An “an assortment of legal and regulatory actions” has been spun off from the high-profile corruption prosecution and conviction of former Ohio House Speaker Larry Householder. Back in 2016, the Ohio General Assembly passed legislation designed to bail out energy giant FirstEnergy from dire financial straits. Speaker Householder accepted a hefty campaign bribe to see the legislation through—and the Sixth Circuit somewhat recently affirmed his conviction.
Those episodes triggered investigations into FirstEnergy by the SEC, Ohio Attorney General, and Ohio Public Utilities Commission. Shareholders initiated securities class actions of their own. FirstEnergy, meanwhile, took internal action: Its “board hired Squire Patton Boggs LLP to investigate the allegations in the Householder complaint. And FirstEnergy hired [other counsel] to investigate the allegations and to advise the company about how to handle the subpoenas.” The securities-fraud class called for those investigation reports in discovery. The district court obliged the plaintiffs’ demand.
That discovery order gave rise to a mandamus petition and, important to all civil litigants, the Sixth Circuit’s reaffirmation of a robust attorney-client privilege. FirstEnergy (backed by “over forty amici”) asserted that attorney-client privilege and work-product protection excludes internal investigation reports from disclosure. A panel of the Sixth Circuit with Chief Judge Sutton, Judge Batchelder, and Judge Nalbandian agreed in a per curiam opinion. Compelled discovery was not just wrong, the court explained, but also reflected legal “errors sufficiently exceptional to warrant mandamus relief.”
Attorney-client privilege ensures the confidentiality of communications pertaining to legal advice. Upjohn (1981) is the leading precedent. And “[a]s with Upjohn, FirstEnergy and its board hired lawyers to ‘secure legal advice’ through internal investigations”—enough to attach privilege. (For instance, Squire provided “investigative findings, legal analyses, and assessments of potential criminal and civil liability.”) The work-product doctrine, codified by Civil Rule 26(b), doubly protected the internal reports FirstEnergy had “prepared in anticipation of litigation.” The court minded the “realities of litigation.” And it dismissed as fiction hairsplitting between quote “business decisions” and legal advice—legal advice informing business decisions.
Legal error on its own, however, does not sustain the “drastic and extraordinary remedy” of mandamus. A writ of mandamus issues not against the parties but against the lower court judge, ordering him to take action consistent with settled law (in this case, revoke the flawed discovery order). Courts moderate that dramatic relief by insisting the remedy is a last resort, backed by a clear right, and overall appropriate.
The first requirement—no other adequate relief—poses a high hurdle. But FirstEnergy cleared it: First, appeal in the ordinary course after final judgment, and so after disclosure, is not relief at all with “no way to unring those disclosure bells.” Beyond that, the district court spurned FirstEnergy’s try for interlocutory review (28 USC §1292(b)); defiance followed by contempt findings did not guarantee review because civil contempt is not immediately appealable; and the Mohawk decision forecloses collateral-order-doctrine review, expressly favoring mandamus in attorney-client-privilege cases. Note that an interlocutory appeal attempt likely is a precondition for mandamus relief in this setting. On the remaining factors, the “district court made substantial departures from bedrock privilege and work-product principles,” and those departures upset the “predictable and certain” standards “essential for FirstEnergy and future litigants facing perilous litigation consequences.”
The Sixth Circuit’s mandamus holding marks a notable recommitment to “the oldest of the privileges for confidential communications known to the common law.” Work-product protections provide a necessary supplement. This case demonstrates why. Internal investigations are an essential pillar for companies like FirstEnergy to withstand a “tsunami of litigation” and regulatory action. Thorough investigations require “full and frank” attorney-client communication, which requires trust and privacy. The Sixth Circuit strongly signaled that businesses can be confident in confidentiality.
(As a post-script, the Sixth Circuit denied the shareholder plaintiff’s requests to clarify the mandamus order and for panel and en banc rehearing.)
