The Privilege Always Protects Communications Among Jointly Represented Corporate Affiliates, Right?

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Corporate parents' in-house lawyers' joint representations of the parent and its wholly-owned subsidiaries should cinch their communications' attorney-client privilege protection. Additional grounds for such privilege protection (in a litigation setting) could also come from the obvious "common interest" between a corporate parent and its wholly-owned subsidiaries – which by definition must comply with their parent's direction.

But not all courts agree. In Somers v. QVC, Inc., Civ. A. No. 19-cv- 04773, 2021 U.S. Dist. LEXIS 148568 (E.D. Pa. Aug. 9, 2021), the court addressed communications between QVC's in-house lawyers and employees of its sister company HSN – and communications between HSN's in-house lawyers and QVC employees. Both QVC and HSN are wholly-owned subsidiaries of the same corporate parent. The court inexplicably rejected a privilege claim, despite acknowledging that: (1) "the QVC and HSN legal teams were consolidated into one legal department" after the corporate parent acquired them; and (2) the corporate family's Shared Services Agreement confirmed that "legal communications among and between" the wholly-owned subsidiaries "are made pursuant to a joint client/attorney-client privilege." Id. at *4-5. Instead of relying on the obvious joint representation privilege protection, the court only considered (and rejected) the common interest argument – noting that "there is no clear interest for sister companies to comply with each other's contracts" or for a corporate parent to assure that "one subsidiary compl[ies] with another subsidiary's contract." Id. at *11.

Although perhaps the common interest analysis was interesting, the court should have extended privilege protection based on the corporate family's consolidated law department's joint representation of both wholly-owned subsidiaries.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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