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Overprivileged

TrumpBothSides

Contrary to some recent Commander-in-Chief tweets, reports of the death of the attorney-client privilege have been greatly exaggerated. Trump appears to believe that the attorney-client privilege is broad. It’s not. In fact, it runs more to the narrow side.

The purpose of the attorney-client privilege is to encourage and promote full and frank consultation between a client and his or her legal advisor by removing the fear of compelled disclosure of such communications. Consolidation Coal Co. v. Bucyrus-Erie Co. 89 Ill. 2d 103, 117-18 (1982).

In addition to generations’ worth of case law interpreting the nature and scope of the privilege, many states, Illinois among them, have specific rules relating to the attorney-client privilege:

Privilege and Work Product. All matters that are privileged against disclosure on the trial, including privileged communications between a party or his agent and the attorney for the party, are privileged against disclosure through any discovery procedure. Material prepared by or for a party in preparation for trial is subject to discovery only if it does not contain or disclose the theories, mental impressions, or litigation plans of the party’s attorney. The court may apportion the cost involved in originally securing the discoverable material, including when appropriate a reasonable attorney’s fee, in such manner as is just.

Illinois Supreme Court Rule 201(b)(2) (emphasis added).

The connections between Trump, Stormy Daniels, Michael Cohen and Essential Consultants LLC, the entity that Cohen created to do the deal with Stormy, bear a distinct resemblance to Abbott & Costello’s “Who’s On First” routine. But even if Cohen makes it past the crime-fraud exception to the attorney-client privilege (and apart from any ethical issues), he’ll have to deal with the terms “between a party” and “the attorney for the party.”

In order to be protected by the attorney-client privilege, the communication must be between a client and his or her lawyer in which legal advice is sought from the lawyer, the communication must relate to that purpose, and it must be made in confidence by the client, and even with those conditions met the privilege can be waived. Center Partners, Ltd. v. Growth Head GP, LLC, 981 N.E.2d 345, 355, 367 Ill. Dec. 20, 30, 2012 IL 113107, ¶ 30 (Ill. S. Ct. 2012). See also People v. Radojcic, 998 N.E.2d 1212, 1221, 376 Ill. Dec. 279, 288, 2013 IL 114197, ¶ 40 (Ill. S. Ct. 2013). Illinois law is clear that the duty to disclose is the rule, and the attorney-client privilege the exception. Consolidation Coal, 89 Ill.2d at 117-18.

So if a communication is made by counsel for one party to counsel for an adverse party, it’s not privileged. Or if a communication is between a client and his or her attorney and privileged, but one of them carbon copies the communication to someone outside that relationship, the privilege may be waived.

Sergeant Schultz

Like Sergeant Schultz, Trump claims to know nothing about any deal between Stormy Daniels and Cohen. If that’s so, then any communication between Cohen and Trump regarding Stormy’s hush money deal would not be privileged because no attorney-client relationship exists between Cohen and Trump as to that matter.

Cohen may argue that he had a “common interest” with Trump that preserved the attorney-client privilege. This would reflect a misunderstanding of the common interest doctrine.

Although sometimes incorrectly referred to as a privilege in itself, the common interest doctrine is not a privilege at all. Rather, it is an exception to the rule that a communication that was protected by the attorney-client privilege loses that privileged status if it is disclosed to a third person. Robinson v. Texas Auto. Dealers Ass’n, 214 F.R.D. 432, 443 (E.D.Tex.2003). The common interest doctrine extends the attorney-client privilege to communications that would otherwise have become non-confidential because they passed outside the attorney-client relationship, but only when the parties undertake a joint effort with respect to a common legal interest. U.S. v. Evans, 113 F.3d 1457, 1467 (7th Cir. 1997). Illinois cases reflect a strong policy in favor of discovery to ascertain the truth in legal disputes, Monier v. Chamberlain, 35 Ill. 2d 351, 359 (1966), so in Illinois the term “common” as used in “common interest doctrine” carries much more freight than it does outside the law: “[t]he key consideration of the [common interest doctrine] is that the nature of the interest be identical, not similar, and be legal, not merely commercial.” Duplan Corp. v. Deering Milliken, Inc., 397 F. Supp 1146, 1174 (D.S.C. 1974). A shared desire to succeed in an action does not create a “common interest.” In re Grand Jury Supboena Duces Tecum, 112 F. 3d 910, 922 (8th Cir.), cert. denied, 521 U.S. 1105 (1997).

Trump’s blanket denial of any knowledge about the Stormy Daniels hush-up deal weakens, if it doesn’t absolutely destroy, any claim by Cohen of a common legal interest.

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Stormy

Every first-year law student goes through Contracts, and of course there’s a final exam at the end of the course. There may be a few multiple choice items, but ordinarily the test is geared to a few essay questions revolving around situations crafted by the contracts law professor to see whether the student has grasped the big ideas in the course, as well as other subsidiary contract law principles that the situation involves. It used to be called  issue spotting. At the same time, most law professors try to inject a little bit of humor into the essay by assigning to parties in the hypothetical the names of other law professors, or other spoof names. (Attorney I. Noah Loophole is visited by a prospective client, Helena Handbasket….”)

Stormy Daniels has now changed all that.

Contracts law final exams may never be the same after this case is done. It has everything in it. Was there a bargain made here? Cash for a promise? Was there a meeting of the minds? Could minds meet if one of them claims they had no knowledge of the agreement? What happens when one party doesn’t sign the contract, but the other party still accepts money or other consideration? What if the money didn’t really come from the party who seeks (or supposedly seeks) to bind the other? Who were the real parties? Is the contract void because it violates other law (e.g., federal election law)?

The Contracts 101 Cup Runneth Over. And as they say in the late night infomercials: “But that’s not all!!!” Just like the old Certs breath mint ad campaign, Stormy’s case is two, two, two tests in one. All sorts of legal ethics questions loom up from the shadows here. Who was (or is) Michael Cohen representing when he put the NDA together, if Trump, a/k/a “David Dension” (or some such fake name), claims to know nothing about it. That’s a whole other line of inquiry, best left for another day.

Linemen

The online magazine Transmission & Distribution World today re-ran an earlier article on the dangers faced by electric utility workers. Though it describes a really brutal accident, it merits reading if only to be reminded about the danger that some workers face every day as part of their job — more dangerous than police and fire. You can read the full article here.

Zuckerberg

In response to the Cambridge Analytica/data-scraping crisis, Facebook’s CEO Mark Zuckerberg has said he’s open to “the right regulation.”

You should be very afraid.

Companies as big as Facebook don’t recoil from regulation. They seek it. Regulation brings inestimable advantages, chief among which is the opportunity to capture the regulator. One need not look far to find prior examples.

In the run-up to the Great Recession of 2008, the Federal Reserve under Alan Greenspan treated the largest banks and mortgage lenders not as entities they regulated but as clients they had to help.

The Nuclear Regulatory Commission would be better known as the Nuclear Plant Approval and Preservation Commission.

Nuclear regulators in Japan looked forward to employment with Tokyo Electric Power Company, which had predictable effects on their reviews of plants like Fukushima. These are just a few examples, and we haven’t even touched Big Pharma.

Creation of some new commission to regulate privacy matters on social media would provide a juicy target for cooptation by Facebook’s immense wealth. No federal agency (and presumably it would be a federal, rather than a state, agency) can compete with Facebook’s immense resources, and Zuckerberg’s friends in Congress could control its funding levels year by year. As with Fukushima, regulators would view their time at the agency as a rung on the ladder to a higher-paying job with Facebook. A new statute granting this commission jurisdiction over privacy issues in social media could insulate Facebook from class actions if such matters were reserved to the new agency’s expertise.

When Facebook talks about “the right regulation,” he has in mind a well-trained regulatory spaniel that will run and fetch the frisbee no matter how far Zuckerberg flings it.

Tax Reform

The GOP-passed tax reform law, a/k/a the Tax Cuts and Jobs Act of 2017, lowered the corporate federal income tax from a maximum of 35% to a flat rate of 21%.

Numerous transmission utilities file tariffs with the Federal Energy Regulatory Commission that are based on a cost of service revenue requirement. The expense of federal corporate income tax is one of those costs of service. When a corporation’s tax rate goes down from a maximum of 35% to a flat 21%, its income tax expense goes down, and thus its cost of service revenue requirement goes down. So, one would think that when transmission utilities’ tax rates go down, as they have, that benefit might flow through (or is that trickle down) to ratepayers.

Nope.

No transmission utility filed any amendments to its tariffs to reflect the new, lowered tax rate. Maybe they thought nobody would notice it, and they could pocket that 14% difference. (“Oh boy!!!).

So on March 15, 2018, FERC opened a series of new proceedings requiring that these transmission utilities either lower their rates to reflect the tax cut, or show cause why they should not be required to do so.

Your tax dollars at work.

The Facebook Problem

invasion+of+privacy

Facebook’s cavalier attitude towards its users’ privacy interests, and its oceanically broad view of what constitutes a user’s “consent” will come back to bite Zuckerberg in the tuchus.

Meanwhile, the lesson for all users of free services on the net, whether Facebook, Twitter, Snapchat or whatever, is fairly simple:

If the service is free, then YOU are the product being sold.

 

NYC Substation

The New York Times today reported that Russian hackers had gained access to nuclear plants and electricity grid controls, and would have been able to shut off the power in the United States at will.

That is deadly serious stuff.

More amazing still, it was the Trump Administration, that leveled the accusation against Russia. Putin may regard that as an act of disloyalty by Trump, perhaps triggering his release of kompromat on the Donald.

Perhaps he’ll announce a 25% tariff on Steele dossiers.