What Level of Corporate Employee Can Waive the Corporation’s Privilege?

July 2, 2008

Courts determining if a corporation has waived its privilege by disclosing privileged communications must occasionally determine if the person disclosing the communication possessed authority to waive the privilege.

In Business Integration Services, Inc. v. AT&T Corp., No. 06 Civ. 1863 (JGK)(MHD), 2008 U.S Dist. LEXIS 33952 (S.D.N.Y. Apr. 22, 2008), Magistrate Judge Michael Dolinger of the Southern District of New York initially held that AT&T’s regional manager had waived AT&T’s privilege by disclosing its law firm’s legal analysis to another company (which had a contractual relationship with AT&T). The district court judge vacated Judge Dolinger’s conclusion, and remanded for a factual determination assessing the manager’s authority to waive AT&T’s privilege. On remand, Judge Dolinger found that the manager did not have actual or apparent authority to waive AT&T’s privilege. However, he concluded that AT&T had acquiesced in (and therefore ratified) the manager’s disclosure. The judge pointed to the manager’s testimony that he advised AT&T’s in-house lawyers that he was making such disclosures to the other company, and noted that the manager copied an AT&T in-house lawyer on an e-mail which disclosed such advice. The judge also emphasized that AT&T waited three years to claim that the manager lacked authority to waive AT&T’s privilege.

Corporations’ lawyers should not expect to win a privilege fight based on lack of authority if they know of a corporate employee’s disclosure of privileged communications and do not stop (or remedy) it.