Privilege Archives - New York Appellate Digest

COMMUNICATIONS BETWEEN PLAINTIFFS’ FINANCIAL ADVISOR AND COUNSEL DURING THE SALE OF PLAINTIFFS’ BUSINESS TO DEFENDANT ARE PRIVILEGED (FIRST DEPT).

The First Department, reversing Supreme Court, determined communications between plaintiffs’ financial advisor (KDC) and plaintiffs’ counsel in connection with the sale of plaintiffs’ company to defendant were privileged:

It is true that KDC was not retained to assist plaintiffs’ counsel in providing legal advice. However, the unrebutted evidence reflects that KDC spent some portion of its time helping counsel to understand various aspects of the transaction for that purpose. As such, KDC’s presence was necessary to enable attorney-client communication … .

Plaintiffs also had a reasonable expectation that the confidentiality of communications between their counsel and KDC would be maintained. Plaintiffs’ counsel attested that KDC promised to keep all such communications confidential. The governing Purchase and Sale Agreement also specified that all privileged documents related to the transaction would remain protected from disclosure to defendant even after closing … .

Contrary to defendant’s contention, the Cooperation Clause in KDC’s engagement letter did not undermine the reasonableness of this expectation of confidentiality, as it only required “reasonabl[e]” assistance to the Company (now owned by defendant), and should thus not be read to require KDC to turn over privileged documents … . Spicer v GardaWorld Consulting (UK) Ltd., 2020 NY Slip Op 01448, First Dept 3-3-20

March 3, 2020/by Bruce Freeman

Arbitration, Contract Law, Employment Law, Human Rights Law, Privilege

ARBITRATOR’S AWARD IN FAVOR OF DONALD J TRUMP FOR PRESIDENT INC VACATED AS VIOLATING PUBLIC POLICY AND EXCEEDING THE ARBITRATOR’S AUTHORITY (FIRST DEPT).

The First Department, reversing Supreme Court, determined the arbitrator’s award in this action based upon a non-disclosure, non-disparagement agreement (NDA) was against public policy and exceeded the arbitrator’s authority. Plaintiff was employed by defendant, Donald J. Trump For President, Inc. She signed the NDA as a condition of her employment. Plaintiff brought an employment discrimination action in Supreme Court alleging a hostile work environment, sexual discrimination, defamation and intentional and negligent infliction of emotional distress. Pursuant to the NDA defendant demanded arbitration. Plaintiff then started a federal lawsuit seeking a declaration that the NDA was void and unenforceable and defendant, pursuant to the NDA again demanded arbitration. The arbitrator found plaintiff had breached the NDA by disclosing confidential information in the federal action and making disparaging comments on her GoFundMe pages and on her Twitter account. The First Department held the information disclosed in the federal action was protected by privilege and the comments posted on the Internet were not part of the defendant’s demand for arbitration:

Plaintiff’s negative statements about defendant, for which the arbitrator made an award, were made in the context of the federal action in which she sought a declaration that the NDA was unenforceable … . By concluding that the allegations in the federal action are tantamount to disclosure of confidential information violative of the NDA, the arbitrator improperly punished plaintiff for availing herself of a judicial forum. Defendant is hard-pressed to explain how plaintiff could have pursued her rights without setting forth necessary factual statements for the federal court to consider.

The remainder of the award was based upon certain Twitter “Tweets” and statements on a GoFundMe page. The nature of the Demand to Arbitrate, however, was limited to statements made “in connection” with this state action. * * * Defendant relies on plaintiff’s actions subsequent to the date of its Demand to Arbitrate in an effort to have the arbitration award confirmed. Since the award takes into account events occurring after the demand, which could not have been legitimately considered at arbitration, the award was made in excess of the arbitrator’s enumerated authority. Denson v Donald J. Trump for President, Inc., 2020 NY Slip Op 00923, First Dept 2-6-20

February 6, 2020/by Bruce Freeman

Civil Procedure, Evidence, Negligence, Privilege

PLAINTIFF WAS ASSAULTED BY ANOTHER PATIENT IN DEFENDANT LONG-TERM CARE FACILITY; THE MEDICAL RECORDS OF THE ASSAILANT, WHO WAS NOT A PARTY, WERE PRIVILEGED AND NOT DISCOVERABLE; THE INCIDENT REPORTS PERTAINING TO THE ASSAULT WERE NOT SHOWN BY THE DEFENDANT TO BE PRIVILEGED PURSUANT TO THE PUBLIC HEALTH LAW AND WERE THEREFORE DISCOVERABLE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that the assailant’s medical records were privileged, but any incident reports pertaining to the assault were not. Plaintiff alleged she was attacked while a long-term resident of defendant long-term health care facility. The assailant in this third-party assault action was not made a party:

We agree with the Supreme Court’s determination denying that branch of the plaintiffs’ motion which sought disclosure of the assailant’s admission chart. The assailant is not a party to the action, his medical records were subject to the physician-patient privilege, and he has not waived that privilege … .

However, the Supreme Court should have granted that branch of the plaintiffs’ motion which sought disclosure of all incident reports related to the assault. Pursuant to Education Law § 6527(3), certain documents generated in connection with the “performance of a medical or a quality assurance review function,” or which are “required by the Department of Health pursuant to Public Health Law § 2805-l,” are generally not discoverable … . The defendant, as the party seeking to invoke the privilege, has the burden of demonstrating that the documents sought were prepared in accordance with the relevant statutes … . Here, the defendant merely asserted that a privilege applied to the requested documents without making any showing as to why the privilege attached. Accordingly, the incident reports related to the assault were subject to disclosure. DeLeon v Nassau Health Care Corp., 2019 NY Slip Op 08989, Second Dept 12-18-19

December 18, 2019/by Bruce Freeman

Attorneys, Civil Procedure, Corporation Law, Privilege, Replevin

THE ATTORNEY-CLIENT PRIVILEGE DID NOT PASS TO THE FOREIGN (DELAWARE) CORPORATION AFTER A MERGER AND ACQUISITION OF NEW YORK BUSINESS ENTITIES; THEREFORE THE NEW YORK PARTIES, IN THEIR CLAIMS AGAINST THE ATTORNEYS WHO REPRESENTED THEM IN THE TRANSACTION, CAN SEEK ACCESS TO THE ATTORNEYS’ PRIVILEGED COMMUNICATIONS CONCERNING THE TRANSACTION (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Austin, reversing Supreme Court, determined that New York law applied to a party’s assertion of the attorney-client privilege for documents associated with a corporate acquisition and merger involving New York and Delaware business entities. The opinion is fact-based and far too complex and comprehensive to summarize here. The Second Department, disagreeing with Supreme Court, held that the choice of law was governed by public policy, and the proper theory for access to the privileged documents is New York’s law of replevin. In a nutshell, the Second Department held that the attorney-client privilege did not pass to the foreign corporation after the merger and acquisition, but rather remained with the the New York parties (Sina and Askari) and allowed the New York parties to pursue claims against the attorneys (McDermott) who represented them in the transaction:

In a situation where documents are sought, New York will apply the law of the forum where the evidence will be introduced at trial or the location of the proceeding seeking discovery of those documents … . Here, the privileged communications being sought by the plaintiffs in this New York replevin action were made in New York between New York-based attorneys at McDermott and Sina, a New York corporation, involving its then-majority shareholder and president, Askari, a New York resident. The sole nexus that Delaware has to this action is that Specialty is a limited liability company formed under the laws of that state. Consequently, New York law applies in this action sounding in replevin seeking the disclosure of McDermott’s files … . …

It would indeed be incongruous to enforce a law which effectively forecloses New York corporations merging with foreign corporations from having the ability to pursue their claims against their counsel or the newly formed, post-merger entities based on the post-merger entities’ control of the documents needed by the former entities to prosecute potential claims. Here, Delaware law gives the new corporation, a putative defendant, sole access to and control of the merger-related documents by the exercise of the attorney-client privilege. This is contrary to New York public policy … . * * *

Here, Business Corporation Law § 1006 specifically provides that a dissolved corporation, like Sina, may commence an action in any court under its corporate name. Sina’s dissolution does not affect Sina’s right or capacity to maintain this replevin action since the claim arose from McDermott’s representation of Sina which began before Sina’s dissolution. … Thus, the plaintiffs demonstrated their prima facie entitlement to judgment as a matter of law in this action for replevin since the plaintiffs submitted evidence, through Askari’s affidavit, that McDermott represented Sina and Askari during the “transactions.” As a result, the plaintiffs demonstrated, prima facie, their superior possessory right to McDermott’s files. Askari v McDermott, Will & Emery, LLP, 2019 NY Slip Op 08547, Second Dept 11-27-19

November 27, 2019/by Bruce Freeman

Attorneys, Evidence, Privilege, Trusts and Estates

THE EXECUTOR PROPERLY WAIVED THE ATTORNEY-CLIENT PRIVILEGE ON DECEDENT’S BEHALF TO DEMONSTRATE THROUGH DECEDENT’S ATTORNEY’S TESTIMONY THAT SHARES OF STOCK HAD BEEN TRANSFERRED TO THE EXECUTOR WELL BEFORE DECEDENT’S DEATH (FOURTH DEPT).

The Fourth Department determined the executor of the estate (respondent) properly waived the attorney-client privilege on decedent’s (Anthony’s) behalf and demonstrated. through the decedent’s attorney’s testimony, that decedent’s shares in the corporation (NYSFC) had been transferred to the executor well before decedent’s death. Therefore the shares were properly excluded from the estate. Despite the absence of stock certificates and corporate records, there was no showing that the executor destroyed evidence:

… [T]he Surrogate held a nonjury trial during which respondent, in his capacity as executor, waived decedents’ attorney-client privilege, and decedents’ former counsel thereafter testified that she did not include a specific bequest with respect to Anthony’s NYSFC shares in his most recent will because Anthony had already transferred those shares to respondent. After the trial, the Surrogate concluded that respondent had in fact satisfied his burden and specifically established that the shares of NYSFC were sold and transferred to respondent prior to Anthony’s death. * * *

On appeal, petitioners contend that Mayorga [302 AD2d 11] and Johnson [7 AD3d 959] support waiver of the attorney-client privilege by an executor only if the waiver benefits the estate. Petitioners assert that excluding an asset from the estate would not benefit the estate or its beneficiaries and that those cases therefore do not support a waiver of the attorney-client privilege here inasmuch as any waiver would only benefit the executor respondent. The 2nd Department, however, has permitted the waiver of the attorney-client privilege under circumstances similar to those presented here … .

… [W]e … reject petitioners’ contention that respondent should not have been allowed to waive the attorney-client privilege on decedents’ behalf as executor due to his own self-interest in the testimony of the decedents’ former counsel. Thus, we hereby join the 2nd and 3rd Departments in concluding that the attorney-client privilege may be waived by an executor. Matter of Thomas, 2019 NY Slip Op 08293, Fourth Dept 11-15-19

November 15, 2019/by Bruce Freeman

Civil Procedure, Insurance Law, Privilege

INSURER’S ACCIDENT INVESTIGATION REPORT IS PRIVILEGED AND NOT DISCOVERABLE (FIRST DEPT).

The First Department, reversing Supreme Court, determined that an insurer’s accident investigation report is privileged and not discoverable:

Documents in an insurer’s claim file, including an accident investigation report, that were prepared for litigation against its insured are immune from disclosure (see CPLR 3101[d][2] … ). Although documents in a first-party insurance action prepared in an insurer’s ordinary course of business in investigating whether to accept or reject coverage are discoverable (see CPLR 3101[g] … ), there is no indication that such documents are being protected here. In the absence of any demonstration of hardship by plaintiff, the insurer’s accident investigation report remains privileged … . Dabo v One Hudson Yards Owner, LLC, 2019 NY Slip Op 07751, First Dept 10-29-19

October 29, 2019/by Bruce Freeman

Civil Procedure, Insurance Law, Privilege, Securities

A PRIVILEGE UNDER WISCONSIN INSURANCE LAW APPLIED IN THIS NEW YORK ACTION CONCERNING INSURANCE CLAIMS STEMMING FROM THE ISSUANCE OF RESIDENTIAL MORTGAGE-BACKED SECURITIES (FIRST DEPT).

The First Department determined a privilege under Wisconsin Law protected certain emails and documents generated in a Wisconsin action by the Wisconsin Commissioner of Insurance concerning the payment of insurance claims stemming from the issuance of residential mortgage-backed securities, The decision doesn’t explain the underlying facts:

The Commissioner appointed a Special Deputy Commissioner (SDC) to oversee all activities … from Ambac’s [plaintiffs’] New York offices, and, at the SDC’s direction, plaintiffs commenced this action in New York, asserting claims of fraudulent inducement and breach of contract in connection with the policies Ambac issued on the securitizations sponsored by defendant. When defendant demanded the production of certain emails and other documents maintained by the SDC, plaintiffs responded by claiming the statutory privilege held by the Wisconsin Office of the Commissioner of Insurance (OCI) under Wisconsin law (see Wis Stat § 601.465). Defendant argued that New York law should be applied because, in adjudicating privilege issues, New York courts must apply the law of the place where the evidence will be introduced at trial or where the discovery proceeding is located. Supreme Court, after engaging in an interest-balancing analysis, determined that the Wisconsin statutory privilege was applicable, and denied defendant’s motion to compel. We affirm.

New York courts “routinely apply the law of the place where the evidence in question will be introduced at trial or the location of the discovery proceeding when deciding privilege issues” … . However, there are circumstances in which an interest-balancing analysis is properly undertaken to decide whether another state’s law should govern the evidentiary privilege … . This is a case that presents such circumstances … . Ambac Assur. Corp. v Nomura Credit & Capital, Inc., 2019 NY Slip Op 06574, First Dept 9-17-19

September 17, 2019/by Bruce Freeman

Civil Procedure, Negligence, Privilege

PLAINTIFF WAIVED THE PHYSICIAN-PATIENT PRIVILEGE BY PLACING THE CONDITION OF HER KNEES INTO CONTROVERSY IN THIS ACCIDENT CASE, APPELLATE DIVISION REVERSED (CT APP).

The Court of Appeals, reversing the Appellate Division, determined plaintiff had placed the condition of her knees into controversy in this accident case and defendants were therefore entitled to discovery re: prior treatment of her knees. The facts were not discussed:

Plaintiff affirmatively placed the condition of her knees into controversy through allegations that the underlying accident caused difficulties in walking and standing that affect her ambulatory capacity and resultant damages … . Under the particular circumstances of this case, plaintiff therefore waived the physician-patient privilege with respect to the prior treatment of her knees and the discovery sought by authorizations pertaining to the treatment of plaintiff’s knees is “material and necessary” to defendants’ defense of the action (CPLR 3101 [a]). Accordingly, Supreme Court erred in denying defendants’ motion to compel plaintiff to provide discovery related to the prior treatment of her knees. Brito v Gomez, 2019 NY Slip Op 06452, CtApp 9-10-19

September 10, 2019/by Bruce Freeman

Attorneys, Civil Procedure, Contempt, Foreclosure, Privilege

MOTION TO QUASH SUBPOENA ISSUED TO ATTORNEY WHO REPRESENTED THE ORIGINAL BORROWERS AGAINST PROPERTY SUBJECT TO FORECLOSURE PROCEEDINGS SHOULD NOT HAVE BEEN QUASHED, CIVIL CONTEMPT ACTION AGAINST THE ATTORNEY SHOULD NOT HAVE BEEN DISMISSED, CRITERIA FOR BOTH TYPES OF PROCEEDINGS EXPLAINED (SECOND DEPT).

The Second Department determined the subpoona issued by the current owners of property subject to a foreclosure action (the Frankels) to the attorney (Satran) who represented the parties who initially took out the loan (the Confinos) should not have been quashed, the action for civil contempt against the attorney should not have been dismissed, and attorney-client privilege could only be asserted at a subsequent deposition:

“A party or nonparty moving to quash a subpoena has the initial burden of establishing either that the requested disclosure is utterly irrelevant to the action or that the futility of the process to uncover anything legitimate is inevitable or obvious'” … . ” Should the [movant] meet this burden, the subpoenaing party must then establish that the discovery sought is material and necessary to the prosecution or defense of [the] action'” … .

Here, Satran failed to meet his initial burden of demonstrating either that the requested disclosure was “utterly irrelevant” to the action or that the “futility of the process to uncover anything legitimate is inevitable or obvious” … . * * *

Additionally, the Supreme Court should have granted the Frankels’ motion to hold Satran in civil contempt for failure to comply with the subpoena by failing to appear for a deposition. “To prevail on a motion to hold another in civil contempt, the moving party must prove by clear and convincing evidence (1) that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect, (2) that the order was disobeyed and the party disobeying the order had knowledge of its terms, and (3) that the movant was prejudiced by the offending conduct'” … . ” To satisfy the prejudice element, it is sufficient to allege and prove that the contemnor’s actions were calculated to or actually did defeat, impair, impede, or prejudice the rights or remedies of a party'” … .

Here, it was undisputed that Satran failed to comply with the subpoena by failing to appear for a deposition and that he had knowledge of the terms of the subpoena. Moreover, the Frankels demonstrated that Satran’s conduct prejudiced their right under CPLR 3101(a)(4) to obtain all information relevant and necessary to their defense of the present action and their cross claims against the Confinos … . Wells Fargo Bank, N.A. v Confino, 2019 NY Slip Op 06114, Second Dept 8-7-19

August 7, 2019/by Bruce Freeman

Attorneys, Civil Procedure, Privilege

EMAILS INADVERTENTLY PROVIDED TO PLAINTIFF WERE NOT PROTECTED BY ATTORNEY-CLIENT PRIVILEGE, SUPREME COURT SHOULD NOT HAVE ISSUED A PROTECTIVE ORDER (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that emails which had inadvertently been provided to the plaintiff were not protected by attorney-client privilege. Therefore Supreme Court should not have granted a protective order pursuant to CPLR 3101 (b):

… [T]he defendants failed to meet their burden of establishing a right to protection of the subject emails … . The communications relate to the business of the defendants, rather than legal issues … , and nothing stated by in-house counsel in the emails sets him apart as a legal advisor in the discussion. The affidavits of the defendants’ CEO and in-house counsel, submitted in support of the cross motion, merely state in a conclusory manner that the communications were confidential and privileged. The defendants point to no particular communication in which in-house counsel gave legal advice, or in which the defendants’ other employees sought legal advice from in-house counsel. Saran v Chelsea GCA Realty Partnership, L.P., 2019 NY Slip Op 05710, Second Dept 7-17-19

July 17, 2019/by Bruce Freeman