Walsh v. Northrop Grumman Corp.

165 F.R.D. 16, 1996 U.S. Dist. LEXIS 11657, 1996 WL 75819
CourtDistrict Court, E.D. New York
DecidedFebruary 9, 1996
DocketNo. CV-94-5105 (TCP)
StatusPublished
Cited by29 cases

This text of 165 F.R.D. 16 (Walsh v. Northrop Grumman Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Walsh v. Northrop Grumman Corp., 165 F.R.D. 16, 1996 U.S. Dist. LEXIS 11657, 1996 WL 75819 (E.D.N.Y. 1996).

Opinion

MEMORANDUM ORDER

POHORELSKY, United States Magistrate Judge:

The plaintiffs have moved to compel discovery from a non-party, Salomon Brothers, Inc. (“Salomon”). Salomon served as the financial advisor to Northrop Corporation (“Northrop”) in connection with the now-consummated merger of Grumman Corp. and Northrop Corp. Specifically, the plaintiffs seek to compel an employee of Salomon, Christopher Varelas, to answer certain questions propounded at a deposition concerning (i) his knowledge of the Grumman Employee Investment Plan (“EIP”) and (ii) discussions between Salomon and Northrop about the EIP.- Salomon, as well as certain of the defendants, have objected to certain parts of the inquiry about those matters, asserting the attorney-client privilege and lack of relevance. For the reasons set forth below, the plaintiffs’ motion is GRANTED and Mr. Varelas shall provide further deposition testimony consistent with this decision.

Salomon’s assertion of the privilege with respect to the information at issue here appears to rest on the assumption that the communication by an attorney of legal advice to a client is automatically privileged. The transcript of those portions of Mr. Varelas’s testimony submitted to the court discloses that he was instructed by counsel at various junctures to answer questions only if he could do so “without divulging the substance of legal advice that you received from [Salomon’s attorneys].” Transcript of Deposition of Christopher Varelas at 59. The privilege [18]*18is not that broad in the Second Circuit. Although there is substantial divergence among the federal circuit courts of appeal about the application of the privilege to communications of legal advice by attorneys, as distinguished from communications of confidential information by clients, see generally, 24 C. Wright & K. Graham, Federal Practice and Procedure § 5491 at 450-54, this circuit remains committed to the narrowest application of the privilege such that it protects only legal advice that discloses confidential information given to the lawyer by the client. In re Six Grand Jury Witnesses, 979 F.2d 939, 944 (2d Cir.1992); Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437, 442 (S.D.N.Y.1995). Thus, the instruction to Mr. Varelas was too broad and prevented him from answering questions which on the present record appear to seek unprivileged information.1 At the resumed session of Mr. Varelas’s deposition, Salomon may continue to maintain its objection to testimony that might disclose legal advice only if the revelation of the advice would reveal confidential information provided to Salomon’s attorneys by Salomon.

As to the questions directed to Mr. Varelas regarding discussions between Salomon and Northrop, Salomon asserts the attorney-client privilege with respect to any information disclosed in those discussions which Salomon obtained from its attorneys. Salomon asserts the “common interest” doctrine to defeat the contention that disclosure of the information to Northrop waived the privilege.

The common interest doctrine has its roots in criminal litigation, see Bank Brussels Lambert, 160 F.R.D. at 447, where it was known as the “joint defense privilege.” United States v. Schwimmer, 892 F.2d 237, 243 (2d Cir.1989). The doctrine “serves to protect the confidentiality of communications passing from one party to the attorney for another party where a joint defense effort or strategy has been decided upon and undertaken by the parties and their respective counsel.” Id. (citing United States v. Bay State Ambulance and Hosp. Rental Serv., 874 F.2d 20, 28 (1st Cir.1989)). The doctrine is limited to situations where multiple parties are represented by separate counsel but share a common interest about a legal matter. Schwimmer, 892 F.2d at 243-44; Bank Brussels Lambert, 160 F.R.D. at 447. The doctrine does not extend to communications about a joint business strategy that happens to include a concern about litigation. Bank Brussels Lambert, 160 F.R.D. at 447. The parties claiming protection under the doctrine must show that they had a common legal, as opposed to commercial, interest, and that they cooperated in formulating a common legal strategy. Id.

Judged under the above principles, Salomon’s claim to the privilege fails on a number of scores. First, the common interest doctrine protects confidences shared by one party with the attorneys of another party. Thus, if it applied at all here, it would apply to confidences shared by Salomon with Northrop’s attorneys, or confidences shared by Northrop with Salomon’s attorneys. Neither situation is at issue here. Salomon wants to protect confidences it shared with its own attorneys and then shared, not with Northrop’s attorneys, but with Northrop. To extend the common interest doctrine that far would mean that a party could shield from disclosure any discussions it had with another person about a matter of common interest simply by discussing that matter first with its attorneys. Such an extension of the privilege would run counter to the axiom, repeated often in this circuit, that the attorney-client privilege should be strictly confined within the narrowest possible limits underlying its purpose. E.g., United States v. Goldberger & Dubin P.C., 935 F.2d 501, 504 (2d Cir.1991); In re Grand Jury Subpoena Duces Tecum Served Upon Gerald L. Shargel, 742 F.2d 61, 62 (2d Cir.1984); In re Grand Jury Subpoena Duces Tecum Served Upon Simon Horowitz, 482 F.2d 72, 81-82 [19]*19(2d Cir.1984). Salomon has cited no authority where the common interest doctrine was extended to protect communications among parties situated like the ones here, and this court declines the opportunity to do so now.

The common interest doctrine does not apply here for other reasons. The common enterprise upon which Salomon and Northrop were embarked was a business, not a legal, enterprise. Salomon was advising Northrop on financial and other business strategies. That is plain from the written agreement between them that was submitted to the court on this motion. There was undoubtedly a concern about litigation. Northrop, in cooperation with Salomon as its investment banking advisor, was developing a business strategy one of whose components was to avoid litigation if possible. But that does not transform their common interest and enterprise into a legal, as opposed to commercial, matter. For all of these reasons, the communications between Northrop and Salomon do not meet the prerequisites for protection under the common- interest doctrine. See, e.g., Schwimmer, 892 F.2d at 243-44; Bank Brussels Lambert, 160 F.R.D. at 447.

Salomon also argues that there was a principal-agent relationship between Northrop and Salomon and that therefore legal advice rendered to the agent, Salomon, for the benefit of the principal, Northrop, should remain privileged when it is shared with Northrop, particularly since all involved understood that the communications would be kept confidential.

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Cite This Page — Counsel Stack

Bluebook (online)
165 F.R.D. 16, 1996 U.S. Dist. LEXIS 11657, 1996 WL 75819, Counsel Stack Legal Research, https://law.counselstack.com/opinion/walsh-v-northrop-grumman-corp-nyed-1996.