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USPS v. PHELPS DODGE REF. CORP.

May 18, 1994

UNITED STATES POSTAL SERVICE, Plaintiff,
v.
PHELPS DODGE REFINING CORPORATION, et ano, Defendants.



The opinion of the court was delivered by: MARILYN DOLAN GO

 GO, United States Magistrate Judge:

 This action involves the alleged breach of contractual obligations by defendants in removing toxic wastes from a property (the "Property") that they sold to plaintiff United States Postal Service ("USPS") in December, 1986. Plaintiff and defendants have each moved to compel production of documents claimed by the other to be privileged. Defendants have asserted an attorney-client privilege, while plaintiff claims protection under the executive/deliberative process privilege.

 Defendants' Claims of Privilege

 Defendants originally withheld 469 documents from discovery on grounds of attorney-client privilege, work product doctrine or both. Plaintiff moved to compel production of approximately 300 documents, the bulk of which defendants claimed constituted attorney work product. Defendants voluntarily produced approximately 35 documents after discussions with plaintiff. At my request, defendants submitted the remaining disputed documents for in camera inspection.

 On February 9, 1994 during a telephone conference, I advised defendants' counsel that after a partial and cursory review of the documents at issue, I found the documents did not, on their face, support defendants' claim that the documents had been prepared in contemplation of litigation. *fn1" At their request, I gave the defendants time to make additional submissions.

 During the conference, I also indicated some documents that defendants originally had claimed to be work product may be protected by the attorney-client privilege. Defendants requested, and I granted, an opportunity to submit a revised privilege log so as to assert the attorney-client privilege for some or all of those documents. Since the documents had not yet been disclosed, there had been no waiver of the attorney-client privilege.

 By letter dated February 10, 1994, Harry Zirlin, Esq., counsel for defendants, advised that they declined to offer further evidence in support of the claim of work product protection. They stated that their "review of the documents being withheld on this theory reveals that they are of no consequence to the present litigation." Defendants did not submit any further documentation regarding work product.

 Defendants also submitted a revised privilege log asserting the attorney-client privilege with respect to 43 documents in addition to the 33 disputed documents for which they had originally claimed the privilege. The remaining and sole issue to determine with respect to plaintiff's motion to compel is whether the 76 documents for which defendants have asserted an attorney-client privilege should be produced.

 Plaintiff's Claim of Privilege

 In its privilege log of January 13, 1994 listing 264 documents, plaintiff asserted an "executive/deliberative process privilege" for 90 documents. This privilege is invoked by Philip E. Wilson, Vice President, Facilities (acting), United States Postal Service, in his declaration dated January 7, 1994 and updated on February 9, 1994. Because the plaintiff had also asserted attorney-client privilege and/or work product doctrine as to 28 of the 90 documents, grounds that defendants do not challenge, the defendants' motion to compel concerns only the remaining 62 documents. Pursuant to my request, plaintiff also submitted those 62 documents for in camera inspection.

 DISCUSSION

 Defendants' claim of Attorney-client privilege

 The attorney-client privilege protects "confidential disclosures by a client to an attorney made in order to obtain legal assistance." Fisher v. United States, 425 U.S. 391, 403, 48 L. Ed. 2d 39, 96 S. Ct. 1569 (1976). The privilege attaches:

 
(1) where legal advice of any kind is sought (2) from a professional legal advisor in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal advisor, (8) except the protection be waived.

 In Re Grand Jury Subpoena Duces Tecum, 731 F.2d 1032, 1036 (2d Cir. 1984). The burden of proving each element of the privilege rests on the party claiming protection. In re Horowitz, 482 F.2d 72, 82 (2d Cir.), cert. denied, 414 U.S. 867, 38 L. Ed. 2d 86, 94 S. Ct. 64 (1973); Stryker Corp. v. Intermedics Orthopedics Inc., 145 F.R.D. 298, 301 (E.D.N.Y. 1992).

 In this case, the privilege arises in the context of communications between a corporate client and in-house counsel. In general, the privilege extends to confidential communications between corporate employees concerning matters in the scope of their corporate duties as counsel. Upjohn Co. v. United States, 449 U.S. 383, 394, 66 L. Ed. 2d 584, 101 S. Ct. 677 (1981); In re Sealed Case, 237 U.S. App. D.C. 312, 737 F.2d 94, 99 (D.C. Cir. 1984). It protects communications with in-house counsel as well as outside attorneys. Upjohn, 449 U.S. at 395.

 Defining the scope of the privilege for in-house counsel is complicated by the fact that these attorneys frequently have multi-faceted duties that go beyond traditional tasks performed by lawyers. House counsel have increased participation in the day-to-day operations of large corporations. See Vincent C. Alexander, The Corporate Attorney-Client Privilege: A Study of the Participants, 63 St. John's L. Rev. 191, 195 & n. 8 (1989). Needless to say, the attorney-client privilege attaches only to legal, as opposed to business, services. The communication must be made to the attorney acting in her capacity as counsel. If the communication is made to the attorney In her capacity as a business adviser, for example, it ought not be privileged." John E. Sexton, A Post-Upjohn Consideration of the Corporate Attorney-Client Privilege, 57 N.Y.U. L. Rev. 443, 490 (1982) (citing United States v. Rosenstein, 474 F.2d 705, 714 (2d Cir. 1973)). See also In re Grand Jury Subpoena, 599 F.2d 504, 511 (2d Cir. 1979) ("Participation of the general counsel does not automatically cloak the investigation with legal garb.").

 My review of the documents at issue indicates that house counsel for defendant Phelps Dodge Refining Corporation ("PDRC") were actively involved in many facets of remediation at the Property. PDRC employees reported to house counsel and, based on those reports, counsel then frequently communicated and dealt with outside consultants on behalf of the corporation. Many of the tasks performed by counsel could have been undertaken by non-attorneys and the advice given made by an employee with no legal background. However, because the transaction was not a routine business matter and required considerable involvement with a state regulatory agency, it is clear that the subject matter was one of particular concern to the client and an area where the expectation of confidentiality arguably is greater. Thus, in situations where advice is rendered or sought which seem to touch upon sensitive issues, I have taken a broad view of legal ...


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