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finding that disclosure of confidential or privileged information is not protected under the First Amendment
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No. 90-416
Submitted April 10, 1991 —
Decided August 14, 1991.
APPEAL and CROSS-APPEAL from the Court of Appeals for Wood County, No. WD-89-54.
In May 1989, the Wood County Court of Common Pleas permanently enjoined appellee and cross-appellant, Rahn M. Huffstutler, from disclosure of trade secrets, confidential information, or matters of attorney-client privilege or attorney-client work product of appellant and cross-appellee, American Motors Corporation ("AMC"), relating to the subject matter of any products liability litigation which Huffstutler received, had knowledge of, or was entrusted with during his employment with AMC and its subsidiary, Jeep Corporation ("AMC Jeep").
He was further enjoined from testifying and consulting with attorneys or their agents in products liability litigation involving AMC without AMC's consent or an order of the trial court.
The court further ordered that Huffstutler return forthwith all writings, materials, and documents removed by him without authority from the possession of AMC, including copies.
The trial court also entered summary judgment for AMC on Huffstutler's amended counterclaim sounding in malicious interference with contractual relations.
In March 1990, the Wood County Court of Appeals, in a divided decision, vacated the permanent injunction prohibiting disclosing, testifying, or consulting, while leaving intact the order to return documents. The court affirmed the summary judgment on Huffstutler's counterclaim.
Huffstutler was hired by AMC Jeep as an engineer in 1974. In 1988, AMC was acquired by Chrysler Corporation and Huffstutler's employment was terminated.
During his early employment, Huffstutler attended law school, with partial assistance from his employer. He attended products liability litigation seminars, and was admitted to the Ohio Bar in 1979. In 1981, he became manager of the Product Design Studies Group and worked intimately with the legal department and its privately retained counsel in products liability cases involving AMC Jeep, particularly "rollover" claims.
In 1983, he became a technical specialist with duties including new vehicle model and production analysis. He returned from Detroit to Toledo in 1984 as Manager of Quality Services for AMC Jeep.
Upon termination he advised his employer that he "must create a market for [his] unique talents * * *." He thereupon created an enterprise serving as an expert witness. He contacted lawyers and litigants soliciting employment as an expert witness. These contacts included attorneys involved as plaintiffs' counsel in Jeep rollover litigation against his former employer.
Following one such contact, Huffstutler was retained in a pending Jeep rollover claim by plaintiffs' counsel, to whom he provided materials and documents which AMC contends were confidential and privileged and were taken from AMC Jeep without authority. These documents were subsequently identified by plaintiffs' counsel on his exhibit list in a case filed against AMC in the United States District Court for the Eastern District of Oklahoma. They included memos prepared at the direction of AMC's legal staff.
The trial court found that during his employment as manager of the Product Design Studies Group, Huffstutler was an agent of AMC Jeep's Legal Department and frequently gave legal advice and performed legal analysis; that he served from 1981 to 1982 as an important member of the products liability defense team; that he represented AMC Jeep as counsel in products liability matters and routinely consulted with AMC Jeep's legal staff and retained counsel; that he assisted AMC Jeep's legal staff in retaining expert witnesses and met with experts to prepare strategy for defense; that he recommended outside counsel; that he suggested lines of testimony and cross-examination; and that he gave generously of his engineering judgment and legal training to assist counsel in the preparation of defenses.
The trial court also found that Huffstutler had access to confidential attorney-client information, attorney work product information involving rollover and other litigation, and highly confidential trade secrets. He improperly removed the confidential and privileged documents and materials and sold them to plaintiffs' counsel in litigation against AMC, offering himself as an expert witness against his former employer in expectation of a significant monetary reward.
The court found that confidential information concerning the development of new vehicle design constituted "trade secrets" under R.C. 1333.51(A)(3).
The permanent injunction recites, inter alia, that:
"* * * [T]he defendant is hereby enjoined from the following acts or conduct:
"1. Consulting or discussing with or disclosing to any counsel or other attorney or person any of the Plaintiff's trade secrets, confidential information or matters of attorney-client privilege or attorney-client work product relating in any manner to the subject matter of any products liability litigation, whether already filed or filed in the future, which the Defendant received, had knowledge of or was entrusted with during his employment with AMC Jeep.
"2. From testifying either upon deposition or at trial, as an expert witness, or as a witness of any kind, and from consulting with attorneys or their agents in any products liability litigation already filed or to be filed in the future, involving Plaintiffs without Plaintiff's consent or order of this Court."
AMC appeals the reversal of the trial court's judgment issuing a permanent injunction. Huffstutler cross-appeals the affirmance of the summary judgment.
The cause is now before this court pursuant to the allowance of a motion and cross-motion to certify the record.
Rayle Stearns and Max E. Rayle; Crabbe, Brown, Jones, Potts Schmidt, Charles E. Brown and Steven B. Ayers; Mayer, Brown Platt, Richard A. Salomon, Howard J. Roin, Javier H. Rubinstein and Ira J. Belcove; Yates, McLamb Weyher and Joseph W. Yates III, for appellants and cross-appellees.
Crandall, Pheils Wisniewski, David R. Pheils and Dale R. Crandall, for appellee and cross-appellant.
King Spalding, Chilton Davis Varner and Sean R. Smith, urging reversal for amicus curiae, Product Liability Advisory Council, Inc.
Porter, Wright, Morris Arthur and Thomas R. Sant; Nancy A. Nord; Bickel Brewer, Robert P. Cummins and Donald K.S. Petersen, urging reversal for amicus curiae, American Corporate Counsel Association.
John J. Curtin, Jr., Michael E. Tigar, Jerold S. Solovy and Barry Levenstam, urging reversal for amicus curiae, American Bar Association.
Our attention in this case is focused primarily upon the propriety of the permanent injunction issued by the trial court. For the following reasons, we reverse the judgment of the court of appeals and reinstate the permanent injunction.
Principles of attorney-client privilege are fully applicable here. Huffstutler was, at minimum, an agent acting on behalf of legal counsel to AMC. As such, Huffstutler is subject to all the legal implications of the attorney-client and attorney work product privileges. Conforti Eisele, Inc. v. Div. of Bldg. Constr. (1979), 170 N.J. Super. 64, 405 A.2d 487; see, also, United States v. Kovel (C.A. 2, 1961), 296 F.2d 918.
"* * * The only practical way to assure that * * * [confidential information is not disclosed] and to preserve public trust in the scrupulous administration of justice is to subject these `agents' of lawyers to the same disability lawyers have when they leave legal employment with confidential information." Williams v. Trans World Airlines, Inc. (W.D.Mo.1984), 588 F. Supp. 1037, 1044.
The attorney-client privilege may be asserted by the client or former client. General Elec. Co. v. Valeron Corp. (C.A. 6, 1979), 608 F.2d 265, certiorari denied (1980), 445 U.S. 930, 100 S.Ct. 1318, 63 L.Ed.2d 763. See, also, Williams v. Trans World Airlines, supra (where a law firm was disqualified prior to trial because it consulted with a nonlawyer who had previously assisted counsel for the opposing party).
Huffstutler claims the permanent injunction violates his constitutionally protected right of free speech under the First Amendment to the United States Constitution and Section 11, Article I of the Ohio Constitution.
Disclosure of confidential information does not qualify for protection against prior restraint under the First Amendment. Seattle Times Co. v. Rhinehart (1984), 467 U.S. 20, 104 S.Ct. 2199, 81 L.Ed.2d 17; Snepp v. United States (1980), 444 U.S. 507, 100 S.Ct. 763, 62 L.Ed.2d 704. We have also held "[t]here is no constitutional bar to the issuance of an injunction against unlawful use of confidential business information." Valco Cincinnati, Inc. v. N D Machining Serv., Inc. (1986), 24 Ohio St.3d 41, 48, 24 OBR 83, 89, 492 N.E.2d 814, 820.
Further, as a quid pro quo for the privilege of being licensed to practice law, an attorney surrenders a fraction of the right of free speech guaranteed under the First Amendment.
"`* * * A lawyer belongs to a profession with inherited standards of propriety and honor, which experience has shown necessary in a calling dedicated to the accomplishment of justice. He who would follow that calling must conform to those standards.
"`Obedience to ethical precepts may require abstention from what in other circumstances might be constitutionally protected speech.'" Ohio State Bar Assn. v. Mayer (1978), 54 Ohio St.2d 431, 438-439, 8 O.O.3d 434, 438, 377 N.E.2d 770, 774, quoting In re Sawyer (1959), 360 U.S. 622, 646-647, 79 S.Ct. 1376, 1388, 3 L.Ed.2d 1473 (Stewart, J., concurring in the result).
It is the affirmative duty of an attorney to obey the Code of Professional Responsibility, which provides in pertinent part:
"* * * [A] lawyer shall not knowingly:
"(1) Reveal a confidence or secret of his client." DR 4-101(B)(1).
Therefore, an attorney has no right under the First Amendment to the United States Constitution or Section 11, Article I of the Ohio Constitution to disseminate information protected by the attorney-client privilege.
While conceding that some ethical and legal restraint is appropriate, Huffstutler argues that the injunction is overbroad and vague, thus impinging upon First Amendment rights to an unnecessary extent. We disagree. We have held that where confidential information is involved, an injunction "may, in order to do equity, be as broad as reasonably thought necessary" to avert the harm complained of. Valco Cincinnati, Inc., supra, 24 Ohio St.3d at 47-48, 24 OBR at 88, 492 N.E.2d at 819-820.
We also find the injunction sufficiently specific to put the enjoined party on notice of that which is prohibited.
Huffstutler also argues that the injunction would "gag" employees so as "to prevent possible discovery of alleged criminal and illegal conduct by Jeep relating to the production of the Jeep C.J. vehicle * * * and to conceal discoverable information from victims injured thereby who have named Jeep as a party defendant." We reject this "whistle blower" claim as it is simply unsupported by the record.
Next, Huffstutler argues that the court of appeals was correct in concluding that AMC had an adequate remedy at law. He argues that AMC can be protected on a case-by-case basis, if his testimony would violate attorney-client privilege or divulge trade secrets, in that each trial court could prohibit such testimony. In fact, at least five other state and federal courts have found a privilege to exist and denied Huffstutler's right to testify, issued protective orders prohibiting discovery of privileged materials, or otherwise acted to prevent the use of confidential information obtained from Huffstutler.
Goldston v. American Motors Corp. (N.C.Super. Apr. 21, 1989), No. 84 CVS 1327; Jacobs v. American Motors Corp. (W.D.Mo. Feb. 20, 1990), No. 89-0518-CV-W-5, 1989 WL 200920; Hull v. Jeep Eagle Corp. (D.S.C. Sept. 13, 1989), No. 3:89-161-16; Matthews v. Jeep Eagle Corp. (Fla.Dis.Ct. 1, Oct. 30, 1989), No. 88-6120-CA-01; Perry v. Jeep Eagle Corp. (S.D.Ind. Aug. 24, 1989), No. IP 88-685-C, 1989 WL 118750.
The attorney-client privilege reaches far beyond a proscription against testimonial speech. The privilege protects against any dissemination of information obtained in the confidential relationship. Thus, allowing consultation and discussion (even without testifying) of privileged information would effectively emasculate the privilege. Conforti Eisele, Inc., supra.
In order to protect the attorney-client and work product privilege, injunctive relief is appropriate, particularly where, as here, it is demonstrated that the former employee-attorney has already violated the privilege and threatens to continue such practice. Id.; see, also, Valco Cincinnati, supra; Snepp, supra.
Finally, Huffstutler argues that the injunction would be virtually impossible to enforce, particularly outside the trial court's jurisdiction. We disagree. The Wood County Court of Common Pleas, having in personam continuing jurisdiction over Huffstutler, can continue to exercise supervisory authority over his compliance with the injunction. See New York, Chicago St. Louis RR. Co. v. Matzinger (1940), 136 Ohio St. 271, 16 O.O. 375, 25 N.E.2d 349.
In his cross-appeal, Huffstutler claims that the trial court erred in entering summary judgment for AMC on his counterclaim alleging willful, malicious and illegal interference with contracts between Huffstutler and third parties. Because we conclude that the trial court did not err in determining the merit issues in favor of AMC and in granting a permanent injunction, there is no "business right" upon which Huffstutler could premise a claim of tortious injury or deprivation. Donald G. Culp Co. v. Reliable Stores Corp. (1983), 14 Ohio App.3d 161, 14 OBR 178, 470 N.E.2d 193; Juhasz v. Quick Shops, Inc. (1977), 55 Ohio App.2d 51, 9 O.O.3d 216, 379 N.E.2d 235.
The judgment of the Wood County Court of Appeals is affirmed in part and reversed in part, the permanent injunction issued by the common pleas court is reinstated, and the cause is remanded to said court for further proceedings according to law, including the exercise of continuing jurisdiction in connection with the permanent injunction.
Judgment accordingly.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, WRIGHT and CACIOPPO, JJ., concur.
JOHN R. MILLIGAN, J., of the Fifth Appellate District, sitting for H. BROWN, J.
MARY CACIOPPO, J., of the Ninth Appellate District, sitting for RESNICK, J.