## Facts

- The Commodity Futures Trading Commission (CFTC) investigated possible Commodity Exchange Act violations by Chicago Discount Commodity Brokers (CDCB), a registered futures commission merchant.
- The CFTC filed an enforcement action; CDCB’s sole director and officer consented to relief that led to a court-appointed receiver.
- The receiver later filed a voluntary bankruptcy petition for CDCB and became the bankruptcy trustee.
- In the investigation, the CFTC subpoenaed CDCB’s former counsel and deposed him.
- Former counsel refused to answer certain deposition questions, asserting CDCB’s attorney-client privilege.
- The trustee executed a written waiver of CDCB’s attorney-client privilege for communications occurring on or before the receiver’s initial appointment.
- The dispute centered on who controls a corporate debtor’s attorney-client privilege after the corporation enters bankruptcy.

## Issues

1. Whether a bankruptcy trustee for a corporation has authority to waive the corporation’s attorney-client privilege as to prebankruptcy communications.

## Decision

- The Supreme Court reversed the court of appeals.
- The Court held that the trustee of a corporation in bankruptcy has the power to waive the corporation’s attorney-client privilege with respect to prebankruptcy communications.
- The Court treated the trustee as the functional equivalent of new corporate management, to whom control of the privilege ordinarily passes when corporate control changes.

## Legal Principles

- The attorney-client privilege applies to corporations as well as individuals.
- For a solvent corporation, the power to assert or waive the corporate privilege rests with corporate management (officers and directors).
- When corporate control shifts to new managers, authority to assert and waive the corporation’s privilege also shifts, and new management may waive privilege for communications made under prior management.
- In corporate bankruptcy, the trustee holds broad authority to manage the debtor’s affairs while former directors’ powers are substantially limited; consistent with governance principles, the trustee controls the corporate privilege.
- The Bankruptcy Code provision permitting courts to order disclosure to the trustee “subject to any applicable privilege” does not allocate privilege-control authority to former directors; privilege allocation is resolved through general corporate and bankruptcy principles.
- Bankruptcy policy supports trustee control because the trustee must investigate potential misconduct and maximize estate value for creditors; leaving privilege control with former managers could obstruct those duties.

## Conclusion

The Court ruled that, in corporate bankruptcy, the trustee—not the corporation’s former management—controls the debtor corporation’s attorney-client privilege and may waive it for prepetition communications when doing so serves the estate’s interests.


Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343 (1985)