Opinion
January 5, 1996
Defendants Ashley Scott, Inc. and Irving Brothman move, pursuant to CPLR 3104(d), for an order reversing part of a decision rendered by Special Master Herbert Stutman, in which he determined that certain documents sought by plaintiffs are not shielded from discovery by the attorney-client privilege.
Defendants have interposed counterclaims in this breach of contract action, alleging, among other things, that plaintiff Mario DePinto infringed upon Ashley Scott's trademark, and committed other deceptive business practices. Defendants submitted a "privilege log" to the Special Master on October 6, 1995, containing a list of the documents, which defendants, claim are protected from discovery by virtue of the attorney-client or other privilege. The Special Master's ruling upheld defendants' claims in part, but called for the disclosure of several documents which, defendants here insist, are protected by the attorney-client privilege. The documents in question, numbered 1, 2, 138, 140, 144, 150, 151, 152, 158, 160, and 170 on defendants' privilege log, involve written communications between Ashley Scott's trademark attorneys and the corporation's attorney, communications between the trademark attorneys and defendant Irving Brothman, Ashley Scott's president (some of which were also sent to the corporation's accountant, Samual Goldstein), and communications made directly between the trademark attorneys and Mr. Goldstein.
Defendants object to the disclosure of these documents on the ground that they contain legal advice from Ashley Scott's trademark attorneys, addressed either to the corporation directly, its attorneys, or its agent, Samual Goldstein.
The attorney-client privilege extends only to confidential communications between an attorney and his or her client for the purpose of obtaining legal advice. See Hoopes v. Carota, 74 NY2d 716, 717. The purpose of the privilege is to encourage complete disclosure of information between attorney and client, and to further the interest of justice. Stryker Corporation v. Intermedics Orthopedics, Inc, 145 FRD 298, 301. The privilege belongs to the client (see In re Von Bulow, 828 F2d 94,100), and, if the client is a corporation, the privilege belongs to the corporation, not the individual officers or directors of the corporation. Rossi v. Blue Cross and Blue Shield of Greater New York, 73 NY2d 588, 592; see also Polycast Technology Corporation v. Uniroyal, Inc., 125 FRD 47, 49. Further, a deposed director or officer has no right to assert or waive the privilege, which right rests with the corporation's present management. Commodity Futures Trading Commission v. Weint raub, 471 US 343, 349.
Plaintiffs claim that none of the communications made to the corporation, or to any of its agents, were ever confidential as to plaintiffs' decedent, Mario DePinto, because the communications were made during the time Mr. DePinto was an officer, director and fifty percent owner of Ashley Scott, and during a period when he had access to the documents (whether or not he actually ever saw them). Plaintiffs assert that Mr. DePinto's prior right to view the documents at the time they were communicated to the corporation destroys any claim of privilege which might otherwise have attached to them, or which might apply to a party who never had a relationship with Ashley Scott. In support of this argument, plaintiffs cite Cohen v. Cocoline Products, Inc., 309 NY 119, in which it was determined that corporate directors, during the period in which they hold office, have an absolute right to inspect the corporation's books and records.
While Mr. DePinto had a right to inspect the books and records of Ashley Scott while he was an officer, director and shareholder of the corporation (see Cohen, supra at 123), he is deceased and therefore obviously no longer holds those positions. Plaintiffs' argument that there never was a privilege to waive as between Ashley Scott and Mr. DePinto is without merit, because it rests on the erroneous reasoning that Mr. DePinto, by virtue of his relationship to Ashley Scott, shared a privilege (and his representatives still share a privilege), which actually belonged, and belongs now, solely to the corporation. Of course, as a result of Mr. DePinto's departure from Ashley Scott, his representatives may not now waive the privilege belonging to the corporation. Commodity Futures, supra.
Plaintiffs claim that Ashley Scott's attorneys, including its accountant, represented Mr. DePinto jointly with Ashley Scott as parties with a "common interest", so as to entitled plaintiffs to share jointly in any privilege which Ashley Scott might enjoy. In support of this argument plaintiffs cite Old Homestead Enterprises of Saratoga, Inc. v. William R. Hall, Jr. Enterprises, Inc., 102 AD2d 935 (claim of attorney-client privilege does not apply to communications made jointly to parties with common interests in subsequent litigation between those parties). This argument, however, is unsupported by the facts. All of the evidence establishes that Ashley Scott's attorneys, as well as their accountant, represented only Ashley Scott at the time the communications were made, and that there was no joint representation. Consequently, Old Homestead Enterprises, supra does not apply. Plaintiffs cannot rely on the prior relationship between Mr. DePinto and Ashley Scott, its attorneys or accountant, to defeat defendants' right to assert the attorney-client privilege in regard to the disputed documents.
Plaintiffs' attorneys have alleged that Samual Goldstein was Mr. DePinto's accountant as well as Ashley Scott's, and that he acted as a "mediator and advisor" to both in the break-up of the business. However, the plaintiffs do not allege that the communications in question involve the representation of Mario DePinto individually, and the defendants claim that the communications in dispute predate the break-up of the corporation and any efforts at "mediation" which Mr. Goldstein may have made.
Plaintiffs argue next that they are entitled to the documents because they relate to trademark applications and searches, which are not privileged, citing, inter alia, Stryker Corporation v. Intermedics Orthopedics, Inc., supra. Defendants concede that facts concerning their trademark searches and applications, as well as the applications and searches themselves, are not privileged, but maintain that all of the documents being sought include legal advice conveyed to Ashley Scott or its accountant concerning those applications and searches, and legal action which Ashley Scott might take in regard to these matters. Materials of this nature are protected by the attorney client privilege.Stryker Corporation, at 301. However, the party asserting the privilege must clearly show that a document renders legal advice rather than serves as a "conduit for factual information". Id., citing Bio-Rad Laboratories, Inc. v. Pharmacia, Inc., 130 FRD 116, 126. Only if the communication is "primarily or predominantly of a legal character" will it be protected. Rossi v. Blue Cross and Blue Shield , supra at 594.
In the present case, the defendants are willing to provide plaintiffs with all of the indisputably non-privileged materials which accompanied the letters, including trademark searches, invoices for attorney's services, and other attachments, as required by the order of the Special Master, balking only at the letters themselves, which defendants claim contain legal advice. The court agrees that any communications constituting legal advice should be privileged, despite Mr. DePinto's former relationship with the corporation.
The court has reviewed the documents in camera and concludes that each of the disputed letters does, indeed, contain legal advice from defendants' attorneys, which is protected from discovery by the attorney-client privilege. Therefore, while the defendants are directed to turn over to plaintiff all of the attachments to the letters, as promised, they need not turn over the letters themselves.
Accordingly, it is
ORDERED that the motion is granted.