First Union Must Turn Over Documents Relating to Allegedly Misleading Release
First Union Corp. must turn over documents regarding an allegedly misleading release signed by approximately 2,000 employees discharged by its predecessor CoreStates Financial Corp., a federal judge in Philadelphia has ruled, rejecting the contention that the documents were protected by attorney –client privilege (Kaminski v. First Union Corp, E.D. Pa., No. 98-CV-1623, 7/10/01).
Applying the crime-fraud exception to attorney-client privilege, Judge James McGirr Kelly of the U.S. District Court for the Eastern District of Pennsylvania decided a reasonable factfinder [sic] could believe that CoreStates drafted the release with the intent of deceiving the laid-off workers and causing them to believe that they had waived their rights under the Age Discrimination in Employment Act. The judge granted the plaintiffs’ motion to compel production and ordered First Union to turn over documents and communications regarding the drafting of the release and a “Question and Answer” document provided to the employees laid off in March 1995.
Kelly also decided attorney-client privilege did not apply to any documents viewed by, or communications with, CoreStates’ reorganization consultant because the consultant did not play any role in facilitating communications with the company’s attorneys.
First Union waived the attorney-client privilege regarding a document titled “Key Human Resources Issues” that the company twice filed mistakenly with the court, Kelly ruled. The document includes a discussion of an attorney’s opinion of the effectiveness of the release.
The decision came in an ADEA opt-in collective action that includes approximately 190 discharged workers, according to plaintiffs’ attorney Carol A. Mager of Mager & White in Philadelphia. The plaintiffs are attempting to defeat First Union’s contention that they waited too long to sue by showing that the release misled them into believing they had waived their right to sue under the ADEA, Kelly said.
The attorney-client privilege protects confidential disclosures by a client to an attorney as part of obtaining legal assistance and can be waived by communications to someone outside the attorney-client relationship, Kelly explained.
First Union sought return of the “Key Human Resources Issues” document, arguing it inadvertently provided the document to the court. However, Kelly found the filing of a document with a court “creates a presumption of public access to the document.” He ruled the company waived the attorney-client privilege regarding that document.
First Union also argued the privilege protected documents and communications revealed to Aston Limited Partners, a reorganization consultant used by CoreStates that had signed a confidentiality agreement.
“Third parties may participate in privileged communications between attorney and client where their presence allows the attorney and client to communicate and enables the attorney to provide legal advice,” Kelly said. He gave examples of obtaining help from a language interpreter or an accountant.
Aston functioned as an outside business consultant, Kelly said, finding no evidence that Aston facilitated communications between CoreStates and its attorneys. “While the existence of a confidentiality agreement demonstrates that CoreStates and Aston intended their communications would remain confidential, nothing about the confidentiality agreement suggests that Aston was somehow presenting legal advice,” the judge said. He decided no attorney-client privilege applied to “any documents viewed by Aston or any communications where Aston was present.”
“If a court determines that the client intended to commit a criminal or fraudulent act, that court may refuse to allow the party to assert the attorney client privilege,” Kelly explained. Based on a review of the release and the preparation leading up to it, he said he was “convinced that a reasonable factfinder could believe that CoreStates drafted the…Release with the intent to deceive terminated employees into believing they must waive their ADEA rights in order to receive enhanced benefits.”
Although the release itself contains no indication that it applies to age discrimination claims, CoreStates “told employees that they waived any and all claims,” Kelly said. He noted that the Older Workers Benefit Protection Act, which amended the ADEA, created certain disclosure requirements for the valid waiver of ADEA claims that are not required for other types of discrimination claims. If a discharged worker showed the release to an attorney who was not familiar with the OWBPA requirements, “it is likely that the attorney would believe that the Release was intended to cover all discrimination claims,” the judge said.
The “Question and Answer” document that CoreStates sent to discharged workers contained “no indication” whether they could keep the enhanced severance benefits and still bring an ADEA suit, Kelly found. “A factfinder could reasonably find that the Question and Answer document was designed to hide this material fact,” the judge said. He concluded that documents and communications related to drafting the release and the Question and Answer document were not privileged because they satisfied the crime-fraud exception.
In addition to Mager, Stephen G. Console of the Console Mattiacci Law, LLC in Philadelphia and Darnley D. Stewart of Bernstein, Litowitz, Berger & Grossmann in New York represent the plaintiffs.
Steven R. Wall and James N. Boudreau of Morgan, Lewis & Bockius in Philadelphia represents First Union.