POSTED: Monday, March 8th, 2010 at 1:00 am

BY: dmc-admin

The Seventh Circuit has maintained a high bar for obtaining appellate review of adverse decisions on the attorney-client privilege.

According to a Mar. 3 per curiam opinion, an attorney must show that an order to produce documents is “patently erroneous or usurpative in character.”

LG Electronics, U.S.A. sued Whirlpool Corp for infringement of trademark, and requested that Whirlpool produce communications between its attorneys and its outside advertising agencies.

Whirlpool objected that the communications were privileged, but the district court rejected the claim and ordered that they be disclosed.

Whirlpool filed both a direct appeal and a petition for mandamus because of uncertainty in the law. At the time of the district court’s order, Mohawk Indus., Inc. v. Carpenter, 130 S.Ct. 599 (2009), was still pending before the U.S. Supreme Court.

At issue in Mohawk was whether adverse decisions on the privilege could be appealed as collateral orders. The Supreme Court ultimately held that they could not, but that mandamus remained a possible remedy.

Accordingly, the Seventh Circuit dismissed Whirlpool’s direct appeal for lack of jurisdiction.

Turning to the petition for mandamus, the court denied it.

Whirlpool argued that, when the attorney-client privilege is at issue, the high standards for mandamus should be relaxed, but the court disagreed.

In Mohawk, the Supreme Court did not indicate that a lower standard should exist for privilege claims, but said that mandamus is reserved for “extraordinary circumstances – i.e., when a disclosure order ‘amounts to a judicial usurpation of power or a clear abuse of discretion,’ or otherwise works a manifest injustice.”

Whirlpool failed to make that showing, the Seventh Circuit concluded.

Instead, the court found, “The district court carefully considered Whirlpool’s arguments that communications between its counsel and outside advertising agencies should be protected by the attorney-client privilege, either because agency staff functioned as de facto Whirlpool employees or because the agencies and Whirlpool shared a common legal interest.”

The court found nothing patently erroneous or usurpative in the district court’s order, and denied the petition, leaving the attorneys with only two options: produce the documents or face sanctions.

The court wrote, “mandamus is inappropriate, regardless of whether Whirlpool has any other opportunities for appellate review, such as refusing to turn over the documents and then using the ensuing sanctions under Fed.R.Civ. P. 37(b)(2) as the basis of an appeal.”

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