Opinion
22-CV-5072 (LGS) (RWL)
2023-01-09
Ilaria BULGARI, Plaintiff, v. Veronica BULGARI, in her capacity as Trustee of the Anna Bulgari Family Trust #1 and the Anna Bulgari Family Trust #2, Defendant.
David Boies, II, Boies, Schiller & Flexner LLP, Armonk, NY, Peter M. Skinner, Morrison & Foerster LLP, New York, NY, Matthew Lane Schwartz, Boies Schiller Flexner LLP, New York, NY, for Plaintiff. Michael Max Rosensaft, Jake Alec Nussbaum, Katten Muchin Rosenman LLP, New York, NY, Mitchell Alan Karlan, Gibson, Dunn & Crutcher, LLP, New York, NY, Jennifer Bracht, Gibson, Dunn & Crutcher LLP, Denver, CO, for Defendant.
David Boies, II, Boies, Schiller & Flexner LLP, Armonk, NY, Peter M. Skinner, Morrison & Foerster LLP, New York, NY, Matthew Lane Schwartz, Boies Schiller Flexner LLP, New York, NY, for Plaintiff. Michael Max Rosensaft, Jake Alec Nussbaum, Katten Muchin Rosenman LLP, New York, NY, Mitchell Alan Karlan, Gibson, Dunn & Crutcher, LLP, New York, NY, Jennifer Bracht, Gibson, Dunn & Crutcher LLP, Denver, CO, for Defendant.
DECISION AND ORDER
ROBERT W. LEHRBURGER, United States Magistrate Judge.
In this family squabble, Plaintiff Ilaria Bulgari ("Ilaria") has sued her older sister Veronica Bulgari ("Veronica") for breach of fiduciary duty and negligence in overseeing two trusts to which Ilaria is a beneficiary. Currently before the Court is Veronica's motion to compel production of communications between Ilaria, Ilaria's lawyers, and Jan Boyer with whom Ilaria cohabits and has been in a long-term, committed romantic relationship since February 2019. Under New York law, absent an exception, the right of a client to assert privilege over attorney-client communications is waived when those communications take place in the presence of third parties. People v. Osorio, 75 N.Y.2d 80, 84, 550 N.Y.S. 2d 612, 614, 549 N.E.2d 1183 (1989). Veronica claims that Ilaria waived her right to claim attorney-client privilege over the communications by including Boyer in those discussions. Ilaria contends that the privilege is preserved for three reasons, any one of which would be an exception to waiver: namely, that Boyer is her spouse, acted as her agent, and shares a common legal interest with Ilaria. The Court addresses each argument in turn.
A. The Spousal Argument
The Court is not persuaded by Ilaria's first argument that her right to assert the privilege is protected by her and Boyer's spousal relationship. Ilaria and Boyer are not legally married and do not claim to be. Nor are they common law husband and wife. Rather, they claim to be each other's "spouse" under Swiss law (Bulgari Decl. ¶ 1; Boyer Decl. ¶ 1), and that she and Boyer "have been cohabiting in a relationship equivalent to a common law marriage." (Pl. Mem. at 6 (emphasis added).) But neither her Swiss legal expert nor any other authority cited by her supports that proposition.
"Bulgari Decl." refers to the Declaration of Ilaria Bulgari, dated December 12, 2022 (Dkt. 73-1). "Boyer Decl." refers to the Declaration of Jan Boyer, dated December 12, 2022 (Dkt. 73-2.)
"Pl. Mem." refers to Plaintiff's Memorandum Of Law In Opposition To Defendant's Application To Overrule Plaintiff's Assertion Of Attorney-Client Privilege Over Communications Between Her Lawyers And Jan Boyer, filed December 12, 2022 (Dkt. 73.)
Instead, Ilaria's expert explains that Ilaria and Boyer are deemed to be "de facto cohabitants" specifically under a Swiss evidentiary rule that permits each cohabitant to refuse to cooperate, in particular to testify, against the other cohabitant. (Goksu Rep. ¶¶ 32-34.) From that proposition, Ilaria leaps to the conclusion that Boyer's presence during discussions between Ilaria and her attorneys does not waive Ilaria's right to assert attorney-client privilege. But Ilaria provides no explanation, and again no authority, to support converting a Swiss testimonial evidentiary rule into a rule against waiver of attorney-client privilege under New York law. And both Ilaria's expert and Veronica's Swiss legal expert agree that there is no generalized "de facto cohabitant" status under Swiss law; rather, it is a concept only selectively applied in particular situations. (See Goksu Rep. ¶ 16; Suter Rep. ¶ 17.)
"Goksu Rep." refers to the "Expert legal opinion" of Prof. Dr. Tarkan Goksu, dated November 17, 2022 (Dkt. 73-3, Ex. 1.)
"Suter Rep." refers to the expert opinion of Claudia Suter as set forth in her "Working paper: Marriage pursuant to Swiss laws," dated December 26, 2022 (Dkt. 90-1.)
As Ilaria concedes, "New York law governs the privilege question." (Pl. Reply at 1.) Under New York law, a spouse's disclosure of attorney-client communications to their spouse made with a reasonable expectation of confidentiality generally does not waive the privilege. In re Lifetrade Litigation, No. 17-CV-2987, 2022 WL 3644357, at *6 (S.D.N.Y. Aug. 24, 2022); Shih v. Petal Card, Inc., 565 F. Supp.3d 557, 573 (S.D.N.Y. 2021). As already established, however, Ilaria and Boyer in fact are not married, whether considered under New York or Swiss law. It thus is irrelevant that, as Ilaria posits, "the validity of a marriage" generally "is determined by the law of the jurisdiction where it is celebrated." (Pl. Mem. at 5) (quoting United States v. Helbrans, 570 F. Supp.3d 83, 88 (S.D.N.Y. 2021)). In short, Ilaria's argument premised on her and Boyer's relationship under Swiss law does not preserve the privilege.
"Pl. Reply" refers to "Plaintiff's Reply Memorandum Of Law In Opposition To Defendant's Application To Overrule Plaintiff's Assertion Of Attorney-Client Privilege Over Communications Between Plaintiff's Lawyers And Jan Boyer," filed January 6, 2023 (Dkt. 100.)
B. The Agency Argument
The Court does find persuasive, however, Ilaria's argument based on Boyer serving as her agent in communicating with counsel. "[W]here a third party is present during attorney-client communications, as either the party's or the attorney's agent, in order to facilitate rendition of legal services, the protection of the privilege remains intact." Oxyn Telecommunications, Inc. v. Onse Telecom, No. 01-CV-1012, 2003 WL 660848, at *2 (S.D.N.Y. Feb. 27, 2003) (citing United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961)). In Kovel, the Second Circuit "recognized that the inclusion of a third party in attorney-client communications does not destroy the privilege if the purpose of the third party's participation is to improve the comprehension of the communications between attorney and client." United States v. Ackert, 169 F.3d 136, 139 (2d Cir. 1999). "The test dividing agency (and thus privilege protection) and lack thereof (and thus waiver) is the necessity of the third-party in facilitating the confidential communications between counsel and client." Guiffre v. Maxwell, No. 15-CV-7433, 2016 WL 1756918, at *8 (S.D.N.Y. May 2, 2016). At the same time, "the scope of the privilege is not defined by the third parties' employment or function . . . it depends on whether the client had a reasonable expectation of confidentiality under the circumstances." Osorio, 75 N.Y.2d at 84, 550 N.Y.S.2d at 615, 549 N.E.2d 1183. Accordingly, "to avail itself of the 'agency' exception and avoid the consequences of a waiver, case law makes clear that [the party claiming privilege] must establish" both a "reasonable expectation of confidentiality" and "that disclosure to a third party . . . was necessary for the client to obtain informed legal advice." National Education Training Group, Inc. v. Skillsoft Corp., No. M8-85, 1999 WL 378337, at *4 (S.D.N.Y. June 10, 1999) (internal quotation marks and citations omitted).
Unlike Ilaria's argument premised on Swiss law, her agency argument does not depend on her and Boyer's marital status. Courts have found no waiver of attorney-client privilege where various third parties, including both family and non-family, acted as the client's agent in communicating with counsel. See, e.g., Oxyn Telecommunications, 2003 WL 660848 at * 3 (privilege preserved where business executive and attorney from third-party corporate entity helped "maximize the effectiveness of [the parties'] attorney-client communications" and whose presence was "intended and expected to enhance communications" across two different cultures); Stroh v. General Motors Corp., 213 A.D.2d 267, 268, 623 N.Y.S.2d 873, 874 (1st Dep't 1995) (privilege preserved where daughter selected law firm for injured mother, drove her to the law office, and "put her sufficiently at ease to communicate effectively with counsel" about "what was probably the most traumatic experience of her life"); St. Louis v. Hrustich, 35 Misc.3d 1232(A), 953 N.Y.S.2d 554, 554, 2012 N.Y. Slip Op. 50982(U), 2012 WL 1958898, at *2 (Sup. Ct. Albany Cty. May 30, 2012) (unreported disposition) (privilege preserved where plaintiff's fiancé initially contacted attorney on plaintiff's behalf at a time when plaintiff was in great pain and could not care for herself, and later communicated with attorney alone or with plaintiff present on multiple occasions); Matter of Sosnow, 16 Misc.3d 1106(A), 841 N.Y.S.2d 826, 826, 2007 N.Y. Slip Op. 51316(U), 2007 WL 1893622, at *2 (Sup. Ct. Nassau Cty. June 21, 2007) (unreported disposition) (privilege preserved where husband of co-executrix participated in attorney-client discussions with estate counsel and was, as alleged, "familiar with the decedent's business enterprises and was thus able to provide information and advice to the executrix with respect to the instant claim").
Here, what matters is whether Boyer was necessary to facilitate the advice of counsel provided to Ilaria in connection with the trust issues and whether she maintained a reasonable expectation of confidentiality with Boyer being included in the discussions. The answer to both is yes. Although, as Veronica points out, Plaintiff "speaks fluent English, sits on the board of numerous organizations, and travels the world" (Def. Mem. at 9), she has no specialized background in finance or understanding of complex financial concepts. (Bulgari Decl. ¶ 5.) In contrast, Boyer has extensive financial knowledge and experience, having worked almost four decades in the financial and investment industry, including at financial institutions such as Lehman Brothers, BancBoston Capital, SoftBank, and Lazard and Templeton. (Boyer Decl. ¶ 5.) He also has served on over twenty corporate, public sector, and nonprofit boards, including their audit committees. (Id.) As a result, Ilaria "relied on [Boyer's] financial expertise and ability to communicate difficult financial concepts in connection with receiving legal advice" concerning the trusts at issue. (Id. ¶ 6.) Indeed, Boyer's presence and financial knowledge were "essential to Ilaria's receipt of legal advice from all of her attorneys." (Id. ¶ 8; Bulgari Decl. ¶ 7.) To be sure, the attorney-client privilege is not preserved where the third party's presence is merely "useful and convenient," but the evidence here substantiates that Boyer's assistance exceeded that. See National Education Training Group, Inc., 1999 WL 378337, at *4 ("The available case law indicates that the 'necessity' element means more than just useful and convenient, but rather requires that the level of involvement of the party be nearly indispensable or served some specialized purpose in facilitating the attorney-client communications").
"Def. Mem." refers to Defendant's Memorandum Of Law In Support Of Her Application To Overrule Plaintiff's Assertion Of Attorney-Client Privilege Over Communications Between Plaintiff's Lawyers And Jan Boyer," filed December 26, 2022 (Dkt. 89.)
In National Education Training Group, Inc., the presence of an assistant to a company director waived privilege because both the assistant and director took notes at the meeting, and the assistant's notes were not passed on to anyone else thus demonstrating that her inclusion was not necessary. 1999 WL 378337, at *5.
It also is abundantly clear that Ilaria and Boyer reasonably expected that their communications with counsel would remain confidential. Ilaria and Boyer each agreed, as a condition of Boyer's participation in any attorney-client communications with Ilaria's attorneys, that Boyer would keep all such communications confidential. (Boyer Decl. ¶ 8; Bulgari Decl. ¶ 7.) That, together with all the facts concerning their established romantic, committed, relationship during which they have cohabited for the last three to four years and manage their finances jointly, makes it eminently reasonable for Ilaria, and Boyer, to have expected that the communications would be maintained as confidential. (See Bulgari Decl. ¶¶ 2-4; Boyer Decl. ¶¶ 2-4.)
Veronica's brief asserts that Ilaria could not have had a reasonable expectation of maintaining privilege because one of her lawyers "warned [her] about the inclusion of Mr. Boyer in what would otherwise be privileged conversations," citing "Friedman Dep. 24-25." (Def. Mem. at 9.) The Court does not agree. First, the "Friedman Dep." cited does not appear to be among the exhibits filed with the Court. Second, the assertion does not purport to quote what was actually said, leaving the Court unable to confirm the correctness of the characterization. Third, even if correctly characterized, "warned" could mean a number of things. For example, attorney Friedman could have warned Ilaria that, even though privilege would be preserved by including Boyer, there was a risk that Veronica would nevertheless contest it. Or, as another example, attorney Friedman could have warned Ilaria that even though Ilaria had a reasonable expectation of confidentiality, there was some chance that a court could still find waiver. Or perhaps, attorney Friedman warned Ilaria that including Boyer necessarily would waive her attorney-client privilege, in which case Ilaria would not have had a reasonable expectation that including Boyer would not waive privilege. But that is pure speculation, and the Court cannot ascribe any particular meaning to attorney Friedman's "warning."
Ilaria thus has established both elements required for the agency exception, and Boyer's presence did not waive Ilaria's claim to attorney-client privilege.
C. The Common Interest Argument
Because the Court finds that the subject attorney-client privilege has not been waived for other reasons, the Court does not analyze Ilaria's common interest argument.
D. Conclusion
For the reasons set forth above, Defendant's motion to compel production of Plaintiff's communications with counsel in which Boyer participated is DENIED.