Upjohn Co. v. United States, 449 U.S. 383 

Supreme Court of the United States

1981

Chapter

13

Title

Privileges

Page

581

Topic

Attorney-Client Protection: managers, employees, work-products, questionnaire, tax Summons.

Quick Notes

Responding to a claim that its foreign subsidiary made illegal payments to secure a government business, petitioner corporation initiated an investigation and sent out a questionnaire to all of its foreign general and area managers to determine the nature and magnitude of such payments. After petitioner disclosed such payments to the Securities and Exchange Commission, the Internal Revenue Service demanded a production of all the files relating to the investigation. Petitioner refused to produce the documents.

Federal Rule of Evidence 501

o         Provides that "the privilege of a witness . . . shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in light of reason and experience."

Privilege

o         [The] protection of the privilege extends only to communications and not to facts. A fact is one thing and a communication concerning that fact is an entirely different   thing.

Implications

o         The client cannot be compelled to answer the question, 'What did you say or write to the attorney?' but may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication to his attorney.

Court - Communications Covered by Attorney-Client Privilege

o         Questionnaire results - Yes.

o         Attorney Work Product - Yes.  (Court of Appeals, tried to say no)

o         Tax Summon - Yes.

Court - Disclosing work product is disfavored

o         Forcing an attorney to disclose notes and memoranda of witnesses' oral statements is particularly disfavored because it tends to reveal the attorney's mental processes.

Book Name

Evidence: A Contemporary Approach.  Sydney Beckman, Susan Crump, Fred Galves.  ISBN:  978-0-314-19105-2.

Issue

o         Whether an attorneys work product is protected?  Yes.

o         Whether the work product applied to tax summons?  Yes.

Procedure

Appellant

o         United States Court of Appeals for the Sixth Circuit, which held that the attorney-client privilege did not apply to communications made by petitioner corporation's mid-level and lower-level officers and agents, and that the work-product doctrine did not apply to the administrative tax summonses issued under 26 U.S.C.S. § 7602.

Supreme

o         The judgment was reversed because petitioner's low- and mid-level employees' information was protected by the attorney-client privilege where it was necessary to defend against potential litigation, and the work-product doctrine applied to tax summonses. The court remanded the case for a determination as to whether the work-product doctrine applied, and to allow respondent to show a necessity for the disclosure.

Facts/Cases

Discussion

Key Phrases

Rules/Laws

Pl - Upjohn

Df - United States

Description

o         Upjohn discovered that subsidiary payments were made to the benefit of foreign government officials to secure government business.

o         Upjohns account informed Mr. Thomas who was Upjohns VP, Secretary and General Counsel.

o         Thomas conducted an internal investigation using a questionnaire.

o         The questionnaire went out to all Foreign managers which contained a disclosure concerning possible illegal payments to foreign governments.

o         A letter accompanied the questionnaire indentifying Thomas as the companys general counsel.

o         Manager were instructed that this investigation was highly confidential and not to be discussed outside of Upjohn employees.

o         Responses were to be sent directly to Thomas.

o         33 Officers were intervied.

o         Upjohn voluntarily submitted a preliminary report to the security and exchanges commission and to the IRS.

o         The IRS issued a summons demanding ALL responses to questionnaire and ALL notes of the interview.

o         Upjohn refused based on the attorney-client privilege.

Lower Court - Denied Protection

Federal Rule of Evidence 501

o         Provides that "the privilege of a witness . . . shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in light of reason and experience."

Purpose

o         Its purpose is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.

Counselor needs to know all

o         The lawyer-client privilege rests on the need for the advocate and counselor to know all that relates to the client's reasons for seeking representation if the professional mission is to be carried out.

Corporation Complications

o         Admittedly complications in the application of the privilege arise when the client is a corporation, which in theory is an artificial creature of the  law, and not an individual.

Court - privilege applies when the client is a corporation

o         This Court has assumed that the privilege applies when the client is a corporation and the Government does not contest the general proposition.

 Court of Appeals - Only senior management can possess a corporation indentify.

o         Considered the application of the privilege in the corporate context to present a "different problem," since the client was an inanimate entity and "only the senior management, guiding and integrating the several operations, . . . can be said to possess an identity analogous to the corporation as a whole."

Control Group Test

o         The first case to articulate the so-called "control group test" adopted by the court below.

o         If the employee making the communication, of whatever rank he may be, is in a position to control or even to take a substantial part in a decision about any action which the corporation may take upon the advice of the attorney, . . . then, in effect, he is (or personifies) the corporation when he makes his disclosure to the lawyer and the privilege would apply."

Court - Overlooks who the privilege extends too

o         Such a view, we think, overlooks the fact that the privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.

Court - Step 1) Ascertain the factual background and sifting through the facts

o         The first step in the resolution of any legal problem is ascertaining the factual background and sifting through the facts with an eye to the legally relevant.

Individual Client

o         In the case of the individual client the provider of information and the person who acts on the lawyer's advice are one and the same.

Corporate Context

o         It will frequently be employees beyond the control group as defined by the court below -- "officers and agents . . . responsible for directing [the company's] actions in response to legal advice" -- who will possess the information needed by the corporation's lawyers.

o         Middle-level -- and indeed lower-level -- employees can, by actions within the scope of their employment, embroil the corporation in serious legal difficulties, and it is only natural that these employees would have the relevant information needed by corporate counsel if he is adequately to advise the client with respect to such actual or potential difficulties.

Court - Control Group Test - Frustrates Privilege

o         The control group test adopted by the court below thus frustrates the very purpose of the privilege by discouraging the communication of relevant information by employees of the client to attorneys seeking to render legal advice to the client corporation.

Court - Advice might be more significant to noncontrol group

o         The attorney's advice will also frequently be more significant to noncontrol group members than to those who officially sanction the advice, and the control group test makes it more difficult to convey full and frank legal advice to the employees who will put into effect the client corporation's policy.

Communication at Issue

Court - Employees were aware of legal advice

o         The communications concerned matters within the scope of the employees' corporate duties, and the employees themselves were sufficiently aware that they were being questioned in order that the corporation could obtain legal advice.

Court - Questionnaire indicated legal implications

o         A statement of policy accompanying the questionnaire clearly indicated the legal implications of the investigation. The policy statement was issued "in order that there be no uncertainty in the future as to the policy with respect to the practices which are the subject of this investigation." 

Court of Appeals - Declined the extend attorney-client privilege

o         The Court of Appeals declined to extend the attorney-client privilege beyond the limits of the control group test for fear that doing so would entail severe burdens on discovery and create a broad "zone of silence" over corporate affairs.

Court - Puts adversary in no worse position

o         Application of the attorney-client privilege to communications such as those involved here, however, puts the adversary in no worse position than if the communications had never taken place.

Court - Only protects the communications, not the underlying facts

o         The privilege only protects disclosure of communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney:

Privilege

o         [The] protection of the privilege extends only to communications and not to facts. A fact is one thing and a communication concerning that fact is an entirely different   thing.

Implications

o         The client cannot be compelled to answer the question, 'What did you say or write to the attorney?' but may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication to his attorney.

Court - Communications Covered by Attorney-Client Privilege

o         Questionnaire results - Yes.

o         Attorney Work Product - Yes.  (Court of Appeals, tried to say no)

o         Tax Summon - Yes.

Court - Disclosing work product is disfavored

o         Forcing an attorney to disclose notes and memoranda of witnesses' oral statements is particularly disfavored because it tends to reveal the attorney's mental processes.

Reversed

Rules

Federal Rule of Evidence 501

o         Provides that "the privilege of a witness . . . shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in light of reason and experience."

Privilege

o         [The] protection of the privilege extends only to communications and not to facts. A fact is one thing and a communication concerning that fact is an entirely different   thing.

Implications

o         The client cannot be compelled to answer the question, 'What did you say or write to the attorney?' but may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication to his attorney.

Class Notes