Hawk Mountain LLC et al v. RAM Capital Group LLC et al

Filing 400

MEMORANDUM ORDER - re #386 Joint MOTION for Hearing To Resolve Discovery Dispute. Signed by Judge Sherry R. Fallon on 2/19/2016. (lih)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
THE HAWK MOUNTAIN LLC, GIGI
JORDAN, MICHELLE E. MITCHELL,
and KIMBERLY JORDAN,

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Plaintiffs,

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RAYMOND A. MIRRA, JR., RAM
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CAPITAL GROUP, LLC D/B/A RAM
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CONSULTING GROUP, LLC, RAM
)
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CAPITAL II, LLC, RAM REALTY
HOLDINGS, LLC, JOSEPH A. TROLIO, )
JR., JOSEPH T. MOLIERI, BRUCE
)
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KOLLEDA, MARK A. KOVINSKY,
JOSEPH J. TROPIANO, JR., LLC,
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BERNARDEIZEN,PATRICKJ. WALSH,)
DANIELLESTEWART,RENEEM.
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SIGLOCH, FREDERICK FORTE,
)
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VIRGINIA L. HALL, BARI KUO, and
SHELLY DEMORA,
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)
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Defendants.
v.

Civil Action No. 13-2083-SLR-SRF

MEMORANDUM ORDER
At Wilmington this \9th day of February, 2016, the court having considered the letter
briefs and arguments presented by the parties regarding the RAM Defendants' request for an
order recognizing a subject matter waiver of the attorney-client privilege with respect to the
contents of the Woodhouse Affidavit, (D.I. 390; D.I. 394; 2/16/16 Tr.), IT IS HEREBY
ORDERED that the RAM Defendants' motion is granted for the reasons set forth below.

1. Background. During plaintiff Gigi Jordan's ("Jordan") criminal prosecution, she
publicly filed a fact affidavit prepared by her former attorney, Gay Woodhouse ("Woodhouse"),
which described the content of certain communications between Jordan and Woodhouse in late
2009 and early 2010 (the "Woodhouse Affidavit"). (D.I. 390, Ex. A) Specifically, the

Woodhouse Affidavit identified the concerns expressed by Jordan that defendant Ray Mirra
("Mirra") had committed fraud against her and intended to have her harmed, and described
Woodhouse's advice to help Jordan cease relying on Mirra and his associates for help with
financial services. (Id) Jordan also described the legal advice she received from Woodhouse in
an email sent on February 5, 2010, which was sent to a number of recipients, including nonattomeys, and was subsequently made public. (Id, Ex. E) Specifically, the email stated that
Woodhouse "advised [Jordan] to effect a final attempt to liquidate all of the assets under old
accounts that [Mirra] had anything to do with including the swiss [sic] money and get away from
[Mirra] entirely. Get [her] own accountants, lawyers, etc." (D.I. 390, Ex.Eat 10)
2. On October 22, 2015, the RAM Defendants filed a notice of subpoena requiring
Woodhouse to testify at a deposition to be held on December 10, 2015. (D.I. 296) On
November 24, 2015, Woodhouse's counsel contacted the RAM Defendants, copying plaintiffs'
counsel and stating Woodhouse's intention to assert the attorney-client privilege during the
deposition. (D.I. 390, Ex.Bat 4-5) On the following day, the RAM Defendants responded that
the Woodhouse Affidavit filed in Jordan's criminal prosecution publicly disclosed privileged
communications between Woodhouse and Jordan, thereby serving as a subject matter waiver of
the privilege. (Id. at 3) On January 4, 2016, the parties met and conferred, and agreed not to
schedule Woodhouse's deposition until after the court resolved the issue of the scope of the
privilege waiver. (D.I. 390 at 2; 2116/16 Tr. at 8:22-9:23)

3. Legal Standard. Rule 502 of the Federal Rules of Evidence adopts a national
standard to govern the intentional waiver of the attorney-client privilege. Rhoads Indus., Inc. v.
Bldg., Materials Corp. ofAm., 254 F.R.D. 216, 217-18 (E.D. Pa. 2008). Rule 502(a) provides

that a waiver of the attorney-client privilege "extends to an undisclosed communication or

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information in a federal or state proceeding only if: (1) the waiver is intentional; (2) the disclosed
and undisclosed communications or information concern the same subject matter; and (3) "they
ought in fairness to be considered together." Fed. R. Evid. 502(a); see also United States v.
Veolia Env't N Am. Operations, Inc., C.A. No. 13-03-LPS, 2013 WL 5779653, at *8 (D. Del.
Oct. 25, 2013). "Thus, under Rule 502(a), the deliberate disclosure of privileged or protected
information may lead to the compelled disclosure of additional privileged or protected
information, if they concern the same subject matter and ought in fairness to be considered
together." Shionogi Pharma, Inc. v. Mylan Pharm., Inc., C.A. No. 10-1077, 2011WL6651274,
at *3 (D. Del. Dec. 21, 2011).
4. The Explanatory Note to Rule 502 provides guidance regarding application of the
fairness prong:
The Rule provides that a voluntary disclosure in a federal proceeding ... if a
waiver, generally results in a waiver only of the communications or information
disclosed; a subject matter waiver ... is reserved for those unusual situations in
which fairness requires a further disclosure of related, protected information, in
order to prevent a selective and misleading presentation of evidence to the
disadvantage of the adversary .... Thus, subject matter waiver is limited to
situations in which a party intentionally puts protected information into the
litigation in a selective, misleading and unfair manner.
Fed. R. Evid. 502(a) advisory committee's note to 2008 amendment. "The idea is to limit
subject matter waiver to situations in which the privilege holder seeks to use the disclosed
material for advantage in the litigation but to invoke the privilege to deny its adversary
access to additional materials that could provide an important context for proper
understanding of the privileged materials." Charles Alan Wright et al., Federal Practice
& Procedure vol. 8, § 2016.2 (3d ed. 1995, Suppl. 2010). The scope of a subject matter

waiver is generally narrow, even when the disclosure of attorney-client privileged

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information is intentional. Seyler v. T-Systems NA., Inc., 771 F. Supp. 2d 284, 287-88
(S.D.N.Y. 2011).
5. Rule 502(c) specifically applies to the scope of a waiver in federal court resulting

from a disclosure made in state court. The Rule provides that,
[w]hen the disclosure is made in a state proceeding and is not the subject of a
state-court order concerning waiver, the disclosure does not operate as a waiver in
a federal proceeding if the disclosure: (1) would not be a waiver under this rule if
it had been made in a federal proceeding; or (2) is not a waiver under the law of
the state where the disclosure occurred.
Fed. R. Civ. P. 502(c). The explanatory note to this subdivision indicates that, when "the state
and federal laws are in conflict on the question of waiver ... the proper solution for the federal
court is to apply the law that is most protective of privilege and work product."
6. New York case law provides that a client may waive the attorney-client privilege (1)

by placing "the subject matter of the privileged communication in issue or where invasion of the
privilege is required to determine the validity of the client's claim or defense and application of
the privilege would deprive the adversary of vital information," Tupi Cambios, S.A. v.

Morgenthau, 989 N.Y.S.2d 572, 575 (N.Y. Sup. Ct. 2014) (quoting Jakobleff v. Cerrato,
Sweeney & Cohn, 97 A.D.2d 834, 835 (N.Y. App. Div. 1983)); or (2) "by placing the subject
matter of counsel's advice in issue and by making selective disclosure of such advice," id
(quoting Oreo Bank, NV. v. Proteinas Del Pacifico, S.A., 179 A.D.2d 390 (N.Y. App. Div.
1992)). These forms of"at issue" waiver continue to be recognized under New York law
following the amendments to Rule 502. See Tupi Cambios, 989 N.Y.S.2d at 575; People ex rel.

Cuomo v. Greenberg, 63 A.D.3d 576, 577-78 (N.Y. App. Div. 2009).

7. Analysis. As a preliminary matter, the court concludes that this issue is ripe for
review. The parties agree that the privilege has been waived with respect to the Woodhouse

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Affidavit, and the only remaining dispute is to determine whether the scope of the waiver
extends to the subject matter of the Woodhouse Affidavit. The cases cited by plaintiffs in
support of the proposition that a ruling from the court at this time would constitute an advisory
opinion are inapposite, because each of those cited cases involved a request for a protective order
prior to a deposition, as opposed to the establishment of a subject matter waiver based on
evidence already in the record. See US. v. Educ. Mgmt. LLC, 2014 WL 1391079, at *5 (W.D.
Pa. Feb. 7, 2014); V. Mane Fils, S.A. v. Int'! Flavors & Fragrances, Inc., 2008 WL 3887621, at
*4 (D.N.J. Aug. 20, 2008); In re Arthur Treacher's Franchisee Litig., 92 F.R.D. 429, 437-38
(E.D. Pa. 1981) (dealing with a motion for a protective order, not a deposition); EEOC v.
Lifecare Mgmt. Servs., LLC, 2009 WL 772834, at *2 (W.D. Pa. Mar. 17, 2009); EEOC v. Corr.
Corp. ofAm., 2007 WL 4403528, at *2 (D. Colo. Dec. 13, 2007).
8. Moreover, the record reflects that the parties reached an express agreement to
postpone the Woodhouse deposition pending the court's resolution of this issue during the meet
and confer process. (2/16/16 Tr. at 8:22-9:23) Subsequent efforts by plaintiffs' counsel to allege
that the Woodhouse deposition must go forward before the court may properly resolve the
dispute regarding the privilege waiver run contrary to the intended purpose of the meet and
confer process. See Order Regarding Discovery Matters, rev. 2/5/13 at n.1 ("Counsel are
expected to first verbally discuss the issues/concerns before seeking the Court's intervention.").
9. Next, the court must determine whether New York law is more protective than Rule
502 in accordance with the advisory committee's notes to Rule 502(c). The court concludes that
it is not. The explanatory notes to Rule 502(a) provide that "a subject matter waiver ... is
reserved for those unusual situations in which fairness requires a further disclosure of related,
protected information, in order to prevent a selective and misleading presentation of evidence to

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the disadvantage of the adversary." Fed. R. Evid. 502(a) advisory committee's note to 2008
amendment. This principle is no less protective than the "selective disclosure" waiver
recognized under New York state law, which provides that a party waives the attorney-client
privilege "by placing the subject matter of counsel's advice in issue and by making selective
disclosure of such advice." Oreo Bank, 179 A.D.2d at 390 (citing Village Bd ofPleasantville v.
Rattner, 130 A.D.2d 654 (N.Y. App. Div. 1987)); see also Am. Re-Ins. Co. v. United States Fid
& Guar. Co., 40 A.D.3d 486, 492 (N.Y. App. Div. 2007) ("It reflects the principle that privilege
is a shield and must not be used as a sword."). In view of the fact that no conflict exists and New
York state law provides no greater protection than Rule 502, the court wilt apply federal law in
accordance with the advisory notes to Rule 502(c).

10. Turning to an analysis of the scope of the privilege waiver in the present case
pursuant to Rule 502, the court notes that the first two prongs of the test are met because there is
no dispute that the waiver is intentional, and there is no dispute that the undisclosed information
sought by the RAM Defendants concerns the same subject matter as the Woodhouse Affidavit.
(D.I. 394 at 2) ("It cannot be disputed that the Woodhouse affidavit disclosed communications
between she and Ms. Jordan that typically would fall well within the attorney-client privilege.")
The parties' dispute centers on the third prong, regarding whether the information disclosed
~ught

in fairness be considered with the information sought.

11. In the present case, Jordan intentionally filed the Woodhouse Affidavit in her state
court criminal proceeding in support of her motion for bail. (D.I. 390, Ex. A) The Woodhouse
Affidavit is a factual summary of the advice provided by Woodhouse to Jordan in 2009 and 2010
in Woodhouse's capacity as Jordan's attorney. (Id) The case law supports a subject matter
waiver under such circumstances. "[C]alling one's attorney as a fact witness in a prior

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proceeding constitutes a waiver of the attorney-client privilege, at least regarding the subject of
the testimony adduced in the prior proceeding." US. v. Titchell, 261 F.3d 348, 352 (3d Cir.
2001). The information that the RAM Defendants intend to pursue during Woodhouse's
deposition relates to the same subject matter as the Woodhouse Affidavit. Jordan cannot fairly
use Woodhouse' s characterizations of her legal advice in support of her motion for bail while
shielding further exploration of the nature of that advice during her deposition under the guise of
the attorney-client privilege.
12. Conclusion. In view of the foregoing analysis, the RAM Defendants' motion is

granted as to the subject matter waiver over certain communications between Jordan and
Woodhouse set forth in the Woodhouse Affidavit. Specifically, the attorney-client privilege does
not apply to questions at the Woodhouse deposition regarding the subject matter of the
Woodhouse Affidavit. The subject matter waiver is limited to the concerns expressed by Jordan
that Mirra had committed fraud against her and intended to have her harmed, and that Jordan
wanted to cease relying on Mirra and his associates for help with financial services.
13. This Memorandum Order is filed pursuant to 28 U.S.C. § 636(b)(l)(A), Fed. R. Civ.

P. 72(a), and D. Del. LR 72.l(a)(2). The parties may serve and file specific written objections
within fourteen (14) days after being served with a copy of this Memorandum Order. Fed. R.
Civ. P. 72(a). The objections and responses to the objections are limited to ten (10) pages each.
14. The parties are directed to the court's Standing Order For Objections Filed Under
Fed. R. Civ. P. 72, dated October 9, 2013, a copy of which is available on the court's website,
www.ded.uscourts.gov.

ES MAGISTRATE JUDGE .

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