Opinion
01 Civ. 8539 (RWS).
October 6, 2006
CAPLIN DRYSDALE, CHARTERED New York, NY By: ELIHU INSELBUCH, ESQ., Of Counsel, Attorneys for Plaintiff.
CAPLIN DRYSDALE, CHARTERED One Thomas Circle, NW Washington, DC By: TREVOR W. SWETT, ESQ. Of Counsel
LOWENSTEIN SANDLER Roseland, NJ By: ROSEMARY E. RAMSAY, ESQ. SAMUEL B. SANTO, JR., ESQ. Of Counsel
SIMPSON THACHER BARTLETT New York, NY By: BARRY R. OSTRAGER, ESQ. MARK THOMPSON, ESQ. DAVID J. WOLL, ESQ. AMANDA T. PEREZ, ESQ. Of Counsel Attorneys for Defendant.
PAUL, WEISS, RIFKIND, WHARTON GARRISON New York, NY By: BRAD S. KARP, ESQ. BRUCE BIRENBOIM, ESQ. DANIEL J. TOAL, ESQ. Of Counsel
SAIBER, SCHLESINGER, SATZ GOLDSTEIN One Gateway Center, Newark, NJ By: DAVID R. GROSS, ESQ. NANCY A. WASHINGTON, ESQ. JAMES H. GIANNINOTO, ESQ. Of Counsel
KEATING, MUETHING KLEKAMP Cincinnati, OH By: KEVIN E. IRWIN, ESQ. MICHAEL L. SCHEIER, ESQ. Of Counsel
WEIL, GOTSHAL MANGES New York, NY By: MARTIN J. BIENENSTOCK, ESQ. KATHRYN L. TURNER, ESQ. RALPH I. MILLER, ESQ. ROBERT R. SUMMERHAYS, ESQ. DEBRA L. GOLDSTEIN, ESQ. Of Counsel
RIKER, DANZIG, SCHERER, HYLAND PERRETTI Headquarters Plaza, Morristown, NJ By: DENNIS J. O'GRADY, ESQ. Of Counsel Attorneys for Interested Parties.
OPINION
Plaintiff Official Committee of Asbestos Claimants (the "Committee") has moved pursuant to Local Civil Rule 6.3 for reconsideration of the opinion of this Court dated April 28, 2006, granting in part the Committee's motion to compel the production of certain documents withheld as privileged, Official Comm. of Asbestos Claimants of G-I Holdings, Inc. v. Heyman, 342 B.R. 416 (S.D.N.Y. 2006) (the "April 28 Opinion"). Non-party International Specialty Products, Inc. ("ISP") has opposed the Committee's motion. For the reasons set forth below, the motion for reconsideration is granted and ISP is hereby ordered to produce responsive documents withheld as privileged, in accordance with this ruling.
The Committee's motion seeks "enforcement of the Privilege Ruling as written." Pl. Mot. at p. 1. Because the parties are in dispute over what the April 28 Opinion held with respect to the documents that are the subject of this motion, the Committee's motion is being treated as a motion for reconsideration.
Background
The plaintiffs in this action have alleged fraudulent conveyance against defendant Samuel Heyman ("Heyman") arising out of G-I Holdings, Inc.'s ("G-I") spin-off of its former subsidiary, ISP (the "1997 Transactions"). G-I and ISP are both owned and controlled by Heyman, and the bankruptcy court has appointed the Committee to represent the bankruptcy estate in this litigation.
On September 6, 2005, the Committee filed a motion to compel G-I, ISP, and Heyman to produce certain documents claimed as privileged. These documents fell into five subject matter categories, including the 1997 Transactions.
This Court granted the Committee's motion insofar as it concluded that the fiduciary exception to the attorney-client privilege applied to the documents withheld as privileged by G-I. Specifically, it was concluded that:
Because the Garner [v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970)] fiduciary exception has been extended to plaintiffs analogous to the Committee and because of the obvious and irreconcilable conflict presented to G-I by the Committee's claims, it is appropriate to apply the Garner exception and require G-I to produce its documents withheld on the basis of the attorney-client privilege.Official Comm. of Asbestos Claimants of G-I Holdings, Inc., 342 B.R. at 425.
With respect to those documents withheld as privileged by ISP, a different result was reached. The April 28 Opinion held that: "ISP retains the privilege over any communications that were made subsequent to the 1997 transactions." Id. at 426. This Court further concluded that the management agreement between ISP and G-I "does not destroy the corporate form and require ISP to withdraw its claim of privilege." Id.
The Committee now argues that the April 28 Opinion entitles it to all responsive documents generated or maintained by G-I or on its behalf, including "materials in the custody of ISP, because . . . lawyers employed by ISP served as G-I's in-house counsel in the matters in question . . . [and] ISP functioned as G-I's managing agent." Pl. Mot. at p. 2-3.
The Committee further contends that a majority of the materials relating to the 1997 Transactions were listed on ISP's privilege log as opposed to on G-I's as a result of convenience and happenstance. According to the Committee, "the chief determinant of which log particular documents ended up on was the pragmatic one of which transactions or events the documents relate to. Most of the documents relating to the 1997 Transactions were produced or logged by ISP's counsel. . . ." Pl. Mot. at p. 3.
The motion was heard and marked fully submitted on May 24, 2006.
Applicable Standard
Local Civil Rule 6.3 for the Southern District of New York provides that parties may file motions for reconsideration of the court's decisions, accompanied by a memorandum "setting forth concisely the matters or controlling decisions which counsel believes the court has overlooked." To be entitled to reconsideration, the movant must demonstrate that the court overlooked controlling decisions or factual matters that were put before it on the underlying motion that might have altered the result reached by the Court. See Ameritrust Co. Nat'l Ass'n v. Dew, 151 F.R.D. 237, 238 (S.D.N.Y. 1993); East Coast Novelty Co. v. City of New York, 141 F.R.D. 245, 245 (S.D.N.Y. 1992).
It is well established that a motion for reconsideration is not the proper avenue for the submission of new material. See Local Civil Rule 6.3; First American Corp. v. Price Waterhouse LLP, No. M8-85 (RWS), 1999 WL 148460, at *6 (S.D.N.Y. Mar. 18, 1999). A party seeking reconsideration may not "advance new facts, issues or arguments not previously presented to the Court."Morse/Diesel, Inc. v. Fidelity Deposit Co. of Md., 768 F. Supp. 115, 116 (S.D.N.Y. 1991); accord Kara Holding Corp. v. Getty Petroleum Mktg., Inc., No. 99 CV. 0275, 2005 WL 53266, *1 (S.D.N.Y. Jan. 10, 2005) (quoting Houbigant, Inc. v. ACB Mercantile, 914 F. Supp. 997, 1001 (S.D.N.Y. 1996) (internal citations omitted)). Indeed, new material submitted to the Court should be stricken and disregarded. See Quartararo v. Catterson, 73 F. Supp. 2d 270, 273 (E.D.N.Y. 1999).
Local Civil Rule 6.3 is "narrowly construed and strictly applied so as to avoid repetitive arguments on issues that have been considered fully by the Court." Davidson v. Scully, 172 F. Supp. 2d 458, 462 (S.D.N.Y. 2001). Discussion
As an initial matter, the Committee contends that the April 28 Opinion as written requires ISP to produce documents relating to the 1997 Transactions. In this regard, the Committee fashions its motion as a motion for "enforcement of the Privilege Ruling as written." Pl. Mot. at p. 2-3. According to the Committee, the implication of the April 28 Opinion's holding is that ISP cannot retain a privilege with respect to materials created before the 1997 Transactions.
Contrary to the Committee's assertions, the determination that "ISP retains the privilege over any communications that were made subsequent to the 1997 transactions," Official Comm. of Asbestos Claimants of G-I Holdings, Inc., 342 B.R. at 426, does not by implication eviscerate ISP's privilege with respect to materials created before the 1997 Transactions. Rather, the April 28 Opinion concluded that while "it is appropriate to apply theGarner exception and to require G-I to produce documents withheld on the basis of attorney-client privilege," that "exception . . . results from the particular dynamics of G-I's fiduciary duties in the context of bankruptcy and its demonstrated conflict of interest, factors which do not extend to ISP." Id. at 425. Accordingly, the Court did not order the production of documents protected by ISP's privilege, and the April 28 Opinion does not otherwise require ISP to produce these materials.
The Committee also seeks reconsideration of the April 28 Opinion with respect to materials relating to the 1997 Transactions that ISP claims as privileged. According to the Committee, many of the documents relating to the 1997 documents were logged on ISP's privilege log, as opposed to G-I's privilege log, despite relating to both parties.
It bears noting that waiver by one joint client of its communications with an attorney does not enable a third party to discover each of the other joint clients' communications with the same counsel. Rather, "[o]ne co-client does not have authority to waive the privilege with respect to another co-client's communications to their common lawyer." Restatement (Third) of The Law Governing Lawyers, § 75 cmt. e (2000). In instances where a communication involves "two or more co-clients, all those co-clients must join in a waiver, unless a nonwaiving co-client's communication can be redacted from the document." Id.; see also Paul R. Rice, Attorney-Client Privilege in the United States § 9.67 (1999) ("Because these privilege claims are held in common, it is generally agreed that none of the joint clients may waive that privilege protection without the consent of the others.").
While, in the instant case, G-I's privilege was eviscerated by way of an exception to the attorney-client privilege as opposed to a waiver of such, the Committee has presented no grounds for treating these two situations differently under the stated rule.
The Committee contends that notwithstanding the above rule, the joint-client doctrine prohibits ISP from maintaining a privilege over materials relating to the 1997 Transactions that G-I also claimed as privileged. In other words, the Committee argues that prior to the spin-off, G-I and ISP were represented by the same attorney on a matter of common interest (the 1997 transactions) and that, as such, ISP and G-I jointly held the privilege. The Committee further contends that because G-I and ISP shared legal representation on a matter, neither can assert the privilege against the other.
Under the joint client exception to the attorney-client privilege, "an attorney who represents two parties with respect to a single matter may not assert the privilege in a later dispute between the clients." Quintel Corp., N.V. v. Citibank, N.A., 567 F. Supp. 1357, 1364 (S.D.N.Y. 1983); see also Rejected Fed.R.Evid. 503(d) (5) ("As to communications relevant to a matter of common interest between two or more clients if the communication was made by any of them to a lawyer retained or consulted in common, when offered in an action between any of the clients."). Under the general rule, the joint client exception may be invoked by one former joint client against another only in a subsequent proceeding in which the two parties maintain adverse positions. Restatement (Third) of Law Governing Lawyers § 75(2) (2000); Jack B. Weinstein Margaret A. Berger, Weinstein's Federal Evidence § 503.21 (2d ed. 2006); Charles A. Wright Kenneth W. Graham, Jr.,Federal Practice Procedure § 5505 (West 2006).
In the instant case, G-I and ISP do not maintain adverse positions in the underlying litigation. Indeed, it is not G-I that here seeks to invoke the joint client doctrine, but rather the Committee, a third-party, that seeks to do so. The Committee highlights the adversity between G-I and ISP that results from the April 28 Opinion — namely that G-I's privilege with respect to materials surrounding the 1997 Transactions was eviscerated while ISP's was not. It is concluded that such adversity arising out of the application of the privilege or the production of documents does not warrant invocation of the joint client exception. Because ISP and G-I do not maintain adverse positions vis-à-vis the plaintiff Committee's claims, it is concluded that the joint client exception is inapplicable in the instant case.
Finally, with respect to the Committee's contention that the presence of the materials relating to the 1997 Transactions on ISP's privilege log as opposed to on G-I's resulted from convenience, ISP is hereby ordered to produce any documents that implicate only G-I's privilege and not ISP's. The parties are ordered to complete the meet and confer process, at the conclusion of which the Committee is granted leave to raise objections to materials it believes were erroneously included on ISP's privilege log.
It is so ordered.