District Court Rules Employer’s Inadequate Privilege Log did not Waive Attorney-Client Privilege

A U.S. District Court in Tennessee ruled an employer must produce a privilege log in response to an administrative subpoena when withholding documents based on a claim of attorney-client privilege and/or the work product doctrine. However, neither the failure to produce the log at the administrative level nor the inadequacy of the privilege descriptions in the log waived the employer’s privilege assertions. Instead, the court gave the employer an opportunity to submit an amended privilege log.

The NLRB issued an administrative subpoena to an employer while investigating a charge of improper, retaliatory discharge from employment by a former employee. The employer objected to requests for documents related to the former employee’s workers’ compensation claims. It asserted the subpoena sought the production of material protected by the attorney-client privilege and/or work product doctrine and refused to turn over the documents.

The NLRB moved for enforcement of the subpoena by the federal district court. Only after the NLRB moved for enforcement did the employer produce a privilege log of withheld documents in the district court action. The NLRB’s motion for enforcement was referred to a magistrate judge, who recommended granting enforcement of the subpoena. The magistrate also found the employer’s privilege log insufficient because it did not adequately set forth the bases for the privileges and/or protections claimed.

In its review of the magistrate’s rulings, the district court analyzed two issues: 1) whether the employer waived its privilege protection arguments by failing to produce a privilege log at the administrative level, before the matter reached the magistrate; and 2) whether the privilege log was sufficient to protect the employer’s privilege assertions.

As to waiver, the employer argued that only Article III courts have the power to decide issues relating to privilege, and that the NLRB did not have authority to require it to create a log. Therefore, it could not have waived its privilege by failing to produce a log. The employer relied on NLRB v. Detroit Newspapers, in asserting that only Article III courts have the power to decide privilege issues.

The district court agreed with that general proposition, but held the employer still had a duty to provide the NLRB with specific information about the documents it withheld. The court found the employer’s interpretation of Detroit Newspapers to be overly broad. That case addressed whether an administrative law judge had the authority to make privilege determinations after an in camera review of withheld documents; it did not absolve recipients of an administrative subpoena of a duty to produce a privilege log. This court held such an interpretation would make it difficult for parties to resolve privilege issues without “forcing the matter into district court in every instance.”

More significantly, while the court did not condone this employer’s failure to provide a privilege log to the NLRB, it ruled that failure did not amount to a waiver of its rights to assert its privilege claims to the district court. That ruling sends an implicit message that a party may fail to provide a privilege log to an administrative agency without waiving attorney-client privilege, as long as it provides a privilege log to a district court when pressed to assert its legal bases for withholding documents. Future litigation would seem inevitable over what, if any, conduct could amount to a waiver when the recipient of an administrative subpoena fails to submit a privilege log to an administrative agency.

As to the sufficiency of a privilege log, the court found the employer used conclusory descriptions of documents it withheld. These descriptions were “thin” and “wholly inadequate” to enable the court to determine whether particular communications were subject to attorney-client privilege.

However, the court again declined to find waiver because there was no evidence of “unjustified delay, inexcusable conduct, or bad faith” by the employer. The court found this employer relied on a good faith interpretation of Detroit Newspapers when it produced its privilege log to the district court in the first instance, instead of to the NLRB.

The court ordered the employer to produce a more detailed privilege log with descriptions sufficient to establish the required elements of the attorney-client privilege and/or work product doctrine. No additional guidance is provided in this ruling as to what level of privilege log insufficiency will cause a privilege waiver in the context of an administrative subpoena. This court was willing to afford the employer another opportunity to revise a deficient privilege log, but generally, recipients of administrative subpoenas must always proceed with caution and avoid testing the boundaries of privilege log sufficiency given the consequences of waiving the attorney-client privilege or work product protection.

Weiner Brodsky Kider regularly represents financial services industry clients in administrative matters before state and federal agencies.