The plaintiff, Itron, acquired a company called SmartSynch, unknowingly assuming a $60 million contractual obligation to a third company, Consert. After years of litigation, Itron settled with Consert for $18 million, and now sues SmartSynch defendants for negligent misrepresentation, seeking the cost of the Consert litigation and settlement.
The Complaint never specifically pleads reliance on any legal advice, nor does it refer to any confidential attorney-client communications. “In fact, a person reading the complaint would have no idea that Itron even had attorneys in the Consert matter, were it not for the common-sense understanding that corporations engaged in prolonged, multimillion-dollar lawsuits tend to employ counsel.”
Nevertheless, a U.S. Magistrate Judge, sitting in the Southern District of Mississippi, held that a waiver of the attorney-client privilege occurs whenever the client files a lawsuit to which privileged communications, if disclosed, might prove “highly relevant” to the claims asserted — even if the client never relies on or uses those communications to make his or her legal case. The District Court agreed.
On mandamus, however, the U.S. Fifth Circuit Court of Appeals reversed. Applying Mississippi Law, though relying on many different sources, the Court re-confirmed the view that “relevance is not the standard for determining whether or not evidence should be protected from disclosure as privileged, even if one might conclude the facts to be disclosed are vital, highly probative, directly relevant or even go to the heart of an issue. Attorney/client documents may be quite helpful to an adversary’s argument, but this is not a sufficient basis for abrogating the privilege. Instead, for this type of waiver to occur, the client must rely on privileged advice from his counsel to make his claim or defense.”
In re Itron, No.17-60733, 2018 WL 1001545 (5th Cir. Feb. 21, 2018).