What's Left of Employee Consent as Grounds for Data Processing After Recent European Court of Justice Decision on Attorney-Client Privilege?

European Union flag and mapU.S. corporations routinely rely on domestic employees’ consent to searches and disclosure of their personal information to avoid liability for privacy-based claims. In the European Union, by contrast, national data protection authorities and the Article 29 Working Party, which issues guidance on the implementation of the European Union Data Protection Directive, have repeatedly warned employers against relying on employees’ consent to provide a legitimate basis for processing personal data. In the European view, the balance of power in the employer-employee relationship so disproportionately favors the employer that an employee’s consent to an employer’s processing of personal data typically cannot be truly voluntary.

The recent decision by the European Court of Justice (ECJ) in Akzo Nobel Chemicals Ltd. v. EU (pdf), albeit addressing attorney-client privilege (known as the “legal professional privilege” in the E.U.) demonstrates just how risky it can be for employers to rely on the consent of E.U. employees as a legitimate ground for data processing. In Akzo, the ECJ rejected the assertion of the legal professional privilege to protect from disclosure communications between in-house counsel and their internal business clients in an anti-trust investigation. The following quotation reflects the logical fulcrum of the court’s decision:

[A]n in-house lawyer cannot, whatever guarantees he has in the exercise of his profession, be treated in the same way as an external lawyer, because he occupies the position of an employee which, by its very nature, does not allow him to ignore the commercial strategies pursued by his employer, and thereby affects his ability to exercise professional independence.”

In other words, according to the ECJ, the employer’s commercial interests so cloud the judgment of in-house attorneys that they are incapable of providing unbiased legal advice to their employer.

The implications of this line of reasoning on E.U. data protection law are potentially profound. Attorneys often will be among the most highly educated members of an employer’s workforce. They have been trained to exercise independent judgment and, of course, have an ethical obligation to their client to do so. If Europe’s highest court has concluded that the employer–employee relationship fundamentally compromises an attorney’s ability to engage in independent decision-making — notwithstanding their education and professional responsibilities, employers can expect to face a heavy burden in persuading E.U. data protection authorities that factory workers, customer sales representatives, or even low- or mid-level managers voluntarily consented to the processing of their personal data.

For further analysis of this development, see Littler ASAP The European Court of Justice Reaffirms that Communications with In-House Counsel May Not Be Privileged in Europe by Nick Linn.

This entry was written by Philip L. Gordon.

Photo credit: FotografiaBasica

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.