Recent decisions (three related cases) by the Pennsylvania Superior Court¬—Commonwealth v. Schultz, No. 280 MDA 2015 (Pa. Super. Ct. Jan. 22, 2016); Commonwealth v. Curley, No. 299 MDA 2015 (Pa. Super. Ct. Jan. 22, 2016); Commonwealth v. Spanier, No. 304 MDA 2015 (Pa. Super. Ct. Jan. 22, 2016)¬—addressed the issue of the right of an organization attorney to waive the privilege of the agent when the agent is being investigated for individual misconduct by a grand jury.
The cases involved a university lawyer who arguably also represented three of the university's administrators/agents—a president, a vice president and an athletic director. The university attorney gave damning testimony before a state grand jury. At issue was the scope of her representation and her right to testify when the university arguably waived attorney-client privilege—but the three university employees did not issue individual waivers.
Baldwin's Legal Role in Sandusky Scandal
The case involved the complaints of three Penn State administration officials who were charged with coverup crimes by a Pennsylvania grand jury in connection with the Jerry Sandusky sex-abuse scandal. Graham Spanier, Tim Curley and Gary Schultz asserted that Cynthia Baldwin, an attorney for Penn State, should not have been allowed to testify before the grand jury against their interests.
The three administrators testified before the state grand jury while Baldwin was present. At a subsequent grand jury hearing, Baldwin gave her own testimony after Penn State waived its privilege, in part. A new counsel for Penn State agreed to waive the university's attorney-client privilege but also asserted "it could not waive any privilege that Curley and Schultz might have and again declined to waive its privilege as to communications between Ms. Baldwin and Curley and Schultz."
Though the Office of Attorney General agreed not to question Baldwin about potential confidential communications between Curley, Schultz, Spanier and Baldwin, Baldwin did provide testimony about private communications that cast the defendants in a negative light. Baldwin said of Spanier: "He is not a person of integrity," she testified. "He lied to me."
Reversal by the Pennsylvania Superior Court
The state Superior Court reversed the lower court's decision to allow her testimony and dismissed several criminal counts against the three PSU administrators. The higher court accepted the defendants' argument that her appearance before the grand jury either created an attorney-client relationship or it did not.
- If her appearance did create the attorney-client relationship, then any waiver had to include the individual defendants.
- If her appearance did not create the attorney-client relationship, then the three defendants should have had the right to use their own counsel. Moreover, her presence in the grand jury room would have been contrary to grand jury secrecy rules.
Judge Mary Jane Bowes, who wrote the higher court opinion for the Superior Court panel, ruled that "Ms. Baldwin did not properly explain to Mr. Curley that her representation of him was solely as an agent of Penn State and that she did not represent his individual interests. ... We find that, even assuming Ms. Baldwin represented Curley in an agency capacity, his communications to her regarding being subpoenaed to testify before the criminal investigating grand jury were privileged." (The opinions for the other two defendants were similar.)
Effect of Baldwin decision on new legal relationships
The Baldwin case raised many legal ¬issues such as:
- What organizations are covered by the decision? The logic of the decision applies to more than just universities. Corporations, partnerships, government agencies, nonprofits, and almost any work environment could be affected.
- Which individuals are covered? The case reasonably applies to anyone who works for the company in any capacity. Agents could include directors, officers, administrators, employees and even independent contractors.
- Where does the decision apply? While the case involved testimony by an attorney before a grand jury, its reasoning can logically apply to any criminal court, any civil courts, probate courts, or anywhere a lawyer may be asked to testify about the conduct of a worker.
- Who is really the client? In the Baldwin case, the administrators did act on behalf of the university but they were being charged individually. The line between agency conduct and individual conduct is a thin and very gray one.
In-house lawyers who testify against the interest of employees are not only at risk for being accused of breaking the attorney-client privilege. They are also at risk for the ethical violations of having a conflict of interest between the organization and the individual worker and for legal incompetence.
Some of the questions lawyers and clients alike will now need to review are:
- Should the individual and the organization each get separate counsel?
- What warnings should the lawyer give to the employee before speaking with the employee?
- What is the effect of a signed informed consent by the client?
- What happens when the relationship between the individual and the organization goes sour in some way?
The Baldwin case only raises the questions. The answers will likely involve ¬additional litigation.