Upjohn Co. v. United States
449 U.S. 383 (1981)
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Rule of Law:
In the corporate context, the attorney-client privilege protects confidential communications between corporate counsel and employees at all levels of the corporate hierarchy, not just the 'control group,' when such communications are made at the direction of superiors for the purpose of securing legal advice for the corporation.
Facts:
- Upjohn Co., a pharmaceutical manufacturer, discovered through its independent accountants that one of its foreign subsidiaries made payments to foreign government officials to secure business.
- Upjohn's General Counsel, Gerard Thomas, was informed and, after consulting with outside counsel and the Chairman of the Board, initiated an internal investigation into these 'questionable payments.'
- As part of the investigation, Thomas sent a confidential questionnaire to Upjohn's foreign managers seeking detailed information about the payments.
- The questionnaire, sent over the Chairman's signature, identified Thomas as the company's General Counsel, stated the purpose was to gather information for a legal review, and instructed recipients to keep the matter 'highly confidential.'
- Thomas and outside counsel also interviewed the questionnaire recipients and 33 other Upjohn officers and employees.
- Upjohn voluntarily submitted a preliminary report disclosing the payments to the Securities and Exchange Commission (SEC) and simultaneously provided a copy to the Internal Revenue Service (IRS).
- As part of its own investigation, the IRS was given a list of all Upjohn employees who had been interviewed by corporate counsel.
Procedural Posture:
- The IRS issued a summons to Upjohn Co. demanding production of the questionnaires and notes from its internal investigation.
- Upjohn refused to produce the documents, asserting attorney-client privilege and the work-product doctrine.
- The United States filed a petition in the U.S. District Court for the Western District of Michigan seeking enforcement of the summons.
- The District Court adopted a Magistrate's recommendation and ordered enforcement of the summons.
- Upjohn, as appellant, appealed to the U.S. Court of Appeals for the Sixth Circuit.
- The Court of Appeals held that the attorney-client privilege did not apply to communications with employees outside the corporation's 'control group' and that the work-product doctrine was inapplicable to IRS summonses.
- The Court of Appeals remanded the case to the District Court to determine which individuals were in the 'control group'.
- The U.S. Supreme Court granted Upjohn's petition for certiorari.
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Issue:
Does the attorney-client privilege protect confidential communications between a corporation's in-house counsel and its lower- and middle-level employees when those communications are made at the direction of corporate superiors to secure legal advice for the corporation?
Opinions:
Majority - Justice Rehnquist
Yes. The attorney-client privilege protects these communications. The 'control group' test, which limits the privilege to senior management, is too narrow and frustrates the fundamental purpose of the privilege, which is to encourage full and frank communication between attorneys and their clients to promote the observance of law. In the corporate context, critical information needed by counsel to provide sound legal advice is often held by middle- and lower-level employees. Limiting the privilege to a 'control group' discourages the communication of this necessary information, thereby undermining the ability of corporate counsel to ensure the corporation's compliance with the law. The communications at issue were made by employees to corporate counsel, at the direction of their superiors, regarding matters within the scope of their duties, and for the express purpose of securing legal advice for the corporation. The privilege protects the communication itself, not the underlying facts, meaning the government remains free to question the employees directly about what they know.
Concurring - Chief Justice Burger
Yes. While agreeing with the Court's rejection of the 'control group' test and its ultimate conclusion, the Court should have articulated a clearer, more predictable standard to govern future cases rather than adopting a case-by-case approach. An uncertain privilege undermines the very purpose it is meant to serve. The Court should have established as a general rule that a communication is privileged when an employee, at the direction of management, speaks with an attorney about conduct within the scope of their employment for the purpose of enabling the attorney to provide legal advice to the corporation. This would provide the certainty that corporations and their counsel need.
Analysis:
The Upjohn decision fundamentally reshaped the application of attorney-client privilege in the corporate setting by rejecting the widely used but restrictive 'control group' test. By extending the privilege to communications with lower-level employees, the Court significantly broadened the 'zone of silence' around corporate internal investigations. This encourages corporations to conduct thorough internal reviews to ensure compliance with complex regulations, as they can gather information from all relevant personnel without fear of automatic disclosure. The ruling enhances the role of corporate counsel but leaves some uncertainty by declining to establish a new bright-line rule, instead favoring a case-by-case analysis based on the factors present in this case.
