Every court recognizes a doctrine stripping away privilege protection from communications between lawyers and clients in furtherance of future crimes or common law fraud. However, courts disagree about the “crime-fraud exception’s” applicability to arguably lesser types of misconduct.
In Chevron U.S.A., Inc. v. United States, 80 Fed. Cl. 340 (Fed. Cl. 2008), the court considered the crime-fraud exception’s applicability to alleged wrongdoing by Department of Energy lawyers. The misconduct involved the lawyers’ ex parte communications with Department of Energy “decision-makers” handling the allocation of oil interests in the Naval Petroleum Reserve. Id. at 350. The court ultimately applied the crime-fraud exception to otherwise privileged communications to and from the DOE lawyers. Acknowledging that the United States Court of Appeals for the Federal Circuit had not addressed the reach of the crime-fraud exception beyond crimes and frauds, the court applied the exception to what it called “violations of an Administrative Order [prohibiting such ex parte contacts] and an essential term in a high-profile government contract.” Id. at 363.
The increasing criminalization of corporate misconduct threatens to dramatically expand the crime-fraud exception in the corporate context. Extending the crime-fraud exception’s application beyond crimes and fraud could stretch the doctrine even further.