Court orders requiring parties to disclose attorney-client privileged information can be devastating for businesses involved in litigation. In Mohawk Industries, the Supreme Court introduced a new obstacle to relief by ruling out one of the four methods litigants have used to challenge such orders. In the future, businesses will need to be especially careful to fully litigate any disclosure orders in the district court, knowing that review may not be available until after the district court rules on the case as a whole.
In its first opinion authored by Justice Sotomayor, the Court held that court orders that require a party to reveal information covered by the attorney-client privilege are not immediately appealable under the collateral order doctrine, which allows parties to appeal a “small class” of orders that are “collateral to” the merits of the case and too “important” to be left until the final appeal. The Court left businesses faced with unfavorable attorney-client privilege disclosure orders with three options: (1) getting special permission from the district court to appeal the order under 28 U.S.C. § 1292(b), (2) asking the Court of Appeals to review the decision immediately under the extraordinary and rarely granted writ of mandamus, or (3) disobeying the disclosure order outright, and either facing an immediately appealable criminal contempt order or simply living with the sanctions that the court imposes.
The plaintiff in Mohawk was a former employee who alleged that he had reported misconduct which, unbeknownst to him, was the subject of a separate class action. He was asked to meet with the company lawyers to discuss his allegations, and not long after, he was fired from the company. The district court ruled that the conversations with the company lawyers should be disclosed in the former employee’s unlawful termination suit, on the grounds that the company had waived the privilege through disclosures in the related class action. The company sought to take an immediate appeal to the Eleventh Circuit and filed a petition for a writ of mandamus and a collateral order appeal. Both were denied, and the company sought review in the Supreme Court.
Justice Sotomayor wrote for a majority that included every justice but Thomas, who concurred separately and argued that this was a matter for rulemaking, and not a case-by-case decision. Overall, the Court’s primary concern seemed to be judicial economy. It emphasized that although the results were harsh in this case, any rule that made disclosure orders easier to appeal immediately could delay civil litigation and clog the courts of appeals. The Court also reasoned that very few disclosure orders were reversed on appeal because of the already deferential standard of review, so the new rule would have a minimal impact on real world attorney-client communication. Finally, it noted that even after final judgment, the court of appeals could remand the case for a new trial if it found that the privileged information was wrongly disclosed—an analysis that effectively treated the attorney-client privilege more as a rule of evidence than as a rule of confidentiality. In the future, businesses should be aware that if they are erroneously ordered to disclose attorney-client privileged materials, they may not be able to appeal that order until they bring their final appeal on the merits.