Here’s an issue you don’t see every day.  Jonathan Moss graduated from law school in May 1993 and was admitted to the California State Bar later that year.  Up until 2002, Jonathan worked in non-legal positions at Pricewaterhouse Coopers and McKesson Health Solutions.  In 2002, Gucci hired Jonathan to work on real-estate matters in conjunction with Gucci’s efforts to expand its U.S. retail presence.  The record is apparently in dispute as to whether Gucci hired Jonathan to work in a legal or non-legal capacity.  Gucci’s then-executive vice president claimed they hired him to do “paralegal” work.  Jonathan, however, alleged that he was hired to provide in-house legal counsel to Gucci.  The court’s opinion states that Jonathan’s assertion was consistent with documentary evidence in the case.  Moreover, Jonathan’s career path at Gucci also supported his assertion as he promptly ascended to various legal positions within the organization, including legal counsel, director of legal services and vice president and director of legal and real estate.  In his positions, Jonathan not only provided Gucci with legal advice, but also represented Gucci before courts and administrative agencies.

The record contained six declarations from Gucci executives that they never confirmed Jonathan’s bar status as an attorney but “perceived” him to be one.  In December 2009, Gucci investigated Jonathan’s qualifications to practice law and determined that he had been an inactive member of the California State Bar for 13 years, during his entire tenure at Gucci.

All of this became relevant in the current case in which Gucci sued Guess?, Inc. (Guess) asserting trademark infringement.  During the course of discovery, Gucci submitted a privilege log that included emails from Jonathan.  Guess deposed Jonathan who testified that he had been an inactive member of the bar for three years.  Guess then demanded that Gucci produce the emails for those three years arguing that they weren’t protected by the attorney-client privilege.  The parties disputed the elements of the attorney-client privilege.  Gucci urged that the court follow the holding in SEC v. Beacon Hill, 231 F.R.D. 134 (S.D.N.Y. 2004) requiring that the party invoking the privilege show that the attorney “is a member of the bar of a court.”  Gucci asserted that Jonathan was a member of the California Bar, albeit an inactive member.  Guess argued that New York Supreme Court Standard 503 states that an attorney is “a person authorized, or reasonably believed by the client to be authorized, to practice law in any state or nation."  Guess argued that Gucci couldn’t prevail under Standard 503 because Jonathan wasn’t authorized to practice law, and Gucci didn’t have a reasonable basis to believe that he was so authorized.

The court held that an essential element of the attorney-client privilege is that an attorney participated in the communication. An attorney is one who is “admitted to the bar of a state or federal court,” and the bar membership must be of a type that “licenses one to practice law,” something that an inactive membership does not.  (Gucci America, Inc. v. Guess?, Inc. et. al., S.D.N.Y. Case No. 09 Civ. 4373 (June 29, 2010)). 

Moreover, the court held that Gucci’s belief that Jonathan was authorized to practice law wasn’t reasonable.  During his tenure with the company, Gucci never made any effort to ascertain his qualifications as an attorney and thus live up to a due diligence standard.  The court ruled against Gucci and ordered that Gucci turn over all communications with Jonathan.

The lesson for corporate executives and their in-house counsel is obvious.  Know what your state law requires to protect your communications from disclosure and be aware of “counsel’s” qualifications and status.