The Privilege Always Protects Communications Among Jointly Represented Corporate Affiliates, Right?

November 3, 2021

Corporate parents’ in-house lawyers’ joint representations of the parent and its wholly-owned subsidiaries should cinch their communications’ attorney-client privilege protection. Additional grounds for such privilege protection (in a litigation setting) could also come from the obvious “common interest” between a corporate parent and its wholly-owned subsidiaries – which by definition must comply with their parent’s direction.

But not all courts agree. In Somers v. QVC, Inc., Civ. A. No. 19-cv- 04773, 2021 U.S. Dist. LEXIS 148568 (E.D. Pa. Aug. 9, 2021), the court addressed communications between QVC’s in-house lawyers and employees of its sister company HSN – and communications between HSN’s in-house lawyers and QVC employees. Both QVC and HSN are wholly-owned subsidiaries of the same corporate parent. The court inexplicably rejected a privilege claim, despite acknowledging that: (1) “the QVC and HSN legal teams were consolidated into one legal department” after the corporate parent acquired them; and (2) the corporate family’s Shared Services Agreement confirmed that “legal communications among and between” the wholly-owned subsidiaries “are made pursuant to a joint client/attorney-client privilege.” Id. at *4-5. Instead of relying on the obvious joint representation privilege protection, the court only considered (and rejected) the common interest argument – noting that “there is no clear interest for sister companies to comply with each other’s contracts” or for a corporate parent to assure that “one subsidiary compl[ies] with another subsidiary’s contract.” Id. at *11.

Although perhaps the common interest analysis was interesting, the court should have extended privilege protection based on the corporate family’s consolidated law department’s joint representation of both wholly-owned subsidiaries.