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G-I HOLDINGS, INC. v. BARON & BUDD

July 13, 2005.

G-I HOLDINGS, INC., Plaintiff,
v.
BARON & BUDD; FREDERICK BARON; RUSSELL BUDD; NESS, MOTLEY, LOADHOLT, RICHARDSON & POOLE; RONALD MOTLEY; JOSEPH RICE; WEITZ & LUXENBERG; PERRY WEITZ and ROBERT GORDON, Defendants.



The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge

OPINION

Plaintiff G-I Holdings ("Holdings") seeks an order compelling defendant Joseph Rice ("Rice") of defendant law firm Ness, Motley, Loadholt, Richardson & Poole ("Ness Motley") and defendant Perry Weitz ("Weitz") of defendant law firm Weitz & Luxenberg to answer deposition questions concerning legal advice given by their respective law firms to their respective clients. Holdings also seeks to compel Weitz to answer questions concerning his exercise of independent professional judgment with respect to certain advice provided to clients of Weitz and Luxenberg.*fn1

For the reasons set forth herein, the motion is denied.

  Prior Proceedings

  The status of this litigation and certain of the prior determinations are contained in G-I Holdings, Inc. v. Baron & Budd, No. 01 Civ. 0216, 2004 WL 638141 (S.D.N.Y. Mar. 30, 2004); G-I Holdings, Inc. v. Baron & Budd, 2004 WL 540456 (S.D.N.Y. Mar. 17, 2004); G-I Holdings, Inc. v. Baron & Budd, 2004 WL 374450 (S.D.N.Y. Feb. 27, 2004); G-I Holdings, Inc. v. Baron & Budd, 218 F.R.D. 409 (S.D.N.Y. 2003); G-I Holdings, Inc. v. Baron & Budd, 213 F.R.D. 146 (S.D.N.Y. 2003); G-I Holdings, Inc. v. Baron & Budd, 02 Civ. 0216, 2002 WL 31251702 (S.D.N.Y. Oct. 8, 2002); G-I Holdings, Inc. v. Baron & Budd, 238 F. Supp. 2d 521 (S.D.N.Y. 2002); and G-I Holdings v. Baron & Budd, 179 F. Supp. 2d 233 (S.D.N.Y. 2001), familiarity with which is presumed.

  The present discovery dispute first arose on October 15, 2004, when Holdings sought an order from the Court compelling Weitz and Rice to answer deposition questions concerning the steps their respective law firms took to comply with the April 15, 2004 settlement agreement (the "Futures Agreement") executed by Michael F. Rooney of the Center For Claims Resolution ("CCR") as sole agent for CCR's members (including GAF Corporation, the predecessor to Holdings) and Weitz in his individual capacity and as agent of Plaintiff Counsel. In open Court on October 27, 2004, it was determined that Weitz and Rice could be required to describe actions taken in order to comply with the Futures Agreement but not the mental process that resulted from any such action. On October 27, 2004, this Court stated:
[T]he opinion of the firm rendered to its client is covered by the privilege. I think that it is possible [that] in the peculiar circumstances of this case that it might be that the privilege should be broken, but I am not at that point yet. I don't think that issue will probably be ripe until I get the motions for summary judgment, and it is possible, it seems to me, that the issue may still be out there.
October 27, 2004 Transcript, at 20:11-18. On February 2, 2005, Holdings wrote to the Court seeking an order (1) compelling Weitz to answer questions concerning the exercise of his independent professional judgment in connection with the Futures Agreement, (2) compelling the Ness Motley defendants to produce a complete list of clients who deferred their claims in the period from June 1997 to January 2000 so that a representative sample could be developed, and (3) granting Holdings leave to take discovery based on this sample set. In open court on February 16, 2005, this Court stated:
I tried to make clear at the first go-round of this issue that I didn't want to invade the attorney-client privilege or have you invade the attorney-client privilege, but [that what] I did want . . . is factual procedures, what factual procedures you went through in order to make your decisions.
I would permit a further deposition, and the question would be — and it may not be necessary to have the deposition because the answer may be none — referring to these procedures. . . .
February 16, 2005 Transcript, at 38:4-14.

  Holdings' present motion was submitted by letter dated March 15, 2005. It was heard and marked fully submitted on April 13, 2005. Discussion

  By this motion, Holdings seeks a determination that the particular circumstances of this case warrant invasion of the attorney-client privilege held by certain clients of Luxenberg and Weiss and Ness Motley. This issue — i.e., whether the circumstances of this case might justify such an invasion — is one that the Court previously declined to reach. Therefore, defendants' argument that Holdings seeks reconsideration of previously decided issues is unavailing.

  1. Choice of Law

  Rule 501 of the Federal Rules of Evidence provides, in pertinent part, that
in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness, person, government, State, or political subdivision thereof shall be determined in accordance with State law.
Fed.R. Evid. 501. The discovery at issue here is sought for the purpose of establishing breach of contract on the part of the defendants. Since these are state law claims, the question of whether or not grounds exist for the invasion of the attorney-client privilege is also determined pursuant to sate law. See id. In its initial papers, Holdings has cited case law from the United States District Court for the District of New Jersey for the proposition that pursuant to the law of the State of New Jersey, the attorney-client privilege is qualified and can be invaded upon a showing: (1) that the there is a legitimate need for the evidence, (2) that the evidence is relevant and material to the issue before the Court, and (3) that the evidence cannot be secured from any less intrusive source. See Dome Petroleum Ltd. v. Employers Mut. Liability Ins. Co. of Wisconsin, 131 F.R.D. 63, 70 (D.N.J. 1990) (applying New Jersey law) (citing In re Kozlov, 79 N.J. 232, 243-45, 398 A.2d 882 (1979)); see also Leonen v. Johns-Manville, 135 F.R.D. 94, 100 (D.N.J. 1990) (same). In contrast, the defendants assert that New York law governs, and that under New York law, the attorney-client privilege is subject to only a limited number of narrow exceptions that are not applicable under the present circumstances.

  As to the state law claims at issue here, a court must apply the choice-of-law rules prevailing in the state in which the court sits. See, e.g., Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Krauss v. Manhattan Life Ins. Co., 643 F.2d 98, 100 (2d Cir. 1981). With respect to the law of evidentiary privileges, New York courts generally apply the law of the place where the evidence in question will be introduced at trial or the location of the discovery proceeding itself. See Drimmer v. Appleton, 628 F. Supp. 1249, 1250 (S.D.N.Y. 1986) (stating that no conflict issue exists where trial and deposition were in same state); Brandman v. Cross & Brown Co. of Florida, Inc., 125 Misc. 2d 185, 479 N.Y.S.2d 435, 437 (N.Y. Sup. Ct. 1984). Here, the evidence will be introduced in New York. Therefore, New York privilege law shall apply.

  2. New York's Attorney-Client Privilege

  New York's attorney-client privilege is codified in Section 4503 of the Civil Practice Laws and Rules ("C.P.L.R."), which states, in pertinent part, as follows:
Unless the client waives the privilege, an attorney . . . who obtains . . . a confidential communication . . . made between the attorney . . . and the client in the course of professional employment shall not disclose, or be allowed to disclose such communication, in any action.
N.Y.C.P.L.R. § 4503(a). "Although typically arising in the context of a client's communication to an attorney, th[is] privilege extends as well to communications from attorney to client." Spectrum Sys. Int'l Corp. v. Chemical Bank, 78 N.Y.2d 371, 377, 575 N.Y.S.2d 809, 814, 581 N.E.2d 1055, 1060 (1991).

  The purpose of this privilege is to "encourage persons needing professional advice to disclose freely the facts in reference to which they seek advice, without fear that such facts will be made public to their disgrace or detriment by their attorney." Hurlburt v. Hurlburt, 128 N.Y. 420, 424, 28 N.E. 651 (1891); Matter of Jacqueline F., 47 N.Y.2d 215, 218, 417 N.Y.S.2d 884, 886, 391 N.E.2d 967, 969 (1979) ...


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