Nationwide Mutual Ins. Co. v. Fleming et al., 992 A2d 65 (PA 2010).
Facts: In the underlying action, Nationwide alleged that a number of its former agents accessed confidential policyholder information from Nationwide's internal computer system and then provided it to competitors. At trial, defense counsel questioned the president of Nationwide with respect to a memo labeled "Document No. 529." Nationwide asserted it was protected by the attorney-client privilege, and redacted all information with the exception of the author, recipient list, date and subject line. The memo had been sent by Nationwide's in-house counsel to 15 Nationwide employees.
Defendants argued that even if Document No. 529 was privileged, Nationwide had waived the privilege by disclosing two other privileged documents on the subject of agent defection (Document Nos. 314 and 395). In other words, Nationwide could not use the privilege as a "sword and a shield" by selectively disclosing only those privileged documents favorable to its position.
Nationwide argued that the other two documents were not protected because they were merely business communications devoid of any confidential communications made by Nationwide for the purpose of obtaining legal advice.
The lower court first examined Documents 314 and 395 to determine whether the production of those documents constituted a disclosure of confidential information by Nationwide. The Court determined that production of these documents did not amount to a disclosure of privileged information because the information contained in the memos was not confidential or conveyed to an attorney for the purpose of securing legal advice, assistance, or opinion. Rather, the documents constituted routine business communications.
Consequently, the Court held that Nationwide had not waived the attorney-client privilege by producing Documents 314 and 395. Nevertheless, the Court ordered disclosure of Document 529 for the following reasons:
- Document 529 was a communication from counsel to a group of managers of a corporate client -- The attorney-client privilege protection is available only for confidential communications made by the client to counsel. Communications from counsel to a client are only protected to the extent they reveal confidential communications previously made by the client to counsel for purposes of obtaining legal advice.
- Document 529 did not reveal any confidential communications from Nationwide to its in-house counsel for the purpose of obtaining legal advice. Rather, much like Documents 314 and 395, it was a memo concerning business strategy with regard to agent defections.
- The Court further noted that counsel's general opinion as to what is likely achievable via litigation is not protected by the attorney-client privilege in the event it does not reveal the client's confidential communications.
Nationwide appealed.
Issue: What is the scope of the attorney-client privilege in Pennsylvania?
Ruling: The Supreme Court was equally divided and the Order of the lower court was, therefore, affirmed.
Justices Eakin and Baer, in favor of affirmance, noted that Nationwide had waived the attorney-client privilege by previously disclosing other, favorable documents with regard to the same "subject matter":
[T]he disclosure of Documents 314 and 395 form the basis of subject matter waiver of the attorney-client privilege regarding Document 529, the scope of which extends to Document 529 because it contains the same subject matter. What distinguishes Document 529 from Documents 314 and 395 is counsel's unflattering concessions regarding the litigation's purpose and prospect of succeeding. [A]ppellants seem to have produced only the documents beneficial to their case by disclosing Documents 314 and 395, and withholding Document 529 based on its privileged nature. I believe appellants waived the attorney-client privilege with respect to the subject of agent defections upon disclosing Documents 314 and 395, and cannot claim the privilege applies to a document containing the same subject matter, as well as potentially damaging admissions.
Justices Saylor and Castille, in favor of reversal, noted:
Document 529 describes, among other things, [discusses] the present litigation in several states involving Appellants, their former agents, and their new companies. Namely, it discusses the nature of these suits, the money damages sought, the purpose behind the litigation, Appellants' likelihood of success, and the other remedies available to Appellants against defecting agents. It also includes counsel's recommendations regarding Appellants' use of specific contract provisions, as well as the possibility of filing complaints with the insurance departments of certain states.
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[The document] both reveals information apparently communicated by management and, more generally, reflects in-house counsel's knowledge apparently derived from familiarity with business aspects. The memorandum proceeds to detail strategies that appear to reflect prior decisions made by management upon legal consultation...
Lesson: The Scope of the attorney-client privilege in Pennsylvania remains undecided. Arguments for disclosure can be made based on "subject matter" waiver, or the fact that the communication discloses no confidential information related to the attorney for purposes of legal advice. An argument for protection under the attorney-client privilege can be made based on the principle that an attorney's case-specific advice is necessarily intermixed with and dependent upon information the client shares in confidence.
