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Sicpa North America Inc. v. Donaldson Enterprises Inc.

Decided: March 2, 1981.


Martin, J.s.c.


Can a corporation's contractually limited disclosure of information, which was supplied to its adversary for settlement purposes only, result in a waiver of the protection afforded to such information by the attorney-client privilege? This is the issue presented in this matter, which comes before the court on defendant's order to show cause why plaintiff should not be compelled to produce a certain report prepared for it by its corporate counsel.

The procedural history and salient facts are as follows. Plaintiff and defendant were, at one time, in an employer-employee relationship. This lawsuit arose from the termination of that relationship by plaintiff. During discovery defendant sought disclosure of a report compiled by plaintiff's attorney. This report was made prior to the termination of employment and it dealt with plaintiff corporation's legal position regarding its employment relationship with defendant.

After plaintiff refused to divulge this report defendant moved to compel its production pursuant to R. 4:18-1(a) and R. 4:23-1(a). This court denied defendant's motion, holding that the report was protected by the attorney-client privilege. R. 4:10-2(a); Evid.R. 26, N.J.S.A. 2A:84A-20.

Subsequent to that motion defendant filed this order to show cause which indicated that plaintiff had previously disclosed the report to defendant's former counsel. Defendant obtained this information from an attorney who had initially handled the matter for defendant and who is not currently involved in the case. Defendant now claims that the prior disclosure resulted in plaintiff's waiving the attorney-client privilege. Evid.R. 37.

Both parties now agree that prior to the initial discovery demand, plaintiff and its attorney permitted defendant's attorney to review the report, for settlement purposes only. The report was disclosed solely for this limited purpose and defendant's attorney agreed, in writing, not to show the report to anyone other than himself and to cocounsel. This agreement read as follows:

This will confirm that I am accepting a copy of an opinion concerning the retention of Robert Donaldson solely upon the condition that it not be shown to anyone other than myself, and a co-counsel of my choosing. Its purpose is to permit me to be able to sufficiently advise my client as to his rights.

Upon the conclusion of that evaluation the material is to be either returned or destroyed, with no copies to be made.

This decision addresses the issue of waiver, based upon the additional information now put before the court regarding this contractually limited disclosure.

It is clear that the report's information, disclosed to counsel by corporate employees, is privileged when it is contained in a report compiled by the attorney for the corporation in order to aid it in its determination as to whether or not to retain an employee. The attorney-client privilege is recognized as part of the common law, Matthews v. Hoagland , 48 N.J. Eq. 455, 464 (Ch. 1891); State v. Toscano , 13 N.J. 418, 424 (1953); In re Selser , 15 N.J. 393, 403 (1954), and the statutory law of New Jersey. Evid.R. 26; N.J.S.A. 2A:84A-20. This privilege extends to corporations and to communications made by agents of it. Stewart Equipment Co. v. Gallo , 32 N.J. Super. 15, 17 (Law Div. 1954); U.S. v. Becton Dickinson and Co. , 212 F. Supp. 92, 94-95 (D.N.J.1962).

Recently the privilege has been extended to apply to corporate employees who are not limited to the entity's "control group." In Upjohn Co. v. U.S. , 447 U.S. , 101 S. Ct. 677, 66 L. Ed. 2d 584 (1981), the United States Supreme Court recognized that middle-level and lower-level employees often have the relevant information needed by corporate counsel if he is to adequately advise the client with respect to potential difficulties; therefore, communications by such employees to corporate counsel are covered by the privilege.

Privileges, like other rights and protections, can be waived, and a corporation's agent can waive it if he is acting within the scope of his authority or if it pertains to his official duty. Stewart Equipment Co. v. Gallo, supra 32 N.J. Super. at 17. ...

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