Prior to the verdict in Wadler v. Bio-Rad Laboratories, Inc., et al (U.S.D.C. No. CA No. 15-cv-02356-JCS), a wrongful termination case, Bio-Rad’s public relations machine had framed a narrative of an out-of-touch, long-term in-house attorney who collected a paycheck but performed little useful services. Sanford Wadler’s resounding trial victory turned that narrative on its head. The victory was made possible, in part, by decisions Bio-Rad made years earlier as it battled government oversight agencies over issues related to what Walder claimed was Bio-Rad’s real reason for terminating the in-house attorney – blowing the whistle on Bio-Rad’s violation of the Federal Corrupt Practices Act (FCPA.)

Wadler’s allegations were investigated by the Securities and Exchange Commission (SEC), the Department of Justice(DOJ), and the Department of Labor (DOL). Bio-Rad’s defense included the substance of communications to the company by its in-house and outside counsel. In the wrongful termination litigation, Bio-Rad assented to Wadler’s public filings of all but a narrow class of arguably privileged information, filed motions that included privileged communications, and did not try to seal the record.

Just prior to trial, Bio-Rad’s new counsel filed a motion in limine to exclude information protected by the attorney-client privilege. Bio-Rad argued that under California’s strict attorney-client privilege, an attorney could breach confidentiality only if necessary to prevent a criminal act likely to result in death or great bodily harm. General Dynamics Corp. v. Sup. Ct. 7 Cal. 4th 1164 (1994) permitted an in-house counsel’s retaliatory discharge claim only if it can be established without revealing protected confidences.

The district court held that the privilege analysis, as applied to Wadler’s mix of federal and state claims, was governed by federal common law. Federal law, in contrast to California law, is not as stringent in protecting attorney-client privilege when other policy objectives are at stake. Van Asdale v. International Game Technology, 577 F.3d 989 (2009)

The court decided that the standard in Rule 1.6 of the Model Rules of Professional Conduct is the standard under federal common law as embodied in Rule 501 Federal Rules of Evidence. The Model Rule specifically provides a lawyer may reveal privileged information reasonably necessary to establish a claim or defense on behalf of the lawyer in a controversy between them. The American Bar Association agrees that the Model Rule allows an in-house lawyer to sue for retaliatory discharge when discharged for complying with ethical obligations, and may reveal information to establish his or her claim. The lawyer must take reasonable affirmative steps to avoid unnecessary disclosure and limit the information revealed.

Under federal law, a district court should balance protection of sensitive information with the in-house counsel’s right to maintain the suit. Concerns about disclosure of client confidences do not warrant dismissal where important public policies underlying federal legislation and the supremacy of federal laws are at stake. Further, a client imparting confidences to a lawyer does not mean the lawyer forfeits rights, or that the client gains unfair leverage over the lawyer. A district court has equitable measures at its disposal that allow an attorney to prove his or her claims while protecting client confidences from disclosure.

Jennifer Becker is certified by the State Bar of California, Board of Legal Specialization in Legal Malpractice, and is chair of BASF’s Legal Malpractice Section.  She is a partner at Long & Levit, and the Editor-in-Chief of Long & Levit’s Lawyers and Judge’s Blog, www.longlevit.com/blog/, which is searchable by topic and case name.