Smithfield Foods, Inc.

968 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Patrick Cudahy, Incorporated, a Wholly Owned Di- vision of Smithfield Foods, Inc. and Local P- 40, United Food and Commercial Workers International Union, AFL-CIO. Cases 30-CA- 9462, 30-CA-9535, and 30-CA-9566 May 12, 1988 ORDER GRANTING APPEALS BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN, BABSON, AND CRACRAFT Upon charges filed by the Union on February 2, March 23, and April 17, 1987, 1 the General Coun- sel of the National Labor Relations Board issued a consolidated complaint on May 19, later amended on May 26, against Patrick Cudahy, Incorporated (Cudahy) and Smithfield Foods, Inc. (Smithfield), the Respondents, alleging that they violated Sec- tion 8(a)(1), (3), and (5) of the National Labor Re- lations Act. The amended consolidated complaint alleges, inter alia, that Cudahy and Smithfield con- stitute a single integrated business enterprise and a single employer and/or joint employer within the meaning of the Act. The complaint also alleges that Cudahy failed and refused to bargain in good faith with the Union as the exclusive collective-bar- gaining representative of its production and mainte- nance unit employees at its plant in Cudahy, Wis- consin. In this regard, the complaint further alleges that Cudahy entered contract negotiations which commenced in November 1986 with a fixed intent not to reach agreement with the Union, having cal- culated that its bargaining proposals and positions would cause a strike and that it could then hire striker replacements and displace the Union as a viable bargaining agent. A hearing on the com- plaint was subsequently scheduled for June 3. On May 14, at the request of counsel for the General Counsel, the Board issued three subpoenas duces tecum. The subpoenas directed the Respond- ents to produce at the trial some company records, including certain Cudahy documents, e.g., bargain- ing notes, proposals, letters, memoranda, and strat- egies, relating to Cudahy's 1986-1987 contract ne- gotiations for a successor agreement with the Union. The two subpoenas served on Cudahy were directed to Roger Kapella, the Company's presi- dent and chief operating officer, and Daniel Ha- bighorst, the Company's director of human re- sources. Another subpoena was served on Joseph W. Luter III, Smithfield's board chairman and chief executive officer. Apparently, some of these Cudahy documents had come into Smithfield's pos- session because one of Smithfield's current employ- All dates are in 1987 unless otherwise indicated. ees, Alan T. Anderson, a director and former presi- dent of Cudahy, had received these documents while serving in that capacity for Cudahy. On May 20, pursuant to Section 102.31(b) of the Board's Rules and Regulations, the Respondents separately filed a petition to revoke the subpoenas to the extent that they requested documents that fell within the scope of the attorney-client privi- lege. The Respondents' main contention was that certain Cudahy documents sought by the Board subpoenas were privileged communications be- tween Cudahy and the law firm of ICrukowski & Costello, S.C., who had been hired to assist and give legal advice to Cudahy in connection with the latter's 1986-1987 contract negotiations with the Union. 2 On May 26 the General Counsel filed sep- arate opposition statements to the Respondents' pe- titions to revoke. On June 2 Cudahy amended its original petition to revoke by identifying several more Cudahy documents arguably subject to the Board subpoenas but also covered by the attorney- client privilege. All of these subpoena matters were ultimately referred to Administrative Law Judge Donald R. Holley, who was assigned to conduct the June 3 hearing. At the Respondents' request, Judge Holley con- ducted a preliminary hearing to allow them to sup- plement the Cudahy documents with witness testi- mony to establish their claim of attorney-client privilege. At the conclusion of this preliminary hearing and based on an in camera inspection of the documents themselves, the judge ruled that the disputed Cudahy documents, except for a portion of the document marked as PCI-1, 3 were not pro- tected from disclosure by the attorney-client privi- lege. The judge, therefore, denied the Respondents' petitions to revoke and ruled that the Respondents were to produce the Cudahy documents on the General Counsel's request. The General Counsel made such a request and the Respondents then re- fused to honor it. In response, the General Counsel asserted that the subpoenaed Cudahy documents were important to the presentation of her case and requested a postponement of the hearing to allow 2 In its answer to the amended consolidated complaint, Cudahy has ad- mitted that Thomas Krukowslu and Robert Bartel, attorneys associated with Krukowslu & Costello, S.0 , were agents of Cudahy for the limited purpose of negotiating a successor collective-bargaining agreement with the Union. 3 PCI-1, undated, is a strategic planning guidebook prepared by Robert J Bartel, an attorney associated with Krukowski & Costello, S.0 , and submitted to Cudahy in early March 1986. Included in PCI-1 is the 1985 Packinghouse Report of the United Food and Commercial Workers, which the judge found was not privileged This report has since been fur- nished to the General Counsel. The remainder of PCI-1, which the judge determined was privileged, contains a wide range of information relating to Cudahy's plans, objectives, strategies, and conduct during the upcom- ing 1986 contract negotiations and in the event of a strike anticipated in PCI-1 to occur on expiration of the 1983-1986 union contract. 288 NLRB No. 107 PATRICK CUDAHY, INC. 969 her to institute subpoena enforcement proceedings in the appropriate Federal district court. The judge granted the General Counsel's request and recessed the hearing sine die on June 10. On June 12 and 16, pursuant to Section 102.26 of the Board's Rules, the Respondents filed with the Board separate requests for special permission to appeal the judge's ruling of June 10 denying their petitions to revoke the subpoenas. 4 Cudahy also filed a brief and requested oral argument should the Board allow the Respondents to file their inter- im appeal. On June 15„ 17, and 19 the General Counsel and the Union filed opposition statements to the Respondents' requests for special permission to appeal the judge's subpoena ruling. On July 1 the Board, Member Cracraft dissenting, 5 granted the Respondents' requests for special permission to appeal the judge's subpoena ruling. In addition, the Board ordered that the Cudahy documents in ques- tion be forwarded to it so that it could inspect them in camera prior to ruling on the Respondents' petitions to revoke. Sixty Cudahy documents were subsequently forwarded to the Board.6 On July 8, in connection with its July 1 Order, the Board also requested that the Respondents fur- nish an index of documents to facilitate the Board's in camera inspection. On July 22 and 30 the Re- spondents submitted an index identifying 54 Cudahy documents, 5 of which are in Smithfield's possession, namely PCI-2, PCI-4, PCI-6, PCI-13, and PCI-21, and all of which they assert are cov- ered by the attorney-client privilege. 7 On July 30 and August 11 the General Counsel filed an oppo- sition to the Respondents' index because, in her view, the index contained argumentative and mis- leading statements, thereby exceeding the scope of the Board's July 8 request. Earlier, on June 18, Cudahy filed a motion under Section 102.37 of the Board's Rules requesting Judge Holley to disqualify himself from further participation in this case on the grounds that he 4 After it filed its request for special permission to appeal the judge's subpoena ruling, Cudahy withdrew its claim of attorney-client privilege for PCI-25, PCI-34, FCI-36, PCI-46, and PCI-54 and submitted these five documents to the General Counsel by letter dated June 16. 5 Member Cracraft would have denied the Respondents' requests for special permission to appeal on the ground that the district court subpoe- na enforcement proceeding the General Counsel intended to institute was the appropriate and customary procedure for resolving the evidentiary issues raised. Now that the case is before her, however, she joins her col- leagues in reversing the judge's rulings for the reasons stated in this deci- sion 6 pci-I was also forwarded even though no objection was raised to the judge's ruling that the attorney-client privilege did apply to that doc- ument PCI-22, PCI-25, PCI-36, PCI-46, and PCI-54, which the Respondents agreed to provide to the General Counsel and which are now in the General Counsel's possession, were also forwarded to the Board. I The attached Appendix provides a brief description of the 54 Cudahy documents in dispute. had demonstrated personal bias and prejudgment of the issues. In support of its motion, Cudahy relied on comments made by the judge on the record at the hearing on June 10 and other statements attrib- uted to him in certain newspaper articles published on June 11 and 14 in The Milwaukee Journal and The Milwaukee Sentinel. In his Order dated July 2, the judge determined that his record comments complied with Section 102.37 of the Board's Rules in that they reflected the grounds for his ruling and that the newspaper articles (1) assigned some re- marks to him which he had not made, (2) con- tained hearsay evidence, or (3) simply reflected those comments previously made by him on the record at the trial. The judge, moreover, asserted that his remarks to the newspaper reporters in- volved did not show that he possessed a partisan attitude or harbored a bias against Cudahy. The judge, therefore, found Cudahy's motion for dis- qualification was without merit. On July 9, pursuant to Section 102.26 of the Board's Rules, Cudahy filed with the Board a re- quest for special permission to appeal the judge's ruling denying its motion for disqualification of the administrative law judge. Cudahy also submitted a brief with attached affidavits and exhibits and re- newed its prior request for oral argument before the Board. On July 14 and 27 the Union and the General Counsel opposed Cudahy's request for spe- cial permission to appeal the judge's refusal to dis- qualify himself In its opposition statement, the Union also asked that the Board reconsider its July 1 Order because the Respondents waived the attor- ney-client privilege when the Cudahy documents were submitted for an in camera inspection by the judge. Given the difficulty and potentially broad impact of the resolution of the issues presented by this sub- poena duces tecum case, we have reviewed in depth the issues specifically raised to us by the par- ties and express our views below in order to give guidance to litigants and judges in this and future cases. The Board having duly considered the matter, the Respondents' appeals seeking reversal of the judge's rulings of June 10 and July 2 are granted for the reasons set forth below.9 The attorney-client privilege essentially prevents compelled disclosure of a document if it constitutes a communication made in confidence to an attor- ney by a client for the purpose of seeking or ob- taining legal advice. 9 If the communication is, 8 The Respondents' request for oral argument is denied as the record, statements of position, and briefs adequately present the views and posi- tions of the parties. 9 For a fuller description of the definition of attorney-client privilege, see 8 Wigmore, Evidence § 2292 and U.S. v. United Shoe Machinery Corp., 89 F Supp. 357, 358 (D.Mass 1950). 970 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD however, for the purpose of committing a crime or perpetrating a fraud in the future (as opposed to re- ferring to prior wrongdoing), then the recognized crime or fraud exception comes into play to permit the disclosure of the otherwise privileged docu- ment. '° In rejecting the Respondents' arguments that the Cudahy documents were protected by the attor- ney-client privilege, the judge based his ruling on two separate grounds. First, the judge concluded that the Cudahy documents marked as PCI-2, PCI- 9, PCI-10, PCI-11, and perhaps PCI-24, but par- ticularly PCI-2, showed that Cudahy "intended to participate in bargaining with an intention to take action which would bring about what they would claim to be an impasse of December 31, 1986," the expiration date for the union contract. Without spe- cifically using the term "crime-fraud exception" or "crime-fraud-tort exception," the judge in effect applied that exception to PCI-2 and all documents generated after PCI-2 was prepared, apparently on the theory that after the preparation of PCI-2, the law firm was assisting the client in the commission of an act comparable to a crime, fraud, or tort. Second, and alternatively, the judge determined that because the task for which the law firm was employed and the work performed by the law firm was, in his opinion, more in the nature of affording business assistance than rendering legal advice to Cudahy, the attorney-client privilege did not apply. The judge did not relate that assessment of the nature of the attorney-client relationship in this case to particular documents, and thus did not con- sider whether the reasons for which he found cer- tain portions of PCI-1 to be traditional legal advice within the attorney-client privilege (see fn. 3, supra) might also apply to other contested docu- ments in whole or in part. All the parties have treated the judge's first ground for denying the Respondents' motion to quash the subpoenas as equivalent to a finding that the Cudahy documents fall within the crime or fraud exception to the attorney-client privilege. In their appeal, the Respondents (1) contest the judge's conclusion that the documents at issue here reflect the provisions of business advice as opposed to legal advice, and (2) contend that the judge erred in applying the crime-fraud exception be- cause he based his ruling on the documents alone, rather than on evidence independent of the docu- ments for which the privilege is claimed. On the '0 8 WIgmore, Evidence § 2298. The privilege may also be lost by waiver, but the only argument as to waiver before us is the Charging Party's contention—for which there is no authority in precedent—that the privilege is waived through a tribunal's in camera inspection of docu- ments other hand, the General Counsel argues that these documents are exempted from the attorney-client privilege because they show that Cudahy violated Section 8(a)(5) of the Act by contriving a bargain- ing impasse and engaging in bad-faith bargaining and that this unlawful activity is sufficient to acti- vate the crime or fraud exception. In support, the General Counsel primarily relies on the position advanced by the Board in NLRB v. Harvey, 349 F.2d 900 (4th Cir. 1965), that an unfair labor prac- tice constituted a crime or fraud for purposes of the crime-fraud exception and dicta by Judge Learned Hand in NLRB v. Remington Rand, Inc., 94 F.2d 862, 872 (2d Cir. 1938), to the effect that the respondent employer and the cause of a strike were a "tortfeasor" and "tort," respectively. For the reasons set forth below, we reverse the judge's ruling on the privilege claim. We first consider the threshold question whether the attorney-client privilege applies at all to the documents at issue here, given that collective bar- gaining and labor-management relations in general have business and economic aspects as well as legal aspects. We start from the principle that "a matter committed to a professional legal adviser is \prima facie so committed for the sake of the legal advice . . . for some aspect of the matter, and is therefore within the privilege unless it clearly appears to be lacking in aspects requiring legal advice." 11 We further note that the presence of business consider- ations intertwined with legal advice does not neces- sarily destroy the privileged nature of communica- tions between attorney and client. Thus, as Judge Wyzanski explained with respect to the outside counsel involved in U.S. v. United Shoe Machinery Corp., 89 F.Supp at 359: They were not acting as business advisers or officers of United, even though occasionally their recommendations had in addition to legal points some economic or policy or public rela- tions aspect and hence were not unmixed opin- ions of law. The modern lawyer almost invari- ably advises his client upon not only what is permissible but also what is desirable. And it is in the public interest that the lawyer should " 8 Wigmore, Evidence § 2296 (McNaughton rev 1961) (emphasis in original), cited in Diversified Industries v. Meredith, 572 F 2d 596, 610 (8th Cir 1978) (en bane) Our consideration of the privilege throughout is guided by Federal precedents, which, pursuant to Rule 501 of the Federal Rules of Evi- dence, call for the application of "the principle of the common law as they may be interpreted by the courts of the United States in the light of reason and experience." Under Sec 10(b) of our own Act, however, we are bound by those rules of evidence only "so far as practicable," and, as is apparent in our discussion below of the application of the privilege to legal advice touching on collective-bargaining negotiations, we bring to bear our own "reason and experience" in determining how to apply the privilege in the context of unfair labor practice proceedings PATRICK CUDAHY, INC. 971 — regard himself as more than predicter of legal consequences. His duty to society involves many relevant social, economic, political and philosophical considerations. And the privilege of nondisclosure is not lost merely because rel- evant nonlegal considerations are expressly stated in a communication which also includes legal advice. See also In re Grand Jury Subpoena Duces Tecum (Marc Rich & Co. A.G.), 731 F.2d 1032, 1036-1038 (2d Cir. 1984) (advice from an attorney on tax mat- ters constitutes legal advice); Diversified Industries v. Meredith, 572 F.2d at 610 (privilege covers legal advice mixed with audit functions); Jack Winter, Inc. v. Koratron Co., 54 F.R.D. 44, 47 (N.D.Cal. 1971) (privilege covers Mixture of legal advice and aid in patent registration); US. v. International Business Machines Corp., 66 F.R.D. 206, 212 (S.D.N.Y. 1974), quoting Zenith Radio Corp. v. RCA, 121 F.Supp. 792, 794 (D.Del. 1954) (commu- nications retain privilege even if attorney's advice is only "predominantly legal"). In our view, the judge in the present proceeding construed the category of legal advice too narrow- ly and mischaracterized the nature of the work per- formed by Krukowski & Costello, S.C. for Cudahy. He failed to recognize that the process of collective bargaining invites the contribution of legal advice at all of its stages and that a primary purpose for the law firm's employment by Cudahy was to render legal advice throughout contract ne- gotiations with the Union. Labor attorneys often advise an employer or a union in contract negotia- tions and may even serve as the party's chief nego- tiators because of their expertise and knowledge in this highly specialized area of the law. Their advice is relevant not only to the question of the ° lawfulness of particular bargaining strategies and dealings with the opposing party or employees but also to how particular contract language is likely to be construed in arbitration if disputes about con- tractual provisions arise. Indeed, the complexities of the law in this area are not unlike those to which the Supreme Court referred in Upjohn Co. v. U.S., 449 U.S. 383, 392 (1981), when criticizing an unduly "narrow" test for applying the privilege: In light of the vast and complicated array of regulatory legislation confronting the modern corporation, corporations, unlike most individ- uals, "constantly go to lawyers to find out how to obey the law," Burnham, The Attor- ney-Client Privilege in the Corporate Arena, 24 Bus. Law 901, 913 (1969), particularly since compliance with the law in this area is hardly an instinctive matter. For specifically labor law policy reasons as well, when the legal advice relates to collective bargain- ing, we will not readily and broadly exclude attor- ney-client communications from the privilege on the ground that business and economic consider- ations are also present. As noted in Berbiglia, Inc., 233 NLRB 1476, 1495 (1977), which concerned an employer's subpoena for union records of employee meetings during a strike while negotiations for a new agreement were going forward: "If collective bargaining is to work, the parties must be able to formulate their positions and devise their strategies without fear of exposure." 1 2 For all of the foregoing reasons, we find, con- trary to the judge, that the attorney-client privilege encompasses the advice rendered by Krukowsld & Costello to Cudahy in the course of helping it pre- pare for and conduct negotiations with the Union and in advising Cudahy as to legal constraints on the operation of the plant should a strike ensue. The privilege covers both the communications which provided that advice and the communica- tions that flowed from client to attorney as a basis for generating the advice. Upjohn Co. v. U.S., 449 U.S. at 390 ("the privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and in- formed advice"). Documents PCI-3, PCI-5, PCI-10, PCI-11, PCI-12, PCI-13, PCI-14, PCI-15, PCI-26, PCI-27, PCI-28, PCI-29, PCI-30, PCI-32, and PCI-40 reveal that the law firm explored the legal ramifications connected with the full range of topics and events that may arise in the setting of contract negotiations. Other documents were generated in this framework, giving the attorneys needed information about the client's circumstances and aims that facilitated the giving of the advice.'" Having concluded that the documents in issue here are initially within the attorney-client privi- lege, we next consider the judge's finding that, 12 In cases involving other types of unfair labor practices, when policy considerations such as those noted here are not involved, the analysts of the relationship of legal advice to business decisions and actions may be different and it may not necessarily result in as broad an application of the pnvilege as here. See also fn. 13, Infra As the Supreme Court ob- served in Upjohn, supra, questions concerning the scope of the privilege are necessarily resolved on "a 'case-by-case' basis" 449 U S at 396-397. 13 We note, however, several important limitations to our holding It is communication between attorney and client related to the giving of legal advice that is pnvileged—not simply documents that pass between them Thus, nonpnvileged documents—e g, ordinary corporate records such as payroll or personnel records—cannot be swept within the privilege simply by being transmitted from client to attorney or vice versa See Di- versified Industries v. Meredith, 572 F.2d at 611 Similarly, we are not con- sidering notes recording the exchanges in a bargaining session with other parties except in one instance where such notes are intermingled with privileged communications. See Document PC1-16 972 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD even assuming the application of the privilege, the documents must be produced because they come within the crime-fraud exception to the privilege. Thus, we must determine whether the crime-fraud exception may extend to unfair labor practices. Judicial consideration of the application of the crime or fraud exception to the NLRA has been slight. In an earlier case involving litigation over enforcement of a Board subpoena, NLRB v. Harvey, 349 F.2d 900 (4th Cir. 1965), the Board took the position that, on a prima facie showing of the commission of an unfair labor practice, the crime or fraud exception would apply to communi- cations in furtherance of such a violation. In Harvey the Board sought the enforcement of a sub- poena which had been served on an attorney who, at the request of his client, had secured the services of a private detective to conduct surveillance of a union representative during an organizing cam- paign. Shortly after the detective reported to the attorney that the union representative had visited the homes of two employees, the latter were dis- charged by their employer. The attorney claimed that the attorney-client privilege justified his refusal to name his client. The Board, however, argued to the circuit court that the revelation of the client's identity might reveal whether the employer had ar- ranged for the surveillance, thereby violating Sec- tion 8(a)(1) of the Act. We observe that the Fourth Circuit in Harvey did not squarely reach the issue of whether a viola- tion of the INLRA constitutes a crime or fraud for purposes of the crime or fraud exception. The court instead remanded the matter for a further in- quiry into the nature of the attorney's employment by his client. 14 In so doing, the court made the fol- lowing pertinent observations (id. at 904): The Board has cited no cases construing an unfair labor practice as defined in § 8(a)(1) of the National Labor Relations Act, 29 U.S.C. § 158 (a)(1) to be a crime or a tort. Congress did not provide any penal provisions in the Act. To deny the privilege on the ground that an unfair labor practice is a crime or a tort would have wide ramifications in the field of labor management relations. We therefore do not reach the question of whether there has been a prima facie showing of an unfair labor practice. Apparently, the only other court to consider the issue to date decided it under a state statute that denied the privilege to "communications regarding legal services 'sought or obtained in order to '4 On remand, the district court found the communication was privi- leged and quashed the Board's subpoena. 264 F Supp 770 (1966). enable or aid the commission or planning of a crime or tort." In Aguinaga v. John Morrell & Co., 124 LRRM 2898, 2907 (D.Kan. 1986), the records and documents subpoenaed included written com- munications between the defendants and their law- yers concerning a plant closing and reopening, which were the subject of an outstanding unfair labor practice complaint. The magistrate ruled that these documents were stripped of the attorney- client privilege because they were generated in the course of the commission of unfair labor practices. The district court reversed the magistrate's ruling and remanded the case to the magistrate to exam- ine evidence independent of the subpoenaed docu- ments to ascertain whether the crime-fraud excep- tion should apply. Thus, it appears that the district court left open the possibility that an unfair labor practice may come within the crime-fraud excep- tion. Given the dearth of precedent on the issue, ap- plication of the crime or fraud exception to the NLRA appears to be an open question. In this regard, we note that it has long been established that the Act is strictly remedial not penal. Thus the Supreme Court held in Republic Steel Corp. v. NLRB, 311 U.S. 7, 10 (1940): The Act is essentially remedial. It does not carry a penal program declaring the described unfair labor practices to be crimes. The Act does not prescribe penalties or fines in vindica- tion of public rights or provide indemnity against community losses as distinguished from ' the protection and compensation of employees. Had Congress been intent upon such a pro- gram, we cannot doubt that Congress would have expressed its intent and would itself have defined its retributive scheme. Although the Act has been amended sine Republic Steel was decided, the Congress has not seen fit to reject the Court's holding. Of interest to our discussion here is the Third Circuit's decision in U.S. v. Bea, 688 F.2d 919 (1982), which relied, in part, on Republic Steel. The court in Boffa was concerned, inter alia, with the application of the mail fraud statute, 18 U.S.C. § 1341, to conduct allegedly intended to deprive employees of rights guaranteed by Section 7 of the NLRA. 15 The court declined to extend the mail fraud statute to that allegation for two reasons: the remedial nature of the Act and the primacy of the 15 In McNally v. US., 107 S.Ct. 2875 (1987), the Supreme Court effec- tively overruled that part of the Boffa decision, not relevant to our dis- cussion here, which determined that the mail fraud statute was not limit- ed to the protection of tangible property nghts PATRICK CUDAHY, INC. 973 Board in resolving unfair lalbor practice disputes. With regard to the former, the court noted that Congress did not intend to create new criminal sanctions when it endowed employees with Section 7 rights. . . . Similarly, the absence of any criminal sanctions in section 8 of the NLRA suggests that Congress did not contem- plate that employers would be subject to criminal liability, even by operation of another statute, as a result of committing an unfair labor practice. U.S. v. Bea, supra at 928. Accordingly, the court concluded that violation of the NLRA could not be included within the sweep of criminal liability under the mail fraud statute. Additionally, as noted above, the court found that the preemption policy of ensuring a uniform interpretation of the NLRA "casts serious doubt on the proposition" that Con- gress intended conduct depriving employees of Section 7 rights to fall within the ambit of the mail fraud statute. Id. at 929. In light of the above, it is clear, at least, that vio- lations of the NLRA cannot come within the crime part of the crime or fraud exception to the privi- lege. What is less clear from the precedent, howev- er, is to what extent the crime and fraud parts of the exception are severable, and, if the fraud part is severable, to what extent, if any, do unfair labor practices fall within its bounds. Most frequently, those cases cited as illustrative of the fraud excep- tion arise in a criminal context or in one where there is an express statutory prohibition of the de- ceptive conduct. For example, in Marc Rich & Co. A. G., supra, the court specifically criticized the company's asserting the privilege for focusing ex- clusively on the crime aspect of the exception and noted that while "advice was sought in furtherance of a fraud that is not necessarily a violation of the criminal code, the communication is nonetheless unprivileged." 731 F.2d at 1039. The import of these statements is unclear, however, because the court went on to find that the crime or fraud ex- ception to the privilege was applicable because "the government has shown adequate reason to be- lieve the sale was a fraudulent conveyance, in the sense that it was intended to delay or hinder the government's ability to collect the contempt fines that had accrued," ibid., and the record was ade- quate to support a conclusion that the company's actions may have been a fraudulent conveyance within the meaning of a New York statutory ban. Application of the fraud exception of the privi- lege to the NLRA is particularly problematic be- cause, unlike many other statutes such as those ad- ministered by the Federal Trade Commission, the Securities and Exchange Commission, and the Food and Drug Administration, the issues of de- ception and disclosure are not expressly included within the statutory scheme. Nevertheless, in many unfair labor practices intent has been found to be relevant and such intent may and often does have an element of deception. While not strictly speak- ing fraud under common law, these might conceiv- ably come within the penumbra of the multitude of definitions of fraud which may be put forth. See, e.g., 37 Am.Jur. 2d Fraud and Deceit §§ 1 and 2. No case has held that the NLRA creates a cause of action for fraud. Even assuming, however, that some unfair labor practices may arguably be defined as fraudulent, we are reluctant to place them within the crime or fraud exception. As one court cautioned, "there is great danger in losing sight of the foundations of this narrow exception to the attorney-client privi- lege." 1 6 Indeed, broad application of the exception to the NLRA would result, essentially, in swallow- ing up the privilege altogether. Moreover, even the narrower application of the exception to the allega- tions before us which concern bargaining without intent to reach an agreement is not without serious implications. Certainly there are unquestionably strong policy reasons favoring disclosure insofar as it would facilitate the discovery and deterrence of "sham" bargaining. These reasons must be weighed, however, against the countervailing policy reasons underpinning the privilege itself and the policy consideration of fostering collective bar- gaining by protecting the seeking of advice and the uninhibited exchange of ideas in that context." In this regard, we note that "sham" bargaining cases have been litigated for many years without the benefit of the sort of disclosure sought here. Parties have successfully relied not only on direct evi- dence of intent but also on intent that might be in- ferred from objective evidence of bad-faith bar- gaining." In this light and in view of the lack of precedent which would support extending the ex- ception under the definition of fraud to the conduct at issue here, we find that the policy considerations disfavoring its extension must prevail. 16 Research Corp. v. Gourmet's Delight Mushroom Co., 560 F Supp. 811, 820 (1983) 17 See, e g, Berbigha, Inc , supra We also note again the cautionary words of the Fourth Circuit in NLRB v. Harvey, supra, that "Rio deny the pnvilege on the ground that an unfair labor practice is a crime or tort would have wide ramifications in the field of labor management rela- tions" 58 See, e g., Atlanta Hilton & Tower, 271 NLRB 1600 (1984); A-1 King Size Sandwiches, 265 NLRB 850 (1982), enfd 732 F.2d 872 (11th Cir. 1984), cert denied 469 U S 1035 (1984), NLRB v Mar-Len Cabinets, 659 Fid 995, 999 (9th Cir. 1981); and NLRB v. Herman Sausage Co., 275 F.2d 229 (5th Cu. 1960). 974 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Finally in this regard we note that it appears that few courts have been willing to extend the excep- tion to the privilege to legal advice in furtherance of torts as well as to advice in furtherance of crimes or fraud." The cases are rare in which the privilege has been lifted on the ground that legal advice was in furtherance of tortious conduct that was neither criminal nor reasonably categorized as fraudulent, 2° and advisory bodies concerned with the development of uniform evidentiary standards do not appear to be rushing to expand the excep- tion in this respect. 21 Accordingly, even were we to fmd the allegation here to be fairly characterized as tortious conduct, we would not extend the ex- ception to the privilege to it. We are hesitant, therefore, in view of the lack of clear precedent, and in view of the significant policy considerations set forth above, to find that the crime-fraud exception to the privilege extends to unfair labor practices generally or, for that matter, to the specific 8(a)(5) allegation pending against the Respondents. Accordingly, we now reject the position taken by the Board in Harvey that a violation of the National Labor Relations Act constitutes a crime or fraud for purposes of the crime or fraud exception. We therefore revoke the General Counsel's subpoenas to the extent that they seek privileged communications as described above. In light of our revocation of the General Counsel's subpoenas, 22 we have decided to remand this proceeding to the Chief Adminstrative Law Judge for a hearing de novo before a different ad- ministrative law judge duly designated by him "to avoid even the appearance of a partisan tribunal." 12 See, e g, Irving Trust Co. v. Gomez, 100 F.R.D. 273, 277 (S.D NY. 1983); Diamond v. Stratton, 95 F.R.D. 503, 505 (S D.N.Y 1982), and cases there cited. Wigmore argued that the exception should extend beyond crimes and frauds. Wigmore, Evidence § 2298 at 577 (McNaughton rev 1961). See also Coleman v American Broadcasting Co., 106 F R D. 201 (D.D.C. 1985), for discussion of the crime or fraud exception as it applies to the Federal civil rights laws (The magistrate did not ultimately decide the issue inasmuch as he found the plaintiff had not made a sufficient showing to invoke the exception. He noted that research had revealed no case extending the cnme-fraud exception to the privilege to violations of the civil rights laws.) 20 Nowell v. Superior Court, 223 Cal App. 2d 652, 36 Cal. Rptr. 21, 25 (1963). 21 Thus, as Judge Weinstein noted in discussing the treatment of the privilege as originally proposed by the Advisory Committee on the Rules of Evidence, the Advisory Committee retained the traditional crime- fraud limitation, finding "the tort phraseology too broad considering the technical nature of some torts, particularly under federal law." 2 Wein- stein, Evidence 503(d)(1), 01. at 503-70 (1986). It is also noteworthy that the 1953 version of the Uniform Rules of Evidence, to which the court in Diamond v. Stratton, 95 F RD. at 505, referred, included torts in its for- mulation, whereas the counterpart in the 1974 version did not. Unif. R. Evid. 502(2X1) (1974) See also Hyde Construction Co v. Koehrmg Ca, 455 F 2d 337, 342 (5th Cir. 1972) (declining, in diversity case, to extend exception to communications in furtherance of a tort because Mississippi law did not warrant such an extension) 22 Because we are remanding to a new judge for this reason, we find it unnecessary to pass on Cudahy's arguments in its June 18 motion for dis- qualification of the Judge on grounds of bias. Indianapolis Glove Co., 88 NLRB 986, 987 (1950). Accordingly, IT IS ORDERED that the Respondents' requests for special permission to appeal the judge's subpoena rulings are granted and the administrative law judge's rulings are reversed. IT IS FURTHER ORDERED that a hearing de novo be held before a different administrative law judge for the purpose of receiving evidence on the issues raised by the allegations of the complaint. Upon the conclusion of the hearing, the judge shall pre- pare and serve on the parties a decision containing findings of fact, conclusions of law, and recommen- dations based on the evidence received and, fol- lowing service of such decision on the parties, the provisions of Section 102.46 of the Board's Rules and Regulations shall be applicable. APPENDIX PCI-2, dated October 17, 1986, is a typed booklet enti- tled "Planning—Contract Expiration" which was pre- pared by Lee Finn, Cudahy's company treasurer, for Robert J. Bartel, an attorney with Krukowski & Cos- tello, S.C. (herein "law firm"). This document was incor- porated into PCI-3. PCI-3, undated, is a strike manual prepared by the law firm for Cudahy and distributed on October 24, 1986. PCI-4 is a letter dated December 31, 1986, from Thomas P. Krukowski, an attorney with the law firm, to Cudahy's president, Roger Kapella. It discusses whether Cudahy and the Union reached a bargaining impasse and related topics. PCI-5 is another copy of PCI-4. PCI-6 is a letter dated November 25, 1986, from Kru- kowski to Kapella and outlines bargaining strategy for Cudahy. Attached to this letter are memoranda from the law firm which analyze several topics including bargain- ing impasse, unilateral implementation of employment terms, survival of employee benefits after contract expi- ration, and an employer's ability to directly communicate with its employees. PCI-7 is an outline of final bargaining objectives devel- oped by the law firm for Cudahy in early December 1986. PCI-8 is a document prepared by Finn for the law firm in May 1986 as a bargaining and planning timetable for the 1986 union contract negotiations. PCI-9 constitutes the handwritten notes of Finn taken during contract negotiation strategy and planning meet- ings held with the law firm and Cudahy on October 15 and 24, 1986. PC1-10 is the handwritten draft version of PCI-2. PCI-11 is a legal memorandum dated October 17, 1986, from the law firm to Cudahy. It discusses unem- ployment compensation eligibility and reviews the Wis- consin state lockout statute. PCI-12 is a legal memorandum dated November 17, 1986, from the law firm to Cudahy. It discusses the legal PATRICK CUDAHY, INC. 975 status of Smithfield in relation to Cudahy and possible implication of a strike at Cudahy on Smithfield. PCI-13 is a legal memorandum dated December 12, 1986, from the law firm to Cudahy. It deals with the ap- plicability of certain contractual and statutory provisions to a possible curtailment in Cudahy's operations after contract expiration. PCI-14 is an internal law firm memorandum dated March 30, 1987, which was orally communicated by Tim Costello, an attorney with the law firm, to Cudahy. It discusses whether unilaterally implemented employment terms can be modified without bargaining with the Union. PCI-15, undated, is a document entitled "Planning for Contract Negotiations and Strike" which was drafted by Bartel and later transmitted to Kapella in November 1986. PCI-16 constitutes the handwritten notes of Kru- kowski taken during contract negotiation sessions with the Union, bargaining caucus meetings with Cudahy, and preparatory meetings with Cudahy prior to the negotia- tion sessions of various dates. PCI-17 constitutes the handwritten notes of Bartel taken from February 1986 through May 1987. It summa- rizes bargaining strategy, caucus, and preparatory meet- ings with Cudahy. PCI-18 constitutes the handwritten notes of Nancy L. Pirkey, a legal assistant with the law firm, taken from October 1986 through May 1987. It summarizes bargain- ing strategy, caucus, and preparatory meetings with Cudahy and with the law firm alone. PCI-19, undated, is a document entitled "Movement in Company Proposals" which was prepared by Pirkey during a meeting with Cudahy. It summarizes areas of possible movement in Cudahy's bargaining proposals as of December 15, 1986. PCI-21, which was not shared with the Union, repre- sents the working drafts of Cudahy's initial contract pro- posals reviewed by the law firm and Cudahy. It also contains an outline of Cudahy's tentative final offer issues as of December 2, 1986. PCI-23 is a letter dated November 29, 1986, from Kru- kowski to Kapella. It discusses Cudahy's need to identify its final bargaining objectives and encloses an outline of potential final offer issues. PCI-24 constitutes the handwritten notes of Karol J. Hite, a legal assistant with the law firm, taken during in- ternal law firm meetings discussing task assignments for Cudahy and during strategy sessions with Cudahy for various dates. PCI-26, dated October 24, 1986, is a document entitled "Patrick Cudahy Strike Manual: Strike Related Issues" prepared by the law firm but never transmitted to Cudahy. PCI-27, dated November 11, 1986, is a memorandum entitled "Patrick Cudahy Negotiations-Checklist of Re- sponsibilities" prepared by the law firm outlining task as- signments for Cudahy. PCI-28, undated, is,a draft of a letter dated December 31, 1986, addressed as "Dear employee" which was pre- pared by the law firm for Cudahy. It discusses the sub- ject of permanent striker replacements. PCI-29, an internal memorandum dated November 4, 1986, and prepared by the law firm, discusses recom- mended contractual changes discussed with Cudahy. PCI-30 is an internal law firm memorandum dated No- vember 26, 1986, prepared by Sheila Gavin, a legal as- sistant with the law firm. It relates to the subject of cus- tomer contracts in relation to a strike at Cudahy. PCI-31 is an outline entitled "Open Items 01/20/87" which was prepared by the law firm to assist Cudahy in its contract negotiations. PCI-32 is a letter dated November 12, 1986, from Bartel to Kapella and provides a suggested agenda for a meeting with Cudahy management and supervisory per- sonnel to discuss the 1986 contract negotiations. PCI-33 is a letter dated October 29, 1986, from Kru- kowski to Cudahy's director of human resources, Dan Habighorst. It forwards revised drafts of Cudahy's initial bargaining proposals. These drafts were not shared with the Union. PCI-35 was given to the law firm by Cudahy. It is a letter dated March 26, 1985, from the law firm of Rein- hart, Boerner, Van Dueren, Norris & Rieselbach to an attorney representing Cudahy but not associated with the law firm. It discusses the operation of the Union's pen- sion fund. PCI-38 constitutes the handwritten notes of Habigh- orst taken during a strategy meeting with the law firm on April 11, 1986, when the topic of a communication program with employees by Cudahy was discussed. PCI-39, dated April 25, 1986, is a draft of a speech prepared by the law firm for Cudahy to deliver to its su- pervisory staff. It was further revised and presented in a different format at supervisory training sessions. PCI-40, undated, constitutes the handwritten notes of Habighorst taken during a telephone conversation with the law firm. It reflects that the topic of Cudahy's com- munication with its employees and supervisors was dis- cussed. PCI-41 constitutes the handwritten notes of Habigh- orst taken from February through October 1986. It sum- marizes bargaining strategy meetings with Cudahy and the law firm. PCI-42, dated October 3, 1986, and prepared by Ha- bighorst, is a document which summarizes a meeting at- tended by Cudahy, the law firm, and attorneys and agents for Geo A. Hormel & Co. held on September 26, 1986. It reflects that the topic of the strike at Hormel's Austin, Minnesota plant was discussed. PCI-43, dated October 5, 1986, is a document for the law firm which contains the handwritten notes of Ha- bighorst identifying proposed contractual changes to be incorporated into Cudahy's initial proposals. PCI-44, dated October 21, 1986, is a document entitled "Proposed Key Bargaining Changes-Company" prepared by Habighorst, incorporated into PCI-2, and distributed at the October 24, 1986 strategy meeting with the law firm. PC1-45, undated, constitutes the handwritten notes of Habighorst in preparation for a telephone conference with the law firm on October 13, 1986.The topics cov- ered by this document include unemployment compensa- 976 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD tion eligibility and vacation benefits post-contract expira- tion. PCI-47, undated, constitutes the handwritten notes of Finn relating to subjects to be covered in PCI-3. PCI-48 constitutes the handwritten notes of Finn taken during a contract negotiation strategy and planning meeting held with the law firm and Cudahy on Septem- ber 9, 1986. PCI-49 constitutes the handwritten notes of Finn taken during a contract negotiation strategy and planning meeting with Cudahy only on September 19, 1986. The topics reviewed and discussed at this meeting were in- corporated into PC1-2. PCI-50 constitutes the handwritten notes of Finn taken during a contract negotiation strategy and planning meeting with Cudahy only in September 1986. The topics reviewed and discussed at this meeting were in- corporated into PCI-2. PCI-51 constitutes the handwritten notes of Finn relat- ing to an analysis of the current union contract and sug- gested contract proposals for the 1986 contract negotia- tions in preparation for a meeting with the law firm held on October 24, 1986. This information ultimately was in- corporated into PC1-44 and PCI-2. PCI-52 is a document prepared by Finn relating to an analysis of the current union contract and suggested areas that needed to be addressed by Cudahy's initial contract proposals. This document was prepared for the contract negotiation strategy meeting held with the law firm and Cudahy on September 18, 1986. PCI-53 is another copy of PCI-19. PCI-55, dated July 11, 1986, is a document entitled "Key Bargaining Changes" prepared by Habighorst and ultimately incorporated in PCI-43 and PCI-44. PCI-56 is a handwritten document entitled "Open Items 12/30/86" prepared by the law firm in preparation for a contract negotiation session with the federal media- tor and used during caucus meetings with Cudahy's ne- gotiation team. PCI-57 is a typed copy of PCI-56. PCI-58 is a document entitled "Open Items 1/20/87" prepared by the law firm used during preparatory meet- ings and in caucuses with the federal mediator. PCI-59, undated, is a document entitled "Outline of Final Offer/Katz Letter," which includes the handwrit- ten notes of Pirkey taken during an internal law firm meeting discussing the subjects of impasse and unilateral implementation of Cudahy's final offer. PCI-60 constitutes the handwritten notes of Pirkey taken during bargaining caucuses and preparatory meet- ings with the law firm and Cudahy of various dates. PCI-61 constitutes typed and handwritten notes of Pirkey related to Cudahy's proposed profit-sharing plan contract proposal and was ultimately incorporated into a tentative contract proposal reviewed by Cudahy and the law firm. PCI-62 constitutes the handwritten notes of Shelia Gavin, a legal assistant with the law firm relating to the subject of a strike and was used to prepare PCI-3.