Encyclopedia Brown And The Case Of The Third-Party Attorney-Client Privilege

When I was preparing my post about Ridley Scott last month, I was reminded that the filmmaker was once slated to direct an Encyclopedia Brown movie. Maybe the financial failure of the "Nancy Drew" movie scared him off or maybe be was frightened by the fact that the HBO series about the boy detective was cancelled after only 8 episodes. Indeed, the HBO series led to a lawsuit, with Encyclopedia Brown Productions president and controlling shareholder Howard David Deutsch being "dissatisfied with HBO's effort to publicize the episodes." Encyclopedia Brown Productions v. Home Box Office, Inc., 1998 WL 734355 (S.D.N.Y. 1988). Personally, I think that Deutsch had a pretty good argument. That series aired in 1989, when I was thirteen and a huge Encyclopedia Brown fan. My brother and I used to read the books regularly (my personal favorite was Encyclopedia Brown and the Case of the Buried Treasure) as did many other kids in our neighborhood. We had HBO at the time, and I don't remember hearing a word about the series. And now, from the looks of it, we won't hear another word about the proposed Ridley Scott film. Apparently, it is in development hell along with the planned Hardy Brothers movie with Ben Stiller and Tom Cruise.

Yesterday, the world learned of the death of Encyclopedia Brown author Donald J. Sobol. With his passing, I thought that I would discuss an interesting case involving Sobol, Encyclopedia Brown, and attorney-client privilege. 

In Sobol v. E.P. Dutton, Inc., 112 F.R.D. 99 (S.D.N.Y. 1986), 

Between 1962 and 1976 Sobol entered into contracts with Thomas Nelson and Sons (“Nelson”) for the publication of thirteen books in the Encyclopedia Brown series. The contracts granted Nelson certain exclusive rights and enumerated subsidiary rights to be shared by Sobol and Nelson according to fixed percentages. Nelson was authorized to act as attorney-in-fact for Sobol in the sale of the enumerated subsidiary rights. Ten of the thirteen contracts contained a provision requiring Nelson to obtain Sobol's approval for sales of subsidiary rights....

In 1978, Dutton acquired Nelson's rights and obligations under the contracts with Sobol....Defendant Gloria Mosesson was responsible for negotiating with third parties regarding the subsidiary rights, first for Nelson and then for Dutton....

Thereafter, in a third contract referred to as the Corrected Amendment Agreement, Dutton extended the rights granted to Deutsch to include the exclusive right to publish "coloring books, activity books, pop-up books, how-to books, screenplays & novelizations and adaptations thereof, encyclopedias, dictionaries, magic books, any books employing comic style artwork, and miniature size versions of any books published and new miniature books."...

Sobol claim[ed] that Dutton breached its contracts with Sobol by assigning subsidiary rights without his approval, that Dutton and Mosesson breached fiduciary duties owed to Sobol and made fraudulent misrepresentations, that Deutsch's activities under the Corrected Amendment Agreement, which Sobol never signed or agreed to, violate the Lanham Act, and that his attorney Abelman committed legal malpractice in his advice regarding the Amendment Agreement.

After bringing the action, Sobol moved to compel production of various enumerated documents as to which Dutton and Mosesson asserted a claim of attorney-client privilege. In response, the court held that

The first eight documents whose discovery plaintiff seeks to compel are correspondence between employees of Nelson, from whom Dutton purchased the rights to Sobol's books, and W. Michael Milom, Nelson's outside counsel, in the period from November 1977 to January 1979. It is not disputed that the subject of these documents pertains to legal matters and legal advice to Nelson relative to its contracts with Sobol, the plaintiff herein, and that the communications are protected by the attorney-client privilege.

This was great news for Nelson, but, the court then found that,

as to these documents, the privilege does not exist in favor of Dutton. It exists in favor of Nelson, the client. Milom was counsel to Nelson, and not to Dutton. The privilege is that of the client, not that of third parties. Because Dutton was a third party, it may not assert the privilege.

Dutton tried to get around this conclusion by arguing that

it was the "successor in interest to Nelson." Dutton assert[ed] that in the course of the transfer of the ownership of Nelson's rights in the Sobol works to Dutton, Nelson handed over to Dutton its files, including correspondence between Nelson and its attorneys. Accordingly, on the authority of the decision of the Supreme Court in Commodity Futures Trading Commission v. Weintraub, Dutton contend[ed] that "the right to assert (or waive) the privilege passes with the transferred assets."

The court, however, rejected this argument, finding that

Weintraub does not stand for any such proposition. In Weintraub, the Supreme Court elaborated upon the control-group principle announced in Upjohn Co. v. United States, which concerns who may assert or waive the privilege of a corporate client. Weintraub applied that principle in determining who is vested with the power to waive the attorney-client privilege of a debtor in reorganization under Chapter 11. The Court held that the trustee in bankruptcy performs the control functions associated with the management of a solvent corporation and under the Bankruptcy Act has the power to assert or waive the corporate privilege with respect to prebankruptcy communications made by former officers and directors. Dutton's argument is factually flawed since it was not the successor-in-interest of Nelson nor was it the "new management" of Nelson when Nelson transferred to Sobol its rights to the Sobol works.

-CM