A trio of cases issued by the Superior Court of Pennsylvania highlight the need for corporate counsel to be vigilant in determining when, and how, to clearly advise corporate employees that they represent the corporation and not them individually.
These three cases evolve out of the Jerry Sandusky scandal and the criminal indictments that were issued against Penn State administrators Graham Spanier, Timothy Curley, and Gary Shultz. The basic facts of the cases are that Penn State General Counsel Cynthia Baldwin met with each of them during the course of the Sandusky scandal and appeared with them when they testified before a Grand Jury that was convened to criminally investigate the Sandusky scandal. Baldwin then testified before the Grand Jury about her conversations with them after Penn State waived any attorney client privilege that may have existed. Following Baldwin’s testimony criminal indictments were issued against Spanier, Shultz and Curley.
Counsel for Spanier, Shultz and Curley appealed the indictments claiming that the charges resulted from Baldwin’s breach of the attorney client privilege when she testified before the Grand Jury. The Superior Court of Pennsylvania agreed with the appellants and dismissed several of the criminal charges filed against Spanier, Shultz and Curley. The court’s findings and decisions are contained in three separate decisions: Commonwealth of Pennsylvania v. Graham B. Spanier; Commonwealth of Pennsylvania v. Timothy M. Curley; and Commonwealth of Pennsylvania v. Gary Charles Shultz.
The critical issue addressed by the court was whether General Counsel Baldwin’s testimony about her conversations with Spanier, Shultz and Curley violated the attorney client privilege and thus required the quashing of charges that were based on her Grand Jury testimony.
The court examined the nature and scope of the attorney client privilege, particularly as applied to corporate counsel and corporate employees. The court noted that in such a relationship the privilege extends to communications between the corporation’s attorney and the corporation’s employees acting on behalf of the corporation. The court further went on to explain that as a result of Upjohn Co. v. United States, 449 U.S. 383 (1981)] under certain situations it is necessary for corporate counsel to clearly inform a corporate employee that he or she ” … represents the corporation and not the individual, and that the corporation possesses the attorney-client privilege.”
The court further observed that particularly in relation to grand jury proceedings the right to counsel is personal and for the purpose of protecting a testifying witnesses from self incrimination. The court explained that the burden is on the attorney appearing with a witness to ” …. adequately explain to the client any limitations of his or her representation at a grand jury proceeding.”
The key finding by the court was that Baldwin did not adequately explain to Spanier, Schultz and Curley (either when she met with them or when appearing with them before the grand jury during their testimony) that she was not representing them personally and that her representation was solely in their capacity as agents of Penn State. This failure to communicate a clear and unambiguous warning of the limits of her representations led to defective indictments for the following three primary reasons:
(1) because Baldwin did not adequately explain the limits of attorney client relationship, Spanier, Shultz and Curley could not make a knowing, intelligent and voluntary decision whether to continue to communicate with Baldwin, particularly in a situation where they were seeking advice concerning their appearance before a Grand Jury convened as a part of a criminal investigation;
(2) Baldwin breached the attorney-client privilege when she testified before the Grand Jury due to the fact that Spanier, Shultz and Curley believed that she was acting as their counsel when they communicated with her due to her failure to adequately explain the limits of her representation, thus the waiver of the privilege did not belong to Penn State but rather belonged to Spanier, Schultz and Curley; and
(3) due to Baldwin maintaining that she did not represent Curley’s, Spanier’s or Shultz’s individual interests, the court found that they were effectively denied their statutory right to counsel (under Pennsylvania law) during their grand jury testimony whose purpose would have been to protect Spanier’s, Shultz’s and Curley’s individual interests and provide advice about whether they should answer potentially incriminating questions or invoke their right against self-incrimination.
These three cases highlight the importance of corporate counsel: (1) not taking for granted that corporate employees have an understanding of the distinction between representation in an agency relationship versus representation in an individual capacity; and (2) giving thought to at what point and under what circumstances a clear and unambiguous “Upjohn” warnings should be given to individual corporate clients.
For further information about Upjohn warnings, recommended best practices, and a sample warning please see the American Bar Association’s White Collar Crime Committee report “Upjohn Warnings: Recommended Best Practices When Corporate Counsel Interacts With Corporate Employees.”