Another Development in Sullivan & Cromwell v. Charney

New York State Supreme Court Justice Bernard J. Fried has issued a new order in the pending case of Sullivan & Cromwell v. Aaron Brett Charney.  I'm not going to rehash the background of the case in any great detail here, since readers of this blog can look back at my prior postings about the case.  The new order portends possibly explosive developments -- at least in terms of potential ethical violations by some of the lawyers involved.

According to the order, dated April 17 and filed April 18, Charney's attorney sent the judge a letter on April 13 asking for an expansion of the scope of depositions that are to be taken of S&C partner Vince DiBlasi and Grinberg's former counsel, Edward Gallion (who long ago was an associate at S&C and was being paid by S&C to represent Gera Grinberg, an S&C associate who was Charney's former work-partner at the firm).  Last month, Fried had authorized limited depositions of those two as well as Grinberg, limited to three questions: (1) What Charney was or was not told concerning the hard drive [on his home computer] and documents that he may have had in his possession from S&C; (2) Any conversations concerning that subject at the January 31 [inconclusive settlement] meeting [concerning Charney's previously-filed discrimination/retaliation lawsuit against S&C, after which S&C filed suit against Charney]; and (3) Whether there were any alleged threats, coercion, pressure, or similar words communicated to Mr. Charney concerning the documents on the hard drive.

It seems that the April 13 letter from Charney's counsel (which of his counsel is not specified in the order) to Justice Fried elicited an April 16 response from S&C, an April 16 rejoinder from Charney's counsel, and another April 17 response from S&C, as well as an April 16 letter from Edward Gallion to the judge.  The upshot is that Charney has gotten wind of a story that "Gallion and S&C conspired to create a false affidavit concerning statements about the hard drive during the January 31, 2007 meeting."  That's a bit ambiguous.  My interpretation is that Charney has heard from some undisclosed source [my speculation: Grinberg] that after the January 31 meeting and the subsequent events surrounding Charney's destruction of the hard drive on his computer and Charney's deposition allegations about what deBlasi and David Braff said to him during the January 31 meeting (at which he was not represented by counsel), Gallion, who was there representing Grinberg but in the pay of S&C, his former employer, and diBlasi (or somebody else from or representing S&C) "conspired" to produce an affidavit memorializing their version of what transpired at the meeting, in which they would assert that no mention was made of Charney's home computer.

Veterans of this ongoing saga will recall that Charney testified in his deposition that the only person who took written notes at the Jan. 31 meeting was Grinberg (and we've all wondered and speculated what he was doing in that meeting in any event???). Charney said that Grinberg's notes memorialized, among other things, diBlasi's reference to S&C's past representation of the Nazis and other memorable bons mots, as well as comments about the hard drive.  According to Charney, Grinberg turned over the notes for "safe keeping" to his attorney, Gallion, at the conclusion of the meeting.... and that at a subsequent hearing in the case, Grinberg's new attorney, Gary Ireland, disclosed in court that those notes had been destroyed by Gallion, and it seemed to have come out that perhaps an ethics complaint has been filed against Gallion, who was discharged by Grinberg as his attorney.

Now - another interesting point.  In responding to the April 13 letter, S&C asked Justice Fried to "require Charney to disclose the basis for the allegations in his attorney's April 13 letter, and to make a finding in advance of the depositions that Grinberg has waived the attorney-client privilege with respect to his communications with Mr. Gallion on these subjects."  So, what is Mr. Grinberg up to these days, sitting home on administrative leave from S&C.....??

Anyway, Fried rejects S&C's request.  "Based on his correspondence," he writes, "I authorize the parties to ask DiBlasi and Gallion the following additional questions during their depositions: (1) Did they discuss a proposed affidavit that would state that there was no mention of the hard drive at the January 31 meeting at the Penn Club; and (2) What did Gallion do with Grinberg's notes from the January 31 meeting at the Penn Club."  "It would be premature at this point," he added, "to resolve any dispute as to waiver of attorney-client privilege."   He also rejected a request by Gallion, presumably in his April 16 letter to the judge, for "an evidentiary hearing."

So, what's going on here?  Where does Grinberg stand in all this?  Why did he discharge Gallion?  Whose side is he on in the Charney dispute with S&C?  (We understand that S&C suspended Grinberg at some point as things unfolded after Charney was terminated, S&C sued Charney, and Grinberg dismissed Gallion as his attorney.)   Certainly, the stage seems to be set for some interesting new developments...

Comments

[Art Leonard]

And.... we understand that Grinberg has been deposed (we would love to have been a fly on the wall there) and has waived attorney-client privilege to allow Gallion to speak freely at his deposition...

[Art Leonard]

A correction - the original version of this post put Zach Fasman at the Jan. 31 meeting. Memory slip on my part, I should have said David Braff, and have corrected the posting to that effect.