District Court: Deposition Testimony Did Not Waive Privilege

Individual defendants in a class action suit against Sprint Corp. did not waive the attorney-client privilege by partially disclosing legal advice during their depositions. Magistrate Judge James P. O'Hara of the U.S. District Court for the District of Kansas found that the individuals did not testify as to the substance of any legal advice. Click here for the order in State of New Jersey v. Sprint Corp.

The court noted that the burden of showing that the privilege has not been waived remains with the party claiming the privilege. Testimony constituting a waiver of the attorney-client privilege, the court explained, must disclose "the substance of privileged communications." Revealing the "general topic of discussion between an attorney and client does not waive the privilege, unless the revelation also reveals the substance of a protected communication."

Warren Batts, a director defendant, testified in his deposition concerning tax shelter issues for the senior officers and the involvement of the company's audit firm that "I think it was sort of this amorphous mass that we might have a problem, and--but what precisely we discussed at that meeting I don’t remember." He added in response to a question concerning who advised him that "God, I wish I remember it. I am sure it was one of the legal counsel." According to the court, Mr. Batts did not clearly disclose the substance of any privileged communication and made no waiver of the privilege.

Another director, Irvine O. Hockaday, testified in a deposition concerning conflicts of interest between the company's senior officers and the audit firm that "no, we looked at that, we got legal advice on that." Again, the court rejected the plaintiffs' claim of waiver because the director "merely stated they got legal advice on the issue of Ernst & Young’s independence. A statement that advice was received regarding a certain issue does not reveal the substance of a protected communication," concluded the court.

The court finally concluded that the individuals did not have waive the privilege by affirmatively placing “reliance on counsel” at issue in the litigation. The defendants did not specifically raise reliance on counsel as an affirmative defense. Their testimony also was insufficient to act as an implicit waiver. Plaintiffs' counsel solicited the testimony through their questioning, and the testimony did not indicate that the individuals intended to use advice of counsel to justify any conduct on their part. The court noted that it could re-visit this issue if a defendant would "affirmatively and voluntarily inject the reliance of counsel issue at trial."

State of New Jersey v. Sprint Corp.

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