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ALLEN v. WEST POINT-PEPPERELL INC.

March 11, 1994

GORDON E. ALLEN, JOHN CURRIER, JAMES J. DUNNE, LEO FORNERO, GERARD P. MANDRY, NORMAN K. MATHESON, BRUCE E. MOORE, NICHOLAS PALLOTTA and COCHRAN B. SUPPLEEE, Plaintiffs,
v.
WEST POINT-PEPPERELL INC., D. MICHAEL ROARK, C. POWERS DORSETT and BARRY F. SHEA, Defendants.



The opinion of the court was delivered by: ALLEN G. SCHWARTZ

 ALLEN G. SCHWARTZ, DISTRICT JUDGE:

 BACKGROUND

 The facts underlying this action, and the related case of Krumme v. West Point-Pepperell, 735 F. Supp. 575 are set forth in detail in Allen v. Westpoint-Pepperell, 945 F.2d 40 (2d Cir. 1991). Some familiarity with them is presumed, but a brief summary follows.

 The underlying lawsuit concerns the amount of lump-sum payments of plaintiffs' deferred compensation benefits under the Executive Permanent Insurance Program ("EPI Agreement") and an Amendment to the EPI Program dated November 11, 1988 (the "EPI Amendment") of West Point-Pepperell, Inc. ("West Point"). In mid-February 1989, a dispute arose over the discount rate to be used in calculating the present value of the EPI Program benefits. An EPI Program participant, Robert D. Krumme (the former general counsel to West Point-Pepperell) objected to the interest rate West Point intended to use in calculating the lump-sum payout to former employees, including Mr. Krumme and plaintiffs. Mr. Krumme stated in a letter to defendants dated February 21, 1989, that he had relied on an earlier value of the discount rate in his decision to sign the EPI Amendment. *fn1" At that point, all EPI participants were permitted to (1) rescind the EPI Amendment and return to the status quo ante, or (2) release West Point from all obligations under the EPI Agreement in exchange for the lump-sum payout.

 Each of the plaintiffs in this action executed the release and received the lump-sum payout. Mr. Krumme, however, initiated a lawsuit against West Point alleging that West Point had fraudulently applied an incorrect discount rate. Discovery took place in Krumme v. West Point-Pepperell, 89 Civ. 2016 until August 31, 1989. Both sides moved for summary judgment in the fall of 1989; both motions were denied by Judge Conboy in an order dated April 19, 1990.

 Plaintiffs commenced this action on June 6, 1990, alleging fraud. They seek, inter alia, to set aside the releases as fraudulently obtained. In the course of discovery in this case, defendants deposed Mr. Krumme on March 3, 1993. In that deposition, Mr. Krumme testified that, in August and September 1989, he telephoned at least 30 or 40 EPI participants, including plaintiffs. Deposition of Robert Krumme ("Krumme Dep.") 120-22, 148-49. He further asserted that he was retained as counsel by plaintiffs at that time to prosecute their claims arising under the EPI Agreement. Krumme Dep. 73-74, 121-22, 130.

 The Pending Motion

 Presently before the Court is defendants' motion to compel discovery. Defendants seek to compel the production of documents and testimony relating to the aforementioned telephone conversations, as well as subsequent interactions between Mr. Krumme, plaintiffs in this action, and other contacted EPI Participants. Defendant's Mem. at 4-5. Both plaintiffs and Mr. Krumme have refused to answer questions on these matters, asserting the attorney-client privilege. Krumme Dep. 69, 73, 98, 123-24, 134-37; Defendants' Mem. at 5. In addition, Krumme has refused to disclose the identities of all but one of his EPI Participant clients (other than plaintiffs in this case), Krumme Dep. 124-37, while plaintiffs refuse to disclose the terms of plaintiffs' retainer agreements with Mr. Krumme-- again plaintiffs assert the attorney client privilege. Krumme Dep. 158. Defendants respond that: (1) the attorney-client privilege should not apply to the conversations between Mr. Krumme and plaintiffs, Defendants' Mem. at 7-10; (2) if the attorney-client privilege does apply to the conversation, plaintiffs have waived its protection by placing the substance of the conversations "at issue" in this lawsuit, id, at 10-12; *fn2" and (3) the identities of Mr. Krumme's remaining EPI Participant clients and the contents of the retainer agreements between plaintiffs and Mr. Krumme are not privileged or confidential. Id, at 12-13. We address these arguments in turn.

 I. The Conversations

 As noted, plaintiffs contend that the attorney-client privilege insulates from disclosure all conversations between plaintiffs and Krumme subsequent to his retention as counsel in August or September, 1989. By contrast, defendants argue that the privilege insulates no aspects of those conversations, and, even if we were to determine that the privilege did apply, substantial authority requires that we pierce its veil. We disagree with both formulations, although they derive from common misapprehensions of the nature and scope of the attorney-client privilege. As explained in detail below, we conclude that the privilege applies only to confidential communications made in the course of those conversations, and that defendants may explore non-privileged matters to an extent sufficient to assert their defense; therefore, the privilege need not be breached where it applies.

 Discussion

 The attorney-client privilege is fundamental to the judicial process, constituting "the oldest of the privileges for confidential communications known to the common law. Upjohn Co. V. United States, 449 U.S. 383, 389, 101 S. Ct. 677, 682, 66 L. Ed. 2d 584 (1981), citing 8 J.Wigmore, Evidence ยง 2290 (McNaughton rev. 1961). The critical purpose of the privilege "is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and the administration of justice." Id. The attorney-client privilege and all other evidentiary privileges, however, also impinge on the production of relevant evidence and thus function as obstacles to the fact-finder in the pursuit of the truth. Consequently, the Supreme Court has indicated that such evidentiary privileges should not be expansively construed. United States v. Nixon, 418 U.S. 683, 710, 94 S. Ct. 3090, 3108, 41 L. Ed. 2d 1039 (1974). Nevertheless, the attorney-client privilege serves a critical function in the operation of the law and the administration of justice and may not be disregarded lightly. See, Upjohn, 449 U.S. at 389, 101 S. Ct. at 682. The Supreme Court has commanded that issues surrounding this privilege be examined on a painstaking, "case by case" basis. Id, at 396, 101 S. Ct. at 686. We proceed to such an examination.

 The party asserting the privilege and resisting discovery, has the burden of establishing the existence of the privilege in all respects. See, e.g., Fisher v. United States, 425 U.S. 391, 96 S. Ct. 1569, 48 L. Ed. 2d 39 (1976); Von Bulow v. Von Bulow, 811 F.2d 136, 144 (2d Cir.), cert. denied, 481 U.S. 1015, 107 S. Ct. 1891, 95 L. Ed. 2d 498 (1987); Friedman v. Bache Halsey Stuart Shields, Inc., 238 U.S. App. D.C. 190, 738 F.2d 1336, 1341 (D.C. Cir. 1984). In order for the attorney-client privilege to attach, then, plaintiffs must demonstrate that *fn3"

 
(1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client, (b) without the presence of strangers, (c) for the purpose of securing primarily either (i) an opinion of law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.

 United States v. Davis, 131 F.R.D. 391, 398 (S.D.N.Y. 1990), citing First Chicago Int'l v. United Exchange Co. Ltd., 125 F.R.D. 55, 56 (S.D.N.Y 1989); see also, United States v. Bein, 728 F.2d 107, 112 (2d Cir. 1984) (similar formulation of factors); 8 J. Wigmore, ...


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