GLOBAL LOGISTIC & DISTRIBUTION, LLC v. 14 BURMA ROAD ASSOCIATES (C-000218-19, MIDDLESEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1562-21
GLOBAL LOGISTIC &
DISTRIBUTION, LLC,
Plaintiff-Respondent,
v.
14 BURMA ROAD ASSOCIATES,
HENRY CHIU, and 100
MIDDLESEX AVENUE, LLC,
Defendants-Appellants.
_____________________________
Submitted September 20, 2022 – Decided October 13, 2022
Before Judges Messano and Rose.
On appeal from an interlocutory order of the Superior
Court of New Jersey, Chancery Division, Middlesex
County, Docket No. C-000218-19.
Lowenstein Sandler, LLP, and Winnie Mok, attorneys
for appellants (Wojciech F. Jung, Reynold Lambert,
Craig Dashiell, and Winnie Mok, on the briefs).
Steinbach & Associates, PC, and Cole Schotz, PC,
attorneys for respondent (Sean Lipsky and Joseph
Barbiere, of counsel and on the brief; Arnold P.
Picinich, on the brief).
PER CURIAM
We granted defendants 14 Burma Road Associates (Burma), Henry Chiu,
and 100 Middlesex Avenue, LLC (Middlesex), leave to appeal from the trial
court's January 18, 2022 order directing they produce certain materials pursuant
to discovery demands by plaintiff Global Logistic and Distribution, LLC
(Global). Defendants asserted the documents were privileged under either the
attorney-client privilege, the work-product privilege, or both. We place the
dispute in its proper context.
I.
Global's amended verified complaint alleged the following. Global
entered into a lease with Burma to rent 108,000 square feet of warehouse space
in a building in Carteret that Burma intended to purchase. Burma is a general
partnership, with Henry Chiu1 and Middlesex as the partners. The lease included
an "irrevocable and exclusive option" for Global to purchase the property from
Burma. Burma consummated the purchase of the property using $400,000
1
To avoid confusion between defendant and his son Alexander Chiu, we
sometimes use their first names and intend no disrespect by this informality.
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Global deposited when it executed the lease. By its terms, the lease permitted
Global to apply the $400,000 deposit to the option purchase price if it exercised
its option. Global invoked its right to purchase in a timely fashion, and Burma
refused to close title in accordance with the option.
Global alleged Burma breached the contract and sought specific
performance, monetary damages, and a declaratory judgment that defendants
had committed an anticipatory breach of the lease. Defendants filed a joint
answer and discovery ensued.
Both before and after plaintiff filed its complaint, Henry sent emails to his
son Alexander, who is not an attorney, regarding the lease, the purchase option,
the potential transaction with Global, and problems that arose between the
parties after Global tried to exercise its option. After the complaint was filed,
Henry sometimes attached draft pleadings or settlement proposals sent by his
counsel; Alexander sometimes responded with suggestions.
Global deposed Alexander. He testified that Burma was a client of his
company, Noir Group, LLC, which provided "periodic services" to Burma for
"customer support, technical support, anything that ha[d] to do with software or
hardware." Alexander estimated spending more than twenty hours providing
services to Burma in the previous year, and his company received professional
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fees and a retainer for this work. Alexander testified his work for Burma also
involved "going through different systems they have for communication" and
determining "whether or not [the] company [was] efficient in their
communications," and if not, providing "equipment." He was also involved in
the purchase and installation of software for Burma.
Alexander disclaimed any knowledge of Burma's business, and said he
was neither an employee nor officer and had no ownership interest in the
company. Alexander had "no idea" if Henry was involved in litigation, and he
repeatedly said he could not recall whether he spoke with Henry about the
litigation. Alexander admitted Henry sent him a copy of the lease in September
2019, and that he edited it for Henry in his role as a consultant to Burma.
Alexander acknowledged being copied on emails regarding a refinance of the
property but did not know why, and he could not recall if he and Henry discussed
Global's plan to exercise the purchase option, or if Henry told him of any plan
not to sell the property to Global. Alexander claimed he was unaware that
Burma did not sell the property to Global.
Defendants refused to turn over certain emails between Henry and
Alexander, including any attachments, in response to Global's discovery
demands. Defendants filed a privilege log with the court identifying 113 entries
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they claimed were protected by the attorney-client privilege, the work-product
privilege, or both. Global moved for the court to conduct an in-camera
inspection of the documents, and the Chancery judge appointed a special master
to review them.
The special master's November 12, 2021 decision discussed the legal
underpinnings of both privileges. Without identifying the specific privilege that
informed the analysis as to each document, the special master concluded 79 of
the 113 documents either were not privileged, or Henry disclosed the document
to Alexander "breaking [the] privilege." Defendants filed objections to the
special master's ruling, and the trial court heard argument.
In a written decision that followed, the judge dismissed defendants' claims
that communications between Henry and Alexander were subject to the attorney-
client privilege, agreeing with the special master that Henry's disclosure of
allegedly privileged information to Alexander "waive[d] [Henry's] privilege."
The judge also agreed with the special master that the documents were not
shielded from discovery by the work-product privilege. Noting Alexander's
deposition testimony, in which he broadly denied any involvement in and
knowledge of Burma's business, the judge reasoned Alexander's lack of
knowledge, including knowledge of the litigation, meant the disputed documents
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"were [not] created with the dominant purpose of preparing for litigation." The
judge concluded the special master correctly decided the work-product doctrine
was inapplicable to the communications at issue.
Nevertheless, the judge proceeded to consider whether the privilege had
been waived. He rejected defendants' argument that because of their close
familial relationship, Henry's disclosure to Alexander did not waive the
privilege. The judge noted defendants offered "no statutory or case law to
support their contention." The judge entered an order requiring defendants to
turn over the 79 documents with attachments that the special master determined
were not privileged. We granted defendants leave to appeal.
II.
Before us, defendants abandon their argument that any of the documents are
subject to the attorney-client privilege, claiming only that the work-product
privilege protects the documents from release to plaintiff. 2 Defendants assert
the documents are "classic, opinion work product," and Henry did not waive the
privilege by forwarding them to Alexander, who, they contend, was a
"consultant to the family business."
2
Our references to "the privilege" throughout the balance of the opinion are to
solely the work-product privilege.
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Global contends Alexander's admissions of non-involvement in Burma's
business affairs means none of the documents are subject to the privilege. It
also contends that defendants are attempting to expand the privilege to every
communication from counsel, and, in doing so, are "undermining common
principles of waiver of the attorney-client privilege." Global also argues there
is no "father-son" exception to the principles governing waiver of the privilege.
Lastly, Global contends all the "pre-litigation documents" are not subject to the
privilege because at that time, "litigation was not objectively reasonable."
Having considered the arguments in light of the record and applicable
legal principles and having conducted our own in camera review of the disputed
documents, we reverse and remand for further proceedings consistent with this
opinion.
A.
"Generally, we accord substantial deference to a trial court's disposition
of a discovery dispute." Brugaletta v. Garcia, 234 N.J. 225, 240 (2018) (citing
Cap. Health Sys., Inc. v. Horizon Healthcare Servs., Inc., 230 N.J. 73, 79–80
(2017)). "[A]ppellate courts are not to intervene but instead will defer to a trial
judge's discovery rulings absent an abuse of discretion or a judge's
misunderstanding or misapplication of the law." Cap. Health Sys., 230 N.J. at
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79–80 (citing Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 371
(2011)).
We "start from the premise that discovery rules 'are to be construed
liberally in favor of broad pretrial discovery.'" Id. at 80 (quoting Payton v. N.J.
Tpk. Auth., 148 N.J. 524, 535 (1997)). Rule 4:10-2(a) reflects this principle:
Parties may obtain discovery regarding any matter, not
privileged, which is relevant to the subject matter
involved in the pending action . . . . It is not ground for
objection that the information sought will be
inadmissible at the trial if the information sought
appears reasonably calculated to lead to the discovery
of admissible evidence . . . .
[(Emphasis added).]
New Jersey's work-product privilege is codified in Rule 4:10-2(c), which
provides:
Subject to the provisions of Rule 4:10-2(d), a party may
obtain discovery of documents, electronically stored
information, and tangible things otherwise discoverable
under Rule 4:10-2(a) and prepared in anticipation of
litigation or for trial by or for another party or by or for
that other party's representative (including an attorney,
consultant, surety, indemnitor, insurer or agent) only
upon a showing that the party seeking discovery has
substantial need of the materials in the preparation of
the case and is unable without undue hardship to obtain
the substantial equivalent of the materials by other
means. In ordering discovery of such materials when
the required showing has been made, the court shall
protect against disclosure of the mental impressions,
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conclusions, opinions, or legal theories of an attorney
or other representative of a party concerning the
litigation.
[(Emphasis added).] 3
The work-product privilege is "not limited to documents prepared by an
attorney." Medford v. Duggan, 323 N.J. Super. 127, 133 (App. Div. 1999); see
also Halbach v. Boyman, 377 N.J. Super. 202, 208 (App. Div. 2005) ("Even a
non-lawyer 'who creates work-product material before hiring an attorney' is
entitled to invoke the work product privilege." (quoting Otto v. Box U.S.A. Grp.,
177 F.R.D. 698, 699 (N.D. Ga. 1997))).
As the Court has instructed,
Analysis of the applicability of the work-product
doctrine is similar to that of the attorney-client
privilege. In order for the doctrine to apply, the
materials must have been prepared in anticipation of
litigation and not in the ordinary course of business, and
there must not be a "substantial need" for the materials.
Moreover, the doctrine's protection must not have been
waived.
[Payton, 148 N.J. at 554 (quoting R. 4:10-2(c))
(citations omitted).]
3
Rule 4:10-2(d) deals with "facts known and opinions held by experts . . .
acquired or developed in anticipation of litigation." It has no relevance to this
appeal.
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Trial courts must apply a fact-specific analysis to determine whether the
privilege applies as to each document. Paladino v. Auletto Enters., Inc., 459
N.J. Super. 365, 377 (App. Div. 2019).
B.
The disputed documents essentially fall into two broad categories: emails
between Henry and Alexander without any attachments; and emails between
them with attached documents from counsel. As best we can discern, the judge
seemingly concluded the emails without attachments were not privileged
because Alexander's deposition testimony established he was uninvolved with
Burma's affairs, and it did "not follow that documents exchanged between
Alexander and Mr. Chiu were created with the dominant purpose of preparing
for litigation." We disagree.
When considering if the privilege attaches, "the court must make a
threshold determination of whether the items sought were, in fact, prepared in
anticipation of litigation or for trial." Medford, 323 N.J. Super. at 133. "[A]
document will be deemed to have been prepared in anticipation of litigation
when the dominant purpose" of preparing it was an "objectively reasonable"
concern for potential litigation. Rivard v. Am. Home Prods., Inc., 391 N.J.
Super. 129, 155 (App. Div. 2007); see also Miller v. J.B. Hunt Transp., Inc., 339
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N.J. Super. 144, 150 (App. Div. 2001). "[A] document may be found to have
been prepared in anticipation of litigation even though litigation had not been
commenced or even threatened when the document was prepared." Miller, 339
N.J. Super. at 149. We reject, therefore, Global's blanket assertion that the pre-
litigation exchanges cannot be work-product.
Our review of the allegedly privileged materials suggests that both Henry
and Alexander anticipated this litigation and communicated about it extensively
before and after the complaint was filed. Their discussions plainly involved
strategy to resolve or otherwise defend against this action. For example, t hey
discussed Henry's pre-litigation negotiations with Global's representative.
Alexander provided his father with internet links defining legal terms to support
an argument that the lease was unenforceable. Henry and Alexander anticipated
litigation, and their communications were made for the dominant purpose of
concern over potential litigation. Rivard, 391 N.J. Super. at 155.
Rule 4:10-2(c) also requires the putative privileged communication to be
made "by or for another party or by or for that other party's representative
(including an attorney, consultant, surety, indemnitor, insurer or agent)." Based
on Alexander's deposition testimony, the judge correctly determined he was not
a true representative of Burma. Nevertheless, subsection (c)'s "by or for"
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language is quite broad, ostensibly providing protection for materials sent by a
disinterested party to a party or its representative. Here, regardless of whether
Alexander was a "representative" of Burma, the communications at issue were
made either: (1) "by" Henry, a party and undisputed representative of Burma; or
(2) "for" Henry, such as the numerous messages with advice and strategy
discussions that Alexander prepared for Henry's benefit. We conclude,
therefore, that the emails between Henry and Alexander, without attachments of
documents from counsel, were ostensibly protected by the work-product
privilege.
The second category of materials were email exchanges that included as
attachments documents prepared by or sent by defendants' counsel to Henry.
Before the trial court, defendants asserted both the attorney-client and work-
product privileges applied. The special master concluded these documents
included "legal advice to Henry . . . from [counsel] disclosed to Alexander . . .
breaking [the] privilege." It is unclear if the special master considered
application of the work-product privilege. The judge upheld the special master's
decision, and, without further discussion as to whether the work-product
privilege applied in the first instance, the judge rejected defendants' assertion
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that they did not waive the privilege by Henry's disclosure to a close family
member, his son Alexander.
For reasons already discussed, we conclude this set of email exchanges
were subject to the privilege. They were generated after the litigation
commenced, included attached documents that were part of or intimately related
to the pleadings, and the exchanges included commentary between Henry and
Alexander about the documents. We focus then on the judge's terse analysis of
the waiver issue.
The Court has recognized the need for lawyers to "work with a certain
degree of privacy, free from unnecessary intrusion by opposing parties and their
counsel." O'Boyle v. Borough of Longport, 218 N.J. 168, 189 (2014) (quoting
Hickman v. Taylor, 329 U.S. 495, 510 (1947)). Disclosure by the attorney of
his or her work-product to a third party waives the protection unless such
disclosure is confidential. Id. at 189–90 (citing N.J.S.A. 2A:84A-29; N.J.R.E.
530). However, if the material is disclosed in a way that is inconsistent with
keeping it from an adversary, the work-product doctrine is waived. Id. at 192.
Thus, as to waiver of the work-product privilege, the O'Boyle Court credited the
"prevailing view" and wrote "the inquiry considers whether the disclosed
material reached an adversary or whether the disclosure . . . made it substantially
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likely that the protected material would reach an adversary." Ibid. (citing In re
Chevron Corp., 633 F.3d 153, 165 (3d Cir. 2011)).
Here, the judge did not discuss this standard when he seemingly concluded
defendants waived any claim that the privilege applied because Henry shared
the material with Alexander. Instead, the judge simply rejected defendants'
assertion that Henry's disclosure to a close family member waived the privilege.
Nor did the judge differentiate between the content of Henry's and Alexander's
email exchanges, which for the reasons already expressed, are prima facie
subject to the privilege, and the attachments themselves, which were generally
from defendants' counsel and only disclosed to Alexander via Henry's emails.
As defendants note, there is some support for the proposition that
disclosure of otherwise privileged information to family members does not
automatically affect a waiver of the privilege. They cite, for example,
Schanfield v. Sojitz Corporation of America, where the court found the sharing
of privileged materials with the party's "two sisters and another close relative"
did not effectuate a waiver. 258 F.R.D. 211, 216–17 (S.D.N.Y. 2009). They
also cite United States v. Stewart, where the court found that the defendant did
not waive the privilege by forwarding an email from counsel to her daughter.
287 F. Supp. 2d 461, 469 (S.D.N.Y. 2003). We need not address the issue
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because the trial judge did not properly consider the waiver standard as
explained in O'Boyle. Because we are remanding for other reasons explained
below, the judge shall also consider whether Henry's disclosure to Alexander of
the attached email documents "made it substantially likely that the protected
material would reach an adversary," O'Boyle, 218 N.J. at 192, thereby waiving
the privilege.
C.
Having concluded that the materials at issue here were prepared in
anticipation of litigation, by or for a party or a party's representative, we return
to Rule 4:10-2(c), which contemplates disclosure nevertheless may be
compelled upon a "showing that the party seeking discovery has substantial need
of the materials in the preparation of the case and is unable without undue
hardship to obtain the substantial equivalent of the materials by other means."
Because the judge adopted the special master's findings and concluded the
documents were not privileged, he never addressed this issue. He shall do so on
remand.
Furthermore, if following remand the court orders production of any of
the disputed materials, it shall order redaction of the "mental impressions,
conclusions, opinions, or legal theories" of Henry or defendants' counsel as
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required by Rule 4:10-2(c). See Jenkins v. Rainner, 69 N.J. 50, 55 (1976)
(mental impressions, legal theories or opinions of attorneys or other party
representatives are immune from production); Halbach, 377 N.J. Super.
at 207 ("[T]he court shall protect against disclosure of the mental impressions,
conclusions, opinions, or legal theories of an attorney or other representative of
a party concerning the litigation" (quoting R. 4:10-2(c))).
In sum, we remand for the court to consider whether defendants waived
the privilege with respect to the attachments contained in the post-litigation
email exchanges between Henry and Alexander by applying the O'Boyle
standard. The court shall also determine pursuant to Rule 4:10-2(c), whether
Global's need for the pre- or post-litigation emails and attachments, and any
hardship associated with obtaining them otherwise, militates against their
privileged status. Any documents ultimately ordered to be produced shall be
redacted to omit the "mental impressions, conclusions, opinions, or legal
theories" of Henry or counsel.
Reversed and remanded. We do not retain jurisdiction.
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