Wednesday, July 15, 2020

Dissolved LLCs and the Attorney-Client Privilege

Dissolved LLCs and the Attorney-Client Privilege

      In recent decision from Mississippi, the court considered whether a dissolved corporation continues to enjoy an attorney-client privilege. On the facts of this case, it was held that it did not. United States v. Walters, 2020 WL 1934803 (S.D. Miss. April 21, 2020).

      Walters served a subpoena duces tecum upon Jonell Beller, an attorney with the Baker Donelson law firm seeking records relating to, amongst others, Prime Care Marketing, LLC and Total Care Marketing, LLC. The exact relationship between Walters and either of these business entities was not recited in the decision, although Walters had, in 2015, filed the articles of dissolution with respect to Prime Care Marketing, LLC.

       In response to the subpoena duces tecum, Beller filed a motion to quash on the basis of privilege, to which Walters responded that Beller “had no standing to assert the privilege because it belongs to the clients” and he “has authority to waive the privilege for the companies.” The court granted the motion to quash, finding that Beller had standing to assert the privilege and that Bellers had failed to demonstrate, on behalf of each of the LLCs, that he had authority to waive the privilege. That ruling led to a motion for reconsideration, which is the subject of this decision.

      On reconsideration, the focus was upon the extent to which a dissolved corporation (although this case involved LLCs) enjoys a post-dissolution attorney-client privilege. Drawing a distinction between natural persons, for whom the privilege does survive death, the court cited a variety of authorities that stand generally for the proposition that a business entity, after its dissolution, notwithstanding the possibility of reinstatement thereafter, does not continue to enjoy an attorney-client privilege. For example, the court cited TAS Bistriv. Co. v. Cummins, Inc., 2009 WL 3255297 (C.D. Ill. Oct. 7, 2009) for the proposition “absent some compelling reason to the contrary, the attorney-client privilege does not survive the death of the corporation.”

      On that basis, the motion to reconsider was granted, the quashing of the subpoena was set aside, and Beller was directed to produce the documents responsive to the subpoena duces tecum.

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