Firefighters' Retirement System et al v. Citco Group Limited et al
Filing
513
RULING AND ORDER granting in part and denying in part 481 to Continue Submission Date on Motion to Compel Privileged Documents or Alternative Motion to Compel Privileged Documents . Signed by Magistrate Judge Erin Wilder-Doomes on 1/5/2018. (LLH) Modified on 1/5/2018 to edit text (LLH).
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
FIREFIGHTERS’ RETIREMENT
SYSTEM, ET AL.
CIVIL ACTION
VERSUS
13-373-SDD-EWD
CITCO GROUP LIMITED, ET AL.
RULING AND ORDER ON MOTION TO COMPEL
Before the court is a Motion to Continue Submission Date on Motion to Compel Privileged
Documents or Alternative Motion to Compel Privileged Documents (the “Motion to Compel”)1
filed by plaintiffs, Firefighters’ Retirement System (“FRS”), Municipal Employees’ Retirement
System of Louisiana (“MERS”), and New Orleans Firefighters’ Pension & Relief Fund (“NOFF”)
(collectively, “Plaintiffs”). Defendants, Citco Technology Management, Inc. (“CTM”), Citco
Banking Corporation N.V. (“Citco Banking”), Citco Fund Services (Cayman Islands) Limited
(“CFS Cayman”), and The Citco Group Limited (“Citco Group”) (collectively, the “Citco
Defendants”) have filed an Opposition.2 For the reasons set forth herein, Plaintiffs’ Motion to
Compel is GRANTED IN PART AND DENIED IN PART.
I.
Background
By their instant Motion to Compel,3 Plaintiffs ask either that the court: (1) require that
Citco categorize its privileged documents into 13 categories (and have the Citco Defendants, as
opposed to counsel, certify as to the accuracy of the categorizations); or (2) issue an order
compelling production of documents listed on Citco’s privilege log and/or review certain
documents in camera. On December 12, 2017, the parties participated in a status conference in
1
R. Doc. 481.
2
R. Doc. 499.
3
R. Doc. 481.
1
this matter and the Motion to Compel was discussed. During that status conference, the court
explained that before considering any in camera review, the sufficiency of the privilege log would
have to be determined. If the descriptions set forth in the log were insufficient, then the court
would decide whether the party asserting the privilege should be given a chance to revise the log.
If the descriptions were sufficient, then the court would consider whether the party seeking
production had established an exception to the privilege. The court allowed the parties to present
argument regarding the adequacy of Citco’s privilege log and the potential applicability of the
fiduciary duty and crime-fraud exceptions. Counsel for Plaintiff confirmed that all entries on the
privilege log at issue in the Motion to Compel remained at issue. On December 20, 2017, the
undersigned ordered the Citco Defendants to provide additional information regarding their
privilege log.4 On December 28, 2017, the Citco Defendants provided a revised “Exhibit 1” which
identified in-house counsel and also provided a chart setting out the general function of each
individual identified on the Citco Defendants’ privilege log.5
II.
Law and Analysis
A. Request for Categorization
Plaintiffs’ first request is that the Citco Defendants be required to categorize the documents
listed in Citco’s privilege log using 12 substantive categories and a thirteenth “catch-all” category.
Plaintiffs propose the following 12 categories:
(1)
Reasons for the Leveraged loan in the amount of $20 million
to Citco Bank being called in 2007;
(2)
Review of the terms of the 2008 Series N Offering between
January 1, 2008 and May 1, 2008;
4
R. Doc. 508. Specifically, the Citco Defendants were ordered to submit a revised Exhibit 1 identifying instances in
the log where in-house counsel only received a copy of the document in question rather than the document having
been received directly or prepared by in-house counsel as well as a chart setting out the position and/or function of
each individual named in the Defendants’ privilege log.
5
R. Doc. 510.
2
(3)
Scope of the terms of the Subordination of the Series 4, 5,
and 6 Shares to the Series N Shares;
(4)
Use of the proceeds of the 2008 Series N Offering;
(5)
Consents of the Series 4, 5, and 6 Shareholders to the term
of the Series N Offering;
(6)
Source of proceeds to purchase Richcourt Holding and
compliance with Know Your Customer Rules of the Patriot
Act (March 1, 2008 to September 1, 2008);
(7)
Execution of the Exclusivity Agreement to purchase
Richcourt by Fletcher and Citco between March 1, 2008 and
May 1, 2008;
(8)
Reasons for the termination of the Administrative
Agreement between January 1, 2009 and December 31,
2009;
(9)
Default on RBS Loan and unwinding of Global Hawk;
(10)
Receipt of fees payable to Citco on unwinding of Global
Hawk;
(11)
Decision or rationale for redeeming Series 4, 5, and 6 shares
without notifying Series N Shareholders; and
(12)
Liability of Richcourt entities or Citco for any deficiency on
the RBS Loan.
Plaintiffs request that the Citco Defendants put any documents that do not fall within any
of these 12 categories into a “catch-all” category, and also that the Citco Defendants themselves
certify as to the accuracy of the categorization. Plaintiffs’ only explanation regarding the need for
the proposed categorization as set forth in their briefing is that “if the Court were to order Citco to
categorize the documents…the parties could continue to hone the privilege log entries that are
really at issue. The Louisiana Funds believe that once this is done, they will be able to eliminate
large amounts of log entries from Catch All Category based upon the dates.”6 During the
December 12, 2017 conference, counsel for Plaintiffs also stated that the proposed categories
would help the court conduct an in camera review of approximately 450 documents.
6
R. Doc. 481-2, p. 3.
3
In opposition to this particular request, the Citco Defendants contend that Plaintiffs’ brief
“completely misrepresents the recent meet-and-confer process regarding Citco’s privilege log.”7
The Citco Defendants confirm that they “did not agree to the requested client certification” because
such “review would have been conducted by Citco’s attorneys.”8 The Citco Defendants assert that
they offered to “bucket the documents into categories if Plaintiffs agreed to withdraw their request
that Citco revise its entire privilege log” and that during the parties’ November 14, 2017
conference, “both parties agreed to not file any motions to compel regarding privilege logs in light
of the parties’ ongoing discussions.”9 In opposition to the Motion to Compel however, the Citco
Defendants state they are “no longer willing to voluntarily undertake this exercise in order to avoid
costs associated with motion practice, now that Plaintiffs have unilaterally abandoned the meetand-confer process.”10
During the December 12, 2017 conference, counsel for the Citco
Defendants confirmed that although the Citco Defendants were initially amenable to Plaintiffs’
proposed categorization, they could no longer could agree to such request following the filing of
Plaintiffs’ Motion to Compel and the Citco Defendants’ efforts in revising entries on their privilege
log.
Plaintiffs have provided no authority, and the court is aware of none, that would require
the Citco Defendants to categorize the documents set forth in their privilege log pursuant to the
categories requested by Plaintiffs. As discussed with the parties during the December 12, 2017
conference, this court will not consider an in camera review of the documents listed on the Citco
Defendants’ privilege log without first determining the sufficiency of the log descriptions
7
R. Doc. 499, p. 2.
8
R. Doc. 499, p. 3.
9
R. Doc. 499, p. 3.
10
R. Doc. 499, p. 4.
4
themselves.11 Accordingly, the court proceeds with considering the sufficiency of the Citco
Defendants’ privilege log, and the potential applicability of the exceptions to privilege advocated
by Plaintiffs.
B. The Majority of Citco Defendants’ Descriptions as Set Forth in Exhibits 1, 2,
and 4 are Sufficient; however, the Undersigned Will Proceed with an In
Camera Review of a Limited Set of Documents and Will Require the Citco
Defendants to Revisit Log Entries on Which Third Parties Appear.
In support of their Motion to Compel, Plaintiffs have not submitted the Citco Defendants’
actual privilege log. Instead, it appears that Plaintiffs have compiled four primary exhibits
reflecting log entries which Plaintiffs contend are insufficient.12
11
Plaintiffs rely primarily on Equal Employment Opportunity Commission v. BDO USA, LLP, 2017 WL 5494237 (5th
Cir. Nov. 16, 2017) to argue that an in camera review is necessary. BDO arose in the context of the EEOC’s
investigation of charges filed by BDO’s former Chief Human Resources Officer, Hang Bower. In the context of its
investigation, the EEOC issued Requests for Information to BDO regarding Bower’s charges of discrimination. In
response, BDO asserted that the EEOC was eliciting (and Bower was revealing) attorney client privileged
communications between Bower and BDO’s in-house and outside counsel. Id. at * 1. There were 278 entries on
BDO’s privilege log referencing documents between (1) Bower and in-house and outside counsel; (2) other BDO
employees and in-house and outside counsel; (3) non-attorney employees with counsel courtesy copied; and (4) nonattorney employees regarding legal advice (but not involving any attorneys). Id. at * 3. The EEOC filed a subpoena
enforcement action, and the magistrate judge ultimately denied the EEOC’s request to enforce the subpoena based on
the magistrate judge’s determination that the EEOC had not made a sufficient showing that the privilege log reflected
an improperly claimed privilege. Id. The Fifth Circuit held that this was an improper shifting of the burden to the
EEOC (i.e., it should have instead been BDO’s burden to establish the documents on the log were privileged). The
EEOC objected to the magistrate judge’s ruling, and appended to that objection an affidavit from Bower in which she
stated that communications she exchanged with BDO’s counsel and with other non-attorneys were for the purpose of
business advice and that, in order to protect communications from disclosure in future legal proceedings, BDO
required her to forward or copy in-house counsel on virtually all communications pertaining to employee
investigations and to include in emails a false designation that the communication “was prepared at the request of
legal counsel.” Id. at * 2. Given the “serious nature” of the allegations in Bower’s declaration and the “lack of a
countering affidavit” from BDO, the Fifth Circuit noted that an in camera review would likely be necessary and that
“the amount of documents in this case – 278 – does not present an unduly burdensome task for review.” Id. at * 5, n.
4. Here, there are not the same sort of “serious” and uncontested allegations regarding improper use of privilege.
Compare, King v. University Healthcare System, L.C., 645 F.3d 713, 721 (5th Cir. 2011) (finding district court did
not err in refusing to conduct a full in camera review of documents listed on privilege log when log set forth sufficient
descriptions and plaintiff “offered only speculation that the e-mails are not covered by privilege because they were
made for a purpose other than obtaining legal advice.”).
12
As discussed below, Exhibit 3 consists of documents for which Plaintiffs contend no privilege extends based on the
crime-fraud exception.
5
First, Plaintiffs assert that log entries compiled on Plaintiffs’ Exhibits 113 and 214 contain
insufficient descriptions because these entries indicate that the Citco Defendants are asserting
attorney-client privilege over documents received by or prepared by in-house counsel. Plaintiffs
argue that the descriptions in the Citco Defendants’ privilege log related to these documents are
insufficient because the descriptions do not satisfy the Citco Defendants’ burden of establishing
that the documents were for the primary purpose of legal, rather than business, advice. The
documents included in Plaintiffs’ Exhibit 1 (321 documents) are documents received by in-house
counsel (either sent to in-house counsel or on which in-house counsel was copied); the documents
included in Plaintiffs’ Exhibit 2 (267 documents) are those prepared by in-house counsel but which
Plaintiffs contend were not prepared in anticipation of litigation or for the predominate purpose of
obtaining legal advice. Second, with respect to the documents included in Plaintiffs’ Exhibits 4(a)
through 4(e),15 Plaintiffs assert these entries are insufficient because the Citco Defendants have
used generic, boilerplate objections. A review of the list of log entries included in Plaintiffs’
Exhibit 4(a) through 4(e) reveals that these entries were also included as log entries in Plaintiffs’
Exhibits 1, 2, or 3.
Although Plaintiffs have obviously taken great pains to re-organize the Citco Defendants’
log into the various exhibits, Plaintiffs have not focused on any particular entry in any of the
exhibits. Instead, Plaintiffs generally argue that the descriptions are “generic” or “boilerplate” and
that given Citco’s business (as a plan administrator), establishing that correspondence by or with
Citco in-house counsel was for the primary purpose of legal, rather than business, advice is almost
impossible. In their opposition to the Motion to Compel, the Citco Defendants attach revised logs
13
R. Doc. 481-3.
14
R. Doc. 481-4.
15
481-6.
6
corresponding to Plaintiffs’ Exhibit 1-4.16 Additionally, in response to this court’s December 20,
2017 Notice and Order, the Citco Defendants submitted a Revised Exhibit 1 highlighting in-house
counsel as well as a chart setting out the general function of each individual identified on the Citco
Defendants’ privilege log.17
Rule 501 of the Federal Rules of Evidence requires a federal court sitting in diversity to
apply the appropriate state’s law concerning the scope and application of the claimed attorneyclient privilege. The Louisiana Code of Evidence states:
A client has a privilege to refuse to disclose, and to prevent another
person from disclosing, a confidential communication ... made for
the purpose of facilitating the rendition of professional legal services
to the client, as well as the perceptions, observations, and the like,
of the mental, emotional, or physical condition of the client in
connection with such a communication....
La. Code Evid. art. 506(B). Under Louisiana law, the party asserting the privilege has the burden
of proving its applicability. Smith v. Kavanaugh, Pierson & Talley, 513 So.2d 1138, 1143 (La.
Sept. 9, 1987).
In BDO, the Fifth Circuit left the initial determination regarding whether the privilege log
was sufficient to the district court on remand, and set forth some general rules regarding the
assertion of privilege. The court explained that “[f]or a communication to be protected under the
privilege, the proponent ‘must prove: (1) that he made a confidential communication; (2) to a
lawyer or his subordinate; (3) for the primary purpose of securing either a legal opinion or legal
services, or assistance in some legal proceeding.’” 2017 WL 5494237 at * 3 (citing United States
v. Robinson, 121 F.3d 971, 974 (5th Cir. 1997)). The party claiming the privilege bears the burden
of proof, and this is a highly fact-specific inquiry. Id. Ambiguities with respect to whether the
16
R. Doc. 499-3-499-10.
17
R. Doc. 510.
7
elements of a privilege claim have been met are construed against the proponent of the privilege.
Id. Once the privilege is established, the burden shifts to the party seeking the documents to prove
an applicable exception. Id. Generally, Plaintiffs assert that the Citco Defendants’ privilege log
fails to meet Defendants’ burden of establishing the documents therein are privileged under the
standards set forth in BDO.18
“There is no presumption that a company’s communications with counsel are privileged.”
Id. * 4. “‘[C]ommunications by a corporation with its attorney, who at the time is acting solely in
his capacity as a business advisor, [are not] privileged,’…nor are documents sent from one
corporate officer to another merely because a copy is also sent to counsel…” Id. at * 4 (internal
citations omitted). “[A] privilege log’s description of each document and its contents must provide
sufficient information to permit courts and other parties to ‘test[ ] the merits of’ the privilege claim”
and “courts have stated that simply describing a lawyer’s advice as ‘legal,’ without more, is
conclusory and insufficient to carry out the proponent’s burden of establishing attorney-client
privilege.” Id. (internal citations omitted). See also, Chemtech Royalty Associates, L.P. v. United
States, Civil Action No. 05-944, 2010 WL 11538363, at * 7 (M.D. La. Sept. 23, 2010) (explaining
that when in-house counsel have responsibilities extending beyond rendering legal advice, “courts
require a clear showing that the attorney was acting in his professional legal capacity” but that
when “non-legal services such as…business advice that must be given along with legal advice in
Plaintiffs contest the sufficiency of the Citco Defendants’ privilege log primarily relying on BDO. As set forth
above, Louisiana law must govern the court’s determination regarding the applicability of the attorney client privilege.
However, this court has explained that federal law is instructive, “given the ‘federal common law and Louisiana
statutory law are materially similar concerning the attorney-client privilege.’” Forever Green Athletic Fields, Inc. v.
Babcock Law Firm, LLC, Civil Action No. 11-633, 2014 WL 29451, at * 6, n. 7 (M.D. La. Jan. 3, 2014) (citing Akins
v. Worley Catastrophe Response, LLC, No. 12–2401, 2013 WL 796095, at *11 (E.D. La. March 4, 2013); Soriano v.
Treasure Chest Casino, Inc., No. 95–3945, 1996 WL 736962, at *2 (E.D. La. Dec. 23, 1996) (federal “common law
and Louisiana statutory law are materially similar in this case in regards to attorney-client privilege”)). Given that
this court routinely considers federal common law when considering the scope and applicability of the attorney-client
privilege under Louisiana law, and in light of Plaintiffs’ extensive reliance on BDO, the undersigned has addressed
the Fifth Circuit’s ruling herein.
18
8
order for the legal advice to be understood by a client, are mixed with legal services, it does not
render the legal services any less protected by the privilege. In fact, they are both protected when
they are inextricably intertwined.”); Swoboda v. Manders, Civil Action 14-19, 2016 WL 2930962,
at * 5, n. 41 (M.D. La. May 19, 2016) (recognizing that not all communications between an
attorney and his client are privileged, “‘[f]or example, no privilege attaches when an attorney
performs investigative work in the capacity of an insurance claims adjuster, rather than as a
lawyer.’”) (citing In re Allen, 106 F.3d 582, 602 (4th Cir. 1997)); U.S. v. Davis, 636 F.2d 1028,
1043 (5th Cir. 1981) (explaining that work papers produced by an attorney in the course of
preparing client’s tax returns were not privileged “because although preparation of tax returns by
itself may require some knowledge of the law, it is primarily an accounting service.
Communications relating to that service should therefore not be privileged, even though performed
by a lawyer.”). Attorney client privilege does not extend to materials assembled in the ordinary
course of business, or which provide purely factual data. See, U.S. v. Louisiana, Civil Action No.
11-470, 2015 WL 4619561, at * 5 (M.D. La. July 31, 2015).
Pursuant to Local Civil Rule 26(c):
A party withholding information claimed privileged or otherwise
protected must submit a privilege log that contains at least the
following information: name of the document, electronically stored
information, or tangible things; description of the document,
electronically stored information, or tangible thing, which
description must include each requisite element of the privilege
or protection asserted; date; author(s); recipient(s); and nature of
the privilege.
Emphasis added.
9
The undersigned has reviewed the log entries in the Citco Defendants’ revised Exhibits 1,
2, and 4.19 The entries reflected in these Exhibits show the date of the document, who the
document was from, who received the document, and who (if anyone) was carbon copied.
Additionally, each entry includes a description of the document on which privilege is claimed.20
These descriptions do more than simply state “legal advice.” For each entry, the subject matter of
the purported legal advice is also provided. For example, the first entry on Exhibit 1 is “email to
counsel requesting legal advice re: legal propriety of FIA Leveraged subscription documents.”21
Descriptions on Exhibit 1 also include “email chain with counsel reflecting and requesting legal
advice re: the requirements of the FIA Leveraged offering memorandum and articles of
association,” “email chain with counsel reflecting and requesting legal advice re: Project Ranier
draft disclosure letter and outstanding details on share purchase agreement,” “email to counsel
requesting legal advice re: draft response letter to SEC information request of Fletcher funds,” and
“email with counsel reflecting and requesting legal advice re: interpretation of Offering
Memorandum concerning investment manager requirements related to NAV backlog.”22 The first
entry on Exhibit 2 is “email chain with counsel requesting and providing legal advice re: Project
19
R. Docs. 499-3, 499-4, 499-6, 499-7, 499-8, 499-9, and 499-10. Again, Plaintiffs do not direct this court to a
specific entry with which they take particular issue, and instead only generally argue that the descriptions are
insufficient and that the Citco Defendants must meet a higher burden with respect to in-house counsel. The
undersigned assumes that Plaintiffs are not asking this court to undertake a more detailed analysis of the Citco
Defendants’ privilege log than they themselves have undertaken and therefore does not address herein every single
log entry set forth by the Motion to Compel individually. Moreover, while Plaintiffs seem to contend that BDO sets
a higher standard for log entries involving in-house counsel, the undersigned reads BDO as continuing to require
specific detail (regardless of whether counsel involved is in-house or not) to allow the court and the opposing party to
test the sufficiency of the privilege claim. The undersigned finds that the descriptions set forth in the Citco Defendants’
log generally meet this standard.
20
Given the descriptions set forth in the log entries, as well as the parties arguments, it appears that the Citco
Defendants are claiming attorney client privilege on all the entries at issue in Plaintiffs’ Motion to Compel.
21
R. Doc. 499-3.
22
R. Doc. 499-3.
10
Ranier draft UBS engagement letter.”23 Descriptions on that list also include “email with counsel
reflecting and requesting legal advice re: legal propriety of FIA Leveraged subscription
documents,” “email from counsel reflecting and requesting legal advice re: legal propriety of
Citco’s resignation from Richcourt corporate directorships,” “email with counsel reflecting and
requesting legal advice re: analysis of RBS’s ability to terminate ISDA agreement and implications
of early termination of Global Hawk investment,” “email chain with counsel requesting and
providing legal advice re: interpretation of contract provisions governing FIA deferred
performance fees,” and “email chain with counsel reflecting and requesting legal advice re:
contractual obligations to pay a deferred performance fee as a result of the Global Hawk
settlement.”24 Finally, Exhibits 4(a) through 4(e) contain descriptions such as “email from counsel
reflecting legal advice re: draft term sheet for financing of Richcourt Paris transaction and drafting
of financing agreement,”25 “email chain with counsel reflecting and requesting legal advice re:
Project Ranier Share Purchase Agreement and French Financial Markets Authority approvals,”26
“chart reflecting legal advice and comments of J. Sadler (not disclosed to third party) re: summary
and analysis of key legal terms for Richcourt bids (attachment to #27),”27 “email with counsel
requesting and reflecting legal advice re: proposed response to CIMA regulatory request,”28 “email
chain from counsel reflecting legal advice re: RBS reporting requirements,”29 “email chain with
23
R. Doc. 499-4.
24
R. Doc. 499-4.
R. Doc. 499-6. Plaintiffs complain that certain entries do not include “from,” “to” or “CC” information. It appears
that certain entries on the log that do not include this information were attachments to emails, and that the emails
themselves were sent for the purpose of obtaining legal advice. See, R. Doc. 499-6 (“materials sent to counsel for the
purpose of obtaining legal advice re: Richcourt insurance policies.”).
25
26
R. Doc. 499-7.
27
R. Doc. 499-7.
28
R. Doc. 499-8.
29
R. Doc. 499-9.
11
counsel requesting legal advice re: interpretation of Leveraged Offering Memorandum in
connection with Global Hawk settlement with RBS,”30 and “email chain with counsel requesting
legal advice re: legality of audit report requested for Arbitrage.”31 With the exception of the
documents discussed below, the undersigned finds the information contained on the Citco
Defendants’ privilege log sufficient to establish attorney-client privilege over the withheld
communications.32
As noted above, on December 20, 2017, the undersigned ordered the Citco Defendants to
submit a revised Exhibit 1 that distinguished between documents which were sent “to” in house
counsel or instead on which in-house counsel was “carbon copied.”33 On December 28, 2017, the
Citco Defendants submitted a revised “Exhibit 1” identifying in-house counsel.34 As revised, the
majority of the entries included on Exhibit 1 were sent directly to in-house counsel (with additional
in-house counsel sometimes carbon copied). However, there are twenty-one (21) entries for which
in-house counsel appear only in the “CC” field.35 Six of these entries were produced in redacted
30
R. Doc. 499-9.
31
R. Doc. 499-10.
In addition to asserting that the descriptions themselves as set forth in Citco’s privilege log are insufficient, Plaintiffs
assert that “[m]any of the in-house emails are between in-house lawyers that do not work for any of the Citco
defendants and whose employers have not produced documents in this litigation.” R. Doc. 481-2, p. 9. Plaintiffs do
not explain which emails fall within this category, nor do they give any specific examples of such emails. In support
of their assertion that it is inconsistent for the Citco Defendants to claim privilege on such emails, Plaintiffs cite In re
Santa Fe Intern. Corp., 272 F.3d 705, 710-711 (5th Cir. 2001). In Santa Fe, the Fifth Circuit discussed the “common
legal interest” extension of privilege to communications between co-defendants and potential co-defendants in actual
litigation and their counsel and found that the privilege did not extend to communications sent to third parties
competitors circulated for the purpose of ensuring compliance with antitrust laws was not protected. To the extent
Plaintiffs contend that there can be no privilege with respect to communications with lawyers and employees of other,
non-defendant Citco entities, or between in-house lawyers employed by non-defendant Citco entities, the undersigned
disagrees that such disclosure would result in waiver of the attorney client privilege. See, American Airlines, Inc. v.
Travelport Limited, Civil Action No. 4:11-244, 2012 WL 12884822, at * 5 (N.D. Tex. July 16, 2012) (finding that
“disclosure of communications between a parent and its majority-owned subsidiaries does not result in waiver of the
attorney-client privilege.”).
32
33
R. Doc. 508.
34
R. Doc. 510, Exhibit 1.
35
See, R. Doc. 510, Exhibit 1, Log Entry Numbers 2079, 1548, 1621, 211, 213, 212, 2109, 516, 513, 1837, 2261, 948,
938, 945, 949, 950, 951, 953, 964, 946, & 947. The Citco Defendants assert that “[a]s to the handful of entries in
12
form.36 Fifteen of these entries have been withheld completely.37 The undersigned questions why
some of these entries were produced in redacted form while some were not. Further, while the
descriptions for each of these entries is detailed, it is unclear whether these communications were
actually confidential communications to a lawyer as required by BDO when the lawyer in question
only appears in the “CC” field.38 Accordingly, for these twenty-one (21) entries,39 the undersigned
GRANTS Plaintiffs’ Motion to Compel in part and will undertake an in camera review. The Citco
Defendants are ORDERED to submit the twenty-one (21) documents to the undersigned for an in
camera review on or before Tuesday, January 9, 2018. The Citco Defendants are instructed to
provide the twenty-one (21) documents directly to the undersigned in hardcopy form (via a sealed
envelope delivered to the clerk’s office), following which the court will file the documents into
the record under seal with the appropriate restrictions. For the documents that were produced in
redacted form, the Citco Defendants shall provide both a redacted and an unredacted copy.
Additionally, as noted above, the undersigned previously ordered the Citco Defendants to
provide a chart setting out the position and/or function of each individual named on the
Defendants’ privilege log.40 Based on the undersigned’s review of the chart submitted by the Citco
which an attorney appears only in the ‘CC’ field, we have again confirmed that these emails were send to in-house
counsel and contain requests for legal advice directed to an attorney that were either redacted or withheld….” R. Doc.
510, p. 1. As explained herein, without reviewing the twenty-one documents for which in-house counsel appears only
as a “CC,” the undersigned cannot determine whether these communications were directed to counsel for the purpose
of obtaining legal advice.
36
See, R. Doc. 510, Exhibit 1, Log Entry Numbers 2079, 1548, 2109, 516, 513, & 2261.
37
See, R. Doc. 510, Exhibit 1, Log Entry Numbers 1621, 211, 213, 212, 1837, 948, 938, 945, 949, 950, 951, 953, 964,
946, & 947.
38
See, e.g., Varughese v. Mount Sinai Medical Center, 12 Civ. 8812, 2014 WL 349698, at * 2 (S.D.N.Y. Jan. 31,
2014) (determining in camera review of documents where in house counsel was cc’d was appropriate).
39
R. Doc. 510, Exhibit 1, Log Entry Numbers 2079, 1548, 1621, 211, 213, 212, 2109, 516, 513, 1837, 2261, 948, 938,
945, 949, 950, 951, 953, 964, 946, & 947.
40
R. Doc. 508.
13
Defendants,41 certain individuals included on the Citco Defendants’ log are third parties (i.e., not
Citco employees or outside counsel). Specifically, the Citco Defendants’ chart includes Andrea
Brandenberger, Louise Campbell, Edourard Devitry, John McElroy, Thomas Ranysford, and
Alexis Theiriet who are described as UBS employees.42 Additionally, the Citco Defendants’ chart
includes Davide De Vittori, Gregory Garoscio, Enrico Laddaga, Sonia Lopez, Silvia Massari,
Michele Mauran, John Mensack, and Rudolph Preud’Homme, who are described as Richcourt
non-lawyer employees.43 Finally, the Citco Defendants’ chart includes Pascal Noel, who is
described as a Deloitte non-lawyer employee. Because there are entries on the Citco Defendants’
privilege log that appear to be communications where employees of UBS, Richcourt, or Deloitte
are included, it is not clear with regard to these entries that the elements of privilege have been
met.44 “A party invoking the attorney-client privilege must establish: (1) that there was a
communication between client and counsel; (2) the communication was intended to be
confidential; (3) the communication was, in fact, kept confidential; and (4) the communication was
made for the purpose of obtaining or providing legal advice.” Swoboda, 2016 WL 2930692, at *
41
R. Doc. 510, Exhibit 2.
Plaintiffs contend that “UBS provided investment banking services for Citco and assisted Citco in the sale of
Richcourt to Fletcher.” R. Doc. 481-2, p. 6.
42
Plaintiffs state that they are “willing to concede that all Richcourt documents between September 1, 2008 and March
1, 2020 are privileged.” R. Doc. 481-2, p. 7. “Richcourt documents” (i.e., documents included on Plaintiffs’ Exhibit
3 and purportedly subject to the crime/fraud exception) within this date range include documents on which Enrico
Laddaga, Silvia Massari, and Michele Mauran were involved. Accordingly, based on Plaintiffs’ assertion that
documents with Richcourt non-lawyer employees remain privileged, it appears that Plaintiffs have conceded that, at
least with respect to certain Richcourt employees, no waiver based on disclosure to a third party has occurred.
43
Plaintiffs contend that “[i]t is inconsistent for Citco to claim that the employees of these companies are so closely
related so as to qualify for a joint privilege, yet at the same time argue they are not required to produce non-privileged
documents in their possession even though under the control of Citco Group, Ltd. Citco has asserted broad coverage
of affiliates under the privilege based upon its definition of common control.” R. Doc. 481-2, p. 9. As noted above,
to the extent Plaintiffs contend that there can be no privilege based on communications with in-house lawyers
employed by non-defendant Citco entities, the undersigned disagrees. To the extent Plaintiffs are also concerned with
inclusion of third party non-lawyer employees of UBS, Richcourt, or Deloitte on the privilege log, Plaintiffs have not
directly addressed this issue in their briefing. However, given the inclusion of these third parties on the Citco
Defendants’ privilege log, the undersigned finds it appropriate to require a supplemental submission from the Citco
Defendants to the Plaintiffs to resolve this potential issue.
44
14
4 (citing Bross v. Chevron USA, Inc., Civil Action No. 06-1523, 2009 WL 854446, at *3 (W.D.
La. March 25, 2009) (citing U.S. v. Construction Products Research, Inc., 73 F.3d 464, 473-74
(2d Cir. 1996)). “The attorney-client privilege exists to protect confidential communications and
to protect the attorney-client relationship and is waived by disclosure of confidential
communications to third parties.” Shields v. Sturm, Ruger & Co., 864 F.2d 379, 382 (5th Cir.
1989). Here, the inclusion of individuals who appear to be third parties makes the questions of
whether the communication was between client and counsel and whether the communication was
intended to be confidential a closer call. As currently presented, the undersigned is unable to
determine the sufficiency of the Citco Defendants’ privilege log entries on which employees of
UBS, Richcourt, or Deloitte are included. Accordingly, with respect to these entries, the Plaintiffs’
Motion to Compel is GRANTED IN PART. Specifically, the Citco Defendants are ORDERED
to provide to Plaintiffs, within fourteen (14) days of this Ruling, a supplemental log (the
supplemental log may consist only of the entries on which employees of UBS, Richcourt, or
Deloitte are included), as well as any legal authority or evidence establishing that inclusion of
these individuals does not affect the existence of the attorney client privilege.45
C. Potential Exceptions to Privilege
In the first step of the analysis, as set out above, the undersigned found the entries sufficient
to establish attorney client privilege on the vast majority of documents listed on the Citco
Defendants’ privilege log. Once the privilege is established, the burden shifts to the party seeking
“[T]he majority approach by courts, when confronted by a privilege log that is technically deficient and that does
not appear to have been prepared in bad faith, is to allow the party who submitted the log a short opportunity to amend
the log prior to imposing the drastic remedy of waiver.” Cashman Equipment Corp. v. Rozel Operating Co., Civil
Action 08-363, 2009 WL 2487984, at * 2 (M.D. La. Aug. 11, 2009) (collecting cases); see also, Chemtech, 2009 WL
854358, at * 5 (requiring plaintiff to provide a revised privilege log and noting “[a]t this juncture, the court will not
order that any of the 379 documents be produced, and will not conduct an in camera review of the documents.
Obviously, such a log will require some work, but an in camera inspection of 379 documents is no substitute for an
informative log.”).
45
15
the documents to prove an applicable exception. BDO, 2017 WL 5494237, at * 3. The Court must
now turn to the issue of whether any exceptions apply that would require production of these
documents. First, Plaintiffs contend that “[a]ll of the documents which are listed on the privilege
log fall into the ‘fiduciary duty exception’ to the attorney client privilege.”46 Second, Plaintiffs
raise the possibility that certain documents set forth in Exhibit 347 are not privileged under the
crime/fraud exception. 48
i. Plaintiffs Have Not Established that the Fiduciary Duty Exception
Applies
Plaintiffs assert that all the documents listed on the Citco Defendants’ privilege log must
be produced because of the fiduciary duty exception to privilege. Plaintiffs contend that “[a]s
administrator of the funds, Citco Cayman was in a fiduciary relationship with the Louisiana Funds.
Citco had a fiduciary duty to the Louisiana Funds because of the role it played as administrator of
Leveraged and the fact that Citco was the recipient of $50 million of the offering proceeds of the
Series N Shares.”49 In support of their position, Plaintiffs rely on Landry v. Georgia Gulf Corp.,
Civil Action No. 97-1164, 2001 WL 36286141 (M.D. La. Feb. 26, 2001).
46
R. Doc. 481-2, p. 5.
47
R. Doc. 499-5.
Plaintiffs also contend that “Citco cannot rely on the opinion of legal counsel in defending this lawsuit yet invoke
the attorney-client privilege.” R. Doc. 481-2, p. 6 (citing United States v. Glailani, 751 F.Supp.2d 498, 501 (S.D.N.Y.
April 26, 2010) (“The fundamental proposition governing implied or ‘at issue’ waivers of attorney-client and other
evidentiary privileges is that a party may not affirmatively rely on privileged communications to support a claim or
defense and then shield those communications from discovery by its adversary.”). See also, Forever Green Athletic
Fields, Inc. v. Babcock Law Firm, LLC, Civil Action No. 11-633, 2014 WL 29451, at * 6 (M.D. La. Jan 3, 2014)
(noting that under Louisiana law regarding attorney-client privilege, “when the privilege holder makes a confidential
communication a material issue in litigation, ‘fairness demands treating the defense [or claim] as a waiver of the
privilege.’”). Plaintiffs do not provide any additional explanation for their apparent position that the privilege has
been waived based on the Citco Defendants placing the opinion of legal counsel “at issue.” As such, Plaintiffs have
done nothing to carry their burden of establishing that such waiver occurred. See, Glailani, 751 F.Supp.2d at 501
(“But the critical point is that a party claiming an implied or at issue waiver must make ‘some showing…that the
opposing party relies on the privileged communication as a claim or defense or as an element of a claim or defense.’”)
(internal citation omitted)).
48
49
R. Doc. 481-2, p. 5.
16
In Landry, this court explained “[i]n an ERISA case, an exception to the attorney-client
privilege has been adopted by the United States Fifth Circuit Court of Appeals. Under the
‘fiduciary exception,’ a person or entity which acts as a fiduciary to an ERISA plan cannot assert
the attorney-client privilege about legal advice concerning plan administration.” Id. at * 3 (citing
Wildbur v. ARCO Chemical Co., 974 F.2d 631, 645 (5th Cir. 1992) (“An ERISA plan is a separate
legal entity from its sponsor, 29 U.S.C. § 1132(d), and a plan’s administrator owes a fiduciary duty
to the plan’s beneficiaries, not its sponsor. See 29 U.S.C. §§ 1002(21), 1103(a) and (c)(1), and
1104(a)(1). When an attorney advises a plan administrator or other fiduciary concerning plan
administration, the attorney’s clients are the plan beneficiaries for whom the fiduciary acts, not the
plan administrator. Washington–Baltimore Newspaper Guild, Local 35 v. Washington Star Co.,
543 F.Supp. 906, 909 (D.D.C.1982). Therefore, an ERISA fiduciary cannot assert the attorneyclient privilege against a plan beneficiary about legal advice dealing with plan administration.”).
In U.S. v. Jicarilla Apache Nation, 564 U.S. 162 (2011), the Supreme Court more generally
discussed the history and applicability of the common law fiduciary exception to the attorney client
privilege.50 The Court explained that under English common law, “when a trustee obtained legal
advice to guide the administration of the trust, and not for the trustee’s own defense in litigation,
As a threshold matter, and as discussed above, rule 501 of the Federal Rules of Evidence provides that “[t]he
common law – as interpreted by United States courts in light of reason and experience – governs a claim of
privilege…But in a civil case, state law governs privilege regarding a claim or defense for which state law supplies
the rule of decision.” Fed. R. Evid. 501. Because this suit is based on federal diversity jurisdiction, state law of
privilege (which is generally the same as federal common law) should govern. The Citco Defendants assert that the
fiduciary duty exception relied upon by Plaintiffs is a creature of federal common law, and that “no Louisiana court
has ever recognized a fiduciary duty exception, which does not exist in the Louisiana Code.” R. Doc. 499, p. 6. To
the extent Plaintiffs contend that the fiduciary duty exception applies based on the premise that they were the “real
client” of the purportedly privileged communications, the Louisiana Code of Evidence does recognize an exception
to privilege as to communications which are “relevant to a matter of common interest between or among two or more
clients if the communication was made by any of them or their representative to a lawyer or his representative retained
or consulted in common, when subsequently offered by one client against the other in a civil action.” La. Code. Evid.
Art. 506(C)(5). Assuming the “common interest” privilege set forth in the Louisiana Code of Evidence would allow
for the application of a fiduciary duty exception or that Louisiana law would otherwise recognize the applicability of
a fiduciary duty exception to attorney client privilege, Plaintiffs have not established such exception should apply
here.
50
17
the beneficiaries were entitled to the production of documents related to that advice.” Id. at 171.
Although this exception to the attorney client privilege was first met with skepticism by American
courts, in “[t]he leading American case on the fiduciary exception,” Riggs Nat. Bank of
Washington, DC v. Zimmer, 355 A.2d 709 (Del.Ch. 1976), the court identified two reasons for
applying the exception. Id. First, the trustees had obtained the legal advice at issue as “mere
representative” of the beneficiaries “because the trustees had a fiduciary obligation to act in the
beneficiaries’ interest when administering the trust” such that the beneficiaries were the “real
clients.” Id. at 172. The Jicarilla Court explained that the “real client” determination in Riggs
was based on several factors: “(1) when the advice was sought, no adversarial proceedings between
the trustees and beneficiaries had been pending, and therefore there was no reason for the trustees
to seek legal advice in a personal rather than a fiduciary capacity; (2) the court saw no indication
that the memorandum was intended for any purpose other than to benefit the trust; and (3) the law
firm had been paid out of trust assets.” Id.51 Second, the Riggs court “concluded that the trustees’
fiduciary duty to furnish trust-related information to the beneficiaries outweighed their interest in
the attorney-client privilege.” Id. at 173.
Other than Landry, Plaintiffs provide no additional support for their assertion that Citco
Cayman (presumably CFS Cayman) owed a fiduciary duty to Plaintiffs (either based on
jurisprudence or the terms of the administration agreement), nor do Plaintiffs explain how such
fiduciary duty (assuming it exists) would extend to the other Citco Defendants. As indicated in
Landry, while the Fifth Circuit has recognized a fiduciary duty exception to the attorney-client
privilege in the specific context of ERISA, that exception was based on specific fiduciary duties
In analyzing whether the fiduciary exception could apply to the United States’ management of Indian tribal trust
accounts (it did not), the Court noted that the source of funds used to obtain the legal advice was a “strong indicator”
of who should be considered the “real client.” Id. at 179.
51
18
set forth by statute, and has been applied only in that limited context. See, Landry, 2001 WL
36286141, at * 4 (finding fiduciary exception to attorney client privilege did not apply where legal
advice at issue concerned amendments to the plan clarifying eligibility and did not relate to
administration or management of the plan); Tolbert v. RBC Capital Markets Corp., Civil Action
No. H-11-107, 2012 WL 1067629, at * 5 (S.D. Tex. March 28, 2012) (“Even assuming the
fiduciary duty exception were to apply, conduct involving the design, modification, or amendment
of an ERISA plan does not constitute fiduciary conduct.”). Moreover, although the fiduciary duty
exception has its roots in the common law exception discussed in Jicarilla, Plaintiffs have made
no showing that the documents for which they contend the exception applies contain legal advice
for which Plaintiffs should properly be considered the “real clients.”52
ii. Plaintiffs Have Not Established that the Crime-Fraud Exception
Applies
Plaintiffs attach Exhibit 3, which includes documents related to “Richcourt/Project
Ranier.”53 Although Plaintiffs list 898 documents in Exhibit 3, they state they “are willing to
concede that all Richcourt documents between September 1, 2008 and March 1, 2010 are
privileged. All documents before and after these dates remain contested.”54 There are a little over
600 documents listed in Exhibit 3 that are within the date range of September 1, 2008 through
March 1, 2010. Plaintiffs argue that the documents listed in Exhibit 3 that are outside this date
52
In opposition, the Citco Defendants attach an affidavit from a Cayman Islands attorney attesting that under Cayman
Islands law, CFS Cayman owed no fiduciary duties to Plaintiffs. R. Doc. 499-1. The Citco Defendants further assert
that “Plaintiffs did not pay CFS Cayman or any other Citco entity any fees at all, let alone fees for legal services.
Because CFS Cayman was using its own funds to pay for legal advice on its own behalf that had nothing to do with
Plaintiffs, the fiduciary exception cannot apply.” R. Doc. 499, p. 7. During the December 12, 2017 status conference,
the undersigned asked Plaintiffs if they had any information regarding the source of the funds used to pay for legal
services. Plaintiffs did not provide a response to that specific inquiry. See, R. Doc. 509, pp. 18:13-19:25.
53
R. Doc. 481-5.
54
R. Doc. 481-2, p. 7.
19
range should be reviewed by the court in camera to determine whether the documents are
exempted from privilege based on the crime-fraud exception.
“The crime-fraud exception applies to both the attorney-client and work product
privileges.” In re EEOC, 207 Fed. Appx. 426, 434 (5th Cir. 2006). “Pursuant to the crime-fraud
exception, privilege is overcome when an attorney-client communication or work product is
intended to further continuing or future criminal or fraudulent activity. The party seeking
discovery of privileged information bears the burden of establishing a prima facie case that the
attorney-client relationship was intended to further criminal or fraudulent activity.” Id. (internal
citations omitted). See also, Bridlington Company, LLC v. Southern Disposal Services, LLC, 216
So.3d 219, 223 (La. App. 2 Cir. Feb. 15, 2017) (“In order to vitiate the attorney-client privilege,
the trial court must make a finding that the attorney-client relationship was intended to further
continuing or future criminal or fraudulent activity. The party challenging the privilege must (1)
make an independent prima facie case that a crime has been committed, and (2) then demonstrate
that the privileged information bears a relationship to the alleged crime or fraud.”) (internal
citations omitted).
Despite bearing the burden, Plaintiffs have done very little to establish the exception’s
applicability. Here, Plaintiffs assert that “[a]s a matter of law under the Patriot Act, Citco was
required to know the source of the funds that was [sic] being used to pay the purchase price on the
June 23, 2008 closing [of the sale of Richcourt to Fletcher]” and that “failure to disclose this
information to the Louisiana Funds would be a violation of the securities law.”55 Plaintiffs
speculate that Citco knew of the source of the funds and failed to disclose that source,56 and argue
55
R. Doc. 481-2, p. 6.
56
R. Doc. 484-4, p. 105:17-19.
20
that is enough to establish fraud and eliminate the privilege. First, while Plaintiffs assert that they
seek the withheld information because they “are entitled to any communications between Citco
and its counsel on the source of the funds that would be used to make this purchase….,” 57 during
Mr. Diver’s corporate deposition on behalf of Citco Group, Mr. Diver testified that “[w]e have
produced documents on what we understood to be the source of funds of Fletcher for the Richcourt
Acquisition.”58 Accordingly, it appears that Plaintiffs have previously been provided with factual
information regarding the source of the funds. Additionally, although Plaintiffs blanketly assert
that Citco (though perhaps only CFS Cayman) was required to know the source of the funds and
the failure to disclose this information to Plaintiffs would violate securities laws, Plaintiffs do not
specifically explain the basis upon which they claim they were entitled to disclosure or how, even
assuming the Citco Defendants (or some of them) violated the Patriot Act or securities law, such
a violation would constitute the necessary criminal or fraudulent activity needed to establish the
applicability of the crime-fraud exception. “A party must present evidence of an intent to deceive
to establish a prima facie case of fraud or perjury.” Industrial Clearinghouse, Inc. v. Browning
Manufacturing Div. of Emerson Elec. Co., 953 F.2d 1004, 1008 (5th Cir. 1992). Finally, Plaintiffs
have not pointed to any specific entry on the Citco Defendants’ privilege log (specifically, Exhibit
3) that demonstrates that the source of the funds was at issue in any of the communications
withheld as privileged and logged on Exhibit 3. Therefore, Plaintiffs have failed to show that the
withheld communications bear a relationship to an alleged crime or fraud. Based on their
undeveloped allegations, Plaintiffs have not met their burden of establishing that the crime-fraud
exception applies here.
57
58
R. Doc. 481-2, p. 6.
R. Doc. 484-4, p. 105:17-19.
21
IV.
Conclusion
For the reasons set forth herein, the Motion to Compel59 filed by plaintiffs, Firefighters’
Retirement System (“FRS”), Municipal Employees’ Retirement System of Louisiana (“MERS”),
and New Orleans Firefighters’ Pension & Relief Fund (“NOFF”) (collectively, “Plaintiffs”) is
GRANTS IN PART AND DENIED IN PART.
IT IS HEREBY ORDERED that Plaintiffs’ Motion to Compel is GRANTED IN PART.
The undersigned will undertake an in camera review of the twenty-one (21) entries listed in R.
Doc. 510, Exhibit 1, Log Entry Numbers 2079, 1548, 1621, 211, 213, 212, 2109, 516, 513, 1837,
2261, 948, 938, 945, 949, 950, 951, 953, 964, 946, & 947. The Citco Defendants are ORDERED
to submit the twenty-one (21) documents to the undersigned for an in camera review on or before
Tuesday, January 9, 2018. The Citco Defendants are instructed to provide the twenty-one (21)
documents directly to the undersigned in hardcopy form (via a sealed envelope delivered to the
clerk’s office), following which the court will file the documents into the record under seal with
the appropriate restrictions. For the documents that were produced in redacted form, the Citco
Defendants shall provide both a redacted and an unredacted copy.
IT IS FURTHER ORDERED that, with respect entries on the Citco Defendants’ privilege
log on which employees of UBS, Richcourt, or Deloitte are included, the Plaintiffs’ Motion to
Compel is GRANTED IN PART. Specifically, the Citco Defendants are ORDERED to provide
to Plaintiffs, within fourteen (14) days of this Ruling, a supplemental log (the supplemental log
may consist only of the entries on which employees of UBS, Richcourt, or Deloitte are included),
as well as any legal authority or evidence establishing that inclusion of these individuals does not
affect the existence of the attorney client privilege.
59
R. Doc. 481.
22
In all other respects, Plaintiffs’ Motion to Compel is DENIED.
Signed in Baton Rouge, Louisiana, on January 5, 2018.
S
ERIN WILDER-DOOMES
UNITED STATES MAGISTRATE JUDGE
23
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