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Lowenstein Sandler, one of New Jersey’s largest firms, swallowed bitter medicine for having flouted discovery rules, as a court ordered disclosure of documents asserted to be lawyer-client or work-product privileged. The Appellate Division said the actions of the Roseland firm were “sufficiently egregious, when taken together, to justify a severe sanction.” The court found a laundry list of misconduct that included withholding documents without notice, serving inadequate privilege logs followed by ex parte submission of supplemental logs to the judge, making inaccurate statements in a brief and an interrogatory response, and failing to comply with an order to submit disputed documents. “We are satisfied that the extent and nature of Lowenstein’s misconduct fully justify the remedial relief sought by appellants, particularly in light of the resulting delay, disadvantage, and inconvenience,” wrote Judge Donald Coburn, joined by Judges Edwin Stern and Donald Collester Jr., in Seacoast Builders Corp. v. Rutgers, A-5837-01, A5838-01. The judges cited as support 10 federal and state cases, outside New Jersey, where “courts have refused to honor claims of privilege when there has been failure to abide by the discovery rules or attorney misconduct.” The court nevertheless denied a request for attorneys’ fees. Lowenstein represents Rutgers University in an Essex County suit by a contractor, Seacoast Builders Corp., for a $2.6 million increase in the contract price for a project to renovate Bradley Hall in Newark. Rutgers counterclaimed for $1.2 million in delay damages. Though Lowenstein drew the brunt of the court’s ire, the judges also criticized Seacoast’s lawyers at Duane Morris, of Philadelphia, for subpoenaing documents from Bovis Construction Corp., hired by Rutgers as project manager, without notifying Rutgers as court rules require. Duane Morris also failed to enforce the subpoena. Instead, it agreed with Lowenstein, which learned of the subpoena from Bovis, that the documents would be transmitted without a Bovis witness appearing to attest to them. The documents were never formally produced, said Coburn. As a result, Seacoast’s charge that Lowenstein interfered with the subpoena was “technically insupportable,” he added. In addition, a footnote says the court is “inclined to believe” an ethics rule — that attorneys who receive apparently privileged or confidential materials in discovery notify the sending lawyer — “might have been applicable here.” The appeals court also faulted the trial judge. Last year, the panel instructed Essex County Superior Court Judge Jared Honigfeld to make specific findings about the discoverability of each document, “stating with specificity the bases” for finding any privilege. But in response, Honigfeld provided only brief descriptions that identified each document, followed by the phrase “attorney-client,” “work product” or both. Coburn said that Honigfeld “failed to find the facts,” contrary to his obligation and the remand. Much of the controversy concerned a letter by Bovis project manager Peter Witt to Rutgers, recommending payment of $600,000 of the increase sought by Seacoast. Lowenstein pulled the Witt letter from Bovis’s documents before producing them but later produced the letter with the Rutgers documents and included it in a privilege log. The letter, sent after Lowenstein was retained but before the case was filed, bore boilerplate privilege language but was neither addressed nor copied to any attorney and stated its purpose was to help Rutgers decide on Seacoast’s request. The court called Lowenstein’s description of the letter in a brief unfair and Lowenstein’s statement that the letter was prepared at its request “at least an exaggeration.” It was the Witt letter that should have prompted Duane Morris to notify Lowenstein it might have inadvertently received privileged matter, the court said. The court also held five Rutgers documents discoverable though “unquestionably” subject to attorney-client or work-product privilege. The court reserved on the issue of admissibility. “We’re very taken aback,” says Gregory Reilly, who heads Lowenstein’s litigation department. “I’ve seen nothing that occurred below which leads me to believe we acted improperly.” He says the ruling shows that the court understood there was no intent by the firm or Rutgers to conceal documents. Reilly — who returned a reporter’s call to Richard Ricci, the partner handling the case — blames the outcome on the firm’s failure to present the best record of what happened. “Some things should have been done more clearly or differently,” he says, adding that the opinion will serve “as a springboard for discussion within the firm.” Duane Morris partner Joseph Battipaglia says the case holds a lot of lessons for lawyers doing discovery. Of a footnote in the opinion stating he should have contacted Lowenstein about the Witt letter, Battipaglia says it was clearly nonprivileged, as the court eventually found.

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