All in the Corporate Family: Attorney-Client Privilege Applies Between Parent and Subsidiaries

Faegre Drinker Biddle & Reath LLP

The District of New Jersey confirmed that members of a corporate family all are represented by the same in-house counsel, whether that counsel occupies an office within the parent company or within a subsidiary, because corporate family members are considered joint clients. Accordingly, emails sent between in-house counsel employed by a subsidiary and an executive or representative from a parent company are protected by the attorney-client privilege. See Trzaska v. L’Oreal USA, Inc., No. 2:15cv-02713 (D.N.J. January 6, 2020).

In Trzaska, the defendant’s general counsel works for an American subsidiary. Emails were exchanged between the general counsel and the global CFO of the research and innovation organization of the French parent company. The plaintiff argued that the difference in corporate entities meant these emails were not protected by the attorney-client privilege. Magistrate Judge Leda Dunn Wettre disagreed with the plaintiff and denied the plaintiff’s renewed application to compel production of three emails at issue.

The Court found that “the fact that the attorney and client do not work for the same … entity [was] of no moment.” Indeed, “parent companies often centralize the provision of legal services to the entire corporate group in one in-house legal department, and, as a result, the members of the corporate family are joint clients … all represented by the same in-house counsel (whether that counsel typically takes up office with the parent or with a subsidiary).”

The Court reiterated that the “attorney-client privilege attaches to any communication between an attorney and client that is made in confidence and for the purpose of obtaining or providing legal assistance.”

The Court reasoned that the attorney-client privilege applied to protect the three emails between the U.S. general counsel and global CFO because it is the job of in-house counsel to advise members of the corporate family on business and legal matters, and the emails were marked “Attorney-Client Privileged” in each message’s subject line. Judge Wettre explained that the communication was confidential because: (1) no other employees were included in the email chain; (2) neither defendant otherwise disclosed the emails’ contents; and (3) the emails contained legal advice.

The Court also rejected the plaintiff’s waiver argument, writing that she was “not aware of any exception to the joint client privilege that could apply here, as neither L’Oreal USA nor L’Oreal, S.A. has waived the privilege, and the parent and subsidiary are not involved in adverse litigation ….” As an alternative to production, the plaintiff asked the Court to conduct an in camera review of the emails. The Court denied the request, stating that the plaintiff’s speculation that the emails could contain business rather than legal communications was insufficient to warrant such a review.

This order illustrates the importance of designating documents, including emails, as “Attorney-Client Privilege” material if they contain privileged communications. The Court’s reasoning also demonstrates that although the attorney-client privilege remains narrow in scope, in-house counsel may represent numerous corporate entities (and their employees) that work together as members of a larger corporate family, and the privilege should apply across jurisdictional borders within a multinational corporation.

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Faegre Drinker Biddle & Reath LLP

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