Court Takes an Expansive View of the “At Issue” Doctrine

January 21, 2004

All courts recognize the obvious concept that a litigant impliedly waives the attorney-client privilege by relying on legal advice without disclosing it (for instance, by asserting an “advice of counsel” defense). Some courts have expanded this doctrine to find a similar waiver if a litigant advances affirmative or defensive claims making privileged communications relevant to the claim or to the adversary’s defense. This has come to be known as the “at issue” doctrine.

In Aloe Vera of America, Inc. v. United States, No. CV 99-1794-PHX-JAT, 2003 U.S. Dist. LEXIS 18317 (D. Ariz. Sept. 19, 2003), defendant IRS asserted a statute of limitations defense, contending that plaintiff Aloe Vera was aware of certain IRS activities and waited too long to file its lawsuit. Applying the “at issue” doctrine, the court compelled Aloe Vera to produce documents that evidence “what investigation [Aloe Vera’s] counsel conducted, what information counsel received, and when counsel received it [as well as] documents containing information relating to when [Aloe Vera’s] counsel may have advised [the company] that a cause of action may have accrued.” Id. at *21.

The implied waiver doctrine (especially in its extreme “at issue” form) represents the most frightening kind of waiver — plaintiff Aloe Vera did not reveal any privileged information, did not assert an “advice of counsel defense” and probably did not have a clue that it would lose its privilege simply by filing a claim that the IRS would argue was untimely.