Argument That Plaintiff’s Counsel Misrepresented Return of Privileged Memo Unavailing; Defendant’s Own Actions Waived Privilege

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Defendant J-M Manufacturing Company, Inc. moved to vacate the Recommendation of the Special Master finding that J-M waived privilege. In so doing, the defendant argued the Special Master erroneously applied New York law instead of California law in determining that the defendant waived the attorney-client privilege attached to the redacted and unredacted versions of a 1983 memo from the defendant’s in-house counsel to its president. The plaintiff opposed the motion.

In its motion to vacate, J-M argued the memo was first inadvertently produced in a very large document production, and that plaintiff’s counsel misrepresented that they returned all copies and had not disseminated it, because a redacted version of the memo appeared 10 years later in a California case. J-M also argued the Master mistakenly applied New York law because the Master incorrectly found the issue was procedural, and that even if New York law applied, the privilege was not waived.

It was undisputed that the memo was privileged. However, since this memo was addressed in depositions, affidavits, and proceedings in courts of numerous states, the issue became whether this privilege was inadvertently waived. In answering this question the Special Master reviewed the history of the memo’s use during litigation of various matters. The Master found that much of J-M’s success in obtaining protective orders was based on nebulous and hearsay accusations of alleged misconduct by some or all of plaintiff’s counsel when, in reality, no one really knew anything about what really happened with respect to the memo. The Master found that J-M’s own actions contributed in great part to diluting the privilege, and that J-M’s assertion of privilege over the memo was incompatible with its numerous disclosures and testimony regarding the statements contained within. As such, the privilege was waived with respect to both versions.

In arguing that this issue was substantive, not procedural, J-M cited article commentary that privilege issues maintained an aura of substance, and cited to lower New York court cases holding that attorney-client privilege was substantive in nature. While New York was the site of the tort in this case, California had the strongest interest in its privilege law being applied to the document (because 12 previous California cases found the document privileged). Further, even if New York law applied, The Master confused compelled disclosures with voluntary disclosures, as compelled disclosures due to court order could not be deemed waivers. The Master also erred in interpreting isolated quotes from J-M’s previous counsel, who was misled by plaintiff’s counsel.

The plaintiff argued certain portions of the memo were not privileged because it contained business, not legal, advice. The plaintiff also cited to several cases holding that evidence was a procedural issue. Even under California law, J-M waived the privilege.

The court’s opinion contained the facts cited by plaintiff to support the Master’s finding of waiver and found as follows. First, the Master correctly applied New York law. New York, not California, had the greatest interest in applying its law because it was the site of the alleged asbestos exposure. Under New York law, a privilege is waived when a document is produced, unless: the proponent of privilege demonstrates that the client intended to maintain confidentiality; reasonable steps were taken to prevent disclosure; the party asserting privilege acted promptly after discovering disclosure; and the parties who received the document would not suffer undue prejudice if a protective order against the use of the document was issued. Other considerations included: whether a party promptly objects; voluntary testimony by a client to a privileged matter.

The court found that under New York law, J-M waived the privilege. The Court stated: “I agree with the Special Master that defendant’s attempt to blame opposing counsel for alleged misrepresentations is untenable. I cannot conclude as a matter of law that these misrepresentations (which are disputed by plaintiff’s counsel) ever took place. Even assuming such misrepresentations were made, and while the best defense is sometimes an offense, defense counsel cannot abdicate their responsibility to represent their clients by deferring to statements made by opposing counsel, regardless of any ethical obligations imposed on the latter. Defense counsel’s job is to protect their clients, rather than seek protection for themselves from the action of opposing counsel …The facts cited by the Special Master easily support a finding of waiver under New York law regarding the redacted Memo.”

Read the full decision here.