Do Defunct Corporations Still Have a Privilege?

November 10, 2010

Given recent economic troubles, it should come as no surprise that courts sometimes deal with privilege claims on behalf of defunct corporations. The typical scenario involves a subpoena directed to a law firm which formerly represented a now-defunct corporation that no longer exists. Can anyone assert the privilege in that setting?

In Favila v. Katten Muchin Rosenman LLP, 115 Cal. Rptr. 3d 274, 298 (Cal. Ct. App. 2010), a California court held that the privilege could be asserted by “persons authorized to act on the dissolved corporation’s behalf during the windup process” – which the court recognized as “ongoing management personnel.” One week later, the Southern District of Ohio reached the same conclusion based on an Ohio statute. In Wallace v. Huntington National Bank, Civ. A. Nos. 2:09-CV-104 & 2:10-CV-469, 2010 U.S. Dist. LEXIS 94958 (S.D. Ohio Sept. 10, 2010), the court allowed a defunct corporation’s former director to assert the privilege.

Although law firms most typically face this issue, others who had some involvement in a now-defunct corporation might also want to avoid discovery.