Firefighters' Retirement System et al v. Citco Group Limited et al

Filing 849

RULING denying 672 OBJECTION to a Magistrate Judge's Order (Rule 72a) re 668 Order on Motion to Compel by Firefighters' Retirement System, Municipal Employees Retirement System of Louisiana, New Orleans Firefighters' Pension & Relief Fund filed by New Orleans Firefighters' Pension & Relief Fund, Municipal Employees Retirement System of Louisiana, Firefighters' Retirement System. The Magistrate Judge's 668 Ruling is hereby AFFIRMED. Signed by Chief Judge Shelly D. Dick on 11/13/2018. (SWE)

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
Before the Court is Plaintiffs’ Objections to the Ruling Dated May 22, 2018,1 which
appeals the Ruling of the Magistrate Judge2 that denied Plaintiff’s Motion to Compel3
certain documents that the responding Citco Defendants4 had identified as privileged. In
opposition to the Motion to Compel, the Citco Defendants urged the Magistrate to apply
the substantive law of England on the issue of privilege. Unpersuaded that the issue
presented a conflict of law, the Magistrate Judge analyzed the privilege question pursuant
to the Louisiana/federal common law of attorney-client privilege. The choice of law is not
challenged in this appeal. Therefore, this Court applies federal common law.
At issue are 267 documents which the Citco Defendants claim are covered by
attorney-client privilege. The subject documents relate to a 2008 transaction in which a
Citco Group affiliate sold a fund-of-funds called Richcourt Holding, Inc. ("Richcourt
Transaction") to Alphonse Fletcher, the investment manager of the Leveraged fund,

1

Rec. Doc. No. 672.
Rec. Doc. No. 668.
3
Rec. Doc. No. 578.
4
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”).
2

which is the subject of this litigation. The documents which Citco contends are privileged
involve communications between in-house lawyers for Citco Group, Citco Group's outside
counsel at Linklaters LLP, an English law firm that advised Citco on the Richcourt
Transaction, and UBS AG ("UBS"), which served as Citco Group's investment banker on
the Richcourt Transaction.
In what can only be described as a scant and ill-supported two-page objection to
the Magistrate’s ruling, the Plaintiffs advance two arguments: First, Plaintiffs argue that in
failing to apply the Second Circuit’s Ackert5 decision, the Magistrate “essentially
establishes a new judicial privilege for investment banks in commercial transactions
where the client also retains a lawyer.”6 Secondly, Plaintiffs claim that the Magistrate
committed “error in finding ‘[t]he detailed descriptions set forth on the Citco Defendants'
privilege log reflect that the withheld communications were primarily for the purpose of
obtaining or rendering legal advice.’”7 Plaintiffs argue that “the only thing the Court relied
upon was the use of legal advice in the description by Citco.”8
The Court rejects the Plaintiffs’ arguments. While it is axiomatic that
communications which involve third persons are not protected by attorney-client privilege,
if the third-party was instrumental to and engaged for the purpose of assisting in the
rendition of legal advice, the communication may be privileged. “What is vital to the
privilege is that the communication be made in confidence for the purpose of obtaining
legal advice from the lawyer.” U.S. v. Kovel.9 The Magistrate correctly found that “[t]he

5

United States v. Ackert, 169 F.3d 136, 139 (2d Cir.1999).
Rec. Doc. No. 672, p. 2.
7
Id.
8
Id.
9
296 F.2d 918, 920 (2d Cir. 1961).
6

Fifth Circuit has cited Kovel with approval in the context of a case applying the federal
common law of attorney-client privilege, and courts in this Circuit have relied on Kovel
when determining whether communications with third parties are privileged.”10 The
Magistrate Judge correctly reasoned that “the controlling factor in these cases is whether
the third-party was necessary for the rendering of legal advice or was instead providing
business advice.”11 The Magistrate concluded that Ackert, “which dealt with an investment
banker approaching a client with an unsolicited business deal rather than a client’s
specific retention of an investment banker to aid with a particular transaction,
distinguishable.”12 This Court agrees.
The Magistrate Judge looked to the engagement letter between Citco Trading and
UBS. The Magistrate also considered the Declaration of Citco Groups’ General Counsel,
Mr. Braham and found that “UBS was retained by Citco Trading to provide various
services. Some of these services – specifically with respect to developing and contacting
potential purchasers, and preparing and circulating sales documentation – do not appear
to be focused on providing services necessary for the rendering of legal, rather than
business, advice. However, other services (i.e., assisting in the negotiation of the terms
of the transaction) may fairly be within the scope of that necessary for Linklaters to provide
legal advice to Citco Trading.”13 The Magistrate Judge then undertook an analysis of the
“detailed descriptions set forth on the Citco Defendants’ privilege log” and concluded that

10

Rec. Doc. No. 668, p. 10, n. 37 and n. 38.
Id. at p. 12.
12
Id.
13
Rec. Doc. No. 668, p. 15.
11

the descriptions “reflect that the withheld communications were primarily for the purpose
of obtaining or rendering legal advice”.14
Based on the plain language of FRCP Rule 26(c), a review of the privilege log, the
Declaration of Mr. Braham, and the engagement agreement with UBS, the Magistrate
concluded that “the privilege log setting out withheld UBS Documents contains
descriptions that meet the Citco Defendants’ burden of establishing that UBS was
involved in these communications with the primary purpose of obtaining or facilitating the
rendition of legal advice.”15 The Court finds no clear error in this factual finding and further
the Court finds that the Magistrate properly applied relevant caselaw and rules of
procedure.
For the reasons set forth above, the Plaintiffs’ Objections to the Ruling Dated May
22, 201816 is DENIED and the Magistrate Judge’s Ruling17 is hereby AFFIRMED.
IT IS SO ORDERED.
Signed in Baton Rouge, Louisiana on November 13, 2018.

S

CHIEF JUDGE SHELLY D. DICK
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

14

Rec. Doc. No. 668, p. 15.
Rec. Doc. No. 668, p. 16.
16
Rec. Doc. No. 672.
17
Rec. Doc. No. 668.
15