Summary
recognizing confidentiality of consultations with in-house ethics adviser but requiring disclosure of in-firm communications made after firm learned of client's adverse claim
Summary of this case from St. Simons Waterfront, LLC v. Hunter, Maclean, Exley & Dunn, P.C.Opinion
No C 06-2071 VRW.
February 21, 2007
ORDER
Defendant Francois Marland ("Marland") seeks an order directing plaintiff Thelen Reid Priest LLP ("Thelen") to produce 64 documents for which Thelen has asserted attorney-client and work product privileges. Doc #66 at 2, Doc #93. Marland also seeks an order directing Thelen to identify, on its privilege log, certain documents from after February 2005 that Thelen also claims are privileged. Doc #99 at 8.
Thelen seeks an order compelling production of an August 27, 2002 letter to Marland from his European counsel that Marland claims was inadvertently produced. Doc #106-1. Marland seeks sanctions against Thelen, including disqualification of Thelen's counsel, Keker Van Nest ("Keker"), for alleged misconduct relating to Marland's inadvertently produced documents.
I
This issue arises out a contract dispute between Thelen and Marland. Thelen is a California limited liability partnership and a law firm. Doc #11 at 1. Marland is a citizen of France, a French attorney and currently a resident of Switzerland. Id.
A
In 1997, Marland approached the New York law firm of Reid Priest, claiming to possess information about an undisclosed fronting agreement, or contrat de portage, through which Crédit Lyonnais, a French bank, had illegally acquired the insurance assets of Executive Life Insurance Company (ELIC), an insolvent California insurance company, at an auction conducted by the California Department of Insurance (CDOI) in 1991. Doc #78 at 13. Marland wanted to know whether he could obtain a financial benefit by divulging information about a July 1991 contrat de portage he claimed to have in his possession to parties in the United States. Id. After Reid Priest merged with Thelen, Marrin, Johnson Bridges in 1998, Marland met with Gary Fontana, a Thelen partner in San Francisco who had previously worked for other clients on ELIC proceedings. Id.
Between October 1998 and February 1999, Thelen partners met with representatives of CDOI and attempted to negotiate an agreement between CDOI and Marland. Id at 14. Ultimately, CDOI failed to offer acceptable compensation. Id at 15. As a result, Thelen recommended that Marland initiate his own qui tam lawsuit on behalf of the state of California and CDOI. Id. In February 1999, Thelen and Marland signed an attorney-client agreement, providing that Thelen would file a qui tam lawsuit against Crédit Lyonnais and advise or assist CDOI and/or the California Attorney General in connection with the lawsuit, in exchange for a percentage of any recovery that Marland received. Id. Thelen helped Marland incorporate an entity called RoNo LLC to protect his anonymity through the process. Doc #72 at 2. Marland alleges that Thelen hurried him to accept an unconsionable fee agreement and that Fontana signed the agreement without obtaining the necessary firm approvals. Id at 33.
On February 18, 1999, Thelen filed the qui tam lawsuit in San Francisco superior court. Doc #78 at 15. That same day, CDOI independently filed a separate complaint in Los Angeles County superior court, raising almost identical claims against many of the same defendants. Id.
Subsequently, in May 1999, CDOI asked Thelen to represent CDOI in its lawsuit. Id. CDOI agreed to allow Marland and Marland's European counsel to share a portion of Thelen's legal fees if it succeeded in the litigation. Id at 16. Thelen claims that it informed Marland and Marland's European counsel of CDOI's proposal and of the potential conflicts between CDOI's lawsuit and Marland's own qui tam lawsuit. Doc #98 at 3-4. Marland contends that Thelen never disclosed its potential conflicts from the dual representation. Doc #72 at 34.
Thelen alleges that Marland's claim to possess a copy of the July 1991 contrat de portage was critical to CDOI's decision to retain Thelen and CDOI's consent to Thelen's sharing fees with Marland. Doc #78 at 16. Marland contends that Thelen never told him he had an obligation to preserve or produce evidence that might have identified him as the whistleblower. Doc #72 at 33.
On May 25, 1999, Thelen and CDOI signed a formal attorney-client agreement, under which CDOI agreed to pay Thelen a percentage of any recovery it received. Doc #78 at 16. On June 2, 1999, Thelen and Marland executed a written amendment to the February 1999 agreement under which Marland agreed that Thelen would take all reasonable steps to dismiss the qui tam action. Id. On June 3, 1999, Thelen, Marland and Marland's European counsel entered into an agreement under which Thelen agreed to share any legal fees it received from CDOI with Marland and European counsel. Id.
By July 2001, the Attorney General completed his investigation of the qui tam action and elected to intervene in the action. Doc #98 at 4. The Attorney General objected to Thelen's continued representation of RoNo as the qui tam relator. Id. Thelen withdrew from representing RoNo in the qui tam action and assisted Marland in retaining other counsel. Id. Thelen continued to serve as general counsel to RoNo. Id.
Thelen alleges that by December 2001, CDOI's lawsuit had become much more costly than the parties had anticipated. Doc #78 at 18. Thelen wanted to ask CDOI for a non-recourse advance to the firm. Id. Because the June 1999 agreement required Thelen to pay to Marland a percentage of any fees received from CDOI, Thelen approached Marland to negotiate a restructuring of their fee sharing relationship. Id.
In June or July of 2002, Thelen requested that Marland produce the July 1991 portage. Id. Marland refused to produce the document and said for the first time that he had destroyed it. Id. On July 8, 2002, pursuant to the terms of the February 1999 agreement, Thelen gave Marland 30 days' written notice of its decision to withdraw from representing him. Id. Thelen extended the notice period once, to August 30, 2002. Doc #98 at 5. Thelen claims that "[a]fter that date," Thelen's attorney-client relationship with Marland ended. Id. Presumably, Thelen means that its attorney-client relationship with Marland endedimmediately after August 30, 2002 (i.e., September 1, 2002).
Thelen contends that Marland's actions constituted a material breach of the June 1999 agreement and provided grounds for rescission, excuse of performance or both. Doc #98 at 6. Thelen considered any future performance on its part under the June 1999 agreement excused by Marland's breach. Id.
On December 19, 2002, Thelen, Marland, and Marland's European counsel entered a new agreement which replaced "any and all other agreements among them." Doc #78 at 19. Under the terms of the December 2002 agreement, Thelen agreed to pay Marland and European counsel 35% of the fees paid to Thelen by CDOI, in exchange for the parties' mutual release and waiver of all claims. Id at 19-20.
Marland alleges that Thelen used the litigation costs and the portage as a pretense to get Marland to reduce his share of the recoveries from the litigation. Doc #72 at 37. Marland alleges he was coerced into signing the December 2002 agreement through intentional misrepresentations and inadequate respresentation of his interests by Thelen. Id at 37-39.
Thelen claims that, in reliance on the December 2002 agreement, it continued to expend time and resources on the litigation and ultimately succeeded in obtaining nearly $1 billion in settlements and judgments. Doc #78 at 20. Thelen has paid, and Marland has accepted, over $19 million pursuant to the terms of the December 2002 agreement. Id.
On February 13, 2006, Marland commenced an arbitration proceeding against Thelen in New York City, asserting that the December 2002 agreement is not fair and is unenforceable and that the release and waiver provisions of that agreement are void. Id. Marland alleges that the December 2002 agreement never went into effect and that the February 1999 and June 1999 agreements remain valid and binding. Doc #72. Marland claims that it had an attorney-client relationship with Thelen until February 4, 2005. Doc #102, Ex A.
Thelen initiated this action against Marland, seeking to enforce the December 2002 agreement and to enjoin Marland from pursuing the New York arbitration. Doc ##1, 11. Thelen maintains that its attorney-client relationship with Marland ended in 2002. Supra.
B
Thelen claims that its attorneys on the CDOI case and its executive committee sought and gave legal advice internally in connection with the litigation. Doc #98 at 2, 6-10. This included communications with the firm's general counsel, Wynne Carvill. Id. According to Thelen, Carvill gathered facts, analyzed legal issues, advised firm management of its legal options and represented the firm in its negotiations with Marland and CDOI, as the parties worked toward new agreements in 2002. Id.Carvill was appointed to the bench and left Thelen in November 2003. Thelen's current general counsel is Robert Blum. Until Marland commenced the arbitration proceeding against Thelen in February 2006, Blum was Thelen's "only litigation counsel." Doc #101 at 7.
C
Marland sought leave of court on November 21, 2006, December 1, 2006 and December 18, 2006 to bring a discovery motion regarding (1) electronic discovery requests, (2) testimony of Thelen's 30(b)(6) witnesses, and (3) Thelen's privilege log. Doc ##66, 77, 87. At the hearing on January 3, 2007, the parties reported that they had resolved the electronic discovery dispute. The parties also agreed that a motion on Thelen's FRCP 30(b)(6) witnesses was premature. The court requested additional briefing on the privilege log issues.
The parties submitted simultaneous opening briefs on January 11, 2007. Doc ##98, 99. The parties submitted simultaneous reply briefs on January 16, 2007. Doc ##101, 103. The matter was heard on January 18, 2007.
D
The privilege log identifies 64 documents for which Thelen asserts attorney-client privilege, work product privilege, or both. Doc #93. The documents contain communications between and among Carvill, Thelen staff working at the direction of Carvill, members of Thelen's executive committee, Gary Fontana and Karl Belgum (the lead attorneys on the CDOI case), and Robert Blum and Stephen O'Neal (Thelen partners). Doc #98 at 6-10.
According to Thelen, documents 1-10, 12, 14, 25-31, 33-34, 50-51, and 57-64 "show Carvill providing information and legal analysis of various terms under discussion, answering questions posed by management, analyzing Thelen's legal options in light of Marland's admitted destruction of key documents, and analyzing the potential ramifications of not reaching a new agreement." Id at 7.
According to Thelen, documents 11, 13, 15-19, 20, 24, 35, 38-43, 47-48, and 52-56 "reflect Carvill's efforts to advise Thelen management regarding the progress of negotiations with CDOI over the terms of an amendment to the CDOI-Thelen fee agreement and the potential consequences of failed negotiations." Id at 8. These documents "show Carvill providing information and legal analysis of various terms under discussion, answering questions posed by management, analyzing the potential specifications of CDOI's proposals, and of not agreeing to an amendment at all." Id at 8-9.
According to Thelen, document 46 is a memo from Carvill to the executive committee providing advice on a partner's suggestion that the firm withdraw from its representation of RoNo and CDOI. Id at 9. Document 9 is an email from the same partner to Carvill asking for Carvill's legal opinion on the February 1999 agreement and the June 1999 fee sharing agreement. Id. Document 49 is an email from Blum to Carvill, various firm partners, and the executive committee providing analysis on an Attorney General memorandum that claimed that Thelen had a conflict of interest in representing RoNo and CDOI. Id. Documents 21-23 and 36-37 are emails from Belgum to Carvill asking about the agreements Carvill had negotiated in 2002 and 2003. Id at 10.
According to Thelen, documents 32, 44, and 45 are emails among Carvill and others at the firm discussing negotiation of the new fee agreement with CDOI. Doc #93.
Thelen has not logged certain Blum documents, containing attorney-client communications and attorney work product, created after February 5, 2005, when Marland terminated Thelen. Doc #101 at 6-7. In addition to seeking an order compelling production of the 64 logged documents, Marland seeks an order directing Thelen to individually log the Blum documents. Doc #99 at 8.
E
Just prior to and during the hearing on Thelen's privilege log, the parties raised two additional discovery disputes.
1
One of these new disputes stems from Thelen's deposition of Marland's European counsel, Philippe Brunswick. Brunswick is a named cross-defendant in this action. On January 12, 2007, Thelen deposed Brunswick in New York City. Doc #104 at 1. According to Thelen, just before the deposition commenced, Brunswick provided Thelen with a letter from the Paris Bar stating that Brunswick would be committing a breach of French secrecy and confidentiality rules should he testify regarding any element or fact relating to his representation of any client. Id at 2. Based on this letter, Brunswick refused to answer any questions about Thelen and the ELIC litigation. Id. Thelen seeks a court order compelling Brunswick's deposition testimony. Id. The parties, including Brunswick's counsel, have submitted letter briefs on this issue. Doc ##104, 107, 113.2
The other recent discovery dispute involves the inadvertent production of certain documents by Marland's counsel, Andrew Hayes ("Hayes").
Specifically, during the January 2007 Brunswick deposition mentioned above, Thelen's counsel sought to use a document that Marland had produced in October 2006. Doc #106-1 at 1. The document was a letter dated August 27, 2002 from Brunswick to Marland and Francois Chateau (Marland's other European counsel). Id. Hayes claimed that the letter was privileged and inadvertently produced. Id.
Prior to this, there had been three other occasions where Hayes claimed that his office had inadvertently produced one or more privileged documents. Id. Accordingly, following the Brunswick deposition, both sides decided to investigate the discrepancies in the defense production. Doc #112-1, Exs 17-18. Hayes reports that, following the Brunswick deposition, he discovered for the first time that his copy service had erroneously sent all of Marland's privileged documents to Thelen's counsel, Keker and Van Nest. Doc #107 at 1.
Thelen now seeks an order compelling production of the August 27 Brunswick letter. Doc #106-1. Marland seeks sanctions against Thelen including disqualification of Keker for their alleged misconduct in handling the inadvertently produced documents. Doc #107. The parties have briefed these issues by letter. Doc ##106-1, 107, 111-1, 114-1.
II Thelen's Privilege Log Documents
Federal courts sitting in diversity apply the law of the forum state on attorney-client privilege issues but apply federal common law to attorney work product issues. Bank of the West v Valley Nat Bank of Arizona, 132 FRD 250, 251 (ND Cal 1990).
In California, the attorney-client privilege is codified in Cal Evid Code § 954 and specifies that, subject to certain exceptions, "the client * * * has a privilege to refuse to disclose, and to prevent from disclosing, a confidential communication between client and lawyer if the privilege is claimed by * * * the holder of the privilege * * *." "Confidential communication is defined as including `a legal opinion formed and the advice given by the lawyer in the course of that [attorney-client] relationship.' * * * [T]he attorney-client privilege applies to confidential communications within the scope of the attorney-client relationship even if the communication does not relate to pending litigation; the privilege applies not only to communications made in anticipation of litigation, but also to legal advice when no litigation is threatened." Roberts v City of Palmdale, 5 Cal 4th 363, 371 (1993) (internal citations omitted).
"At its core, the work-product doctrine shelters the mental processes of the attorney, providing a privileged area within which he can analyze and prepare his client's case." In re Grand Jury Subpoena, 357 F3d 900, 907 (9th Cir 2004). "[T]he work product doctrine only attaches to documents prepared in anticipation of litigation or for use in trial." Hickman v Taylor, 329 US 495, 511-12 (1947); FRCP 26(b)(3).
A
Assuming that the communications at issue reflect privileged attorney-client communications as defined by California law, the issue is whether the attorney-client privilege applies where a law firm is attorney to both an outside client and to itself. Thelen argues that it does, citing United States v Rowe, 96 F3d 1294 (9th Cir 1996).
In Rowe, a law firm senior partner assigned associates at the firm to investigate the conduct of another of the firm's attorneys in handling client funds. When the government attempted to question the associates in connection with a grand jury investigation, the law firm claimed attorney-client privilege. After the trial court ordered the associates to testify, the court of appeals held that the privilege could apply to intra-firm communications. While Thelen relies on Rowe here, the case involved the assertion of privilege against a third party. Rowe does not address whether the attorney-client privilege can be asserted against the firm's then-current client.
Thelen cites no case in which an intra-firm communication relating to the firm's representation of a client was withheld from the client under a claim of privilege. The court finds In re Sunrise Sec Litig, 130 FRD 560 (ED Pa 1989) instructive.
In re Sunrise was multidistrict litigation arising out of the collapse of the Sunrise Savings and Loan Association. One of the defendants was a Philadelphia law firm that had served as Sunrise's general counsel. An issue before the court was whether the firm had properly withheld from discovery on the ground of the attorney-client privilege a number of documents to and from lawyers in the same firm who had consulted with each other during the time when the firm was general counsel to Sunrise and after the Sunrise litigation against the firm had been instituted. The court recognized the theoretical existence of an attorney-client privilege between the law firm as attorney and itself as client. The court held, however, that:
[A] law firm's consultation with in house counsel may cause special problems which seldom arise when other businesses or professional organizations consult their in house counsel. A law firm's representation of a client, and its ability to meet its ethical and fiduciary obligations to that client, may be affected by its representation of another client, even if the second client is the law firm itself. So, for example, when a law firm seeks legal advice from its in house counsel, the law firm's representation of itself (through in house counsel) might be directly adverse to, or materially limit, the law firm's representation of another client, thus creating a prohibited conflict of interest.
Id at 595. The court ordered in camera inspection of individual documents to determine "if the communication implicates or creates a conflict between the law firm's fiduciary duties to itself and its duties to the client seeking to discover the communications."
Similarly in Veruslaw Inc v Stoel Rives, 127 Wash App 309, 334 (2005), a legal client sued a law firm for malpractice, and the firm asserted privilege over documents concerning legal and ethical issues in representing the client, created during the representation. The court held that whether documents relating to advice to one attorney given by other members of the firm were covered by attorney-client privilege required in camera review to determine whether there was a conflict between the firm's own interests and its fiduciary duty to the client.
Based on these authorities, the court grants Marland's request to order Thelen to produce the documents listed in its privilege log. The logged documents relate to the Marland representation and were created during the Marland representation. While Thelen states that some of the documents pertain to the CDOI representation, Thelen represented Marland and CDOI for the same purpose; and the interests of Thelen, CDOI and Marland intertwined. As a result, all of these documents implicate or affect Marland's interests, and Thelen's fiduciary relationship with Marland as a client lifts the lid on these communications. Accordingly, the court orders Thelen to produce all the logged documents other than those that fall within the narrow exception discussed next.
The court recognizes that law firms should and do seek advice about the their legal and ethical obligations in connection with representing a client and that firms normally seek this advice from their own lawyers. Indeed, many firms have in-house ethics advisers for this purpose. A rule requiring disclosure of all communications relating to a client would dissuade attorneys from referring ethical problems to other lawyers, thereby undermining conformity with ethical obligations. Such a rule would also make conformity costly by forcing the firm either to retain outside counsel or terminate an existing attorney-client relationship to ensure confidentiality of all communications relating to that client. This court declines to follow such a strict rule, preferring one that is consistent with a law firm in-house ethical infrastructure. Accordingly, Thelen is to produce some but not all communications in which a Thelen lawyer seeks or gives advice on the firm's ethical obligations to Marland.
Specifically, while consultation with an in-house ethics adviser is confidential, once the law firm learns that a client may have a claim against the firm or that the firm needs client consent in order to commence or continue another client representation, then the firm should disclose to the client the firm's conclusions with respect to those ethical issues. See ABA Model Rule of Prof Conduct 1.7. See also NY Eth Op 789, 2005 WL 3046319 at 4.
In sum, Thelen must produce the documents listed on its privilege log except for certain documents reflecting consultations between Thelen lawyers on the firm's ethical and legal obligations to Marland. Regarding the consultations, Thelen must produce certain conclusions of those consultations: Thelen must produce any communications discussing claims that Marland might have against the firm or discussing known errors in its representation of Marland. Thelen must produce any communications discussing known conflicts in its representation of Marland or other circumstances that triggered Thelen's duty to advise Marland and obtain Marland's consent. Conflicts include any representation — whether of Thelen itself, CDOI, or another — adversely implicating or affecting the interests of Marland, when Thelen was receiving information from and/or providing legal advice to its own lawyers while at the same time continuing to represent Marland.
Finally, the court notes that, while the logged documents extend through 2003, the parties disagree over when their attorney-client relationship ended. The court also notes that this issue relates in part to the merits of the case. Thelen argues that the attorney-client relationship ended "after" August 30, 2002, which the court presumes is September 1, 2002. Doc #98 at 5. Marland argues that the relationship lasted until 2005 on the grounds that the 2002 agreement, which purportedly terminated the prior relationship, is invalid and unenforceable. Doc #102, Ex A. The court finds that Marland's argument is neither frivolous nor made for an improper purpose. Accordingly, for purposes of this motion only, and without reaching the merits of the underlying claims, the court orders production of all the logged documents, subject to the limited exception described above. The court will refer this dispute to a United States Magistrate Judge to review in camera all of Thelen's logged documents and determine which ones should be produced to Marland, based on this directive.
B
The court notes that Thelen has asserted two privileges for most of the logged documents: attorney-client and work product. While the above cases only address attorney-client privilege, the court finds the same issues of conflict pertain to the work product protection:
Like the attorney-client privilege, protection afforded by the work-product doctrine is not absolute. Clearly, lawyers cannot cloak themselves in its mantle when their mental impressions and opinions are directly at issue. The doctrine does not apply where a client, as opposed to some other party, seeks discovery of the lawyer's mental impressions. It cannot shield a lawyer's papers from discovery in a conflict of interest context anymore than can the attorney-client privilege.Koen Book Distributors, Inc v Powell, Trachtman, Logan, Carrle, Bowman Lombardo, PC, 212 FRD 283, 286 (ED Pa 2002) (internal citations omitted) (Court ordered production of firm's communications to counsel it retained after client threatened legal malpractice proceedings where firm had continued to represent client). Similarly, the court finds that Thelen's logged documents should be produced here, subject to the above guidelines.
III The Blum Documents
Under FRCP 26(b)(5):
When a party withholds information otherwise discoverable under these rules by claiming that it is privileged or subject to protection as trial-preparation material, the party shall make the claim expressly and shall describe the nature of the documents, communications, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection.
Accordingly, Marland's request to direct Thelen to log Blum documents created between February 4, 2005 and the commencement of the New York arbitration proceeding is GRANTED. The court also DIRECTS Marland individually to log otherwise responsive documents for which it is claiming privilege for this time period.
IV Brunswick Testimony
The court lacks jurisdiction to compel Brunswick's testimony at this time. The deposition subpoena issued from the Southern District of New York, and the deposition occurred in New York City. Doc #113. Under FRCP 45(a)(2), a motion to compel concerning a subpoena must be presented to the court for the district in which the deposition would occur. See Adv Comm note to 1991 amendment ("[T]he court in whose name the subpoena issued is responsible for its enforcement.") Thelen does not dispute that this court is unable to grant the relief it requests. Accordingly, the court DENIES Thelen's request that it issue an order compelling Brunswick's testimony, although the court does not foreclose reconsideration of the issue at a later time upon procedurally proper request.
V Marland's Inadvertently Produced Documents
Last, the court addresses both parties' requests surrounding Marland's inadvertently produced documents, including the August 27, 2002 Brunswick letter.
A Thelen's Request to Compel Brunswick Letter
Thelen seeks an order compelling production of the Brunswick letter. Thelen contends that the Brunswick letter is not privileged because: (1) Marland's delay in asserting the privilege and failure to include the document on his privilege log created a waiver, and (2) the crime-fraud exception to the attorney-client privilege applies. The court need only address Thelen's first argument to conclude that it is correct.Thelen states that Marland's counsel never identified Brunswick's letter "on any version of Marland's privilege log: not the log produced on October 3; not the draft revised log produced on October 27, and not the second revised log produced on January 2, 2007." Doc #111-1 at 6. Marland's counsel does not dispute that he never logged this document and offers no explanation.
As stated above, FRCP 26(b)(5) requires a detailed showing to withhold discovery on privilege grounds. The law is well settled that failure to produce a privilege log or production of an inadequate privilege log may be deemed waiver of the privilege. See, e g, Burlington Northern Santa Fe Ry Co v US Dist Court for Dist of Mont, 408 F3d 1142 (9th Cir 2005) (railroad waived discovery privileges claimed in privilege log it filed in response to request for production of documents in environmental litigation, where railroad filed privilege log five months after the document request, rather than within the 30-day time limit for filing written response to discovery request, was a sophisticated corporate litigant and a repeat player in environmental lawsuits and regulatory action involving site that was subject of the suit, and made substantive changes to privilege log after producing it); Universal City Development Partners, Ltd v Ride Show Engineering, Inc, 230 FRD 688 (MD Fla 2005) (Litigant waived attorney-client privilege for documents it produced where litigant did not provide privilege log or generally describe documents to which it asserted privilege until eight months after written response was due, log failed to identify capacity of many recipients and did not provide sufficient information to assess claim of privilege, litigant's counsel reviewed all 13,000 pages of documents in single evening, and litigant did not review production after it learned that one privileged document had been turned over to opponent to determine whether other privileged documents had been produced.)
Weighing all the factors here, the court finds that Marland has waived any privilege for the Brunswick letter. Marland asserts that all of its privileged documents were inadvertently produced, Doc #107 at 1, and that the bates numbers for these documents range from 1 to 533. Doc #115 ¶ 4. Thelen states that only 24 of these documents appear on the privilege log. Doc #111-1 at 2. Hayes does not dispute that he failed to log the additional documents and gives no explanation. Moreover, Hayes was put on notice at least three times prior to the Brunswick deposition that he had produced privileged documents and that there were discrepancies between what Keker received and what Hayes intended Keker to receive. Doc #111-1 at 3-4. Specifically, Brunswick's deposition was the third consecutive deposition conducted by Thelen in which Hayes asserted that a privileged document was inadvertently produced. Even prior to that, Keker attorneys had notified Hayes that they had found what appeared to be two privileged defense documents. Id at 3. Keker contends that it regularly prompted Hayes to send a revised privilege log and that Hayes revised his privilege log twice. Id at 4, 6. Yet Hayes never logged the Brunswick letter. Id at 6. Hayes does not dispute any of this. The court therefore finds that Marland failed timely and adequately to make his objections.
The court also notes that, while Hayes reports that he inadvertently produced all of Marland's privileged documents, Marland does not move to compel return of those documents. Doc ##107, 114-1. Rather, Marland seeks sanctions and mentions no other relief. Id. Accordingly, the court finds that Marland has waived any privilege claim over the Brunswick letter.
B Marland's Requests for Sanctions Including Disqualification of Thelen's Counsel
Marland seeks an order imposing sanctions on Thelen including disqualification of Keker for alleged misconduct in Keker's handling of the inadvertently produced documents. Doc ##107, 114-1. Marland contends that, based on the scope of Marland's privilege claims regarding communications from Brunswick, Keker knew that Marland had produced many privileged documents and failed to comply with its ethical obligation to promptly notify Marland's counsel and refrain from examining the materials. Doc #114-1 at 1-2. The court disagrees.
Marland urges the court to apply ABA Comm on Ethics and Prof Responsibility, Formal Op 92-368, which states:
A lawyer who receives materials that on their face appear to be subject to the attorney-client privilege or otherwise confidential, under circumstances where it is clear they were not intended for the receiving lawyer, should refrain from examining the materials, notify the sending lawyer and abide the instructions of the lawyer who sent them.
Doc #107.
Thelen points out that this opinion was withdrawn by the ABA in 2005 and replaced with ABA Formal Ethics Opinion 05-437, which states:
A lawyer who receives a document from opposing parties or their lawyers and knows or reasonably should know that the document was inadvertently sent should promptly notify the sender in order to permit the sender to take protective measures. To the extent that Formal Opinion 92-368 opined otherwise, it is hereby withdrawn.
Doc #111-1.
Under either authority, the first question is whether the receiving lawyer had reason to know that the documents were subject to a claimed privilege. Marland's only argument is that Keker knew Marland was asserting privilege over communications from Marland's European counsel, including Brunswick, that were not shared with Thelen. Doc #114-1 at 1-2, 5-6. The court finds that blanket and general objections do not provide sufficient detail about the documents in this case in order to trigger the obligations under the foregoing ethical rule. This is why FRCP 26(b)(5) requires a detailed showing to withhold discovery on privilege grounds. See Universal City Development Partners, Ltd v Ride Show Engineering, Inc, 230 FRD 688 (MD Fla 2005). Indeed here, Thelen points out that Marland had produced nearly 800 pages of communications between and among Brunswick, Marland, and Chateau. Doc #112-1 at 8.
Even as to the 24 inadvertently produced documents that Marland did log, the court cannot find an ethical violation. Marland did not provide bates numbers on its log. Id at 7. Marland cites no authority, and the court knows of none, requiring a receiving party to cross-check documents produced against the producing party's privilege log. Nonetheless, where Keker became aware of logged documents that had been produced, it notified Hayes immediately. Id at 2. Following the Chateau deposition, the second consecutive deposition where Hayes asserted that a privileged document was inadvertently produced, Keker emailed Hayes stating: "You have indicated at various times that your office inadvertently produced one or more privileged documents from Mr Marland. In order to be sure we are understand [sic] fully the documents you believe are privileged and were inadvertently produced, please provide us promptly with a list of these documents, and a revised privilege log." Doc #112-1 Ex 13. Hayes responded: "I am not aware of any other inadvertently-produced documents." Id.
Finally, following the Brunswick deposition, Keker did undertake its own investigation into the discrepancies by crosschecking Marland's production against the log and then promptly notifying Hayes that it had found 24 logged documents in the production. Doc #112-1 at 8-9. Because the log did not include bates numbers, Keker associates and staff were forced to crosscheck the documents using the date, author, recipient, and description information on the log, taking several days. Id.
Marland does not dispute this. "We note that whenever a lawyer seeks to hold another lawyer accountable for misuse of inadvertently received confidential materials, the burden must rest on the complaining lawyer to persuasively demonstrate inadvertence. Otherwise, a lawyer might attempt to gain an advantage over his or her opponent by intentionally sending confidential material and then bringing a motion to disqualify the receiving lawyer." State Compensation Ins Fund v WPS, Inc, 70 Cal App 4th 644, 657 (1999). Accordingly, the court does not find an ethical violation in Thelen or Keker's handling of the documents and DENIES Marland's request for sanctions.
VI
For the reasons discussed above, the court will refer this matter to Chief United States Magistrate Judge Larson for random assignment to a United States Magistrate Judge. Thelen shall within two days of entry of this order submit all of its logged documents under seal to the assigned magistrate judge, who is directed to review the documents in camera as soon as practicable. The assigned magistrate judge shall determine which, if any, of the documents can be withheld based on the limited exception described above. The court ORDERS Thelen to produce to Marland all documents falling outside of the exception as determined by the magistrate judge. Such production shall be made within two days of the magistrate judge's determination.
Additionally, as discussed above, the court DIRECTS both Marland and Thelen to revise their privilege logs to include documents created between February 4, 2005 and the commencement of the New York arbitration. The court DENIES without prejudice Thelen's request for an order compelling Brunswick's deposition testimony. The court GRANTS Thelen's request to compel production of the August 27, 2002 Brunswick letter and ORDERS Marland to produce that letter. The court DENIES Marland's request for sanctions including disqualification of Thelen's counsel.
The court has received Thelen's letter of February 20, 2007, Doc #128, requesting a conference regarding a dispute over the continuation of Marland's deposition. The parties are to appear for a conference on February 23, 2007 at 9:00 am.
SO ORDERED.