Extracted from Law360
When an environmental crisis strikes, a company must have a strong public relations plan at the ready. A good PR response can mitigate damaging reputational effects, re-instill consumer confidence and de-escalate threatened litigation. While a PR consultant can be a critical adviser in selecting and shaping a corporation’s next legal steps, communications with that consultant by a corporation or its legal counsel are generally not privileged.
For those corporations facing a firestorm of scrutiny for perceived environmental wrongdoing and potentially millions — or even billions — of dollars in fines, sharing certain otherwise privileged information about legal strategy may seem like the only option. While counsel should proceed with caution when involving PR consultants in confidential communications, courts have recognized three theories a corporation may take advantage of to protect such communications from discovery.
PR Firm as “Translator” for Law Firm
In the seminal 1961 Second Circuit decision United States v. Kovel,[1] the court determined that certain communications between a corporation and an accountant employed by a law firm were protected under the attorney-client privilege. Specifically, the protected communications were made during the course of the accountant’s assistance in providing legal services to the client. The accountant was, in effect, “translating” certain matters for the attorney in furtherance of the legal representation itself. More than 40 years later, the basis for this “translator” theory was applied to communications with a PR firm in the Southern District of New York’s decision in Grand Jury Subpoenas.[2]
A criminal case, Grand Jury Subpoenas involved a PR firm hired by defense counsel to reduce public pressure on the prosecutor and reduce the risk of prosecution. When the defendant contended that certain communications with the PR firm were privileged, the district court agreed. The court determined that lawyers must be able to depend upon PR consultants to, inter alia, advise clients of the legal risks of speaking publicly and the legal impact of possible alternative expressions and to seek to avoid or narrow charges against the client. Because these discussions could not practically occur without sharing certain nonpublic facts and legal defense strategies, the court held that the attorney-client privilege should extend to “(1) confidential communications (2) between lawyers and public relations consultants (3) hired by the lawyers to assist them in dealing with the media ... (4) ... made for the purpose of giving or receiving advice [and] (5) directed at handling the client’s legal problems.”
Nearly 13 years after the decision, the reasoning in Grand Jury Subpoenas remains a path to asserting attorney-client privilege,[3] but its holding has been kept narrow.[4] Courts have again and again rejected attempts to assert the privilege when there has been no demonstrated link between the assistance of the PR consultant and actual legal advice to the client — in other words, when the consultant merely performed standard public relations services. In 2013’s McNamee v. Clemens,[5] for example, the Eastern District of New York declined to find PR communications protected under the attorney-client privilege where the PR firm had been hired by legal counsel to provide consulting services “with respect to media relations advice and counsel.”
The PR firm in question coordinated the defendant’s appearance on 60 Minutes, issued press releases and responded to media inquiries. Although the McNamee court initially found that the defendant had waived the privilege by failing to submit a timely privilege log, the court found that, even absent a waiver, the attorney-client privilege would still not have applied even if the PR firm had not done anything other than perform standard public relations or agent services. It was not enough for communications with a PR firm to be “important to an attorney’s legal advice to a client;” they must also have been confidential, primarily or predominately of a legal character, and made for the purpose of obtaining legal advice.
In recent months, the narrow reading of Grand Jury Subpoenas (and Kovel) has been reiterated multiple times. In Bloomingburg Jewish Education Center v. Village of Bloomingburg, New York,[6] the court rejected the application of the privilege when the defendants failed to produce a privilege log of communications with the PR consultant and when there had been no showing that the PR consultant was needed for any purpose other than communicating with the public at large.
In Scott v. Chipotle Mexican Grill, Inc.,[7] the court noted the narrow applications of Grand Jury Subpoenas and Kovel in rejecting the application of privilege to a report produced by a human resources consultant, when there was no showing that the law firm had engaged the consultant other than for factual research or assistance on a client’s business decision. And in Fine v. ESPN Inc.,[8] the court found that even when a PR consultant had been retained to shape media coverage to avoid prosecution, communications unrelated to obtaining legal advice were not privileged. The Fine court reiterated that “communications disclosed to a third party must be necessary to facilitate attorney-client communications and for the provision of legal advice.”
In sum, a corporation seeking to protect communications with a PR consultant hired by its legal counsel via the attorney-client privilege should ensure (1) that any privileged communications are shared confidentially within the context of assisting counsel with legal representation; (2) the work provided by the PR consultant toward the litigation is separate and distinct from what could otherwise be considered “standard services”; and (3) timely and adequate production of a privilege log.
PR Firm as “Functional Equivalent” of an Employee
Communications with a PR consultant may also be privileged when that PR consultant acts as a “functional equivalent” of the client or client employee. Returning to the Southern District of New York, in In re Copper Market Antitrust Litigation[9] a Japanese corporation hired a PR firm for “crisis management” in defending an antitrust litigation action. The PR firm worked out of the client’s headquarters, acted as the client’s spokesperson in front of the press, prepared internal documents to inform corporate employees about what could and could not be said about the underlying basis of the litigation, and frequently conferred with counsel.
In other words, the PR firm acted as the functional equivalent of an in-house PR department. In such instance, the court determined that communications were protected under the attorney-client privilege: the firm was “essentially, incorporated into [the corporation’s] staff to perform a corporate function that was necessary in the context of the government investigation, actual and anticipated private litigation, and heavy press scrutiny obtaining at the time.”
The “functional equivalent” theory was recently affirmed in the PR context in Schaeffer v. Gregory Village Partners LP,[10] a California case involving environmental contamination. In Schaeffer, the relevant PR consultant was hired by the client, participated in public regulatory meetings and went door-to-door in neighborhoods potentially affected by contamination to meet neighbors and secure access agreements for environmental sampling by the client. Although the court acknowledged that the PR consultant’s responsibilities in Schaeffer were not nearly as extensive as in certain other cases, the court nevertheless determined that the attorney-client privilege extended “where a consultant performs work that is substantially intertwined with the subject matter of a corporation’s legal concerns, and the consultant provides information to the corporation’s attorney to aid the attorney in advising the corporate client.”
Other recent applications of the “functional equivalent” test include Hadjih v. Evenflo Company (finding the PR consultant to be a functional equivalent of an employee where the corporation had no public relations department and the consultant prepared a communications plan regarding a product recall with the corporation’s counsel) and Grand Canyon Skywalk Developmetn LLC v. Cieslak (finding the PR consultant a functional equivalent of an employee where it was hired by the tribe, through its counsel, to protect the tribe name and make it look more reasonable in the eyes of the public). But see DRFP LLC v. Republica Bolivariana de Venezuela,[11] (finding documents provided to a company’s PR firm not privileged where the PR firm was not a party to the party’s attorney-client relationship with its lawyers).
Similar to when a PR consultant is hired by legal counsel, a corporation seeking to protect communications with its own PR consultant via the attorney-client privilege should ensure the PR consultant is performing critical tasks related to the actual litigation and is acting on behalf of the corporation.
Work Product Doctrine
Should all else fail, a corporation might sometimes be successful in protecting its documents under the work product doctrine, which protects materials that were “created by a party and its attorney or an agent of the attorney, and would not have been prepared in substantially similar form but for the prospect of litigation.” Pemberton v. Republic Services Inc.[12] In Pemberton, for example, the plaintiffs brought suit alleging negligence and nuisance from odor, pollution and emissions from an inactive landfill-turned-federal Superfund site.
The Eastern District of Missouri determined that protection under the work product doctrine extended to certain defense documents in which “counsel, their clients and [the PR consultants] worked closely together in discussing the information to be provided to the public” in order to impact future litigation. “All of the materials in question,” determined the court, “were created in an effort to foster a public environment that was less likely to lead to further litigation involving the landfill.” All of the materials were created at the direction of counsel in anticipation of litigation. See also, e.g., Calvin Klein Trademark Trust v. Wachner (extending work product protection to materials produced by the PR consultant hired by counsel to manage publicity surrounding the client).[13]
It should be noted that courts may reject attempts to apply the work product doctrine to (1) documents in which litigation strategy is rarely mentioned (McNamee); (2) when the communications predominantly deal with public relations and media strategy (McNamee); or (3) a timely privilege log is not produced (McNamee, Bloomingburg Jewish Education Center)
Conclusion
A company facing an environmental crisis has three potential arguments at its disposal to protect communications with PR consultants from disclosure. Because these narrow theories have been tested only in a few courts, the most conservative course of action is to avoid involving the PR consultant in client confidences absent a well-developed plan for hiring and managing the PR consultant in a way that fits well within the jurisprudential boundaries. This is especially so when the inclusion of the PR consultant on communications between client and counsel may waive any underlying privilege. With planning and care, a corporation will then hopefully not have to face two crises.
[1] 296 F.2d 918 (2d Cir. 1961).
[2] 265 F. Supp. 2d 321 (S.D.N.Y. 2003).
[3] See, e.g., Eagle Harbor Holdings LLC v. Ford Motor Co., No. C11-5503 BHS (W.D. Wash. April 28, 2014) (denying discovery motion on communications between the plaintiffs’ attorneys and PR firm under the reasoning and five-factor test from Grand Jury Subpoenas).
[4] See, e.g., Egiazaryan v. Zalmayev, 290 F.R.D. 421 (S.D.N.Y. 2013) (collecting documents in the PR firm’s possession, for example, is insufficient to warrant an extension of the attorney-client privilege.); Haugh v. Schroder Investment Management North America Inc., 02 Civ. 7955 (S.D.N.Y. Aug. 25, 2003) (denying the assertion of the privilege, noting that under Kovel “it is crucial that the party asserting the privilege show that the communication is made so that the client may obtain legal advice from her attorney.”); In re New York Renu with Moistureloc Product Liability Litigation, MDL No. 1785, CA 2:06-MN-77777-DCN (D.S.C. May 8, 2008) (denying privilege and noting that, to invoke privilege, “the services performed by the nonlawyer [must be] necessary to promote the lawyer’s effectiveness”).
[5] No. 09 CV 1647 (E.D.N.Y. Sept. 18, 2013).
[6] No. 14-cv-7250 (S.D.N.Y. March 18, 2016).
[7] 94. F. Supp. 3d 585 (S.D.N.Y. 2015).
[8] No. 12-CV-0836 (N.D.N.Y. May 28, 2015).
[9] 200 F.R.D. 213 (S.D.N.Y. 2001).
[10] 78 F. Supp. 3d 1198 (N.D. Cal. 2015).
[11] No. 4-cv-793 (S.D. Ohio Oct. 19, 2015).
[12] 308 F.R.D. 195, 202 (E.D. Mo. 2015).
[13] 198 F.R.D. 53, 55–56 (S.D.N.Y.2000).