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Do Former Corporate Officers Hold the Attorney-Client Privilege Jointly with the Corporation?

Until late 2017, the question of whether a former officer of a Massachusetts corporation has access to attorney-client privileged communications made while that officer was employed at the corporation, had not been directly addressed by Massachusetts courts.

Recently, however, a case in the Business Litigation Session of the Superior Court issued an order directly on point.

 

In the case of John J. Mooney, et al. v Diversified Business Communications, et al., Judge Sanders issued an order that clearly distinguishes Delaware law from Massachusetts law regarding the scope of the attorney-corporate client privilege. In that case, the plaintiff Mr. Jones, a former CEO of a company incorporated in Delaware but based in Massachusetts, sought documents from the defendant company (for which he worked) containing attorney-client privileged communications.  The documents were created during the time Mr. Jones was employed as the CEO of the company.  

 

The Court held that, under Delaware law, which has adopted the "collective-corporate-client" approach, Mr. Jones would have a right to the documents since he would be considered a joint client, along with the company, at the time the communications were made. 

 

The Court, however, held that Massachusetts law, rather than Delaware law, should apply.  Typically, the "internal affairs doctrine," which provides that the law of the state in which a company is incorporated applies to issues regarding the relationships between the corporation and its officers, directors and shareholders.  The Court found that, in this instance, the "internal affairs doctrine" was not relevant because issues of attorney-client privilege are general litigation matters and not peculiar to these corporate relationships.  Rather, the Court applied the principal that, because the corporation was located in Massachusetts and the privileged communications were made in Massachusetts, Massachusetts had the most significant relationship to the issue and should apply its own law.

 

Applying Massachusetts law, the Court reasoned that the Massachusetts Supreme Judicial Court's decision in the case of Chambers v. Gold Medal Bakery,suggested that the Supreme Judicial Court would adopt the "entity is the client" approach (which is the approach used by the majority of courts) rather than Delaware's "collective-corporate-client" approach.  Under the "entity is the client" approach, the corporation alone is the client.  Thus, since only the corporation holds the attorney-client privilege, former officers of the company cannot demand access to attorney-client privileged communications.  The Court noted three flaws in the "collective-corporate-client approach" used by Delaware: (1) it could undermine the purpose of the privilege to promote candid communications if there were a fear that such communications could be used later against the corporation by a disgruntled corporate officer; (2) it ignores the fact that a corporate officer acts in a fiduciary role rather than as an individual; and (3) it allows a former officer to use his former fiduciary role as a weapon to advance his own interests at the expense of the corporation.

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