COMMODITY FUTURES TRADING COMMISSION v. WEINTRAUB

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Case Basics
Docket No. 
84-261
Petitioner 
Commodity Futures Trading Commission
Respondent 
Gary Weintraub, Frank H. McGhee, Andrew McGhee
Advocates
(for the petitioner)
(for the respondent)
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Facts of the Case 

The Commodity Futures Trading Commission (the Commission) filed a complaint against the Chicago Discount Commodity Brokers (CDCB), alleging violations of the Commodity Exchange Act. CDCB was going through bankruptcy at the time and a trustee was appointed At a deposition related to the Commission’s lawsuit, Gary Weintraub, CDCB’s former counsel, refused to answer certain questions, citing attorney-client privilege. The Commission obtained a waiver of attorney-client privilege from the CDCB’s bankruptcy trustee. The district court directed Weintraub to answer the questions, but the U.S. Court of Appeals for the Seventh Circuit reversed, holding that a bankruptcy trustee does not have the power to waive attorney-client privilege for communications that occurred before the filing of the bankruptcy petition.

Question 

Does the trustee of a corporation in bankruptcy have the power to waive that corporation's attorney-client privilege with respect to communications that took place before the bankruptcy petition was filed?

Conclusion 
Decision: 8 votes for Commodity Futures Trading Comm'n, 0 vote(s) against
Legal provision: Bankruptcy Code, Bankruptcy Act or Rules, or Bankruptcy Reform Act of 1978

Justice Thurgood Marshall, writing for a unanimous court, reversed the Seventh Circuit. The Supreme Court held that a bankruptcy trustee does have the power to waive attorney client privilege for communications that occurred before filing the bankruptcy petition. This power is held by the management of a corporation, and a bankruptcy trustee is merely a new form of management. If the power to waive attorney-client privilege remained with the corporation’s directors, it would frustrate the goal of the trustee, to uncover fraud and misappropriated corporate assets. Justice Lewis F. Powell did not participate.

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COMMODITY FUTURES TRADING COMMISSION v. WEINTRAUB. The Oyez Project at IIT Chicago-Kent College of Law. 25 November 2014. <http://www.oyez.org/cases/1980-1989/1984/1984_84_261>.
COMMODITY FUTURES TRADING COMMISSION v. WEINTRAUB, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1980-1989/1984/1984_84_261 (last visited November 25, 2014).
"COMMODITY FUTURES TRADING COMMISSION v. WEINTRAUB," The Oyez Project at IIT Chicago-Kent College of Law, accessed November 25, 2014, http://www.oyez.org/cases/1980-1989/1984/1984_84_261.