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Emails that Marvel Entertainment‘s CEO exchanged with his personal counsel through the company’s email system aren’t privileged but might be protected work product, the New York Appellate Division, First Department held March 16 ( Peerenboom v. Marvel Entm’t, LLC , 2017 BL 82109, N.Y. App. Div. 1st Dept., No. 3435N 162152/15, 3/16/17 ).
The court found that Marvel’s email policy prevented billionaire Isaac Perlmutter from having a reasonable expectation of privacy in his personal emails sent through the company’s server, so he can’t claim the attorney-client privilege for communications with his attorneys, and he can’t invoke the marital privilege for correspondence with his wife.
However, Perlmutter’s use of Marvel’s email system didn’t automatically waive attorney work protection, the court ruled.
The decision highlights the riskiness of using an employer’s email system for personal communications, as many employees—and apparently even top executives—often do.
The ruling is an offshoot of an ongoing legal feud involving a swanky Palm Beach, Fla., condominium development where Perlmutter and Toronto multimillionnaire Harold Peerenboom both have homes.
Peerenboom claims that Perlmutter and his wife orchestrated a hate mail campaign against him that painted him as a sexual predator and spread other vicious falsehoods about him. He issued subpoenas to Marvel in the Florida action to obtain any communications via the company’s email server that referred to him and others involved in a dispute over management of the tennis club at the Palm Beach condominium complex.
Then Peerenboom launched this proceeding to enforce the subpoenas in New York, where Marvel is headquartered. Perlmutter tried to block the production of his emails by seeking protective orders in the New York proceeding for numerous items he listed in privilege logs.
The New York Supreme Court, New York County, upheld Perlmutter’s marital privilege claim but denied his other privilege claims.
The appeals court endorsed and applied the four-factor test in In re Asia Global Crossing, Ltd., 322 B.R. 247 (Bankr. S.D.N.Y. 2005), for assessing the confidentiality of email communications on an employer’s system.
Application of those factors here “indicates that Perlmutter lacked any reasonable expectation of privacy in his personal use of the email system of Marvel, his employer, and correspondingly lacked the reasonable assurance of confidentiality that is an essential element of the attorney-client privilege,” the court said.
The court pointed out that, although Marvel’s email policies allowed employees to receive personal emails, the company asserted that it owned all emails on its system and reserved the right to audit networks and systems to ensure compliance with its email policies. Marvel also reserved the right “to access, review, copy and delete any messages or content” and “to disclose such messages to any party (inside or outside the Company),” the court said.
As Marvel’s chair, Peerenboom was constructively on notice of Marvel’s email policy if not actually aware of it, the court said.
Similarly, the court said that Perlmutter’s use of Marvel’s email system for personal correspondence with his wife waived the confidentiality necessary for a finding of spousal privilege.
On the other hand, the court held that Perlmutter can claim work product protection despite his use of Marvel’s email system.
“Given the lack of evidence that Marvel viewed any of Perlmutter’s personal emails, and the lack of evidence of any other actual disclosure to a third party, Perlmutter’s use of Marvel’s email for personal purposes does not, standing alone, constitute a waiver of attorney work product protections,” the court said.
The court sent the case back for the trial court to review the alleged work product items to see if they’re in fact protected attorney work product.The panel comprised Justices Peter Tom, Rolando T. Acosta, Karla Moskowitz, Marcy Louise Kahn and Ellen Gesmer. Paul, Weiss, Rifkind, Wharton & Garrison LLP represented Perlmutter. Kasowitz, Benson, Torres & Friedman LLP represented Peerenboom.
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