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In-house lawyers who file whistle-blower claims against their employers recently picked up some support from a federal circuit court in Texas. An appellate panel ruled that Donald Willy could use a report he wrote while working for The Coastal Corporation as evidence in his 21-year-old wrongful termination suit against the company. Coastal, which merged with El Paso Corporation in 2001, argued that the report was confidential because it was protected by attorney-client privilege. But a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit unanimously disagreed. “The case law amply demonstrates…that the attorney-client privilege only prohibits a party from simultaneously using confidential information as both a shield and sword,” wrote Judge Jacques Wiener in the panel’s August decision. “Stated differently, the ‘shield and sword’ analogy is conjunctive; it does not stand broadly for the proposition that an attorney may never use confidential information offensively.” The Fifth Circuit’s opinion won’t set a standard, however, according to Susan Hackett, general counsel of the Association of Corporate Counsel. “There have been so many cases and so many decisions” about whether an in-house attorney can use privileged information to prove a whistle-blowing claim, she says, adding that courts have split almost evenly between backing companies and siding with lawyers. Hackett says that whistle-blowers are more likely to prevail in the post-Enron era, though. “The older cases tend to focus more attention on the client’s right to confidentiality. Newer cases support the employee’s right to not be retaliated against.” Though the Fifth Circuit’s decision is recent, Willy’s case is an old one. His claim centers on a report he wrote for Coastal in 1984, when he was an in-house environmental attorney at the Houston-based oil company. In the report Willy concluded that one of Coastal’s subsidiaries was liable for allegedly violating several federal environmental statutes. According to the Fifth Circuit opinion, Willy’s supervisors disagreed and asked him to delete references to some of the alleged violations, which he refused to do. Coastal later fired Willy after his supervisors accused him of contacting Texas state regulators about alleged problems at one of the company’s refineries, the opinion states. Later that year Willy filed a complaint with the U.S. Department of Labor, alleging that Coastal violated federal whistle-blower laws by firing him in retaliation for writing his report. Coastal denied the accusation. The company also refused to produce Willy’s report, arguing that it was protected by privilege. Nevertheless, a Labor Department administrative law judge allowed Willy to enter into evidence two draft versions of the report he had in his possession. After a series of dismissals and reversals, the Labor Department’s Administrative Review Board dismissed Willy’s complaint again in 2004. The board concluded that there was no exception to attorney-client privilege that would allow Willy’s report to be admitted into evidence; therefore he couldn’t prove his complaint. The Fifth Circuit overturned this ruling in its August decision, however, and remanded Willy’s case back to the board. Willy, who coincidentally has been employed as a federal administrative law judge in Houston for the past ten years, says he’s pleased with the ruling. “Look at the Constitution. The Fifth Amendment says you have a right to due process,” Willy says. “How can you not have a right to due process because of your occupation?” Willy represents himself in the case and argued it at the Fifth Circuit. “It’s almost impossible to find someone to represent you in a case that’s been pending for 20 years,” he says. “I was forced to handle it, because there was no one else to handle it.” J. Richard Hammett, a partner in the Houston office of Baker & McKenzie who represents Coastal, did not respond to requests for comment. Mark Edward Papadopoulos, a Labor Department attorney who represents the agency in the case, declined to comment. Meanwhile, a similar case is still chugging along in Connecticut. Paul O’Brien, the former GC of Stolt-Nielsen Transportation Group Ltd., says that he was ethically compelled to resign after management failed to act on his allegations of criminal activity at the Greenwich, Connecticut � based shipping company ["His Lips Are Sealed," April 2004]. Stolt-Nielsen, which has denied O’Brien’s allegations, has argued that he can’t introduce privileged information in his wrongful termination suit. At press time discovery was slated to begin in O’Brien’s case in October, according to his attorney, David Golub of Silver, Golub & Teitell in Stamford. Golub adds that O’Brien is currently an in-house lawyer at a small private company.

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