In re Stephen A. Lawrence, et al., Petitioners,

STATE OF MINNESOTA
IN COURT OF APPEALS
A20-0382

In re Stephen A. Lawrence, et al.,
Petitioners,

Stephen A. Lawrence, et al.,
Petitioners,

vs.

Rihm Family Companies, Inc., et al.,
Respondents.

Filed December 21, 2020
Writ of prohibition granted
Reilly, Judge

Hennepin County District Court
File No. 27-CV-18-19102

Richard T. Ostlund, Randy G . Gullickson, Shannon M. Awsumb, Anthony Ostlund Baer
& Louwagie P.A., Minneapolis, Minnesota (for petitioners)

Bryant D. Tchida, Kelly C. Engebretson, Moss & Barnett, P.A., Minneapolis, Minnesota
(for respondents)

Considered and decided by Worke, Presiding Judge; Reilly, Judge; and Bratvold,
Judge.
S Y L L A B U S
When an attorney represents more than one client related to a matter, the clients
hold a joint attorney -client privilege. Waiver of a joint attorney -client privilege requires
consent by all joint clients.

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O P I N I O N
REILLY, Judge
This litigation arises out of the sale of a business. Petitioners, former shareholders
of the business, sold the business to respondents, current shareholders of the business.
Petitioners seek a writ of prohibition to preclude the district court from enforcing an order
granting respondents ’ motion to review potentially privileged information between
petitioners, the business and their attorneys before the business was sold. Because both the
business and its shareholders jointly hold and control any privilege over communications
involving an attorney who represented the business and the shareholders before and during
the sale, and because the district court ordered disclosure bas ed on waiver by the business
alone, we determine that a writ of prohibition is necessary to protect the rights of the
petitioners as joint privilege -holders. As a result, we grant the petition for a writ of
prohibition.
FACTS
This litigation arises out of the corporate reorganization and stock sale of a closely
held truck and trailer le asing company , LTX, Inc. (LTX). Petitioners are former
shareholders of LTX.1 Respondents are current shareholders of LTX.2 LTX is not a party

1 Petitioners include Stephen Lawrence, Stephanie Johnson, Anne Jones, David Lawrence,
Eric Lawrence, Margaret Lawrence, R. Scott Jones and Anne Jones as Tenants in Common,
Allan Watts and Julie Watts as Joint Tenants, Stephen Lawrence as trustee for the Stephen
A. Lawrence Revocable Trust UTA 04/05/10, George Wilson as trustee for the George C.
Wilson Rev ocable Trust UTA 10/12/06 , Lawrence Management, Inc. , and Lawrence
Brothers Realty.
2 Respondents include the Rihm Family Companies, Inc., CEO Kari J. Rihm, and Kari J.
Rihm as trustee for the Kari J. Rihm Revocable Trust UAD 12/2/08.

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to this litigation. In 2018, petitioners filed a civil action alleging, among other things, that
respondents breached the stock purchase agreement by defaulting on payments. The
following summarizes facts alleged in petitioners’ complaint, as well as the facts stipulated
by petitioners and respondents when they submitted this discovery issue to the district
court.
Before its reorganization and sale to respondents, LTX was the parent company of
five subsidiary companies. One subsidiary company managed LTX’s leasing operation s,
while the others managed LTX’s logistics and trucking operations. In 2016, LTX’s
founder, Stephen Lawrence, discussed selling the leasing operations to respondents.
Because respondents were only interested in LTX’s leasing operations, petitioners
undertook a corporate restructuring that separated the leasing business from the other
business activities.
The stoc k sale closed in January 2017 , pursuant to a stock purchase agreement .
Petitioners sold their shares in LTX and one of the LTX subsidiaries to respondents.
Petitioners are not the only individuals who sold the company stock here. Other individuals
also sold company stock to respondents, but are not named as petitioners or as respondents.
After the sale, some of LTX’s employees went to work for respondents.
The privileged information at th e heart of this appeal is in LTX’s electronic files.
Before the stock sale, the parties discussed separating the electronic files of LTX and its
subsidiaries and migrating the data about LTX’s leasing operations from the original email
servers to respondents’ servers. As part of the electronic data migration, entire employee
email accounts for the individuals who went to work for respondents were transferred to

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respondents. The parties’ information-technology consultants did not complete the data-
migration process until several months after the January 2017 closing.
After petitioners sued respondents for nonpayment and during the discovery
process, respondents’ counsel learned that the data migration included potentially
privileged communications between the company, petitioners and other shareholders, and
their attorneys at Kaplan Strangis and Kaplan P.A. (KSK). KSK provided legal advice to
LTX in connection with the corporate reorganization and stock sale. KSK also represented
and provided legal advice to the individual seller shareholders of LTX in connection with
the stock purchase agreement. 3 Petitioners contend that, unknown to them, privileged
documents and communications (the transferred com munications) were transferred to
respondents during the data -migration process. The parties agreed to segregate and
sequester the transferred communications pe nding determination of whether they were
subject to claims of privilege by petitioners.
After discovering the transferred communications, respondents filed a motion for
authority to view them. Respondents gave two reasons: first, petitioners did not control
the attorney -client privilege, LTX did; second, petitioners waived any privilege.
Petitioners provided the district court with a privilege log of documents, identifying the

3 Petitioners have presented evidence demonstrating joint representation of LTX and the
individual-selling shareholders. Respondents do not challenge the evidence showing that
KSK attorneys also represented the selling shareholders in their individual capacities. Even
so, the district court determined that LTX, alone, controlled the privilege based on its
analysis of caselaw addressing the transfer of privilege from one company to another. As
explained below, this analysis does not resolve whether the individual-selling shareholders
also held or waived privilege.

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transferred communications potentially subject to privilege. The log consisted of nearly
800 email exchanges and attachments sent between March 2016 and April 2017.
As for respondents’ first argument, the district court noted that generally, when
control of a corporation passes to new management, the authority to assert and waive the
attorney-client privilege passes as well. Commodity Futures Trading Co mm’n v.
Weintraub, 471 U.S. 343, 349, 105 S. Ct. 1986, 1991 (1985). The district court determined
that the authority to assert the attorney-client privilege passed to LTX’s successor company
with respect to confidential communications relating to general business commun ications
and certain other matters. But the district court also concluded that LTX’s successor
company did not control the attorney -client privilege with regard to the communications
concerning the acquisition. Tekni-Plex, Inc. v. Meyner & Landis, 674 N. E.2d 663, 666
(N.Y. 1996).
Nevertheless, the district court partially granted respondents’ motion to view t he
transferred communications based on waiver. The district court first considered whether
the disputed information included privileged information and treated the transferred
communications “as if they satisfy the threshold criteria of embodying a communication
in which legal advice is sought or rendered.” The district court next considered what legal
work was performed for the petitioners and LTX. The district court recognized petitioners’
contention that KSK “represented the individual selling shareholders of LTX in connection
with the Stock Purchase Agreement, and as such, the individual sellers, and not the
corporation, control t he attorney-client privilege.” But the district court recognized that
petitioners “also admit” that KSK “provided some legal services to LTX in relation to the

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Stock Purchase Agreement” and argue that “this work was only in furtherance of their
representation of the individual selling shareholders.”
After examining the privilege log, however, the district court found it could not
“determine which communications were made in relation to the corporate restructuring and
which were made in relation to the . . . Stock Purchase Agreement. Similarly, . . . the Court
cannot determine which communications were made regarding matters specific to the
corporation and which communications were made regarding matters specific to the
individuals.”
Even so, the district court determined that LTX had sole control over the attorney -
client privilege for communications related to the corporate restructuring and stock
purchase agreement because a waiver occurred . The district court noted that “[a]ll of the
Transferred Communicati ons were made or received using corporate addresses,” that
Stephen Lawrence copied his executive assistant on privileged emails, and that the
employee handbook designated the emails as company prop erty. The district court also
determined that LTX waived t he privilege. The district court denied pe titioners’ letter
request seeking permission to file a motion for reconsideration of the order.4

4 Respondents moved to strike portions of petitioners’ brief and addendum relating to
petitioners’ reconsideration request. We denied the motion to strike in a special-term order,
noting that an addendum to a petition for an extraordinary writ may include “any portion
of the record necessary for an understanding of the application.” Minn. R. Civ. App. P.
120.01. Upon review, we note that the reconsideration materials relate mainly to the
district court’s determination that LTX waived any privilege over the disputed information.
Because we do not reach the waiver issue, we do not consider these mat erials helpful to
our analysis.

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In March 2020, petitioners sought a writ of prohibition to prevent the district court
from enforcing its order. We stayed the district court’s order, and ordered briefing and oral
argument on the petition.
ISSUE
Did the district court exceed its authority when it ordered disclosure of the
transferred communications?
ANALYSIS
Petitioners request a writ of prohibition to prevent the district court from enforcing
its order. “Prohibition is an extraordinary remedy and should be used only in extraordinary
cases.” Thermorama, Inc. v. Shiller , 135 N.W.2d 43, 46 (Minn. 1965). For a writ of
prohibition to issue, a petitioner must satisfy three elements: “(1) [the district court] must
be about to exercise judicial or quasi -judicial power; (2) the exercise of such power must
be unauthorized by law; and (3) the exercise of such power must result in injury for which
there is no ad equate remedy.” Minneapolis Star & Tribune Co. v. Schumacher , 392
N.W.2d 197, 208 (Minn. 1986). A writ of prohibition may issue “to correct an error of law
in the [district] court where no other adequate remedy is available to the petitioner and
enforcement of the [district] court’s order would result in irremediable harm.” State v.
Turner, 550 N.W.2d 622, 626 (Minn. 1996).
In discovery-related disputes, “a petition for a writ of prohibition is an appropriate
means of obtaining review of a discovery order, which is not appealable as of right, where
the district court has ordered the production of information clearly not discoverable.”
Turner, 550 N.W.2d at 625; see also Loveland v. Kremer , 464 N.W.2d 306, 308 (Minn.

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App. 1990) (recognizing that “a writ of prohibition is the appropriate form of relief when
a court has exceeded its power to order discovery” (quotation omitted)). Because there is
not an adequate remedy at law for disclosure of attorney-client privileged communications,
a writ of prohibition is an appropriate remedy. See In re Paul W. Abbott Co., 767 N.W.2d
14, 17-19 (Minn. 2009). An appellate court reviews “a district court’s order for an abu se
of discretion by determining whether the district court made findings unsupported by the
evidence or by improperly applying the law.” Id. at 18 (quotation omitted).
In the district court, respondents argued that they acquired the privilege when they
bought LTX stock. The district court rejected that argument and determined that the
privilege did not automatically transfer with the sale of the stock. The district court then
found that the corporation, alone, could waive that privilege. The question be fore us is
whether the petitioners, as joint clients of the same legal counsel, can invoke attorney-client
privilege to protect the transferred communications from disclosure. The attorney-client
privilege encourages clients to confide openly with their attorneys, to enable attorneys to
act more effectively on their clients’ behalf. Prior Lake Am. v. Mader , 642 N.W.2d 729,
738-39 (Minn. 2002). The privilege is found to exist:
(1) Where legal advice of any kind is sought (2) from a
professional legal adv iser in his capacity as such, (3) the
communications relating to that purpose, (4) made in
confidence (5) by the client, (6) are at his instance permanently
protected (7) from disclosure by himself or by the legal adviser,
(8) except the protection be waived.

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Kobluk v. Univ. of Minn ., 574 N.W.2d 436, 440 (Minn. 1998). The party asserting the
attorney-client privilege bears the burden of proving that the privilege applies. Sprader v.
Mueller, 121 N.W.2d 176, 180 (Minn. 1963).
As determined by the district court, the parties agree that KSK represented
petitioners and LTX before and during the stock purchase agreement, KSK communicated
electronically with petitioners and LTX , and that these communications were ultimately
transferred to new servers after the sale closed . The district court presumed that the
transferred communications were privileged. The district court relied on the stipulated
facts presented by the parties and determined that (1) “the Transferred Communications
were made or received using corporate email addresses,” (2) Stephen Lawrence copied his
executive assistant on these emails, (3) the employee handbook designated all the emails
as company property, and (4) petitioners failed to properly delineate between business and
personal communications. Based on these facts, the district court determined that LTX
controlled the attorney -client privilege on its own behalf and on behalf of the in dividual
selling shareholders.
The district court’s decision that LTX controlled the privilege of the individual
selling shareholders is erroneous. When an attorney represents more than one client, those
clients are considered joint clients of the attorney and any co -client may invoke attorney-
client privilege. Restatement (Third) of the Law Governing Lawyers § 75(2) (2000). There
are no Minnesota cases specifically addressing the appropriateness of a writ of prohibition
in cases involving joint -client privilege such as this. When Minnesota caselaw does not
address an issue, we may look to other jurisdictions for guidance. Berthiaume v. Allianz

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Life Ins. Co. of N. Am., 946 N.W.2d 423, 427 (Minn. App. 2020). And caselaw from other
jurisdictions recognizes that “waiving the joint-client privilege requires the consent of all
joint clients.” Teleglobe Commc’ns Corp. v. BCE Inc., 493 F.3d 345, 363 (3d Cir. 2007)
(citing Restatement (Third) of the Law Governing Lawyers § 75(2)), as amended (Oct. 12,
2007). A joint client “ may unilaterally waive the privilege as to its own communications
with a joint attorney, so long as those communications concern only the waiving client.”
Id. (citing Restatement (Third) of the Law Governing Lawyers § 75 cmt. e (2000)). But
the joint client may not “unilaterally waive the privilege as to any of the other joint clients’
communications or as to any of its communications that relate to other joint clients.” Id.
Additionally, “communications by co-clients with their common lawyer retain confidential
characteristics as against third persons.” Restatement (Third) of the Law Governing
Lawyers § 75 cmt. b (2000).
KSK performed legal work for LTX related to the corporate reorganization and
subsequent stock sale. KSK also represented the individ ual seller shareholders of LTX
regarding the stock purchase agreement. Thus, as joint clients of KSK, LTX and the
individual seller shareholders had rights and expectations that they could openly and freely
communicate with KSK. As explained in Teleglobe, “a client may unilaterally waive the
privilege as to its own communications with a joint attorney, so long as those
communications concern only the waiving client,” however, it cannot “unilaterally waive
the privilege as to any of the other joint clients ’ communications or as to any of its
communications that relate to other joint clients.” 493 F.3d at 363 (citing Restatement

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(Third) of the Law Governing Lawyers § 75 cmt. e). There does not appear to be any basis
in the law for a district court to assign “control” of a joint privilege to one client.
Because the district court assumed that the transferred communications contain
privileged information, and because any privileged information is protected by a joint
privilege, we hold that the district court erred in concluding that LTX controlled and could
waive the attorney -client privilege on behalf of itself and all the selling shareholders ,
including petitioners . We therefore conclude that a writ of prohibition precluding the
district court from enforci ng its discovery order is necessary to protect the joint -privilege
holders, and we grant the petition for a writ of prohibition.
But our holding here is limited. We hold that the district court erred by assigning
control of a joint privilege to one privil ege-holder, after assuming for purposes of its
analysis that all of the transferred communications are privileged. We have not been asked
to address, and this decision should not be construed to reach, the assumption that each of
the transferred communica tions sought or rendered legal advice . We conclude that the
district court erred by determining that LTX controlled the privilege and could waive it on
behalf of all petitioners, but we do not further address the waiver issue. Nothing in our
decision today should be read to preclude further proceedings before the district court about
the transferred communications, provided such proceedings reflect our holding here.
D E C I S I O N
When an attorney represents two or more clients in a matter, all clients j ointly hold
and control the attorney-client privilege , and the privilege must be waived by e ach
privilege-holder. The district court erred when it concluded that the company controlled

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the attorney-client privilege for itself and for the individual sell er shareholders, including
petitioners. Thus, the district court’s order for disclosure was not authorized by Minnesota
law. Petitioners do not have an adequate remedy if privileged communications with
counsel are disclosed. We therefore grant the writ of prohibition.
Writ of prohibition granted.