Absolute Activist Value Master Fund Limited et al v. Devine

Filing 558

ORDER overruling 537 defendant's Objection to Order Denying Defendant's First, Second, and Third Motions to Compel. See Order for details. Signed by Judge John E. Steele on 5/8/2017. (AMB)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
ABSOLUTE
ACTIVIST
VALUE
MASTER
FUND
LIMITED,
ABSOLUTE EAST WEST FUND
LIMITED, ABSOLUTE EAST WEST
MASTER
FUND
LIMITED,
ABSOLUTE EUROPEAN CATALYST
FUND
LIMITED,
ABSOLUTE
GERMANY
FUND
LIMITED,
ABSOLUTE
INDIA
FUND
LIMITED, ABSOLUTE OCTANE
FUND
LIMITED,
ABSOLUTE
OCTANE MASTER FUND LIMITED,
and ABSOLUTE RETURN EUROPE
FUND LIMITED,
Plaintiffs,
v.

Case No: 2:15-cv-328-FtM-29MRM

SUSAN ELAINE DEVINE,
Defendant.
ORDER
This matter comes before the Court on defendant's Objection
to Order Denying Defendant’s First, Second, and Third Motions to
Compel (Doc. #537) filed on March 15, 2017.

Plaintiffs filed a

Response (Doc. #549) on April 4, 2017.
I.
Pursuant

to

28

U.S.C.

§

636(b)(1)(A),

the

Court

may

reconsider or review the Magistrate Judge’s Order on a pretrial
matter if shown that it was clearly erroneous or contrary to law.

II.
On February 24, 2017, the Magistrate Judge issued an Order
denying defendant’s First, Second, and Third Motions to Compel
Plaintiffs to Produce Documents Responsive to Her First Set of
Requests for Production of Documents.

(Doc. #526.)

Defendant

filed an Objection to the Magistrate Judge’s Order (Doc. #537) on
March 15, 2017.
A. First Motion to Compel (Doc. #315)
The Magistrate Judge’s Order on defendant’s First Motion to
Compel related to two requests for production – Numbers 23 and
24.

(Doc. #526, pp. 3-22.)
Request number 23 requests the following:
All communications between Plaintiffs and any
domestic
or
foreign
governmental
or
enforcement agent or agency, including but
not limited to the Swiss Prosecutor’s Office,
Interpol, the United States Department of
Justice, the United States Attorney’s Office
for the Central District of California or any
other United States Attorney’s Office, the
United
States
Securities
and
Exchange
Commission, the United States Federal Bureau
of Investigation, and the London Stock
Exchange,
that
relate
to
Devine,
her
children, or assets directly or indirectly
held by Devine or her children.

(Doc. #315, p. 4; Doc. #526, p. 3.)

Plaintiffs asserted the

following objection in response to request for production number
23:

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Plaintiffs object to Document Request No. 23
because
it
is
overly
broad,
unduly
burdensome, and redundant of other Document
Requests.
Plaintiffs further object to
Document Request No. 23 to the extent it calls
for the production of documents regarding
matters that are not relevant to the claims
or defenses of any party to this action or
proportional to the needs of the case, or
calls for the production of documents or
information protected from disclosure by the
work product doctrine.
Plaintiffs further
object to Document Request No. 23 to the
extent responsive documents are available in
the Swiss files, to which Devine has equal
access.
To the extent Plaintiffs have
provided documents to a governmental or
enforcement agent or agency that are not
protected from disclosure and are responsive
to another Document Request, subject to the
objections herein, Plaintiffs will produce
those documents.
(Doc. #315, p. 4; Doc. #526, p. 3.)

Request number 24 requests

the following:
All documents Plaintiffs discussed with,
exchanged with, accessed from, or provided to
any domestic or foreign governmental or
enforcement agent or agency, including but
not limited to the Swiss Prosecutor’s Office,
the United States Department of Justice, the
United States Attorney’s Office for the
Central District of California or any other
United States Attorney’s Office, the United
States Securities and Exchange Commission,
the
United
States
Federal
Bureau
of
Investigation, and the London Stock Exchange.
(Doc. #315, p. 4; Doc. #526, pp. 3-4.)

Plaintiffs asserted the

following objection to request for production number 24:
Plaintiffs object to Document Request No. 24
because
it
is
overly
broad,
unduly

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burdensome, and redundant of other Document
Requests.
Plaintiffs further object to
Document Request No. 24 to the extent it calls
for the production of documents regarding
matters that are not relevant to the claims
or defenses of any party to this action or
proportional to the needs of the case, or
calls for the production of documents or
information protected from disclosure by the
work product doctrine, and to the extent
responsive documents are available in the
Swiss files, to which Devine has equal access.
To the extent Plaintiffs have provided
documents to a governmental or enforcement
agent or agency that are not protected from
disclosure and are responsive to another
Document Request, subject to the objections
herein,
Plaintiffs
will
produce
those
documents.
(Doc. #315, p. 4; Doc. #526, p. 4.)

Defendant moved to compel

documents responsive to these requests asserting, among other
things, that plaintiffs had waived their work-product privilege
by producing documents to government entities.

(Doc. #315, p.

6.)
In ruling on the First Motion to Compel, the Magistrate Judge
started off by stating that the waiver of the attorney-client
privilege is not at issue because plaintiffs have only asserted
that the materials are protected work product.
10.)

(Doc. #526, p.

The Magistrate Judge went on to explain that the type of

privilege

claimed

is

of

importance

because

“while

voluntary

disclosure to third-parties waives the attorney-client privilege,
it does not necessarily waive work-product protection.”

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(Id.)

The Magistrate Judge stated that although the Eleventh Circuit
has little precedent on what constitutes a waiver of the workproduct privilege, other federal courts have addressed the issue
and those courts have focused on whether the disclosure was to an
adversary or non-adversary.

(Id. at 11.)

The Magistrate Judge

then reviewed the three categories of waiver of work product
protection when items are produced to governmental entities.
at 12-16.)

(Id.

The first category occurs where work product is

produced to a governmental entity that is an ally in litigation
or has a common interest with the producing party.
This production does not result in waiver.

(Id.)

(Id. at 12.)
The second

category occurs where there is disclosure to a governmental entity
in response to some coercion by the governmental authority, which
is not expected to reveal the material to the producing party’s
adversary.

(Id. at 14.)

result in a waiver.

(Id.)

This production does not typically
The third category occurs where the

producing party voluntarily produces material to a governmental
agency to incite an attack on the producing party’s adversary.
(Id. at 15.)
protection.

This category of production waives the work-product
(Id.)

The Magistrate Judge examined the applicability of these
categories and whether there had been a waiver of the work-product
privilege.

(Id. at 16-20.)

The Magistrate Judge started out by

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stating

that

there

is

no

evidence

that

the

plaintiffs

were

adversaries to the government entities to which documents may have
been disclosed.
found

that

it

(Id. at 16-17.)
appeared

as

if

Instead, the Magistrate Judge
the

plaintiffs

and

government

entities to which the plaintiffs produced work-product material
shared a common interest.

(Id. at 17-18.)

The Magistrate Judge

held that he could not conclude that Plaintiffs waived workproduct protections because “nothing in the record demonstrates
that Plaintiffs voluntarily provided such materials to United
States or Swiss authorities to incite an attack of Defendant.”
(Id.)
The Magistrate Judge also held that while the existence of a
confidentiality agreement is not determinative, it can make the
case against waiver even stronger.
found

that

agreement

here,
with

due

the

to

USAO,

the

(Id.)

existence

plaintiffs

The Magistrate Judge
of

a

confidentiality

maintained

a

reasonable

expectation of confidentiality in the documents at issue.

(Id.)

As to the Swiss Prosecutor, the Magistrate Judge found that
plaintiffs and the Swiss Prosecutor are not adversaries, it is
unclear what documents were produced and whether they ended up in
the “Swiss file” and whether plaintiffs are even still claiming
these documents are work product, and that it seems that defendant
has a vehicle for obtaining these documents.

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(Id. at 19.)

Further, the Magistrate Judge found that there is no indication
that there was a disclosure of these documents by the Swiss
Prosecutor that undermined the plaintiffs’ reasonable expectation
of

confidentiality.

(Id.)

Therefore,

the

Magistrate

Judge

declined to find that plaintiffs had waived the work product
privilege. 1

(Id.)

The Magistrate Judge also found that he could not assess the
relevancy of the documents due to the current stage of the
pleadings.

(Id. at 21.)

At the time the Magistrate Judge entered

his Order, this Court had dismissed plaintiffs’ federal claims
and it was unknown whether plaintiffs would file a Second Amended
Complaint and what the scope of the claims and defenses would be.
(Id.)
In her Objection, defendant asserts that the Magistrate
Judge’s Order is clearly erroneous because it relied on clearly
erroneous factual findings in support of the Court’s denial.
(Doc. #537, p. 9.)

Defendant makes three main assertions: that

the Magistrate Judge erred (1) in finding that nothing in the
record demonstrates that plaintiffs voluntarily provided workproduct materials to United States or Swiss authorities to incite

1

The Magistrate Judge made additional findings in regard to
three reports sought by Defendant. (Doc. #526, p. 19.) These,
however, are not specifically the subject of defendant’s
Objection.

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an

attack

on

Ms.

Devine;

(2)

in

finding

that

there

was

no

indication in the record that the Swiss Prosecutor had disclosed
any

putative

work-product

documents

in

a

manner

that

would

undermine plaintiff’s expectation of confidentiality; and (3) by
improperly applying the law regarding implied waiver of the workproduct doctrine.

(Id. at 9-18.)

1) Voluntary Production to Incite an Attack
First, defendant asserts that the Magistrate Judge erred in
finding that nothing in the record demonstrates that plaintiffs
voluntarily provided work-product materials to United States or
Swiss authorities to incite an attack on Ms. Devine.

(Id.)

Specifically, defendant asserts that “[t]he failure to require
Plaintiffs to specify what work-product material they shared, with
whom they shared it, and when and under what circumstances they
provided it to each governmental agency, was clearly erroneous.”
(Id. at 9-10.)

Defendant asserts that the criminal complaint

provided to the Swiss Prosecutor was work product because it
“reveals

Plaintiffs’

counsels’

understanding

of

this

case,”

plaintiffs have conceded to this Court that they provided workproduct
February

materials
18,

2014

to
and

governmental
April

29,

Prosecutor were also work product.

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agencies,
2014

and

letters

to

(Id. at 10-12.)

plaintiffs’
the

Swiss

Plaintiffs respond that the Magistrate Judge’s primary ruling
was that he could not assess the relevance of defendant’s document
requests at this time and that defendant has not challenged this
ruling.

(Doc. #549, pp. 4-5.)

Plaintiffs point out that they

have never asserted that the criminal complaint nor the two
letters were work product, that these specific documents have
either been filed on the public docket in this matter or are in
defendant’s possession, and any attempt to assert that these
instances justify a broad waiver of work-product privilege fails.
(Id. at 7-8.)
The Court finds that the Magistrate Judge’s ruling declining
to find a waiver of the asserted work-product privilege to be
neither clearly erroneous nor contrary to the law.

Defendant

relies on the criminal complaint submitted to the Swiss Prosecutor
dated May 26, 2015 and two letters to the Swiss Prosecutor dated
February 18, 2014 and April 29, 2014.

(Doc. #537, pp. 10-12.)

It is clear, however, that the Swiss Prosecutor initiated the
investigation into Florian Homm and defendant well before these
dates.
that

(See Docs. ##27-14 to -16.)

even

if

these

documents

were

2

Therefore, the Court finds
work

product 2 that

were

Plaintiffs are not claiming that the complaint and two
letters are work product and defendant does not dispute that she
either has access to these documents or she has them in her
possession already.

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voluntarily submitted to the Swiss Prosecutor, they were not
submitted to incite an attack on defendant.

An investigation

into the penny stock scheme allegedly perpetrated by defendant
and Florian Homm was already underway.

See RMS of Wis., Inc. v.

Shea-Kiewit Joint Venture, No. 13-CV-1071, 2015 WL 3454272, at *2
(E.D. Wis. June 1, 2015) (“[I]in cases where the government is
already investigating the adversary and the government and the
one claiming work product protection have a ‘common interest’ and
a

‘reasonable

expectation

that

confidentiality

of

the

communications would be preserved,’ there is authority supporting
no waiver.” (citation omitted));

E.I. Du Pont de Nemours and Co.

v. Kolon Indus., Inc., 76 Fed. R. Serv. 3d 453 (E.D. Va. 2010)
(finding no waiver where documents were sent after government had
initiated

its

investigation,

the

producing

party

and

the

government shared a common interest, and there was a reasonable
expectation

of

confidentiality);

Info.

Res.,

Inc.

v.

Dun

&

Bradstreet Corp., 999 F. Supp. 591, 593 (S.D.N.Y. 1998) (finding
waiver of work product protection where “plaintiff sought to
persuade uncommitted agencies to initiate actions which would
disadvantage its competitor and perhaps provide plaintiff with
the advantages of collateral estoppel from a governmentallylitigated favorable judgment, or at least useful evidence from a

- 10 -

governmental

authority’s

investigation”).

Accordingly,

this

portion of defendant’s Objection is overruled.
2) Indication that Production of Documents
Plaintiffs’ Expectation of Confidentiality

Undermined

Defendant also asserts that the Magistrate Judge erred by
finding no indication in the record that the Swiss Prosecutor has
disclosed any putative work-product documents in a manner that
would

undermine

plaintiffs’
(Doc.

confidentiality.

reasonable
pp.

#537,

13-14.)

expectation

of

Specifically,

defendant asserts that the fact that plaintiffs’ January 22, 2014
and April 29, 2014 letters to the Swiss Prosecutor were eventually
provided to Ms. Devine “eviscerates the notion that Plaintiffs’
reasonable expectations of privacy as to the letters – privacy
that Plaintiffs explicitly requested from the Swiss Prosecutor –
were not undermined.”

(Id. at 13.)

Defendant also asserts that

the Magistrate Judge’s finding is further underscored by his own
assertion that defendant has the same access to the documents in
the Swiss file as the plaintiffs do.

(Id. at 14.)

Plaintiffs

respond that defendant has waived this argument because she did
not discuss these letters in her briefing to the Magistrate Judge,
and

even

assuming

this

was

properly

before

the

Court,

the

disclosure of one document does not waive the privilege as to
other documents.

(Doc. #549, pp. 9-11.)

- 11 -

The Court finds that the Magistrate Judge’s ruling is neither
clearly erroneous nor contrary to the law.

Defendant makes the

blanket assertion that because “both letters eventually were
provided to Ms. Devine obviously eviscerates the notion that
Plaintiffs’ reasonable expectations of privacy as to the letters
– privacy that Plaintiffs explicitly requested from the Swiss
Prosecutor – were not undermined.”

(Doc. #537, p. 13.)

However,

defendant does not outright say that the Swiss Prosecutor provided
these documents to her.

And the fact that plaintiff eventually

came into possession of these letters does not support a finding
that

plaintiffs

did

not

have

a

reasonable

expectation

of

confidentiality in the documents claimed to be work product that
were

produced

to

the

Swiss

Prosecutor.

Defendant

has

not

identified any documents provided to her by the Swiss Prosecutor
that the plaintiffs claim to be protected by the work-product
privilege to support her claim that plaintiffs did not have a
reasonable expectation in the work-product documents.
Even assuming that these documents were placed in the Swiss
file, to which defendant obtained access, the Court still does
not find the Magistrate Judge’s ruling to be erroneous or contrary
to

the

law.

When

there

are

common

interests

between

the

transferor and the transferee against a common adversary, as there
are in this case, “the transferee is not at all likely to disclose

- 12 -

the work product material to the adversary.”
AT&T,

642

F.2d

1285,

1299

(D.C.

Cir.

United States v.

1980).

Under

these

circumstances, a confidentiality agreement is not essential to
prevent waiver, but it can make “the case against waiver [] even
stronger.”

Id.

Here, not only did plaintiffs and the Swiss

Prosecutor have common interests against a common adversary, the
plaintiffs also requested, at least in two letters, to the extent
permitted

by

law,

that

the

Swiss

Prosecutor

communicating certain information to defendant.

refrain

from

Defendant has

not identified one document claimed to be protected work product
that

was

produced

by

the

Swiss

Prosecutor

to

defendant.

Accordingly, this portion of the Objection is overruled.
3) The Appropriate Law Regarding Implied Waiver of WorkProduct Privilege
Defendant next asserts that the Magistrate Judge erred by
“improperly applying the law regarding implied waiver of the work
product

doctrine.”

(Doc.

#537,

pp.

14-18.)

Specifically,

defendant asserts that the Magistrate Judge focused on whether
the plaintiffs and the government entities were adversaries when
the appropriate inquiry is “whether the disclosure at issue was
inconsistent with the maintenance of secrecy from the disclosing
party’s adversary.” (Id. at 14-15 (emphasis in original) (citation
omitted) (internal quotation marks omitted)).

Defendant claims

that because the Swiss Prosecutor was a “conduit to an adversary”

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who

eventually

disclosed

at

least

some

of

the

work

product

materials to defendant, the work product privilege was waived.
(Id. at 14-18.)
completely

Plaintiffs respond that defendant’s argument

overlooks

the

portion

of

the

Magistrate

Judge’s

decision where he explicitly discussed within the legal standard
that voluntary disclosure to an adversary or a conduit to an
adversary results in a waiver of the work-product protection.
(Doc. #549, pp. 11-13.)
The Court agrees with plaintiffs and finds the Magistrate
Judge’s ruling to be neither clearly erroneous nor contrary to
the law.

In his Order, the Magistrate Judge explicitly stated

that “the voluntary disclosure of attorney work product to an
adversary

or

a

conduit

to

an

protection for that material.”
omitted)).

adversary

waives

work-product

(Doc. #526, p. 11 (citation

Further, it is clear that the Swiss Prosecutor and

defendant are adversaries as defendant is/was the target of an
investigation by the Swiss Prosecutor.

See Westinghouse Elec.

Corp. v. Republic of Philippines, 951 F.2d 1414, 1428 (3d Cir.
1991) (discussing that a target of an investigation results in an
adversarial relationship between the target and the investigating
agency).
Accordingly,
Objection.

the

Court

overrules

this

portion

of

the

Further, as stated within the Magistrate Judge’s

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standard, the disclosure of these materials that are ultimately
revealed

to

material.”

the

adversary

results

in

the

waiver

“for

that

Plaintiffs are not claiming work-product privilege

for the letters that defendant refers to.
B. Second Motion to Compel (Doc. #321)
The Magistrate Judge’s Order on defendant’s Second Motion to
Compel related to the defendant’s request to compel responses to
“Document Request Nos. 8, 13, 98, 122, 201, and 206.” (Doc. #526,
p. 22.)

In response to those requests, plaintiffs asserted that

the responsive documents are privileged.
Defendant

moved

to

compel

those

(Doc. #321, pp. 4-6.)

responses,

asserting

that

plaintiffs had waived their attorney-client privilege as to the
responsive documents by asserting fraudulent concealment and lack
of knowledge of their injury.

(Doc. #526, pp. 22-23.)

The Magistrate Judge noted that most of plaintiffs’ claims
have

been

dismissed,

enrichment remains.
dismissal

of

the

and

only

plaintiffs’

(Id. at 24.)
other

claims,

claim

for

unjust

He stated that despite the
defendant’s

contention

that

plaintiffs waived their applicable privileges applies to the
unjust enrichment allegations.

(Id.)

The Magistrate Judge then began his analysis by discussing
the “seminal case” of Cox v. Administrator United States Steel &
Carnegie, 17 F.3d 1386 (11th Cir.), opinion modified on other

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grounds, 30 F.3d 1347 (11th Cir. 1994).

(Doc. #526, p. 24.)

Applying the standard as set forth in Cox, the Magistrate Judge
found that “Plaintiffs have not waived any applicable privilege.”
(Id. at 25.)

The Magistrate Judge based his determination that

plaintiffs had not waived any privilege on Federal Rule of Civil
Procedure 11(b), which requires a reasonable inquiry for all
pleadings submitted to the Court, and his finding that there was
no indication that plaintiffs intended to rely on confidential
communications in proving their claims.
Defendants

assert

that

the

(Id. at 26.)

Magistrate

Judge

improperly

applied the narrow view of Rhone’s 3 waiver-by-implication doctrine
to the case at hand, and that the Eleventh Circuit’s decision in
Cox contains the determinative law regarding plaintiffs’ waiver
of their attorney-client privilege.

(Doc. #537, pp. 18-19.)

Plaintiffs respond that defendant is incorrect and the Magistrate
Judge

did

in

fact

rely

primarily

on

the

Eleventh

decision in Cox and discussed the case in detail.
pp. 13-17.)

Circuit’s

(Doc. #549,

As to Rhone, plaintiffs state that the Magistrate

Judge indicated that the decision had not been expressly adopted
by the Eleventh Circuit, but found it instructive.
Plaintiffs

also

assert

that

their

3

allegation

(Id. at 16.)
of

fraudulent

Rhone-Poulenc Rorer Inc. v. Home Indemnity Co., 32 F.3d 851
(3d Cir. 1994).

- 16 -

concealment does not waive their attorney-client privilege.

(Id.

at 16-17.)
The Court first notes that the Magistrate Judge based his
determination on the Eleventh Circuit’s decision in Cox.
#526, pp. 24-26.)

(Doc.

Only after the Magistrate Judge determined

that, under Cox, plaintiffs had not “injected their counsels’
investigation

into

the

litigation

such

that

it

in

fairness

requires disclosure of otherwise confidential communications,”
(id. at 26 (citing Cox, 17 F.3d at 1419)), did the Magistrate
Judge discuss the Third Circuit’s decision in Rhone-Poulenc Rorer
Inc. v. Home Indemnity Co., 32 F.3d 851 (3d Cir. 1994), as it had
been discussed by both parties in their briefs, (Doc. #526, pp.
26-29).

While the Magistrate Judge found his ruling to also be

consistent with Rhone, contrary to what defendant suggests, the
Magistrate Judge did not base his decision on the Third Circuit’s
decision.

For this reason, the Court finds this ruling to neither

be erroneous nor contrary to the law and overrules this portion
of the defendant’s Objection.
C. Third Motion to Compel (Doc. #322)
Defendant’s Third Motion to Compel sought information related
to a settlement agreement between plaintiffs and a non-party.
(Doc. #526, p. 29.)

Defendant asserted that the settlement

agreement is critical to determining what plaintiffs knew and

- 17 -

when.
that

(Id. at 29-30.)
the

motion

Plaintiffs opposed the request asserting

should

be

denied

as

settlement agreement is not relevant.

untimely

and

that

the

Alternatively, plaintiffs

requested the Magistrate Judge to review the settlement agreement
in camera.
The

(Id. at 30.)

Magistrate

Judge

held

that

he

could

not

properly

determine the relevance of the settlement agreement at that time
due to the possibility that plaintiffs may file a Second Amended
Complaint.

(Id.)

Therefore, the Magistrate Judge denied the

Motion to Compel without prejudice, indicating that defendant may
file a renewed motion to compel after plaintiffs filed a Second
Amended Complaint.

(Id.)

Defendant now asserts that the Magistrate Judge erred in
concluding that he could not determine the relevance of the
settlement

agreement.

(Doc.

#537,

pp.

21-22.)

Plaintiffs

respond that the Magistrate Judge’s ruling was not erroneous and
defendant is free to file a renewed motion.

(Doc. #549, p. 18.)

The Court finds the Magistrate Judge’s Order to be neither
erroneous nor contrary to the law.

Now that plaintiffs have

indicated they will only be proceeding on their unjust enrichment
claim, the Magistrate Judge will be able to analyze the scope of
the claims and defenses and defendant is free to file a renewed
motion

seeking

to

compel

the

production

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of

the

settlement

agreement.

Accordingly, this portion of defendant’s Objection is

also overruled.
Accordingly, it is now
ORDERED:
Defendant’s Objection to Order Denying Defendant’s First,
Second, and Third Motions to Compel (Doc. #537) is OVERRULED.
DONE and ORDERED at Fort Myers, Florida, this __8th__ day of
May, 2017.

Copies: Counsel of Record

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