Squire, Sanders & Dempsey, L.L.P. v. Givaudan Flavors Corp.

• Decision Date: 28 September 2010
• Docket Number: No. 2009-1321.,2009-1321.
• Citation: 2010 -Ohio- 4469,937 N.E.2d 533
• Parties: SQUIRES SANDERS & DEMPSEY, L.L.P., Appellant, v. GIVAUDAN FLAVORS CORPORATION, Appellee.
• Court: Ohio Supreme Court

937 N.E.2d 533

2010 -Ohio- 4469

SQUIRES SANDERS & DEMPSEY, L.L.P., Appellant,

v.GIVAUDAN FLAVORS CORPORATION, Appellee.

No. 2009-1321.

Supreme Court of Ohio.

Submitted April 21, 2010.

Decided Sept. 28, 2010.

*161 Syllabus of the Court

1. Ohio recognizes the common-law self-protection exception to the attorney-client privilege, which permits an attorney to testify concerning attorney-client communications when necessary to establish a claim for legal fees on behalf of the attorney or to defend against a charge of malpractice or other wrongdoing in litigation between the attorney and the client.

2. Attorney work product, including but not limited to mental impressions, theories, and legal conclusions, may be discovered upon a showing of good cause if it is directly at issue in the case, the need for the information is compelling, and the evidence cannot be obtained elsewhere.

Jones Day, John M. Newman Jr., Louis A. Chaiten, Pearson N. Bownas, Matthew P. Silversten, Cleveland, and Eric E. Murphy, Columbus, for appellant.

Hermann, Cahn & Schneider, L.L.P., Anthony J. Hartman, Jay H. Salamon, and Hugh D. Berkson, Cleveland; and Mitchell, Silberberg & Knupp, L.L.P., and Jeffrey L. Richardson, Los Angeles, CA, for appellee.

Vorys, Sater, Seymour & Pease, L.L.P., Sandra J. Anderson, and Michael J. Hendershot; and Eugene P. Whetzel, Columbus, urging reversal on behalf of amicus curiae, Ohio State Bar Association.

O'DONNELL, J.

{¶ 1} Squire, Sanders & Dempsey, L.L.P., appeals from a judgment of the Eighth District Court of Appeals reversing a discovery order that had compelled Givaudan Flavors Corporation to produce documents related to Squire Sanders' representation of Givaudan and that had directed Givaudan's former and current general counsel to testify regarding attorney-client communications in connection *162 with litigation over the amount of Squire Sanders' legal fees and the adequacy of the legal services it rendered.

{¶ 2} The issue in this case is whether the common-law self-protection exception to the attorney-client privilege, permitting an attorney to reveal attorney-client communications when necessary to establish a claim or defense on the behalf of the attorney, applies as an exception to R.C. 2317.02(A), which provides that an attorney "shall not testify * * * concerning a communication made to the attorney by a client in that relation or the attorney's advice to a client."

{¶ 3} Ohio recognizes other common-law exceptions to the attorney-client privilege. For example, as detailed below, Ohio recognizes the crime-fraud exception to prevent concealment of attorney or client wrongdoing. Similarly, in this case, recognition of the common-law self-protection exception to the attorney-client privilege as part of Ohio law aids the administration of justice and is supported by decisions of other jurisdictions addressing this issue.

{¶ 4} Pursuant to the common-law self-protection exception to the attorney-client privilege, an attorney should be permitted to testify concerning attorney-client communications when necessary to collect a legal fee or to defend against a charge of malpractice or other wrongdoing in litigation against a client or former client. Ohio recognizes this exception. As a result, we reverse the judgment of the court of appeals and remand the cause for further proceedings consistent with this opinion.

Facts and Procedural History

{¶ 5} In 2003, the law firm of Squire, Sanders & Dempsey, L.L.P., began to represent Givaudan Flavors Corporation in connection with litigation filed by employees and others who allegedly became ill after inhaling the butter flavoring that Givaudan produced for use on popcorn. At that time, Frederick King, then Givaudan's vice president for legal affairs, selected Squire Sanders to handle the litigation and generally approved payment of invoices submitted by the firm.

{¶ 6} In January 2007, Givaudan replaced King with Jane Garfinkel, naming her senior vice president and general counsel. She determined that the litigation attorneys defending the "butter flavor" litigation lacked sufficient qualification, experience, or expertise in pulmonary toxic tort litigation, and she thought that Squire Sanders had inadequately handled the defense, prolonging the litigation and generating excessive legal fees. Her deposition testimony revealed that she decided not to submit Squire Sanders' invoices for payment out of her concern that they showed a pattern of dishonesty, inaccuracy, and incompleteness. In May 2007, she terminated Squire Sanders without paying any of the outstanding invoices for legal services rendered by Squire Sanders.

*163 {¶ 7} Squire Sanders filed this action for breach of contract and money due on account, alleging that Givaudan owed $1,801,204.37 in legal fees as a result of work it had performed up to the date of its termination. Givaudan denied liability and counterclaimed for breach of contract, legal malpractice, breach of fiduciary duty, fraud, and unjust enrichment. It asserted that Squire Sanders had charged unreasonable,excessive, and unnecessary legal fees while failing to provide competent and adequate legal services.

{¶ 8} Through discovery, Squire Sanders sought production of documents related to its representation of Givaudan, including its budgeting and staffing of the litigation, trial strategy, handling of witnesses, and Givaudan's allegation that it failed to pursue opportunities for settlement; it also requested documents concerning Givaudan's decision to terminate its representation. Givaudan objected, asserting that the law firm sought documents protected by the attorney-client privilege and the work-product doctrine.

{¶ 9} Further, when Squire Sanders deposed King and Garfinkel, Givaudan asserted attorney-client privilege and the work-product doctrine to prevent either King or Garfinkel from answering questions. Givaudan objected when counsel for Squire Sanders asked King about the firm's staffing of the case, the resources the firm committed to the litigation, the strategy it pursued in defending Givaudan, and the adequacy of the firm's trial preparation. Givaudan similarly asserted attorney-client privilege to prohibit Garfinkel from answering questions about how she had formed her view that the Squire Sanders litigation team lacked qualified leadership and experienced attorneys, that it had inadequately prepared for trial and performed unauthorized work, and that Givaudan should retain different outside counsel. Givaudan further invoked the attorney-client privilege and the work-product doctrine to prevent Squire Sanders from having an independent expert review its billing invoices and other documents in its effort to establish the reasonable value of the legal services it rendered to Givaudan.

{¶ 10} Squire Sanders moved to compel the production of documents and testimony from both King and Garfinkel, relying on the self-protection exception to the attorney-client privilege and the work-product doctrine. The trial court granted the motion, compelling Givaudan to produce the documents that Squire Sanders had requested and directing King and Garfinkel to answer questions related to the Givaudan/Squire Sanders relationship. The court also permitted Squire Sanders to use documents already in its possession relative to the billing dispute.

{¶ 11} Givaudan appealed the trial court's discovery order to the Eighth District Court of Appeals. The appellate court reversed the trial court, holding that R.C. 2317.02(A) provides the exclusive means for a client to waive the attorney-client privilege for testimonial statements and that the implied waiver *164 test articulated in Hearn v. Rhay (E.D.Wash.1975), 68 F.R.D. 574, applies to nontestimonial statements. The appellate court concluded that the trial court should not have granted the motion to compel without conducting an evidentiary hearing or an in camera review to determine whether the attorney-client privilege or the work-product doctrine applied and whether Givaudan had expressly or impliedly waived either or both. Squire, Sanders & Dempsey, L.L.P. v. Givaudan Flavors Corp., Cuyahoga App. No. 92366, 2009-Ohio-2490, 2009 WL 1486553.

{¶ 12} Squire Sanders appealed that decision to this court, contending that the common-law self-protection exception to the attorney-client privilege is recognized both in American jurisprudence and in Ohio law and is incorporated into the attorney-client privilege codified in R.C. 2317.02(A). According to Squire Sanders, when the exception applies, there is no privilege for the client to assert or waive, and the "good cause" requirement for obtaining attorney work product is satisfied. It also contends that the court of appealserred in relying on cases dealing with waiver of the attorney-client privilege, which would be relevant only if no exception applied. And it further asserts that the trial court correctly concluded that the communications it sought fell outside the attorney-client privilege and the work-product doctrine.

{¶ 13} By contrast, Givaudan argues that the attorney-client privilege provided in R.C. 2317.02(A) is unambiguous and does not create an exception for attorney self-protection. It notes that this court has consistently rejected judicially created waivers, exceptions, and limitations of statutorily created testimonial privileges. Further, Givaudan maintains that R.C. 2317.02(A) could not have incorporated the common-law self-protection exception because this court never recognized it at common law and has reversed the only Ohio appellate court cited by Squire Sanders to do so, Keck v. Bode (1902), 13 Ohio C.D. 413, 1902 WL 868, reversed without opinion by Bode v. Keck (1903), 69 Ohio St. 549, 70 N.E. 1115. In the alternative, Givaudan urges the court to uphold the Eighth District's decision to remand the case to the trial court for a hearing or in camera review of the disputed evidence to determine whether it actually falls within the...