Newsome et al v. Lawson et al

Filing 149

MEMORANDUM OPINION regarding Objections to the magistrate judge's rulings (D.I. 126 , 128 ). Signed by Judge Richard G. Andrews on 12/12/2017. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

P. DAVID NEWSOME, JR., as Liquidating
Trustee ofMahalo Energy (USA), Inc.,
Plaintiff,
V.

JEFF G. LAWSON and GRANT A.
MACKENZIE,
Defendants.

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Civ. No. 14-842-RGA-MPT

MEMORANDUM OPINION

Laura Davis Jones, Esquire and James E. O'Neill, Esquire of Pachulski Stang Ziehl & Jones LLP,
Wilmington, Delaware. Counsel for Plaintiff. Of Counsel: Ali M.M. Mojdehi, Esquire and Janet
Dean Gertz, Esquire of Cooley LLP, San Diego, California.
James W. Semple, Esquire of Cooch and Taylor, P.A., Wilmington, Delaware. Counsel for
Defendants. Of Counsel: Paula J. Quillin, Esquire and Joseph R. Farris, Esquire ofFranden, Farris,
Quillin, Goodnight, & Roberts, Tulsa, Oklahoma.

December /

J--, 2017

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Plaintiff P. David Newsome, Jr. ("Plaintiff') is the liquidating trustee and successor-ininterest to the claims of the reorganized debtor Mahalo Energy (USA), Inc. ("Mahalo USA"). (D.I.
115). Plaintiff has asserted various claims against Defendants Jeff G. Lawson and Grant A.
MacKenzie (collectively, the "Defendants") based on their role as attorneys for both Mahalo USA
and its parent Mahalo Energy Ltd. ("Mahalo Canada"). (Id. at iii! 9, 84). The parties are currently
engaged in jurisdictional discovery, which has led to the present dispute. A magistrate judge
denied Plaintiffs motion to compel certain documents Defendants withheld as privileged. (D.I.
128). Presently before the court are Plaintiffs objections to the magistrate judge's rulings. (D.I.
129). For the reasons stated below, the court affirms in part and reverses in part the magistrate
judge's rulings.

I.

BACKGROUND

A. Factual Background
Mahalo USA was a Delaware corporation and wholly-owned subsidiary of Mahalo
Canada, a Canadian corporation headquartered in Calgary, Alberta. (D.I. 115 iii! 27, 80). On May
21, 2009, Mahalo USA filed for bankruptcy and Mahalo Canada filed for the Canadian equivalent
of bankruptcy. (Id. at

iii! 26,

28).

Defendants are corporate lawyers at Burnett, Duckworth &

Palmer, LLP, a Canadian law firm, and had an attorney-client relationship with both Mahalo USA
and Mahalo Canada. (Id. at

iii! 9,

84). Defendants also served as officers or directors of the

companies. Specifically, MacKenzie was the corporate secretary of both Mahalo USA and Mahalo
Canada, and Lawson was a director ofMahalo Canada. (Id. at if 84).

B. Procedural History
Plaintiff sued Defendants alleging breach of attorney fiduciary duty, attorney malpractice,
aiding and abetting breach of fiduciary duties, and aiding and abetting illegal distributions in

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violation of 8 Del. C. § 174. (Id. at iii/ 115-82). On August 28, 2014, Defendants filed a motion
to dismiss, asserting lack of personal jurisdiction. (D .I. 11 ). After briefing and oral argument, the
court entered an order granting Plaintiff leave to conduct jurisdictional discovery. (D.I. 35).
Plaintiff thereafter issued discovery requests which led to several discovery disputes. (D.I. 47,
D.I. 49, D.I. 50).
On May 12, 2015, the court referred the determination of all discovery disputes to a
magistrate judge. (D.I. 68). A ruling on the parties' discovery disputes was held in abeyance
pending, among other things, disposition of Plaintiffs motion to amend, which the court granted.
(D.I. 20, D.I. 59, D.I. 85). After Plaintiff filed his first amended complaint, Defendants filed their
second motion to dismiss. (D.I. 115, D.I. 116). The second motion to dismiss, like the first motion

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to dismiss, argued that the court lacked personal jurisdiction. (D.I. 116 at 5-8). Accordingly, the
parties requested that the court rule on the outstanding discovery disputes. (D.I. 117).

C. The Magistrate Judge's Rulings
The only portion of the discovery disputes currently before the court is whether Defendants
have improperly asserted privilege to withhold certain documents from production. Plaintiff
moved to compel production of the documents based on two exceptions to the attorney-client
privilege: the adverse-litigation exception recognized by the Third Circuit in In re Teleglobe
Communications Corp., 493 F.3d 345 (3d Cir. 2007), and the breach of duty exception codified at
Del. R. Evid. 502(d)(3). (D.I. 128 at 18:15-20, 21:24).

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judge found that the adverse-litigation exception was inapplicable, because Plaintiff was suing the

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joint attorney and not the other joint client. (See, e.g., D.I. 128 at 19:13-20:19). In addition, the

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On June 9, 2016, the magistrate judge held a discovery conference, and the transcript of
that conference served as the order of the court. (D.I. 126, D.I. 128). In general, the magistrate

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breach of duty exception was inapplicable, because it "has nothing to do with joint
representations." (See, e.g., id. at 32:12-19). More specifically, the magistrate judge made the
following six rulings to which Plaintiff objects:
THE COURT: [U]nder the Teleglobe case, the Court specifically stated,
and I quote, the great caveat of the joint client privilege is that it only protects
communications from compelled disclosures to parties outside the joint
representation. When former co-clients sue one another ... the default rule is that
all communications made in the course of the joint representation are
discoverable. The Teleglobe case differs from this case because in that case, the
subsidiary sued the parent. And there had been a joint representation involved
between the parent and the sub. Here [it is] not joint clients suing one another,
... it's one client ... suing the attorney for both clients. A waiver cannot occur
for the client who is not the party to the suit. .... In other words, if your argument
is we have a parent and a sub, the sub is now suing counsel who allegedly
represented both the parent and the sub, that parent [doesn't] lose attorney/client
privilege just because the sub has sued the attorney. That is a completely
different circumstance. And that's what I understand we have here and what we
didn't have in the Teleglobe case.
(D.I. 128 at 19:13-20:19).
THE COURT: [Y]ou're suggesting to me that the parent has given up ...
any claim of attorney/client privilege in any document that has any reference to
[Mahalo USA] because of the joint representation and [Mahalo USA is] now
suing through the trustee ... the attorneys that represented it [and] the parent. I
don't see how ... Teleglobe ... fits.
MR. MOJDEHI: Let me address that question which was the second point.
So Teleglobe gives us the general rule, and then the question is does this fall
within that general rule?
THE COURT: And the answer is no.
(Id. at 21 :4-21 ).

THE COURT: Then [Teleglobe] says when co-clients and their common
attorneys communicate with one another both communications are in confidence
for privilege purposes. Moreover, the waiving of attorney/client privilege
requires a consent. That consent [is in] regards to a client. Under the statements
there are other laws governing lawyers. And a client ... may unilaterally waive
the privilege as to its own communications with a joint attorney so long as those
communications concern only the waiving client. It may not, however,
unilaterally waive the privilege as to any other joint client communication or to
any of its communications that relate to the joint clients. And that was the
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finding by the Third Circuit. That was the finding of the law that was applicable
by the Third Circuit.
(Id at 24:2-19).

THE COURT: You may have a case in the Delaware statutes, but I am
saying to you I am going to follow the Teleglobe case on this, because the
Teleglobe case also considered that Delaware statute in its applications and
findings.
MR. MOJDEHI: But it wasn't dealing with -- for the reasons you have
stated, so we have got to take the general rule in Teleglobe and apply it to what
we have here.
THE COURT: But it has pointed out, you cannot -- just because I decide
to sue my attorney who is jointly representing somebody else, I cannot say -- I
mean, this would put attorney/client privilege on its head. And I don't agree with
the California case [Anten v. Super. Ct., 183 Cal. Rptr. 3d 422, 423 (Cal. Ct.
App. 2015)]. And I don't think the Third Circuit would, either.
(Id at 25:8-26:4; see also Id. at 22:1-9).

THE COURT: I think when we're talking about breach of a duty by a
lawyer or a client, I think that has nothing to do with joint representation by a
lawyer to two clients or by two lawyers to the same two clients. I think that has
to do with single lawyer or lawyer to that one client. It has nothing to do with
joint representation.
(Id at 32:12-19).

THE COURT: Well, Delaware has a similar statute. 1 I also think that part
of . . . the reason why this exception was made was the fact that when, for
example, ... a client sues a lawyer, the client cannot make the argument that the
lawyer cannot use in his or her defense any confidential information that was
provided by the lawyer to the client.
That's part of what happens under this breach of duty by the lawyer or
client aspect of it. But I could go back, the Tele globe case speaks volumes on
this, and the Teleglobe case also addressed these points more directly than
certainly this case did as far as the issues.
It was a thorough analysis and I'm standing by that. I understand what
was said by the Court of Appeals in California [in Anten], and that's fine, that's

The court is referring to the breach of duty exception codified at Del. R. Evid. 502(d)(3).
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their own interpretation. And you think that when it comes to the joint clients
common interest that that's a different situation?
MR. MOJDEHI: So, Your Honor-THE COURT: Because otherwise you just basically eviscerate the
attorney/client privilege for that one party who has nothing to do with the action,
who has not waived its rights, who has not waived anything at all, who is not
involved in the lawsuit.
(Id at 113:5-114:13).
II.

STANDARD OF REVIEW

Under Fed. R. Civ. P. 72(a), the district judge must consider timely objections to a
magistrate judge's ruling on any "pretrial matter not dispositive of a party's claim or defense."
Discovery orders are non-dispositive pretrial matters, even where questions of privilege are
involved. Lebovitz v. Hartford Ins. Co. ofthe Midwest, 918 F. Supp. 2d 422, 424 (W.D. Pa. 2013);
Shu/ton, Inc. v. Optel Corp., 1987 WL 19491, at *6 (D.N.J. Nov. 4, 1987). The magistrate judge's

legal conclusions are given de novo review. Wilmot v. Marriott Hurghada Mgmt., Inc., 2016 WL
3457007, at *1 (D. Del. June 22, 2016), aff'd, 2017 WL 4570664 (3d Cir. Oct. 13, 2017). The
district judge must "modify or set aside any part of the order that is clearly erroneous or is contrary
to law." Fed. R. Civ. P. 72(a).

III.

DISCUSSION

The magistrate judge relied on Teleglobe to hold that neither the adverse-litigation
exception nor the breach of duty exception were proper grounds to compel Defendants' production
of privileged documents from the joint representation of Mahalo USA and Mahalo Canada. (D.I.
128 at 19:13-20:19, 25:8-26:4, 113:5-114:13). Other courts addressing the same factual scenario
have uniformly reached a different conclusion: A joint client suing only the joint attorney may

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compel disclosure of privileged documents from the joint representation. 2 See Anten v. Super. Ct.,
183 Cal. Rptr. 3d 422, 423 (Cal. Ct. App. 2015); Bolton v. Weil, Gotshal & Manges LLP, 2005
WL 5118189, at *5-7 (N.Y. Sup. 2005); Farnsworth v. Van Cott, Bagley, Cornwall & McCarthy,
141 F.R.D. 310, 313 (D. Colo. 1992); Construction Unlimited Corp. v. Woodfield, 1992 WL
157511, at *2 (Conn. Super. June 17, 1992); Tunick v. Day, Berry & Howard, 486 A.2d 1147,
1149 (Conn. Super. 1984). These courts have rested their conclusion on the adverse-litigation
exception and/or the breach of duty exception. In light of the foregoing, the court will first address
the limits of Teleglobe, and then discuss the rationales of these other cases. Next, the court will
discuss the scope of discovery under the adverse-litigation exception, and why the magistrate judge
correctly ruled that Plaintiff is not entitled to every document that mentions Mahalo USA. Finally,
the court will address Defendants' argument that a joint attorney's conflict of interest allows him
to withhold privileged communications from a joint client, even though the communications were
made in the course of the joint representation. 3 (D.I. 131 at 3).
A. The Limits of Teleglohe
The parties did not cite, and the court did not find, any Delaware case addressing whether
a joint attorney, sued by only one of his joint clients, could withhold communications from the
joint representation on the basis of privilege. Instead, the parties cited, and the magistrate judge
relied on, the Third Circuit's decision in In re Teleglobe Communications Corp., 493 F.3d 345 (3d
Cir. 2007). (D.I. 128 at 18:15-20, 19:13-20:19). In that case, Teleglobe's subsidiaries (the

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Defendants did not cite, and the court did not find, any case with the opposite outcome,
i.e., where a joint attorney sued by only one of the joint clients was allowed to withhold
communications from the joint representation on the basis of privilege.

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The court will not address Defendants' argument raised in their response to Plaintiffs
objections that the documents are irrelevant. (D.I. 131 at 6-7). Defendants have not shown that
this argument was presented to and ruled on by the magistrate judge.
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"Subsidiaries") sued Teleglobe's parent Bell Canada Enterprises, Inc. ("Bell Canada"), meaning
the Subsidiaries essentially sued their grandparent. Id. at 354. The Subsidiaries alleged that Bell
Canada had improperly decided to cease funding Teleglobe, thereby causing its bankruptcy. Id.
In discovery, Bell Canada withheld from production documents regarding its decision to abandon
Teleglobe, claiming that the documents reflected privileged advice given solely to it. Id. at 355.
The trial court disagreed. Id. at 357. It found that Teleglobe and Bell Canada were joint clients
represented by Bell Canada's in-house counsel and compelled the production of all the privileged
documents from that joint representation. Id.
On appeal, the Third Circuit reversed. Id. at 380. As the Third Circuit explained, the jointclient privilege protects communications among joint clients and their common attorneys "from
compelled disclosure to persons outside the joint representation." Id. at 363. As a general rule,
persons outside the joint representation may obtain privileged communications from the joint
representation only if all of the joint clients consent to waiving the privilege. Id. Bell Canada did
not consent. Id. at 354. As a result, the Subsidiaries could not compel disclosure of the privileged
documents unless they fit within one of two exceptions to the general rule. Under the first
exception, one joint client "may unilaterally waive the privilege as to its own communications with
a joint attorney, so long as those communications concern only the waiving client." Id. at 363.
But one joint client may not "unilaterally waive the privilege as to any of the other joint clients'
communications or as to any of its communications that relate to other joint clients." Id. Thus,
Teleglobe's unilateral consent was not a proper basis on which to compel production of Bell
Canada's privileged documents from the joint representation. Id. at 387. Under the second
exception (the adverse-litigation exception), all communications made in the course of the joint
representation are discoverable when former joint clients sue one another. Id. at 366. The trial

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court, however, made no factual findings regarding whether the Subsidiaries were a part of the
joint representation. Id. at 380. It only found that Teleglobe and Bell Canada were part of a joint
representation. Id. at 357. Accordingly, the Third Circuit reversed and remanded with instructions
for the trial court to determine whether the Subsidiaries were a part of any joint representation with
Bell Canada and Teleglobe. Id. at 380.
Here, the parties dispute whether the adverse-litigation exception applies when a joint
client sues the joint attorney but not the other joint client. Teleglobe did not address this particular
issue because, in Teleglobe, plaintiffs were trying to compel the production of documents from a
purported joint-client, not the joint-attorney. Accordingly, Tele globe has limited applicability to
this case. For cases addressing the factual scenario presented here, the court must look outside
Delaware.

B. Reasons to Compel Disclosure
In a lawsuit between a joint client and the joint attorney, all of the courts found to have
addressed the issue relied on the adverse-litigation exception to compel disclosure of the privileged
communications from the joint representation. 4 See Bolton v. Weil, Gotshal & Manges LLP, 2005
WL 5118189, at *5-7 (N.Y. Sup. 2005); Farnsworth v. Van Cott, Bagley, Cornwall & McCarthy,
141 F.R.D. 310, 313 (D. Colo. 1992); Construction Unlimited Corp. v. Woodfield, 1992 WL
157511, at *2 (Conn. Super. June 17, 1992); Tunick v. Day, Berry & Howard, 486 A.2d 1147,
1149 (Conn. Super. 1984). Some of these courts found that the breach of duty exception was a
second independent reason to compel disclosure. See Construction Unlimited, 1992 WL 157511,
at *2; Tunick, 486 A.2d at 1149. The court will address each of these exceptions in tum.

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Some of these cases refer to the adverse-litigation exception as the "joint client privilege"
or the "co-client privilege."
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1.

The Adverse Litigation Exception

As one court explained, the adverse-litigation exception is not limited to lawsuits between
former joint clients. Bolton, 2005 WL 5118189, at *6. It applies equally to lawsuits between one
of the joint clients and the joint attorney. Id. "Rules governing the [joint client] privilege are
premised on an assumption that [joint clients] usually understand that all information is to be
disclosed to all of them." Restatement (Third), The Law Governing Lawyers, § 75, Comment d.
A joint client "cannot reasonably expect that the [joint attorney] will keep information from other
[joint clients]." Bolton, 2005 WL 5118189, at *5. The only people joint clients can reasonably
expect to withhold privileged communications from are third parties or strangers to the joint
representation. Id. at *6; see also Teleglobe, 493 F.3d at 363 (the joint-client privilege protects
privileged communications "from compelled disclosure to persons outside the joint
representation"). Neither a joint client nor a joint attorney is a stranger or a third party to the joint
representation. Bolton, 2005 WL 5118189, at *6. Indeed, the joint attorney provided the joint
representation. Id.
As a result, a joint attorney may not withhold from one joint client privileged
communications from the joint representation, even if the other (non-party) joint client refuses to
consent to the disclosure. See Farnsworth, 141 F.R.D. at 312 (rejecting joint attorney's argument
that privileged communications from the joint representation may be withheld because the nonparty joint clients have not consented to the disclosure); Anten, 183 Cal. Rptr. 3d at 424 (same).
Allowing the non-party joint client to withhold consent creates a substantial risk of collusion.

Anten, 183 Cal. Rptr. 3d. at 426. For example, if "an attorney breached a duty to one of two joint
clients but breached no duties to the other, and the wronged client sued the attorney, then it would
be unjust to allow the nonsuing client to thwart the other client's suit by invoking the privilege to

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prevent introduction of relevant attorney-client communications made in the course of the joint
representation." Id. Under Plaintiffs theory of the case, collusion would be a relevant concern
here.
Ultimately, the documents Plaintiff seeks would not be disclosed to a third party, but would
remain among the joint clients and the joint attorney that participated in the joint representation.
Accordingly, it is not enough that Mahalo Canada, a non-party joint client, objects to the disclosure
of privileged documents from the joint representation. The court finds that the magistrate judge
erred in holding that the adverse-litigation exception was not a proper legal basis for compelling
disclosure of privileged documents from the joint representation.

2.

The Breach of Duty Exception

Several courts have relied on the breach of duty exception to compel disclosure of
privileged communications in a lawsuit between a joint client and the joint attorney. See, e.g.,
Tunick, 486 A.2d at 1149; Construction Unlimited, 1992 WL 157511, at *2. The breach of duty
exception provides that, "[i]n a lawsuit between an attorney and a client based on an alleged breach
of a duty arising from the attorney-client relationship, attorney-client communications relevant to
the breach are not protected by the attorney-client privilege." Anten, 183 Cal. Rptr. 3d at 423.
Delaware has adopted a breach of duty exception in substantially the same form. See Del. R. Evid.
502(d)(3) (stating that there is no privilege "[a]s to a communication relevant to an issue of breach
of duty by the lawyer to the client or by the client to the lawyer"); State v. Black, 1995 WL 156073,
at *3 (Del. Super. Ct. Feb. 8, 1995) ("There is no attorney-client privilege when a client alleges a
breach of duty on the attorney's part with regard to communications relevant to the alleged
breach."), aff'd, 1995 WL 301370 (Del. 1995).

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Here, the magistrate judge ruled that the breach of duty exception was limited to litigation
involving a single lawyer and a single client. (D.I. 128 at 32:12-19). Defendants did not provide
any authority suggesting that the breach of duty exception does not apply to joint clients. In
addition, there is nothing in the rule itself that suggests such a limitation. More important, a narrow
interpretation of the exception could lead to a situation where a joint lawyer could breach the duty
owed to all of his joint clients, and those joint clients could not compel disclosure of privileged
communications from the joint representation.

For these reasons, the court finds that the

magistrate judge erred in concluding that the breach of duty exception does not apply to cases
involving a joint representation.
C. The Scope of Documents Subject to Disclosure

The magistrate judge rejected Plaintiffs suggestion that, under the adverse-litigation
exception, Mahalo Canada gave up any claim of attorney-client privilege in any document
referencing Mahalo USA. (D.1. 129 at 3). The court finds no error in this statement. The adverselitigation exception does not entitle Plaintiff to unbounded discovery. A joint client is entitled to
only those communications relevant to the matter of common interest that was the subject of the
joint representation. See, e.g., Tunick, 486 A.2d at 1149 (explaining that material not a part of the
joint representation remains protected by the attorney client privilege); Teleglobe, 493 F.3d at 38687 (explaining that communications outside the scope of the joint representation, even if shared
with a conflicted joint attorney, are not discoverable, but communications within the scope are
discoverable).
Although the parties do not dispute that there was a joint representation, they have not
identified the matter of common interest that was the subject of the joint representation. It is
possible that Mahalo Canada has some privileged documents which reference Mahalo USA, but

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which are not the subject of the joint representation. Because the parties did not identify the matter
of common interest, it is difficult to determine where exactly that line would be drawn.
Nevertheless, once the parties have agreed on the matter of common interest, Plaintiff is entitled
to all communications that fall within the scope of the joint representation, including
communications where one joint client is not present. See Glacier Gen. Assurance Co. v. Super.

Ct., 157 Cal. Rptr. 435, 437 (Cal. App. 1979) (explaining that disclosure under the adverselitigation exception is not limited to those communications made to an attorney by joint clients in
the presence of each other, but "include[s] all communications-bilateral as well as trilateral"
(emphasis in original)); Ashcraft & Gere! v. Shaw, 728 A.2d 798, 811-12 (Md. App. 1999) (finding
that the adverse-litigation exception applies regardless of whether the communication was made
in the presence of all joint clients or only one joint client).

D. When A Conflict of Interest Arises in the Joint Representation
Defendants rely on dicta in Teleglobe to argue that a joint attorney's conflict of interest
allows one joint client to withhold from the other joint client privileged documents from the joint
representation. (DJ. 131 at 3). Specifically, Teleglobe favorably quoted the following statement
from Eureka Inv. Corp., NV v. Chicago Title Ins. Co., 743 F.2d 932 (D.C. Cir. 1984):
[C]ounsel's failure to avoid a conflict of interest should not deprive the client
of the privilege. The privilege, being the client's, should not be defeated solely
because the attorney's conduct was ethically questionable.
(D.I. 131at3 (quoting Teleglobe, 493 F.3d at 369 (quoting Eureka, 743 F.2d at 938))). This quote
is taken out of context. Neither Teleglobe nor Eureka held that privileged communications from
the joint representation can be withheld from a joint client when the joint attorney develops a
conflict of interest due to diverging interests of the joint clients.
Instead, as Teleglobe itself stated, "Eureka is merely one in a line of cases that hold that
communications outside the scope of the joint representation or common interest remain
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privileged." Teleglobe, 493 F.3d at 381. In Eureka, the owner of an apartment building announced
its intention to convert the building into condominiums. 743 F.2d at 935. The tenants sued in
opposition. Id. The owner's insurer agreed to pay all of the owner's legal expenses in opposing
the tenants. Id. The owner eventually agreed to settle the action with the tenants, but the insurer
did not approve of the terms. Id. When the owner sued the insurer for wrongful delay in approving
the settlement, it used the same lawyers as in the tenant action. In the insurance action, the owner
refused to produce documents related to its consultation with the lawyers about that action. Id. at
936. The owner argued, and the court agreed, that the lawyers represented the insurer and the
owner jointly with respect to the defense of the tenant action, but represented the owner

individually with respect to the insurance action. Id. Accordingly, the court identified two separate
matters of interest (represented by two different lawsuits) and held that documents related to the
tenant dispute were not protected from disclosure, but the documents related to the insurance
dispute remained protected by privilege, even though the lawyers should not have represented the
owner in the insurance dispute given the conflict of interest. Id.

Bolton v. Weil, Gotshal & Manges LLP demonstrates the error of Defendants' position.
2005 WL 5118189 (N. Y. Sup. Sept. 16, 2005). In Bolton, a law firm represented a musician along
with a music publishing company, a record company, and a songwriter in defending against a claim
of copyright infringement. Id. at *1. The law firm's fees were paid by the insurer for the music
publishing company. Id. The copyright infringement action resulted in a jury verdict against all
of the defendants. Id. The adverse judgment allowed the music publishing company and the
record company to recover from the musician under an indemnity agreement. Id. In a second
action, the musician sued the law firm, alleging that it breached its fiduciary duties owed to him
by pushing the copyright infringement action to trial instead of settlement, which favored his co-

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clients' interests over his. Id. at *I. In the fiduciary duty action, the law firm withheld, as
privileged, communications from the joint representation in the copyright infringement. Id. at *2.
The court compelled disclosure on the grounds that: (1) the documents reflected communications
between the law firm and the co-clients in the copyright infringement action, (2) the documents
"were relevant to the common interest of the joint clients," and (3) the documents were relevant to
the issues in the fiduciary duty action. Id. at *6. The court added that, to the extent the musician
and his co-clients "are alleged to have had conflicting interests in the [copyright infringement
action], any such purported conflict does not render their individual communications with their
joint attorneys confidential," because the co-clients had no reasonable expectations of
confidentiality with respect to communications relevant to the matter of common interest. Id.
Taking Eureka and Bolton together, the touchstone for compelling disclosure is whether
the communications are relevant to the matter of common interest that is the subject of the joint
representation.

The Defendants cannot maintain a claim of privilege over communications

relevant to the matter of common interest for which they were retained as joint attorneys by
claiming that they had a conflict of interest within that joint representation. Instead, Defendants
must demonstrate that the communications are related to an individual matter for which they were
separately retained.
IV.

CONCLUSION

For the foregoing reasons, Plaintiffs objections (D.I. 129) are overruled in part and
sustained in part. The magistrate judge's rulings (D.I. 126, D.I. 128) are affirmed in part and
reversed in part. The matter is returned to the magistrate judge for further proceedings consistent
with this memorandum opinion.
An appropriate order will be entered.

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