The propriety of the Cunningham deposition depends upon different considerations from those obtaining with respect to Leonard Rubin. Cunningham did enjoy an attorney-client relationship with Javelin. The question with regard to Cunningham is whether the privilege flowing from that relationship extends to a conversation which Cunningham had with John A. Rozzini on March 27, 1976.
As an officer of Javelin in 1974, Rozzini certified to Javelin's independent outside auditors a portion of the costs of Javelin's road construction project in Panama. Rozzini later became a director of Javelin and sought to withdraw his prior certification, claiming that the road project had been overvalued on the Company's books. A series of potential legal problems confronted Javelin as a result of these and other disclosures relating to the Panama road project and at a directors' meeting on March 6, 1976, the Board of Directors ordered Javelin's outside auditors to conduct an extensive audit of Javelin and to compile a report, appointed the law firm of Steptoe & Johnson, of which Cunningham is a partner, as United States securities counsel, and directed all Javelin employees to cooperate with any governmental and regulatory investigations into Javelin's business.
On March 26-27, 1976, a meeting of the executive committee of the Board of Directors was held at Javelin's in-house counsel's law offices in Toronto, at which Cunningham and another attorney with Steptoe & Johnson reported on certain discussions with members of the Enforcement Division of the SEC. Present at the meeting were other Javelin counsel and two members of the accounting firm of Lee & Martin, Javelin's auditors at the time. On March 27, 1976, during a break in the meeting, Rozzini approached Cunningham and discussed the possible overvaluation of Javelin's construction costs on the Panamanian road. Cunningham warned Rozzini that the conversation would not be held in confidence, since Cunningham was obliged to report to certain designated officers of Javelin. Cunningham took extensive notes of the conversation, prepared a seven-page memorandum on the conversation, and later sent copies of the memorandum to compliance counsel and to Javelin's outside auditors.
Despite Defendants' claims that Rozzini approached Cunningham in Rozzini's official capacity as an officer and director of Javelin pursuant to the instructions of Javelin's Board of Directors, which authorized an inquiry into and an audit of Javelin's financial affairs, the Court finds that Rozzini was not acting as an agent of Javelin when he made the communications in issue. Rozzini's statements to Cunningham were not made as a part of the meeting held in connection with the authorized investigation and audit, but rather were made during a break in that meeting. The Court is not persuaded that the statements were made on behalf of Javelin or for purposes of enabling Cunningham to properly advise the Company.
The Court therefore concludes that in light of the circumstances under which the statements were uttered, the employee's communications here cannot be classified as the corporate client's communications so as to permit invocation by the corporation of the attorney-client privilege either under the "control group" test formulated in City of Philadelphia v. Westinghouse Electric Corp., 210 F. Supp 483, 485 (E.D. Pa.), mandamus and prohibition denied sub nom. General Electric Co. v. Kirkpatrick, 312 F.2d 742 (3d Cir. 1962), cert. denied, 372 U.S. 943, 9 L. Ed. 2d 969, 83 S. Ct. 937 (1963) or under the "circumstances" test articulated in Harper & Row Publishers, Inc. v. Decker, 423 F.2d 487 (7th Cir. 1970), aff'd by an equally divided court, 400 U.S. 348, 91 S. Ct. 479, 27 L. Ed. 2d 433 (1971), reh. denied, 401 U.S. 950, 91 S. Ct. 917, 28 L. Ed. 2d 234 (1971) and recently expended on in Diversified Industries, Inc. v. Meredith, et al., 572 F.2d 596 (8th Cir. 1978).
The final question before the Court is whether the Court's ruling with respect to attorney-client privilege should be certified pursuant to 28 U.S.C. § 1292(b) to allow Defendants to petition the United States Court of Appeals for the District of Columbia Circuit for leave to take an interlocutory appeal. The Court is not persuaded that the privilege issue involves a controlling question of law herein or that an interlocutory appeal would materially advance the ultimate termination of the litigation.
Consequently, Javelin's application for certification must be denied.
For the above-stated reasons, it is the decision of the Court that the depositions of Leonard J. Rubin and Richard O. Cunningham, shall proceed as ordered by this Court on January 13, 1978.
Aubrey E. Robinson, Jr. United States District Judge