Issues concerning attorney-client privilege and Upjohn warnings are ever-present for legal professionals. When the privilege applies, and to whom, should be at the forefront of every attorney’s mind when dealing with clients and potential clients. These issues are especially important in the context of internal investigations.[1]

Recently, in one of the criminal cases arising from the Sandusky child sexual abuse scandal, a Pennsylvania Appellate Court overturned a Superior Court decision regarding grand jury testimony on the basis of breach of the attorney-client privilege. The reversal was in the case involving three former Penn State administrators linked to the scandal. In the decision, the Appellate Court held that Cynthia Baldwin, serving as General Counsel for the University, breached the attorney-client privilege when she testified before a grand jury about her knowledge of what the defendants knew about the abuse accusations. As a result of the reversal, the Appellate Court threw out several of the charges against the men including obstruction and conspiracy charges.

Ex-Penn State President Graham Spanier, former athletic director Timothy Curley and former university vice president Gary Schultz face numerous charges for their roles in the scandal, including failure to report suspected child abuse, perjury, obstruction, endangering the welfare of a child and conspiracy. The PA Office of the Attorney General (“OAG”) began investigating the allegations against Sandusky in 2009. The investigation uncovered inappropriate behavior with a minor and sexual misconduct that occurred on the Penn State campus as early as 1998. Based on this information, the OAG issued subpoenas for Curley, Schultz and Spanier to testify before the grand jury.

Ms. Baldwin informed each of the men that she would represent them before the grand jury, and met individually with the men to explain the grand jury process. Ms. Baldwin was, in fact, present when each of the men testified. She eventually acknowledged to the judge that she represented the University, and solely the University, but only outside the presence of Schultz, Curley and Spanier. The men were never directly advised, by Ms. Baldwin or the judge, that she did not represent them individually. When advised of their rights to advice and assistance of a lawyer, Ms. Baldwin was present. Further, in the case of Spanier, upon entering the grand jury room he was asked “Sir, are you represented by counsel today?” To which he responded, “Yes… Cynthia Baldwin sitting behind me.”[2] No objections or corrections were made regarding this statement, and Ms. Baldwin proceeded to interrupt his testimony for consultations.

Later in its investigation, the OAG determined to call Ms. Baldwin to testify before the grand jury regarding her knowledge of what the men knew about the incidents. In her testimony, Ms. Baldwin claimed that the men, specifically Spanier, were not people of integrity and that they lied to her.[3] The grand jury recommended charges against Spanier on the same day that Ms. Baldwin testified.

At a preliminary hearing in the cases against the men, pre-trial motions were filed in an attempt to preclude the testimony of Ms. Baldwin based on the attorney-client privilege. The motions were denied and the trial court held that the men were not denied counsel during the grand jury proceedings. The court determined that Ms. Baldwin had only represented them as agents of the University, and, therefore, there was no privilege to breach.[4]

The Appellate Court overturned the trial court’s ruling for several reasons. First, it stated that what is most important is what the potential client(s) reasonably believed. It is immaterial what Ms. Baldwin’s official position was or what she believed to be her role in the matter. In the course of seeking advice and counsel, if an individual reasonably believes he/she is represented by an attorney and no steps are taken to rectify the impression, then an attorney-client relationship exists. Ms. Baldwin never sought informed consent from the men to nullify or limit her representation.

The Appellate Court also said “that grand jury testimony ‘is an inherently personal undertaking, involving personal rights…and personal liability.’”[5] When subpoenaed to testify, the men were individually prepared by Ms. Baldwin. She was also present during the testimony, which would violate the secrecy of grand jury testimony if she were not there as a representative.[6] In the case of Spanier, she was even identified as his counsel (to which she did not object) and consulted with him during the testimony. The Court posited that despite being aware of Ms. Baldwin’s position at the University, the men’s knowledge did not necessarily mean that they understood she did not represent them individually as well. Communications between corporate attorneys and corporate employees can be privileged. The Court decided that based on her actions, and the absence of a clear and decisive disclaimer stating otherwise, an attorney-client privilege existed between Ms. Baldwin and three men. As such, Ms. Baldwin was incompetent to testify.

The Appellate Court’s decision demonstrates the importance of clear disclosures when dealing with clients, prospective clients and even non-clients. In the corporate setting it is imperative to give Upjohn warnings when meeting with employees of the represented corporation who are not also clients. When dealing with such individuals, it is important to clearly delineate the relationship at the outset, to avoid any confusion. A best practice is to have appropriate warnings/disclosures prepared in advance, and to take notes on what was said and when. No matter how repetitive or irritating it may seem, fully informing a party of who you do, and do not, represent can prevent attorney-client privilege issues down the line.

[1] See, e.g., US v. Nicholas, 606 F. Supp. 2d 1109 (C.D. Cal. 2009), reversed and remanded, US v. Ruehle, 583 F.3d 600 (9th Cir. 2009). Lawyers interviewed company’s CFO in the course of an investigation into alleged stock options backdating. The Company later disclosed statements by the CFO to the government which issued criminal charges against the CFO. The district court granted the CFO’s suppression motion and referred the case for consideration of whether there had been ethical violations. The 9th Circuit reversed. Although the court of held that defendant had not established the existence of attorney-client privilege, it expressed concern about the absence of proof of Upjohn disclosures. The decision did not address the ethics referral. See also Palmeri v. Willkie Farr & Gallagher LLP (Sup. Ct. NY County 2015) (dismissed on statute of limitations grounds but individual alleged that his lawyers facilitated disclosure of his privileged communications to protect his employer, the more important client).
[2] Commonwealth of Pennsylvania v. Graham B. Spanier, 2016 PA Super 14, J-A22011-15, at 10.
[3] Id. at 20.
[4] Id. at 22.
[5] Id. at 27.
[6] Id. at 29.

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