Ramada Inns, Inc. v. Dow Jones & Co., Inc.

• Decision Date: 15 October 1986
• Parties: 13 Media L. Rep. 1872 RAMADA INNS, INC., Hotel Ramada of Nevada, Admar of New Jersey, Inc. and Ramada Hotel Operation Company, Plaintiffs, v. DOW JONES & COMPANY, INC. Defendant. . Submitted:
• Court: Delaware Superior Court

Page 968

523 A.2d 968

13 Media L. Rep. 1872

RAMADA INNS, INC., Hotel Ramada of Nevada, Admar of New

Jersey, Inc. and Ramada Hotel Operation Company, Plaintiffs, v. DOW JONES & COMPANY, INC. Defendant.

Superior Court of Delaware,

New Castle County.

Submitted: Oct. 15, 1986.

Decided: Dec. 15, 1986.

On Motion of Plaintiffs to Compel Deposition of Certain Dow Jones' Attorneys--Denied.

F. Alton Tybout, of Tybout, Redfearn, Casarino & Pell, and Thomas C. Green, of Sharp, Green & Lankford, Washington, D.C., for plaintiffs.

Edmund N. Carpenter, II, of Richards, Layton & Finger, and Gregory L. Diskant, of Patterson, Belknap, Webb & Tyler, New York City, for defendant.

TAYLOR, Judge.

Plaintiffs seek to take the deposition of two attorneys, Gregory L. Diskant, Esq., who is head counsel for Dow Jones & Company, Inc. [defendant] in this suit, and Robert S. Sack, Esq., who is general counsel of defendant.

This is a libel suit growing out of articles written by James A. Drinkhall and John Andrews and published by defendant in the Wall Street Journal [Journal]. Plaintiffs seek, by these depositions, to establish what facts were communicated to the management and/or editors of the Journal regarding Mr. Drinkhall's reporting policies and manner of performance as a writer for the Journal. ¹ Plaintiffs support their need for taking these depositions on the ground that the managing editor of the Journal was "less than precise in his knowledge of the emerging evidence accumulated by plaintiffs during previous litigation."

The discovery sought by plaintiffs deals with facts communicated by the attorneys to the management and/or editors of the Journal. Plaintiffs seek to use this information to aid in establishing reckless indifference to the truth or actual malice on the part of the Journal, by showing that the editors of the Journal were on notice of Jim Drinkhall's reporting practices when they published his articles which are the subject of this suit.

The fact that the management and/or editors of the Journal had certain information at a critical time is relevant to an issue in this case, Rule 401 Delaware Uniform Rules of Evidence, in that it may have a tendency to establish plaintiffs' contention that defendant was aware of Mr. Drinkhall's reporting practices which resulted in these allegedly libelous articles.

Defendant opposes these depositions on the grounds that the subject of the depositions is protected (1) by lawyer-client privilege and (2) by the work product rule.

I.

The current scope of the lawyer-client privilege in this State is defined in Rule 502 of the Delaware Uniform Rules of Evidence. Rule 502(b) declares:

A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client (1) between himself or his representative and his lawyer or his lawyer's representative, (2) between his lawyer and the lawyer's representative, (3) by him or his representative or his lawyer or a representative of the lawyer to a lawyer or a representative of a lawyer representing another in a matter of common interest, (4) between representatives of the client or between the client and a representative of the client, or (5) among lawyers and their representatives representing the same client. ²

Paraphrasing the language of Rule 502(b) as it applies to alternative number (1), the privilege extends to a (1) communication, (2) which is confidential, (3) which was made for the purpose of facilitating the rendition of professional legal services to the client, (4) between the client and it's attorney.

The significance of Rule 502 becomes clear from a review of the events which led up to the adoption of the Delaware Uniform Rules of Evidence. Before adoption of the Federal Rules of Evidence, a body of case law developed in the Federal Courts which excluded from the protection of the lawyer-client privilege, information obtained by an attorney from non-privileged sources. Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947); 8 Wright & Miller, Federal Practice and Procedure: Civil § 2017, p. 137. This limited exclusion has been applied even where the attorney communicated that information to the client. In re Sealed Case, D.C.Cir., 737 F.2d 94 (1984); United States v. International Business Machines Corp., S.D.N.Y., 66 F.R.D. 206, 211-2 (1974); J.P. Foley & Co., Inc. v. Vanderbilt, S.D.N.Y., 65 F.R.D. 523 (1974). Not all decisions of the Federal Courts have followed this view. Valente v. Pepsico, Inc., D.Del., 68 F.R.D. 361, 367 (1975); In re Grand Jury Proceedings, 3d Cir., 604 F.2d 798 (1979); United States v. Amerada Hess Corp., 3d Cir., 619 F.2d 980 (1980). The Court of Appeals for the Third Circuit in United States v. Amerada Hess Corp., supra, at 986, disapproved the exclusion of such communications from a lawyer to his client from protection as a privileged communication.

Conceptually, the two lines of federal decisions differ over whether all communications from an attorney to his client (which otherwise come under the traditional concept of privilege) should be protected by the privilege or whether only attorney's communications which reflect prior communications from the client should be protected. The latter alternative rests on the premise that the sole objective of the privilege is to permit a client to divulge matters to an attorney without fear that these will be revealed to anyone else. J.P. Foley & Co., Inc. v. Vanderbilt, 65 F.R.D. at 526; United States v. International Business Machine Corp., 66 F.R.D. at 211; United States v. Silverman, 2d Cir., 430 F.2d 106 (1970); 8 Wigmore on Evidence (McNaughton Ed.) § 2290-2292, p. 542-554; McCormick on Evidence (3d Ed.) § 87, p. 205.

The decisions by the Federal Courts cited by plaintiffs have followed the rationale espoused by Wigmore and McCormick that the legitimate purpose of lawyer-client privilege is only to assure that the client can disclose all pertinent information to the attorney without fear that it will be divulged. This concept was embodied in the following oft-quoted formulation by Judge Wyzanski in United States v. United Shoe Machinery Corporation, D.Mass., 89 F.Supp. 357 (1950):

"The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client." ³

The Committee which formulated the draft of the Federal Rules of Evidence which was approved by the United States Supreme Court inserted a series of Rules dealing with privilege. The Rule dealing with lawyer-client privilege, Rule 503, was substantially the same as Rule 502 of the Uniform Rules of Evidence. It will be noted that draft Federal Rule 503 differs substantially from the Judge Wyzanski and Wigmore formulations which limit lawyer-client privilege to communications made by a client. The Uniform Rules of Evidence formulation contains no such limitation but instead extends to communications between the lawyer and the client.

When the Rules of Evidence as conditionally adopted by the United States Supreme Court came before Congress, the rules dealing with privilege came under criticism. 2 Weinstein's Evidence § 502-1 to 501-19. Ultimately, it was concluded that a formulation satisfactory to Congress could not be made and Congress struck the rules defining privilege and substituted a rule which would "leave the Federal law of privilege where we found it." Ibid., p. 501-19. Thus, the division within the Federal Courts remains.

Prior to adoption of the Federal Rules of Evidence, the Chief Justice of this State appointed a committee of lawyers and judges to consider the adoption of rules of evidence for this State. With the staff assistance of Prof. Louis E. Schwartz of Delaware Law School, the committee made a thorough study of the Federal Rules as conditionally adopted by the United States Supreme Court and as modified by Congress, and the Uniform Rules of Evidence and prior Delaware decisions. On the subject of lawyer-client privilege, the Committee adopted (with only minor modification not significant here) the wording of Rule 502 of the Uniform Rules of Evidence, as Rule 502 of the Delaware Rules.

The comment at the end of Rule 501 of the Delaware Uniform Rules of Evidence (which is adopted with respect to Rule 502) notes that the Delaware draftsmen rejected the view of the United States Congress that the definition of privilege should be left to the common law. However, that comment notes that "except for minor refinements," the Delaware Rules defining privilege are consistent with existing Delaware law.

The comment following Rule 502 refers to only one prior decision which that Rule is intended not to be in conflict with, namely, Riggs Nat. Bank of Washington, D.C. v. Zimmer, Del.Ch., 355 A.2d 709 (1976). That case held that the lawyer-client privilege does not prevent a trust beneficiary from obtaining a legal memorandum submitted to the trustee by its attorney and requested by the trustee for the benefit of the trust beneficiaries. The reasoning of the Chancellor was that in such case, the beneficiaries were the real client for whom the legal memorandum was prepared. This holding does not conflict with the meaning which the instant case attaches to Rule 502.

The foregoing background demonstrates that Delaware Rule...