Upjohn Co. v. United States

Brief Fact Summary. The Petitioner, Upjohn Co. (Petitioner), conducted an internal audit and investigation that revealed alleged illegal payments made to foreign officials in exchange for business. Petitioner volunteered notice of such actions to the Internal Revenue Service (IRS), who issued a summons for information collected by Petitioner, including internal questionnaires sent to managerial employees. Petitioner maintained those documents were protected by the attorney-client privilege and attorney work product.

Synopsis of Rule of Law. In the corporate context, attorney-client privilege extends to lower level employees, not just to those in control of the corporation. The work-product doctrine protects oral statements made to attorneys, which necessitates a showing of undue hardship on the part of the party-opponent who seeks that information.

Facts. Petitioner, an international pharmaceutical company discovered through an independent audit that one of its foreign subsidiaries might have made payments to foreign government officials in order to secure government business. Gerard Thomas, Petitioner’s General Counsel, was notified and he consulted with outside counsel as well as Petitioner’s Chairman, all of whom decided an internal investigation as to “questionable payments” was necessary. As a result, questionnaires were sent to all foreign and area managers inquiring as to information regarding any such payments. This procedure of collecting information had been deemed “highly confidential.” Petitioner voluntarily sent a preliminary report to the Securities and Exchange Commission (SEC) and the IRS. The IRS began an investigation and was given lists by Petitioner of all those who were interviewed and all whom had responded to the questionnaire. The IRS then sought production of all files relative to the investigation cond
ucted under Gerard Thomas’ supervision. The requested production included, but was not limited to the written questionnaires and memoranda or notes of interviews conducted in the US and abroad of officers and employees of Petitioner and its subsidiaries. Petitioner refused, citing attorney-client privilege and attorney work product in anticipation of trial. The Respondent, the United States (Respondent), filed a petition seeking enforcement of the summons in the United States District Court for the Western District of Michigan, which was granted. Petitioner then appealed to the Court of Appeals for the Sixth Circuit which rejected the District Court’s finding of waiver of the attorney-client privilege, but agreed that the privilege did not apply to the communications made by officers and agents not responsible for directing Upjohn’s actions in response to legal advice. The Appellate Court remanded to the District Court to determine who was within the control group.

Issue. Whether the attorney-client privilege in the corporate context extends to employees not within the “control group” of the corporation.
Whether the IRS had shown sufficient necessity and justification to overcome the work-product doctrine.

Held. Judgment of the Court of Appeals reversed and remanded.
The attorney-client privilege protects the communications in this case from compelled disclosure.
The work-product doctrine applies in tax summons enforcement proceedings where a strong showing of necessity must be shown to compel discovery of work product.

Discussion. The attorney-client privilege applies to corporations, not just to the “control group” rather, it extends to lower level employees as well, since their actions as well may involve the corporation in legal difficulties. The attorney-client privilege only protects disclosure of communications. It does not protect disclosure of the underlying facts by those who communicated with the attorney. In this case, the Petitioner gave to the IRS a list of those employees to whom the questionnaire was given and those who answered. The IRS was free to question the employees who communicated with Thomas and outside counsel.
The court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation. The notes and memoranda that the IRS sought in this case were work product based on oral statements. This required the IRS to show necessity and undue hardship in obtaining the information it sought, a burden that the Supreme Court of the United States (Supreme Court) held was not met.