Attorney-Client Privilege Is Examined In Gucci v Guess?

Judge Says No Attorney-Client Privilege for Gucci's Non-Licensed GC
By Noeleen G. Walder, New York Law Journal, June 30, 2010

Gucci America Inc. cannot "cloak itself under a veil of ignorance" to avoid handing over to a competitor communications with its former chief in-house counsel, an attorney who was not licensed to practice law, according to a magistrate judge.

After Guess? Inc. sought discovery of the communications in a trademark infringement suit, Gucci claimed that communications with Jonathan Moss were protected by the attorney-client privilege.

Gucci executives insisted that they considered Mr. Moss to be a lawyer, even though they never confirmed his bar status.

In denying Gucci's motion for a protective order, Southern District Magistrate Judge James L. Cott held that Gucci could not justify its "mistaken belief" since the company "was plainly in a position to confirm the extent of [Mr. Moss'] qualifications as a legal professional and failed to do so."

"Gucci cannot now cloak itself under a veil of ignorance to avoid its discovery obligations," Magistrate Judge Cott wrote in Gucci America Inc. v. Guess? Inc., 09 cv 4373. The order, which can be challenged by either party, also directed Gucci and Guess to further brief the issue of whether the attorney work-product doctrine applies to any of the communications at issue.

Mr. Moss, a graduate of Fordham University School of Law, passed the California bar exam in 1993 but went on inactive status three years later.

He was referred to Gucci by two of its outside counsel from Patton Boggs in Washington, D.C., and joined the company's Secaucus, N.J., office in 2002 to analyze real estate financials.

Just months after joining the company, Mr. Moss, who maintains he was hired as a "legal associate," filed a pro hac vice motion in U.S. Bankruptcy Court for the Southern District to represent Gucci, according to Magistrate Judge Cott's decision.

In 2003, Gucci promoted Mr. Moss to in-house counsel. In that position, Mr. Moss filed trademark applications in which he was labeled an "attorney-at-law and member of the Bar of California," represented Gucci in employment matters, and appeared before courts and administrative agencies on the company's behalf. In 2005, Gucci once again promoted Mr. Moss, this time appointing him director of legal services. Three years later, Mr. Moss was appointed vice president and director of legal and real estate.

In an affidavit, Mr. Moss said, "I did not believe that my inactive status in California limited my ability to practice law in any other jurisdiction where such practice was permissible."

Mr. Moss insists that no one ever brought up the issue of his inactive status during his eight years at Gucci.

For its part, Gucci has maintained that it "perceived" Mr. Moss to be an attorney authorized to practice law.

In an affidavit, Christy Leleck, a director of Human Resources at Gucci during Mr. Moss' tenure, said she never thought to confirm Mr. Moss' qualifications since "he was already perceived by senior management as the company's lawyer."

It was not until December 2009 that Gucci launched a "preliminary investigation" into Mr. Moss' status.

Gucci terminated Mr. Moss on March 1, a month after he reactivated his bar status in California.

In court papers filed in April, Guess maintained that Gucci could have discovered "with a few clicks of the mouse" that Mr. Moss was not licensed to practice law.

"Gucci could have readily learned that Jonathan Moss was not authorized to practice law simply by asking him whether he was an active member of the California Bar… And this is what Gucci never did in all these years as Gucci's legal counsel."

Magistrate Judge Cott agreed.

"Had Gucci visited the California State Bar website and conducted an attorney search for 'Jonathan Moss,' it would have discovered that Moss had been an inactive member since 1995," he wrote.

Due Diligence Required
However, despite promoting Mr. Moss to legal positions on three occasions, Magistrate Judge Cott found "the record devoid of evidence that, during Moss's eight years of employment with the company, Gucci made any effort to ascertain his qualifications as an attorney."

Even if Gucci hired Mr. Moss to perform administrative work, "once it promoted Moss from a non-legal to a legal position, Gucci was obligated to conduct some due diligence to confirm his professional status as an attorney," Magistrate Judge Cott concluded.

Pointing out that Gucci was "apparently" paying the fee for Mr. Moss' inactive status, the magistrate judge noted that the company could have required Mr. Moss to transfer his inactive status to active as a condition of employment.

Magistrate Judge Cott said Gucci could not justify its "mistaken belief" on the fact that Patton Boggs had recommended Mr. Moss, since he never worked at the firm and was merely "the son of a friend of the firm."

"Gucci itself bears responsibility for allowing its counsel to represent its interests without ensuring that he was authorized to do so," he concluded.

Gucci also has suggested that some of Mr. Moss' communications could be shielded by the work-product doctrine, Federal Rule of Civil Procedure, §26(b)(3), which protects documents prepared in anticipation of litigation.

Magistrate Judge Cott said that he lacked sufficient information to determine whether the doctrine applied in this case.

In a separate ruling, Magistrate Judge Cott found that he lacked sufficient information to determine whether communications of non-party Vanni Volpi, Guccio Gucci S.p.A's in-house intellectual property counsel, were privileged.

He ordered Gucci to submit a revised privilege log by July 6.

The lead attorney for Guess, Robert Welsh of O'Melveny & Myers' Los Angeles office, declined to comment.

Louis S. Ederer of Arnold & Porter represents Gucci. He did not immediately return a call for comment.

The trademark dispute is before Southern District Judge Shira A. Scheindlin.

Decision

Gucci America, Inc. v. Guess?, Inc., 09 Civ. 4373
U.S. District Court, Southern District

Magistrate Judge James L. Cott
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Decided: June 29

Plaintiff Gucci America, Inc. ("Gucci") commenced this action against defendant Guess?, Inc. ("Guess") and other named parties, asserting trademark infringement and related claims arising out of Guess's use of certain trademarks, logos, and designs (Dkt. # 1).1 On April 2, 2010, Gucci made two separate motions for protective orders against the disclosure of the communications of its in-house counsel Jonathan Moss ("Moss"), and the communications of non-party Guccio Gucci S.p.A.'s ("GG") in-house counsel Vanni Volpi ("Volpi"), pursuant to Rule 26(c) of the Federal Rules of Civil Procedure (Dkt. #62-77). During the course of discovery, Gucci produced a privilege log reflecting, as amended, numerous communications involving Moss and Volpi. This Memorandum and Order principally addresses the motion for a protective order against the disclosure of the Volpi communications. A separate memorandum and order addressing the motion for a protective order against the disclosure of the Moss communications is also being issued today.

With respect to the Volpi motion, the amended privilege log reflects two groups of communications: (i) an investigation between March and June, 2007 of Guess's use of the "Twirl" mark (a mark owned by GG); and (ii) an investigation between March 2008 and May 2009 of Guess's use of Gucci marks and designs that are the subject of this litigation. The Twirl mark is the subject of a lawsuit pending in Milan, Italy between GG and Guess's Italian affiliate, Guess Italia. The Italian lawsuit was commenced approximately four days before this suit was filed. Recognizing that the Volpi communications implicate foreign law, the parties have briefed choice of law. Gucci urges the Court to apply American law to resolve this dispute. Gucci further asserts that Volpi, though not a bar-admitted attorney, acts as an agent or representative of a bar-admitted attorney and therefore under American law the attorney-client privilege extends to his communications. Gucci adds that, even if the Court were to find that Italian law applies, the result should be the same on public policy grounds.

In contrast, Guess argues that the Court should apply Italian law because the Volpi communications "touch base" with Italy. Guess further asserts that, under Italian law, the attorney-client privilege does not extend to a non-attorney professional such as Volpi, and consequently such communications would be subject to disclosure in an Italian litigation. In the alternative, Guess submits that, even under American law, Volpi's communications are not privileged because GG had no reasonable expectation of privacy in its communications with him.

Rule 501 of the Federal Rules of Evidence provides that questions of privilege are "governed by the principles of common law." Golden Trade S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 521 (S.D.N.Y. 1992) (quoting Fed. R. Evid. 501). The common law includes "choice of law" questions. Astra Aktiebolag v. Andrx Pharm., Inc., 208 F.R.D. 92, 97 (S.D.N.Y. 2002). Accordingly, the Court must conduct a choice of law analysis. Courts in this district adopt the comity or "touching base" approach to determine the law that applies to claims of privilege involving foreign documents. The "touching base" analysis focuses on the jurisdiction with the "predominant interest," "the place where the allegedly privileged relationship was entered into," Golden Trade, 143 F.R.D. at 521-22, or "the place in which that relationship was centered at the time the communication was sent." Bayer AG and Miles, Inc. v. Barr Labs., Inc., 92 Civ. 0381 (WK), 1994 WL 705331, at *5 (S.D.N.Y. Dec. 16, 2004). See also In re Rivastigmine Patent Litig., 237 F.R.D. 69, 74 (S.D.N.Y. 2006). Under this analysis, "'any communications touching base with the United States are governed by the federal discovery rules while any communications related to matters solely involving [a foreign country] are governed by the applicable foreign statute." Golden Trade, 143 F.R.D. at 520.

Applying this standard, the challenged documents seem to implicate both the laws of Italy and the United States. However, the evidentiary record is inadequate to determine which country has a "predominant interest" in the specific communications and, therefore, which law applies to each set of documents. It may be that the same country's laws apply to each of the Volpi communications, but the descriptions provided in the amended privilege log, such as "Guess Twirl Watch," "Investigation into Guess Products," and "Strategic Review and Preparation of Evidence," are insufficient for the Court to determine whether American or Italian law applies.

With respect to the Moss communications, as noted, I have today issued a memorandum and order denying Gucci's motion for a protective order on the basis that the attorney-client privilege applies to those communications. However, Gucci requests, in the alternative, that the Court consider the applicability of the work product doctrine. Just as it is deficient on the choice of law issues, the amended privilege log also provides insufficient information for the Court to determine the basis of Gucci's invocation of the work-product doctrine. Specifically, the Court lacks evidence "as to which of the documents and oral communications…covered by the work-product rule were in fact made principally in anticipation of litigation and which were made principally for other purposes." Bowne of New York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 472 (S.D.N.Y. 1993).

To facilitate its determination of privilege, a court may require "an adequately detailed privilege log in conjunction with evidentiary submissions to fill in any factual gaps." Bowne, 150 F.R.D. at 474; accord United States v. Constr. Prods. Research. Inc. 73 F.3d 464, 473 (2d Cir. 1996). At a minimum, a privilege log must "describe the nature of the documents, communications, or tangible things not produced or disclosed—and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim." Fed. R. Civ. P. 26(b)(5)(A)(ii). Rule 26(b) is supplemented by Local Civil Rule 26.2(a)(2)(A), which sets forth the specific information that must be disclosed when documents are withheld on the ground of privilege. Local Civil Rule 26.2(c). Although Gucci's privilege log establishes that Volpi and Moss participated in communications regarding this litigation, the issues raised in both motions require further particularization of the communications.

Accordingly, Gucci is directed to revise its amended privilege log as follows: (i) identify with specificity which of the Volpi communications relate to the instant litigation and which communications relate to the Italian litigation so that the Court can determine whether the attorney-client privilege applies; and (ii) provide a detailed description, beyond the subject matter of the document, sufficient to indicate Gucci's basis for designating each of the communications—involving both Volpi and Moss—as protected from disclosure pursuant to the work-product doctrine. Gucci is further directed to submit the revised amended privilege log to the Court in 12-point font, with a copy served upon all counsel of record, by July 6, 2010.

In revising its privilege log, Gucci is reminded that "neither the attorney-client privilege nor the work product privilege protects underlying facts." SR Int'l Bus. Ins. Co. Ltd. v. World Trade Center Prop. LLC, 01 Civ. 9291 (JSM), 2002 WL 1455346, at *4 (S.D.N.Y. July 3, 2002). As the Supreme Court instructed in Upjohn Co. v. United States, 449 U.S. 383, 396(1981), a client "may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication to his attorney." Gucci is further advised that if it fails to "provide sufficient detail to demonstrate fulfillment of all of the legal requirements for application of the privilege, [its] claim will be rejected." Bowne, 150 F.R.D. at 474 (citing cases).2

Following the production of the revised amended privilege log, the parties are directed to meet and confer promptly to determine if they can agree as to whether any of the documents at issue are protected under the work product doctrine. The parties should advise the Court by letter no later than July 9, 2010 which documents on the revised amended privilege log remain in dispute. In addition, by July 16, 2010, the parties may submit additional memoranda of law, not to exceed 10 pages, addressing the work product doctrine issues raised with respect to both the Moss and Vanni communications.

SO ORDERED.

1. Gucci has twice amended its complaint. See Second Amended Compl. (Dkt. #101).

2. While there has been discussion by the parties of in camera review of the documents, at this stage of the proceedings, it would be premature to do so. As Magistrate Judge Dolinger noted in Bowne, such review is not "to be routinely undertaken, particularly in a case involving a substantial volume of documents, as a substitute for a party's submission of an adequate record in support of its privilege claims." 150 F.R.D. at 475. In camera review may be useful if there is "a genuine dispute between the parties as to the accuracy of the withholding party's description of certain documents." Id.

Gucci Fires Lawyer...
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BAR FIGHT: The trademark skirmish between Gucci and Guess Inc. offered up a side dish last week when the luxury firm revealed it recently fired an in-house lawyer after learning he wasn’t an active member of any state bar. According to court documents filed Friday, Gucci America Inc. terminated Jonathan Moss on March 1. Gucci said it discovered in January that Moss’ status with the California bar had been inactive for the whole of his seven-year run as legal counsel with the firm. Guess has sought access to Moss’ communications regarding a trademark infringement lawsuit Gucci brought against it in U.S. District Court in Manhattan last year. Gucci’s disclosure came in a memo backing a motion that the attorney-client privilege should still apply to his involvement in the case. In the memo, Gucci argues Moss is a graduate of Fordham University School of Law and passed the California state bar exam in 1993. In what the company’s lawyer called a “ministerial” change, Moss voluntarily switched his status with the bar from “active” to “inactive” in 1996 because the latter was less expensive to maintain. In invoking attorney-client privilege, Gucci argued that Moss was still a member of the bar despite the status change and that he has been a member of the bar for two of California’s federal courts since 1994. According to the memo, Gucci hired Moss in 2002 in a nonlawyer position and promoted him to in-house legal counsel the next year. The company said it placed him on administrative leave in January after learning of his bar status and later fired him with cause after he admitted he had not been forthcoming. Gucci’s attorney said the company had no comment. — Matthew Lynch