Weitz & Luxenberg P.C. v. Ga.-Pac. LLC (In re N.Y.C. Asbestos Litig.)

• Decision Date: 06 June 2013
• Court: New York Supreme Court — Appellate Division
• Parties: In re NEW YORK CITY ASBESTOS LITIGATION. Weitz & Luxenberg P.C., Plaintiffs–Respondents, v. Georgia–Pacific LLC, Defendant–Appellant.

109 A.D.3d 7

966 N.Y.S.2d 420

2013 N.Y. Slip Op. 04127

In re NEW YORK CITY ASBESTOS LITIGATION.Weitz & Luxenberg P.C., Plaintiffs–Respondents,

v.Georgia–Pacific LLC, Defendant–Appellant.

Supreme Court, Appellate Division, First Department, New York.

June 6, 2013.

Quinn Emanuel Urquhart & Sullivan, LLP, New York (Kathleen M. Sullivan of counsel), and Lynch Daskal Emery LLP, New York (Scott Emery of counsel), for appellant.

Weitz & Luxenberg P.C., New York (Jerry Kristal and Alani Golanski of counsel), for respondents.

RICHARD T. ANDRIAS, J.P., JOHN W. SWEENY, JR., HELEN E. FREEDMAN, PAUL G. FEINMAN, JUDITH J. GISCHE, JJ.

ANDRIAS, J.P.

This discovery dispute pertains to all of the Weitz & Luxenberg New York City Asbestos Litigation (NYCAL) cases in which Georgia–Pacific (GP) is a defendant. For the following reasons, we find that the motion court providently exercised its discretion when it denied GP's motions to vacate the Special Master's recommendations and directed an in camera review of certain internal communications identified in GP's privilege log and the production to plaintiffs of certain underlying data related to eight published research studies funded by GP concerning the health effects of its joint compound.

GP funded these studies in 2005 to aid in its defense of asbestos-related lawsuits. The studies were performed by experts from various organizations, who, among other things, recreated GP's historical joint compound product for the purpose of testing its biopersistence and pathogenicity. To facilitate the endeavor, GP entered into a special employment relationship with Stewart Holm, its Director of Toxicology and Chemical Management, to perform expert consulting services under the auspices of its in-house counsel, who also was significantly involved in the pre-publication review process.

At Holm's deposition, plaintiffs requested that GP produce all documents relating to the studies. GP produced certain documentsand a privilege log asserting that all communications with its consulting experts were protected by the attorney work product privilege and that its internal communications were protected by the attorney-client privilege. The Special Master directed an in camera review of all documents identified in GP's privilege log (Recommendation # 1), and production of all materials and raw data underlying the published studies (Recommendation # 2).

The motion court denied GP's motion to vacate the Special Master's recommendations, as well its motion for leave to reargue the in camera prong of that decision to narrow its scope. GP appeals, arguing that plaintiffs failed to make the necessary showings to warrant in camera review of internal privileged communications or production of work product data and that ordering that review and production is an unwarranted intrusion into GP's privileged communications.¹

The motion court providently exercised its broad discretion in supervising disclosure when it confirmed Recommendation # 1 and granted in camera review of the documents to determine whether the crime-fraud exception to the attorney-client privilege applied ( see Those Certain Underwriters at Lloyds, London v. Occidental Gems, Inc., 11 N.Y.3d 843, 845, 873 N.Y.S.2d 239, 901 N.E.2d 732 [2008] ).

The crime-fraud exception encompasses “ ‘a fraudulent scheme, an alleged breach of fiduciary duty or an accusation of some other wrongful conduct’ ” ( Art Capital Group LLC v. Rose, 54 A.D.3d 276, 277, 862 N.Y.S.2d 369 [1st Dept. 2008], quoting Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 1 A.D.3d 223, 224, 767 N.Y.S.2d 228 [1st Dept. 2003] ). “[A]dvice in furtherance of a fraudulent or unlawful goal cannot be considered ‘sound.’ Rather advice in furtherance of such goals is socially perverse, and the client's communications seeking such advice are not worthy of protection” (In re Grand Jury Subpoena Duces Tecum, 731 F.2d 1032, 1038 [2d Cir.1984] ).

A party seeking “to invoke the crime-fraud exception must demonstrate that there is a factual basis for a showing of probable cause to believe that a fraud or crime has been committed and that the communications in question were in furtherance of the fraud or crime” ( United States v. Jacobs, 117 F.3d 82, 87 [2nd Cir.1997]; see also Ulico Cas. Co., 1 A.D.3d at 224, 767 N.Y.S.2d 228;Matter of Grand Jury Subpoena, 1 A.D.3d 172, 767 N.Y.S.2d 77 [1st Dept. 2003] ). However, “[a] lesser evidentiary showing is needed to trigger in camera review than is required ultimately to overcome the privilege” ( United States v. Zolin, 491 U.S. 554, 572, 109 S.Ct. 2619, 105 L.Ed.2d 469 [1989] ).

To permit in camera review of the documents to analyze whether the communications were used in furtherance of such wrongful activity, there need only be “a showing of a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies”( id. [internal quotation marks and citation omitted] ). “Once that showing is made, the decision whether to engage in in camera review of the evidence rests in the sound discretion of the [ ] court” ( id.).

Holm co-authorized nearly all of the studies, which were intended to cast doubt on the capability of chrysotile asbestos to cause cancer. On the two articles that he did not co-author, he and GP's counsel participated in lengthy “WebEx conferences” in which they discussed the manuscripts and suggested revisions. Despite this extensive participation, none of the articles disclosed that GP's in-house counsel had reviewed the manuscripts before they were submitted for publication. Two articles falsely stated that “[GP] did not participate in the design of the study, analysis of the data, or preparation of the manuscript.” For articles lead-authored by David M. Bernstein, Ph.D., and co-authored by Holm, the only disclosure was that the research was “sponsored” or “supported” by a grant from GP. The articles did not disclose that Holm was specially employed by GP for the asbestos litigation or that he reported to GP's in-house counsel. Furthermore, there were no grant proposals, and Dr. Bernstein was hired by GP on an hourly basis. Nor did the articles reveal that Dr. Bernstein has been disclosed as a GP expert witness in NYCAL since 2009, that he had testified as a defense expert for Union Carbide Corporation in asbestos litigation, or that he had been paid by, and spoken on behalf of, the Chrysotile Institute, the lobbying arm of the Quebec chrysotile mining industry. Although GP belatedly endeavored to address the inadequacies of certain of its disclosures, its corrections failed to acknowledge its in-house counsel's participation and did not make clear that Dr. Bernstein's testimony as an expert witness preceded the publication of the first GP reformulated joint compound article in 2008.

The foregoing constitutes a sufficient factual basis for a finding that the relevant communications could have been in furtherance of a fraud, and the motion court properly confirmed the recommendation directing in camera review of the internal documents. As the court remarked, it is of concern that GP's in-house counsel would be so intimately involved in supposedly objective scientific studies, especially in light of GP's disclosures denying such participation ( see United States v. Philip Morris USA, Inc., 449 F.Supp.2d 1 [D.D.C. 2006] [applying the fraud-crime exception, in regard to defendants' litigation-related efforts to skew smoking and health research], affd. in relevant part566 F.3d 1095 [D.C. Cir. 2009], cert. denied––– U.S. ––––, 130 S.Ct. 3501, 177 L.Ed.2d 1090 [2010] ).²

The motion court providently exercised its discretion when it confirmed Recommendation # 2 and directed GP to produce all documents and materials underlying the published studies over which it has possession, custody, or control, including, but not limited to, microscopy images, the data generated in the chambers where the reformulated compounds were created, and numerical calculations, and to act in good faith to secure its consulting experts' compliance with the direction to produce.

Attorney work product under CPLR 3101(c), which is subject to an absolute privilege, is limited to “documents prepared by counsel acting as such, and to materials uniquely the product of a lawyer's learning and professional skills, such as those reflecting an attorney's legal research, analysis, conclusions, legal theory or strategy” (Brooklyn Union Gas Co. v. American Home Assur. Co., 23 A.D.3d 190, 190–191, 803 N.Y.S.2d 532 [1st Dept. 2005] ). Documents generated for litigation are generally classified as trial preparation materials (CPLR 3101[d][2] ) unless they contain otherwise privileged communications, such as memoranda of private...