Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Corporate compliance policy not protected by attorney-client privilege, (Oct 14, 2014)

By Jeffrey May, J.D.

Building products maker CertainTeed Gypsum, Inc. has been ordered to produce its corporate antitrust compliance policy to plaintiffs in multi-district litigation alleging a conspiracy to fix the prices of drywall products. CertainTeed's argument that the policy was shielded by the attorney-client privilege was rejected, and the federal district court in Philadelphia granted the Indirect Purchaser Plaintiffs’ motion to compel production of the policy (In re: Domestic Drywall Antitrust Litigation, October 9, 2014, Baylson, M.).

The antitrust compliance policy was not privileged, the court ruled. The issue was apparently one of first impression in the Third Circuit. According to the court, the attorney-client privilege was to be construed narrowly and should be limited to legal advice leading to a decision by the client. The court identified the necessary elements for application of the privilege: (1) a communication; (2) made between privileged persons; (3) in confidence; (4) for the purpose of obtaining or providing legal assistance for the client.

CertainTeed’s antitrust compliance policy, although based on legal advice, was primarily a business policy outside the protections of the privilege, the court decided. The policy was intended help insure that company employees do not violate the antitrust laws. It summarized anticompetitive practices to be avoided, provided guidance for situations that could lead to violations, and detailed possible sanctions for antitrust violations. Moreover, there was no evidence CertainTeed’s parent company—Compagnie de Saint-Gobain, S.A.—would have refrained from creating the policy absent the privilege.

Wide distribution within company. CertainTeed’s argument that its policy was shielded from disclosure because it was not distributed outside the company also was rejected. The argument was undermined by the wide distribution of the policy within the organization. The policy was distributed to more than 120 employees who attended a training session, as well as through its internal Internet site. Therefore, the policy lost any privileged communication status.

Proposed redactions. The court also rejected CertainTeed’s alternative argument that it should be permitted to produce a redacted version of the policy. At oral argument, the court allowed CertainTeed to suggest redactions in the event its argument that the entire policy was privileged failed. The court reviewed CertainTeed’s proposed redactions and rejected the approach.

The case is MDL No. 2437 (13-MD-2437).

Attorneys: Jennie Lee Anderson (Andrus Anderson LLP) and David A. Young (Cohen Milstein Sellers and Toll PLLC) for Indirect Purchaser Plaintiffs. David Suggs (White & Case LLP) for CertainTeed Gypsum, Inc.

Companies: CertainTeed Gypsum, Inc.; Compagnie de Saint-Gobain, S.A.

Cases: Antitrust PennsylvaniaNews