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In re State Commission

Decided: July 25, 1988.

IN RE STATE COMMISSION OF INVESTIGATION SUBPOENA NUMBER 5441


On appeal from the Superior Court, Law Division, Mercer County.

King, Gaulkin and Gruccio. The opinion of the court was delivered by Gaulkin, J.A.D.

Gaulkin

New Jersey School Boards Association (NJSBA) appeals from a final order denying its motion to quash a subpoena duces tecum issued by the State Commission of Investigation (SCI) for the production of a report prepared by Thomas W. Greelish as special counsel to NJSBA. The motion judge held (1) that the report was a privileged attorney-client communication and (2) that the SCI had failed to establish a sufficient justification for piercing that privilege, but (3) that the NJSBA had waived the privilege by disclosing the report to trustees of the New Jersey School Boards Association Insurance Group (Group). We agree with the judge's conclusions (1) and (2) but reject his conclusion (3). We accordingly hold that the subpoena must be quashed.

The relevant facts, disclosed in the parties' certifications and attached documents, are undisputed. On or about July 15, 1987, Greelish's firm was retained as special counsel by NJSBA to conduct an investigation, render legal advice, make recommendations and take appropriate steps in anticipation of litigation arising from alleged improprieties in the investment program of the Group. In performing those services, Greelish examined documents provided by NJSBA and the Group, conducted interviews and legal research, engaged an accounting firm and prepared a written report. Greelish distributed copies of the report to NJSBA directors and alternates at a September

11, 1987 meeting. No other persons were present at that meeting; Greelish collected and retained custody of each copy of the report at the conclusion of the meeting. On September 23, 1987, copies of the report were distributed and collected in a similar fashion at a meeting of the voting trustees of the Group. Those trustees had been allowed access to the report by express authorization of the NJSBA directors and upon Greelish's advice that such disclosure would not waive any privilege or breach any confidence.

On October 2, 1987, the SCI adopted a resolution to investigate the management of the Group. In support of that investigation, the SCI issued its subpoena 5441, dated October 15, which commands only the production of the Greelish report. The subpoena recites that the subject of the investigation is

Whether the laws of the State of New Jersey are being faithfully executed and effectively enforced in connection with the management of the New Jersey School Boards Association Insurance Group, whether the laws regulating the Insurance Group are adequate to protect the interests of the State of New Jersey, and whether the Insurance Group, its officers and employees are faithfully and effectively discharging their duties.

On November 18, 1987, the SCI adopted a second resolution broadening the scope of its investigation to include the management of NJSBA as well. On November 12 and 19, 1987, the SCI issued subpoenas to the executive director of NJSBA commanding the production of a broad range of financial records of NJSBA and the Group from July 1, 1985 forward. Both NJSBA and the Group represent that they have complied fully with the latter subpoenas.

Based on those facts, the motion judge properly held, and the SCI concedes, that the Greelish report was a privileged attorney-client communication. See N.J.S.A. 2A:84A-20. Substantially for the reasons expressed in his February 23, 1988 oral opinion, we are also satisfied that the motion judge correctly found that the SCI had not shown sufficient justification to pierce the privilege. See In re Kozlov, 79 N.J. 232, 243-244 (1979). Based on our evaluation of the relationship between

NJSBA and the Group, however, we find that the judge erred in concluding that the disclosure of the report to the Group trustees waived the privilege.

NJSBA is a body corporate and politic created by N.J.S.A. 18A:6-45. All boards of education of the various school districts in New Jersey are members. Id. The board of directors is comprised of the NJSBA president, executive director, immediate past president and five vice ...


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