Representing In-House Attorneys in Whistleblowing Suits

www.dailyjournal.com

FRIDAY, FEBRUARY 8, 2019 Representing in-house attorneys in whistleblowing suits By Tamarah Prevost ed admissibility of evidence, orders This conundrum presents these attorneys with a restricting the use of testimony in nique challenges arise when veritable Sophie’s Choice: assert their legal claims and successive proceedings, and, where in-house attorneys bring disclose privileged information, or protect their appropriate, in-camera proceedings Uwhistleblowing claims professional duty of client confidentiality that is so as solutions to the problem of confidential disclosures. Judges are en- against their former entity clients. sacrosanct in California. Aside from the customary fear of rep- couraged to take an “aggressive man- utational damage felt by most such agerial role” in this regard. Id. plaintiffs, they also face trouble when Ultimately, General Dynamics the whistleblowing communications found “there is no reason inherent in at issue are attorney-client privileged. the nature of an attorney’s role as in- This conundrum presents these house counsel to a corporation that in attorneys with a veritable Sophie’s itself precludes the maintenance of a Choice: assert their legal claims and [suit for wrongful termination] pro- disclose privileged information, or vided it can be established without protect their professional duty of Shutterstock breaching the attorney-client privi- client confidentiality that is so sacro- a retaliatory discharge claim under However, potential plaintiffs need lege or unduly endangering the values sanct in California. two circumstances: where counsel not fret. Per Lexis, there have been 36 lying at the heart of the professional Courts nationally have wrestled was discharged for reasons that con- published California Supreme Court relationship.” 7 Cal. 4th at 1169; see with how, or if, in-house attorneys travened mandatory ethical obliga- or state appellate cases citing Gener- also Fox Searchlight Pictures, Inc. v. should be permitted sue their for- tions, or second for which a non-at- al Dynamics since its publication in Paladino, 89 Cal. App. 4th 294, 309 mer client entities when privileged torney employee could maintain such 1994. Not a single one of these cases (2001). In sum, both General Dynam- communications are involved. This a claim and a statute or ethical code dismissed a whistleblowing attorney’s ics and its progeny support attorneys analysis is entangled by the practical provision permitted the attorney to claims. Three cases dismissed other, wishing to bring these claims. fact that in-house attorneys are often depart from the usual rule that client non-whistleblowing claims, but only To navigate the sticky wicket of exposed to, and obligated to report, matters remain confidential.Id. at when they were brought against an at- privilege, plaintiffs would be well-ad- a corporation’s legal wrongdoing. 1188-89, 1192. torney or a law firm who would need vised to plead facts in their complaint Denying in toto their ability to bring Note that California law only per- to disclose privileged information sufficient to align with one of the two a wrongful termination claim could mits disclosure of client confidences in order to defend themselves. See, tests described in General Dynam- send a troubling message: that the pro- under extremely limited circumstanc- e.g., Reilly v. Greenwald & Hoffman, ics. They should also be prepared to tections afforded to whistleblowing es. See, e.g., California Rule of Pro- LLP, 196 Cal. App. 4th 891 (2011) oppose a demurrer attacking their employees do not extend to lawyers. If fessional Conduct 3-100, codified as (claim against an attorney dismissed ability to litigate without revealing corporations are given all the chips in Business and Professions Code Sec- when privileged communications are privileged information. In this regard, this regard, they might start firing law- tion 6068 (stating an attorney may material to that attorney’s defenses); specifically articulating disclosures yers for having witnessed or opposed reveal confidential information “in- Solin v. O’Melveny & Myers, 89 Cal. upon which their case relies may help unlawful conduct, while avoiding any volving the commission of a crime App. 4th 451 (2001) (attorney’s suit convince a judge that applying pro- liability for wrongful termination that or a fraud, or [where] the attorney against law firm for legal malpractice tective discovery measures is more might otherwise accrue. reasonably believes that disclosure dismissed, because law firm could appropriate than dismissing their The last time the California Su- is necessary to prevent the commis- only defend itself by revealing priv- claims with prejudice. Of course, preme Court addressed this issue was sion of a criminal act likely to result ileged communications); see also plaintiffs should also be aware of in- 25 years ago, in General Dynamics in death or substantial bodily harm”). McDermott, Will & Emery v. Superi- stances a defendant entity has waived Corp. v. Superior Court, 7 Cal. 4th Thus, this second option under Gen- or Court, 83 Cal. App. 4th 378, 380 privilege by disclosing those same 1164 (1994). General Dynamics eral Dynamics is only met under rare (2000) (derivative suit against lawyer communications to third parties or moved to dismiss its former in-house circumstances. for malpractice precluded because publicly. Such a waiver takes those counsel’s claims against the company At first blush, theGeneral Dynamics lawyer could not mount reasonable communications out of General Dy- for tortious retaliatory discharge, ar- court appeared to ring the death knell defense without revealing privileged namics’ gambit entirely. guing it had an absolute right to dis- on these cases, stressing that when a communications). Tamarah Prevost is an associate at charge an attorney without cause and wrongful discharge claim cannot “be This is likely because the General Cotchett, Pitre that in-house counsel should not be fully established without breaching Dynamics court also stressed that: & McCarthy, permitted to bring a claim because so the attorney-client privilege, the suit “trial courts can and should apply an LLP. doing would breach the attorney-cli- must be dismissed in the interest of array of ad hoc measures from their ent privilege. preserving the privilege.” 7 Cal. 4th at equitable arsenal designed to permit Grappling with the complicated 1190; see also id. at 1170 (“in those the attorney plaintiff to attempt to balancing attendant to a plaintiff at- instances where the attorney-employ- make the necessary proof while pro- torney seeking to vindicate his claims ee’s retaliatory discharge claim is inca- tecting from disclosure client confi- when client confidences are at issue, pable of complete resolution without dences subject to the privilege.” Id. the California Supreme Court held breaching the attorney-client privilege, at 1191. The court stressed the use of that in-house counsel could bring the suit may not proceed”). sealing and protective orders, limit- PREVOST Reprinted with permission from the Daily Journal. ©2019 Daily Journal Corporation. All rights reserved. Reprinted by ReprintPros 949-702-5390.