FILED
JAMES J. WALDRON, CLERK
MAR 10 2006
U.S. BANKRUPTCY COURT
NEWARK, N.J.
BY: s/ M. Cohen, DEPUTY
FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY
Caption in Compliance with D.N.J. LBR 9004-2(c)
In re
JACK C. BENUN,
Debtor.
Case No.: 03-32195 (MS)
Chapter 7
FUJI PHOTO FILM CO., LTD.,
Plaintiff,
v.
JACK C. BENUN,
Defendant.
Adv. Pro. No. 03-2615 (MS)
O P I N I O N
APPEARANCES
Bruce Buechler, Esq.
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, NJ 07068
Attorneys for Fuji Photo Film Co., Ltd.
Matthew W. Siegal, Esq.
Stroock, Stroock & Lavan, LLP
180 Maiden Lane
New York, NY 10038
Attorneys for Fuji Photo Film Co., Ltd.
1Related reported decisions include:
Jazz Photo Corp. v. United States, F.3d , 2006 WL 463551 (Fed.
Cir. February 28, 2006), affirming 353 F. Supp. 2d 1327 (Ct. Int’l Trade 2004);
Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368 (Fed. Cir. 2005),
affirming 249 F. Supp. 2d 434 (D.N.J. 2003); Jazz Photo Corp. v. Int’l Trade
Comm’n, 264 F.3d 1094 (Fed. Cir. 2001); and In re Jazz Photo Corp., 312 B.R.
524 (Bankr. D.N.J. 2004).
2Fuji seeks, among other documents in Kaplan’s possession, those “which, in whole or in
part, can be considered to impeach the truthfulness of statements, testimony or written
representations of Benun,” as well as Kaplan’s deposition testimony that Benun’s claims “of
good faith,” including such claims “in . . . proceedings” relating to the infringement of Fuji’s
patents, “were untrue.” Fuji senses that if this court orders such production and testimony, Mr.
2
Joseph L. Schwartz, Esq.
Riker Danzig
Headquarters Plaza
One Speedwell Avenue
Morristown, NJ 07962
Attorneys for Defendant, Jack C. Benun
Warren A. Usatine, Esq.
Cole, Schotz, Meisel, Forman & Leonard, PC
25 Main Street
Hackensack, NJ 07602
Attorneys for Brian T. Moore, Liquidating Trustee
HONORABLE MORRIS STERN
I. Background.1
Fuji Photo Film Co., Ltd (“Fuji”) seeks to depose Jeffrey I. Kaplan, Esq. (“Kaplan”), and
to require production of certain documents from his file, in connection with his representation of
Jazz Photo Corp. (“Jazz”). Kaplan also represented Jack C. Benun (“Benun”), at times jointly
with Kaplan’s representation of Jazz. Jazz, a Chapter 11 debtor, is presently under the control of
Brian T. Moore (“Moore”), as liquidating trustee. Benun is currently a debtor in a Chapter 7
bankruptcy case. In immediate dispute are knotty attorney-client privilege issues.2
Kaplan, as a recently turned antagonist of Mr. Benun, would become an invaluable discovery
source. See Fuji proposed form of discovery order, Docket entry 56 part 3.
3
This adversary proceeding has a near decade-long history, with Benun and Jazz being
pursued by Fuji for patent infringement. Fuji seeks to deny Benun a discharge and to except
from any bankruptcy discharge (if one should issue) its claims against Benun. Fuji’s claims to
exception to discharge are (now) based upon 11 U.S.C. § 523(a)(6) (“willful and malicious
injury . . . to property. . . .”). Denial of discharge would be grounded in 11 U.S.C. § 727(a)(2)(3)
and (5) (transfer, etc. of estate property, failure, etc. to keep records, and failure to explain loss
of assets).
Jazz, in liquidation following confirmation of a liquidating plan, had been a corporation
whose stock was owned by Benun’s family but which operated under his control. Kaplan is a
patent lawyer whose representation of both Benun and Jazz, variously, was in an array of
litigation, regulatory/enforcement proceedings and appeals over the period of this odyssey. The
Benun-Jazz-Fuji litigation trail, in summary form for present purposes, began with a
Fuji-prompted investigation by the International Trade Commission (“ITC-I”). On June 28,
1999 the ITC adopted an administrative finding that the importing and sale of certain
“Lens-Fitted Film Packages” (disposable cameras referred to as “LFFPs”) by Jazz and a number
of other importers violated Fuji’s patents. The Commission issued a General Exclusion Order
and Order to Cease further infringement of Fuji’s patents (hereinafter the “Cease and Desist
Order”). Jazz (not Benun) and others appealed to the Federal Circuit (“Appeal I”). In significant
part, the appeal centered on what manner of refurbishment of Fuji-patented disposable camera
shells would be an allowable “repair,” as distinguished from an infringing “reconstruction.”
3The Federal Circuit reversed the ITC judgment of patent infringement “with respect to
LFFPs for which the patent right was exhausted by first sale in the United States and that were
permissibly repaired.” Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d at 1110. The “first
sale in the United States” (emphasis added) requirement has taken on overriding significance in
subsequent volumes of the Jazz-Benun-Fuji tome.
4
Meanwhile, immediately on the heels of the 1999 ITC-I decision, Fuji sued Jazz, its Hong Kong
subsidiary and Benun in an infringement/damage action in the District Court for the District of
New Jersey (“District Court I”). The chronology of these three matters is:
•ITC initial investigation (ITC-I) - March 18, 1998 to June 28, 1999;
• Fuji District Court patent suit (District Court I) - June 23, 1999 to March
18, 2003 (judgment date); and
•Appeal of ITC-I to Federal Circuit (Appeal I) - September 28, 1999 to
August 21, 2001 (decision date).
Kaplan was counsel to Jazz in ITC-I and Appeal I, and counsel (along with co-counsel) to Jazz
and Benun in District Court I.
Appeal I resulted in a lengthy opinion and, in effect, a manual of “how to” refurbish
LFFPs so that the affirmative defense of “repair” could be advanced by Jazz and others.3 There
was a remand to the ITC for implementation of the decision, which, in turn, generated a request
for comment by the ITC. On January 10, 2002 Kaplan responded for Jazz; Fuji’s January 16,
2002 response included a request for an enforcement proceeding (as to the earlier Commission
Cease and Desist Order), targeting not only Jazz, but also Benun and Jazz’s then president
(Cossentino). Thus, Fuji alerted Kaplan (and the ITC) on January 16, 2002 to Fuji’s intention to
put Benun in further jeopardy, beyond the then pending District Court I infringement action in
which Kaplan had appeared for both Jazz and Benun. On September 24, 2002 the ITC did, in
fact, accede to Fuji’s request by initiating an enforcement proceeding against Jazz, Benun and
5
Cossentino (“ITC-II”). Kaplan dutifully appeared on behalf of Jazz and Benun in ITC-II, and
represented them throughout that proceeding, which concluded on or somewhat after January 14,
2005.
District Court I, long stayed pending the Federal Circuit’s decision in Appeal I, resulted
in a near $30 million judgment against Jazz, its Hong Kong subsidiary and Benun, jointly and
severally. The judgment of March 18, 2003 (covering infringement only through the date of the
decision in Appeal I, August 21, 2001) propelled Jazz and Benun into this court. Jazz filed a
Chapter 11 petition on May 20, 2003, and Benun filed a like petition on July 2, 2003.
The judgment in District Court I was then appealed to the Federal Circuit by counsel
other than Kaplan (Notice of Appeal filed April 9, 2003, “Appeal II”). However, on April 22,
2003 Kaplan filed a declaration in support of a stay pending appeal on behalf of both Jazz and
Benun. Ultimately, on January 14, 2005 the judgment against Benun and Jazz was affirmed.
ITC-II was initially stayed by the bankruptcies. Eventually, the stays were lifted and
Kaplan was authorized by this court to continue to represent both Jazz and Benun in that
enforcement proceeding. Things went badly there for the debtors. On July 27, 2004 the ITC
adopted administrative findings that Jazz, with Benun’s complicity, had again infringed Fuji’s
patents (now, after August 21, 2001). On the day of the Federal Circuit’s January 14, 2005
affirmance (Appeal II), the ITC levied a $13,675,000 penalty (for violation of the 1999 Cease
and Desist Order for the August 21, 2001 through December 12, 2003 period), jointly and
severally, against Jazz and Benun. This amount is due the United States government; however,
Fuji has filed claims in the Jazz and Benun bankruptcies based upon the ITC findings. The
4In a related branch of Jazz-Benun-Fuji fisticuffs, certain containers of LFFPs were
denied entry into the United States by U.S. Customs in August 2004. Customs acted pursuant to
the ITC’s Cease and Desist Order. Jazz challenged Customs by application of October 4, 2004
to the Court of International Trade. That court tried the dispute (between the United States
government and Jazz, to the exclusion of would-be intervenor Fuji), in November 2004. Some
(but not all) LFFPs were deemed to have been established as compliant with the affirmative
defense of first sale/permissible repair announced by the Federal Circuit, and were thus released
into the United States. The United States appealed; on February 28, 2006, the Federal Circuit
affirmed the decision of the Court of International Trade. Jazz Photo Corp. v. United States,
F.3d , 2006 WL 463551 (Fed. Cir. February 28, 2006).
6
ITC-II penalty was appealed, again to the Federal Circuit (“Appeal III”), on Benun’s behalf
(only) by Kaplan. Appeal III is pending.4
Eventually, Jazz was rendered subject to liquidation (an ongoing post-confirmation
process) and Benun’s individual Chapter 11 case was converted. Jazz’s liquidation plan was
confirmed by an Order of May 13, 2005, and Benun’s case was converted to one in Chapter 7 on
March 11, 2005.
On or about May 16, 2005, Moore, Jazz’s liquidating trustee, initiated a legal malpractice
case against Jazz’s lawyers (including Kaplan) for their alleged errors in defense in District
Court I. After being removed from state court and “stopping off” in this court long enough to
allow this court some limited insight into the claims, this case moved (via withdrawal of the
bankruptcy reference) to the District Court (“District Court II”). At some point during the
pendency of District Court II, Benun, a nonparty, provided plaintiff Moore with a declaration. It
alleged that Benun had requested that a certain legal theory be advanced in District Court I
(based upon the view that Appeal I announced “new law” in requiring “first sale in the United
States” as a prerequisite to the affirmative defense of permissible repair, and that the requirement
should not have been applied retroactively in District Court I). Benun’s alleged advice or
7
request was said to have been ignored. Appeal II would not address the issue, deeming it to be
waived as not having been raised in District Court I.
Kaplan, taking umbrage and seeking (in the name of his law firm, “KGGD”) to be
relieved as Benun’s counsel in Appeal III, advised the Federal Circuit in November 2005, as
follows:
Here, withdrawal is mandated under Rule of Professional Conduct
1.7 because the representation of Benun in this appeal will be
“materially limited . . . by the lawyer’s own interests.” KGGD will
be introducing specific documents, and specific testimony, which will
refute the declaration that Mr. Benun has submitted in the
malpractice action. . . . Those documents and that testimony, much
of which represents previously privileged communications between
Mr. Benun and/or his former company, Jazz Photo Corp., and KGGD
as counsel, will most definitely undermine the truthfulness and good
faith of Mr. Benun, and will have a detrimental effect on Mr. Benun’s
rights in this Appeal on several other issues. . . . Indeed, KGGD is
reluctant to disclose those specific documents and testimony
presently for full consideration by this Court now, as mere disclosure
of them would have a detrimental impact on Mr. Benun’s rights.
However, counsel believes that there are specific arguments to be
made in this appeal that will be undermined and indeed refuted by the
privileged information that KGGD will likely be submitting in the
malpractice action, and by the arguments it will be making there, to
refute Benun’s declaration. . . .
Siegal Declaration, Docket Entry 46, Ex. 2 at 3. Thus, in a forum where review of Benun’s good
faith effort to comply with the ITC Cease and Desist Order was a prominent issue, Kaplan
signaled that privileged documents and his testimony would be contra. Fuji, of course, quickly
picked up on the attorney-client schism and the potential for proofs as to Benun’s lack of good
faith. Fuji’s obvious hope is to use Kaplan’s file and testimony to establish Benun’s “willful and
malicious” infringement of its patents for exception to discharge purposes in the immediate
adversary proceeding.
8
This adversary proceeding was initiated by complaint filed on October 7, 2003. The
case has moved slowly through discovery and motion practice. Now that trial is approaching,
motion practice has intensified, including recent cross-summary judgment motions. These
motions resulted in the excising of one of Fuji’s causes (as to 11 U.S.C. § 523(a)(4)) and denial
of the balance of both parties’ motions.
The summary judgment cross-motions made it clear that Benun’s conduct and state of
mind (including the issues of “willful” and “malicious” injury per § 523(a)(6)) had to be
addressed in specific blocks of time running from before the decision in District Court I, through
interim points as marked by, e.g., the ITC-I determination, to the ITC-II determination (and
perhaps beyond).
By motion filed on shortened notice on January 26, 2006, Fuji, apparently energized by
the recently developed split between Kaplan and Benun, sought access to Kaplan’s files and to
Kaplan as a deposition witness. The motion, heard on February 6, 2006, espoused three theories:
that Benun, in asserting in discovery that he was or might be relying on early 1990's advice of
counsel (not Kaplan) to a now-defunct camera company controlled by Benun, opened the
“advice-of-counsel” door; that Jazz’s legal malpractice suit against Kaplan had broadly stripped
away Jazz’s privilege (and presumably Benun’s); and, that in a December 2005 document
discovery session in Trustee Moore’s offices, a significant letter from Kaplan to Jazz’s president
– not Benun – was discovered by Fuji’s counsel. That letter was dated February 15, 2002 and, in
most general terms, expressed Kaplan’s view of “potential ‘holes’ in our compliance” with the
ITC’s 1999 Cease and Desist Order, as impacted by the Appeal I decision of August 21, 2001.
5It is clear that, at the time this letter was written, Fuji was pressing the ITC to begin an
enforcement action against not only Jazz but also Benun, and that Kaplan had already appeared
for Benun in District Court I, the infringement trial which had been stayed pending the decision
in Appeal I. The enforcement action was, in fact, initiated on September 24, 2002. Benun and
Jazz were named respondents. The infringement trial went forward on October 24, 2002.
9
This court reviewed the letter and has readily concluded that it was legal advice of an extremely
sensitive nature based in large part upon Kaplan’s opinion.5
Moore and Fuji disagreed fundamentally as to the December 2005 discovery ground
rules. (Fuji was engaging in discovery in yet another case – its action against Ribi Tech, a newly
formed corporation owned by the Benun family and the current employer of Benun.) Moore
contended that the February 15, 2002 letter was inadvertently made available in and among more
than seventy-five boxes of Jazz documents he had just moved to new quarters (after closing
down the Jazz facility), and that there had been an understanding with Fuji’s counsel that no
attorney-client privilege was being waived by Moore in extending to Fuji the courtesy of
document review. Fuji’s counsel saw things differently. More generally, Moore and Fuji’s
counsel disagreed on the scope of waiver of the attorney-client privilege effected by Moore’s
malpractice suit against Kaplan.
It is apparent to this court that the Trustee did not intend to waive any aspect of Jazz’s
attorney-client privilege by permitting Fuji to review documents, nor did/does Moore believe
that the effort to maximize assets in liquidation through the malpractice suit broadly waived that
privilege. Nevertheless, as to the February 15, 2002 letter inadvertently left available for
discovery, the Trustee did not choose to spend estate assets in expensive litigation with Fuji; by
letter agreement of January 23, 2006, Moore (not “having a dog” in the Fuji-Benun fight) agreed
with Fuji as follows:
10
In the interest of our continuing cooperation with Fuji . . . in
this matter, including its continuing discovery efforts, I provided Fuji
representatives access to certain Jazz documents and information in
both hard copy and electronic form. I did so with the express
understanding that Fuji’s inspection would not effect a waiver of the
attorney-client or attorney work product privileges with regard to any
of those materials. You have disputed that we had such an
understanding with regard to Fuji’s review of the documents in Jazz’s
office that existed in hard copy form. Our disagreement on that point
notwithstanding, and even assuming we had no such agreement for
those hard copy documents, any disclosure of privileged material to
Fuji was inadvertent and cannot form the basis of a claim that any
privilege has been waived.
. . .
As you are aware, the Liquidation Trust is currently pursuing
the above mentioned malpractice claim against the Kaplan & Gillman
and Dreier firms relating to their handling of the patent infringement
trial before Judge Hochberg. This matter is being pursued for the
benefit of creditors. I have been advised that under applicable law the
filing of that malpractice claim effected at least a partial waiver of
Jazz’s privilege as to otherwise privileged communications with the
defendants. Fuji and the Liquidation Trust appear to disagree as to the
breadth of that waiver, which has given rise to potential motion
practice over Fuji’s ability to use in other proceedings a February 15,
2002 letter from Kaplan & Gilman to Jazz’s then president and CEO
(the “Kaplan Letter”). In the interest of avoiding unnecessary and
costly motion practice, the undersigned agree as follows: (1) Fuji may
use the Kaplan Letter in the context of other proceedings; (2) Fuji’s
use of the Kaplan Letter in other proceedings shall not effect a waiver
of the attorney-client privilege to the extent such a privilege still
exists in view of the pending malpractice case; and (3) the Liquidation
Trust and Fuji reserve their rights as to any future disputes on the issue
of the attorney-client privilege.
(Emphasis added.)
Obviously, the Kaplan-Jazz-Benun interaction and relationship are fundamental to
analysis of the attorney-client privilege here at issue. The Benun-Jazz relationship is likewise
important; in formal terms, it varied. He was president of Jazz from its inception in 1995 to
11
March 31, 1997. Then he served as “consultant” but not officer or director, through his
consulting corporation, JCB. On October 1, 2003 during the pendency of Jazz’s Chapter 11, he
again became chief operating officer. There is, however, no doubt in the court’s mind that
Benun controlled Jazz from its origin until he was rendered subject to certain bankruptcy
controls, and eventually displaced in bankruptcy.
At the February 6, 2006 hearing on Fuji’s application for access to Kaplan and Kaplan’s
files, Fuji’s motion was conditionally denied (including denial of use sub judice of the February
15, 2002 letter). The condition was Benun’s required waiver of an “advice-of-counsel” defense;
if Benun chose to advance that defense, Kaplan would, within reason, become fair discovery
game for Fuji; otherwise, Kaplan would be off limits based upon this Court’s view of: (i)
Benun’s privilege; (ii) Jazz’s limited waiver of its privilege through the malpractice case
(privileged documents and testimony there to be walled off from Fuji here, without impairing
either Kaplan’s defense or Jazz’s affirmative legal malpractice case); and (iii) the February 15,
2002 letter as being advice implicating Benun’s privilege, not waivable by joint-privilege holder
Jazz following unintended disclosure. Benun almost immediately waived advice of counsel as a
defense. Fuji promptly moved – again on short notice – for reconsideration.
II. Specific Discovery Order Sought by Fuji.
Fuji’s proposed form of order submitted with the immediate motion is, in pertinent part,
as follows:
[ ]. Jeffrey I. Kaplan be, and hereby is, directed to produce
within five (5) days of the entry of this Order the following
documents prepared or distributed from August 21, 2001 and
through January 25, 2005 (for the purposes of this order, “Jazz” shall
include Jack C. Benun (“Benun”) in his role as officer or consultant
of Jazz):
12
a. All documents referring or relating to advice given to Jazz
. . . to the effect that any of Jazz’s LFFPs were or could be infringing
Fuji’s LFFP patents.
b. All documents relating to Benun’s knowledge that Jazz was
or could be infringing Fuji’s LFFP patents.
c. All documents exchanged with Jazz containing statements
that Jazz’s LFFPs were being made from shells of cameras not first
sold in the U.S.
d. All documents which, in whole or in part, can be
considered to impeach the truthfulness of statements, testimony or
written representations of Benun.
e. All documents relating to Benun’s knowledge that Jazz’s
LFFPs were being made from shells of previously refurbished
cameras.
[ ]. Jeffrey I. Kaplan be, and hereby is, directed to appear for
an oral deposition to be conducted by counsel for Fuji during the
week of February 27, 2006, at a mutually agreed place and time and
continue from day to day thereafter until completed, and said
deposition shall be limited to events in the period from August 21,
2001 through January 25, 2005 concerning communications with
Jazz, including Benun in his role as consultant or officer of Jazz,
regarding the subject matters listed below:
a. Any advice given to Jazz that any of Jazz’s LFFPs were or
could be infringing Fuji’s LFFP patents.
b. Matters relating to Benun’s knowledge that Jazz was
infringing Fuji’s LFFP patents.
c. Any communication with Jazz that Jazz’s LFFPs were
being made from shells of cameras not first sold in the United States.
d. Bases for Kaplan’s contention that Benun’s testimony
relating to the malpractice claim and/or other claims by Benun of
good faith in other proceedings, were untrue.
e. Benun’s knowledge that Jazz’s LFFPs were being made
from the shells of previously refurbished LFFPs.
6Matters could change; but, for the moment and as the immediate adversary proceeding
moves toward trial, the current Moore/Jazz-Benun relationship does not appear to be overtly
adversarial.
13
(Emphasis supplied.) The precise meaning of the “prepared or distributed” language of the
proposed form of order was said by Fuji’s counsel to include communication to or from Kaplan,
to or from “whichever actor was acting on behalf of Jazz,” including Benun. Docket entry 76,
14:20-23.
Fuji identifies Benun – in his capacity as officer or consultant – as being “Jazz” “for
purposes of this order.” Fuji seeks Kaplan-held documents and Kaplan testimony as to
infringement, Benun’s knowledge of infringement, Benun’s truthfulness and Benun’s claims of
good faith – all in a period when Kaplan actively represented Benun in infringement litigation
with Fuji (District Court I, running from 1999 to trial on October 24, 2002 and final
order/judgment on March 18, 2003), and the enforcement action, ITC-II (beginning September
24, 2002 and ending by notice dated January 24, 2005). And, unlike a case where a document
log should be produced as a precursor to court review of potentially privileged material, the
immediate discovery demand of Fuji specifies that which is prima facie privileged. See Point
IV, A, infra.
III. The Weintraub and Bevill, Bresler & Schulman Cases - Fundamentally Different.
This is not a case where a shift in corporate management (in or out of bankruptcy or in or
out of a regulatory/receivership proceeding) has, up to this point, rendered the corporate
entity-privilege holder adverse to employees or prior management. Moore has not effected a
waiver of Jazz’s attorney-client privilege so as to pursue Benun as former management.6 Moore,
14
in fact, seeks to preserve to the extent possible the privilege arising from Jazz’s relationship with
Kaplan.
In this posture, the matter sub judice differs from Commodity Futures Trading Comm’n v.
Weintraub, 471 U.S. 343 (1985). Weintraub resolved a conflict among Circuits by holding that
a trustee in bankruptcy may waive the corporate debtor’s attorney-client privilege with respect to
prepetition communications. The decision rested on the Supreme Court’s conclusions: “the
trustee plays the role most closely analogous to that of a solvent corporation’s management,”
thus succeeding to management powers; and, vesting the trustee with the power to waive the
privilege is not inconsistent with policies of the bankruptcy laws. 471 U.S. at 353-54. A
significant underpinning of the decision is “that vesting control over the attorney-client privilege
in the trustee will facilitate the recovery of misappropriated corporate assets.” 471 U.S. at 354.
The theme of uncovering insider fraud or misdeeds is carried forward in In re Bevill,
Bresler & Schulman Asset Mgmt. Corp., 805 F.2d 120 (3d Cir. 1986) (hereinafter “BBS’).
Moreover, we find that appellants’ position is contrary to the public
policies identified by the Supreme Court in Weintraub. The
Weintraub Court found that permitting a bankrupt corporations’ [sic]
management to assert the corporation’s privilege against the
bankruptcy trustee would defeat the Bankruptcy Code’s goal of
uncovering insider fraud. . . . To provide a blanket privilege
regarding all discussions of corporate matters on the basis of an
assertion of personal privileges by the officers would prevent the
trustee from investigating possible misconduct by the officers and
permit the officers to “use the privilege as a shield against the
trustee’s efforts.”
805 F.2d at 125 (citations to Weintraub omitted). However, the BBS opinion was quick to point
out that while “officers . . . do not have an attorney-client privilege with regard to
communications made in their role as corporate officials,” they “may assert their personal
7Indeed, factually, the District Court in BBS deemed privileged early, pre-retention
communications between corporate officers who were seeking both corporate and personal
advice and possible retention, and counsel. It accepted the contention “that the corporate
communications were indistinguishable from those related to . . . personal legal problems. . . .”
805 F.2d at 123. (This finding, not appealed, was the subject of a rather opaque comment in
dicta by the Third Circuit. 805 F.2d at 125 n.3.)
15
privilege as to matters not related to their role as officers of the corporation.” Ibid. Moreover,
the Third Circuit did not discount the potential for a joint defense privilege, even between a
corporate officer and the entity (though in BBS no evidence supported the concept). 805 F.2d at
126.
While BBS broadly states certain propositions as to a corporate officer’s role and
privilege, it does so in the context of a waiver by the trustee who would actively investigate
insider activity and without evidence that would establish a common defense or cause. The
Jazz-Benun interfaces with counsel and inter se are quite different. Here, Fuji would have this
court strip away Benun’s privilege (as well as that of Jazz), for Fuji’s benefit (not to benefit
Jazz).
BBS reflects and quotes Weintraub (471 U.S. at 348): “Displaced managers may not
assert the privilege over the wishes of current managers, even as to statements that the former
might have made to counsel concerning matters within the scope of their corporate duties.”
(Emphasis added.) See 805 F.2d at 124. In the immediate case, development of distinctions
between individual communication and “corporate communication” with the common attorney is
problematic,7 and the need to make such distinctions is questionable given the absence of a
current adversarial relationship between Benun and Jazz. The presence here of one attorney
representing, in ongoing litigation, both the corporate entity and the “officer” (really the
8Kaplan’s advice to Jazz or Benun during the pendency of District Court I and ITC-II
(including the run up to ITC-II following Fuji’s demand of January 2002 for enforcement against
both Jazz and Benun) was “work product” when given. In fact, the “re” line of Kaplan’s
16
controlling party), is a significant factual difference from BBS. Kaplan filed the answering
pleading in District Court I for both Benun and Jazz as early as 1999, and then (while District
Court I was ongoing and thereafter), actively represented both before the ITC. These years of
co-representation (running from at least June 1999 through January 14, 2005), and continued
representation of Benun alone into November 2005, must be contrasted with the short period of
consultation (mere days) which was at the center of the BBS inquiry. In the final analysis,
“[w]hether there is a valid claim of privilege is decided on a case-by-case basis.” BBS, 805 F.2d
at 124 (citing Upjohn Co. v. United States, 449 U.S. 383 (1981)). Given the significant factual
differences between BBS and the matter at bar, BBS cannot be a precedential model here.
IV. Benun’s Attorney-Client Privilege Is At Stake in the Discovery Demand.
A. Prima Facie Case for Privilege.
Fuji’s discovery demand goes to Benun’s knowledge, state of mind and truthfulness, and
infringement for which he would clearly be jointly responsible with Jazz. Its proposed form of
order would have this court require Kaplan to produce “[a]ll documents which, in whole or in
part, can be considered to impeach the truthfulness of statements, testimony or written
representations of Benun”; and, as to infringement, two decretal paragraphs would order
disclosure of Kaplan’s “advice” that Jazz’s LFFPs were or could be infringing Fuji’s LFFP
patents.” (Emphasis added.) Inter alia, what Fuji seeks from Kaplan offends the purpose of the
attorney-client privilege. To the extent that discovery is sought regarding Kaplan’s advice to
Jazz and Benun, the work product doctrine is implicated.8 See FED. R. CIV. P. 26(b)(3).
February 15, 2002 letter is “Compliance with the Cease and Desist Order.” There would have
been no basis for discovery of such work product in and during the cases for which the work
product was developed. Given the continuum of issues and parties from those matters into the
immediate adversary proceeding, there would be merit in applying the work product bar sub
judice to production of Kaplan’s advice, given earlier. See In the Matter of Grand Jury, 211 F.
Supp. 2d 555, 559-61 (M.D. Pa. 2001), citing In re Ford Motor Co., 110 F.3d 954, 962 n.7 (3d
Cir.
