Chang v. Cashman

Background

Stacy Chang sued Carlos Cashman and several entities, including Arrowside Ventures, LLC and Perseverus, LLC, over claims related to Cashman’s alleged recruitment of Chang as a partner at an investment fund and subsequent wrongful termination. Chang moved to compel Ventures and Perseverus to produce communications between Tom Copeman, their former investment manager, and their corporate counsel, Wilchins Cosentino & Novins LLP.

The communications were dated between December 8, 2022, and February 10, 2023. The defendants withheld them based on the attorney-client privilege, which generally protects confidential communications made between a client and lawyer for the purpose of obtaining legal advice.

The parties’ arguments

Chang argued that Copeman was no longer employed by Ventures or Perseverus when the communications occurred. She relied on a severance agreement stating that his “Employment End Date” was December 1, 2022.

The defendants argued that the agreement was ambiguous and that Copeman continued performing his duties as investment manager until February 10, 2023, when he signed the agreement. They also argued that the privilege protected the communications even if Copeman’s employment ended on December 1, 2022. Copeman’s declaration stated that his employment end date had been made retroactive to December 1 for accounting purposes.

Court’s analysis

Because this was a diversity action, the court applied California law to the privilege issue. Under that law, the party asserting attorney-client privilege must establish the basic facts supporting the privilege, including that the communication occurred during an attorney-client relationship. The privilege is construed narrowly.

The court held that the severance agreement unambiguously identified December 1, 2022, as Copeman’s employment end date. The agreement stated that all salary and expense reimbursements had been paid through that date and provided that the agreement was the parties’ complete agreement and could be modified only in a signed writing. The court found that nothing in the agreement referred to retroactivity. It therefore concluded that Copeman’s declaration could not be used to contradict the agreement’s express terms.

The court then considered whether Copeman’s post-December 1 communications with the companies’ lawyers were privileged. Under the authorities discussed in the opinion, a corporation communicates with its lawyers through an authorized representative, such as an agent or employee. The defendants did not show that Copeman remained an authorized representative after December 1, 2022. They also did not provide evidence that the communications were made to process his separation from employment or that he was required to speak with corporate counsel after his employment ended.

The court concluded that the defendants had not met their burden to show that the communications were made during an attorney-client relationship. The communications therefore were not protected by the attorney-client privilege.

Disposition

The court granted Chang’s motion to compel. It ordered the defendants to produce, within three days of the order, all communications between Copeman and the defendants’ corporate counsel that occurred after December 1, 2022, and had been withheld based on attorney-client privilege.