Opinion
01 Civ. 8854 (LTS) (THK).
July 26, 2006
MEMORANDUM OPINION AND ORDER
In an earlier Memorandum Opinion and Order in this action, the Court concluded that Defendants had waived the attorney-client privilege with respect to communications with their former attorneys at Baker Botts, relating to the transactions in issue in this action. The documents containing the communications had been voluntarily produced in an earlier arbitration, where Defendants invoked an advice-of-counsel defense and explicitly waived the attorney-client privilege. See Urban Box Office Network, Inc. v. Interfase Managers, L.P., No. 01 Civ. 8854 (LTS) (THK), 2004 WL 2375819 (S.D.N.Y. Oct. 21, 2004). The District Court (Swain, J.) affirmed this Court's decision, concluding that Defendants had placed the advise of their counsel in issue in prior litigation, thus waiving privilege in this action. See Urban Box Office Network, Inc. v. Interfase Managers, L.P., No. 01 Civ. 8854 (LTS) (THK), 2005 WL 1639392 (S.D.N.Y. July 12, 2005). In response to the Court's Order, Defendants produced several thousand pages of documents from Baker Botts, and, in subsequent depositions, Defendants were questioned about the documents and their prior privileged communications with their attorneys. It now appears that Defendants have withheld and claimed as privileged in this action additional documents from Baker Botts's files, covering the same subjects as contained in the produced documents. Many of the documents are withheld based on the attorney work product doctrine, and others are withheld based upon the attorney-client privilege. Defendants argue that these documents were not produced in the arbitration and were never inspected by the parties to the arbitration. "[T]he documents are not client documents, but instead represent documents and/or attorney notes from the attorney-work-files at Baker Botts." (Letter to the Court from Frank J. Franzino, Jr., Esq., dated July 11, 2006, at 1.) Defendants argue, therefore, that there has been no waiver of privilege. The Court disagrees, in part.
Defendants communications with their attorneys about the matters at issue in this action have now been disclosed in the prior arbitration, a separate malpractice action filed against Baker Botts, and in this action. In the Complaint in the malpractice action, Defendants openly discussed what would have been privileged communications with their attorneys, on issues directly related to the instant action. (See Complaint, Eco Opportunity Fund, LP, et al. v. Baker Botts LP, Exhibit C to Letter from Mariann Meier Wang, Esq. to the Court, dated June 30, 2006 ("Wang Ltr.").) Yet, Defendants contend that there has not been a waiver of privilege with regard to other documents on the same subject.
"Subject matter waiver . . . allows the attacking party to reach all privileged conversations regarding a particular subject once one privileged conversation on that topic has been disclosed. . . ." In Re von Bulow, 828 F.2d 94, 102-03 (2d Cir. 1987) (internal quotation marks omitted). Subject matter waiver is implicated when a client places an attorney's advice "at issue," for example, by asserting a defense of advice of counsel,see United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991), or when other considerations of fairness are at work in the litigation, see von Bulow, 828 F.2d at 103, for example, (1) where there has been selective disclosure which inures to the benefit of the privilege-holder, (2) where the party asserting the privilege makes factual assertions, the truthfulness of which may be assessed only by an examination of the privileged communications or documents, see Am. S.S Owners Mut. Prot. and Indem. Ass'n v. Alcoa S.S Co., 232 F.R.D. 191, 199 (S.D.N.Y. 2005), and (3) to prevent the privilege from being used as both a sword and a shield, see von Bulow, 828 F.2d at 103. See also Granite Partners, L.P. v. Bear Stearns Co., 184 F.R.D. 49, 54-55 (S.D.N.Y. 1999).
While Defendants are correct that the extrajudicial disclosure of privileged communications does not necessarily waive privilege on all communications on the same subject which have not been disclosed, see von Bulow, 828 F.2d at 103, the disclosures in this action were not extrajudicial. Unlike the von Bulow disclosures, which occurred in the context of a published book, here there were disclosures in an arbitration, which is a quasi-judicial adversarial proceeding, and in the malpractice action against Baker Botts, which is clearly a judicial proceeding. Defendants placed their privileged communications in issue in those proceedings, thus resulting in a subject matter waiver of all privileged communications on the same issues. See Sec. and Exch. Comm'n v. Beacon Hill Asset Mgmt. LLC, 231 F.R.D. 134, 142 (S.D.N.Y. 2004) ("But it has been established law for a hundred years that when the client waives the privilege by testifying about what transpired between her and her attorney, she cannot thereafter insist that the mouth of the attorney be shut. From that has grown the rule that testimony as to part of a privileged communication, in fairness, requires production of the remainder. Yet this rule protecting the party, the fact finder, and the judicial process from selectively disclosed and potentially misleading evidence, does not come into play when, as here, the privilege-holder or his attorney has made extrajudicial disclosures, and those disclosures have not subsequently been placed at issue during litigation.") (internal citations omitted); 670 Apartments Corp. v. The Agric. Ins. Co., No. 96 Civ. 1464 (PKL) (JCF), 1997 WL 801458, at *2 (S.D.N.Y. Dec. 30, 1997) ("A voluntary disclosure of privileged communications results in subject matter waiver when the disclosure takes place in the context of litigation.") (quotingN. River Ins. Co. v. Columbia Cas. Co., No. 90 Civ. 2518, 1995 WL 408214, at *2 (S.D.N.Y. July 11, 1995)); Haymes v. Smith, 73 F.R.D. 572, 576 (W.D.N.Y. 1976) ("If a party-client chooses to disclose part of an otherwise privileged communication directed to his legal counsel, then he waives the privilege and the production of all the correspondence or the remainder of the consultations about the same subject can be demanded.").
There has been no explanation of why some, but not all, privileged documents were produced in the arbitration, where reliance on advice of counsel was asserted. The omission may have been inadvertent, or it is possible that the withheld documents did not relate to the subject on which privilege was waived.
Moreover, Defendants have been questioned at depositions about their privileged communications with their attorneys which were related to the transaction in issue, and questions have arisen as to whether the clients responded to various privileged communications made by the attorneys, and if so, how they responded. (See, e.g., Deposition of Scott Hyten, dated Jan. 10, 2006, at 405-28.) Fairness dictates that there be full disclosure of all communications on the same subjects. The proverbial cat is well out of the bag, and it would distort the judicial process to permit selective waiver in this context.
Accordingly, Defendants are to produce the remaining documents from their attorneys' files which involve communications between Defendants and their counsel on the subjects discussed in the already produced privileged communications.
The Court sees no basis to require production of attorney work product, such as handwritten notes of attorneys, and notes between various attorneys at Baker Botts. This Court concluded that Defendants waived the attorney-client privilege with respect to their communications with their attorneys on the subject of this litigation. The Court has also concluded that fairness requires that all documents reflecting such communications be produced to Plaintiffs. However, there has been no waiver of attorney work product, and Plaintiffs have not demonstrated that they have "substantial need" for counsels' work product. See Fed.R.Civ.P. 26(b) (3).
So Ordered.