130 F.R.D. 560 (E.D. Pa. 1989)
This multidistrict litigation arises out of the insolvency of Sunrise Savings and Loan Association (“Sunrise”). Three groups of claims have been consolidated for pretrial proceedings in this district: state common law and Securities Exchange Act of 1934 claims asserted by Sunrise shareholders (the “Securities case”); fiduciary duty claims asserted by the Federal Savings and Loan Insurance Corporation (“FSLIC”) in its corporate capacity (the “Fiduciary Duty case”); and state common law and civil RICO claims asserted by former Sunrise depositors (the “Depositors case”).
Among the defendants in this litigation are former officers and directors of Sunrise, as well as the law firm which served as Sunrise’s general counsel, and the accounting firm which served as Sunrise’s outside auditor.
Presently before this Court are a number of motions to compel discovery relating to first phase document production. In this memorandum, I decide most of the legal issues presented by the outstanding discovery motions, and refer to the Special Master those issues which will require examination of individual documents or further factfinding. See In re Sunrise Securities Litigation, 124 F.R.D. 99 (E.D.Pa. 1989) (stating the reasons for appointment of a Special Master in this litigation).
Blank Rome, Michael D. Foxman, Kenneth A. Treadwell and M. Kalman Gitomer have claimed work product protection for a multitude of documents sought by the outside directors of Sunrise, Deloitte Haskins & Sells (“DHS”), FSLIC, Caldwell C. Robinson, Frederic Gruher, Kenneth R. Howard, Laddie D. Howard, J. Randolph Black, and Curtis Walker. Blank Rome turned over two-thirds of these work product documents to FSLIC pursuant to an agreement that FSLIC would “not place the documents in the plaintiffs’ Sunrise document depository, or allow any third party to inspect, review or use the documents in any manner whatsoever, absent a court order.” Response of Blank Rome to Certain Defendants’ Amended Motion, Exhibit B. The moving parties argue that by giving these documents to FSLIC Blank Rome has waived any claims it may have that they are protected work product. They also contend that work product protection is not applicable because Blank Rome is a defendant in this litigation, and its legal advice to Sunrise is directly at issue.
F.R.C.P. Rule 26(b)(3) codifies the doctrine of work product protection set forth in Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947), for documents and tangible things “prepared in anticipation of litigation” by or for a party or a party’s representative. The Hickman Court formulated the work product doctrine to protect “the public policy underlying the orderly prosecution and defense of legal claims,” stating that “it is essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel.” 329 U.S. at 510, 67 S.Ct. at 393. The public policy supporting the work product doctrine “is not to protect all recorded opinions, observations and impressions of an attorney made in connection with any legal problem, but to protect the integrity of the adversary process.” Hercules Inc. v. Exxon Corp., 434 F.Supp. 136, 150-151 (D.Del.1977).
“The privilege derived from the work-product doctrine is not absolute. Like other qualified privileges, it may be waived.” United States v. Nobles, 422 U.S. 225, 239, 95 S.Ct. 2160, 2170, 45 L.Ed.2d 141 (1974). The Court of Appeals for the District of Columbia Circuit has identified three factors as important in determining whether there has been a waiver of work product protection: (1) did the party claiming the privilege “seek[ ] to use it in a way that is not consistent with the purpose of the privilege”; (2) did the party have any “reasonable basis for believing that the disclosed materials would be kept confidential”; and (3) would waiver of the privilege under the circumstances of the case “trench on any policy elements now inherent in th[e] privilege?” In re Subpoenas Duces Tecum, 738 F.2d 1367, 1372 (D.C.Cir.1984).
Regarding the first factor, the general rule is that “[disclosure to an adversary waives the work product protection as to items actually disclosed.” Grumman Aerospace Corp. v. Titanium Metals Corp., 91 F.R.D. 84, 90 (E.D.N.Y.1981). As the Court of Appeals for the District of Columbia Circuit stated, “the health of the adversary system—which spawned the need for protection of an attorney’s work product from discovery by an opponent— would not be well served by allowing [parties] the advantages of selective disclosure to particular adversaries, a differential disclosure often spurred by considerations of self-interest.” In re Subpoenas Duces Tecum, 738 F.2d at 1372. By the same token, “[disclosure to a person with an interest common to that of the attorney or the client normally is not inconsistent with an intent to invoke the work product doctrine’s protection and would not amount to such a waiver.” In re Doe, 662 F.2d 1073, 1081 (4th Cir.1981), cert. denied, 455 U.S. 1000, 102 S.Ct. 1632, 71 L.Ed.2d 867 (1982).
The question here, then, is whether Blank Rome disclosed the documents to an adversary. The moving parties contend that FSLIC is an adversary of Blank Rome. Blank Rome argues that it gave the documents to FSLIC Receiver, which is not its adversary in this action, and not to FSLIC Corporate, plaintiff in the Fiduciary Duty case. According to the agreement under which Blank Rome handed over the documents, they were sought by “FSLIC, as successor in interest to Sunrise Savings & Loan Association, Blank, Rome’s former client.” Response of Blank Rome to Certain Defendants’ Amended Motion, Exhibit B. Blank Rome claims that FSLIC identified “FSLIC as successor in interest to Sunrise” as FSLIC Receiver in its Motion to Compel Documents by Blank Rome. FSLIC contends that “FSLIC as successor in interest to Sunrise” was FSLIC Corporate, since all rights against Blank Rome “previously held by FSLIC-Receiver have been assigned to FSLIC-Corporate.” FSLIC’s Reply to Blank Rome’s Response to FSLIC’s Motion to Compel, at 2.
But Blank Rome and FSLIC did not distinguish between FSLIC Corporate and FSLIC Receiver when the documents were transferred. The FSLIC/Blank Rome agreement does not refer to “FSLIC Receiver” or “FSLIC Corporate” at all, much less provide that the disclosure of work product was limited to FSLIC Receiver alone, or even to FSLIC only as successor in interest to Sunrise. Moreover, throughout this litigation, FSLIC Receiver and FSLIC Corporate, although recognized as legally separate entities, have been represented by the same attorneys and law firm. Disclosure to FSLIC Receiver’s counsel therefore is the equivalent of disclosure to FSLIC Corporate’s counsel, absent some agreement specifically providing otherwise. There is no such provision in the FSLIC/Blank Rome agreement. Therefore, in turning over the documents to counsel for FSLIC “as successor in interest to Sunrise,” Blank Rome should have anticipated that they would be reviewed by counsel for its adversary FSLIC Corporate as well as by counsel for FSLIC Receiver.
Blank Rome also contends that the FSLIC/Blank Rome agreement provides a “reasonable basis for believing that the disclosed materials would be kept confidential.” As noted above, the agreement prevents FSLIC from giving third parties access to the documents without a Court Order, and also prevents FSLIC from revealing the documents' contents in court submissions.
Despite these limitations, the agreement nevertheless anticipates disclosure of the documents to counsel for FSLIC Corporate, Blank Rome’s adversary in the Fiduciary Duty case. The agreement forecloses only those uses of the documents by FSLIC Corporate which might reveal the contents of the documents to other parties. For example, it did not prevent FSLIC Corporate or its counsel from using the documents to formulate discovery and litigation strategies. See In re Sunrise Securities Litigation, 698 F.Supp. at 1260, n. 9 (noting, in discussing proposed settlement between Blank Rome, FSLIC and shareholder plaintiffs, that “[b]y virtue of its position in relation to Sunrise, the FSLIC has had access to much information unavailable to the non-settling defendants. As a result, the FSLIC currently is better able to assess the fairness of the settlement than the non-settling parties.”) Permitting an adversary to use documents even for the limited purpose of formulating settlement strategies is inconsistent with the work product doctrine’s purpose of protecting the integrity of the adversary process.
Finally, as in In re Subpoenas Duces Tecum, there is “no policy factor now inherent in the work product privilege [that] calls for a special exception” for Blank Rome’s voluntary production of work product documents, since “the privilege does not protect against the manipulation of selecting a particular opponent for selective disclosure—most probably for the discloser’s own benefit.” 738 F.2d at 1374-1375. As a result, Blank Rome has waived work product protection for the documents handed over to FSLIC, and I will order that Blank Rome produce them to the moving parties.
As to those work product documents which Blank Rome expressly declined to produce to FSLIC, claims of work product protection have not been waived. The moving parties argue that work product protection nevertheless does not apply to these documents because Blank Rome is a defendant, and the legal advice it gave Sunrise is directly at issue in this litigation. Courts have recognized an exception to the work product doctrine in cases where an attorney’s “mental impressions and opinions are directly at issue.” Reavis v. Metropolitan Property and Liability Insurance Co., 117 F.R.D. 160, 164 (S.D.Cal.1987). See Coleco Industries, Inc. v. Universal City Studios, 110 F.R.D. at 690 (noting that “a consistent line of cases has developed an exception to the work-product privilege where the party raises an issue which depends upon an evaluation of the legal theories, opinions and conclusions of counsel”); 4 J. Moore, Federal Practice ¶26.64[3.-2], at 26-385 (1987) (“Cases indicate that when the activities of counsel are inquired into because they are at issue in the action before the court, there is cause for production of documents that deal with such activities, though they are ‘work product.’ ”)
In Bird v. Penn Central Co., 61 F.R.D. 43 (E.D.Pa.1973), for example, defendants claimed that plaintiffs’ action for rescission of an insurance policy was barred because plaintiffs knew or should have known of the grounds for rescission long before they filed suit. The defendants sought documents from plaintiffs’ counsel relating to their investigation of and advice concerning claims under the policy and the basis for rescission. This Court denied work product protection to these documents, stating that
[b]ecause the nature of this defense concerns knowledge, legal theories and conclusions of plaintiffs’ attorneys charged with claim investigation, such “advice of counsel” evidenced in these documents is discoverable when it is directly relevant to a possible rescission action or suggests reasons to indicate the propriety of such an action.
61 F.R.D. at 47.
Similarly, in Truck Insurance Exchange v. St. Paul Fire & Marine Insurance Co., 66 F.R.D. 129 (E.D.Pa.1975), this Court ordered production of an attorney’s file, which contained memoranda and other work product materials prepared by the attorney, because “[t]he activities of counsel in the underlying lawsuit are the basis of [defendant]’s defense in this case.” 66 F.R.D. at 136.
Allegations of negligence or other misconduct while rendering legal advice also can place attorneys’ mental impressions and opinions directly at issue and eliminate work product protection. The District of Columbia District Court faced such a situation in Securities and Exchange Commission v. National Student Marketing Corp., 18 F.R.Serv.2d 1302 (D.D.C.1974). Defendant White & Case, which had served as outside legal counsel to National Student Marketing Corporation (“NSMC”) during a merger transaction, was charged with “failure to disclose relevant and damaging financial data and improper participation in [the] merger closing; involvement in the issuance of a questioned opinion ...; [and] illegal reporting of the sales of two NSMC’s subsidiaries.” 18 F.R.Serv.2d at 1304. White & Case asserted work product protection for a number of documents it had prepared prior to the filing of the complaint, even though its former client NSMC consented to a permanent injunction providing, among other things, that NSMC had “divested itself of any interest it might have in immunizing attorney ‘work-product’ from discovery.” 18 F.R.Serv.2d at 1306.
But the Court held that the documents were not protected work product because White & Case were named defendants and NSMC had consented to judgment and ceased participation in the case. In particular, the Court noted that “[t]he fact that White & Case are themselves defendants charged with acts allegedly committed partly in concert with their client, while presumably representing their client’s interests, clearly sets them apart and highlights this case as one in marked contrast with the typical situation where shelter is sought under ‘work-product’ doctrine.” 18 F.R.Serv.2d at 1305. The Court held that
[t]he Hickman rule, as well as the 1970 amendments to the Federal Rules, cannot be viewed as a means by which attorneys, based solely upon that status, are to be elevated to a preferred position when involved as parties in the litigation process. The sound basis for granting special treatment to attorney ‘work-product’ is the realization that, in appropriate circumstances, the adversary system of justice requires that certain activities of attorneys be sheltered from discovery. It would be difficult indeed for White & Case to now posit their reliance upon theories of work product in terms of serving or protecting the rights of a former client and co-defendant who no longer has any interest in this injunctive action. 18 F.R.Serv.2d at 1306.
The same factors relied on by the NSMC Court are present in this case. The knowledge, mental impressions, opinions and advice of defendant Blank Rome as counsel to Sunrise clearly are at issue here. FSLIC has alleged that Blank Rome committed a variety of wrongs while counsel to Sunrise including professional negligence, breach of contract, aiding and abetting breaches of fiduciary duties, aiding and abetting violations of law and conflict of interest. FSLIC First Amended Complaint, at ¶¶ 271-280. Plaintiff shareholders have claimed that Blank Rome, Foxman and Gitomer committed securities and common law fraud, and were guilty of deceit and intentional misrepresentation. Restated Second Consolidated Amended Complaint, ¶¶ 34-44, 55-58. Many of the individual defendants have filed cross-claims against Blank Rome based on the allegations in the FSLIC and shareholder complaints or have claimed “advice of counsel” as an affirmative defense to claims by FSLIC and the shareholder plaintiffs. Moreover, Blank Rome cannot contend that work product protection should apply to protect their client’s interests, since FSLIC “as successor in interest to Sunrise” has waived all claims of privilege as to Blank Rome, including both attorney client privilege and work product protection. Reply Memorandum of Certain Defendants to Response of Blank Rome to Motion to Compel, Exhibit 1.
It is impossible to tell from the descriptions presently before this Court whether the documents contain information directly at issue in this litigation. I therefore will ask that the Blank Rome documents for which work product protection has not already been waived by production to FSLIC be reviewed by the Special Master to determine whether they fall within the at issue exception.
As Blank Rome argues, documents fall within the at issue exception to work product protection only if they contain information “directly at issue, and the need for [their] production is compelling.” Bird, 61 F.R.D. at 47. But a party is not required to prove that information cannot be discovered by any method other than document production to establish “compelling need.” The “compelling need” inquiry focuses on the party from whom discovery is sought, not on the particular mode of discovery. So, for example, the Bird Court’s analysis centered on the attorneys’ exclusive control over information concerning their state of knowledge and actions regarding the rescission action:
Since the relevant inquiry is into what plaintiffs knew or should have known concerning grounds for their rescission action, only through discovery of information in the hands of plaintiffs, and their agents, can defendants substantiate their defense. Since in this case counsel served as investigators and advisors on the merits of the potential and actual claims asserted by defendants under the policy, and therefore alone could ascertain the justification for a rescission action, discovery of the relevant documents in their possession is essential to defendants’ case.
61 F.R.D., at 46-47 (emphasis added).
Thus, “compelling need” exists whenever information is within the exclusive control of the party from whom discovery is sought, regardless of whether the information might also be obtained from that party through depositions, interrogatories or document production. I therefore will ask the Special Master to review the documents, and to order production of those documents containing information directly at issue in this litigation for which the moving parties have compelling need, i.e. those documents containing any information over which Blank Rome has exclusive control.
Blank Rome has withheld a number of documents on the basis of attorney client privilege asserted on behalf of Fitzgerald, David L. Devaney, William Frame, Gitomer, Earl Slosberg, Georgeann Grisby, Robert Jacoby, Bibi Jacoby, a joint venture between Robert Jacoby, Frame, Gitomer and Devaney (the “JFGD joint venture”), and Blank Rome itself. The moving parties contend that the attorney client privilege does not shield these documents for a number of reasons, including that: Blank Rome has failed to establish the elements of the privilege; the privilege for communications between Sunrise officers or directors and Blank Rome belongs to Sunrise, which has waived the privilege; no privilege applies to communications between Blank Rome and Robert Jacoby, Frame or Devaney, since they have raised reliance upon advice from Blank Rome as a defense; any privilege between Blank Rome and Robert Jacoby or Frame is void under the crime/fraud exception; and Blank Rome cannot claim attorney client privilege for correspondence between members of the firm.
The attorney client privilege exists “to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in observance of the law and administration of justice.” Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 682, 66 L.Ed.2d 584 (1981). But “because the privilege obstructs the search for the truth and because its benefits are, at best, ‘indirect and speculative,’ it must be ‘strictly confined within the narrowest possible limits consistent with the logic of its [purpose].’ ” In re Grand Jury Investigation, 599 F.2d 1224, 1235 (3d Cir.1979) (citation omitted) (quoting 8 Wigmore on Evidence § 2291, at 545 (1961)). Thus, it applies to bar disclosure only if:
(1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.
United States v. United Shoe Machinery Corp., 89 F.Supp. 357, 358-359 (D.Mass. 1950); In re Grand Jury Investigation, 599 F.2d at 1233. This Court has held that “[w]hen the record is ambiguous as to the elements necessary to establish a claim of attorney-client privilege, the burden is on the party asserting it ... [to] show, by record evidence such as affidavits, sufficient facts as to bring the communications at issue within the narrow confines of the privilege.” Delco Wire & Cable, Inc. v. Weinberger, 109 F.R.D. 680, 687-688 (E.D.Pa.1986) (citations omitted) (emphasis in original).
Under this standard, Blank Rome has failed to show facts sufficient to establish that the Fitzgerald, Bibi Jacoby, Slosberg or Grisby documents are privileged. Blank Rome has submitted affidavits purporting to establish the elements of the privilege for the Devaney, William Frame, Gitomer, Slosberg, Grisby, Robert Jacoby, JFGD joint venture and Blank Rome documents. Response of Blank Rome to Certain Defendants’ Amended Motion, Appendices E and F. But no affidavits have been submitted for the Fitzgerald or Bibi Jacoby documents, and the affidavits purportedly establishing the privilege for Slosberg and Grisby (prepared by attorneys Fred Blume and Nicholas Kouletsis, respectively) do not establish that these clients have claimed the protection of the privilege. I therefore will ask the Special Master to review these documents and conduct such further factfinding as is necessary to determine whether these clients have claimed the privilege and whether the privilege is applicable, and to order production of all non-privileged documents.
Any attorney client privilege that may have attached to the Robert Jacoby, Frame, Devaney or JFGD joint venture documents has been waived. If “a party asserts as an essential element of his defense reliance upon the advice of counsel, ... the party waives the attorney-client privilege with respect to all communications, whether written or oral, to or from counsel concerning the transactions for which counsel’s advice was sought.” Panter v. Marshall Field & Co., 80 F.R.D. 718, 721 (N.D.Ill.1978); see Barr Marine Products Co., Inc. v. Borg-Warner, 84 F.R.D. 631, 635 (E.D.Pa.1979) (noting that courts have found waiver of the attorney client privilege “where the party resisting discovery raises as a defense that which transpired between client and counsel, or reliance on advice of counsel, or questions counsel’s authority”). As Blank Rome admits, Robert Jacoby, William Frame and Devaney have all invoked reliance upon advice of counsel as a defense to the claims against them in this litigation. As a result, they have waived the attorney client privilege with respect to all communications they made to Blank Rome concerning the transactions for which they sought Blank Rome’s legal advice.
Blank Rome contends that “[t]he fact that an officer asserts that he relied upon advice of counsel with respect to some issue presented in this litigation does not open to discovery privileged communications as to other issues which are not implicated or involved in the present litigation.” Response of Blank Rome to Certain Defendants’ Amended Motion, at 18. I agree that applicability of attorney client privilege and relevance are two separate issues. Regardless of the waiver of attorney client privilege, the Robert Jacoby, William Frame and Devaney documents need be produced only if they contain information “reasonably calculated to lead to the discovery of admissible evidence.” F.R.C.P. Rule 26(b)(1). I therefore will request the Special Master to review these documents and to order production of those discoverable under Rule 26(b)(1).
Robert Jacoby’s, William Frame’s and Devaney’s invocations of reliance upon advice of counsel in their own defense also have waived the attorney client privilege asserted by Blank Rome on behalf of the JFGD joint venture. Because the JFGD joint venture was an unincorporated association of Robert Jacoby, William Frame, Gitomer and Devaney, the joint venture has no claim of privilege other than that of its individual members. In other words, each individual member of the JFGD joint venture must establish each element of the privilege to support the joint venture’s privilege. The waiver of privilege by Robert Jacoby, William Frame and Devaney thus has waived the JFGD joint venture’s privilege as well, and I will order Blank Rome to produce those documents withheld on its behalf.
It is not possible to determine from the information before this Court whether the attorney client privilege applies to the documents Blank Rome has withheld on behalf of Gitomer. The documents in question contain information communicated by Gitomer, a former Sunrise board chairman, to Blank Rome, former Sunrise outside counsel. Corporate officers “do not have an attorney-client privilege with regard to communications made in their role as corporate officials.” In the matter of Bevill, Bresler and Schulman Asset Management Corporation, 805 F.2d 120, 125 (3d Cir.1986). Rather, “any privilege that exists as to a corporate officer’s role and functions within a corporation belongs to the corporation, not the officer.” 805 F.2d at 124. In the present case, as noted above, Sunrise has waived all claims of privilege as to communications with Blank Rome.
To assert a claim of attorney client privilege as to communications with corporate counsel, corporate officers must satisfy the test approved in Bevill:
First, they must show they approached [counsel] for the purpose of seeking legal advice. Second, they must demonstrate that when they approached [counsel] they made it clear that they were seeking legal advice in their individual rather than in their representative capacities. Third, they must demonstrate that the [counsel] saw fit to communicate with them in their individual capacities, knowing that a possible conflict could arise. Fourth, they must prove that their conversations with [counsel] were confidential. And, fifth, they must show that the substance of their conversations with [counsel] did not concern matters within the company or the general affairs of the company.
805 F.2d at 123.
Therefore, I will ask the Special Master to decide if the documents withheld on behalf of Gitomer must be produced by determining whether they meet the Bevill test, and in particular, by determining whether they concern Gitomer’s personal affairs or matters within the general affairs of Sunrise.
Finally, Blank Rome has withheld a number of documents as to which it claims attorney client privilege applies because Blank Rome was both attorney and client. Blank Rome cites no authority for its novel assertion that a law firm may consult its own attorneys as house counsel to secure legal advice in connection with or related to the firm’s representation of a client, and as a result obtain the protection of the attorney client privilege on the basis that it is its own client. Only communications from one person or entity, a client, to another person or entity, an attorney, can be protected by the attorney client privilege. See United Shoe, 89 F.Supp. at 358-359. Blank Rome presents no facts to support treating the communications in question as between attorney and client, rather than as between members of one and the same entity. Without any supporting legal precedent, I will not extend the attorney client privilege to protect communications between members of a law firm, and I will order that Blank Rome produce the documents withheld on behalf of Blank Rome as both attorney and client.
Blank Rome has asserted that the joint defense privilege protects a number of documents prepared in connection with a federal grand jury investigation related to Sunrise in the Southern District of Florida. According to Blank Rome, the privilege belongs to two groups of people or entities investigated by the grand jury: Robert Jacoby, William Frame, Gitomer, Devaney, Sunrise and their respective counsel, relating to the JFGD joint venture; and the members of the first group plus Skubal, Calsin, Taber, Fitzgerald, Pitt and Waldron, relating to other matters investigated by the grand jury. In addition, Robert Jacoby, William Frame, Gitomer and Devaney have withheld from FSLIC documents relating to the JFGD joint venture based in part on a joint defense privilege between the members of the JFGD joint venture and Sunrise.
The moving parties argue that any joint defense privilege for these documents has been waived because, in the present litigation, FSLIC has asserted Sunrise’s rights against the other joint defendants. Blank Rome, Jacoby and Devaney contend that the privilege has not been waived because in this litigation the joint defendants are adversaries of FSLIC Corporate and not of FSLIC Receiver, the successor to Sunrise.
The joint defense privilege protects communications between an individual and the attorney of another, or between two or more persons and an attorney, concerning a mutual concern, where the communications are “part of an on-going and joint effort to set up a common defense strategy.” Eisenberg v. Gagnon, 766 F.2d 770, 787 (3d Cir.1985), cert. denied sub nom., Wasserstrom v. Eisenberg, 474 U.S. 946, 106 S.Ct. 342, 88 L.Ed.2d 290 (1985). In Bevill, the Court of Appeals for the Third Circuit held that to establish the existence of the joint defense privilege, “the party asserting the privilege must show that (1) the communications were made in the course of a joint defense effort, (2) the statements were designed to further the effort, and (3) the privilege has not been waived.” Bevill, 805 F.2d at 126.
The joint defense privilege is waived “where one of the joint defendants becomes an adverse party in a litigation.” Ohio-Sealy Mattress Mfg. Co. v. Kaplan, 90 F.R.D. 21, 29 (N.D.Ill.1980). The privilege is deemed waived in this situation for two reasons:
In the first place the policy of encouraging disclosure by holding out the promise of protection seems inapposite, since as between themselves neither would know whether he would be more helped or handicapped, if in any dispute between them, both could invoke the shield of secrecy. And secondly, it is said that they had obviously no intention of keeping these secrets from each other, and hence as between themselves it was not intended to be confidential.
McCormick on Evidence (Third Ed.1984) § 91, at 219.
The privilege also is waived “in an action brought by or against a successor-in-interest to a former joint client where any one of the other former joint clients stands as an opposing party in such action.” In the Matter of a Grand Jury Subpoena Duces Tecum Dated November 16, 1974, 406 F.Supp. 381, 393-394 (S.D.N.Y.1975).
I find that any joint defense privilege has been waived in this case. FSLIC Corporate filed the Fiduciary Duty case as assignee of Sunrise’s rights against, among other defendants, the members of the joint defense group. Indeed, because of the assignment, only FSLIC Corporate (and not FSLIC Receiver) could assert Sunrise’s rights against the members of the joint defense group. As a result, FSLIC Corporate’s suit against the joint defense group was, in effect, a suit by Sunrise itself; the joint defense privilege therefore was waived, and I will order that Blank Rome produce the joint defense documents, and that Jacoby, Frame, Gitomer and Devaney produce all requested documents relating to the JFGD joint venture.
Blank Rome has invoked what it terms “the Grand Jury Privilege” to withhold various documents relating to the Sunrise grand jury investigation sought by the moving parties, including indices and documents produced to the grand jury, memoranda and correspondence among Blank Rome attorneys, correspondence between Blank Rome and counsel for various Sunrise officers, correspondence between Blank Rome and the Assistant U.S. Attorney in charge of the investigation, and motions. Blank Rome contends that production of these documents would breach the policy of grand jury secrecy, and therefore should not be allowed. The moving parties argue that there is no “grand jury privilege” applicable to the requested documents, and that, in any event, production of the documents would not breach grand jury secrecy.
The sole basis asserted by Blank Rome for a “grand jury privilege” is the “settled federal policy that the grand jury system requires secrecy of grand jury proceedings.” In re Grand Jury Matter, 682 F.2d 61, 63 (3d Cir.1982). “Rule 6(e) of the Federal Rules of Criminal Procedure is intended to preserve this norm of secrecy by preventing the disclosure of matters occurring before a grand jury.” 682 F.2d at 63. Rule 6(e)(2) states the general rule of secrecy:
A grand juror, an interpreter, a stenographer, an operator of a recording device, a typist who transcribes recorded testimony, an attorney for the government, or any person to whom disclosure is made under paragraph (3)(A)(ii) of this subdivision shall not disclose matters occurring before the grand jury, except as otherwise provided for in these rules. No obligation of secrecy may be imposed on any person except in accordance with this rule. A knowing violation of Rule 6 may be punished as a contempt of court. (emphasis added)
Plainly, Blank Rome does not fit in any of the classes enumerated by the Rule; consequently, Rule 6(e)(2) does not prevent Blank Rome from disclosing the requested documents. Moreover, Blank Rome can cite no authority independent of Rule 6(e) for imposing an obligation of secrecy: every case relied upon by Blank Rome for the policy of imposing secrecy cites and interprets Rule 6(e); and Rule 6(e)(2) explicitly prevents imposition of an obligation of secrecy on any person except in accordance with the Rule. See, e.g., Sells Engineering, 463 U.S. at 425, 103 S.Ct. at 3138 (“Witnesses are not under the prohibition unless they also happen to fit into one of the enumerated classes”); In re Grand Jury Subpoena Duces Tecum, 575 F.Supp. 1219, 1221 (E.D.Pa.1983) (holding that Rule 6(e)’s explicit directive cannot “be overridden by this court’s general supervisory authority over grand juries” to impose an obligation of secrecy on grand jury witnesses).
Blank Rome attempts to distinguish between imposing an obligation of secrecy on a witness and compelling that witness’s disclosure, based on the William Iselin Court’s statement that:
[w]hen the witness chooses to disclose his testimony, this ground of grand jury secrecy remains unaffected. However, when another party is attempting to compel disclosure, the policy which requires secrecy must be balanced against the policy requiring that there be full disclosure of all available evidence in order that the ends of justice may be served. The decision as to whether or not to order disclosure of grand jury testimony is one committed to the sound discretion of the trial court. 510 F.Supp. at 346 (citations omitted)
See also State of Texas, 546 F.2d at 629-631 (holding that particularized need must be shown to compel grand jury witnesses to produce grand jury subpoenas, schedules, notices, summonses, documents and transcripts of testimony before grand jury).
Thus Blank Rome’s argument is that the Court can compel it to produce the documents it does not wish to produce only upon a showing of particularized need; it takes this position even though under Rule 6(e) if it wished to produce these same documents, the Court could not impose any obligation of silence. In effect, Blank Rome argues for adoption of a “grand jury privilege,” purportedly intended to protect the secrecy of grand jury proceedings, which could be waived or asserted by a party at will without regard for the secrecy of grand jury proceedings. But adoption of such a privilege clearly would not protect the secrecy of grand jury proceedings, and would extend the holdings of William Iselin and State of Texas far beyond protection of grand jury testimony or documents.
In short, Blank Rome provides no legal authority for a “grand jury privilege” or for otherwise imposing an obligation of secrecy on Blank Rome under the circumstances of this case, and I will order Blank Rome to produce the requested “grand jury privilege” documents.
Blank Rome has withheld as irrelevant documents created before Sunrise was incorporated on March 10, 1980, or after the date on which Blank Rome turned over its Sunrise files to successor counsel, between July 19 and December 31, 1985. F.R.C.P. Rule 26(b)(1) provides that information may be discovered even if inadmissible at trial “if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.” Thus, a document’s discoverability seldom turns solely on the date of its preparation. See, e.g., Midland Investment Co. v. Van Alstyne, Noel & Co., 59 F.R.D. 134, 138 (S.D.N.Y.1973) (“Merely because the document is dated after the last act complained of, however, does not make it immune from discovery if it relates to relevant discoverable information.”)
I therefore will ask the Special Master to review the documents withheld by Blank Rome based on a “time frame” objection, and order their production if they are discoverable under Rule 26(b)(1) in light of the issues in this litigation as framed by the pleadings.
Defendant Fitzgerald was formerly a Blank Rome partner, and worked in Blank Rome’s West Palm Beach office between May 1983 and September 23, 1984. Fitzgerald has moved to compel production of five groups of documents withheld from him by Blank Rome: (1) memoranda authored by Fitzgerald and memoranda or correspondence sent to Fitzgerald withheld as work product; (2) memoranda or correspondence authored by Fitzgerald or received by Fitzgerald withheld under the attorney client privilege; (3) documents withheld on the basis of a “grand jury privilege”; (4) documents withheld under both work product protection and attorney client privilege on behalf of Fitzgerald as client; and (5) documents recording discussions with or referring to Fitzgerald withheld as work product. Blank Rome offers no opposition to production of the first three categories of documents, and opposes production of only some of the documents in categories (4) and (5). Because it is unclear whether Blank Rome has yet produced the uncontested documents, I will order that Blank Rome produce them to Fitzgerald.
Blank Rome has withheld documents in category (4) based on its own work product privilege and on the attorney client privilege asserted on behalf of Fitzgerald as client. Of course, the attorney client privilege “belongs to the client, not the attorney; and an attorney can neither invoke nor waive the privilege if his client desires the contrary.” In re Grand Jury Proceedings, 73 F.R.D. 647, 652 (M.D.Fla.1977).
Blank Rome claims that it has not produced these documents to Fitzgerald out of concern that production would be considered a waiver of Blank Rome’s work product protection. But production to Fitzgerald would not waive these documents’ work product protection: Fitzgerald is not an adversary of Blank Rome in this litigation; there is a reasonable basis for believing that these documents will be kept confidential, since Fitzgerald has distinguished between his rights to these documents and those of other parties to the litigation, and has claimed he is entitled to share “in any valid claims of privilege as to these documents asserted by Blank, Rome”; and public policies inherent in the privilege militate against construing production to the client as waiver. In re Subpoenas Duces Tecum, 738 F.2d at 1372. Moreover, a client could not control the attorney client privilege if his or her attorney were able to assert work product protection against that client for documents prepared on his or her own behalf. As a result, I find that any work product protection these documents might have does not prevent their discovery by Fitzgerald, the client for whom they were prepared, and I will order Blank Rome to produce them to him.
Blank Rome has withheld the documents in category (5) as protected work product. Two of these documents, BSX0010520 and BPX7503785, were turned over to FSLIC, so that their work product protection has been waived. Fitzgerald contends he should receive the remaining documents in this category because he had access to them while he was a partner at Blank Rome, and because they concern him and his work as an attorney for Sunrise. Fitzgerald cites no authority to support his contentions, and Blank Rome cites no opposing authority.
Considerations of fairness favor production of those documents prepared while Fitzgerald was a partner at Blank Rome. Current Blank Rome partners who are defendants in this litigation have had access to these documents in preparing their defense, even those named as individual defendants with interests potentially adverse to Blank Rome. While a Blank Rome partner, Fitzgerald was entitled to review those documents in existence at that time in preparing his defense; he should not be penalized in preparing his defense to charges he faces solely in his capacity as a former Blank Rome partner merely because he is not currently a Blank Rome partner and failed to review the documents while he was a partner. Moreover, as discussed above, disclosure of these documents to Fitzgerald will not waive Blank Rome’s work product protection as to third parties.
On the other hand, Fitzgerald has no such equitable claim to documents prepared after he left Blank Rome; he never has been entitled to review such documents. If courts accepted Fitzgerald’s contention that the work product doctrine does not prevent compelling production to a party of documents “inherently concerned with” that party, the work product doctrine would be swallowed up by exceptions. I therefore will order Blank Rome to produce to Fitzgerald only those documents in category (5) which were either turned over to FSLIC or prepared before Fitzgerald left Blank Rome.
FSLIC has moved to compel defendants Foxman, Treadwell, Gitomer, Gruher, Michael Hyman, William Frame, Lynn S. Felps, Keiser, Jacobs, Logsdon, Siemon, Greenberg, and Lytal (“objecting defendants”) to produce personal financial information, including all state and federal tax returns they filed from 1980 to the present. The objecting defendants have withheld the requested tax returns and/or other personal financial information, contending that they are irrelevant, confidential, and contain information obtainable elsewhere.
Generally, “public policy favors the nondisclosure of income tax returns.” DeMasi v. Weiss, 669 F.2d 114, 119 (3d Cir.1982). But because “[i]ncome tax returns may be the best source of complete and competent information as to a party’s income,” they may be discovered “in appropriate circumstances.” In re Reading Tube Corp., 73 B.R. 99, 101 (Bkrtcy.E.D.Pa.1987). The Court must balance a party’s legitimate privacy interest in his or her tax returns against “a number of factors, including [the moving party]’s need for the information, its materiality, and its relevance.” DeMasi, 669 F.2d at 120. The District Court for the Eastern District of New York recently adopted a two-part test balancing these factors when discovery of tax returns is sought:
First, the court must find that the returns are relevant to the subject matter of the action; and second, that there is a compelling need for the returns because the information contained therein is not otherwise readily obtainable. While the party seeking discovery of the tax returns bears the burden of establishing relevance, the party resisting disclosure should bear the burden of establishing alternative sources for the information.
United States v. Bonanno Organized Crime Family, 119 F.R.D. 625, 627 (E.D.N.Y.1988) (citations omitted).
I find that any financial information relating to income derived from Sunrise is discoverable under the Bonanno test. FSLIC has alleged that the objecting defendants breached their fiduciary duties to Sunrise, and information about their Sunrise income would be relevant to this issue, particularly to FSLIC’s allegation that Sunrise adopted a system of “incentives to approve, recommend, originate or underwrite loans detrimental to the well-being of Sunrise but advantageous to the individuals involved in violation of those individuals’ fiduciary duties owed to Sunrise.” FSLIC’s Memorandum of Points and Authorities Relating to Common Issues, at 10. Although some information about the objecting defendants’ Sunrise income might be available from Sunrise records, FSLIC’s hardship in ferreting out this information from the Sunrise records would be much greater than the hardship to the objecting defendants in producing their own records of Sunrise compensation. Moreover, the Protective Order Governing Pretrial Discovery (“Protective Order”) entered by consent of the parties on July 17, 1986 will adequately protect the defendants’ legitimate privacy interests in this information.
But FSLIC’s request for information concerning all of the objecting defendants’ sources of income from 1980 to the present is so broad that it is nothing less than a “fishing expedition.” FSLIC argues that evidence of income received by the objecting defendants both from Sunrise and from other sources is relevant to the alleged breaches of fiduciary duty because “such information could provide evidence of further violations of their various fiduciary duties, the existence of conflicts of interest through the disclosure of a financial interest in a borrower, ..., and that officers received monetary gifts or bribes from borrowers.” FSLIC’s Memorandum of Points and Authorities Relating to Common Issues, at 10. FSLIC’s purported explanation of relevance is no more than an expression of hope. FSLIC’s allegations of breaches of fiduciary duties do not warrant production of any document or information that conceivably could contain evidence of breaches of fiduciary duties. FSLIC has not attempted to tailor its request to specific alleged misdeeds, or even to the time during which the objecting defendants owed fiduciary duties to Sunrise.
As a result, I will grant FSLIC’s motions only insofar as they seek information concerning the objecting defendants’ income derived from Sunrise.
FSLIC and the Outside Directors have moved to compel DHS to produce three categories of withheld documents: documents regarding DHS’s policies and procedures governing audits of savings and loan associations; documents regarding the performance and experience of DHS personnel who supervised or performed audits of Sunrise; and documents generated after January 12, 1986, the date upon which DHS’s services to New Sunrise were formally concluded.
DHS has withheld the first category of documents, those regarding its policies and procedures governing audits of savings and loan associations, as confidential, but has stated that it is willing to produce these documents subject to a disclosure requirement in addition to those mandated by this Court’s Protective Order. The present Protective Order requires that any person, other than an attorney or a member of a legal support staff, who reviews materials designated confidential must sign a written assurance that he or she will not divulge, copy or use the materials other than as authorized for the purposes of this litigation. Accordingly, all accounting experts hired by the parties currently are required to sign the written assurance set forth in the Protective Order. DHS seeks to impose an additional requirement that “before it produces this material, all parties employing an expert furnish, twenty days before production, the signed written assurance of its accounting expert.” Memorandum of Law of DHS in Opposition to Motions to Compel Production of Documents, at 16.
DHS does not dispute the moving parties’ contention that this requirement would not permit disclosure of these documents to any party’s counsel until twenty days after every accountant who may review the documents for any party has signed a written assurance. DHS argues this additional requirement is necessary because “[i]t would be extremely damaging and unfair to DHS if it were to learn—after the fact—that its proprietary materials had been widely distributed in a manner arguably consistent with the letter of the Protective Order, but in violation of its purpose and intent.” Memorandum of Law of DHS in Opposition to Motions to Compel Production of Documents, at 16. While this argument may explain the need for a twenty day waiting period between the written assurances of a party’s experts and production of documents to that party’s experts or attorneys, it does not explain why any particular party’s experts or attorneys must wait to review the documents until every party has designated its own experts.
A reasonable compromise would allow any party’s attorneys or accounting experts to review these documents twenty days after that party’s designated accounting experts have signed written assurances. Counsel will be directed to confer and to submit an appropriate amendment to the Protective Order so providing.
DHS contends that the second group of documents withheld, documents regarding the performance and experience of DHS personnel who supervised or performed audits of Sunrise, are confidential and irrelevant to this litigation. The moving parties argue that these documents are relevant and that the Protective Order provides sufficient protection to any confidential information sought.
Strong public policy exists against disclosure of the personnel records sought by the moving parties because disclosure would invade DHS employees’ privacy, and “firms might cease to frankly criticize and rate their own performance, for fear that any written evaluations they make might be used against them or their employees in a lawsuit.” New York Stock Exchange, Inc. v. Sloan, 22 F.R.Serv.2d 500, 503 (S.D.N.Y.1976). As with income tax returns, discovery of personnel records is permissible “if (1) the material sought is ‘clearly relevant,’ and (2) the need for discovery is compelling because the information sought is not otherwise readily obtainable.” Matter of Hawaii Corp., 88 F.R.D. at 524 (citing Sloan, 22 F.R.Serv.2d at 505).
The moving parties claim that the personnel records are clearly relevant to the allegations of negligence and wrongdoing by DHS in this litigation. Any connection, however, between these records and the allegations of negligently conducted audits, fraud and conspiracy is speculative. See Sloan, 22 F.R.Serv.2d at 502 (holding that personnel records were irrelevant to allegations of negligently conducted audits because they concerned only what “management thought of the employees it assigned to the audit.”). The one allegation to which the personnel records might be relevant, FSLIC’s allegation that DHS acted negligently in “planning” and “staffing” its audits, is too general to make clearly relevant all available information about the employees who conducted the audits. As discussed above, general allegations of wrongdoing do not, standing alone, open the season for fishing expeditions.
For DHS’s personnel records to be clearly relevant, the moving parties must make specific allegations or some initial showing, based on deposition testimony or other evidence, that DHS acted negligently in using particular employees on the Sunrise audits. Because no such showing or specific allegation has been made at present, I will not compel production of the DHS personnel documents.
DHS asserts that the third group of withheld documents, documents generated by DHS after January 12, 1986, are privileged because they were all prepared for the use and benefit of counsel representing DHS in litigation. Because neither FSLIC nor the Outside Directors contests this assertion, I will not compel production of these documents.
FSLIC seeks to compel production by William Frame of documents referring or relating to his brother Ron Frame, as well as document FRM 4564-4751. Although Frame has not filed any opposition to FSLIC’s motion, in his response to FSLIC’s Request for Documents he stated that FSLIC’s requests for the Ron Frame documents were “overbroad and not reasonably calculated to lead to the discovery of admissible evidence,” and claimed that document FRM 4564-4751 is protected by “Grand Jury Rule 6 Work Product Attorney-Client Privilege.” Memorandum in Support of FSLIC’s Motion to Compel Production of Documents by William Frame, at 2-3.
FSLIC argues that the requested documents referring or relating to Ron Frame are relevant to the allegation that William Frame breached his fiduciary duty to Sunrise. FSLIC claims that “Ron Frame received substantial brokerage commissions for loans made by Sunrise to borrowers,” and that “certain would-be borrowers were told that the only way they could obtain a loan from Sunrise was to use Ron Frame as their broker.” Memorandum in Support of FSLIC’s Motion to Compel Production of Documents by William Frame, at 2. Because those requested documents which referred or related to both Ron Frame and Sunrise would be highly relevant to these claims, and therefore to William Frame’s alleged breach of fiduciary duty, I will compel William Frame to produce them. But FSLIC’s requests also encompass correspondence between William and Ron Frame which may concern separate business or personal matters having no relationship to the issues in this litigation. I therefore will order William Frame to submit those documents responsive to FSLIC’s request which do not refer or relate to Sunrise to the Special Master, whom I will ask to review the documents and to order production of those relevant or reasonably calculated to lead to evidence relevant to William Frame’s alleged breach of fiduciary duty.
William Frame has not described document FRM 4564-4751 or otherwise substantiated his claim of privileges for this document, but he has stated that “this document’s description will be presented to Judge O’Neill ex parte upon request.” Memorandum in Support of FSLIC’s Motion to Compel Production of Documents by William Frame, at 4. Because FSLIC challenges the applicability of these privileges, I will order Frame to submit this document to the Special Master, who will order production of this document unless he determines that a claimed privilege applies.
Defendant Robert Jacoby has withheld two categories of documents sought by FSLIC: documents relating to Crusader Savings and Loan Association of Rosemont, Pennsylvania (“Crusader”); and documents created after Jacoby left Sunrise. FSLIC claims that relationships and transactions between Crusader, Sunrise and Blank Rome, including advising, a planned merger, and loan sales, make the Crusader documents relevant to, or reasonably calculated to lead to evidence relevant to, the allegations against Blank Rome and the director and officer defendants. Jacoby contends that these documents are irrelevant because “only those documents which relate to loan administration or underwriting are producible.” Defendant Jacoby’s Response to FSLIC’s Motion to Compel Production of Documents, at 4.
Jacoby correctly states that FSLIC’s allegations of negligence and breaches of fiduciary duties by the defendant officers and directors relate to loan administration and underwriting; these allegations, however, are specifically “not limited to the examples [of loans] outlined in the Complaint.” Moreover, FSLIC alleges negligence, breach of contract, aiding and abetting violations of fiduciary duties, and conflict of interest by Blank Rome in connection with loan closings and advice to Sunrise. Because it is not apparent from the descriptions before this Court whether any or all of the Crusader documents are relevant to these allegations, I will ask the Special Master to review the documents and to order their production if he determines, in light of the allegations of FSLIC’s First Amended Complaint, that they are discoverable under Rule 26(b)(1).
Of the second group of documents sought by FSLIC, documents created after Jacoby left Sunrise, Jacoby has withheld “only those documents created after his departure from Sunrise that do not concern activities which occurred at Sunrise during his employment; documents relating to the operations of Sunrise during Jacoby’s employment, regardless of when created, have been produced.” Defendant Jacoby’s Response to FSLIC’s Motion to Compel Production of Documents, at 8. FSLIC correctly argues that relevant documents must be produced regardless of their date of preparation, but presents no theory of relevance for documents Jacoby created after he left Sunrise which do not concern activities at Sunrise during his employment. I therefore will not compel production of these documents.
Robert Jacoby has moved to compel production of seven memoranda prepared by Taber in June, 1985, while he was Executive Vice President and acting president of Sunrise. At that time, a federal grand jury was investigating certain individual Sunrise borrowers and their transactions with Sunrise. Pursuant to the advice of his personal counsel Bruce Wagner, and of Sunrise’s counsel regarding the grand jury investigation, Rebekah Poston, Taber prepared these memoranda “in order to create a record of [his] communications with any potential targets of the federal grand jury investigation ... to protect [himself] from any potential criminal proceedings.” Taber’s Memorandum of Law in Opposition to Jacoby’s Motion to Compel, Exhibit A (Taber Affidavit), at 1. Taber has withheld the memoranda as protected by the attorney client, work product and joint defense privileges.
On the present record, I find that work product protection applies to these documents. Taber has documented by affidavits his claim that he prepared the memoranda in anticipation of the grand jury proceedings. Jacoby argues that the memoranda are not protected because they were prepared in anticipation of the grand jury proceedings, not in anticipation of this litigation. But work product prepared in anticipation of one action are protected in a subsequent action “where both actions were proceeding at the same time and both involved the identical subject matter.” In re Grand Jury Investigation, 557 F.Supp. 1053, 1057 (E.D.Pa.1983) (citing In re Grand Jury Proceedings (FMC Corp.), 604 F.2d 798, 803 (3d Cir.1979)). As Taber notes, the original complaints underlying this litigation “were filed during the time in which the grand jury investigation was proceeding and prior to the time that any indictments were issued by the grand jury.” Taber’s Memorandum of Law in Opposition to Jacoby’s Motion to Compel, at 10. In addition, both the grand jury investigation and the present litigation concern relationships and transactions between certain borrowers and Sunrise.
Jacoby also argues that Taber waived work product protection by disclosing the documents to Poston and defendant Treadwell, Sunrise’s in-house corporate counsel. Yet none of the three factors identified in In re Subpoenas Duces Tecum, 738 F.2d at 1372, as important in determining whether work product protection has been waived are present here. Taber did not disclose the memoranda to adversaries, but to counsel for Sunrise, which had interests in common with Taber regarding the grand jury investigation. See In re Doe, 662 F.2d at 1081. Taber disclosed the memoranda under an understanding of confidentiality and of pursuing a joint defense, and therefore had a reasonable basis for believing that Poston and Treadwell would keep the materials confidential. Finally, no policy inherent in the work product privilege mandates waiver under the circumstances of Taber’s disclosure.
Jacoby does not contend that he has substantial need of the Taber memoranda, that he cannot obtain the substantial equivalent without undue hardship, or that they contain information directly at issue in this litigation. As a result, I will not compel production of the memoranda.
FSLIC has filed motions to compel production of documents withheld by Treadwell, Devaney and Gitomer under individual claims of attorney client privilege and/or work product protection. In his response to FSLIC’s motion, Treadwell states that he will produce certain requested documents, but withhold two groups of documents under the attorney client privilege and work product protection: notes of interviews of various individuals taken by Rebekah Poston in connection with her representation of Treadwell individually, Sunrise and/or New Sunrise; and notes taken by Treadwell as part of an investigation he conducted on his own behalf to assist Rebekah Poston in his defense. Similarly, Devaney states in his response that certain documents sought by FSLIC “were prepared within the context of Devaney’s attorney-client relationship with Marsha Lyons, Esquire.” Memorandum of Devaney in Opposition to FSLIC’s Motion to Compel, at 2. Gitomer also withholds documents under claims of individual attorney client privilege and work product protection.
Although FSLIC contended in the memoranda supporting its motions to compel production by Treadwell and Devaney that any privileges attached to these documents belong to Sunrise (and therefore to FSLIC), and not to Treadwell and Devaney individually, FSLIC apparently has abandoned this contention.
In addition, FSLIC has not contested Gitomer’s assertion of individual attorney client privilege. As a result, I will not compel production of documents withheld by Treadwell, Devaney or Gitomer under assertions of individual attorney client privilege. If FSLIC did not intend to abandon its contentions regarding these documents, it may file another motion to compel stating its argument why the claimed privileges belong to FSLIC, and not to Treadwell, Devaney or Gitomer.
All defendants except the Blank Rome Defendants have moved to compel production of documents by FSLIC, and to enforce subpoenas duces tecum issued at the request of Blank Rome to Beach Federal Savings and Loan Association (“Beach”), AmeriFirst Federal Savings and Loan Association (“AmeriFirst”) and the Federal Asset Disposition Association (“FADA”) in December 1986 for depositions scheduled in January 1987, and to the Federal Home Loan Bank of Atlanta (“FHLB-A”) in May 1987 for a deposition scheduled in June 1987. The documents sought include: loan and work-out documents generated after Sunrise went into receivership on July 18, 1985 relating to current unresolved “on-going negotiations” to collect on loans or to foreclose and sell the property securing loans; documents relating to collection litigation since Sunrise went into receivership; and documents relating to the pre-receivership examination, regulation and supervision of Sunrise by FSLIC and the Federal Home Loan Bank Board. The moving defendants also have moved for imposition of sanctions against FSLIC for producing documents without the “brief description by file (or other unit)” required by Section V, Paragraph G of Pretrial Order No. 5 (entered March 16, 1987).
FSLIC argues that these motions should be denied for a variety of reasons. It contends that this Court either cannot or should not enforce subpoenas issued by other District Courts against non-parties to this litigation. It argues that the documents sought by the moving defendants are irrelevant, unduly burdensome to produce and/or highly confidential and sensitive. And although it admits failing to submit a description of produced documents, FSLIC maintains that the parties reached an understanding waiving this requirement in exchange for accelerated production.
The subpoenas in question were issued to Beach and AmeriFirst by the U.S. District Court for the Southern District of Florida, and to FADA and FHLB-A by the U.S. District Court for the Northern District of Georgia. FSLIC does not argue that the Florida and Georgia Courts could not issue the subpoenas, but rather that only those Courts may enforce their subpoenas under F.R.C.P. Rules 37 and 45. FSLIC concludes that “this Court is not empowered to hail non-resident non-parties into this Court and order them to produce documents demanded by subpoenas issued by foreign district courts.”
The Judicial Panel on Multidistrict Litigation consolidated the Sunrise actions filed in the Eastern District of Pennsylvania and the Southern District of Florida in this District for “centralized pretrial proceedings” under 28 U.S.C. § 1407. Docket No. 655 Transfer Order, Judicial Panel on Multidistrict Litigation, December 10, 1985. Section 1407(b) provides that “[t]he judge or judges to whom such actions are assigned ... may exercise the powers of a district judge in any district for the purpose of conducting pretrial depositions in such coordinated or consolidated pretrial proceedings.” Under this section, as the Court of Appeals for the District of Columbia Circuit observed in In re Corrugated Container Antitrust Litigation, 662 F.2d 875 (D.C.Cir.1981),
[t]he deposition proceedings remain anchored in the courts of the districts where they are being conducted, but because of the obvious policy reasons for allowing a single judge to preside over the disparate activity in a multidistrict case, the multidistrict judge is granted the same powers as a judge of those courts where the depositions are being taken.
662 F.2d at 880-881 (citations omitted)
Section 1407(b) does not authorize this Court to “reach out, assert jurisdiction, and compel the non-party disputants to the out-of-district controversy to appear initially in this district.” In re Uranium Antitrust Litigation, 503 F.Supp. 33, 35 (N.D.Ill. 1980). But it does authorize a multidistrict judge to “go to other districts to hear and decide motions to compel discovery from non-parties.” 503 F.Supp. at 35. See also In re IBM Peripheral EDP Devices Antitrust Litigation, 411 F.Supp. 791, 792 (J.P.M.L.1976) (holding that § 1407(b) “plainly and clearly empowers a transferee judge to preside at depositions in any federal district without the specific authorization of the Panel” on Multidistrict Litigation).
So, for example, when the Corrugated Container Antitrust Litigation was consolidated for pretrial proceedings in the Southern District of Texas before Judge Singleton, he invoked § 1407(b) to preside over depositions in several other districts by telephone from Texas. Judge Singleton thus exercised “the powers of a district judge of the District Court for the Southern District of New York” to “compel Fleischacker, a non-party deponent, to answer questions at a deposition conducted in the Southern District of New York,” and to hold him in contempt for refusing to answer. In re Corrugated Container Anti-Trust Litigation, 620 F.2d 1086, 1090-1091 (5th Cir.1980), reh. denied, 625 F.2d 1016 (5th Cir.1980), cert. denied sub nom. Adams Extract Co. v. Franey, 449 U.S. 1102, 101 S.Ct. 897, 66 L.Ed.2d 827 (1981). Similarly, Judge Singleton exercised “the powers of the District Court for the District of Columbia” to compel a deponent to answer questions at a deposition in Washington, D.C., and to hold that deponent in contempt for refusing to answer. In re Corrugated Container Antitrust Litigation, 662 F.2d at 878-881. And Judge Singleton exercised his power under § 1407(b) “to sit as a district judge in Illinois” to compel deposition testimony of a third deponent in Chicago, and to hold him in contempt for refusing to answer. In re Corrugated Container Antitrust Litigation, 661 F.2d 1145, 1147-1148 (7th Cir.1981), affirmed sub nom. Pillsbury Co. et al. v. Conboy, 459 U.S. 248, 103 S.Ct. 608, 74 L.Ed.2d 430 (1983).
Thus, a multidistrict judge may decide a motion to compel a non-party in other districts even if he or she is not physically situated in those districts. Therefore, in this litigation I may, pursuant to § 1407(b), exercise the powers of the U.S. District Courts for the Southern District of Florida and the Northern District of Georgia to enforce the subpoenas issued by those Courts against Beach, AmeriFirst, FADA and FHLB-A. These non-parties are entitled, however, to produce documents in the districts within which they are situated. The moving defendants and the non-parties are encouraged to agree to an appropriate procedure for copying and review of those documents whose production is required herein. The Special Master will be asked to assist in this effort.
The first group of documents sought by the moving defendants consists of loan and work-out documents generated after Sunrise went into receivership. FSLIC has produced all post-receivership loan and work-out documents in its possession except for those relating to “on-going work out or sale negotiations that currently are unresolved and not finalized.” Opposition of FSLIC to the Motion to Compel Documents Filed by DHS and the Outside Directors, at 13. FADA has produced all its post-receivership loan and work-out documents generated prior to January 1, 1987 except for those relating to “on-going negotiations.” Beach has offered to produce its post-receivership loan servicing documents, and the post-receivership files it had stored for FSLIC have been produced by FSLIC. AmeriFirst and FHLB-A apparently do not possess any documents in this category.
FSLIC offers three grounds for withholding the “on-going negotiations” documents. It contends that these documents are irrelevant to the issues in this litigation, that they would be unduly burdensome to collect and produce, and that they contain extremely sensitive information the production of which “would hinder the assets manager’s ability to dispose of the property.” The moving defendants argue that these documents are relevant to a number of issues, and that the Protective Order will adequately protect any sensitive information.
Both FSLIC’s and the moving defendants’ arguments have some merit. On-going work-out documents may be relevant, or may be reasonably calculated to lead to evidence that is relevant, to a number of issues in this litigation, including: whether defenses exist relating to pre-receivership acts by former Sunrise officials; whether the defendants met their duties of care; and whether persons other than FSLIC or the defendants caused any of Sunrise’s losses. But collection and production of these documents, more of which are generated each day all over the country, would likely prove burdensome to FSLIC and FADA.
Review of a representative sample of these documents may prove helpful in striking a balance between the interests in production of relevant information and in avoiding burdensome production, and may be the only way to determine whether the Protective Order will adequately protect sensitive information in these documents. I therefore will ask the Special Master to review a representative sample of the ongoing work-out documents to determine if a reasonable accommodation between relevance and burdensomeness can be drawn, and whether the Protective Order offers sufficient protection of the documents.
The second group of documents sought by the moving defendants consists of litigation files compiled by FSLIC in suits arising out of Sunrise since Sunrise entered receivership. FSLIC has produced “all non-privileged litigation files in the possession of the Receiver, [but] it has not collected hundreds of litigation files from numerous outside counsel that may not be in the Receiver’s possession.” Opposition of the FSLIC to the Motion to Compel Documents Filed by DHS and the Outside Directors, at 15. FSLIC also has produced a list of the 218 pending suits relating to Sunrise, but contends that litigation files from these suits would be irrelevant and unduly burdensome to produce. In addition, FSLIC points out that the requested documents are public records filed in courthouses around the country, and could be obtained just as easily by the moving defendants as by FSLIC. The moving defendants argue that these documents would be relevant to whether loans were prudently made, and to determining the value of collateral and actual losses suffered.
“[I]t is ‘not usually a ground for objection that the information is equally available to the interrogator or is a matter of public record.’ ” Petruska v. Johns-Manville, 83 F.R.D. 32, 35 (E.D.Pa.1979) (citing 8 Wright & Miller, Federal Practice and Procedure, Civil § 2014, at 111). But this request for documents is exceptional. FSLIC is a party to 218 suits relating to Sunrise filed in courthouses all over the country, and is represented by a number of law firms hired as outside counsel. Requiring FSLIC to collect litigation files from all of the firms for all 218 actions would be extremely burdensome. Since the moving defendants may obtain these documents just as easily as FSLIC, they should be required to weigh the expense and burden of obtaining them against their possible relevance. As a result, I will not require FSLIC to produce the post-receivership litigation documents.