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MARK R. MCDONALD (CA SBN 137001)
MMcDonald@mofo.com
ROBERT B. HUBBELL (CA SBN 100904)
RHubbell@mofo.com
ASHLEIGH LANDIS (CA SBN 281601)
ALandis@mofo.com
JULIUS J. NAM (CA SBN 288961)
JNam@mofo.com
WILLIAM C. HERBERT (CA SBN 300963)
WHerbert@mofo.com
ZAINAB A. ALI (CA SBN 323187)
ZAli@mofo.com
MORRISON & FOERSTER LLP
707 Wilshire Blvd., Suite 6000
Los Angeles, California 90017-3543
Telephone: 213.892.5200
Facsimile: 213.892.5454
Attorneys for Defendant
BANC OF CALIFORNIA, INC.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
IN RE BANC OF CALIFORNIA
SECURITIES LITIGATION
SACV 17-00118 AG (DFMx)
consolidated with
SACV 17-00138 AG (DFMx)
DEFENDANT BANC OF
CALIFORNIA’S OPPOSITION
DEFENDANT STEVEN
SUGARMAN’S MOTION TO
COMPEL PRODUCTION OF
DOCUMENTS LOGGED AS
PRIVILEGED
Judge: Honorable Douglas F. McCormick
Date: February 8, 2019
Time: 10:00 A.M.
Place: Courtroom 6B
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TABLE OF CONTENTS
Page
INTRODUCTION ..................................................................................................... 1
ARGUMENT ............................................................................................................. 2
A. The September 3, 2018 Privilege Log Properly Identifies
Privileged Documents ........................................................................... 2
B. Banc Has Not Waived Privilege Over Any Documents
Appearing on the Privilege Logs .......................................................... 5
1. Banc Has Not Waived Privilege Over Communications
with Winston & Strawn .............................................................. 5
2. Banc Has Not Waived Privilege Over Communications
with Sanford Michelman ............................................................ 7
a. Banc’s RFA Responses Do Not Require The
Production of the Documents Sugarman Seeks ............... 8
b. Sugarman’s Remaining Arguments Are Meritless .......... 9
3. Any Waiver over the Potential Defamation Suit Against
SeekingAlpha Is Limited to Communications Before
October 18, 2016 ........................................................................ 9
4. Banc Has Not Selectively Disclosed Privileged
Communications Regarding the December 2016 Board
Meeting ..................................................................................... 11
C. The Bank Secrecy Act Precludes the Disclosure of Certain
Documents .......................................................................................... 11
D. The Common Interest Privilege Does Not Require a Formal
Agreement ........................................................................................... 12
E. Banc’s Privilege Logs Conform to Rule 26(b)(5)(A) ......................... 14
1. The August 30, 2018 and September 3, 2018 Privilege
Logs .......................................................................................... 14
2. August 29, 2018 Privilege Log ................................................. 14
CONCLUSION ........................................................................................................ 16
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TABLE OF AUTHORITIES
Page(s)
Cases
Bittaker v. Woodford,
331 F.3d 715 (9th Cir. 2003) ................................................................... 10, 11, 12
Cotton v. PrivateBank & Tr. Co.,
235 F. Supp. 2d 809 (N.D. Ill. 2002) ................................................................... 12
Dole v. Milonas,
889 F.2d 885 (9th Cir. 1989) ............................................................................... 15
In re Grand Jury Investigation,
974 F.2d 1068 (9th Cir. 1992) ..................................................................... 1, 2, 15
In re Grand Jury Witness,
695 F.2d 359 (9th Cir. 1982) ................................................................................. 3
Nidec Corp. v. Victor Co. of Japan,
249 F.R.D. 575 (N.D. Cal. 2007) ........................................................................ 13
OXY Res. Cal. LLC v. Super. Court,
115 Cal. App. 4th 874 (2004) .............................................................................. 13
Starsight Telecast v. Gemstar Dev. Corp.,
158 F.R.D. 650 (N.D. Cal. 1994) ....................................................................... 10
Union Bank of Cal. v. Super. Court,
130 Cal. App. 4th 378 (2005) .............................................................................. 12
United States v. Bergonzi,
216 F.R.D. 487 (N.D. Cal. 2003) ........................................................................ 13
United States v. Chen,
99 F.3d 1495 (9th Cir. 1996) ....................................................................... 3, 4, 15
United States v. Chevron Texaco Corp.,
No. C 01-4243 MMC (WDB), 2002 U.S. Dist. LEXIS 24970 (N.D.
Cal. Mar. 25, 2002) .......................................................................................... 4, 11
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United States v. Reyes, ............................................................................................... 5
239 F.R.D. 591 (N.D. Cal. 2006)
Other Authorities
12 C.F.R. § 21.11(k) (2005) ....................................................................................... 7
Fed. R. Civ. P. 26(b)(5)(A) ................................................................................ passim
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INTRODUCTION
Thirteen days before the February 1, 2019 discovery cut-off, Defendant
Steven Sugarman moved to compel over a thousand documents listed on privilege
logs based primarily on the argument that Banc and its directors’ communications
with their counsel were either never privileged, or that privileged was waived. Most
of Sugarman’s arguments have long existed and most have already been rejected by
this Court, at least once. Yet, Sugarman asserts them again, now, as one final attack
on the attorney-client privilege. As explained in detail below, Banc has throughout
this case properly protected its attorney-client communications. And in the limited
instances, in other proceedings involving the SEC, in which Banc has expressly
waived that privilege Banc has properly applied the waiver in this action,
withholding only those documents that fall outside the waiver. Sugarman provides
no evidence to the contrary. Sugarman’s motion should be denied.
To the extent Sugarman challenges the privilege logs themselves, Banc has
met its obligations. Fed. R. Civ. P. 26(b)(5)(A) requires that the party claiming the
privilege “describe the nature of the documents . . . in a manner that, without
revealing information itself privileged or protected, will enable other parties to
assess the claim.” Where, as here, a party identifies “the attorney and client
involved,” the “nature of the document,” the “persons or entities shown on the
document to have received or sent the document,” “the date the document was
generated, prepared, or dated,” and “the subject matter of each document,” it “has
met its burden in demonstrating the applicability of the attorney-client privilege.” In
re Grand Jury Investigation, 974 F.2d 1068, 1071 (9th Cir. 1992). In the interest of
cooperation, however, Banc has in some instances provided additional information
to confirm the sufficiency of the privilege logs, and in others has agreed to amend
the logs to clarify the privilege asserted.
Were any issue to remain about the adequacy of the privilege logs, the proper
remedy would be an amended privilege log. Sugarman’s Motion, under no
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circumstance, warrants the production of a document merely because of a perceived
inadequacy of the privilege log.
ARGUMENT
A. The September 3, 2018 Privilege Log Properly Identifies
Privileged Documents
There is no legal or factual support for Sugarman’s “preliminary” argument
that “Banc’s September 3, 2018 privilege log include[s]” eleven documents for
which, he argues, “legal advice was not the predominant purpose of the
communication” (Mot. at 4). Banc’s privilege log contains all information
necessary to show that the communications at issue sought or reflected legal advice
and are thus privileged.
Fed. R. Civ. P. 26(b)(5)(A) requires that the party claiming the privilege
“describe the nature of the documents . . . in a manner that, without revealing
information itself privileged or protected, will enable other parties to assess the
claim.” When a party identifies “the attorney and client involved,” the “nature of
the document,” the “persons or entities shown on the document to have received or
sent the document,” “the date the document was generated, prepared, or dated,” and
“the subject matter of each document,” it “has met its burden in demonstrating the
applicability of the attorney-client privilege.” In re Grand Jury Investigation, 974
F.2d at 1071.
Banc’s privilege log satisfies that standard. Ten of the eleven entries
Sugarman seeks to compel, on their face, include an attorney and are accompanied
by descriptions that make clear the purpose of the communication was to seek legal
advice.
Entries Nos. 91-92 are communications with John Madden, Deputy General
Counsel at Banc of California, seeking legal review of a financial transaction.
(Declaration of Mark R. McDonald ¶ 2.) That fact should be sufficient to establish
the privilege protecting communications to or from Madden concerning “financial
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transactions.” Yet Sugarman argues that a communication to a lawyer “concerning”
and “for review of financial transactions” does not make clear that the
communication is seeking legal advice. While Banc believes these entries already
suffice to establish the privilege, to eliminate the need for the Court to decide the
issue, Banc will supplement the entries to further clarify that the documents “seek
legal advice concerning” and contain “legal review of” financial transactions.
Entries Nos. 203, 212, 215 are communications with O’Melveny & Meyers,
who provided legal advice to certain Banc officers. (McDonald Decl. ¶ 3.)
Sugarman contends these entries have “no attorneys present on the underlying
communication,” but the privilege log shows otherwise. No. 203, for example, is
described as an “[e]mail concerning communications with outside counsel.” The
entry then lists two partners at O’Melveny, John-Paul Motley and Steven Olson, as
recipients of the email and includes the firm’s domain name: “@omm.com.”
(McDonald Decl. ¶ 3.) Nos. 212 and 215 also include Mr. Motley, Mr. Olson, or
both. In addition to satisfying Rule 26(b)(5)(A), communications with outside
counsel are presumed to regard legal advice. See United States v. Chen, 99 F.3d
1495, 1501 (9th Cir. 1996) (“If a person hires a lawyer for advice, there is a
rebuttable presumption that the lawyer is hired ‘as such’ to give ‘legal advice.’”).
Entry No. 576 is also a communication with, Robert Sacks, a partner at
Sullivan Cromwell, which represented a Banc director. Sugarman acknowledges
that Sacks is an attorney (Mot. at 4), but contends that the description “Email
concerning Special Committee expenses” does not relate to legal advice. (Id.) Yet
the Special Committee’s only purpose was a privileged investigation, and expenses
directly pertain to the scope and tasks in that investigation. See In re Grand Jury
Witness, 695 F.2d 359, 362 (9th Cir. 1982) (attorney expenses are privileged to the
extent they reveal litigation strategy and the nature of the services provided). These
communications are therefore privileged. See Chen, 99 F.3d at 1501.
Entry No. 680 falls under this Court’s earlier ruling that “communications
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about legal issues related to director independence” are privileged. (Dkt. 420.) The
document is one of ten attachments to an email from Angelee Harris, then Banc’s
Deputy General Counsel, regarding legal “review of director independence”;
Harris’s email was copied to John Grosvenor, then Banc’s General Counsel, and
Rachel Fisher, then a paralegal at Banc (see No. 676-686). (McDonald Decl. ¶ 4.) If
it would clarify the issue, Banc could amend the description to make clear that the
review of director independence was a “legal” review, though Banc does not
believe the amendment is required given the author and recipients of the document.
Entries Nos. 1473-1475 are communications with Banc’s outside counsel,
Morrison & Foerster, as indicated by the presence of Morrison & Foerster partner
Henry Fields, (McDonald Decl. ¶ 5.), and the descriptions, “Email reflecting
communications with outside counsel concerning employment agreement.”
Because the privilege log for these entries contain the information required by Rule
26(b)(5)(A), the documents are presumptively privileged. See Chen, 99 F.3d at
1501.
Only one of the communications, Entry No. 614, an “[e]mail concerning
insurance issues,” does not include an attorney and its description. But the
document wholly concerns communications seeking legal advice from Banc’s
outside counsel, Michelman & Robinson, regarding an insurance issue. (McDonald
Decl. ¶ 6.) These communications are privileged. See United States v. Chevron
Texaco Corp., No. C 01-4243 MMC (WDB), 2002 U.S. Dist. LEXIS 24970, at *28.
(N.D. Cal. Mar. 25, 2002) (“[I]nternal communications that reflect matters about
which the client intends to seek legal advice are protected.”).
Thus, all of the entries Sugarman identifies as not seeking legal advice do, in
fact, seek or reflect such advice. But were the Court to find any of these entries
insufficient, the proper remedy would be to order Banc to supplement its
descriptions to support the claim of privilege—as Banc has offered to do, above.
There is no basis for Sugarman’s request to force Banc to produce these
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presumptively privileged documents.
B. Banc Has Not Waived Privilege Over Any Documents Appearing
on the Privilege Logs
The bulk of Sugarman’s motion is his argument that Banc has waived the
attorney-client privilege protecting 87 documents. For the following reasons, Banc
has not waived the privilege protecting any of these documents.
1. Banc Has Not Waived Privilege Over Communications
with Winston & Strawn
Sugarman first argues that Banc “voluntarily waive[d] its attorney-client
privilege over” nine documents “related to the Winston & Strawn investigation
referenced in the October 18, 2016 press release.” (Mot. at 5 (citing the language
from Banc’s waiver).) Banc does not dispute that, in connection with requests for
documents and testimony for the SEC, Banc agreed to waive privilege over the
Winston & Strawn investigation and communications on October 18 and 19, 2016
concerning certain public disclosures on those days. (McDonald Decl. ¶ 7.) Based
on that prior waiver, Banc is therefore not asserting privilege in this action over
those communications. See United States v. Reyes, 239 F.R.D. 591, 603-04 (N.D.
Cal. 2006) (“a voluntary disclosure” to the SEC waives the “right to protect [the
information] under the attorney-client or work-product privilege” in subsequent
litigation). But the documents Sugarman seeks do not fall within the limited scope
of that waiver. As the privilege log makes clear, six of the nine communications
occurred after Winston & Strawn completed its work, four of the nine are
communications with WilmerHale—which this Court has already ruled
privileged—and the remaining communications bear descriptions showing that they
are unrelated to the Winston & Strawn investigation.
August 29, 2018 Log Entries MR000823 and MR000825 are two January
1, 2017 communications. The first is a letter from Randall Lee of WilmerHale to
David Aronoff of Winston & Strawn, dated January 1, 2017 and described as
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“correspondence regarding [an] interview,” made in connection with WilmerHale’s
investigation. (See Dkt. 480-3, Ex. 1 at Log No. MR000823.) The second is another
January 1, 2017 email from Aronoff to Banc’s then outside counsel, Sanford
Michelman, also “regarding [an] interview.” (See id. at MR000825.) The
communications do not fall within the limited waiver of the Winston & Strawn
investigation referenced in the October 18, 2016 press release, because they came
after the investigation concluded. The communications are also, on their face,
related to the WilmerHale investigation, over which this Court has repeatedly
upheld privilege, including communications regarding Michelman. (See Dkt. 198
(arguing subject matter waiver over WilmerHale investigation and moving to
compel “[a]ll communications with or copying Sanford Michelman”); 246
(Magistrate Court denying motion to compel “for the reasons set forth in Banc’s
and WilmerHale’s oppositions.”); 326 (District Court denying motion for review
without modification); 429 (Magistrate Court rejecting further argument of subject
matter waiver over WilmerHale investigation as “a thinly-disguised motion for
reconsideration”).) As such, they remain privileged.
November 19, 2018 Privilege Log Nos. 10, 15 are January 18, 2017 emails
between Banc Director Jonah Schnel and Banc’s then outside counsel, Mr. Aronoff,
“regarding [a] meeting.” (Dkt. 480-3, Ex. 9 at Log Nos. 10, 15.) These
communications came after the Winston & Strawn investigation and a full three
months after October 18, 2016 press release and are therefore outside the scope of
the waiver. They remain privileged.
November 19, 2018 Privilege Log Nos. 1024, 1334 are two October 29,
2016 emails between WilmerHale attorney William McLucas, Banc Directors
Jonah Schnel and Jeffrey Karish, and Aronoff “regarding [the] Special Committee
engagement” of WilmerHale. (Id. at Log Nos. 1024, 1334.) The emails not only
occurred after the Winston & Strawn investigation, their descriptions show that
they are related to the WilmerHale investigation—an investigation this Court has
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repeatedly found privileged. (Dkt. 246, 326, 429.) Banc has not waived privilege
over the WilmerHale investigation.
August 30, 2018 Privilege Log Nos. 110-112 are the only three entries that
pre-date the completion of the Winston & Strawn investigation. Banc, however,
does not assert the attorney-client privilege over these documents, making the
waiver irrelevant. Rather, as indicated on the privilege log, Entry Nos. 110 and 111
are protected by the Bank Secrecy Act because they concern “suspicious activity
reports”—or SARs. (Dkt. 480-3, Ex. 2 at Log Nos. 110-111.) As discussed below,
under the Bank Secrecy Act a party “subpoenaed or otherwise requested to disclose
a SAR or the information contained in a SAR shall decline to produce the SAR or
to provide any information that would disclose that a SAR has been prepared or
filed[.]” 12 C.F.R. § 21.11(k) (2005). Banc has determined that the production of
these documents would disclose whether a SAR was prepared or filed. Banc is
therefore legally obligated not to disclose Entry Nos. 110 and 111. In regards to
Entry No. 112, Banc will produce it.
2. Banc Has Not Waived Privilege Over Communications
with Sanford Michelman
The Court has already addressed Sugarman’s argument that Banc waived the
privileged over communications with Michelman. The first time, this Court denied
Sugarman’s motion to compel Banc and WilmerHale to produce “[a]ll
communications with or copying Sanford Michelman,” finding that Banc had not
waived privilege over those documents. (Dkt. 198; Dkt. 246 (Magistrate Court
denying motion).) The second time, Sugarman moved to compel Banc to withdraw
certain privilege objections and instructions to Michelman at his deposition. (Dkt.
431.) That motion is currently pending before this Court, but only to the extent
Banc’s responses to Plaintiff’s August 17, 2018 Requests for Admission may waive
privilege over the subject of who directed Michelman in connection with his
interactions with the Special Committee. (See Dkt. 470.)
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The Court’s pending ruling on the RFA responses is thus the only potential
basis for a waiver, as Sugarman’s remaining arguments have either already been
rejected by this Court or are factually inaccurate.
a. Banc’s RFA Responses Do Not Require The
Production of the Documents Sugarman Seeks
The pending RFA responses cannot have effected a waiver because they do
not disclose the contents of any confidential communication—evidenced by the fact
that Sugarman has never identified a disclosed communication. (See Dkt. 478.) But
even if the Court were to decide against Banc on that issue, the waiver would
extend only to “who hired and directed Sanford Michelman” to send the
communications to the Special Committee. (Mot at 6.) It would not extend to other
communications with Banc or to communications with WilmerHale or the Special
Committee, which this Court has already found privileged. (Dkt. 246 (Magistrate
Court denying discovery into both Banc’s and WilmerHale’s communications with
or copying Sanford Michelman; Dkt. 326 (District Court denying review); Dkt. 470
(RFA issue does not ask Court to reconsider “prior discovery ruling concern[ing]
documents”). Many of the documents Sugarman seeks fall under the umbrella of
those prior rulings. (See e.g. Mot. at 6 (citing September 3, 2018 Privilege Log Nos.
759-61, 1031-36, 1040, 1181-84, 1189-91, 1193, and 1355-56 described as
“[s]mail[s] concerning communications with outside counsel regarding Special
Committee investigation”).)
As to other documents, it is currently unclear whether they would fall within
the scope of any potential waiver—as this Court has, to date, found no such waiver.
(See e.g. Dkt. 480-3, Ex. 1 at Log No. MR000304-306 (“Correspondence regarding
scope of legal representation”).) If any further ruling by the Court affects Banc’s
privilege determinations, Banc requests the opportunity to amend the privilege logs
to describe the nature of the documents in a matter that “will enable other parties to
assess” whether the documents fall within the scope of a waiver. Fed. R. Civ. P.
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26(b)(5)(A).
b. Sugarman’s Remaining Arguments Are
Meritless
Sugarman’s remaining arguments for waiver have either already been
rejected by this Court or are factually incorrect. Sugarman’s argument regarding
“the Seabold Amended Answer” was made in Sugarman’s May 4, 2018 Motion to
Compel; both this Court and Judge Guilford rejected the argument. (Dkt. 246
(“reject[ing] [Sugarman’s argument] for the reasons set forth in Banc’s and
WilmerHale’s oppositions.”); Dkt. 326 (J. Guilford denying review).) Similarly,
this Court’s order on Sugarman’s December 12, 2018 Motion to Compel assigned
no merit to Sugarman’s reliance on the January 22, 2017 Letter from Mark
McDonald to Manny Abascal and other mentions in Banc filings. (See Dkt. 470
(finding RFA responses as only potential waiver).)
Sugarman’s final argument contends Banc’s communications with
Michelman are not privileged because Banc “conclude[ed] that Michelman did not
represent Banc” and “claimed that Michelman acted in an adverse capacity to the
Banc.” (Mot. at 8.) This argument misstates Banc’s position. Banc has never argued
that Michelman was not counsel to Banc. To the contrary, Banc has always asserted
attorney-client privileged over its communications with Michelman. (See Dkt. 213,
437, 478.) The fact that Banc later concluded that Michelman took positions that
did not serve Banc’s interests does not mean that there is no attorney-client
privilege over communications between Banc and Michelman.
3. Any Waiver over the Potential Defamation Suit
Against SeekingAlpha Is Limited to Communications
Before October 18, 2016
Sugarman argues that Banc waived privilege over twenty-one
communications with Winston & Strawn occurring on or after October 20, 2016.
Sugarman’s argument is founded on Banc’s advisement to the SEC that it would
waive privilege over communications occurring on or about October 18, 2016
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regarding a potential defamation suit against SeekingAlpha. (McDonald Decl. ¶ 7.)
Again, Sugarman seeks to overextend the scope of Banc’s waiver. The
communications Sugarman seeks postdate the preparation of that defamation letter
and do not fall within the limited scope of that waiver. (See Dkt. 480-3, Ex. 2
[August 30, 2018 Privilege Log Nos. 226, 237-238, 239, 240, 243-46, 254-56, 261-
71].)
To the extent Sugarman argues that Banc’s waiver should extend beyond the
October 18, 2016 cease and desist letter, he is wrong. Banc’s express waiver
extends only to that which was disclosed to the SEC. As the Ninth Circuit has
explained, “Disclosures that effect an express waiver are typically within the full
control of the party holding the privilege; courts have no role in encouraging or
forcing the disclosure—they merely recognize the waiver after it has occurred.”
Bittaker v. Woodford, 331 F.3d 715, 719 (9th Cir. 2003). Here, Banc’ agreement
with the SEC was limited to communications occurring on or about October 18 and
19 related to the cease and desist letter. (McDonald Decl. ¶ 7.) Privilege is only
waived as to those communications.
Sugarman’s reliance on Starsight Telecast v. Gemstar Development Corp., is
misplaced. 158 F.R.D. 650, 653 (N.D. Cal. 1994). That case involved a subject
matter waiver where the defendant relied upon documents that were “beneficial to
its case.” Id. It therefore could not in fairness “refuse to disclose, on the grounds of
privilege, related facts adverse to its position.” Id. (citation omitted). Here, Banc
has not relied on the Winston & Strawn investigation in defending this action. It
merely produced responsive documents over which it had waived privilege to the
SEC. The scope of the waiver is therefore governed by Bittaker and limited to
communications on or about October 18 and 19, 2016 regarding the preparation of
a cease and desist letter. The documents Sugarman seeks remain privileged.
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4. Banc Has Not Selectively Disclosed Privileged
Communications Regarding the December 2016 Board
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Sugarman contends that Banc waived privilege over three documents on the
September 3, 2018 Privilege Log by producing documents regarding “concerns that
Mr. Sugarman raised at a December 2016 meeting with Board members” (Mot. at
9). For two reasons, Banc has not effected any such waiver.
First, the two communications Sugarman cites as the source of a waiver were
not privileged—and Sugarman does not contend they were. The first is an email
from Sugarman to the Board with no attorneys present. The second was an email
from Banc Director Jonah Schnel to Sugarman, again with no attorney present.
Only the top email in the chain includes Mr. Grosvenor, but nothing in any of the
emails suggests the communication was written for counsel or with the intention of
seeking legal advice. As such, neither document is privileged. Chevron Texaco
Corp., 2002 U.S. Dist. LEXIS 24970, at *27-28 (communications without lawyers
are privileged only where they “reflect matters about which the client intends to
seek legal advice are protected”). And wavier occurs “when a party discloses
privileged information to a third party.” Bittaker, 331 F.3d at 719. As there was no
disclosure of privileged information, there could be no waiver of any privilege.
Second, the entries Sugarman challenges “concern [the] Special Committee
investigation,” not “concerns that Mr. Sugarman raised at a December 2016
meeting with Board members” (Mot. at 9). This Court has repeatedly found that
documents concerning the Special Committee Investigation are privileged. (Log
Nos. 690, 914, 915.) Thus, these entries remain privileged.
C. The Bank Secrecy Act Precludes the Disclosure of Certain
Documents
Sugarman next challenges a subset of documents on the August 30, 2018 and
November 19, 2018 privilege logs, which Banc has withheld under the Bank
Secrecy Act (“BSA”), because he “cannot determine whether these documents are
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SARs or confirm the existence of SARs”—Suspicious Activity Reports. (Mot. at
11.)
But as Sugarman’s own citations recognize, Banc is not required to confirm
the existence of a SAR because the fact of whether a SAR existed is itself
privileged. See Cotton v. PrivateBank & Tr. Co., 235 F. Supp. 2d 809, 815 (N.D.
Ill. 2002) (“documents representing drafts of SARs or other work product or
privileged communications that relate to the SAR itself… are not to be produced
because they would disclose whether a SAR has been prepared or filed.”)
(emphasis added); Union Bank of Cal. v. Super. Court, 130 Cal. App. 4th 378, 390
(2005) (a party “subpoenaed or otherwise requested to disclose a SAR or the
information contained in a SAR shall decline to produce the SAR or to provide any
information that would disclose that a SAR has been prepared or filed”)
(emphasis added) (citation and quotation marks omitted). His argument is self-
defeating. Banc cannot provide sufficient information to “confirm the existence of a
SAR” without also disclosing whether a SAR has been prepared or filed. The
privilege logs state as much as Banc can without disclosing information Banc is
legally obligated not to disclose.
D. The Common Interest Privilege Does Not Require a Formal
Agreement
Sugarman contends that Morrison & Foerster’s November 19, 2018 privilege
log and Jones Day’s October 2 and October 31, 2018 privilege logs do not establish
privilege over communications between Jonah Schnel and Robert Sznewajs and
their counsel at Jones Day, because Banc has not “produce[d] evidence of a
common interest agreement.” (Mot at 13.) But Banc is not required to produce a
written common interest agreement, because none is required. Sugarman cites no
authority to the contrary.1
1 Sugarman’s lone citation, Bittaker, does not even address the common
interest privilege. 331 F.3d at 719.
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The common interest privilege is a legal doctrine—not a contract—that
applies to “individuals with a community of interests” and allows them to
confidentially “communicate among themselves and with the separate attorneys on
matters of common legal interest, for the purpose of preparing a joint strategy.”
Nidec Corp. v. Victor Co. of Japan, 249 F.R.D. 575, 578 (N.D. Cal. 2007) (citation
omitted). It exists any time there is a “(1) the communication [that] is made by
separate parties in the course of a matter of common interest; (2) the
communication is designed to further that [legal] effort; and (3) the privilege has
not been waived.” United States v. Bergonzi, 216 F.R.D. 487, 495 (N.D. Cal. 2003)
(citation omitted).
Schnel and Sznewajs’ communications with their counsel at Jones Day
squarely meet these requirements. Both share a common interest as directors of the
Banc and members of the Special Committee. To the extent that Sugarman has
sought documents and testimony from them it is because of their common status as
directors who served on the Board of Directors during the period of the Special
Committee investigation and Sugarman’s separation from the Banc. Their
communications with their counsel at Jones Day, as demonstrated by the privilege
log, were related to protecting their common interests against Sugarman’s attacks
on the directors and the work of the Special Committee. As this Court is aware
from prior motion practice, Jones Day has vigorously sought to prevent disclosure
of communications of the directors protected by the attorney-client privilege and
work product doctrine.
Sugarman’s only argument in the face of this authority is that Banc has not
provided evidence of a formal common interest agreement. But Sugarman cites no
authority for this requirement. There is none. See OXY Res. Cal. LLC v. Super.
Court, 115 Cal. App. 4th 874, 892 (2004) (“A common interest agreement . . .
strengthens the case against waiver [of the privilege], but such an agreement is
neither a requirement nor a guarantee.”). The circumstances themselves establish
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the common interest privilege as a matter of law, and no agreement is required. The
logs, therefore, are sufficient.
E. Banc’s Privilege Logs Conform to Rule 26(b)(5)(A)
1. The August 30, 2018 and September 3, 2018 Privilege
Logs
Sugarman contends that twelve entries on the August 30, 2018 and
September 3, 2018 privilege logs contain descriptions that are inadequate to support
an assertion of privilege. While Sugarman does not identify any deficiency, his
argument appears to be that the descriptions do not include express indicia of legal
advice, but instead rely upon the inclusion of an attorney on the communication for
that inference. While Banc does not believe the descriptions are insufficient, Banc
will amend the twelve descriptions to provide more detail.
2. August 29, 2018 Privilege Log
Sugarman challenges the August 29, 2018 privilege log pertaining solely to
documents produced by Banc’s then outside counsel, Michelman & Robinson on
three grounds.
First, Sugarman argues that the privilege log does not “list the specific claim
of privilege being asserted.” (Mot. at 14.) Banc advised Sugarman’s counsel that
the basis of withholding Michelman’s documents was attorney-client privilege and
the work product doctrine. (McDonald Decl. ¶ 8.) Banc will amend the log and
state which specific privilege applies.
Second, Sugarman argues that the “descriptions of the supposedly privileged
documents are insufficient to support the[ ] assertions of privilege.” (Mot. at 14.)
Sugarman does not identify how the descriptions are insufficient, but presumably
his argument is that the descriptions do not include statements such as “for the
purpose of seeking legal advice.” Banc does not believe these descriptors are
necessary to assess the validity of the privilege assertion given that Mr.
Michelman’s representation of Banc is well established. (See e.g. McDonald Decl.
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Ex. 4 (seeking communications and memoranda made “in connection with, relating
to, or arising out of [Banc’s] Engagement”).) Where an engagement is established,
the presumption is that “the lawyer is hired ‘as such’ to give ‘legal advice.’” See
Chen, 99 F.3d at 1501. Thus, amending descriptions such as “correspondence
regarding insurance” to read “correspondence regarding legal advice on insurance”
is unnecessary and superfluous. But Banc is willing to do so, if the Court would
find it helpful in resolving the dispute.
Finally, Sugarman argues that Banc is required to include who authored
every document on the privilege log. That is not the rule. Banc is required only to
“describe the nature of the documents . . . in a manner that, without revealing
information itself privileged or protected, will enable other parties to assess the
claim.” Fed. R. Civ. P. 26(b)(5)(A). The author of a document is not a required
element of that description. See Dole v. Milonas, 889 F.2d 885, 888 (9th Cir. 1989)
(requiring only “(a) the attorney and client involved, (b) the nature of the document,
(c) all persons or entities shown on the document to have received or sent the
document, (d) all persons or entities known… to have been furnished the document
or informed of its substance, and (e) the date the document was generated,
prepared, or dated.”); In re Grand Jury Investigation, 974 F.2d at 1071 (requiring
only “the attorney and client involved,” the “nature of the document”, the “persons
or entities shown on the document to have received or sent the document,” “the date
the document was generated, prepared, or dated” and “the subject matter of each
document” it “has met its burden in demonstrating the applicability of the attorney-
client privilege.”). Here, Sugarman does not explain why the author is necessary to
assess privilege—and it is not. The privilege log demonstrates the entries are
communications with Banc’s outside counsel. As such, Banc has met its burden of
establishing privilege. See Chen, 99 F.3d at 1501.
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CONCLUSION
For the foregoing reasons, Sugarman’s motion to compel should be denied.
Dated: January 29, 2019 MORRISON & FOERSTER LLP
/s/ Mark R. McDonald
MARK R. MCDONALD
Attorneys for Defendant
Banc of California, Inc.
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