Opinion
No. 01 Civ. 9291 (JSM).
June 19, 2002
OPINION ORDER
The scope of this litigation has been described in an Opinion Order filed in this action on June 3, 2002, and familiarity with that opinion is assumed.
Presently before the Court is a motion by The Travelers Indemnity Company (joined in by many other insurers) to compel testimony regarding post-9/11 communications between attorneys for the Silverstein Parties (the holders of leases on the World Trade Center Complex) and employees of Willis of New York, Inc. (the insurance broker that obtained insurance coverage for the World Trade Center), and between the Silverstein Parties' attorneys and Willis witnesses during preparation for the Willis employees' depositions.
The Silverstein Parties contend that the conversations between their counsel ("the Wachtell firm")and Willis employees are protected from disclosure because 1) they come within the attorney-client privilege that exists between counsel for the Silverstein Parties and its agents and employees, since Willis was acting as an agent of the Silverstein Parties in placing the insurance for the World Trade Center, 2) The Silverstein Parties and Willis share a "common interest privilege," or 3) the work product privilege protects these conversations.
The Attorney-Client Privilege
The attorney-client privilege recognizes that the provision to a client of competent legal advice or advocacy promotes the public interest in the observance of law and sound administration of justice, and that the ability of a lawyer to provide such advice and representation depends upon the lawyer being fully informed by the client. Upjohn Co. v. United States, 449 U.S. 383, 389-91, 101 S.Ct. 677, 682-83 (1981). However, "privileges are neither lightly created nor expansively construed. Instead, they are recognized only to the very limited extent that permitting a refusal to testify or excluding relevant evidence has a public good transcending the normally predominant principle of utilizing all rational means for ascertaining the truth." In re: Grand Jury Subpoenas dated January 20, 1998, 995 F. Supp. 332, 334 (E.D.N.Y. 1998).
The party claiming privilege and resisting discovery has the burden of establishing the existence of the privilege in all respects. If a privilege claim lacks factual support, production should be ordered.United States v. Davis, 131 F.R.D. 391, 402 (S.D.N.Y. 1990).
"To sustain a claim of privilege, the party invoking it must demonstrate that the information at issue was a communication between client and counsel or his employee, that it was intended to be and was in fact kept confidential, and that it was made in order to assist in obtaining or providing legal advice or services to the client." Bowne of New York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 470-71 (S.D.N.Y. 1993). Since Willis employees were not clients of the Wachtell firm, communications between them and the Wachtell attorneys fall outside these parameters unless, either they are agents of the Silverstein Parties with a status equivalent to employees, or Willis shares a common interest privilege with the Silverstein Parties.
A. Agency
A limited number of cases have held that the corporate attorney-client privilege can extend to communications between the corporation's attorney and outside agents or consultants to the corporation whose role is the functional equivalent to that of a corporate employee. For example, in In re: Beiter Co., 16 F.3d 929, 937 (8th Cir. 1994), the court extended the privilege to an individual non-employee who acted as a representative of the client in an attempt to develop a real estate property and then in the litigation that resulted when the project failed. He acted for the party in numerous situations, and there were times when he was the sole representative of the party at meetings with the party's counsel. See also In re: Copper Market Antitrust Litigation, 200 F.R.D. 213, 218 (S.D.N.Y. 2001); Environmental, L.C. v. New York Marine and General Ins. Co., No. 96 Civ. 6033, 1998 WL 614478 (S.D.N.Y. June 4, 1998).
The Court need not reach the question of whether the above cases were rightly decided, because the facts here are substantially different. Since the attorney-client privilege "stands in derogation of the public's `right to every man's evidence, . . . it ought to be strictly confined within the narrowest possible limits consistent with the logic of its principle.'" In re Horowitz, 482 F.2d 72, 81 (2d Cir.), cert. denied, 414 U.S. 867 (1973) (quoting 8 Wigmore, Evidence §§ 2192, 2291 at 70, 554 (1961)). That logic does not support extending the privilege beyond the facts of the above cases to the conversations at issue here, which were between Willis, a multinational corporation with its own retained counsel, and the lawyers for one of its many clients.
In Upjohn Co. v. United States, 449 U.S. 383, 389-91, 101 S.Ct. 677, 682-83 (1981), the Supreme Court quoted from the ABA Code of Professional Responsibility, Ethical Consideration 4-1 as follows:
A lawyer should be fully informed of all the facts of the matter he is handling in order for his client to obtain the full advantage of our legal system. It is for the lawyer in the exercise of his independent professional judgment to separate the relevant and important from the irrelevant and unimportant. The observance of the ethical obligation of a lawyer to hold inviolate the confidences and secrets of his client not only facilitates the full development of facts essential to proper representation of the client but also encourages laymen to seek early legal assistance.Id.
The cases extending the corporate privilege beyond corporate employees have focused on the first sentence of this paragraph. While it is obvious that any competent lawyer desires to be "fully informed of all the facts of the matter he is handling" for a client, that interest does not extend the attorney-client privilege to all those who may have relevant information. The privilege is much more limited.
The purpose of the attorney-client 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 administration of justice. Upjohn, 449 U.S. at 389, 101 S.Ct. at 682 (1981) (emphasis added); see Jaffee v. Redmond, 518 U.S. 1, 11, 116 S.Ct. 1923, 1929 (1996); United States v. Jacobs, 117 F.3d 82, 87 (2d Cir. 1997). The privilege is designed to encourage the client to fully disclose all information to her lawyer, and the privilege belongs solely to the client. In re von Bulow, 828 F.2d 94, 100 (2d Cir. 1987) Thus, the Supreme Court's reference in Upjohn to the lawyer being "fully informed" should not be divorced from the context that the information is coming from those to whom the lawyer has the ethical obligation "to hold inviolate the confidences and secrets."
Here, the Wachtell firm had no ethical obligation "to hold inviolate" any information they obtained from Willis employees; their obligation was to promote the distinct interest of their clients, the Silverstein Parties. The Willis employees who conferred with the Wachtell firm had no reason to believe that they were talking to lawyers who were representing their interest and who would hold inviolate [their] confidences and secrets. Indeed, it was no doubt because it was recognized that the Willis employees' conversations with the Wachtell firm were not privileged that counsel advised their clients to enter into a joint defense agreement.
Even if the Willis employees believed their conversations with the Wachtell lawyers were privileged, that would not make them so. As the Eighth Circuit observed in In re: Grand Jury Subpoena Duces Tecum, 112 F.3d 910, 915 (8th Cir.), cert. denied, 521 U.S. 1105 (1997):
But we know of no authority, and Mrs. Clinton has cited none, holding that a client's beliefs, subjective or objective, about the law of privilege can transform an otherwise unprivileged conversation into a privileged one.
The communications between Willis employees and the Wachtell firm were not protected by the attorney-client privilege.
B. Common Interest Privilege
The common interest privilege is a limited exception to the general rule that the attorney-client privilege is waived when a protected communication is disclosed to a third party. It is not a separate source of privilege, and the Second Circuit has warned that courts should be cautious about extending the attorney-client privilege under the common interest rule. In re: FTC, No. M18-304, 2001 WL 396522, at *4 (S.D.N.Y. April 19, 2001). The purpose of the common interest privilege is to permit a client to share confidential information with the attorney for another who shares a common legal interest. "The key consideration is that the nature of the interest be identical, not similar, and be legal, not solely commercial." North River Ins. Co. v. Columbia Cas. Co., No. 90 Civ. 2518, 1995 WL 5792, at *3 (S.D.N.Y. January 5, 1995); Bank Brussels Lambert v. Credit Lyonnais, 160 F.R.D. 437, 447 (S.D.N.Y. 1995). Sharing a desire to succeed in an action does not create a "common interest."Shamis v. Ambassador Factors Corp., 34 F. Supp.2d 879, 893 (S.D.N.Y. 1999); In re: Grand Jury Subpoena Duces Tecum, 112 F.3d 910, 922 (8th Cir.), cert. denied, 521 U.S. 1105 (1997) (holding that the White House did not have a common legal interest with Mrs. Clinton's personal interest in avoiding criminal charges — a common political interest is not enough). Similarly, in Aetna Casualty and Surety Co. v. Certain Underwriters at Lloyd's London, 176 Misc.2d 605, 611, 676 N.Y.S.2d 727, 733 (Sup.Ct. N.Y. Cty. 1998), the court stated:
[A]ny "common interest" privilege must be limited to communication between counsel and parties with respect to legal advice in pending or reasonably anticipated litigation in which the joint consulting parties have a common legal interest. . . . [it] may not be used to protect communications that are business oriented or are of a personal nature. . . . This court does not find that the limited New York authority on the subject permits the carving out of a large class of communications between potential parties so as to immunize their communications between themselves and counsel for other parties. That would be inconsistent with the narrow claim of the attorney-client privilege.
Moreover, "[a] business strategy which happens to include a concern about litigation is not a ground for invoking the common interest rule."In re: FTC, 2001 WL 396522, at *5. In one of the leading cases on this issue, Duplan v. Deering Milliken, Inc., 397 F. Supp. 1146, 1175 (D.S.C. 1974), the court stated:
The privilege is designed to secure objective freedom of mind for the client in seeking legal advice. It has not concern with other persons' freedom of mind, nor with the attorney's own desire for secrecy in the conduct of his client's case. It is therefore not sufficient for the attorney, in invoking the privilege, to state that the information came somehow to him while acting for the client, nor that it came from some particular third person for the benefit of the client. . . . This is true no matter how commercially strong the non-party client's interest is, or how severely the non-party client may be legally effected by the outcome of the transaction between the prime client and an outsider. (emphasis added).
There has been no showing that Willis and the Silverstein Parties have an identical legal interest, as required by the cases. Willis is not a party to this litigation, and its legal position will be unaffected by the outcome of this case. If it did, for any reason, anticipate litigation after September 11, it would seem that it would have been more likely to be sued by Silverstein than by the insurance companies. Thus, the communications between the Wachtell firm and employees of Willis are not protected by the common interest privilege.
The Work Product Privilege
To merit work product protection under Fed.R.Civ.P. Rule 26(b)(3), material must (1) be a document or tangible thing; (2) be prepared in anticipation of litigation; and (3) be prepared by or for a party. ECDC Environmental, L.C. v. New York Marine and General Ins. Co., No. 96 Civ. 6033, 1998 WL 614478, at *11 (S.D.N.Y. June 4, 1998). Documents prepared in anticipation of litigation with the purpose of assisting in the making of a business decision may fall within the scope of the privilege. ECDC, 1998 WL 614478 at *12. In United States v. Adlman, 134 F.3d 1194, 1195 (2d Cir. 1998), the Second Circuit stated that "a document created because of anticipated litigation, which tends to reveal mental impressions, conclusions, opinions or theories concerning the litigation, does not lose work-product protection merely because it is intended to assist in the making of a business decision influenced by the likely outcome of the anticipated litigation." Furthermore, documents prepared in anticipation of litigation need not be created at the request of an attorney. Once it is established that a document was prepared in anticipation of litigation, work product immunity protects documents prepared by or for a representative of a party, including his or her agent. In re Copper Market, 200 F.R.D. at 221.
Here, all documents prepared by the Wachtell firm or by their clients at their direction after September 11th are clearly protected by the work product privilege. However, the Court does not accept the view that statements made to the Wachtell firm by employees of Willis should be protected from disclosure under the work product privilege.
The Silverstein Parties rely on the opinion of Judge Rakoff in Morales v. United States, No. 94 Civ. 8773, 1997 WL 223080, at *1 (S.D.N.Y. May 5, 1997), in which he refused to compel nonparty witnesses to testify regarding meetings with Government attorneys before their depositions because "there is a material Possibility that responses to [plaintiff's] deposition questions will reveal government counsel's legal strategy and thought processes in contravention of the attorney work product doctrine."
This Court does not disagree with the proposition that questioning of witnesses which is obviously designed to discover an attorney's work product should not be permitted. Examples of such questioning are found in the two opinions cited by Judge Rakoff in Morales, United States v. District Council of New York City, No. 90 Civ. 5722, 1992 WL 208284, at *12 (S.D.N.Y. Aug. 18, 1992), and Bercow v. Kidder Peabody Co., 39 F.R.D. 357, 358 (S.D.N.Y. 1965).
In United States v. District Council of New York, defense counsel attempted to examine an agent who was assisting Government counsel in the preparation of the case with respect to: 1) the identity of witnesses known to the agent who had knowledge of facts underlying the allegations in the Supplemental Complaint; 2) the identification of documents known to the agent that supported the allegations in the Supplemental Complaint; 3) discussions the agent had with attorneys and other law enforcement personnel concerning the allegations in the Supplemental Complaint; and 4) communications the agent had with persons specified in the Supplemental Complaint. The court held that the above questioning about the agent's knowledge of the Government's case was precluded by the work product doctrine, although the agent had been permitted to respond to questions she could answer based upon her personal knowledge, independent of her role as an F.B.I. investigator assisting the U.S. Attorney's Office in this case. See 1992 WL 208284, at *2.
In Bercow v. Kidder, Peabody Co., the questions to which a work product objection was sustained were:
Q. "Would you tell me, Mr. Hoff, what preparation you have made for this examination today?"
Q. "Mr. Hoff, would you please tell me who you have talked to about this deposition today since we last met on May 5, 1964?"
Q. "Mr. Hoff, what documents have you looked at in preparation for this deposition today since we last met on May 5, 1964?"
While it may be appropriate to preclude questioning specifically designed to discover opposing counsel's work product such as took place in the above cases, their reasoning should not be extended to preclude any questioning as to what a witness said to another party's attorney. Similarly, it should not preclude testimony concerning conversations between the lawyer and the witness relating to the events which are expected to be the subject of the witness's testimony.
It must be remembered that, at least as codified in the Federal Rules of Civil Procedure, the work product doctrine applies only to tangible things — not testimony. Fed.R.Civ.P. Rule 26(b)(3). Clearly, much more can be learned about a lawyer's strategy and tactics from documents that the lawyer prepares than can be gained from general questioning concerning a witness's recollection of conversations with an attorney concerning the events about which the witness is expected to testify. Thus, to the extent that the work product privilege is to be extended to verbal communications between a lawyer and a witness, it should be limited to questioning that is either specifically designed to discover the attorney's work product or for some other reason presents a substantial likelihood that a response to the question will result in a significant disclosure of counsel's legal strategy and thought processes.
Applying these principles to the specific issues in this case, the Court concludes that the work product doctrine does not preclude: (1) questioning of the Willis witnesses about any of their conversations with the attorneys for the Silverstein Parties prior to the sessions at which the witnesses were being prepared for their depositions; (2) questioning of those witnesses concerning what they said to lawyers for the Silverstein Parties during the preparation for their depositions; and (3) questions concerning what the lawyers for the Silverstein Parties said to these witnesses during their preparation sessions to the extent that statements of the lawyers are necessary to provide an understanding of what the witness was saying to the lawyer. For example, if a witness testified that he said "Yes" in answer to a lawyer's question, one would have to know what the question was in order to understand the answer.
Fed.R.Civ.P. Rule 26(b)(3) provides that work product may be discoverable on a showing of a "substantial need of the materials in the preparation of the party's case." Given the significance of the Willis witnesses's views on the intent of the parties to the negotiations, as they expressed them immediately after the events of September 11th, and the likelihood that their recollections may have dimmed by the time of their depositions and that they may have felt themselves under some obligation to protect their client's interest at their depositions, the Court concludes that "a highly persuasive showing" has been made that disclosure should be made, even if the conversations could be considered work product. United States v. Adlman, 134 F.3d 1194, 1204 (2d Cir. 1998) Moreover, there is very little danger that the lawyers' eventual litigation strategy and tactics will be disclosed by testimony regarding their questioning of witnesses immediately after the crucial events, and months before litigation was commenced.
CONCLUSION
For the foregoing reasons, the application to compel the Willis witnesses to testify concerning their conversations with the attorney for the Silverstein Parties is granted except to the limited extent that statements made by the attorneys at deposition preparation sessions may be protected by the work product privilege as set forth herein.