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Keywords

defendantlitigationattorneydiscoveryclass actionattorney-client privilege
defendantattorneydiscoveryliabilitycorporationattorney-client privilege

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In re LTV Securities Litigation, 89 F.R.D. 595, 31 Fed.R.Serv.2d 1542, Fed. Sec. L. Rep. P 97,969, 8 Fed. R. Evid. Serv. 748

Facts

This securities fraud class action involves a certified class of buyers and sellers of LTV securities against LTV, its steel subsidiary J&L, LTV's accountants Ernst & Whinney, and various individuals associated with LTV and J&L. The class alleges violations of federal securities laws related to transactions in LTV securities from 1974 to 1978, claiming that the defendants engaged in a scheme to defraud shareholders by manipulating inventory valuations. LTV refused to disclose certain information, asserting attorney-client and work-product privileges, which led to the current dispute over the discovery of materials generated after the SEC investigation began.

LTV has refused to disclose certain information sought by the class, asserting both attorney-client and work-product privileges.

Issue

Whether LTV can assert attorney-client and work product privileges against the discovery demands of its own shareholders.

One of the central questions here presented concerns the ability of corporate management to assert a privilege against the discovery demands of the corporation's own stockholders.

Rule

The attorney-client privilege protects confidential communications made for the purpose of obtaining legal advice, and the work product doctrine protects materials prepared in anticipation of litigation. The privilege can be asserted against shareholders unless there is 'good cause' to override it.

The hoary rule is that the attorney-client privilege shields confidential communications between an attorney and client made for the purpose of furnishing or obtaining professional legal advice and assistance.

Analysis

The court analyzed whether the information sought by the shareholders was privileged and determined that the communications between LTV and its attorneys were made for the purpose of obtaining legal advice. The court emphasized that the attorney-client privilege applies to communications made by corporate employees concerning matters pertinent to their job tasks, as long as the information was solicited to facilitate legal advice. The court found that the privilege was not waived by LTV's disclosure of certain materials to the SEC, as the disclosures did not compromise the confidentiality of the communications.

The court finds little merit in the class' contention that the joint defense privilege does not extend to civil defendants whose liability may arise from different acts or omissions, or who may assert cross-claims against each other.

Conclusion

The court ruled in favor of LTV, allowing it to assert both attorney-client and work product privileges against the shareholders' discovery requests.

Order accordingly.

Who won?

LTV prevailed in the case because the court upheld its claims of attorney-client and work product privileges, determining that the communications were made for the purpose of obtaining legal advice and were confidential.

LTV has established that the joint conferences undertaken with representatives of E&W were confidential, concerned common issues, and were intended to facilitate representation in proceedings involving the SEC and potential shareholder litigants.

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