United States v. United Shoe Machinery Corporation

Decision Date10 March 1950
Docket NumberCiv. A. No. 7198.
Citation89 F. Supp. 357
PartiesUNITED STATES v. UNITED SHOE MACHINERY CORPORATION.
CourtU.S. District Court — District of Massachusetts

James M. Malloy, Holmes Baldridge, Richard B. O'Donnell, Sp. Assts. to Atty. Gen., C. Worth Rowley, Edward M. Feeney, Roy Freed, Boston, Mass., Morton Myerson, Brookline, Mass., Laurence S. Flaherty, Somerville, Mass., Sp. Attys. (Herbert A. Bergson, Asst. Atty. Gen., Gerald J. McCarthy, Sp. Asst. to Atty. Gen., Alfred Karsted, Boston, Mass., Margaret H. Brass, Washington, D. C., Bernard I. Kaplan, Boston, Mass., Robert L. Grant, Boston, Mass., Clarence S. Walker, Cambridge, Mass., James Browning, Washington, D. C., Sp. Attys., on the brief), for plaintiff.

John L. Hall, Claude R. Branch, Charles P. Curtis, Robert Proctor and John B. Reigeluth (of Choate, Hall & Stewart), Walter Powers and Bertram H. Loewenberg (of Sherburne, Powers & Needham), Boston, Mass., and Theodore Kiendl (of Davis, Polk, Wardwell, Sunderland & Kiendl), New York City, for defendant.

WYZANSKI, District Judge.

Defendant objects to the introduction of nearly 800 exhibits on the ground that they fall within the attorney-client privilege.

The rule which allows a client to prevent the disclosure of information which he gave to his attorney for the purpose of securing legal assistance is founded upon the belief that it is necessary "in the interest and administration of justice". Hunt v. Blackburn, 128 U.S. 464, 470, 9 S.Ct. 125, 127, 32 L.Ed. 488. As stated in the Comment to Rule 210 of the A.L.I. Model Code of Evidence: "In a society as complicated in structure as ours and governed by laws as complex and detailed as those imposed upon us, expert legal advice is essential. To the furnishing of such advice the fullest freedom and honesty of communication of pertinent facts is a prerequisite. To induce clients to make such communications, the privilege to prevent their later disclosure is said by courts and commentators to be a necessity. The social good derived from the proper performance of the functions of lawyers acting for their clients is believed to outweigh the harm that may come from the suppression of the evidence in specific cases." Emphasis added. But the privilege should be strictly construed in accordance with its object. People's Bank v. Brown, 3 Cir., 112 F. 652.

Since this memorandum examines in turn the asserted application of this privilege to different classes of documents, it is unnecessary to try to state at the outset and with precision every qualification necessary to found a justified claim of privilege. It will be enough now to note in general, and later to apply in detail, the main qualifications which are necessary. The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.

Before the various classes of challenged documents are enumerated, three observations applicable to all of them should be stated.

1. For present purposes the client is United Shoe Machinery Corporation and all its subsidiaries and affiliates considered collectively. These corporations all used the same outside and inside counsel. The legal affairs of these corporations were closely related. Except for convenience in billing and formal accounting there was no attempt to regard one particular corporation as "the client."

2. None of these corporations or their officers or employees consulted counsel with the purpose of seeking assistance in committing a crime or a tort. Mistaken or not, the officers and employees believed they were acting according to law. Unlike the persons referred to by Mr. Justice Cardozo in Clark v. United States, 289 U.S. 1, 15, 53 S.Ct. 465, 77 L.Ed. 519, they sought advice so that they might continue to act according to law. And counsel gave advice in the same spirit.

3. The defendant seasonably claimed whatever privilege it had. It did not waive its privilege by surrendering the exhibits in response to subpoenas, because it was agreed in advance by Government counsel that compliance with the subpoenas should not constitute a waiver.

The documents which are to be examined fall into four classes: (1) those to or from independent lawyers; (2) those to or from defendant's legal department; (3) those to or from defendant's patent department; and (4) working papers of persons in the patent department.

1. The first group of documents consist chiefly of letters to or from members of independent law partnerships.

These communications were all made at a time when each of the law partnerships was counsel for United, its subsidiaries and affiliates. The members of the law partnership in each case were acting as attorneys giving legal advice. They were not acting as business advisers or officers of United, even though occasionally their recommendations had in addition to legal points some economic or policy or public relations aspect and hence were not unmixed opinions of law. The modern lawyer almost invariably advises his client upon not only what is permissible but also what is desirable. And it is in the public interest that the lawyer should regard himself as more than predicter of legal consequences. His duty to society as well as to his client involves many relevant social, economic, political and philosophical considerations. And the privilege of nondisclosure is not lost merely because relevant nonlegal considerations are expressly stated in a communication which also includes legal advice. It follows that in so far as these letters to or from independent lawyers were prepared to solicit or give an opinion on law or legal services, such parts of them are privileged as contain, or have opinions based on, information furnished by an officer or employee of the defendant in confidence and without the presence of third persons. Cf. Tutson v. Holland, 60 App. D.C. 188, 50 F.2d 338.

However, in so far as the subject of these communications was the giving of legal or other advice upon the basis of facts disclosed to the attorney by a person outside the organization of defendant and its affiliates the communication is not privileged. Thus, for example, there is no privilege for so much of a lawyer's letter, report or opinion as relates to a fact gleaned from a witness, Hickman v. Taylor, 329 U.S. 495, 508, 67 S.Ct. 385, 91 L.Ed. 451, affirming D.C., 4 F.R.D. 479, 482; see Wigmore, Evidence, 3d Ed., § 2317; or a person with whom defendant has business relations, General Electric Co. v. Jonathan Clark & Sons Co., C.C.W.D.N.Y., 108 F. 170, In re Ruos, D.C.E.D.Pa., 159 F. 252; or a public document such as a patent, cf. Edison Electric L. Co. v. United States Electric L. Co., C.C.S.D.N.Y., 44 F. 294; or a judicial opinion, Aaron v. United States, 8 Cir., 155 F. 833.

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