Opinion
Civil Action 04-968.
October 20, 2004
MEMORANDUM AND ORDER
Via the motions now pending before this Court, Plaintiffs move to supplement the record with a BDO Seidman Memorandum dated August 11, 2000, and Defendants move to compel the return of the allegedly privileged document. For the reasons outlined below, Plaintiffs' Motion is DENIED and Defendants' Motion is GRANTED.
Discussion
The Proper Forum for Adjudication of this Dispute
Defendants, who have filed a cross-motion to compel return of the BDO Seidman Memorandum dated August 11, 2000 ("the Memorandum"), allege that the Memorandum is protected by the attorney-client privilege. We first address Plaintiffs' contention that this Court is not the proper forum in which to determine the status of the BDO Memorandum dated August 11, 2000 ("the Memorandum") or consider motions for its return.
Plaintiffs' counsel obtained the Memorandum from Jenkens Gilchrist as part of the settlement process in Denney v. Jenkens Gilchrist, in which Plaintiffs' counsel are lead class counsel. Denney v. Jenkens Gilchrist, No. 03-5460 (S.D.N.Y., filed July 23, 2003). Plaintiffs contend that, because the Memorandum was originally produced in connection with theDenney case, Defendants should seek its return before the United States District Court for the Southern District of New York. Plaintiffs further assert that resolution of this issue before this Court would interfere with the rights of the parties in the Denney settlement, which bars putative class members from pursuing further claims against Jenkens Gilchrist or its related parties.
We find that the United States District Court for the Eastern District of Pennsylvania is the proper forum for Defendants' claims regarding the use of the Memorandum in this action. Defendants, in their cross-motion, demand that Plaintiffs return the Memorandum to Defendants' counsel, destroy all copies, and "refrain from any further use of or reference to that memorandum in this case." A decision by this Court to limit Plaintiffs' use of the Memorandum in the instant case would have no effect on the rights of the parties in the Denney settlement, as the Plaintiffs are not parties to that action; it is questionable whether the United States District Court for the Southern District of New York would even have jurisdiction over Plaintiffs' use of the Memorandum in this case. Nor does Defendants' request for relief implicate the Denney injunction prohibiting claims against Jenkens Gilchrist and related parties, as Defendants BDO Seidman and Deutsche Bank seek no relief from their Denney co-defendants, Jenkens Gilchrist. Furthermore, it is unlikely that Defendants would be able to obtain relief before the United States District Court for the Southern District of New York given that the Denney litigation has been stayed pending appeal. Denney v. Jenkens Gilchrist, No. 03-5460, 2004 U.S. Dist. Lexis 11241 (S.D.N.Y. 2004).
The Privileged Status of the Memorandum
Defendants contend that the Memorandum is protected by the attorney-client privilege, and move to compel its return and prohibit its use in this case. The central issue before this Court is whether Defendants have waived this privilege by intentionally or inadvertently sharing the Memorandum with Jenkens Gilchrist; we find that they have not.
The attorney-client privilege, designed to encourage uninhibited communication between clients and their attorneys, is "[w]orthy of maximum protection." EEOC v. Guess?, Inc., 176 F. Supp. 2d 416, 422 (E.D. Pa. 2001). A party seeking to withhold information on the basis of this privilege bears the burden of showing that the communication in question was made in confidence, in connection with a request for legal advice from a legal advisor in his capacity as such, and that the privilege has not been waived. See In re Grand Jury Proceeding Impounded, 241 F.3d 308, 316, n. 6 (3rd Cir. 2001); Rhone-Poulenc Rorer v. Home Indem. Co., 32 F.3d 851, 862 (3rd Cir. 1994); EEOC v. Guess?, Inc., 176 F. Supp. 2d at 422-23.
Because waivers of attorney-client privilege must generally be voluntary, inadvertent disclosure of an allegedly privileged communication will not necessarily constitute a waiver. Fidelity Deposit Co. v. McCulloch, 168 F.R.D. 516, 521-22 (E.D. Pa. 1996) (holding that a small number of insignificant disclosures do not constitute a waiver); Advanced Med., Inc. v. Arden Med. Sys., Inc., No. 87-3059, 1988 U.S. Dist. LEXIS 7297, 5-6, 1988 WL 76128, 2 (E.D. Pa. 1988) (holding that limited inadvertent disclosures in extraordinary circumstances, such as expedited discovery or massive document exchanges, do not constitute a waiver). In determining whether an inadvertent disclosure has waived the attorney-client privilege, this Court must consider the following factors: (1) the reasonableness of precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) any delay and measures taken to rectify the disclosure; and (5) whether the overriding interests of justice would be served by relieving the party of its errors. Fidelity Deposit Co., 168 F.R.D. at 522.
The common interest doctrine is an exception to the general rule that the attorney-client privilege is waived upon disclosure of privileged information to a third party. Katz v. AT T Corp., 191 F.R.D. 433, 436 (E.D. Pa. 2000). Where parties with "shared interest in actual or potential litigation against a common adversary" share privileged information pursuant to this shared goal, the common interest doctrine preserves the attorney-client privilege with respect to that information. Katz v. AT T Corp., 191 F.R.D. 433, 436 (E.D. Pa. 2000) (quoting Thompson v. Glenmede Trust Co., No. 92-5233, 1995 U.S. Dist. LEXIS 18780, 15-16, 1995 WL 752443, 4 (E.D. Pa. 1995)); see also In Re: Diet Drugs Prods. Liab. Litig., 2001 U.S. Dist. LEXIS 5494, 14-15, 2001 WL 34133955, 5-6 (E.D. Pa. 2001)
At issue in this case is the question of whether Defendant BDO Seidman waived its right to assert the attorney-client privilege with respect to the Memorandum. Plaintiffs contend that the confidential nature of the Memorandum was destroyed when Jenkens Gilchrist, a third party, obtained the document. Defendants claim that BDO Seidman did not waive its privilege because it never intentionally or inadvertently shared the Memorandum with anyone outside the firm, and further suggest that Jenkens Gilchrist obtained the document using improper means. The affidavits of Jenkens Gilchrist shareholder Donna Guerin and BDO Seidman partner Robert Greisman, which are in direct conflict, do little to resolve this issue, although the detailed and verifiable information in Mr. Greisman's affidavit strongly suggests that he sent no fax to Ms. Guerin on January 19, 2001, the day she claims to have received it. Luckily, it is not necessary for this Court to delve into the quagmire of exactly how Jenkens Gilchrist obtained the Memorandum.
If, as Plaintiffs contend, Robert Greisman or anyone at BDO Seidman intentionally faxed the Memorandum to Jenkens Gilchrist, we find that such disclosure is protected by the common interest doctrine. Even accepting as true Ms. Guerin's assertion that the Memorandum was "not sent in connection with any on-going litigation," Defendants have satisfied their burden of showing that BDO Seidman and Jenkens Gilchrist were parties with "shared interest in actual or potential litigation against a common adversary" at the time the Memorandum was allegedly faxed.Katz, 191 F.R.D. at 436. The Memorandum sought legal advice from BDO Seidman's outside counsel in connection with confidential issues regarding potential litigation and tax liability. At the time the Memorandum was allegedly faxed to Ms. Guerin, both BDO Seidman and Jenkens Gilchrist faced the same legal issues concerning their standing before the IRS and common clients. Indeed, Ms. Guerin's affidavit asserts that Mr. Greisman had on other occasions sent her information relating the same topic and the same common clients, including a September 7, 2000 letter and memorandum regarding whether the two firms would be subject to new IRS requirements. The common interest between these two firms is further established by the fact that BDO Seidman and Jenkens Gilchrist are co-defendants in the pendingDenney litigation, which concerns similar issues of tax liability. This Court is satisfied with Defendants' showing that the common interest doctrine would protect the BDO Memorandum's privileged status if the communication between BDO Seidman and Jenkens Gilchrist were found to be intentional.
Even if, on the other hand, Jenkens Gilchrist obtained the Memorandum without authorization as a result of inadvertent or involuntary disclosure by someone within BDO Seidman (as Defendants contend), our analysis of the five Fidelity factors indicates that such a disclosure would not constitute a waiver.See Fidelity Deposit Co., 168 F.R.D. at 522. The Memorandum was addressed to a limited audience of high-level BDO employees and outside counsel, suggesting some degree of precaution in terms of confidentiality. As to the number and extent of disclosures, Plaintiffs allege only that the Memorandum was faxed from BDO Seidman to Jenkens Gilchrist on January 19, 2001, and claim no further disclosures by BDO. In arguing that the privilege has been waived, Plaintiffs rely on the fact that "multiple persons" now have a copy of the Memorandum; however, Plaintiffs fail to mention that the source of these circulating copies was Plaintiffs' counsel, not BDO Seidman. A week after Judge Kauffman ordered the Memorandum sealed pending resolution of these motions, Plaintiffs' counsel filed five new complaints against Defendants and others in which counsel quoted from the Memorandum. See Heller v. Deutsche Bank AG, et al, No. 04-3572 (E.D. Pa., filed July 28, 2004); Armitage v. BDO Seidman, et al, No. 04-6154 (C.D. Cal.); Crunk v. BDO Seidman, et al, NO. 04-2573-MIV (W.D. Tenn.); Illingworth v. Deutsche Bank, et al, No. 1:04-4966 (N.D. Ill.); Blythe v. Deutsche Bank, et al, No. 04-5867 (S.D.N.Y.). This Court notes that Defendant BDO Seidman has fought vigorously to preserve the privilege surrounding the Memorandum, both before this Court as well as before the United States District Court for the Northern District of Illinois inUnited States v. BDO Seidman, LLP, No. 02-4822.
We find that the "overriding interests of justice would be served" by granting Defendants' motion for return of the Memorandum and prohibiting Plaintiffs from using or referring to the Memorandum in this case. Fidelity Deposit Co., 168 F.R.D. at 522. A ruling in Defendants' favor on the issue of attorney-client privilege will serve to protect Defendants' confidential interests in the instant case, and will not unduly prejudice Plaintiffs or their counsel. Plaintiffs' counsel appears able to obtain copies of the Memorandum by virtue of their relationship with Jenkens Gilchrist pursuant to theDenney settlement, and will likely continue to cite to the Memorandum in its actions before other Courts. If such a situation arises, Defendants are of course free to assert their claim of privilege before those Courts, as we have no jurisdiction over counsel's use of the Memorandum beyond the present action.
Accordingly, we find that the BDO Memorandum dated August 11, 2000 is protected by attorney-client privilege. We will DENY Plaintiffs' motion to supplement the record and GRANT Defendants' cross-motion to compel return of the privileged document.
An appropriate order follows.
ORDER
AND NOW, this day of October, 2004, upon consideration of Plaintiffs' Motion for Leave to Supplement the Record (Doc. No. 58), Defendants' Cross-Motion to Compel the Return of Privileged Document (Doc. No. 67), and all responses thereto (Docs. No. 71, 75), it is hereby ORDERED that Plaintiffs' Motion is DENIED and Defendants' Motion is GRANTED.It is further DECREED that Plaintiffs shall return to BDO Seidman's counsel the Memorandum dated August 11, 2000 and attached to their Motion within five (5) days of this Order, and destroy all copies, and refrain from any further use of or reference to that Memorandum in this case.