On December 8, 2009, in the first decision authored by Justice Sotomayor since her elevation to the Court, Mohawk Industries, Inc. v. Carpenter, No. 08-678, the Supreme Court held that orders compelling disclosure of material allegedly protected by the attorney-client privilege are not subject to immediate appeal under the collateral order doctrine.   

In this case, the plaintiff sought discovery of materials relating to an internal investigation conducted by counsel for the defendant, Mohawk Industries, Inc. Mohawk objected to the discovery request on the ground that the requested materials were protected by the attorney-client privilege. Although the district court agreed that the materials were confidential, it nevertheless ordered their disclosure, holding that Mohawk had waived the attorney-client privilege with respect to the documents in question. Mohawk filed an interlocutory appeal challenging the court’s disclosure order. The Eleventh Circuit dismissed the appeal, holding that it lacked subject matter jurisdiction because the disclosure order was neither a final order within the meaning of 28 U.S.C. § 1291 nor covered by the collateral order doctrine established in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949). In yesterday’s decision, the Supreme Court affirmed.

Section 1291 of the Judicial Code grants federal courts of appeals authority to review “final decisions of the district courts.” 28 U.S.C. § 1291. With certain exceptions, the courts of appeals lack jurisdiction to hear interlocutory appeals from non-final orders. The collateral order doctrine, first recognized in Cohen, creates an exception to section 1291’s finality requirement and allows interlocutory appeal from an order that conclusively determines the disputed question, resolves an important issue separate from the merits of the action, and is effectively unreviewable on appeal from a final judgment. In yesterday’s decision, the Supreme Court refused to extend the collateral order doctrine to permit immediate appeal from an order requiring disclosure of information a party contends is protected by the attorney-client privilege. According to the Court, most orders adverse to the attorney-client privilege—like typical pre-trial discovery orders—can be adequately reviewed in a post-judgment appeal without unduly jeopardizing the fundamental interests at stake. Moreover, it concluded, the limited benefit of permitting parties to immediately appeal such rulings cannot justify the institutional costs of additional litigation.  

Justice Thomas concurred in part and concurred in the judgment. He agreed that the collateral order doctrine should not be expanded to cover orders compelling discovery; however, he would avoid attempting to apply the collateral order doctrine at all, and instead leave the issue of permissible interlocutory appeals entirely to the rulemaking process, as provided in the Rules Enabling Act. 

The Court’s decision, which exposes privileged material to disclosure without effective pre-trial review, is likely to have a significant impact on how attorneys involved in corporate litigation conduct factual investigations. As a result of this decision, parties may be less likely to make full and frank disclosures to their attorneys for fear that privileged information will become part of the public domain prior to appeal, and prudent defense counsel will be even more circumspect when conducting internal investigations.

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