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A Manhattan federal judge has ruled that a bankrupt asbestos manufacturer may not pierce the attorney-client privilege to depose the plaintiffs lawyers it claims conspired to inundate it with spurious claims. G-I Holdings Inc. had sought to depose Joseph Rice of Ness, Motley, Loadholt, Richardson & Poole and Perry Weitz of Weitz & Luxenberg on what advice they gave clients about complying with an April 2004 settlement agreement. Though G-I acknowledged that such communications were privileged, it argued that the state’s interest in the enforcement of valid contracts was sufficient to overcome the privilege. But Southern District Judge Robert Sweet said G-I’s arguments “failed to cite any authority for the proposition that New York’s interest in the enforcement of contractual duties is sufficiently strong to justify invasion of the attorney-client privilege.” The plaintiffs also failed to show the New York Court of Appeals was inclined to expand the recognized public policy exceptions to attorney-client privilege, Sweet added in G-I Holdings, Inc. v. Baron & Budd, 01 Civ. 0216. G-I’s predecessor, GAF Corp., one of the nation’s largest makers of building materials using asbestos, filed for bankruptcy in the face of mass tort litigation. In G-I’s 4-year-old suit against the plaintiff’s firms that have led suits against it, the company has made several allegations of misconduct by the lawyers and sought discovery to support those allegations. But Sweet has forced the dismissal or withdrawal of G-I’s most serious claims against the firms: fraud and violations of the Racketeer Influenced and Corrupt Organization Act. The suit has proceeded with claims for tortious interference with contract and breach of contract. The New York Times reported Wednesday that G-I has recently discussed some of its claims with federal prosecutors. G-I had claimed the plaintiffs lawyers may have breached the April 2004 agreement by failing to advise new clients of alternative dispute resolution options, as required by the agreement. It claimed invading the attorney-client privilege was the only way it would be able to gather evidence of these breaches. Sweet noted that the state Court of Appeal’s most relevant case on the issue, In the Matter of Jacqueline F., 47 N.Y.2d 215, involved extraordinary circumstances. In that case, a court directed a lawyer to testify about the address of his client, who had kidnapped a child in the middle of a custody dispute. He also said G-I’s argument ignored the principle that the privilege belonged to the client rather than the attorney. In those instances where the privilege had been allowed to be invaded, the judge wrote, “it is the nature of the client’s conduct or the client’s relationship to the litigant that justifies invasion.” He said G-I had made no showing that the clients had committed any act or had any relationship with G-I justifying invading the privilege. Sweet further noted that G-I’s alleged problem with enforcing the settlement agreement was “one of its own making.” He said the problem was foreseeable and G-I should have taken steps at the time of the agreement to have enforcement clauses included. The company’s “failure to insist on contractual terms that specified an enforcement mechanism does not justify the invasion into the privilege that [G-I] now seeks.” G-I was represented by Peter Wang of Friedman, Wang & Bleiberg and Thomas Kavaler of Cahill Gordon & Reindel. Weitz & Luxenberg was represented by Stephen Juris of Morvillo, Abramowitz, Grand, Iason & Silberberg. Ness Motley was represented by Steven Storch of Storch Amini & Munves.

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