Business Integration Services, Inc. v. AT&T Corp., 2008 U.S. Dist. LEXIS 33952 – In this federal court action, the court considered whether an employee’s disclosure of privileged information constituted a waiver of his company’s right to assert the attorney-client privilege.
Business Integration Services (“BIS”) contracted with AT&T to sell AT&T’s services to third parties. During the relationship, James Glackin, AT&T’s regional manager, worked with BIS on a daily basis. AT&T developed concerns about its relationship with BIS and eventually decided to terminate it. While communicating AT&T’s concerns to BIS, Glackin disclosed the thought processes of AT&T’s in-house counsel. About three years later, while in litigation with BIS, AT&T asserted attorney-client privilege over Glackin’s disclosures. The court decided that AT&T had waived the privilege.
When privileged information is voluntarily disclosed, courts usually find that the privilege has been waived. Normally, only a company’s officers, directors, and high-level managers can authorize disclosure of privileged information of the company. However, in the following three situations, a lower-level employee’s disclosure can be deemed a voluntary disclosure by the company: first, if the company authorized the employee to act on its behalf; second, if the company, before the disclosure, led others to believe the employee was so authorized; and third, if the company, after the disclosure, ratified the employee’s disclosure through its conduct. The court in BIS found that AT&T ratified Glackin’s disclosure. AT&T was aware of the disclosure for a long time, but made no effort to dissent from it. Glackin’s disclosure was deemed a voluntary disclosure by the company, and therefore a waiver of the privilege.
The court considered the following factors: (1) the reasonableness of any precautions taken to prevent disclosures, (2) time taken to rectify the error, (3) the extent of the disclosure, and (4) fairness. The court found that the first two factors weighed against AT&T. AT&T failed to instruct Glackin about privilege issues and allowed years to pass before asserting privilege. The last two factors were deemed irrelevant. Therefore, the court decided that, had AT&T not voluntarily disclosed the information, its disclosure would have nevertheless constituted a waiver of the privilege.