Summary
observing that if an automobile manufacturer is attempting to remedy a design defect that has created legal liability, then the vice president for design and the engineer who will actually redesign the defective part will be among those to whom confidential legal communications can be made, but that "the autoworker on the assembly line has no need to be advised of the legal basis for a charge in production even though it affects the worker's routine and thus is within his or her general area of responsibility"
Summary of this case from Scholtisek v. Eldre Corp.Opinion
00 Civ. 1339 (AGS) (JCF).
March 22, 2001.
MEMORANDUM AND ORDER
Anita Verschoth, formerly a writer for Sports Illustrated, brings this action alleging that the defendants discriminated against her on the basis of her age and gender and denied her equal compensation and benefits in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. ¶¶ 1001 et seq., Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e et seq., the Equal Pay Act, 29 U.S.C. § 206(d) et seq., and state law. Defendant Time Warner, Inc. ("Time"), the publisher of Sports Illustrated, has submitted papers in support of its privilege objections to certain deposition questions. I will treat these papers as a motion pursuant to Rule 26(c) of the Federal Rules of Civil Procedure for a protective order. The plaintiff has opposed Time's application.
Background
Anita Verschoth worked for Time from at least 1962 as a secretary, then as a reporter, and ultimately as an associate editor. (Compl. ¶¶ 21, 23, 29; Ans. ¶¶ 21, 23, 29). In 1989, allegedly in response to pressure from the employer, she resigned her position as a full-time employee and began performing work as an independent contractor. (Compl. ¶¶ 33, 36; Ans. ¶¶ 33, 36). In 1998, Time advised Mr. Verschoth that her project employment agreement would not be renewed when it expired at the end of that year. (Compl. ¶ 53; Ans. ¶ 53). Her attorney then sent a letter dated January 6, 1999 to Time's in-house counsel threatening legal action (Affidavit of Andrew W. Goldwater dated Jan. 18, 2001 ("Goldwater Aff."), Exh. D).
The plaintiff filed an action in this Court on March 3, 1999, 99 Civ. 1607 (DAB), and moved for a preliminary injunction. In support of that motion, she submitted an affidavit stating that on February 6 or 7, 1999, she had spoken with Jerry Kirshenbaum, a former Assistant Managing Editor of Sports Illustrated who continued to do freelance editing for the magazine. (Affidavit of Anita Verschoth dated March 2, 1999 ("Verschoth P.I. Aff.") ¶ 19). According to Ms. Verschoth, Mr. Kirshenbaum told her that he had been contacted by Craig Neff, a current Assistant Managing Editor for Sports Illustrated. Mr. Neff purportedly recounted a meeting he had attended with William Colson, the Managing Editor; Richard O'Brien, a Senior Editor; and Sandy Bailey, another Assistant Managing Editor (Verschoth P.I. Aff. ¶ 20; Affidavit of Craig Neff dated Jan. 18, 2001 ("Neff Aff."), ¶ 6), at which Mr. Colson had said in substance that Time's attorneys had instructed that no further work assignments should be given to Ms. Verschoth because she had threatened to sue. (Verschoth P.I. Aff. ¶¶ 20, 21). The preliminary injunction motion was denied, and that case was dismissed without prejudice pursuant to stipulation. On February 23, 2000, the plaintiff commenced the instant action.
Mr. Neff has since confirmed that a meeting took place in January 1999 concerning Ms. Verschoth's possible litigation against Time. (Neff Aff. ¶ 6). In addition to the persons identified by Mr. Kirshenbaum as having been present, Peter Carry, Sports Illustrated's Executive Editor, may also have attended. (Neff Aff. ¶ 6). According to Mr. Neff, Mr. Colson reported Ms. Verschoth's threat to bring a lawsuit and relayed "legal advice from Time's Law Department with respect to communications with Ms. Verschoth." (Neff Aff. ¶ 6). Because Mr. Kirshenbaum edited stories about the Olympic Games, which was Ms. Verschoth's area of expertise, either Mr. Colson or Mr. Carry suggested that the information from Time's lawyers be conveyed to him. (Neff Aff. ¶ 7). Mr. Neff then contacted Mr. Kirshenbaum, but did not expect that he would disclose the legal advice to Ms. Verschoth or anyone else outside the magazine. (Neff Aff. ¶¶ 7-9).
During the course of discovery in this action, Time has objected on grounds of attorney-client privilege to disclosing the communications that took place during the January 1999 meeting as well as those between Mr. Neff and Mr. Kirshenbaum thereafter. It also argues that the latter conversations are immune from discovery under the work product doctrine. In response, the plaintiff contends that the communications are not privileged because they were intended to be shared with Mr. Kirshenbaum, who had no managerial responsibility, and even if they were originally privileged, the privilege had been waived. Furthermore, she maintains that the communications fall within the crime/fraud exception to the privilege.
The content of the communications is pertinent to my determination of whether they were conveyed only to persons with responsibility over the subject matter who therefore had a need to be informed. Accordingly, I held an in camera proceeding on March 7, 2001, at which I took the testimony of Mr. Kirshenbaum and Mr. Neff. The record of that hearing has been sealed insofar as it reveals the substance of the communications at issue.
Discussion
A. Attorney-Client Privilege
The attorney-client privilege "protects from disclosure communications among corporate employees that reflect advice rendered by counsel to the corporation." Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437, 442 (S.D.N.Y. 1995) (citations omitted). "This follows from the recognition that since the decision-making power of the corporate client is diffused among several employees, the dissemination of confidential communications to such persons does not defeat the privilege." Id.
However, the person to whom an executive relays legal advice must "share responsibility for the subject matter underlying the consultation" in order for the privilege to be preserved. SCM Corp. v. Xerox Corp., 70 F.R.D. 508, 518 (D.Conn. 1976). Furthermore, the originator of the communication must have intended that it be kept confidential, and it may not be circulated beyond those employees with a need to know the information. See Bank of New York v. Meridien BIAO Bank Tanzania Ltd., No. 95 Civ. 4856, 1996 WL 474177, at *2 (S.D.N Y Aug. 21, 1996); In re Pfizer Inc. Securities Litigation, No. 90 Civ. 1260, 1993 WL 561125, at *9 (S.D.N.Y. Dec. 23, 1993); Cuno, Inc. v. Pall Corp., 121 F.R.D. 198, 203 (E.D.N.Y. 1988); 3 Jack B. Weinstein Margaret A. Berger Weinstein's Federal Evidence § 503.22[4][b] (Joseph M. McLaughlin ed. 2000). The issue here is whether Time has satisfied these criteria. It bears the burden of demonstrating that it disseminated any communications containing legal advice only to persons with a need to know. See Bank of New York, 1996 WL 474177, at *2; Weinstein, supra, § 503.22[4][a] n. 33.
The "need to know" must be analyzed from two perspectives: (1) the role in the corporation of the employee or agent who receives the communication; and (2) the nature of the communication, that is, whether it necessarily incorporates legal advice. To the extent that the recipient of the information is a policymaker generally or is responsible for the specific subject matter at issue in a way that depends upon legal advice, then the communication is more likely privileged. For example, if an automobile manufacturer is attempting to remedy a design defect that has created legal liability, then the vice president for design is surely among those to whom confidential legal communications can be made. So, too, is the engineer who will actually redesign the defective part: he or she will necessarily have a dialogue with counsel so that the lawyers can understand the practical constraints and the engineer can comprehend the legal ones. By contrast, the autoworker on the assembly line has no need to be advised of the legal basis for a charge in production even though it affects the worker's routine and thus is within his or her general area of responsibility. The worker, of course, must be told what new production procedure to implement, but has no need to know the legal background.
By these standards, it was not necessary for Mr. Kirshenbaum to be apprised of the legal advice received by Time, regardless of whether the content of that advice was as Ms. Verschoth alleges or as Mr. Neff has attested. At the time of the communications, Mr. Kirshenbaum was a "former 30-year employee of [Sports Illustrated] and Assistant Managing Editor with a continuing role at the magazine." (Neff Aff. ¶ 8). However, he had been retired from the magazine for at least two years (Neff Aff. ¶ 3), was working sporatically as a freelance editor, and had no managerial responsibilities. (Deposition of Jerry Kirshenbaum dated Jan. 11, 2001 ("Kirshenbaum Dep."), at 54-60, attached as Exh. A to Goldwater Aff.). He specifically had no responsibility for hiring or firing. (Kirshenbaum Dep. at 60). Thus, if the advice of counsel discussed at the January 1999 meeting and later conveyed to Mr. Kirshenbaum concerned excluding Ms. Verschoth from future projects, as she alleges, it is not protected by the attorney-client privilege.
If the substance of the discussions was instead "legal advice from Time's Law Department with respect to communications with Ms. Verschoth" (Neff Aff. ¶ 6), it is likewise unprotected. Even taking into account Mr. Neff's somewhat more specific in camera characterization of the content of the January 1999 meeting, there is no basis for finding that Mr. Kirshenbaum needed to know the legal authority for any direction Time was giving to its employees about talking with Ms. Verschoth. There is, for example, no suggestion that Mr. Kirshenbaum was expected to give feedback to Time's legal department to help it adjust its policy for communicating with the plaintiff. Mr. Kirshenbaum, like the autoworker on the assembly line, needed to be told what procedure to follow, but had no reason to be informed of any legal analysis that went into the formulation of the procedure.
Nevertheless, it is undisputed that either Mr. Colson or Mr. Carry suggested that Mr. Kirshenbaum be informed of the substance of the meeting. Each of them had the authority to determine for Time whether communications should be kept confidential and whether any privilege should be waived. By explicitly indicating that legal advice should be shared with Mr. Kirshenbaum, Time lost any privilege with respect to that advice.
B. Work Product
Even though not privileged, the communications at issue might still be protected from discovery by the work product doctrine. While disclosure to any third-party generally waives the attorney-client privilege, work product protection is only waived "where disclosure to a third-party substantially increases the likelihood that the work product will fall into the hands of the adversary." Bank Brussels, 160 F.R.D. at 448 (citations omitted).
That was certainly the case here. Mr. Kirshenbaum had known Ms. Verschoth for thirty years (Kirshenbaum Dep. at 61), and they had remained friends after he left Sports Illustrated. (Kirshenbaum Dep. at 140). In January 1999 she was threatening litigation against Time. Under these circumstances, it was not reasonable to discuss with Mr. Kirshenbaum information that may have been gathered in anticipation of that litigation and expect him not to convey it to Ms. Verschoth. Therefore, any work product protection that might have attached has been waived.
Conclusion
For the reasons set forth above, the substance of the January 1999 meeting and of the subsequent communications between Mr. Neff and Mr. Kirshenbaum is not protected from discovery by either the attorney-client privilege or the work product doctrine. Time's objections to questions posed to the participants in those discussions are therefore overruled, and its motion for a protective order is denied.
SO ORDERED.