The U.S. Court of Appeals for the Seventh Circuit affirmed a district court decision rejecting attorney-client privilege arguments and ordering Whirlpool to disclose communications between is attorneys and its outside advertising agencies relating to allegedly false advertising. LG Electronics, Inc. v. Whirlpool Corp., Case Nos., 09-3777; -3795 (7th Cir. Mar. 3, 2010) (per curiam) (Easterbrook, C.J.; Wood, J., Evans, J.).
LG Electronics sued Whirlpool claiming that Whirlpool, in violation of the Lanham Act, made literally and implicitly false claims in advertising, i.e., that its dryers use steam to reduce wrinkles. When asked to produce communications between its attorneys and its outside advertising agencies relating to the allegedly false claims, Whirlpool refused, arguing that the communications were protected by the attorney-client privilege. Whirlpool argued that the advertising agents were not third parties to whom the privilege would usually not apply, but de facto employees of the company. Alternatively, Whirlpool argued that the communication should be kept confidential based on the theory that the advertising agencies shared with it a common legal interest in producing lawful advertisements. After the district court rejected these arguments and ordered the communications produced, Whirlpool sought mandamus.
In its petition for mandamus, Whirlpool argued that because of the unavailability of collateral appeal the court should relax the standards for issuing writs of mandamus. The Seventh Circuit rejected the argument, stating that a petitioner seeking a writ of mandamus must show both that the challenged district court order will be effectively unreviewable if the “petitioner is forced to wait until the end of the case and also that the order is patently erroneous or usurpative in character.” Mandamus, as a remedy, is reserved for “extraordinary circumstances — i.e., when a disclosure order amounts to a judicial usurpation of power or a clear abuse of discretion, or otherwise works a manifest injustice.”
Further, in the present circumstances, the court found that the cases Whirlpool cited failed to establish error in the district court’s rejection of Whirlpool’s common interest (between it and its advertising agency). Rather, the court noted that the only common legal interest shared by Whirlpool and its chosen advertiser, over whom it has control, is the “fear of lawsuit,” a “fear that [does not] justify the common-interest exception” under Seventh Circuit law. Absent such error, the court determined that mandamus was inappropriate, regardless of whether Whirlpool has other opportunities for appellate review.