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Keywords

attorneyappealwillcorporationcommon lawattorney-client privilege

attorneyappealcommon lawattorney-client privilege

Related Cases

U.S. v. Ruehle, 583 F.3d 600, Fed. Sec. L. Rep. P 95,365, 09 Cal. Daily Op. Serv. 12,338, 2009 Daily Journal D.A.R. 14,349

Facts

William J. Ruehle, the CFO of Broadcom Corporation, was indicted for his involvement in an alleged backdating scheme that led to a $2.2 billion restatement of the company's earnings. Following media scrutiny, Broadcom engaged outside counsel, Irell & Manella LLP, to conduct an internal review of its stock option practices. During this review, Ruehle met with Irell attorneys to discuss the company's practices, but he later claimed that his statements were protected by attorney-client privilege when the government sought to use them against him in a criminal case.

Ruehle was criminally indicted for his involvement in an alleged backdating scheme that ultimately resulted in Broadcom's restatement of its earnings to account for approximately $2.2 billion in additional stock-based compensation expenses.

Issue

Did the district court err in suppressing Ruehle's statements to Irell attorneys on the grounds of attorney-client privilege?

Rule

The attorney-client privilege protects confidential communications made for the purpose of obtaining legal advice, but the burden is on the party asserting the privilege to establish its existence and scope.

The attorney-client privilege protects confidential disclosures made by a client to an attorney in order to obtain legal advice, … as well as an attorney's advice in response to such disclosures.

Analysis

The Court of Appeals found that the district court incorrectly applied California law instead of federal common law regarding attorney-client privilege. It determined that Ruehle's statements were not made in confidence, as he was aware that the information would be disclosed to third parties, including auditors. The court emphasized that Ruehle's understanding of the disclosure process undermined his claim of confidentiality necessary to invoke the privilege.

The district court applied a liberal view of the privilege that conflicts with the strict view applied under federal common law, which governs here. … Ruehle's statements to the Irell attorneys were not 'made in confidence' but rather for the purpose of disclosure to the outside auditors.

Conclusion

The Court of Appeals reversed the district court's suppression order, ruling that Ruehle's statements to the Irell attorneys were not protected by attorney-client privilege and remanded the case for further proceedings.

Who won?

The United States prevailed in the appeal because the Court of Appeals found that the district court had committed legal errors in its application of the attorney-client privilege.

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