Fifth Circuit Issues a Favorable “At Issue” Doctrine Decision

May 9, 2018

The frightening “at issue” variety of implied waiver can destroy privilege protection if litigants affirmatively seek some advantage by (among other things) relying on their actions’ “good faith.”  If the litigants sought legal advice about the actions that they claim to have been taken in “good faith,” many courts order discovery of those otherwise privileged communications.

In In re Itron, Inc., 883 F.3d 553 (5th Cir. 2018), plaintiff claimed that three corporate officers of a company it acquired lied about the purchased company’s contractual obligations to a third party.  Plaintiff litigated with and eventually settled with that third party.  Plaintiff then sued the defendant officers for “negligent misrepresentation, seeking as compensatory damages the cost of the . . . litigation and settlement.”  Id. at *555The trial court had ordered plaintiff to produce its communications with its Gibson Dunn lawyers – noting that defendants were “seek[ing] to uncover that [plaintiff] followed unreasonable advice from its law firm (Gibson Dunn), which might arguably relieve Defendants of liability as a superseding cause.”  Id. at *566The Fifth Circuit took the extraordinary step of granting a petition for writ of mandamus “to correct [the trial court’s] significant misapplication of attorney-client privilege law.”  Id. at *555The court held that “the mere act of filing this lawsuit effected no waiver of any attorney-client privilege,” and that “the objective reasonableness of [plaintiff’s] conduct should be apparent from the facts known to [plaintiff] at the time (which again, are not privileged) coupled with objective legal analysis.” Id. at *556, *566 (emphases added).

The Fifth Circuit’s forceful rejection of a broad “at issue” waiver approach should encourage corporate defendants who seek lawyers’ advice before taking actions, if the corporations may later rely on those actions in pursuing or defending litigation.