Note by Chris G. Outlaw
The Commodity Futures Trading Commission (Commission) filed a complaint against Chicago Discount Commodity Brokers (CDCB) in the United States District Court for the Northern District of Illinois alleging violations of the Commodity Exchange Act. Thereafter, the parties entered into a consent decree that provided for the appointment of a receiver. The district court appointed a receiver who filed a voluntary petition in bankruptcy on behalf of CDCB seeking relief under chapter VII of the Bankruptcy Code (Code). The bankruptcy court later appointed the receiver as CDCB's trustee in bankruptcy. During the discovery stage of its lawsuit, the Commission deposed CDCB's former attorney, Gary Weintraub, who asserted CDCB's attorney-client privilege in refusing to answer questions about his prebankruptcy communications with CDCB. The bankruptcy trustee then waived the privilege, and a United States Magistrate granted the Commission's motion to compel Weintraub to testify. The magistrate found that the trustee, as successor to all of CDCB's assets, rights, and privileges, had effectively waived the debtor's attorney-client privilege. The district court upheld the magistrate's order. The directors of CDCB then intervened, arguing that the trustee did not have legal capacity to effectively waive CDCB's attorney-client privilege regarding communications made before the petition for bankruptcy was filed. The district court rejected the directors' argument, and the Seventh Circuit reversed. The court of appeals held that the right to assert or waive the attorney-client privilege did not pass to the trustee with the property of the bankrupt corporation. The Supreme Court reversed, and held that the trustee of a corporation in bankruptcy may waive the corporation's attorney-client privilege for communications made before the bankruptcy petition is filed. Commodity Futures Trading Commission v. Weintraub, 105 S. Ct. 1986 (1985).
About the Author
Chris G. Outlaw.
Citation
60 Tul. L. Rev. 1307 (1986)