Stender et al v. Archstone-Smith Operating Trust
Filing
486
ORDER granting in part and denying in part 459 Plaintiff's Privilege Motion. Plaintiffs Privilege Motion is GRANTED as against the Archstone Defendants tothe following extent: In connection with asserting an advice-of-counsel defense, the Arch stone Defendants have waived the attorney-client privilege with respect to all documents and communications in which Archstone employees and/or Trustees received, discussed, reflected on, or reacted to the advice of counsel on the rights of A-1 Unith olders under the Declaration of Trust, as well as the contractual and fiduciary obligations the Archstone Defendants had with respect to A-1 Unitholders; and Plaintiffs Privilege Motion is DENIED AS MOOT as against the Tishman Defendants in light of the Tishman Defendants choice to withdraw their affirmative defenses of Good Faith and Transaction Permitted by Declaration of Trust. Ordered by Judge William J. Martinez on 01/22/2016.(cthom, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 07-cv-02503-WJM-MJW
STEVEN A. STENDER, and
INFINITY CLARK STREET OPERATING, L.L.C.,
on behalf of themselves and all others similarly situated,
Plaintiffs,
v.
ARCHSTONE-SMITH OPERATING TRUST et al.,
Defendants.
ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFFS’ PRIVILEGE MOTION
Before the Court is Plaintiffs’ Motion for Determination That the Defendants May
Not Assert Attorney-Client Privilege with Respect to Legal Advice Given on Treatment
of A-1 Unitholders and A-1 Units (“Privilege Motion”). (ECF No. 459.) As explained
below, the course of briefing has mooted the Privilege Motion as to the Tishman
Defendants,1 and also revealed that the Archstone Defendants2 do not oppose the relief
Plaintiffs originally requested. Accordingly, the Privilege Motion will be granted as to the
Archstone Defendants and denied as moot as to the Tishman Defendants.
1
The “Tishman Defendants” are Tishman Speyer Development Corporation, River
Holding, LP, River Acquisition (MD), LP, and River Trust Acquisition (MD), LLC.
2
The “Archstone Defendants” are Archstone-Smith Trust, Archstone-Smith Operating
Trust, Archstone Smith Multifamily Series I Trust, Ernest A. Gerardi, Ruth Ann M. Gillis, Ned S.
Holmes, Robert P. Kogod, James H. Polk, III, John C. Schweitzer, Jr., R. Scot Sellers, Robert
H. Smith, Stephen R. Demeritt, Charles Mueller, Jr., Caroline Brower, Mark Schumacher, and
Alfred G. Neely.
Familiarity with the extensive factual background and procedural history of this
case is presumed. The Privilege Motion argues that the Archstone Defendants have
already produced documents containing attorney advice regarding the rights of A-1
Unitholders under the Merger (see ECF No. 458 at 4–7), 3 and, as a result, the
Archstone Defendants have waived the attorney-client privilege as to the “Subject
Matter,” which Plaintiffs define as “the rights of A-1 Unitholders under the Declaration of
Trust (‘DOT’), as well as the contractual and fiduciary obligations the Archstone
Defendants had with respect to A-1 Unitholders” (id. at 2). The Privilege Motion further
argues that both the Archstone Defendants and Tishman Defendants have waived the
attorney-client privilege because they are asserting affirmative defenses that are, in
essence, advice-of-counsel defenses. (Id. at 15–16.) Indeed, say Plaintiffs, “[i]t is
inconceivable that the advice of counsel will not be relied upon to support Defendants’
affirmative defenses. Therefore, Defendants have put the advice at issue and [the]
privilege has been waived.” (Id. at 16.)
The Tishman Defendants’ Response and Plaintiffs’ Reply revealed that the
Tishman Defendants are withdrawing their affirmative defenses of “Good Faith” and
“Transaction Permitted by Declaration of Trust,” thus mooting the Privilege Motion as to
them. (See ECF No. 469 at 8; ECF No. 474 at 2; ECF No. 476; ECF No. 478.)
The Archstone Defendants, for their part, countered that the Privilege Motion
was also moot as to them because “they have agreed that communications regarding
legal advice provided by Archstone’s outside counsel . . . to Archstone” regarding the
3
All ECF page citations are to the page number in the ECF header, which does not
always match the document’s internal pagination.
2
Subject Matter (as Plaintiffs defined it) “shall no longer be withheld on grounds of
attorney-client privilege.” (ECF No. 470 at 2.) The Archstone Defendants insisted,
however, that “the covered ‘Subject Matter’ does not include,” among other things,
“protected attorney-work product.” (Id. at 3.)
In reply, Plaintiffs countered that the Archstone Defendants were really only
agreeing to give up a subset of what Plaintiffs seek: “communications concerning
(1) advice (2) from [outside counsel] (3) to a single entity, Archstone.” (ECF No. 473
at 3 (emphasis in original).) According to Plaintiffs,
[a] full production relating to the Subject Matter would
include such things as inquiries to counsel from the
Archstone Defendants, individually or as a group; actions
taken in response to the legal advice; internal
communications about the advice among individuals,
including the Trustees; discussions between [outside
counsel], the Trustees, and/or management, be they
individually or together; discussions of the Tishman
Defendants’ desire to eliminate A-1 Units in the face of the
fiduciary and contractual obligations of which the Board and
management were advised; and all other materials and
information concerning legal advice regarding duties to—and
the rights of—A-1 Unitholders.
(Id.) Thus, Plaintiffs argued that the Privilege Motion was not moot.
As to the Archstone Defendants’ insistence that their proposed waiver does not
include work product, Plaintiffs stated that any ruling from this Court on that issue
“would amount to an advisory opinion” because the Privilege Motion
is directed to a subject matter waiver of attorney-client
privilege. It seeks nothing beyond that. There may well be
developments in discovery which justify Plaintiffs’ challenge
to the assertion of work product . . . . At that time, the
parties and the Court will have the benefit of a record and
briefs on whatever issues are in dispute. But with no
controversy now before the Court concerning these matters,
3
the Court should refrain from issuing an advisory opinion or
ruling on hypothetical scenarios that are not the subject of
Plaintiffs’ motion.
(Id. at 4 (emphasis added).)
The Court ordered the Archstone Defendants to file a surreply. (ECF No. 477.)
The Archstone Defendants there confirmed that, as Plaintiffs predicted, they “intend to
assert an advice-of-counsel defense” and accordingly
agree to waive the attorney-client privilege to the extent
defined in Plaintiffs’ opening memorandum. Specifically, in
connection with their advice-of-counsel defense, the
Archstone Defendants agree to waive the attorney-client
privilege for all documents and communications in which
Archstone employees or Trustees received, discussed,
reflected on, or reacted to “the advice of counsel on the
rights of A-1 Unitholders under the Declaration of Trust
(‘DOT’), as well as the contractual and fiduciary obligations
the Archstone Defendants had with respect to A-1
Unitholders” (defined by Plaintiffs as the “Subject Matter”).
This agreement also encompasses the examples of
documents and communications that Plaintiffs referred to in
their reply brief (except for an undefined, catch-all example),
and the Archstone Defendants agree not to withhold them
on the basis of the attorney-client privilege.
(ECF No. 479 at 2–3 (citation omitted).) The Archstone Defendants also submitted a
proposed order embodying what they believe to be the proper scope of the discovery to
which they are subject in light of the foregoing concession. (ECF No. 479-1 at 3.)
Plaintiffs responded with a Motion for Leave to File a Rejoinder to the Archstone
Defendants’ Sur-Reply (“Rejoinder Motion”). (ECF No. 480.) Plaintiffs argued that the
Archstone Defendants’ surreply revealed “for the first time” that an advice-of-counsel
defense is at issue (ECF 480 at 1 (emphasis in original))—as if this was completely
unexpected, despite Plaintiffs’ previous argument that Defendants’ failure to assert
4
such a defense would be “inconceivable” (ECF No. 458 at 16). Plaintiffs further argued
that the advice-of-counsel defense necessarily waives the work product protection as
well. (ECF No. 480 at 2.) Thus, the proposed order attached to the Archstone
Defendants’ surreply “describes the types of materials . . . Plaintiffs sought (and were
entitled to) before learning of the Archstone Defendants’ newly asserted defense,” but
is now “unduly restrictive and inconsistent with their actual discovery obligations” given
that work product has allegedly become open for inspection as well. (Id. at 1, 2
(emphasis in original).)
This Court denied the Rejoinder Motion (ECF No. 482). More importantly, the
Court does not hesitate to observe that the position it asserts borders on bad f aith.
Plaintiffs previously told this Court that any ruling on the work product question would
be “advisory” and that they seek “nothing beyond” materials that would otherwise be
subject to the attorney-client privilege. (ECF No. 473 at 4.) Plaintiffs made this
assertion under the assumption that the Archstone Defendants must be asserting an
advice-of-counsel defense. (ECF No. 458 at 15–16.) Thus, when Plaintiffs told this
Court that a work product waiver was not at issue, they must have also believed at that
time that a work product waiver was not at issue even if the Archstone Defendants
eventually asserted an explicit advice-of-counsel defense.
Plaintiffs agree that the Archstone Defendants’ proposed order properly states
the scope of discovery for which Plaintiffs argued in the Privilege Motion. The Court will
therefore adopt the proposed order’s language in its order below. As for work product,
the Court makes no ruling. If Plaintiffs can assemble a well-supported, good faith
5
argument that the advice-of-counsel defense necessarily entails a work product waiver,
Plaintiffs may bring a motion to that effect within a reasonable time.4 Otherwise, the
Court does not expect to see any such motion unless—to use Plaintiffs’ words—
“developments in discovery . . . justify Plaintiffs’ challenge to the assertion of work
product.” (ECF No. 473 at 4.) To be perfectly clear, the supposedly unexpected
assertion of the advice-of-counsel defense is not itself a “development[] in discovery.”
Accordingly, the Court ORDERS as follows:
1.
Plaintiffs’ Privilege Motion (ECF No. 459) is GRANTED IN PART and DENIED IN
PART;
2.
Plaintiffs’ Privilege Motion is GRANTED as against the Archstone Defendants to
the following extent: In connection with asserting an advice-of-counsel defense,
the Archstone Defendants have waived the attorney-client privilege with respect
to all documents and communications in which Archstone employees and/or
Trustees received, discussed, reflected on, or reacted to the advice of counsel
on the rights of A-1 Unitholders under the Declaration of Trust, as well as the
contractual and fiduciary obligations the Archstone Defendants had with respect
to A-1 Unitholders; and
3.
Plaintiffs’ Privilege Motion is DENIED AS MOOT as against the Tishman
Defendants in light of the Tishman Defendants’ choice to withdraw their
affirmative defenses of “Good Faith” and “Transaction Permitted by Declaration
of Trust.”
4
Plaintiffs’ arguments in their Rejoinder Motion are insufficient to establish this
sweeping proposition.
6
Dated this 22nd day of January, 2016.
BY THE COURT:
_________________________
William J. Martínez
United States District Judge
7
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