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UPJOHN CO. v.

UNITED STATES
13 JANUARY 1981 | J. William Hubbs Rehnquist | Attorney-Client Privilege | Sandoval
PETITIONER/S: UPJOHN CO. (UJC), Gerard Thomas - UJCs VP, Secretary, and General Counsel
(for 20 years)
RESPONDENT/S: United States (US) Government
FACT TO BE ESTABLISHED:
EVIDENCE PRESENTED: letters containing questionnaires, notes and memoranda
SUMMARY: The Petitioner, Upjohn Co., 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
doctrine.
DOCTRINE: 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.
ABBREVIATIONS:
UJC: UpJohn Co.
GC: General Counsel
IRS: Internal Revenue Service
EE: Employee
ACP: Attorney-Client Privilege
WPD: Work Product Doctrine
CGT: Control Group Test

FACTS:
1. UJC is a pharmaceutical manufacturing company which sells pharmaceuticals in the US and
abroad. UJC was informed (by independent accountants conducting an audit of one foreign
subsidiary) that one of its foreign subsidiaries had made questionable payments to foreign
government officials to secure government business.
2. An internal investigation was initiated.
UJCs attorneys sent a letter containing a questionnaire to all foreign General and Area
Managers (with Chairmans signature), noting recent disclosures that several American
companies made possibly illegal payments to foreign government officials and that they needed
all the information. The responses were sent to GC.
GC + outside counsel: interviewed recipients of the questionnaire, plus other corporate officers
and EEs.
Based on a report voluntarily submitted by UJC disclosing the payments, the IRS investigate to
determine the tax consequences and issues summons pursuant to 26 U.S.C. Sec. 762 demanding
productions, inter alia, of the questionnaires and memoranda and notes of the interviews, which
UJC refused to do so on grounds that they were protected by ACP, and constituted the work
product of attorneys prepared in anticipation of litigation.
3. US filed a petition in Federal District Court seeking enforcement of summons. They adopted the
Magistrates recommendation that summons should be enforced. The Magistrate concluded that
ACP has been waived and that the Government made sufficient showing of necessity to overcome
the WPD.

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4. CA: rejected Magistrates finding of waiver. Held that, under the so-called CGT, the ACP didnt
apply. The communications were made by officers and agents not responsible for directing UJCs
action in response to legal advice for the simple reason that the communications were not the
clients. Also held that the WPD didn't apply to IRS summons.

ISSUE/S, HELD & RATIO


1. WON communications by UJCs EEs to counsel are covered by Attorney-Client
Privilege, insofar as the responses to the questionnaires and any notes reflecting
responses to interview questions are concernedYES, they are covered.
a. CGT overlooks the fact that such privilege exists to protect not only the giving of professional
advice to those who can act on it, but also the giving of information to the lawyer to enable
him/her to make/give sound, informed advice.
i. Individual Client: the provider of information and person who can act on the advice are
one and the same.
ii. Corporate Context: It is frequently EEs beyond the Control Group who will possess the
information needed by the corps lawyer.
b. Middle- and Lower-Level EEs can, by actions within the scope of their employment, embroil the
corporation in serious legal difficulties and it is only natural that these EEs have the information
needed by corporate counsel to adequately advise the client (with respect to actual/potential
difficulties).
c. CGT: frustrates the purposes of ACP by discouraging relevant information by the EEs of the
client-corporation to attorneys seeking to render legal advice to the client. Also, attorneys
advice will often be more significant to non-control EEs than those who officially sanction the
advice. CGT makes it harder to convey full and frank legal advice to EEs who will put into
effect the client-corporations policy.
d. Narrow scope given to the ACP by the CA makes it hard for corporate attorneys to (1)
formulate sound advice when their client is faced with a specific legal problem; and (2)
threatens to limit valuable effects of counsel to ensure their client-corporations compliance the
law.
e. Here, communications at issue were made by UJCs EEs to counsel for UJC acting at the
discretion of corporate superiors in order to secure legal advice from counsel. Information
needed from upper management was needed to supply basis for legal advice (concerning
compliance with securities and tax laws, foreign laws, etc.). The communication concerned
matters within the EEs corporate duties and the EEs themselves were sufficiently aware that
they were being questioned in order that the corporation could obtain legal advice.
2. WON the Work Product Doctrine applies to IRS SummonsYES, it applies.
a. Obligation imposed by a tax summons remains subject to traditional privileges and limitations;
nothing in the language and legislative history of the IRS summons provisions suggests an intent
on the part of Congress to preclude application of WPD.
b. Magistrate applied the wrong standard when he concluded that the Government made
sufficient showing of necessity to overcome protections of the WPD. The notes and memoranda
constitute work product based on oral statements. If they reveal informations, they are
protected by ACP, to the extent that they dont reveal conversations but the attorneys mental
process. In Hickman v. Taylor, the Court said such work product cannot be disclosed simply on
a showing of substantial need or inability to obtain the equivalent without undue hardship.

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DISPOSITION: 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.

CONCURRING OPINION: Chief Justice Warren Burger wrote a concurring opinion in which he
supported the Court's decision, but advocated a clear bright-line that would privilege any employee or
former employee's communications with attorneys, if the attorneys' inquiry was authorized by
management, and was designed to assess legal responses or issues with regard to the employee's
conduct.

NOTES: (justia.com's case commentary: The decision's discussion of this long-standing


evidentiary privilege stresses the importance of candid communication between parties and
lawyers, which facilitates the judicial system, encourages compliance with the law, and helps
produce more accurate results. The case did not fully address what must be shown to compel
disclosure of an attorney's opinions, despite their status as work product, but it appears likely
to be allowed when the attorney's own thoughts and actions are at issue.)

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