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Schlumberger Didn’t Waive Attorney Privilege Defending FLSA Case

June 5, 2020, 12:13 AM

Schlumberger Technology Corp. convinced the Fifth Circuit that is shouldn’t be compelled to produce documents related to communications with its attorneys despite its “good faith” defense to alleged FLSA overtime violations.

STC is accused in a Louisiana federal court of violating the Federal Labor Standards Act by failing to properly classify some of its employees, thereby depriving them of overtime compensation.

In response, it raised an affirmative defense that it made good-faith efforts to comply with the law. STC claimed any violations were not willful, and that it was acting in good faith.

Former STC human resources consultant James Hanley, who was retained by STC’s legal counsel to help review the FLSA status of certain positions, was deposed in the case. He revealed contents of an attorney-led team’s report to STC’s management, leading the plaintiffs to subpoena FLSA classification reviews Hanley had prepared.

STC sought to quash the subpoena and strike some of Hanley’s deposition, citing attorney-client privilege, but a magistrate judge recommended denying the motions.

The district court agreed, finding the privilege waived based on the good faith defense.

The Fifth Circuit held Thursday the court erred in light of In re Itron Inc.. That decision held that a party doesn’t waive its attorney-client privilege unless it affirmatively invokes it and relies on the privileged communications.

The U.S. Court of Appeals for the Fifth Circuit found that STC didn’t do so, adding also that, “as STC points out, denying the privilege in FLSA cases may discourage employers from seeking legal input in classifying employees.”

The mandamus petition was granted.

The petitioner is represented by Kullman Firm.

The case is In re: Schlumberger Tech. Corp., 5th Cir., No. 20-30236, 6/4/20.

To contact the reporter on this story: David McAfee in Los Angeles at dmcAfee@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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