(Article from Insurance Law Alert, February 2015)
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A Pennsylvania federal district court ruled that attorney-client privilege does not apply to a company’s internal communications with an attorney that was hired to perform risk management functions rather than to act as in-house counsel.
Casey v. Unitek Global Services, Inc., 2015 WL 539623 (E.D. Pa. Feb. 9, 2015). Although the decision was issued in an employment discrimination case, insurers may be able to rely on its holding in coverage litigation to obtain full access to risk manager files.
Unitek had hired Casey as its Director of Risk Management and then promoted her to Vice President of Safety and Risk. Unitek later fired Casey, allegedly as a result of her discrimination and harassment complaints. During litigation, Unitek argued that Casey was employed as an attorney and was therefore prohibited from using privileged communications to support her claims. The court disagreed, finding that an attorney-client relationship did not exist between Casey and Unitek.
First, the court found that Casey was not hired as an attorney or for the purpose of providing legal advice, but rather for assessing the company’s risk and insurance needs—a position that required no legal knowledge. Second, the court ruled that Casey’s participation in insurance claim litigation management did not establish an attorney-client relationship. Although Casey received court notices, retained and communicated with outside counsel, verified pleadings, made discovery responses, granted settlement authority, and attended quarterly litigation update meetings, the court found that “the cases were not assigned to her office because she was an attorney. Rather, she took charge of these claims because the insurance policies which she negotiated and oversaw would indemnify Unitek for any loss.” The court therefore concluded that Casey was “not acting as Unitek’s attorney,” but instead “was acting as a client to outside counsel.”
Alternatively, the court held that even assuming that Casey was in-house counsel, Unitek failed to identify any specific privileged communications that warranted the issuance of a protective order. In this context, the court emphasized that even when communications are made between a company and its counsel, attorney-client privilege applies only if the “communication in question was made for the express purpose of securing legal not business advice.” Here, the court held that Unitek had not established that any specific communications were made to Casey in her role as legal advisor.
Finally, the court denied Unitek’s motion to file certain privileged documents under seal. The court acknowledged the “privileged character of some of the exhibits” but held that by using attorney-client privilege as a complete defense to Casey’s lawsuit, Unitek waived its right to assert privilege. As discussed in our
January 2015 Alert, courts routinely refuse to protect attorney-client communications where a party seeks to use privilege “as both a sword and a shield.”