TRT, Inc. CLE Blog

 

The attorney-client privilege cannot be claimed by a company that failed to confirm that its in-house lawyer was actually authorized to practice law (Gucci America Inc. v. Guess? Inc., S.D.N.Y., 09 Civ. 4373 (SAS) (JLC), 6/29/10).   Magistrate Judge James L. Cott ruled that the attorney-client privilege does not cover a company's communications with an in-house lawyer who was an inactive member of a state's bar.  The company's belief that its employee was an actively licensed attorney authorized to practice law was not reasonable because the company never did any due diligence, i.e., checking the state bar's website, to confirm the employee’s professional status.  During discovery in a trademark infringement case that Gucci America, Inc. was pursuing against Guess?, Inc. and several other companies, Gucci submitted a privilege log including communications with its in-house legal counsel, Jonathan Moss.  Upon discovery of Moss’s inactive California bar license, Guess disputed Gucci’s privilege claim.  Upon investigation, Gucci terminated Moss and sought a protective order.  Moss had transferred to inactive status in 1996 and remained on inactive status for more than 13 years, meaning his license was inactive throughout his eight years of employment with Gucci. During that time, Moss provided Gucci with legal advice and appeared before courts and administrative agencies on Gucci's behalf, Cott said. Gucci explained that it never checked Moss's bar status because its primary outside law firm recommended him and because initially he was hired for a nonlegal position before being promoted to inside legal counsel.  The company contended that Gucci management had always believed that Moss was an attorney authorized to practice law.  Magistrate Judge Cott agreed with Guess, that the attorney-client privilege does not apply under these circumstances.  Whether the work product doctrine shields the Gucci-Moss communications is to be resolved following additional briefing.  The court noted that “the attorney-client privilege contemplates that the client communicate with an individual who is not simply trained in the law, but actually authorized to engage in the practice of law.”  The court further observed that California explicitly limits the practice of law — including legal advice and court appearances — to active bar members.  Though Gucci claimed that Moss’s choice to switch to inactive status did not impact his status as a bar member, the magistrate judge disagreed.  Inactive membership is preserved for attorneys who choose to refrain from practicing law in California, and a voluntarily inactive bar member who holds himself out as entitled to practice law could be found to have committed a misdemeanor, he said.  Cott also rejected Gucci's argument that Moss was authorized to practice law for purposes of the attorney-client privilege because of his membership in two federal district courts in California.  Although Moss was ostensibly an active member of those courts' bars, he was constructively suspended from practicing in them because of his inactive status with the California State Bar, Cott said. “Because Moss did not possess a bar membership authorizing him to practice law in any jurisdiction, Gucci's communications with Moss do not satisfy any standard of the attorney-client privilege,” Cott declared. Citing United States v. Boffa, 513 F. Supp. 517 (D. Del. 1981), Cott said that Gucci could avail itself of the privilege if it was able to demonstrate that it reasonably believed Moss was authorized to practice law. According to Cott, Boffa set out three factors for determining whether a client reasonably believes that his counsel is in fact an “attorney”:

 

    1] whether the purported lawyer fraudulently held himself out as an attorney; 

 

     2] whether the client genuinely and reasonably believed him to be an attorney; and

 

     3] whether, pursuant to that belief, the client made confidential communications to the purported attorney.