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Winans v. Starbucks Corp.

December 15, 2010


The opinion of the court was delivered by: James C. Francis IV, United States Magistrate Judge.


This is a putative class action in which the plaintiffs, Assistant Store Managers ("ASMs") in Starbucks Corporation ("Starbucks") stores in New York, allege that they have been improperly excluded from participating in each store's tip pool, in violation of New York Labor Law. Starbucks contends that the ASMs are managerial employees who are not entitled to share tips under the Labor Law. A dispute has now arisen over the defendant's assertion of the attorney-client privilege with respect to communications that its counsel had with certain ASMs after the commencement of litigation.


On May 7, 2010, the plaintiffs moved to certify this matter as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure. In response, Starbucks submitted declarations from sixteen ASMs attesting to the scope of their duties and responsibilities. In the declarations, each ASM also confirms that the statement is voluntary and that no benefit was received in return for making it.

At the plaintiffs' request, Starbucks then made eight of the declarants available for deposition. However, during the examinations, Starbucks' counsel instructed each witness not to answer questions about the execution of his or her declaration to the extent that the testimony would reveal information protected by the attorney-client privilege. (Transcript dated Oct. 13, 2010, attached as Exh. A to Letter of Lewis M. Steel dated Oct. 27, 2010 ("Steel Letter"); Transcripts dated Oct. 13-28, 2010, attached as Exhs. 1-8 to Letter of Lewis M. Steel dated Nov. 10, 2010 ("Steel Reply Letter")).

The plaintiffs have now submitted a letter motion seeking an order overruling Starbucks' assertion of the attorney-client privilege with respect to communications between Starbucks' counsel and the declarant ASMs. (Steel Letter at 4). They argue that the privilege does not attach to the conversations at issue; that, even if it did, it has been waived; and that, in any event, the possibility that the ASMs were subject to coercion warrants disclosure of the communications leading up to the execution of the declarations. (Steel Letter at 2-4). In addition, the plaintiffs request an order compelling Starbucks to produce all e-mails and other communications regarding the selection of ASMs to execute declarations and the arrangement of meetings between the ASMs and Starbucks' counsel. (Steel Letter at 4).


A. Existence of the Privilege

The attorney-client privilege protects from discovery "(1) a communication between client and counsel that (2) was intended to be and was in fact kept confidential, and (3) was made for the purpose of obtaining or providing legal advice." In re County of Erie, 473 F.3d 413, 419 (2d Cir.2007); see United States v. Construction Products Research, Inc., 73 F.3d 464, 473 (2d Cir.1996).*fn1 The party invoking the privilege bears the burden of establishing all of the elements. See In re Grand Jury Subpoenas Dated March 19, 2002 and August 2, 2002, 318 F.3d 379, 384 (2d Cir.2003); Construction Products Research, 73 F.3d at 473.

In Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981), the Supreme Court addressed the applicability of the privilege to corporate entities. In doing so, it rejected the "control group" test, which protected only those communications between counsel for the corporate entity and those corporate employees " 'in a position to control or even to take a substantial part in a decision about any action which the corporation may take upon the advice of the attorney.' " Id. at 390 (quoting Philadelphia v. Westinghouse Electric Corp., 210 F.Supp. 483, 485 (E.D.Pa.), petition for mandamus and prohibition denied sub nom. General Electric Co. v. Kirkpatrick, 312 F.2d 742 (3d Cir.1962)). The Court reasoned that "the privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice." Id. The Court further observed that "[t]he first step in the resolution of any legal problem is ascertaining the factual background and sifting through the facts with an eye to the legally relevant." Id. at 390-91. Thus, the Court found that the privilege extends to communications with employees "beyond the control group" because

Middle-level-and indeed lower-level-employees can, by actions within the scope of their employment, embroil the corporation in serious legal difficulties, and it is only natural that these employees would have the relevant information needed by corporate counsel if he is adequately to advise the client with respect to such actual or potential difficulties.

Id. at 391.

Within a corporation, then, the attorney-client privilege protects communications by corporate employees to counsel for the corporation who is acting as a lawyer when the communications are made at the direction of corporate superiors in order to secure legal advice and the employees were aware that they were being questioned in connection with the provision of such advice. Id. at 394-95; see also Stampf v. Long Island Railroad Co., No. 07 CV 3349, 2009 WL 3628109, at *1 (E.D.N.Y. Oct. 27, 2009); In re Copper Market Antitrust Litigation, 200 F.R.D. 213, 218 (S.D.N.Y.2001); Leucadia, Inc. v. Reliance Insurance Co., 101 F.R.D. 674, 678 (S.D.N.Y.1983).

There is no doubt that the communications at issue here meet these criteria. The plaintiffs' contention that the conversations were not privileged because Starbucks' counsel does not represent the ASMs individually (Steel Letter at 2) misses the point; the privilege belongs to Starbucks, not to the ASMs, and arises from the need to ...

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