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Keywords

attorneysubpoenaappealmotioncorporationprivileged communicationattorney-client privilege
attorneylawyersubpoenacorporationattorney-client privilege

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Lane v. Sharp Packaging Systems, Inc., 251 Wis.2d 68, 2002 WI 28, 640 N.W.2d 788

Facts

Harold C. Lane was employed as Executive Vice President of Sharp Packaging Systems, Inc. and served on its board of directors. After his termination, Lane issued subpoenas for documents from the law firm representing Sharp and its shareholders, claiming that the documents were necessary for his legal claims against them. The circuit court denied motions to quash the subpoenas, leading to an appeal. The case involved complex issues regarding the attorney-client privilege and the work product doctrine, particularly in the context of Lane's former role within the corporation.

Sharp Packaging Systems, Inc. (Sharp) is a Wisconsin corporation of which Paul and Virginia Scarberry (hereinafter the Scarberrys) are, and at all relevant times have been, the sole shareholders. In 1992, Harold C. “Bud” Lane joined Sharp as Executive Vice President of Marketing and Sales.

Issue

The main legal issues included whether Lane, as a former director, could waive the attorney-client privilege on behalf of Sharp, whether the law firm's billing records were protected by the privilege, and whether the circuit court erred in its handling of the subpoenas and the crime-fraud exception.

Specifically, we address: (1) whether a corporation can invoke the lawyer-client privilege against a former member of the corporation's board of directors; (2) whether an attorney's billing records are protected by the lawyer-client privilege; (3) whether the circuit court erred in ordering production of documents reflecting communications with third parties; (4) whether the circuit court should conduct an in camera review of records when otherwise privileged records are sought under the crime-fraud exception to the attorney client privilege; and (5) whether documents created prior to an employee's termination are protected as work product.

Rule

The court applied the entity rule, which states that the corporation, not individual members, is the client for purposes of attorney-client privilege, and only the corporation can waive that privilege. Additionally, the court recognized the crime-fraud exception to the privilege, which allows for disclosure if the communications were made in furtherance of a crime or fraud.

Wisconsin Stat. § 905.03 protects confidential communications between clients and their attorneys.

Analysis

The court determined that Lane, as a former director, could not waive the attorney-client privilege on behalf of Sharp. It also found that the law firm's billing records were protected by the privilege. However, the court agreed with the circuit court's decision to order the production of non-privileged communications with third parties. The court noted that Lane had established a prima facie case for the application of the crime-fraud exception, but criticized the circuit court for failing to conduct an in camera review of the documents in question.

We first conclude that Sharp can effectively assert the lawyer-client privilege against Lane. Lane's status as a former director does not allow him to waive the lawyer-client privilege as a representative of Sharp, nor does Lane's status preclude the current board of directors from asserting the lawyer-client privilege against him regarding documents prepared during his tenure.

Conclusion

The Supreme Court reversed the circuit court's decision and remanded the case for further proceedings, instructing the circuit court to conduct an in camera review of the documents affected by the prima facie showing of the crime-fraud exception.

Reversed and remanded.

Who won?

Harold C. Lane prevailed in part, as the Supreme Court found that the circuit court had erred in its handling of the subpoenas and the attorney-client privilege, particularly regarding the need for an in camera review.

Harold C. Lane prevailed in part, as the Supreme Court found that the circuit court had erred in its handling of the subpoenas and the attorney-client privilege.

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