In a whistleblower suit brought by a former athletic director, a New Jersey Appellate court recently held that a basketball coach’s disclosure to the NCAA of an email to the university’s counsel did not waive the university’s attorney-client privilege. See Hedden v. Kean University, No. A-4999-12T2 (N.J. App. Div. Oct. 24, 2013).
Back in 2010, the Kean University (“Kean”) women’s basketball team took a trip to Spain. The trip had both an academic and an athletic component, as the participants were to hone their basketball skills and earn Spanish credits. The opportunity was available only to members of the team. To fund the trip, head basketball coach Michele Sharp sought donations from fundraisers, and on January 29, 2010, she emailed a draft solicitation letter to Kean general counsel Michael Tripodi for review (the “Email”).
After the trip, Glenn Hedden, Kean’s athletic director, became aware that the trip potentially ran afoul of NCAA regulations. The NCAA launched an investigation. Sharp retained her own private counsel, and later disclosed the Email to the NCAA. Kean claimed it was never consulted about, and never approved of, the production of the Email.
During the fallout of the NCAA investigation, Kean dismissed Hedden for failure to properly supervise subordinates, and Hedden in turn sued Kean for wrongful termination. In discovery, Hedden requested the Email, and Kean refused, asserting attorney-client privilege. The trial court ordered Kean to disclose the Email, and the University appealed.
The appellate court held that (1) the email was protected by the corporate privilege, and (2) that privilege had not been waived because Kean, the holder of the corporate attorney-client privilege, had not authorized Sharp to waive that protection.
The attorney-client privilege protects confidential communications between client and counsel made for the purpose of securing legal advice. Where the client is a corporation, the privilege covers communications to counsel made by mid or lower level employees, so long as they are made for the purpose of soliciting legal advice. See Upjohn Co. v. United States, 449 U.S. 383, 391 (1981). The court found that the Email met this requirement. Sharp emailed Tripodi for him to review a fundraising letter. In the court’s view, “there would be no plausible reason for the request other than to solicit legal advice.” Hedden, at 11. Tripodi often reviewed similar letters for Kean, and he had no role in fundraising other than as legal counsel.
On the issue of confidentiality, the court determined that the Email satisfied that requirement even though another Kean employee received a courtesy copy. The “privilege should not be defeated by some limited circulation beyond the attorney and the person” requesting the legal advice. Hedden, at 13. A single courtesy copy to another Kean employee did not rise to the level of broad internal dissemination that would undermine the confidentiality of the communication. Thus, the Email, at the time it was made, was protected by the attorney-client privilege.
In this case, however, “the closer question is whether the University waived the attorney-client privilege upon Sharp’s disclosure of the email to the NCAA.” Hedden, at 14. That outcome depended upon Sharp’s authority to waive Kean’s privilege.
Where the corporation is the client, “the authority to waive the attorney-client privilege does not belong to each and every employee of the corporation, but rather is held by the organizational client, namely the officers and directors of the organization.” Hedden, at 15 (citing Commodity Futures Trading Co. v. Weintraub, 471 U.S. 343, 348 (1985). Sharp was never a Kean officer, director, or otherwise involved in Kean management. She was not acting pursuant to Kean instructions when she produced the email to the NCAA. Critically, “the University neither directed nor approved Sharp’s release of the e-mail.” Hedden, at 16. Thus, Sharp was not acting in the scope of her employment in releasing the email, but rather in her own interest. The University did not have to “voice an objection at the time or take affirmative steps” to preserve the privilege in the face of Sharp’s disclosure. Hedden, at 17.
The dissent argued that the Email was not sent for the purpose of securing legal advice, and thus was never privileged. In the dissent’s view, the Email sought permission to fundraise, rather than legal advice. The dissent wanted to see a more explicit appeal for legal advice before finding that the privilege applies. Otherwise, any communication to an attorney would satisfy the “purpose of seeking legal advice” requirement.
On the issue of waiver, the dissent found it troubling that Kean did not object when Sharp disclosed the Email to the NCAA, and only asserted the privilege during Hedden’s lawsuit. The dissent concluded it allowed too much gamesmanship. Kean was able to use the Email advantageously in the NCAA investigation, when it was in its interest to disclose it, and then protect it in the course of Hedden’s lawsuit. “The attorney-client privilege should not be the subject of such arbitrary, selective, and opportunistic enforcement and cannot be doffed and donned like a raincoat on a cloudy day.” Hedden, dissent at 9.
Ultimately, Hedden reinforces the strength of the corporate privilege. As a practical matter, it further incentivizes corporations to instruct employees to rely on corporate counsel, because of the presumption that such communications are made for the purpose of securing legal advice.
Jeffrey M. Monhait (Harvard Law School, Class of 2012) practices in the commercial litigation group at Cozen O’Connor in Philadelphia.
Jeffrey M. Monhait, University’s Attorney-Client Privilege Survives Basketball Coach’s Disclosure, Harv. J.Sports & Ent. Online Dig., November 27, 2013, http://harvardjsel.com/2013/11/attorney-client-privilege/.