to its defense. Home Indem. Co., 43 F.3d at 1326 (citing Hearn v. Rhay, 68 F.R.D. 574, 581 (E.D.Wash.1975)). But the “at-issue” test applies only if the advice of counsel is truly at issue vis-à-vis the defendant’s affirmative enses.

Fresh and Process Potatoes Antitrust Litigation, _ F.Supp.2d at _. Because these defendants did not rely on legal communications in their participation in the cooperatives, the production of the requested documents was not ordered. However, the court noted that if during the proceedings these defendants claimed to have "sought, obtained or relied upon the advice of counsel, the privilege is waived. To hold otherwise would be tantamount to allowing Offutt Defendants to use the privilege both as a sword and a shield." Fresh and Process Potatoes Antitrust Litigation, _ F.Supp.2d at _.


The Fresh and Process Potatoes Antitrust Litigation case provides a recent example of the court analysis on whether a claim of reliance on the advice of counsel will result in waiver of the attorney client privilege. As part of its decision, the court engaged in in camera review of some of the communications. Ultimately, the court found waiver for many of the defendant but not for a few.


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