Most if not all courts recite the tenet that corporations can lose their privilege protection for privileged documents circulated within the corporation to employees beyond those with a "need to know." One might think that this approach makes little sense, because it can force corporations to disclose purely internal communications to litigation adversaries just because the documents were shared with others in the corporation who did not need them to do their job (but presumably would be required to keep them confidential). Fortunately for corporations, most courts mention this counter-intuitive "need to know" standard in their introductory explanation of corporate privilege, without actually stripping away privilege based on that standard. But some courts do.
In Novafund Advisors, LLC v. Capitala Group, LLC, Civ. No. 3:18-cv-01023, 2021 U.S. Dist. LEXIS 98560, at *14 (D. Conn. May 25, 2021), the court repeated the commonly-recited approach that "the involved non-lawyer employees must have a 'need to know' the privileged information in order for it to remain protected." The court then concluded that "defendants' log entries do not demonstrate that the involved non-lawyers were persons with a 'need to know' the legal advice being discussed, and accordingly the Court will direct them to submit a sample for in-camera review." Id.
One might justifiably wonder how an in-camera review would shed much light on the "need to know" standard. Some courts wisely take what seems like the common sense view. They presume that corporate employees would not share privileged communications with random colleagues who did not need them. And perhaps those courts also implicitly recognize the unfairness of granting a corporation’s litigation adversary access to purely internal documents shared with another corporate employee who had a built-in duty to keep them confidential.
Published August 2, 2021.
