CARONE v. VENATOR GROUP INC (2001)

Order, Supreme Court, New York County (Marilyn Shafer, J.), entered May 8, 2001, which denied plaintiffs' motion to compel further disclosure, unanimously affirmed, without costs.

 Plaintiffs, former employees of defendant, claim that they were defamed by an office memo that defendant circulated which falsely stated that they were suspended because of concern about possible disclosure of confidential information to a firm of securities analysts, when, in fact, defendant had other motives for circulating the memo and suspending them, i.e., retaliation against a former employee for his negative analysis of defendant.   Defendant interposed truth and qualified privilege as defenses, and asserts that an in-house investigation conducted by its legal department showed that plaintiffs had made many phone calls to the firm of securities analysts.   Plaintiffs respond that defendant's answer put in issue the bona fides of its ostensible concern about leaks.   Toward that end, plaintiffs seek to compel defendant's in-house counsel who headed up the investigation to disclose certain communications he had with defendant's officers and an outside management firm retained to assist in the investigation, as well as what he and others associated with defendant “believed” at certain times about plaintiffs, their loyalty to defendant and whether they had leaked confidential information.   The disclosure sought is precluded by the attorney-client privilege (see, Rossi v. Blue Cross & Blue Shield, 73 N.Y.2d 588, 592, 542 N.Y.S.2d 508, 540 N.E.2d 703).   The privilege was not waived by counsel's participation in the investigation (see, Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584), or by his testimony regarding non-privileged matters (cf., Miranda v. Miranda, 184 A.D.2d 286, 584 N.Y.S.2d 818;  Verschell v. Pike, 65 A.D.2d 622, 409 N.Y.S.2d 533).   Defendant properly raised the privilege at deposition by objection to specific questions (see, 305-7 W. 128th St. Corp. v. Gold, 178 A.D.2d 251, 577 N.Y.S.2d 278, citing Verschell v. Pike, supra ).