FLSA Cases Raise Interesting Privilege Issues

THOMAS E. SPAHN M C GUIREWOODS LLP

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.