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Adams and Reese Represents Exxon Mobil in Attorney-Client Privilege Memo Case

5/7/2014

The legal national publication Law360 reported that a Fifth Circuit panel ruled Tuesday that a 1988 memo by Exxon Mobil Corp.’s in-house counsel about the oil giant’s contract negotiations was privileged, reviving Exxon’s attempts to strike references to the memo from a personal injury suit over radioactive material in oil pipes.

Exxon is represented by Adams and Reese attorneys Martin Stern, Glen Pilie, Ray Ward and Diana Surprenant.

Circuit Judge Jerry Edwin Smith, writing for a unanimous panel, vacated a lower court decision dismissing Exxon’s intervention suit and holding that the memo was merely business advice. The memo, prepared by Exxon attorney Rosemary Stein and referred to as the Stein memo, was written during contract negotiations with another company that involved several legal issues.

That context "strongly suggests that Exxon Mobil was approaching its in-house counsel for just the sort of lawyerly thing one would expect of an in-house lawyer: advice on transactional matters," the opinion said.

The opinion remanded the case back to the district court.

The case stems from Clarence Hill’s 2011 suit against Exxon, Shell Oil Co. and others, claiming Hill worked at a pipe-cleaning facility in Louisiana and was exposed to radioactive material from the companies’ oil pipes. Hill said the exposure increased his risk for cancer and that the companies should have disclosed their knowledge about the radioactive material to the cleaning facility.

After being dismissed from Hill’s suit, Exxon filed a complaint in intervention against Hill and his attorneys alleging that they had referred to the Stein memo, which was covered by attorney-client privilege. Exxon asked the court to strike the memo from the record and order the defendants to return all copies of the memo, but the district court dismissed its intervention.

The memo was prepared during Exxon’s contract negotiations with ITCO to clean and store oil pipes, using a device designed to contain radioactive dust created during cleaning. ITCO asked Exxon for copies of a confidential Exxon study into the device, prompting Stein’s memo which suggested only sharing part of the report.

Exxon accidentally revealed the Stein memo in 2008 during discovery in another case over radiation exposure. The plaintiffs’ attorney in that case, Timothy Falcon, returned the memo to Exxon and did not object to its assertion of privilege, but kept a copy for himself  and shared it with other plaintiffs’ attorneys for use in their cases.

Falcon, who represents Hill in his suit against the oil companies, claimed the withheld information referenced in the memo confirmed Exxon knew about high levels of radiation in the pipes.

Tuesday’s decision held that the memo was giving advice about the legal implications about disclosing the data and there was no evidence that Stein was giving business advice “divorced form legal implications.” The memo included a draft response to ITCO which disclaimed any liability for relying on the data.

“The Stein memo cannot be mistaken for anything other than legal advice,” the opinion said.

An attorney for the defendants told Law360 that the opinion remanded the issues back to a "dead and closed file" and that he would likely appeal. 

[It] makes no sense to remand to a graveyard," Frank M. Buck Jr. said. "We must seek review and should prevail."

Attorneys for Exxon did not immediately respond late Tuesday to requests for comment.

Circuit Judges Jerry Edwin Smith, Jennifer Walker Elrod and Leslie H. Southwick sat on the panel that reached Tuesday’s decision.

The defendants are represented by Timothy J. Falcon, Jeremiah A. Sprague, Jarrett S. Falcon and Juan C. Obregon of Falcon Law Firm as well as Frank M. Buck Jr. 

The case is Exxon Mobil Corp v. Clarence Hill et al., case number 13-30830, in the U.S. Court of Appeals for the Fifth Circuit.