Raifman et al v. ClassicStar, LLC et al
Filing
263
MEMORANDUM OPINION & ORDER: It is ordered that the ( 1065 in 5:07-cv-353) Motion of Defendants S. David Plummer and Spencer D. Plummer III to Compel Production of Audit Report is DENIED. Signed by Judge Joseph M. Hood on 4/4/2012.Associated Cases: 5:07-cv-00353-JMH-REW et al.(SCD)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
IN RE CLASSICSTAR MARE LEASE
LITIGATION
)
MDL No. 1877
)
)
Master File:
)
) Civil Action No. 5:07-cv-353-JMH
)
)
5:07-cv-347-JMH
5:07-cv-348
)
5:07-cv-349-JMH
)
5:07-cv-351-JMH
)
5:07-cv-419
)
)
5:08-cv-53-JMH
5:08-cv-321-JMH
)
5:08-cv-496-JMH
)
5:09-cv-15-JMH
)
MEMORANDUM OPINION & ORDER
*** *** ***
This matter is before the Court on the Motion of Defendants S.
David
Plummer
and
Spencer
D.
Plummer,
III
(hereinafter,
collectively, “Plummers”), to Compel Production of Audit Report
[see Lexington Civil Action No. 07-353, Record No. 1065], to which
Defendants Tony Ferguson, GeoStar Corporation, John Parrott, and
Thom Robinson have responded [see Lexington Civil Action No. 07353-JMH, Record No. 1108], stating their objections.
Movants have
also filed a Reply in further support of the Motion [see Lexington
Civil Action No. 07-353-JMH, Record No. 1143].
The Court being
sufficiently advised, the Motion will be denied for the reasons
stated below.
In their motion, the Plummers have ask the Court to compel
GeoStar Corporation and Tony Ferguson to produce a financial audit
of GeoStar and ClassicStar, LLC, shown to Robert L. Keys, owner of
Defendant Private Consulting Group (“PCG”), by Ferguson on or about
February 2009 and referenced in Key’s deposition. During the April
10, 2009, deposition of Keys, the Fed. R. Civ. P. 30(b)(6) designee
for Defendant PCG, testified that Ferguson, an officer of GeoStar
and ClassicStar, had shown him an audit report of GeoStar and
ClassicStar two months prior to the deposition.
As the parties have explained it, the audit was conducted by
a public accounting firm and, according to Keys, revealed that
David Plummer had taken approximately $60 million that was paid
into the ClassicStar program and that some sum of money was moved
back and forth between GeoStar and ClassicStar.
The day of the
deposition, counsel for the Plummers and the various plaintiffs
requested from GeoStar a copy of the audit report described by Keys
at his deposition. GeoStar declined to produce the document on the
basis that the audit was protected by a joint attorney-client or
work product privilege shared by GeoStar, Ferguson, Robinson, and
Parrott.
Counsel for GeoStar has described the so-called audit document
as
a
spreadsheet
containing
targeted
financial
information
collected from GeoStar and its financial personnel and prepared at
the request of undersigned counsel in order to assess the merits of
the
allegation
that
millions
of
dollars
were
looted
from
ClassicStar’s accounts by GeoStar and to better understand the flow
of cash from ClassicStar to GeoStar compared to the value returned
2
by GeoStar to ClassicStar, as well as large transfers of cash and
stock to Plummer.
A draft tabulation of the financial numbers was
provided to counsel for use in analyzing the claim.
No one disputes that it is a portion of this document that was
shown to Keys.
Plummer argues, however, that Ferguson waived any
privilege or protection that might be assigned to that document
when he disclosed the document to Keys, a third party.
GeoStar
argues that Ferguson’s disclosure of the audit does not consitute
a waiver of Defendants’ attorney-client and work product privileges
because a joint client privilege exists.
As an initial matter, the document in question may fall within
the scope of attorney-client privilege, which attaches in certain
instances where an attorney has communications with his client, as
follows:
(1) Where legal advice of any kind is sought
(2) from a professional legal adviser in his
capacity as such, (3) the communications
relating to the purpose, (4) made in
confidence (5) by the client, (6) are at his
instance permanently protected (7) from
disclosure by himself or by the legal adviser,
(8) except [where] the protection be waived.
United States v. Goldfarb, 328 F.2d 280, 281 (6th Cir. 1964)
(quoting 8 Wigmore, Evidence § 2292 at 554).
They also fall,
however, within that category of protection afforded attorney work
product.
Stated succinctly:
The
work-product
doctrine
3
protects
an
attorney's trial preparation materials from
discovery to preserve the integrity of the
adversarial process. See Hickman v. Taylor,
329 U.S. 495, 510-14 (1947). The work-product
doctrine is a procedural rule of federal law;
thus, Federal Rule of Civil Procedure 26
governs this diversity case. In re Powerhouse
Licensing, LLC, 441 F.3d 467, 472 (6th Cir.
2006). Rule 26(b)(3) protects (1) “documents
and tangible things”; (2) “prepared in
anticipation of litigation or for trial”; (3)
“by
or
for
another
party
or
its
representative.”
In re Professionals Direct Ins. Co., 578 F.3d 432, 438 (6th Cir.
2009). In the instant matter, no one disputes that the spreadsheet
in question was prepared at the behest of counsel in anticipation
of litigation. See id. at 439 (quoting United States v. Roxworthy,
457 F.3d 590, 594 (6th Cir.2006)) (“a document has been prepared
‘in
anticipation
of
litigation,’
and
is
thus
protected
work
product, . . . [when] that document was prepared ‘because of’ a
party's subjective anticipation of litigation, as contrasted with
ordinary
business
purpose;
and
...
[when]
that
subjective
anticipation was objectively reasonable.”). Thus, it qualifies for
protection under the work-product doctrine.
See id. at 438.
The question, then, is whether the work-product protection was
waived when Ferguson showed the document to Keys, whether in Keys’
role as an individual or as a representative of PCG, neither of
whom
were
represented
at
that
time
by
Ferguson, Robinson, Parrott, and GeoStar.
the
same
attorney
as
As with attorney-client
privilege, work product protection can be waived by disclosing the
4
product itself to a third party. However, unlike the attorneyclient privilege, the third party to whom the disclosure is made
must be an “adversary” in order for waiver to take place regarding
work product material. In re Columbia/HCA Healthcare Corp. Billing
Practices Litig., 293 F.3d 289, 305 (6th Cir. 2002).
The Plummers offer the conclusion that Keys is a “potential
adversary” for these co-defendants, but no one has suggested how
that might come to be.
Neither Ferguson, Robinson, Parrott, nor
GeoStar have indicated that they consider PCG or Key to be an
adversary
or
a
potential
adversary,
although
they
motivation to do so in the context of this motion.
have
no
That said,
while there has been a host of finger-pointing among the various
defendants to the primary lawsuits by investor-plaintiffs with
respect to the mare leasing programs, no one has identified any
claims by or between Ferguson, Robinson, Parrott, and GeoStar and
PCG or Keys at this point nor has anyone anticipated that they will
or articulated how they will arise.
In the absence of some
suggestion that this spreadsheet was shown by Ferguson to an
“adversary” of his own or one of his co-defendants, including
GeoStar, the Court is satisfied that work product doctrine applies
and continues to protect this spreadsheet against disclosure to the
Plummers at this time. As such, the Court need not further explore
the question of joint-client or co-client privileges.
Finally, the Court cannot conclude that the privilege should
5
be disregarded because the Plummers have demonstrated a need for
the information in this spreadsheet on grounds of substantial need
or inability to obtain the information from other sources.
Responding Defendants have indicated that the data on financial
transfers from which the information on this spreadsheet was drawn
has been produced to the Plummers. The Plummers argue that somehow
this Court needs more evidence of the fact that the two are
correlated, but they do not suggest that the data from which the
spreadsheet was prepared came from any other source. The fact that
the Plummers would like to see how counsel and clients compiled
this data in order to prepare their case is not reason enough to
order its production.
Accordingly, IT IS ORDERED that the Motion of Defendants S.
David
Plummer
and
Spencer
D.
Plummer,
III
(hereinafter,
collectively, “Plummers”), to Compel Production of Audit Report
[Lexington Civil Action No. 07-353, Record No. 1065] is DENIED.1
This the 4th day of April, 2012.
1
The motion may be found in the individual actions as
follows: 5:07-cv-347-JMH, DE 142; 5:07-cv-348, DE 152, 5:07-cv349-JMH, DE 170; 5:07-cv-351-JMH, DE 66; 5:07-cv-419, DE 117; 5:08cv-53-JMH, DE 217, 5:08-cv-321-JMH, DE 122; 5:08-cv-496-JMH, DE 86;
and 5:09-cv-15-JMH, DE 77.
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