Freund v. Weinstein et al

Filing 206

Minute Order for proceedings held before Magistrate Judge Marilyn D. Go: Motion Hearing held on 4/18/2013. Appearances by S. Rubin for plaintiff; P. Carlebach for Weinstein defendants; C. Yannucci for Hager; J. Golenbock for Shain. Rulings made on the record and in separate order on various motions to compel. As to plaintiff's motion to compel 193 , Hager must produce by 4/23/2013 specified documents for in camera inspection and supplement his opposition by 5/3/2013 with r espect to the documents on his supplemental privilege log. Plaintiff's response is due by 5/10/2013. As to Hager's motion to compel 198 , plaintiff should supplement his claim of privilege by 4/30/2013 and any response is due 5/3/2013. Plaintiff's deposition must be held by the week of 6/9/2013. Plaintiff's motions to compel 200 , 202 the Weinstein defendants are granted. Counsel for Weinstein must confirm by 4/25/2013 a date for Weinstein's deposition, which m ust take place no later than 5/24/2013. Plaintiff's motion to compel 203 production of documents pertaining to the disciplinary action against Hager is granted, but the order stayed until 5/2/2013 to permit Hager to seek a ruling from the First Department regarding confidentiality of the documents. Discovery is extended to 6/17/2013. Settlement will be discussed at the conference scheduled for 5/14/2013 at 2:00 p.m. FTR: 4:16 - 5:24. (Albertsen, Joanne)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
FREUND V. WEINSTEIN, et al.
CV 2008-1469 (FB)
MINUTE ORDER
This Minute Order reflects rulings made at a conference held on
April 18, 2013 regarding plaintiff's [193], [200], [202] and [203]
Motions to Compel and defendant Hager's [198] Motion to Compel.
1)

[193] Plaintiff's Motion to Compel as to Hager
A.

Crime-Fraud Exception

Plaintiff argues that certain communications between defendants
Hager and Weinstein that would otherwise be shielded from discovery by
the attorney-client privilege should be produced pursuant to the crimefraud exception to the privilege.
As the Supreme Court has explained, although the attorney-client
privilege

generally

protects

communications

regarding

the

past

commission of criminal conduct for the purpose of receiving legal
advice, it is not intended to protect "communications 'made for the
purpose of getting advice for the commission of a fraud' or crime."
United States v. Zolin, 491 U.S. 554, 563 (1989) (quoting O'Rourke v.
Darbishire, 1920 A.C. 581, 604 (P.C.)).
crime-fraud

exception

pierces

the

In the Second Circuit, the

privilege

where

"'the

client

communication . . . was itself in furtherance of the crime or fraud'
and 'probable cause [exists] that the particular communication . . .
was

intended

in

some

way

to

facilitate

or

conceal

the

criminal

activity.'" In re Richard Roe, Inc. ("Roe II"), 168 F.3d 69, 71 (2d
Cir. 1997) (quoting In re Richard Roe, Inc. ("Roe I"), 68 F.3d 40, (2d
Cir. 1995)) (emphasis on original).
In deciding whether documents should be produced pursuant to this
exception, courts may engage in in camera review.

Before undertaking

such a review, a court "should require a showing of a factual basis
adequate to support a good faith belief by a reasonable person . . .
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that an in camera review of the materials may reveal evidence to
establish the claim that the crime-fraud exception applies."

Zolin,

491 U.S. at 572 (quoting Caldwell v. District Court, 644 P.2d 26, 33
(Colo. 1982)).

In examining the evidence, the court should consider:

the facts and circumstances of the particular case, including,
among other things, the volume of materials the district court has
been asked to review, the relative importance to the case of the
alleged privileged information, and the likelihood that the
evidence, produced through in camera review, together with other
available evidence then before the court, will establish that the
crime-fraud exception does apply.
Id., 491 U.S. at 572.
This Court finds that plaintiff has made a sufficient showing,
including the fact that defendant Weinstein pled guilty to real estate
investment fraud; defendant Hager resigned from the New York State bar
after a complaint was made about Hager's participation in similar
fraudulent

transaction

as

plaintiff

alleged

in

this

matter,

as

discussed in Matter of Benjamin Hager, 94 A.D.3d 161, 941 N.Y.S.2d 53
(1st Dept' 2012); the deposition testimony of Mr. Siforov discussing
his business dealings with Weinstein; the Siforov contract; and the
fraudulent check purporting to represent a deposit in furtherance of
the Siforov contract, such that a reasonable person would believe that
communications between Weinstein and Hager were in furtherance of real
estate investment fraud and that such communications were intended to
facilitate or conceal the fraud.

Defendant Hager's argument that the

communications at issue post-date plaintiff's initial decision to
invest with Mr. Weinstein go to relevance, not whether the crime-fraud
exception should pierce Hager's assertion of the privilege.
Therefore, defendant Hager must produce to the Court documents
Bates stamped 384-388, 395-516 and 535-536 by no later than April 23,
2013.
B.

Bushwick Documents

All of the documents plaintiff requests pursuant to the joint
client theory will be examined by the Court in its in camera review
with respect to the applicability the crime-fraud exception. The Court

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will

consider

the

parties'

arguments

on

this

theory

during

its

examination of the relevant documents.
C.

Executed Documents on Privilege Log

Plaintiff is correct that executed documents generally may not be
shielded by the attorney-client privilege.

Since defendant Hager

contends that the documents were not, in fact, executed, he is given an
opportunity to supplement his submissions to explain why the privilege
applies to these documents.

As discussed on the record, it may be

appropriate

submit

for

Hager

to

an

affidavit

detailing

circumstances under which the documents were produced.

the

Furthermore,

Hager should amend the privilege log to clarify the dates of the
documents.

Hager's supplemental submissions must be filed by May 3,

2013 and plaintiff's response filed by May 10, 2013.
D.
Decision

Deposition Questions
is

reserved

after

consideration

of

the

additional

submissions and further review of prior orders and prior pleadings.
2)

[198] Hager's Motion to Compel as to Plaintiff
Defendant Hager argues that communications involving David Freund,

plaintiff and plaintiff's attorney should be produced because the
presence of David Freund vitiates the attorney-client privilege that
would otherwise shield these documents from disclosure.

The Court is

troubled by plaintiff's simultaneous assertion of the attorney-client
privilege on the theory that David Freund acted as an agent of
plaintiff and his refusal to produce David Freund for a deposition or
to accept a subpoena on his behalf.

However, that concern aside, the

Court finds that plaintiff has not met his burden of proving that the
attorney-client privilege protects these communications because he has
provided

no

persuasive

brother's agent.

evidence

that

David

Freund

acted

as

his

The mere fact that David Freund communicated with

defendant Weinstein on his brother's behalf does not create an agency
relationship.

Plaintiff may supplement his submissions by April 30,

2013 to establish that an agency relationship existed between plaintiff
and David Freund.

Defendant Hager's response must be filed by May 3,
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2013. Plaintiff must confirm whether David Freund will be traveling to
the United States to testify at defendant Weinstein's sentencing on
June 17, 2013 so the parties can arrange for his deposition.
3)

[200], [202] Plaintiff's Motions to Compel as to Weinstein
Plaintiff

seeks

previously requested

to

compel

documents

and

previously ordered by this Court.
production,

this

time

to

defendant
to

Weinstein

appear

at

a

to

produce

deposition

as

Since this Court previously ordered

produce

all

documents

responsive

plaintiff's requests is extended only to April 30, 2013.

to

Weinstein

must amend his Rule 7.1 Statement by April 22, 2013, as also previously
ordered.

The Court deems all of Weinstein's documents seized by the

government to

be

in

control of

Weinstein, particularly

the

ones

provided to his defense counsel.
The Court has already ordered defendant Weinstein to appear for a
deposition, see [192] Order of the Court; Order of the Court dated Mar.
21, 2013, and the Court's ruling remains in place.

The deposition must

be held by no later than May 24, 2013, and counsel for defendant
Weinstein must confirm a date by no later than April 25, 2013.

In

light of the fact that plaintiff has already deposed Weinstein for one
day and admits he has little likelihood of recovering any losses other
than through restitution in the criminal case, the deposition is
limited to four hours of examination by plaintiff and three hours of
examination total for the other defendants.

The Court recognizes that

a guilty plea is not a waiver of self-incrimination for the sentencing
phase of the case and therefore, where a defendant has not yet been
sentenced, he "may have a legitimate fear of adverse consequences from
further testimony."
(1999).

Mitchell v. United States, 526 U.S. 314, 326

Defendant Weinstein is free to assert his Fifth Amendment

right against self-incrimination, but if he so chooses, he must do so
on a question-by-question basis.
However, when a civil litigant claims Fifth Amendment privilege,
"courts . . . should seek out those ways that further the goal of
permitting as much testimony as possible to be presented in the civil
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litigation."

4003-4005, 55 F.3d at 84.

One approved method of

accomplishing this is for the parties to consent to the use of a
protective order
testimony.

limiting

disclosure

of

potentially incriminating

Martindell v. Intern. Tel. and Tel. Corp., 594 F.2d 291,

296 (2d Cir. 1979) (upholding Fed. R. Civ. P. Rule 26(c) protective
order consented to by parties protecting deposition transcripts and
denying United States government access to the transcripts in criminal
proceeding); Andover Data Servs. v. Statistical Tabulating Corp., 876
F.2d 1080, 1084 (2d Cir. 1989) (Court's ruling that judge could not
compel self-incriminating testimony pursuant to Rule 26(c) protective
order "is in no way intended to abrogate the Martindell line of cases,
wherein we have upheld the use of protective orders limiting disclosure
of potentially incriminating testimony where parties have voluntarily
consented

to

testify

in

reliance

upon

such

protective

orders")

(emphasis in original).
In order to respect defendant's Fifth Amendment privilege while
facilitating

discovery,

a

court

may

enter

or

approve

protecting the confidentiality of incriminating material.

an

order
Such a

protective order is appropriate 1) where a defendant has asserted his
Fifth Amendment privilege, 2) where the parties have voluntarily agreed
to enter into a protective order to shield confidential information
from disclosure, and 3) the order is narrowly tailored to shield only
discovery communicated by defendant that implicates his Fifth Amendment
privilege.

U.S. v. Hines, 2012 WL 5182910, at *8-*9 (E.D.N.Y. 2012).

Therefore the parties are encouraged to consider agreeing to a
protective

order

that

would

ensure

the

confidentiality

of

any

potentially incriminating information that defendant Weinstein may
reveal at deposition while allowing discovery to proceed in this
matter.
4)
[203] Plaintiff's Motion to Compel as to Hager's Disciplinary
Proceedings
As noted, Hager bears the burden of showing that the documents
pertaining to the disciplinary proceedings brought against him are
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confidential.

Since

the

First

Department

order

accepting

his

resignation does not indicate that the proceedings are confidential and
should be sealed, this Court grants plaintiff's motion. However, this
order is stayed until May 2, 2013 to permit defendant Hager to make an
application to the Supreme Court of New York, Appellate Division, First
Department for an order addressing the confidentiality of documents
pertinent to the disciplinary action against defendant Hager discussed
in Matter of Benjamin Hager, 94 A.D.3d 161, 941 N.Y.S.2d 53 (1st Dept'
2012).

If defendant Hager chooses to make such an application, he must

give prompt notice to plaintiff's counsel. If defendant Hager does not
make such an application by May 2, 2013, Hager must promptly comply
with

the

Court's

order

confidentiality

order

reconsideration

from

is

that

the

issued,

this

documents
Hager

Court.

is

However,

be

produced.

given
this

leave

If

to

Court

a

seek

notes,

notwithstanding the importance of comity and respect for state court
decisions, any confidentiality order shall be weighed against the need
to complete discovery in this case promptly and the potential relevance
of the information.
5)

Remaining scheduling issues
Discovery is extended to June 17, 2013.

must be held the week of June 9, 2013.

Plaintiff's deposition

The conference previously

scheduled for May 14, 2013 at 2:00 p.m. will be held to discuss the
parties' progress on discovery and to explore settlement.

Defendant

Weinstein must amend his Rule 7.1 Statement by no later than April 22,
2013.
SO ORDERED.
Dated:

Brooklyn, New York
April 23, 2013
/s/_____________________________
MARILYN D. GO
UNITED STATES MAGISTRATE JUDGE

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