Privilege Implications of an Explicit or Implicit “Advice of Counsel” Defense: Part II

May 17, 2017

Last week’s Privilege Point described the normal broad subject matter waiver triggered by litigants’ explicit defensive reliance on legal advice. Litigants’ implicit reliance can have the same effect.

In Maar v. Beall’s, Inc., FLSA defendant Beall’s contended that any employee miscalculations were “not willful, and made in a good faith attempt to comply with the law.” Case No. 16-cv-14121-MIDDLEBROOKS/LYNCH, 2017 U.S. Dist. LEXIS 29016, at *4 (S.D. Fla. Feb. 28, 2017). Answering interrogatories about one of its defenses, Beall’s noted that it “‘consulted with legal counsel regarding such classification.'” Id. at *5 (emphasis and internal citation omitted). The court concluded that Beall’s waived its privilege protection “by setting forth an affirmative defense that invoked its good faith belief in the legality of its employee classification.” Id. at *11. The court even ordered Beall’s to produce its lawyer to be deposed “concerning the substance of advice the company received from legal counsel as to the classification of Area Managers.” Id. at *12. Beall’s argued that the court’s draconian standard would give FLSA plaintiffs “automatic access” to companies’ legal advice whenever they assert a “good faith” defense. Id. at *11-12. The court rejected what it called Beall’s “dire pronouncement” — explaining that companies “can always deny the element of a plaintiff’s claim alleging a certain mental state ‘without affirmatively asserting’ a good faith belief in an act’s legality.” Id. at *12 (citation omitted). The court did not explain how that approach would work.

Corporations and their lawyers must remember the scope of any explicit “advice of counsel” defense, and the less obvious danger of implicitly relying on their good faith attempt to comply with the law.