OFFICIAL COMMITTEE OF UNSECURED CREDITORS v. CALPERS CORPORATE PARTNERS LLC et al

Filing 121

ORDER ON APPEAL - re 106 Appeal from Magistrate Judge Decision to District Court. By JUDGE NANCY TORRESEN. (mnw)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS,
Plaintiff,
v.
CALPERS CORPORATE PARTNERS,
LLC, et al.,
Defendants.

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) Docket No. 1:18-cv-68-NT
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ORDER ON APPEAL
Before me is Defendant CalPERS Corporate Partners, LLC’s appeal of the
Magistrate Judge’s Order quashing CalPERS’s subpoena of third-party Bernstein,
Shur, Sawyer & Nelson, P.A. (“BSSN”), a law firm that served as counsel to the
Debtor in the bankruptcy action that underlies the instant case. CalPERS’s Mot.
(ECF No. 106). I AFFIRM the Magistrate Judge’s decision.
Upon timely objection to a magistrate judge’s order on a non-dispositive
motion, I must set aside any part of the order that is clearly erroneous or contrary to
law. Fed. R. Civ. Pro. 72(a). Under the “clearly erroneous” standard, I “must accept
both the trier’s findings of fact and the conclusions drawn therefrom unless, after
scrutinizing the entire record, [I] ‘form a strong, unyielding belief that a mistake has
been made.’ ” Phinney v. Wentworth Douglas Hosp., 199 F.3d 1, 4 (1st Cir. 1999).
When an objection turns on a pure question of law, my review under the “contrary to
law” branch of the Rule 72(a) standard is de novo. PowerShare, Inc. v. Syntel, Inc., 597

F.3d 10, 15 (1st Cir. 2010). CalPERS’s timely appeal asserts three objections. I take
each in turn.
CalPERS first argues that the Magistrate erroneously found that the evidence
sought through its subpoena was not relevant. I note that CalPERS failed to respond
to BSSN’s relevance argument in its briefing below, CalPERS’s Opp’n (ECF No. 92),
and that CalPERS’s counsel’s limited discussion of relevance at the hearing on this
discovery dispute was a far cry from the developed argument presented to me.
Hearing Tr. 24:1-22 (ECF No. 108-2). To the extent that CalPERS’s relevance
argument is not waived, I find upon a review of the entire record that it was not clear
error for the Magistrate to conclude that the requested evidence was neither
sufficiently relevant nor proportionate to the needs of this case to necessitate
disclosure under Federal Rule of Civil Procedure 26(b)(1).
CalPERS next argues that the Magistrate erred as a matter of law in finding
that a purported “limited waiver” of the attorney-client privilege between the Debtor,
the Debtor’s Liquidating Trustee, and the Committee of Unsecured Creditors for the
Debtor, did not constitute a complete waiver of the privilege. CalPERS is correct that
the First Circuit has held that a party cannot effect a “limited waiver” of the attorneyclient privilege. E.g. United States v. Mass. Inst. of Tech., 129 F.3d 681, 684-86 (1st
Cir. 1997). But this rule is inapposite to the Magistrate’s finding that no waiver
(“limited” or otherwise) occurred here. Hearing Tr. 40:24-41:21 (noting that while the
Magistrate “appreciate[d] the argument about First Circuit law that when there is a
waiver then that waiver opens up all related documents or communications on the

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subject matter . . . the question before the Court [was] whether there was a waiver
under the circumstances,” and finding there was not). I find that the Magistrate did
not clearly err when he determined that the parties’ correspondence and conduct did
not reflect a waiver. 1 CalPERS’s “limited waiver” argument accordingly fails.
CalPERS finally argues that the Magistrate’s ruling regarding waiver was
clearly erroneous because the Liquidating Trustee did not take reasonable steps to
protect the Debtor’s privilege. See Fed. R. Evid. 502(b) (disclosure does not operate as
a waiver if “(1) the disclosure is inadvertent; (2) the holder of the privilege . . . took
reasonable steps to prevent disclosure; and (3) the holder promptly took reasonable
steps to rectify the error”). Nothing in the record causes me to “form a strong,
unyielding belief” that the Magistrate erred in making his heavily fact-based
determination that the Liquidating Trustee took reasonable steps to prevent
disclosure of privileged materials. See Hearing Tr. 41:16-19; see also Phinney, 199
F.3d at 4. In the context of this proceeding, the Magistrate reasonably concluded that
the Liquidating Trustee’s efforts were, if not fool-proof, enough.
For the foregoing reasons, I AFFIRM the Magistrate Judge’s decision.
SO ORDERED.
Before the Magistrate, CalPERS took the position that the Bankruptcy Judge’s April 13, 2017,
Standing Order, CalPERS’s Opp’n Ex. A (ECF No. 92-1), precluded the Committee from asserting that
the Committee fell within the scope of the Debtor’s privilege. CalPERS’s Opp’n 5 (ECF No. 92). The
Standing Order appears to have been superseded by the Bankruptcy Judge’s May 7, 2018, order
confirming the Debtor’s and the Committee’s joint plan of liquidation in the bankruptcy action.
CalPERS’s Opp’n Ex. D (ECF No. 92-5). CalPERS’s position below also conflicted with CalPERS’s
October 9, 2018, representation to the Liquidating Trustee and to the Committee that “the debtor’s
privilege is maintained by/extends to its Board and extends to the Committee, which has stepped into
the debtor’s shoes and has the power to waive the debtor’s privilege.” CalPERS’s Opp’n Ex. C at 1 (ECF
No. 92-4). In any event, CalPERS appears to have dropped its argument that the Standing Order
controls in its briefing before me.

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/s/ Nancy Torresen
United States District Judge
Dated this 6th day of August, 2019.

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