Lawyers for Former Reznor Manager Must Hand over Client Documents

The Court of Appeals of Ohio, Eighth District, affirmed an order to compel the production of documents from trademark lawyers for John Malm, former manager of musician Trent Reznor, for use in litigation between Malm and his counsel from an earlier suit that Reznor had filed against Malm. Meyers, Roman, Friedberg & Lewis (MRFL) v. Malm, 90949. MRFL served as counsel to Malm in a case before Judge Jed Rakoff in the Southern District of New York in which Reznor alleged Malm mishandled the artist's money and ownership of the trademark to Reznor's band, Nine Inch Nails. A federal jury awarded $5 million to Reznor in 2005.

MRFL soon sued Malm for legal fees and Malm countered with a legal malpractice claim against MRFL, which subpoenaed Malm's trademark lawyers, Fay Sharpe, for “[a]ny and all communications of any kind between Federal District Judge Jed Rakoff and [Fay Sharpe attorneys], or anyone at the law firm of Fay, Sharpe, Fagan, Minnich & McKee (or any former name or current name of such law firm) during the year 2005.” Citing attorney-client privilege, Malm told Fay Sharpe to not turn over the documents. MRFL then filed its motion to compel. In granting the motion, the Court of Common Pleas of Cuyahoga County decided that Malm had voluntarily waived the attorney-client privilege during the Reznor litigation.

Ohio's attorney-client privilege rule appears in Revised Code '2317.02, which acknowledges that “if the client voluntarily testifies [on a privileged matter] ' the attorney may be compelled to testify on the same subject.” During the Reznor-Malm litigation, Malm had given testimony in court that conflicted with a statement in his deposition as to whether he tried to obtain a 100% interest in the “Nine Inch Nails” trademark from Reznor.

In a sidebar with the trial lawyers, Judge Rakoff said: “What I am concerned about is in his deposition [Malm] simply denies any conversation. Now he says he has one but then he volunteers, but the reason I did the way I did it was on advice of [trademark] counsel. That is not even in response to a question from the plaintiff's counsel; it is something he has volunteered, and he has done it twice now in two different contexts.”

Rakoff then asked Malm: “The lawyers who represented you in connection with this [trademark] application [for "Nine Inch Nails"] were [Fay Sharpe attorneys], is that right? ' Did I understand you to be saying that it was on their advice that you signed this declaration?”

After Malm answered “yes” to both questions, Rakoff asked: “Had you told them that the trademark, in part or in whole, belonged to Mr. Reznor?”

“Yes,” Malm again replied.

The Ohio Court of Appeals noted, in upholding the motion to compel in the MRFL-Malm case: “Malm affirmatively asserted [during his Reznor trial testimony], without being asked, that he acted on the advice of his Fay Sharpe attorneys. As Judge Rakoff stated, Malm voluntarily offered this contention as a defense to counter the fact that he misappropriated Reznor's trademark rights. It was not forced out of him by Reznor's counsel on cross-examination. In fact, it was not even asked of him. Moreover, when Malm answered Judge Rakoff's questions, his answers simply reaffirmed and clarified what he had already testified to.”

The Ohio court added: “As for his deposition testimony in the current litigation ' regarding the same subject matter ' Malm argues that it was also involuntary since deposition testimony is considered cross-examination. For the same reasons we set forth above, we also disagree with this argument.”

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Motion to Strike Claims/Pre-Litigation Letters. The California Court of Appeal, Second District, upheld an order that granted a law firm's special motion under the state's Code of Civil Procedure '425.16 to strike the allegations in a complaint filed against the firm by a former member of the rock band Marilyn Manson. Bier v. Grodsky & Olecki, B204887. Stephen Bier (pka Madonna Wayne Gacy), who had been a partner in the band beginning in 1993, sued Marilyn Manson and the attorneys after being sent a band-member termination notice. Bier claimed that money he was owed had been mishandled and alleged breach of a fiduciary obligation of loyalty and care against Grodsky & Olecki (G&O). The firm had sent two pre-litigation letters to Bier on behalf of Manson prior to Bier's suit. G&O previously represented Manson and Bier in 2004 and 2005 on copyright and trademark claims against former band member Scott Putesky (pka Daisy Berkowitz).

On March 1, 2007, G&O sent Bier a letter that Bier alleged “falsely claimed, among other things, that [Bier's] employment contract with the band had expired, [he] was an at-will employee who could be fired at any time by Manson, and [Bier] had stolen the band equipment retrieved earlier in the day from storage.” On March 23, 2007, G&O sent Bier's newly hired counsel a letter that, purportedly among other things, “made several allegedly false claims about [Bier's] relationship with Manson and the band. G&O failed to produce documents as it had promised.” But in April 2007, G&O sent several boxes of documents and notified Bier's counsel that G&O was no longer representing Manson or the band.

In his suit in L.A. Superior Court, Bier claimed that G&O “breached its fiduciary duties by conspiring with Manson and other defendants, by failing to avoid conflicts of interest between partners in the band, and by failing to render 'just accounts' to [Bier] of their profits from the band.” Bier also charged that the firm “intentionally lied in the letter to his counsel.”

Section 425.16, also known as the “Anti-SLAPP” statute (i.e., to prevent “Strategic Lawsuits Against Public Participation”) gives immunity from suit for an act that furthers a party's “right of petition or free speech under the United States or California Constitution in connection with a public issue” including a statement or writing “in connection with an issue under consideration or review by a ' judicial body, or any other official proceeding authorized by law.” This has included publications made “in any legislative, judicial, or other proceeding authorized by law,” which are afforded an absolute privilege under Calif. Civ. Code '47(b).

Of the March 1 and March 23 letters sent by G&O, the California Court of Appeal noted in its unpublished opinion: “The communications indisputably postdate [Bier's] demand for payment of his outstanding bills and his reported statement that he had 'already spoken to his lawyers.' ' 'The absolute privilege attaches to any publication that has any reasonable relation to the action and is made to achieve the objects of the litigation, even though published outside the courtroom and no function of the court or its officers is involved.'”

Of Bier's claim of breach of a fiduciary duty owed him by G&O as a former client, the court emphasized: “G&O provided evidence that it formerly represented Manson and [Bier] individually, and only with respect to copyright and trademark infringement claims the firm brought on Manson's and [Bier's] individual behalf against Putesk[y]. The infringement complaint, which is part of the record below, raised no issues regarding any alleged partnership agreement among band members.”

The court of appeal further found to the extent that Bier “suggests that G&O's communications do not deserve protection because they were not truthful, the argument is irrelevant. ' The communications in this case were sufficiently connected and logically related to anticipated litigation and were therefore absolutely privileged.”