Court Upholds Parent-Indirect Subsidiary Privilege

Attorney-client privilege applies to discovery communications between a parent company’s in-house counsel and management personnel of an indirect subsidiary, the U.S. District Court for the Western District of Texas ruled recently. After a fatal accident on an “E-Z-Go Workhouse cart” distributed by Ransomes Jacobsen, Ltd., a lawsuit was filed against Textron, which designed the cart’s allegedly faulty brake system. Ransomes Jacobsen is a subsidiary of Ransomes Limited, which itself is a subsidiary of Textron Acquisition Limited, which is a subsidiary of Textron Atlantic LLC, a Delaware company. Finally, Textron Atlantic is a subsidiary of Textron Inc., the company whose in-house counsel communicated with Ransomes Jacobsen management personnel regarding the case. Plaintiffs sought access to those communications as part of discovery, but Textron Inc.’s general counsel said those emails were “confidential, and intended to remain confidential, and were made for the primary purpose of securing professional legal services.” The court agreed, finding that Textron’s in-house counsel “engaged to represent both [Ransomes Jacobsen] and Textron as joint clients during the 2005 HSE investigation.”