Don't Be a Maverick: Chancery Reinforces Limits on Attorney-Client Privilege
By Jarret P. Hitchings
August 21, 2019
Delaware Business Court Insider
The attorney-client privilege is fundamental to the adversarial system of law. Indeed, the Delaware Court of Chancery recently observed that "without the privilege, candid communication between client and counsel for purposes of representation would be impossible," see Maverick Therapeutics v. Harpoon Therapeutics, C.A. 2019-0002-SG (Del. Ch. Aug. 9, 2019). At the same time, because the privilege operates to shield from disclosure certain information that might otherwise be relevant to a case or controversy, the Court of Chancery cautioned that "the privilege must be rigorously upheld, but only in the concise sphere within which it is indispensable."
In a letter opinion issued Aug. 9, in Maverick Therapeutics, the Court of Chancery held that just because a client or its attorney designates something as "privileged," doesn’t necessarily make it so. This opinion not only reinforces the contours of the attorney-client privilege, it makes plain that in order for the attorney-client privilege to apply, there must exist an actual attorney-client relationship between the parties engaged in communication.
The attorney-client privilege is codified in Delaware Rule of Evidence 502(b). In relevant part, Rule 502(b) provides that "a client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client," Del R. Evid. 502(b). The rule further requires that such confidential communication be between the client and lawyer (or their respective representative). Notably, the attorney-client privilege protects legal advice only; it does not shield business advice, see Moyer v. Moyer, 602 A.2d 68, 72 (Del. 1992). The burden of proving that the attorney-client privilege applies to a particular communication is on the party asserting the privilege.
In Maverick, plaintiff Maverick Therapeutics filed a verified complaint against defendant Harpoon Therapeutics seeking injunctive relief in connection with certain alleged breaches of contract and misappropriation of trade secrets. After the complaint was filed, Millennium Pharmaceutical joined the case as intervenor plaintiff. Maverick and Millennium then sought third-party discovery from MPM Capital, a private equity firm that had invested in Harpoon. Specifically, the discovery requests sought the production of certain material and communications between Harpoon and Dr. Greg Sieczkiewicz, an attorney and MPM's chief IP counsel.
Harpoon directed MPM to withhold production of its communications with Sieczkiewicz, in part, on the basis that such communications were shielded from disclosure by the attorney-client privilege. Maverick and Millennium filed a motion to compel production of the communications between Harpoon and Sieczkiewicz. They argued that the attorney-client privilege did not apply to the communications because Harpoon was not a client of Sieczkiewicz. Harpoon filed an objection to the motion to compel asserting that an attorney-client relationship did exist between it and Sieczkiewicz and was evidenced by emails between them which Sieczkiewicz had marked "Harpoon privileged communication."
The parties agreed that California law applied to govern whether an attorney-client relationship existed between Harpoon and Sieczkiewicz. Accordingly, the Court of Chancery recognized that such a relationship could only be created by express or implied contract, (citing Koo v. Rubio’s Restaurants, Cal. Rptr. 2d 415, 423 (Cal. Ct. App. 2003)). The court further noted that "an attorney-client relationship is not created by the unilateral declaration of one party to the relationship."
Here, there was no express contract of representation between Harpoon and Sieczkiewicz. And neither Harpoon nor MPM offered any evidence that their representives actually believed Sieczkiewicz to be Harpoon’s lawyer. Instead, Harpoon and MPM offered testimony from its principals that they believed their communications with Sieczkiewicz were privileged. Harpoon also argued that the fact Sieczkiewicz labeled at least one of his communications as "Harpoon privileged communication" demonstrated that an attorney-client privilege was created.
The Court of Chancery disagreed. First, the court applied California law and concluded that the unilateral belief of Harpoon and MPM's witnesses that an attorney-client privilege existed was insufficient to establish a privilege as between Harpoon and Sieczkiewicz. Further, the court recognized that "merely labeling a communication as 'privileged' does not make it so." In sum, the court determined that Harpoon had simply failed to produce evidence of an attorney-client relationship with Sieczkiewicz. The court therefore ordered Harpoon and MPM to produce the requested communications.
The court's letter opinion in Maverick reinforces the limits of the attorney-client privilege. While still a powerful tool necessary to facilitate the free flow of information between attorney and client, the privilege cannot be wielded by a party merely because its communication partner happens to be an attorney. Rather, as the court makes clear—and perhaps as should be presumed by its moniker—a true attorney-client relationship is required in order to empower a party with the right to invoke the privilege. In similar fashion, the Maverick letter opinion serves as a humbling reminder to practitioners that just because they participate in a communication does not automatically cloak the communication in the protective shroud of the attorney-client privilege.
Reprinted with permission from Delaware Business Court Insider, © ALM Media Properties LLC. All rights reserved.