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STATEMENT IN SUMMONS WITH NOTICE ABSOLUTELY PRIVILEGED.

The Second Department determined the statement in a summons with notice alleging a mortgage was obtained by fraud was protected by judicial-proceedings privilege:

Generally, statements made at all stages of a judicial proceeding in communications among the parties, witnesses, counsel, and the court are accorded an absolute privilege, as long as the statements may be considered in some way “pertinent” to the issue in the proceeding … . This privilege, or “immunity” … , applies to statements made in or out of court, on or off the record, and regardless of the motive with which they were made … .

The test of pertinency to the litigation is extremely liberal, so as to embrace anything that may possibly or plausibly be relevant or pertinent … . The purpose of the privilege is to allow the parties, witnesses, and attorneys in a litigation to communicate freely without fear of defamation litigation … . Weinstock v Sanders, 2016 NY Slip Op 07947, 2nd Dept 11-23-16

 

DEFAMATION (STATEMENT IN SUMMONS WITH NOTICE ABSOLUTELY PRIVILEGED)/PRIVILEGE (DEFAMATION, STATEMENT IN SUMMONS WITH NOTICE ABSOLUTELY PRIVILEGED)/IMMUNITY (DEFAMATION, STATEMENT IN SUMMONS WITH NOTICE ABSOLUTELY PRIVILEGED)

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NEWS REPORTS CONNECTING PLAINTIFF TO AN ATTEMPTED RAPE ABSOLUTELY PRIVILEGED UNDER CIVIL RIGHTS LAW, REPORTS ACCURATELY REFLECTED INFORMATION PROVIDED BY THE POLICE.

The Second Department determined the media-defendant (WPIX) in a defamation action was entitled to absolute immunity under the Civil Rights Law. The action stemmed from news reports which included the plaintiff’s photograph and stated the police were looking for the plaintiff in connection with an attempted rape. The final report stated that another had been arrested but plaintiff’s photograph was included in that report as well:

… [T]he Supreme Court properly determined that the plaintiff’s allegation that the subject news reports were published without privilege was not a fact at all, because WPIX’s evidentiary submissions established that the news reports were absolutely privileged pursuant to Civil Rights Law § 74. That statute provides, in pertinent part, that “[a] civil action cannot be maintained . . . for the publication of a fair and true report of any judicial proceeding, legislative proceeding or other official proceeding” (Civil Rights Law § 74). Contrary to the plaintiff’s contention, the police investigation of the attempted rape constituted an “official proceeding” under the statute … . Further, the subject news reports were substantially accurate reports of the information provided by the NYPD in its press releases … .

The privilege is not defeated by the NYPD’s error in identifying the plaintiff by his photograph as the assailant. The statute “was designed precisely to protect the publisher of a fair and true report from liability for just such an error and to relieve it of any duty to expose the error through its own investigation” … . Rodriguez v Daily News, L.P., 2016 NY Slip Op 06071, 2nd Dept 9-21-16

 

DEFAMATION (NEWS REPORTS CONNECTING PLAINTIFF TO AN ATTEMPTED RAPE ABSOLUTELY PRIVILEGED UNDER CIVIL RIGHTS LAW, REPORTS ACCURATELY REFLECTED INFORMATION PROVIDED BY THE POLICE)/PRIVILEGE (DEFAMATIION, NEWS REPORTS CONNECTING PLAINTIFF TO AN ATTEMPTED RAPE ABSOLUTELY PRIVILEGED UNDER CIVIL RIGHTS LAW, REPORTS ACCURATELY REFLECTED INFORMATION PROVIDED BY THE POLICE)/CIVIL RIGHTS LAW(NEWS REPORTS CONNECTING PLAINTIFF TO AN ATTEMPTED RAPE ABSOLUTELY PRIVILEGED UNDER CIVIL RIGHTS LAW, REPORTS ACCURATELY REFLECTED INFORMATION PROVIDED BY THE POLICE) 

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CRITERIA FOR ATTORNEY WORK-PRODUCT PRIVILEGE, WILLFUL AND CONTUMACIOUS CONDUCT DURING DISCOVERY, AND SPOLIATION OF EVIDENCE CLEARLY EXPLAINED.

The Second Department determined: (1) information procured by an attorney’s freedom of information law requests was not protected by work-product privilege; (2) defendants’ conduct during discovery was not willful and contumacious; and (3) an adverse inference instruction was an appropriate sanction for spoliation of evidence. The Second Department offered detailed summaries of the criteria for work-product privilege, sanctions for conduct during discovery, and spoliation of evidence which are worth reading. With respect to attorney work-product privilege, the court wrote:

The CPLR exempts attorney work product from disclosure … . However, “the party asserting the privilege that material sought through discovery was prepared exclusively in anticipation of litigation or constitutes attorney work product bears the burden of demonstrating that the material it seeks to withhold is immune from discovery by identifying the particular material with respect to which the privilege is asserted and establishing with specificity that the material was prepared exclusively in anticipation of litigation” … . Furthermore, “[n]ot every manifestation of a lawyer’s labors enjoys the absolute immunity of work product. The exemption should be limited to those materials which are uniquely the product of a lawyer’s learning and professional skills, such as materials which reflect his [or her] legal research, analysis, conclusions, legal theory or strategy” … .

Here, the plaintiffs contend that materials obtained by their attorney via requests pursuant to state and federal freedom of information laws are privileged attorney work product. However, this material cannot be characterized as being “uniquely the product of [the plaintiffs’ counsel’s] learning and professional skills” or as reflecting his “legal research, analysis, conclusions, legal theory or strategy” … . Cioffi v S.M. Foods, Inc., 2016 NY Slip Op 05741, 2nd Dept 8-10-16

 

ATTORNEYS (CRITERIA FOR ATTORNEY WORK-PRODUCT PRIVILEGE, WILLFUL AND CONTUMACIOUS CONDUCT DURING DISCOVERY, AND SPOLIATION OF EVIDENCE CLEARLY EXPLAINED)/PRIVILEGE (ATTORNEY WORK PRODUCT PRIVILEGE CRITERIA EXPLAINED)/WORK PRODUCT (ATTORNEY WORK PRODUCT PRIVILEGE CRITERIA EXPLAINED)/CIVIL PROCEDURE (WILLFUL AND CONTUMACIOUS CONDUCT DURING DISCOVERY, AND SPOLIATION OF EVIDENCE CLEARLY EXPLAINED)/DISCOVERY (CIVIL, CRITERIA FOR FINDING WILLFUL AND CONTUMACIOUS CONDUCT DURING DISCOVERY CLEARLY EXPLAINED)/EVIDENCE (CIVIL, CRITERIA FOR SPOLIATION OF EVIDENCE CLEARLY EXPLAINED)/SPOLIATION (CRITERIA FOR SPOLIATION OF EVIDENCE CLEARLY EXPLAINED)

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COMMUNICATIONS BETWEEN ATTORNEYS IN A LAW FIRM AND THE FIRM’S IN HOUSE COUNSEL CONCERNING ETHICAL ISSUES IN A FORMER CLIENT’S CASE PROTECTED FROM DISCLOSURE IN THE FORMER CLIENT’S MALPRACTICE ACTION.

The First Department, in an extensive full-fledged opinion by Justice Friedman (which cannot be fairly summarized here), determined the communications between attorneys in a law firm and the firm’s in house counsel were protected by attorney-client privilege and were not subject to the fiduciary exception to the privilege. The communications were sought by plaintiff, a former client of the firm, who brought the instant malpractice action against the firm:

The primary issue on this appeal is whether attorneys who have sought the advice of their law firm’s in-house general counsel on their ethical obligations in representing a firm client may successfully invoke attorney-client privilege to resist the client’s demand for the disclosure of communications seeking or giving such advice. We hold that such communications are not subject to disclosure to the client under the fiduciary exception to the attorney-client privilege … because, for purposes of the in-firm consultation on the ethical issue, the attorneys seeking the general counsel’s advice, as well as the firm itself, were the general counsel’s ” real clients'” … . Further, we decline to adopt the “current client exception,” under which a number of courts of other jurisdictions … have held a former client entitled to disclosure by a law firm of any in-firm communications relating to the client that took place while the firm was representing that client. Because we also find unavailing the former client’s remaining arguments for compelling the law firm and one of its attorneys to disclose the in-firm attorney-client communications in question, we reverse the order appealed from and deny the motion to compel. Stock v Schnader Harrison Segal & Lewis LLP, 2016 NY Slip Op 05247, 1st Dept 6-30-16

 

ATTORNEYS (PRIVILEGE, COMMUNICATIONS BETWEEN ATTORNEYS IN A LAW FIRM AND THE FIRM’S IN HOUSE COUNSEL CONCERNING A FORMER CLIENT’S CASE PROTECTED FROM DISCLOSURE IN THE FORMER CLIENT’S MALPRACTICE ACTION)/PRIVILEGE (ATTORNEY-CLIENT,COMMUNICATIONS BETWEEN ATTORNEYS IN A LAW FIRM AND THE FIRM’S IN HOUSE COUNSEL CONCERNING A FORMER CLIENT’S CASE PROTECTED FROM DISCLOSURE IN THE FORMER CLIENT’S MALPRACTICE ACTION)/ATTONNEY-CLIENT PRIVILEGE (COMMUNICATIONS BETWEEN ATTORNEYS IN A LAW FIRM AND THE FIRM’S IN HOUSE COUNSEL CONCERNING A FORMER CLIENT’S CASE PROTECTED FROM DISCLOSURE IN THE FORMER CLIENT’S MALPRACTICE ACTION)/FIDUCIARY EXCEPTION (ATTORNEY-CLIENT PRIVILEGE, COMMUNICATIONS BETWEEN ATTORNEYS IN A LAW FIRM AND THE FIRM’S IN HOUSE COUNSEL CONCERNING A FORMER CLIENT’S CASE PROTECTED FROM DISCLOSURE IN THE FORMER CLIENT’S MALPRACTICE ACTION)/MALPRACTICE (ATTORNEYS, COMMUNICATIONS BETWEEN ATTORNEYS IN A LAW FIRM AND THE FIRM’S IN HOUSE COUNSEL CONCERNING A FORMER CLIENT’S CASE PROTECTED FROM DISCLOSURE IN THE FORMER CLIENT’S MALPRACTICE ACTION)

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PROSECUTOR’S QUESTIONING DEFENDANT ABOUT AN ADMISSION ALLEGEDLY MADE TO HIS ATTORNEY REQUIRED REVERSAL IN THE INTEREST OF JUSTICE.

The Second Department reversed defendant’s conviction in the interest of justice because he was improperly cross-examined about an admission allegedly made to his attorney:

The defendant contends that he was deprived of a fair trial because the Supreme Court allowed the prosecutor, on cross-examination, to question him, in violation of the attorney-client privilege, as to whether he made a certain admission to his attorney which contradicted his trial testimony. Although the defendant failed to preserve this claim for appellate review … , we nevertheless reach it in the exercise of our interest of justice jurisdiction … . Allowing this questioning was error, as it concerned a statement the defendant allegedly made to his attorney … . The error was not harmless, as the proof of the defendant’s guilt was not overwhelming and the questioning was highly damaging to the defendant’s credibility, the jury’s assessment of which, compared to that of the complainant, was the central issue in the case … . Under the circumstances of this case, the court’s instructions to the jury in its preliminary instructions and final charge that questions in and of themselves were not evidence, and that the jurors were prohibited from inferring any facts from the mere asking of a question, cannot be deemed to have obviated any prejudice resulting from the error … . People v Loiseau, 2016 NY Slip Op 05172, 2nd Dept 6-29-16

CRIMINAL LAW (PROSECUTOR’S QUESTIONING DEFENDANT ABOUT AN ADMISSION ALLEGEDLY MADE TO HIS ATTORNEY REQUIRED REVERSAL IN THE INTEREST OF JUSTICE)/ATTORNEYS (CRIMINAL LAW, PROSECUTOR’S QUESTIONING DEFENDANT ABOUT AN ADMISSION ALLEGEDLY MADE TO HIS ATTORNEY REQUIRED REVERSAL IN THE INTEREST OF JUSTICE)/EVIDENCE (CRIMINAL LAW, PROSECUTOR’S QUESTIONING DEFENDANT ABOUT AN ADMISSION ALLEGEDLY MADE TO HIS ATTORNEY REQUIRED REVERSAL IN THE INTEREST OF JUSTICE)

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APPELLATE DIVISION WRONGLY EXTENDED COMMON INTEREST ATTORNEY CLIENT PRIVILEGE TO MERGER NEGOTIATIONS WHEN THERE WAS NO PENDING LITIGATION.

The Court of Appeals, in a full-fledged opinion by Judge Pigott, over an extensive two-judge dissenting opinion, reversing the Appellate Division, determined the common interest attorney-client privilege should only apply when there is litigation or pending litigation involving the parties with a common interest. The 1st Department had extended to privilege to merger negotiations between Countrywide and Bank of America at a time when the failure of mortgage-backed securities was in the air but there was no litigation or pending litigation:

Disclosure is privileged between codefendants, coplaintiffs or persons who reasonably anticipate that they will become colitigants, because such disclosures are deemed necessary to mount a common claim or defense, at a time when parties are most likely to expect discovery requests and their legal interests are sufficiently aligned that “the counsel of each [i]s in effect the counsel of all” … . When two or more parties are engaged in or reasonably anticipate litigation in which they share a common legal interest, the threat of mandatory disclosure may chill the parties’ exchange of privileged information and therefore thwart any desire to coordinate legal strategy. In that situation, the common interest doctrine promotes candor that may otherwise have been inhibited.

The same cannot be said of clients who share a common legal interest in a commercial transaction or other common problem but do not reasonably anticipate litigation. Ambac Assur. Corp. v Countrywide Home Loans, Inc., 2016 NY Slip Op 04439, CtApp 6-9-16

CIVIL PROCEDURE (ATTORNEY CLIENT PRIVILEGE, APPELLATE DIVISION WRONGLY EXTENDED COMMON INTEREST ATTORNEY CLIENT PRIVILEGE TO MERGER NEGOTIATIONS WHEN THERE WAS NO PENDING LITIGATION)/ATTORNEYS (ATTORNEY CLIENT PRIVILEGE, APPELLATE DIVISION WRONGLY EXTENDED COMMON INTEREST ATTORNEY CLIENT PRIVILEGE TO MERGER NEGOTIATIONS WHEN THERE WAS NO PENDING LITIGATION)/PRIVILEGE (ATTORNEY CLIENT PRIVILEGE, APPELLATE DIVISION WRONGLY EXTENDED COMMON INTEREST ATTORNEY CLIENT PRIVILEGE TO MERGER NEGOTIATIONS WHEN THERE WAS NO PENDING LITIGATION)/COMMON INTEREST PRIVILEGE (ATTORNEY CLIENT PRIVILEGE, APPELLATE DIVISION WRONGLY EXTENDED COMMON INTEREST ATTORNEY CLIENT PRIVILEGE TO MERGER NEGOTIATIONS WHEN THERE WAS NO PENDING LITIGATION)

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ATTORNEY WHO HAD PREVIOUSLY PROSECUTED MOTHER FOR ENDANGERING THE WELFARE OF A CHILD SHOULD NOT HAVE BEEN APPOINTED TO REPRESENT MOTHER’S CHILDREN IN A CUSTODY MATTER; IN THE ABSENCE OF EVIDENCE MOTHER WAS PREJUDICED BY CONFIDENTIAL INFORMATION MOTION TO VACATE CUSTODY STIPULATION ON CONFLICT OF INTEREST GROUNDS PROPERLY DENIED.

The Third Department determined Family Court should not have allowed an attorney who, as an assistant District Attorney, prosecuted mother for endangering the welfare of a child, to serve as the children's attorney in a custody matter. Mother moved to vacate the custody stipulation, in part based upon the attorney's (Bielicki's) conflict of interest. The fact that Bielicki should not have been appointed, in the absence of evidence of actual prejudice to mother from the use of confidential information, did not warrant vacation of the stipulation:

The mother … argues that Bielicki's representation of the children violated Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.11 (c), which provides that “a lawyer having information that the lawyer knows is confidential government information about a person, acquired when the lawyer was a public officer or employee, may not represent a private client whose interests are adverse to that person in a matter in which the information could be used to the material disadvantage of that person.” The rule defines confidential governmental information as “information that has been obtained under governmental authority and that, at the time this Rule is applied, the government is prohibited by law from disclosing to the public or has a legal privilege not to disclose, and that is not otherwise available to the public” … . * * *

Bielicki's assignment as attorney for the children in this matter was contrary to the standards set forth in Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.11 (c) — and, for that reason, Family Court … should not have permitted Bielicki to serve in that capacity — such error, without more, does not warrant vacatur of the stipulation and order. Matter of Tina X. v John X., 2016 NY Slip Op 02874, 3rd Dept 4-14-16


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STATEMENTS MADE BY ATTORNEY IN AFFIDAVIT SUBMITTED TO THE COURT WERE ABSOLUTELY PRIVILEGED, DEFAMATION ACTION PROPERLY DISMISSED.

The Second Department determined the defendant-attorney's motion to dismiss the defamation complaint was properly dismissed for failure to state a cause of action. The allegedly defamatory statements were made in an affidavit submitted to the court and concerned the will at the center of the proceedings. The statements, therefore, were absolutely privileged:

An otherwise defamatory statement may be “privileged” and thus not actionable … . Insofar as is relevant herein, an absolute privilege is accorded statements made at all stages of a judicial proceeding in communications among the parties, witnesses, counsel, and the court, provided that the statements may be considered in some way “pertinent” to the issue in the proceeding … . “The test of pertinency [to the litigation] is extremely liberal so as to embrace [ ] anything that may possibly or plausibly be relevant or pertinent'” … . This privilege applies to all statements made in or out of court and regardless of the motive for which they were made … .

Here, the complaint alleges that the defendant, who was counsel for the executor in a probate proceeding, made allegedly defamatory statements in an affirmation in support of a motion in that proceeding to compel a continued examination pursuant to Surrogate's Court Procedure Act § 1404. The statements concerned the very subject of the probate proceeding, the contested last Will and Testament of the decedent. Therefore, the subject statements were absolutely privileged as a matter of law and cannot be the basis for a defamation action … . Brady v Gaudelli, 2016 NY Slip Op 01793, 2nd Dept 3-16-16

ATTORNEYS (DEFAMATION, STATEMENTS MADE IN AFFIDAVIT SUBMITTED TO THE COURT WERE ABSOLUTELY PRIVILEGED)/DEFAMATION (STATEMENTS MADE IN AFFIDAVIT SUBMITTED TO THE COURT WERE ABSOLUTELY PRIVILEGED)/PRIVILEGE (ATTORNEYS, STATEMENTS MADE IN AFFIDAVIT SUBMITTED TO THE COURT WERE ABSOLUTELY PRIVILEGED)

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COMMON INTEREST PRIVILEGE MAY APPLY TO SUBPOENAED DOCUMENTS.

The First Department determined Supreme Court should have conducted an in camera review of documents sought from Morgan Stanley by the petitioner to see whether the documents are privileged under a “common interest privilege.”  Even though a third party, NaturEner, was privy to the documents, and despite a debtor-creditor relationship between Morgan Stanley and NaturEner, because Morgan Stanley and NaturEner shared a common interest in the underlying contract dispute, the common interest privilege may apply:

The common interest privilege is an exception to the rule that the presence of a third party will waive a claim that a communication is confidential. It requires that the communication otherwise qualify for protection under the attorney-client privilege and that it be made for the purpose of furthering a legal interest or strategy common to the parties asserting it … .

We find that Morgan Stanley and NaturEner shared a common interest in their desire to have plaintiff comply with its contractual obligations under the Rim Rock agreements. The fact that respondent and defendant were in a debtor-creditor relationship did not make their interests adverse in all matters and at all times … . Under the circumstances, the court should have ordered an in camera inspection, the limited relief requested in the petition … . Matter of San Diego Gas & Elec. Co. v Morgan Stanley Senior Funding, Inc., 2016 NY Slip Op 01238, 1st Dept 2-18-16

CIVIL PROCEDURE (COMMON INTEREST PRIVILEGE MAY APPLY TO SUBPOENAED DOCUMENTS, PARTIES COOPERATING IN LAWSUIT)/COMMON INTEREST PRIVILEGE (PARTIES COOPERATING IN LAWSUIT)/PRIVILEGE (COMMON INTEREST PRIVILEGE, PARTIES COOPEERATING IN LAWSUIT)

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Criteria for the “Fiduciary Exception” to the Attorney-Client Privilege in the Context of a Derivative Action Explained

The First Department, in a full-fledged opinion by Justice Acosta, in a matter of first impression, developed analytical criteria for determining whether documents sought by the plaintiff major investor (NAMA) in defendant limited liability company (Alliance) (formed for a major real estate development project) were protected by the attorney-client privilege. The documents at issue are communications between the managers of defendant Alliance and their attorneys, defendant Greenberg.  Supreme Court held that the 3000 communications were not protected by attorney-client privilege pursuant to the “fiduciary exception” to the privilege (re: derivative actions) because the interests of the plaintiff were not adverse to Alliance. However, that finding was not based upon a review of the communications. The First Department determined each individual communication must be reviewed to find whether it evinces an adversarial relationship. If so, such “adversity” would be only one factor to weigh in concluding whether “good cause” exists to invoke the “fiduciary exception” to the privilege. The First Department adopted the reasoning of a Fifth Circuit case, Garner v Wolfinbarger, 430 Fed 1093, which sets out a list of factors to be applied in finding good cause to apply the fiduciary exception to the privilege. “Adversity” is but one of those factors:

In the corporate context, where a shareholder (or, as here, an investor in a company) brings suit against corporate management for breach of fiduciary duty or similar wrongdoing, courts have carved out a “fiduciary exception” to the privilege that otherwise attaches to communications between management and corporate counsel. * * *

In 1970, the U.S. Court of Appeals for the Fifth Circuit extended the fiduciary exception to the corporate environment in Garner v Wolfinbarger (430 F2d 1093 [5th Cir 1970], cert denied 401 US 974 [1971]), for the first time allowing shareholders to use the exception to pierce the corporate attorney-client privilege. The Garner court was persuaded by two English cases that “treat[ed] the relationship between shareholder and company as analogous to that between beneficiaries and trustees” (id. at 1102). Relying on those cases and the traditional crime-fraud and joint-representation exceptions for the proposition that the corporate attorney-client privilege is not absolute, the court summarized its reasoning in the following way:

“[W]here the corporation is in suit against its stockholders on charges of acting inimically to stockholder interests, protection of those interests as well as those of the corporation and of the public require that the availability of the privilege be subject to the right of the stockholders to show cause why it should not be invoked in the particular instance” (id. at 1103-1104). * * *

While some factors in the Garner test are relevant to a determination of adversity, Garner did not create a categorical adversity limitation. Thus, adversity is not a threshold inquiry but a component of the broader good-cause inquiry. Moreover, of the Garner factors that pertain to adversity, some will indicate whether the parties are generally adverse, while others will require a review of the communications in dispute; the relevant factors may weigh against finding good cause to apply the fiduciary exception with respect to those communications that reveal adversity. Accordingly, a court may find that the party seeking disclosure has shown good cause to be given access to some communications but not others. NAMA Holdings, LLC v Greenberg Traurig LLP, 2015 NY Slip Op 07346, 1st Dept 10-8-15

 

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