SM Kids, LLC v. Google LLC

Background

SM Kids, LLC brought a breach-of-settlement-agreement case against Google LLC, Alphabet Inc., and XXVI Holdings Inc. The defendants challenged privilege assertions in SM Kids’ privilege log, which contained 4,587 entries. The court reviewed exemplar documents in camera, meaning privately, to determine whether particular documents were protected from disclosure.

The underlying dispute concerns a 2008 settlement agreement involving the Googles trademark. SM Kids alleged that Google breached the agreement by creating Google Play and YouTube Kids and acquiring children’s entertainment businesses. The opinion addresses only the defendants’ privilege challenge.

Governing law

Because jurisdiction was based on diversity and the settlement agreement selected New York law, the court applied New York law on attorney-client privilege. The party claiming privilege had to show that a communication involved an attorney and client, was primarily for legal advice, and was confidential. That party also had to show that privilege had not been waived.

The court explained that disclosure to a third party generally waives attorney-client privilege. Exceptions can apply when the recipient is an agent of the client or the functional equivalent of an employee. Under New York law, however, sharing communications based only on a common legal interest does not avoid waiver unless pending or reasonably anticipated litigation exists. The court also explained that communications with a public-relations firm are protected only when their main purpose is obtaining or providing legal advice, rather than advancing a public-relations strategy.

Rulings concerning the challenged communications

Mazer

The court found that Matt Mazer acted as an agent for Garchik and his companies regarding the Googles intellectual property. A communication requesting legal advice from an attorney remained privileged when forwarded to Mazer. A communication solely between Mazer and Garchik that did not reflect legal advice was not privileged and had to be produced.

A. Cohen and Taral

The court found that, after A. Cohen and Taral entered their agreement with Garchik and Stelpro on March 2, 2014, the two groups effectively became joint clients of Robert Wyman and Wyman & Isaacs. Communications involving Wyman or Wyman & Isaacs and Garchik or Stelpro after that date were privileged. Communications from before that date were not privileged as to Garchik, Stelpro, or successor entities because Wyman and Wyman & Isaacs then represented only A. Cohen and Taral.

The court therefore required production of several documents concerning drafts of the March 2, 2014 agreement and a December 2013 email chain. It also required production of an email chain that had been forwarded to Richard Rakowski, because that disclosure waived privilege and later messages did not seek or convey legal advice. Other reviewed communications involving legal advice remained privileged and did not have to be produced.

Lader

The court found that Jared Lader acted as Taral’s agent or functional equivalent of an employee concerning the Googles intellectual property. Several communications involving Lader therefore remained privileged. One email chain had to be produced except that SM Kids could redact two emails sent by Wyman that contained privileged material.

Salmansohn

The court found that Karen Salmansohn acted as an agent for SJM through Bungalow after Bungalow secured an agreement with SJM in late June or July 2016. Sharing privileged communications with her after that point did not waive privilege. But communications with her in May 2016 were not protected because she was not yet acting as SJM’s agent. The court ordered production of the reviewed Salmansohn documents, including a document for which SM Kids withdrew its privilege assertion.

Bungalow

The court found that Bungalow acted as SJM’s agent after it was retained in late June or July 2016 to seek a sale, joint venture, or other capital infusion for SJM and googles.com. Later communications involving legal advice remained privileged. Communications shared with Bungalow before that relationship existed were not protected; the common-interest exception did not apply because litigation was not pending or reasonably anticipated. The court ordered production of those documents and permitted one sentence containing information about Wyman’s work to be redacted from another document.

The court left open the privilege status of communications from the period between the June 30, 2016 “as of” date of Bungalow’s agreement and the dates when the agreement was executed, because the answer would depend on each document’s content and context.

Sayles and Winnikoff

SM Kids agreed to withdraw its privilege claim over the single document concerning Carina Sayles and Alan Winnikoff, principals of a public-relations firm. The court therefore ordered that document produced and reminded SM Kids that public-relations communications qualify for attorney-client protection only when their predominant purpose involves legal advice.

Disposition

Magistrate Judge Stewart D. Aaron ordered SM Kids to produce the specified exemplar documents within seven days, with the stated redactions. The court also ordered the parties to meet and confer by March 2, 2021, and file a joint letter by March 5, 2021, reporting on that process. The opinion does not state that the defendants’ letter motion was granted or denied in those terms.