Federal Trade Commission v. GlaxoSmithKline
294 F. 3d 141, 53 Fed. R. Serv. 3d 98, 352 U.S. App. D.C. 343 (2002)
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Rule of Law:
A corporation does not waive the attorney-client privilege by disseminating confidential communications to employees or outside consultants so long as the dissemination is limited to those who need to know the information to perform their duties for the corporation and are bound by a duty of confidentiality.
Facts:
- GlaxoSmithKline (GSK) manufactures the drug Paxil.
- The Federal Trade Commission (FTC) initiated an investigation into whether GSK abused the FDA patent-listing process to delay generic competition for Paxil.
- In its investigation, the FTC subpoenaed documents from GSK.
- GSK withheld 91 documents, asserting they were protected by the attorney-client privilege.
- GSK had disseminated these documents to various internal teams composed of employees and to outside public relations and government affairs consultants.
- The employees and contractors who received the documents were all bound by a corporate policy or separate understanding not to disclose confidential information.
- GSK asserted that these individuals needed the information to provide input to the legal department or to receive the legal advice formulated by counsel.
Procedural Posture:
- The Federal Trade Commission (FTC) petitioned the U.S. District Court for the District of Columbia to enforce a subpoena against GlaxoSmithKline (GSK).
- GSK asserted attorney-client privilege over 91 documents.
- The parties submitted briefs to the district court regarding the privilege claims.
- The district court granted the FTC's petition and ordered GSK to produce the 91 documents, finding that GSK had waived the privilege.
- GSK appealed the district court's enforcement order to the U.S. Court of Appeals for the D.C. Circuit.
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Issue:
Does a corporation waive the attorney-client privilege for confidential documents by disseminating them to employees and outside consultants whose corporate duties relate to the subject matter of the communications?
Opinions:
Majority - Chief Judge Ginsburg
No. A corporation does not waive the attorney-client privilege by disseminating confidential communications to those who, because of the corporate structure, need to know their contents. The burden is on the corporation to show that it limited dissemination in keeping with confidentiality, not to justify each individual determination that a particular employee needed access. When a corporation provides a confidential document to specified employees or contractors whose duties relate to the document's contents and who are under an admonition of confidentiality, a court may reasonably infer the recipients had a 'need to know.' This protection extends to outside consultants who act as part of a corporate team and become integral to the formulation of legal strategy, functioning as de facto employees for that purpose. Here, GSK's privilege log and supporting affidavit sufficiently established that it limited dissemination to such individuals, thereby preserving the privilege. Furthermore, the district court abused its discretion by ruling against GSK based on an argument the FTC raised so late that GSK had no opportunity to respond, in violation of the parties' scheduling stipulation.
Analysis:
This decision clarifies and arguably relaxes the 'need to know' standard for maintaining corporate attorney-client privilege. It establishes that courts should not engage in a burdensome, recipient-by-recipient analysis of why each individual needed access to a privileged document. Instead, if a corporation demonstrates a system of limited dissemination to individuals whose job functions generally relate to the communication's subject matter, the burden is met. This provides corporations with greater certainty in sharing legal advice internally and, significantly, extends that protection to essential outside consultants who are functionally integrated into the corporate team, reflecting the realities of modern business and legal practice.
