Morgan v. City of Rockville, Maryland

Filing 54

MEMORANDUM OPINION. Signed by Magistrate Judge Jillyn K Schulze on 10/24/2014. (kns, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
COURTNEY L. MORGAN
v.
CITY OF ROCKVILLE, et al.

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Civil No. GJH 13-1394

MEMORANDUM OPINION
Presently pending is Plaintiff’s Memorandum Re: Attorney-Client Privilege, hereinafter
referred to as Plaintiff’s Motion to Compel Production of the Saul Ewing Report. ECF No. 51.
The issues have been fully briefed and no hearing is necessary. See Local Rule 105.6. For the
reasons set forth below, Plaintiff’s motion will be denied.
I. Background. 
This case arises out of a racial discrimination claim filed by Plaintiff against Susan Swift
and the City of Rockville. During discovery, Plaintiff sought the production of an investigative
report conducted on behalf of the City by Saul Ewing, LLP. ECF No. 40-1. The City hired Saul
Ewing as part of an effort to address recent complaints by city employees about the workplace
environment. On May 4, 2012, the City and Saul Ewing executed a written agreement setting
out the terms of the project. ECF No. 52-1. Exhibit A to the agreement states that Saul Ewing
will “[r]eview, revise, and supplement the City’s Personnel Policy and Procedures Manual” and
“[c]onduct investigations of . . . [c]omplaints by former City employees . . . [and] [w]orkplace
complaints by current City employees.” Id. The document also explains that Saul Ewing was
required to submit a “Confidential Report summarizing [its] findings and offering
recommendations to the City.” Id. The hourly rates of the Saul Ewing lawyers assigned to the
project also are included.

After the report was completed, the City of Rockville issued a news release stating that
the City had engaged Saul Ewing to conduct an internal review of Rockville’s personnel policies
and procedures and that “Saul Ewing identified no unlawful conduct.” ECF No. 52-2 at 1. The
news release stated that the report contained several recommendations, including (1) refining the
City’s employee performance evaluation policies; (2) updating the City’s Personnel Policies and
Procedures Manual; and (3) improving training to ensure consistent application of the City’s
policies across the organization. Id.
Defendants refused to produce the report to Plaintiff, claiming that the document was
protected by the attorney-client privilege. The court held a telephone conference on July 17,
2014 to address the issue and, after some discussion, directed the parties to brief the matter
further. The issues presented in those briefs are the same issues presently pending before the
court, namely: (1) whether the Saul Ewing report is protected by the attorney-client privilege and
(2) if so, whether Defendants waived the privilege by disclosing the content of the report in a
news release.
II.

Discussion.
a. Attorney-Client Privilege.
The aim of the attorney-client privilege is “‘to encourage full and frank communication

between attorneys and their clients and thereby promote broader public interests in the
observance of law and administration of justice.’” United States v. Jicarilla Apache Nation, 131
S. Ct. 2313, 2320-21 (2011) (citing Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)). The
objectives of the attorney-client privilege apply to governmental or corporate clients just as they
do to individual clients. Id. “The privilege aids government entities and employees in obtaining
legal advice founded on a complete and accurate factual picture.” Id. at 2321. “Unless

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applicable law provides otherwise, the Government may invoke the attorney-client privilege in
civil litigation to protect confidential communications between Government officials and
Government attorneys.” Id. (citation omitted). “Admittedly complications in the application of
the privilege arise when the client is a corporation [or a government entity], which in theory is an
artificial creature of the law, and not an individual; but this Court has assumed that the privilege
applies when the client is a corporation.” Upjohn Co., 449 U.S. at 389-90.
A party asserting the attorney-client privilege must demonstrate that:
(1) the asserted holder of the privilege is or sought to become a client;
(2) the person to whom the communication was made (a) is a member of the bar
of a court, or his subordinate and (b) in connection with this communication is
acting as a lawyer;
(3) the communication relates to a fact of which the attorney was informed (a) by
his client (b) without the presence of strangers (c) for the purpose of securing
primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in
some legal proceeding, and not (d) for the purpose of committing a crime or tort;
and
(4) the privilege has been (a) claimed and (b) not waived by the client.
In re Allen, 106 F.3d 582, 600 (4th Cir. 1997). Here, there is no dispute that Saul Ewing LLP
entered into a written agreement with the mayor and the city council of Rockville to provide
“professional and specialized legal services” and to prepare a confidential report “offering
recommendations to the City” about its personnel policy and procedures manual. ECF No. 52-1
at 1, 7. The core question is whether the attorneys at Saul Ewing, in preparing the confidential
report, were actually offering “legal services” to the City or whether they were merely providing
business advice to the City.
Plaintiff argues that Saul Ewing was merely providing business advice because (1) the
relevant communications were voluntarily made by lower level employees who are not covered

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by the City’s assertion of the attorney-client privilege and (2) interviewing employees about
potential workplace complaints does not constitute a legal service.
Both parties rely on Upjohn Co. v. United States, 449 U.S. 383 (1981). There, an audit of
a pharmaceutical manufacturing company revealed that a certain foreign subsidiary made
payments to foreign government officials in order to secure government business. Id. at 386. As
a result of this news, the company conducted an internal investigation of what it deemed
“questionable payments.” Id. The investigation included personal interviews and the
distribution of questionnaires to Upjohn officers and employees. Id. at 387. Managers were
instructed to treat the investigation as “highly confidential” and not to discuss it with anyone
other than Upjohn employees who might be helpful in providing the requested information. Id.
After Upjohn’s counsel completed the investigative report, the company voluntarily submitted
the report to the SEC, which in turn forwarded it to the IRS. The IRS began its own
investigation into the matter, and issued a summons to Upjohn demanding production of the
written questionnaires and the memoranda and notes of the interviews. Id. at 387-88. Upjohn
refused to produce the materials, and eventually, the question posed to the Supreme Court was
whether these communications between general counsel and lower-level employees at Upjohn
were protected by the attorney-client privilege.
The Court began by rejecting the “so-called ‘control group test,’” which stated that a
privilege only exists if the employee making the communication is in a position to control “a
decision about any action which the corporation may take upon the advice of the attorney.” Id.
at 390. The Supreme Court concluded that such a view “overlooks the fact that the privilege
exists to protect not only the giving of professional advice to those who can act on it but also the
giving of information to the lawyer to enable him to give sound and informed advice.” Id. “The

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first step in the resolution of any legal problem is ascertaining the factual background and sifting
through the facts with an eye to the legally relevant.” Id. The court reasoned that “it is only
natural that [lower-level] employees would have the relevant information needed by corporate
counsel if he is adequately to advise the client . . . .” Id. at 391. The court recognized that “[i]n
light of the vast and complicated array of regulatory legislation confronting the modern
corporation, corporations, unlike most individuals, constantly go to lawyers to find out how to
obey the law.” Id. at 392 (citation and quotation marks omitted). Specifically, in Upjohn,
“[i]nformation, not available from upper-echelon management, was needed to supply a basis for
legal advice concerning compliance with securities and tax laws, foreign laws, currency
regulations, duties to shareholders, and potential litigation in each of these areas.” Id. at 394.
Moreover, “the communications were considered ‘highly confidential’ when made, and have
been kept confidential by the company.” Id. at 395. Ultimately, the Court concluded that “the
communications by Upjohn employees to counsel [were] covered by the attorney-client
privilege.” Id. at 397. Any reliance that Plaintiff places on the control group test, or its premise
that the privilege does not apply because some of the communications were made with lowerlevel employees, is thus misplaced.
The Rockville city council, a municipal corporation organized under the laws of
Maryland, ECF No. 52-1 at 1, contracted with Saul Ewing so that it could “[r]eview, revise, and
supplement the City’s Personnel Policy and Procedures Manual.” Id. at 7. As asserted by
Defendants, “the purpose of hiring Saul Ewing was to obtain legal advice regarding the content
and sufficiency of the City’s personnel policies vis-à-vis Federal and State laws and statutes.”
ECF No. 52 at 13. Such compliance is legally mandated. The State of Maryland has a
comprehensive statutory scheme that governs personnel procedures. For example, Title 20 of the

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State Government Article governs “Discrimination in Employment,” and Titles 5, 6 and 7 of the
State Personnel and Pensions Article govern, respectively, “Employee Rights and Protections,”
the “State Personnel Management System Generally,” and “Employment in the State Personnel
Management System.” According to the City’s news release, to accomplish this task, “Saul
Ewing established a confidential telephone hotline, which current employees used to schedule
confidential in-person meetings to review any complaints or concerns related to the City.” ECF
No. 52-2 at 2. Moreover, “[f]or the convenience of the witnesses and to protect their privacy,
employee interviews were conducted at confidential locations in and around Rockville.” Id. The
final sentence of the news release emphasized that “[t]he final report is confidential as it contains
personnel information which cannot be made public.” Id.
Here, as in Upjohn, outside counsel was hired to investigate whether certain of the
client’s policies and procedures were in accordance with the law. That investigation involved
interviews with lower-level employees, that the interviews were not employer-directed, or that a
non-lawyer could have conducted the interviews, does not alter the fact that the purpose of the
relevant communications was to provide legal advice regarding compliance with employment
law. “Courts have consistently recognized that investigation may be an important part of an
attorney’s legal services to a client.” In re Allen, 106 F.3d at 602. “While in house accountants
or lay investigators could have been employed to investigate the events in question, neither
would have brought to bear the same training, skills and background possessed by attorneys and
necessary to make the professional independent analysis and legal recommendations sought by
the [client].” Id. at 602-03. Indeed, “[t]he very retention of outside counsel indicates that the
[client] wanted someone who could collect and ‘sift [ ] through the facts with an eye to the

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legally relevant.’” Id. at 602 n.9 (quoting UpJohn, 449 U.S. at 390-91). As stated in
Montgomery Cnty. v. MicroVote Corp., 175 F.3d 296, 303 (3d Cir. 1999):
There may be evidence that the County chose the Webb Law Firm as a
“consultant,” but the loose use of the term does not alone denude a lawyer of his
legal character. . . . It is not uncommon for public entities, including state and
local governments, which have appointed attorneys, to engage outside lawyers for
advice or for trial in meeting difficult or unusual problems. It is very important in
the practice of law, especially matters of great public interest to a county such as a
troublesome controversy over an expensive but highly unsatisfactory electronic
voting system, that the county have complete freedom of consultation fostered by
the client-attorney privilege. The services need not be rendered in conjunction
with actual or potential litigation to qualify for the privilege.
b. Waiver.
Plaintiff also argues that Defendants waived their claimed attorney-client privilege when
they issued a news release regarding the findings of the Saul Ewing report. Specifically, Plaintiff
maintains that Defendants selectively disclosed certain findings of the report for the tactical
purposes of appeasing City employees and deflecting any negative attention the City may have
been receiving at the time. ECF No. 51 at 19.
The attorney-client privilege only applies to communications “made with the intention of
confidentiality.” Koch v. Specialized Care Servs., Inc., 437 F. Supp. 2d 362, 368 (D. Md. 2005).
Thus, it is essential that the communications “not be intended for disclosure to third persons.”
Id. “Any disclosure inconsistent with maintaining the confidential nature of the attorney-client
relationship waives the attorney-client privilege.” United States v. Jones, 696 F.2d 1069, 1072
(4th Cir. 1982). Moreover, “when a party reveals part of a privileged communication to gain an
advantage in litigation, the party waives the attorney-client privilege as to all other
communications relating to the same subject matter.” Id. However, courts “retain discretion not
to impose full waiver as to all communications on the same subject matter where the client has
merely disclosed a communication to a third party, as opposed to making some use of it.” Id.
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Here, no actual communications between Rockville employees and Saul Ewing were disclosed to
the public. The news release merely outlines the legal services provided to the Rockville city
council in response to prior employee complaints. Informing the public that counsel
recommended improvements to communication between management and staff does not
constitute a disclosure of a confidential communication. “[T]he simple fact that attorney-client
communications eventually result in a ‘public’ communication does not rob the preliminary or
prior attorney-client communications of their privileged status.” Koch, 437 F. Supp. 2d at 369.
Adopting the approach suggested by Plaintiff—that the entirety of the Saul Ewing report should
be produced on account of the news release—“would lead to the untenable result that any
attorney-client communications relating to the preparation of publicly filed legal documents—
such as court pleadings—would be unprotected.” Id. at 370. As concluded in Koch, consultative
attorney-client communications will not be stripped of their privilege “simply because as a result,
a ‘public’ letter of legal position is subsequently sent.” Id. “Such a sweeping interpretation
would interfere with the noble purposes of the attorney-client privilege to ‘encourage full and
frank communication between attorneys and their clients and thereby promote broader public
interests in the observance of law and administration of justice.’” Id. (quoting Upjohn, 449 U.S.
at 389). The privilege that protects the communications between Defendants and their counsel
that lead to the Saul Ewing Report has not been waived.
III.

Conclusion.
Plaintiff’s Motion to Compel Production of the Saul Ewing Report, ECF No. 51, is

denied.
Date: October 24, 2014

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__________/s/_____________                  

JILLYN K. SCHULZE
United States Magistrate Judge