FLSA Cases Raise Interesting Privilege Issues

THOMAS E. SPAHN M C GUIREWOODS LLP

Because our parent company is in Japan and is publicly traded, it is subject to the “J-SOX,” which is the Japanese equivalent of the Sarbanes-Oxley Act. So it is subject to many reporting and internal control obligations which, as a wholly-owned subsidiary, we also have to observe. In addition, I have to pay attention to regulatory developments in Europe because I also oversee European legal concerns. That can be a challenge because it's not easy to keep track of all the new developments in Europe, which is a consumer friendly, environmentally sensitive, regulatory culture. Every year you encounter new directives and new laws.

What is your advice to attorneys or other executives?

As I mentioned above, my number one advice is to be a good listener—no matter what type of company you work for, but especially if it's a multinational company. Be authentic, open and inclusive in your leadership style, especially when you work with people from diverse backgrounds, because everybody has a different communication style— especially Japanese. They don't really speak up as much as Europeans or Americans, so you need to really pay attention to them and then ask them what they think, because they don't like to talk over other people; they're very polite. Part of being inclusive and culturally sensitive is adapting your communication style because you can be perceived as being too aggressive. 

Ako Shimada is Vice President, General Counsel and Corporate Secretary of Ushio America, Inc., and General Counsel of Ushio Europe B.V. in the Netherlands, leading providers of light sources and solutions for a variety of applications including scientific, medical, semiconductor, entertainment, horticulture, and architectural applications. In her role as General Counsel and Corporate Secretary, Ako oversees the company’s legal, compliance, risk management, and corporate governance matters. Reach her at ashimada@ushio.com

Fair Labor Standards Act cases frequently involve privilege issues, in part because employers' treatment of employees' status and their treatment of compensation frequently (if not normally) implicate legal advice that those employers have received.

In Raymond v. Renew Therapeutic Massage, Inc., Civ. Case No. 18-13760, 2022 U.S. Dist. LEXIS 196908, at *2 (E.D. Mich. Oct. 28, 2022), plaintiff filed a Motion in Limine "seeking to exclude evidence or testimony related to advice of counsel regarding [defendant] Renews' classification of [plaintiff] Raymond as an independent contractor" for compensation purposes. Plaintiff filed her motion after defendant's counsel noted during a pretrial conference "that he intended to defend against [plaintiff]'s FLSA claims and damages by using the advice of counsel defense." Id. at *3. The court granted plaintiff's motion, noting that: (1) defendant Renew "never identified an advice of counsel affirmative defense on the record" (id. at *11-13); and (2) Renew "refused to allow Raymond to inquire about the legal advice obtained by [defendant's deponent] in a deposition, asserting attorney-client privilege." Id. at *16. Although not using the word karma, the court explained that "it would be unfair to Raymond to argue against a defense regarding communications that she was prevented from inquiring about during discovery." Id. at *17.

Three days later, the court in Walters v. Professional Labor Group, LLC, addressed a fascinating issue triggered when defendant's Rule 30(b)(6) witness "appeared to assert an advice of counsel defense" based on advice he had received from the defendant's lawyer. No. 1:21-cv-02831-JRS-MJD, 2022 U.S. Dist. LEXIS 197345, at *1 (S.D. Ind. Oct. 31, 2022). As it turned out, the witness had received that advice fourteen years earlier — when he was employed by a different company which was then represented by the same lawyer. Understandably labeling the situation a "conundrum," the court held that:

(1) the previous employer owns the privilege protection covering that earlier advice;

(2) absent that previous employer's waiver, the defendant would be prohibited "from offering testimony or other evidence relating to any advice of counsel" its executive received while employed at the previous company that owned the privilege. Id. at *2-3.

This strange case highlights the importance of identifying the attorneyclient privilege protection's ownership, especially in the corporate context.