BROIDY CAPITAL MANAGEMENT LLC et al v. MUZIN et al

Filing 237

Motion for a Protective Order and Sanctions regarding non-party ArentFox Schiff LLP's #226 Motion to Compel. See text for details. Signed by Judge Dabney L. Friedrich on November 14, 2023. (lcdlf1) Modified to reflect correct motion type on 11/15/2023 (zjch, ).

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

BROIDY CAPITAL MANAGEMENT,
LLC, et al.,
Plaintiffs,
No. 19-cv-150 (DLF)

v.
NICOLAS D. MUZIN, et al.,
Defendants.

MEMORANDUM OPINION
Before the Court is non-party ArentFox Schiff LLP’s Motion for a Protective Order and
Sanctions. Dkt. 226. For the following reasons, the Court will deny the motion.
Arent Fox is a law firm. Until August 2023, it represented Joseph Allaham in litigation
against Broidy Capital Management, LLC and Elliott Broidy (collectively, “Broidy”). See Dkt.
25. Broidy and Allaham settled in August 2023. Dkt. 195. In parallel with the settlement, and
without Arent Fox’s consent, Allaham provided much of his correspondence with Arent Fox to
Broidy. See, e.g., Dkts. 215-2 (proposed changes to interrogatory responses); 215-3 (discussion
of case strategy). Broidy continues to litigate against Allaham’s former codefendants.
Arent Fox, now lawyering without a client, contends that Allaham gave away materials
protected by the work-product privilege.

It moves for “an order (1) directing [Broidy]

to . . . promptly return or destroy all work product of Arent Fox [in his possession] as well as any
material that references or is derived from that work product . . . and (2) sanctioning [Broidy] for
improperly reviewing and using Arent Fox’s work product.” Dkt. 226 at 1.

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The Court finds that Allaham validly waived any privilege held by Arent Fox and will
therefore deny the motion. “The work product privilege . . . exempts from discovery documents
prepared by an attorney in contemplation of litigation.” Moody v. IRS, 654 F.2d 795, 798 (D.C.
Cir. 1981); see Fed. R. Civ. P. 26(b)(3).1 “[L]ike other [similar] privileges, it may be waived.”
United States v. Nobles, 422 U.S. 225, 239 (1975).
In general, “a lawyer may invoke” the work product privilege “on the basis of the lawyer’s
independent interest in privacy.” Restatement (Third) of the Law Governing Lawyers § 90 cmt. c
(Am. L. Inst. 2000). But “[w]hen lawyer and client have conflicting wishes or interests with
respect to work-product material, the lawyer must follow [the] instruction of the client” and may
not assert immunity on her own. Id. After all, an attorney cannot “withhold the fruits of his
professional labors from the client, who presumably paid for and was the intended beneficiary of
those labors.” Martin v. Valley Nat’l Bank of Ariz., 140 F.R.D. 291, 320 (S.D.N.Y. 1991); cf. In
re Sealed Case, 676 F.2d 793, 810 n.56 (D.C. Cir. 1982) (“Courts have often recognized that the
interests of attorneys and those of their clients may not always be the same. To the extent that the
interests do not conflict, attorneys should be entitled to claim privilege even if their clients have
relinquished their claims.”) (emphasis added).
These principles doom Arent Fox’s assertion of privilege and thus its motion for a
protective order and sanctions. Allaham voluntarily provided his correspondence to Broidy,
presumably to facilitate his dismissal from this litigation. By handing the documents over to his
former adversary, he waived any privilege he might hold in them. See United States v. Deloitte

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Because Rule 26(b)(3) covers discovery rather than the voluntary disclosure of information,
this case implicates the common-law version of the work product privilege rather than the
version created by the Federal Rules of Civil Procedure. Cf. In re Sealed Case, 676 F.2d at 808.
Nothing important turns on the distinction here.
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LLP, 610 F.3d 129, 139–40 (D.C. Cir. 2010). And while Arent Fox may disagree with Allaham’s
choice to disclose the documents, its “conflicting wishes” cannot stand in his way. Restatement
(Third) of the Law Governing Lawyers § 90 cmt. c. It follows that Arent Fox’s assertion of
privilege is meritless and that its motion, which relies on its privilege assertion, must fail.
Arent Fox contends that “attorneys have an independent right to protect their own work
product.” Arent Fox’s Mot. at 5. Even so, an attorney cannot protect his work product at his
client’s expense. The cases Arent Fox cites do not say otherwise, as “none involved an invocation
of the [work product] rule against the client or against the client’s stated wishes and interests.”
Martin, 140 F.R.D. at 321. In Hobley v. Burge, for instance, the Seventh Circuit allowed a law
firm to claim work product privilege when the claim was “not inconsistent with [its client’s]
interests in [the] litigation.” 433 F.3d 946, 949 (7th Cir. 2006). And in In re Grand Jury
Proceedings, the Fifth Circuit held that a client’s alleged crimes did not abrogate his innocent
attorney’s privileges.2 43 F.3d 966, 972 (5th Cir. 1994) (per curiam); see also QBE Ins. Co. v.
Griffin, No. 08-cv-949, 2009 WL 2913478, *2–3 (M.D. Ala. Sept. 4, 2009) (declining to find that
former client’s failure to object to discovery request in subsequent litigation forfeited attorney’s
work-product privilege); Krys v. Paul, Weiss, Rifkind, Wharton, & Garrison LLP (In re China
Med. Techs., Inc.), 539 B.R. 643, 658 (S.D.N.Y. 2015) (declining to find that foreign liquidator
could waive privilege on behalf of formerly solvent entity’s Audit Committee).

Arent Fox’s assertion that the clients in In re Grand Jury “expressly waived privilege as part of
a plea agreement,” Arent Fox Reply at 5, Dkt. 232, is not relevant. The Fifth Circuit’s analysis
turned on whether “the crime/fraud exception [would] permit disclosure of materials when the
attorney who prepared the materials had no knowledge that his efforts were furthering his
client’s criminal activity,” not on whether a client could waive privilege through a plea
agreement without his lawyer’s consent. 43 F.3d at 972.
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So too, the fact that Allaham is no longer a party in this case does not diminish his interest
in disclosing Arent Fox’s work product to Broidy. Cf. Arent Fox’s Mot. at 5–6; FTC v. Grolier,
462 U.S. 19, 25 (1983) (holding that work-product privilege applies even after litigation has
terminated). Allaham acquired his documents while a defendant in this litigation. Indeed, handing
the documents over to Broidy may well have facilitated his departure from it. Against that
backdrop, it is obvious that Allaham has a legitimate interest in conveying his documents to
Broidy—one that Arent Fox, Allaham’s fiduciary, must honor. See Restatement (Third) of the
Law Governing Lawyers § 21(2) & cmt. d.
Finally, in passing, Arent Fox contends that Allaham disclosed “communications covered
by a joint-defense agreement among” his former codefendants. Arent Fox’s Mot. at 5; see Arent
Fox’s Reply at 1. But if that is so, Allaham has victimized his now-former codefendants, not his
own lawyers. “Ordinarily, a party must assert its own legal rights and cannot rest its claim to relief
on the legal rights of third parties.” Metro. Wash. Chapter, Assoc. Builders & Contractors, Inc. v.
District of Columbia, 62 F.4th 567, 573 (D.C. Cir. 2023) (cleaned up). Even if a joint defense
agreement made Allaham’s disclosure of Arent Fox’s work product improper, Arent Fox’s
sanctions motion is not the appropriate vehicle for such a claim.
For these reasons, Arent Fox’s motion for a protective order and sanctions, Dkt. 226, is
denied. Because the motion—while not meritorious—was not frivolous, Broidy’s cross-motion
for sanctions, Dkt. 231 at 7, is also denied. A separate order consistent with this decision will
accompany this memorandum opinion.

__________________________
DABNEY L. FRIEDRICH
United States District Judge

November 14, 2023
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