The plaintiffs in this securities fraud class action—purchasers of stock in defendant Omnicom corporation— sought to compel the production of documents which Omnicom claimed were protected by the attorney-client privilege. The plaintiffs alleged that the documents were not protected by the attorney-client privilege because they fell within the crime-fraud exception, as well as the fiduciary exception, to the privilege. They also argued that the privilege was waived by Omnicom’s assertion of an adviceof- counsel defense.
Specifically, the plaintiffs asserted that documents reflecting communications between Omnicon executives and their counsel were used to facilitate or conceal fraudulent conduct, thus falling within the crime-fraud exception to the attorney-client privilege. The court articulated the following three concerns: first, that the effect of granting the motion would be to eliminate any protection for a wide array of otherwise privileged documents; second, any findings of the court would suggest a strong enough basis to infer perpetration of a fraud when such fraud is an essential element of the plaintiffs’ underlying claim; and third, the plaintiffs’ motion had been made at a relatively early stage in the litigation before there was a comprehensive record in the case. In light of these concerns, the court found, using the “more likely than not” mode of analysis, that the plaintiffs had not met their burden of showing that the otherwise privileged communications were used by the client to assist in perpetrating a fraud.
The plaintiffs next argued that the officers at Omnicom and their attorneys owed a fiduciary duty to the company and, accordingly, Omnicom could not withhold from them documents protected by the attorney-client privilege. The court found that the fiduciary exception did not apply because the case was a private securities fraud lawsuit, as opposed to a derivative action.
Next, the court addressed the issue of whether Omnicom waived the attorney-client privilege through its assertion of an advice-of-counsel defense. The court found inadequate facts to support the theory of waiver because it was not clear to what extent Omnicom relied on the advice of its attorneys, as opposed to other, nonlegal professionals.
Lastly, the court focused on the issue of whether documents authored by, addressed to, or copied to both an officer of Omnicom as well as an Omnicom attorney were protected by the attorney-client privilege. The court reviewed the documents in camera and held that the documents that reflected some rendition of what appeared to be legal advice were protected by the privilege, while those documents that bore no such indication, and instead reflected solely business advice, were not protected. In its decision, the court emphasized that documents created for business purposes do not acquire a protected status merely because copies are sent to an attorney, even if the attorney ultimately renders legal advice based on them.