Valutron, N.V. v Pennie & Edmonds
Annotate this CaseDecided on October 28, 2004
Supreme Court, New York County
VALUTRON, N.V. et al., Plaintiffs,
against
PENNIE & EDMONDS et al., Defendants.
122744/95
Marylin G. Diamond, J.
This is a legal malpractice action against a law firm, defendant Pennie & Edmonds (P&E), which represented plaintiffs in an unsuccessful patent infringement lawsuit which they brought against National Cash Register Co. ("NCR"). The lawsuit was dismissed on the ground of laches. In this action, plaintiffs claim that P&E failed to warn or advise them of the potential laches problem and that in the absence of this advice, the infringement action was commenced later than it could and should have been, thereby resulting in the dismissal. P&E, however, has argued that plaintiffs already knew about the potential laches problem because they had received advice and counsel on that issue from other attorneys prior to and after retaining P&E. It asserts that by bringing this action claiming they were not properly advised by defendants that their infringement suit had to be commenced by a certain time, plaintiffs have put their knowledge of the laches problem at issue. As a consequence, defendants claim that they are entitled to discovery concerning plaintiffs' knowledge about this issue. Specifically, defendants have demanded copies of all handwritten notes which relate to meetings and communications plaintiffs had with other patent lawyers and any correspondence between plaintiffs and any other patent lawyers concerning the infringement action against NCR and the defense of laches. Defendants have also demanded that plaintiffs answer questions at a deposition about any advice they received from other attorneys as to the doctrine of laches. Plaintiffs have refused to provide any of the demanded discovery on the ground that the information sought is protected by the attorney-client privilege.
Defendants now move, pursuant to CPLR 3124 and 3126, for an order compelling the production of notes and correspondence between plaintiffs and other counsel concerning the infringement action and the doctrine of laches. Specifically defendants seek an order (a) finding that plaintiffs have waived the attorney-client privilege by placing the subject matter of their communications with other patent attorneys about laches at issue, (b) directing plaintiffs to produce the handwritten notebooks of their principals concerning their conversations with other attorneys, (c) directing plaintiffs to produce correspondence, notes or documents reflecting their communications with patent attorneys regarding the subject patent litigation, and (d) directing [*2]plaintiff Valutron's principal, Dr. David Hill, to appear for a deposition in order to testify about these documents.
It is well settled that confidential communications between an attorney and client in the course of professional employment are generally privileged, unless waived. See CPLR 4503. In additional, material prepared in anticipation of litigation is immune from disclosure unless a party shows "substantial need" and is unable to duplicate them without "substantial hardship." See CPLR 3101(d)(2). It is also well settled that the burden of establishing the existence of a privilege is on the party asserting it, that the protection claimed must be "narrowly construed" and that its application must be "consistent with the purposes of the underlying immunity." Spectrum Systems Intern. Corp. v. Chemical Bank, 78 NY2d 371, 377(1991).
Under what is known as the "at issue" waiver doctrine, a client is deemed to have waived the attorney-client privilege when the client places the subject matter of the communication in issue or where the invasion of the privilege is needed to determine the validity of the client's claim and application of the privilege would deprive the client's adversary of vital information. See Orco Bank, N.V. v. Proteinas Del Pacifico, 179 AD2d 390 (1st Dept.1992); Jabkobleff v. Cerrato, Sweeney & Cohn, 97 AD2d 834 (2nd Dept. 1983); Imo Industries, Inc. v. Anderson Kill & Olick, P.C., 192 Misc 2d 605, 609 (Sup Ct. NY Co 2002). Defendants argue that the doctrine applies to this case since, by bringing a legal malpractice suit based upon an alleged failure to advise plaintiffs about laches and its application to patent infringement actions, plaintiffs have placed their knowledge of laches at issue. The court agrees.
The record indicates that plaintiffs, both before and after retaining P&E, consulted with other attorneys about the possibility of commencing patent infringement actions against companies other than NCR and that, in the course of these consultations, may have discussed the problems which the laches issue posed to these possible actions, as well as to the prospective action against NCR. The record also indicates that plaintiffs delayed the commencement of their infringement action against NCR in order to obtain funding from investors. Since plaintiffs assert that the patent infringement litigation against NCR would have been commenced earlier and would not therefore have been dismissed for laches had P&E properly advised them about the problem, P&E may be entitled to show that its failure to so advise or warn plaintiffs was not the proximate cause of plaintiffs' damages because, even if it had raised the issue with plaintiffs, they were already familiar with the possible applicability of the laches doctrine, were aware of the risks attendant in delaying the commencement of their patent infringement action against NCR and would nevertheless have knowledgeably exposed themselves to that risk in order to use the time to obtain the necessary funding.
The court therefore finds that the attorney-client privilege has been waived with respect to information relating to plaintiffs' communications with other attorneys about any potential laches defense which they may face in bringing patent infringement litigation against other companies, including NCR. P&E has demonstrated that such communications may bear directly on plaintiffs' allegations that they suffered damages by reason of P&E's failure to inform them of the possibility that their action against NCR could be dismissed on the ground of laches if it was not brought within a certain time. In reaching this conclusion, the court has not finally determined the issue of whether, at trial, evidence of the plaintiffs' familiarity with the doctrine of laches would be admissible on the ground of relevancy. Rather, the court is persuaded that the plaintiffs are, at the very least, entitled to explore the issue through discovery. [*3]
Accordingly, the defendants' motion to compel discovery is granted to the extent that plaintiffs are hereby directed to produce, within thirty days of notice of entry of this order, any and all handwritten notebooks of their principals concerning conversations plaintiffs had with other attorneys about the problems which the laches issue posed to any patent infringement action which they considered bringing, including an action against NCR. Plaintiffs shall also produce any and all correspondence, notes and documents reflecting communications between them and any patent attorneys about the issue of laches. In addition, plaintiffs are directed to produce Dr. David Hill for a deposition within sixty days of notice of entry of this order and Dr. Hill is directed to respond to questions regarding communications with patent attorneys to the extent consistent with the court's decision herein.
The parties shall appear before the court in Room 412, 60 Centre Street, New York, New York on December 7, 2004 at 10:00 a.m. for a status conference.
ENTER ORDER
Dated: October 28, 2004 MARYLIN G. DIAMOND, J.S.C.
Check one:[] FINAL DISPOSITION[X] NON-FINAL DISPOSITION
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