The Latest Charney Sensation

Ok, now somebody's invoking the Nazis and things are getting really hot in the Charney case. 

At his March 5 deposition, Aaron Charney was being questioned about the events leading to his destruction of his computer hard drive on the weekend after Sullivan & Cromwell filed its lawsuit against him and discharged him.  (He had filed his discrimination suit against S&C a few weeks previously, at which time they had suspended him.)  At the deposition, Charney testified that he destroyed the computer drive because he was "terrified" as a result of the settlement meeting on January 31 and the events the following day - being sued and receiving his discharge notification. 

So here's a Q&A that has now become the subject of heated blogging discussion.  (Typographical errors reproduced from the original, excerpts from which are attached as an exhibit to Charney's reply papers filed in response to S&C's opposition to his motion to dismiss their lawsuit - available in the NY Courts efile system):

"A.  I was frightened by being fired and sued, sir.

Q. So you were frightened about being sued and being in court on February 1st, right?

A.  Yes, sir.

Q. And so it was fear of being in court plus the fear that you say you had from Mr. DiBlasi that caused you to boil, hammer and boil again, is that your testimony?

A.  It was Mr. -- it started with -- earlier before the meeting at the Penn club with Mr. DiBlasi, when I saw Mr. Grinberg and he told me that he feared that the firm was going to have him deported if we didn't meet.  And he asked that I come to a meeting with the firm.  And I feared for him, and that made me frightened.  And when we got to the Penn club, the content of that meeting and the threats that Mr. DiBlasi with made [sic] invoking the fact that the firm had represented the Nazis and how -- that nobody cared, and that people wrote a book about them representing the Nazis and no one cared.  And he went on and on about how he didn't care about the first amendment and what people said, and that nobody would care about me and my gay discrimination claims, these little claims were irrelevant, and the firm was invincible and that they would crush me.  And I was terrified.  And then the next morning when Mr. Fasman called and I got sued and then fired, the events of those two days were just some of the worst experiences -- they were the worst experience I ever had in my life, rest assured."

Further on in the depo excerpts filed as exhibits yesterday, Charney further describes the meeting.  He mentions that when he started to take notes, DiBlasi told him not to - that it would violate the confidentiality understanding under which the meeting was being held, but Charney saw that Grinberg, sitting at the other end of the conference table, was taking notes on a small pad and appeared to Charney to have taken 4-5 pages of notes.  During a break in the proceedings, Charney walked out of the room past that end of the table and glanced down at Grinberg's pad, where he saw on the top page:

"It was stuff about destruction of hard drive, or returning my home computer.  And stuff about "affidavit," and then some of the comments, for instance the Nazi comments, I remember seeing the word Nazis in his notes."

These are the notes that Charney observed Grinberg turning over to his lawyer, Gallion, at the end of the meeting.  He says Gallion folded them and put them in his inner jacket pocket.  He also says he heard Grinberg tell Gallion to take them for safe keeping.  It later came out in court that Gallion had "destroyed" the notes.  (It is interesting that Spielvogel & Gallion, the firm retained by Grinberg to represent him in these proceedings in which he is not a party but most definitely a witness who will be deposed and who will testify if there is a trial, was being compensated by S&C, according to what is reported to be the firm's policy of providing independent counsel for their lawyers who become involved in court proceedings as witnesses or parties.  So Gallion was Grinberg's attorney, paid by S&C, who was handed notes allegedly recording that an S&C partner, DiBlasi, had referred to the firm's past representation of "the Nazis" in connection with a threat to "crush" Charney, the gay Jewish defendant in S&C's lawsuit....  rather unfortunate reference, we think.  And Gallion was employed as an associate at S&C prior to becoming associated in his own firm with Spielvogel.)  The reference to Grinberg being deported refers to the fact that Grinberg is a Canadian national, whose residency status in the US may depend on his continued employment by S&C...

Of course, this is all from Charney's deposition, given under oath but not tested for credibility in open court yet.  The notes are reportedly gone, and Grinberg is no longer represented by Spielvogel & Gallion, having retained new counsel.  Could it be that Grinberg remains kindly disposed towards Charney and was upset upon learning that Gallion had destroyed the notes, and thus lost confidence in Gallion....?  And what about the cryptic reference by Grinberg's new attorney, Gary Ireland, during the most recent court hearing, that disciplinary charges are on file?  (This is recounted in an article this week in The New York Observer by a reporter who attended the hearing.) Ireland was reportedly cut off before he could say by whom against whom - could it be that Grinberg has filed charges with the disciplinary committee against Gallion for destroying the notes???  No way of knowing, since the disciplinary committee proceedings are confidential, so just speculation here....

Elsewhere in the deposition, Charney explains the particular motivation for destroying his computer drive.  He is being questioned by Charles Stillman, a lawyer for S&C, who first established that Charney had obtained counsel after being sued on February 1:

Q.  [by Stillman, S&C's lawyer?] And can you tell me why you didn't ask your lawyer or lawyers whether or not you should destroy the hard drive?  [Objection as to form by Kennedy, Charney's lawyer]

A.  I was terrified of Mr. DiBlasi, he demanded that I destroy the hard drive or give them back my home computer.  I told him that I didn't want to give it to him because it had personal stuff on it.  We went back and forth, he raised his voice.  Finally Mr. Braff tried to end the debate and said: Just destroy the hard drive and give us an affidavit.  And Mr. DiBlasi turned to me and said: "You're a member of the bar, if you destroy the hard drive you will give us an affidavit.  I said: That's fine, I will give you an affidavit.  I don't understand what the issue was but they were adamant, so I did it."

In other words, the deposition testimony supports Charney's assertions to the court (through counsel, he hasn't actually testified in court or filed an affidavit to this effect) that he destroyed his computer drive because he was told to do so by S&C, speaking through DiBlasi and Braff at the January 31 meeting, as the alternative to surrendering the computer to them.  (David Braff is an openly-gay partner at S&C who heads the firm's litigation department.)

The excerpts from the depo explain another point.  There was an article in the Wall Street Journal in January, shortly before Charney filed his complaint, discussing the associate morale problem at S&C, which had a higher turnover rate than comparable firms.  The article mentioned a partnership meeting at which an S&C partner made a power point presentation in which she used some client documents -- employee evaluations from Goldman Sachs -- to illustrate a particular method of doing employee evaluations.  The WSJ article comments that although the names of the GS employees who were being evaluated were redacted from the front page of each document, whoevert did the redacting was sloppy and the names appear elsewhere in the documents, a circumstance that the WSJ article, a copy of which is also attached to the papers filed yesterday, says was embarrassing to S&C and GS.) 

In deposition testimony filed earlier in this case by S&C's lawyers in support of their arguments against Charney, Charney admitted that he had passed copies of these documents to the WSJ.  In these new fragments from the depo filed yesterday, Charney denies that he stole the documents or took them from S&C offices, claiming instead that he received  them in a  package in the mail, in an S&C envelope that did not otherwise identify the sender, and that he sent them to the Wall Street Journal.  Presumably, they were sent to him by somebody at S&C who knew about his planned law suit and wanted to provide him with documents that would be helpful in supporting his claims - at least that's one inference to draw from his depo testimony in which implies that he does not know who sent him the GS documents.

On the merits -- Charney's lawyers filed a memorandum replying to S&C's opposition to Charney's motion to dismiss the case.  The memorandum, by Alterman & Boop associate Douglas C. James, goes through S&C's allegations regarding Charney's alleged violations of confidentiality and secrecy requirements, showing in each case cited by S&C how the information referenced in Charney's complaint was not confidential or a secret.   James also explains why all the case law authority cited by S&C in support of its contention that it can maintain a cause of action against Charney for breach of fiduciary duty and breach of contract does not support S&C's case and in fact supports Charney's argument that S&C may not sue him for alleged violation of any duty to S&C's clients. 

James makes the point that an employer's remedy for an employee's violation of company policies -- such as the confidentiality agreement that S&C has its lawyers sign -- is to discharge the lawyer, and S&C discharged Charney on February 1.  The right to sue for breaches of confidentiality regarding client matters is a right of the client whose confidentiality was breached, not of the law firm that employees the lawyer, argues James.  Among the exhibits filed with the court in support of this reply memo are printouts from S&C's website, showing that the client matters that Charney mentioned in his complaint were all publicly noted on S&C's website and thus in the public domain.  James also asserts that Charney rendered the remaining claims for conversion and replevin of S&C firm documents moot by returning the documents when they were demanded by S&C.

What's next?  Well, once Charney's lawyers have deposed DiBlasi, Gallion and Grinberg, perhaps some of the transcript from that deposition will find its way into the public record.

But until then, one has to ask:  Why would anybody in the position of Gandolfo DiBlasi make any reference to S&C's past representation of "the Nazis" - knowing that somebody in the room was taking notes - even if he believed that the meeting was covered by a promise of confidentiality?  Will DiBlasi deny under oath that he said any such thing?  (In fact, there is a book that discusses S&C's representation of business interests that had dealings with the German government during the 1930s, and DiBlasi would be correct if he had asserted, as Charney claims, that the publication of this book, which was evidently little noticed, had no discernible effect on S&C's current standing and profitability as a big law firm.)  Will Grinberg, whose job and residence in the US may be at stake, deny that DiBlasi said it? Will Gallion, who was in the pay of S&C but owed his fiduciary duty to his client Grinberg and not to the source of his compensation, as these duties are parsed out under the ethical rules?  And what motive could Charney have for making this up?   Who is writing the script for this thriller.  And will Sir Ian play "Gandolfo" in the docudrama.....???

The saga to be continued....

Comments

[Lavi Soloway]

I'll be trying to post with as much flair, but you may have me beat! I'll be taking a crack at it this weekend. Good job! Now why can't we access all the relevant court transcripts on e-filing? That would certainly help the reportage.