In Zambelli Fireworks Manufacturing Co v. Wood, where Zambelli ...

[sarasara]

In Zambelli Fireworks Manufacturing Co v. Wood, where Zambelli sued Wood for violating the noncompete agreement in his contract, the appeals court held that:
 a. the noncompete agreement was void because it violated common law policies b. the noncompete agreement was void because it violated public policy
  c. Wood's specialized knowledge from working at Zambelli, but not customer goodwill, constituted a legitimate business interest that Zambelli had a right to protect through a reasonable restrictive covenant
  d. Wood's specialized knowledge from working at Zambelli and established customer goodwill did not constitute legitimate business interests that Zambelli had a right to protect through a reasonable restrictive covenant
  e. none of the other choices are correct

Question 2

Confidentiality and Privilege. Napster, Inc, offered a service that allowed its users to browse digital music files on other users' computers and download selections for free. Music industry principals filed a suit in a federal district court against Napster, alleging copyright in-fringement. The court ordered Napster to remove from its service files that were identified as in-fringing. Napster failed to comply and was shut down in July 2001. In October, Bertelsmann AG, a German corporation, loaned Napster 85 million to fund its anticipated transition to a licensed digital music distribution system. The terms allowed Napster to spend the loan on general, administrative and overhead expenses. In an e-mail, Hank Barry, Napster's chief executive officer, referred to a side deal under which Napster could use up to 10 million of the loan to pay litigation expenses. Napster failed to launch the new system before declaring bankruptcy in June 2002. Some of the plaintiffs filed a suit in a federal district court against Bertelsmann, charging that by its loan, it prolonged Napster's infringement. The plaintiffs asked the court to order the disclosure of all attorney-client communications related to the loan. What principle could Bertelsmann assert to protect these communications? What is the purpose of this protection? Should this principle protect a client who consults an attorney for advice that will help the client commit fraud? Should the court grant the plaintiffs' request? Discuss.

[akemokai]

Answer to Question 1

e

Answer to Question 2

Confidentiality and privilege
The attorney-client privilege protects the confidentiality of attorney-client communications. Under this principle, an attorney cannot discuss a client's case without the client's permission or the client's waiver of this privilege, even by court order. The purpose for this protection is to encourage the client's full disclosure to the attorney of the facts of the client's case. There is an exceptionthe crime-fraud exceptionunder which a client who consults an attorney for advice that will help the client commit fraud cannot avoid disclosure.
In this case, citing the Barry e-mail and other evidence, the court ordered the disclosure of the attorney-client communications relating to the Bertelsmann-Napster loan under the crime-fraud exception. Bertelsmann appealed to the U.S. Court of Appeals for the Ninth Circuit, which reversed this order and remanded the case, holding that the plaintiffs did not prove the crime-fraud exception applied. The court concluded that the plaintiffs' evidence failed to establish an intentional, material misrepresentation directly aimed at the court. Litigation expenses could fall under the general, administrative and overhead expenses clause in the loan documents. The court added that even if we were to conclude that the written terms of the loan misrepresented the parties' agreement to allow some of the funds to be used for litigation expenses, the plaintiffs' evidence nowhere suggests that Bertelsmann selected these terms with the intent to defraud the courts. The fact that a party has taken steps to structure a business transaction to limit its liability does not suffice, without more, to establish that the crime-fraud exception applies. Finally, the court reasoned that even assuming for the sake of argument that Bertelsmann's failure to spell out in the loan documents that overhead costs' included litigation expenses was an intentional misrepresentation, we do not see how it could have deceived a court into concluding that Bertelsmann provided no financial support to, or had no financial stake in, the existing Napster company. . . . If funding Napster's litigation may have helped to prolong Napster's existence, so, too, did injecting any cash into Napster.