Moskovitz et al v. LA SUISSE, SOCIETE D' ASSURANCES SUR LAVIE
Filing
232
OPINION AND ORDER. For the foregoing reasons, Mahon's motion to quash Swiss Life's subpoena is denied. (Signed by Magistrate Judge Gabriel W. Gorenstein on 12/1/2014) (rjm)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------X
LA SUISSE, SOCIETE D’ASSURANCES
:
SUR LA VIE, n/k/a SWISS LIFE AG
: OPINION AND ORDER
Third-party plaintiff,
:
-against06 Civ. 4404 (CM) (GWG)
:
MOSES KRAUS and CARUSO AG,
:
Third-party defendants.
:
---------------------------------------------------------------X
GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE
Plaintiffs’ former counsel, Richard M. Mahon, II, has moved to quash a subpoena issued
by third-party plaintiff La Suisse, Societe d’Assurances Sur La Vie, now known as Swiss Life
AG (“Swiss Life”).1 The subpoena seeks communications between Mahon and Moses Kraus, a
third-party defendant who, before he was sued by Swiss Life, began communicating with Mahon
on a regular basis about this litigation. Mahon objects to divulging the communications on the
ground that they are protected by the attorney-client privilege. For the reasons that follow,
Mahon’s motion to quash the subpoena is denied because we find that Kraus was not authorized
1
See Swiss Life’s Memorandum of Law in Support of Its Request for Post-Judgment
Discovery, filed July 29, 2014 (Docket # 213) (“Swiss Life Mem.”); Declaration of Jesse T.
Conan in Support of Swiss Life Mem., filed July 29, 2014 (Docket # 214); Declaration of
Nicholas Karl Goldstone in Support of Swiss Life Mem., filed July 29, 2014 (Docket # 215)
(“Goldstone Decl.”); Letter addressed to Magistrate Judge Gabriel W. Gorenstein from Richard
M. Mahon filed Sept. 12, 2014 (Docket # 221) (“Mahon Letter”); Letter addressed to Magistrate
Judge Gabriel W. Gorenstein from Zeb Landsman, filed Sept. 18, 2014 (Docket # 222);
Declaration of Jesse T. Conan in Opposition to Mahon Letter (Docket # 223) (“Conan Decl.”);
Supplemental Declaration of Jesse T. Conan in Support of Swiss Life Mem., filed Sept. 23, 2014
(Docket # 224); Reply Declaration of Richard M. Mahon in Opposition to La Suisse’s Subpoena
Seeking Attorney-Client and Privileged Nformation [sic], dated Sept. 24, 2014 and filed Nov.
21, 2014 (Docket # 231) (“Reply Decl.”); Letter addressed to Magistrate Judge Gabriel W.
Gorenstein from Zeb Landsman, filed Sept. 25, 2014 (Docket # 226).
1
to act as the plaintiffs’ agent when he communicated with Mahon.
I.
BACKGROUND
This action was brought by holders of insurance policies — sometimes referred to as
“marriage policies,” see Mahon Letter at 2 — against Swiss Life to recover benefits under those
policies. See Class Action Complaint, filed June 2, 2005, transferred to the S.D.N.Y. June 12,
2006 (Docket #1). Mahon was the attorney for the plaintiffs in this action. See Mahon Letter at
1; Notice of Appearance, filed Feb. 27, 2006, transferred to the S.D.N.Y. June 12, 2006 (annexed
as Attach. 11 to Class Action Complaint). Mahon represented the plaintiffs until July 25, 2012,
when his firm withdrew as counsel. See Mahon Letter at 1; Decision and Order, dated July 25,
2012 (Docket # 148). The complaint was dismissed with prejudice on February 3, 2014. See
Order Dismissing Action with Prejudice and Directing Return of Funds Posted with the Court
(Docket # 196).
In the meantime, on March 17, 2008, Swiss Life filed a third-party complaint against
Kraus and a brokerage company, Caruso AG (“Caruso”), both of whom had marketed and sold
the insurance policies in question. See Third-Party Complaint, filed Mar. 17, 2008 (Docket
# 22). Swiss Life sought damages against Kraus and Caruso for violations of the Racketeer
Influenced and Corrupt Organizations Act (“RICO Act”), 18 U.S.C. § 1961 et seq., and
indemnification based on breach of fiduciary duty. See id. ¶¶ 4-6. On December 17, 2013,
Swiss Life obtained a default judgment against Kraus and Caruso, jointly and severally, for
attorney’s fees and costs in the amount of $1,571,603.11. See Default Judgment, dated Dec. 17,
2013 (Docket # 193). On August 6, 2014, after an inquest, Swiss Life obtained a default
judgment against Kraus and Caruso for an additional $157,921,020.29 in damages. See
Judgment, dated Aug. 6, 2014 (Docket # 218).
2
In the subpoena that is the subject of the current motion, Swiss Life seeks documents
relating to the payment of Mahon’s legal fees in this action and communications between Mahon
and Kraus. See Swiss Life Mem. at 1-3. Mahon argues that the communications are protected
by the attorney-client privilege and has moved to quash the subpoena on that basis. See Mahon
Letter. Before addressing the merits of those objections, we address the legal basis for the
subpoena.
II.
LEGAL BASIS FOR THE SUBPOENA
Swiss Life seeks to obtain the communications between Mahon and Kraus for use in a
proceeding it has brought in the United Kingdom to enforce its default judgment in this case
against Kraus. See Goldstone Decl. ¶ 4; Swiss Life Mem. at 1, 3. One of Swiss Life’s attorneys
in the United Kingdom states that “[w]hen the U.K. court considers the issue of the
enforceability of the Judgment in England, an important factor will be whether or not Kraus had
control over [the instant litigation].” Goldstone Decl. ¶ 5. Swiss Life thus seeks to obtain
discovery as to “communications between Kraus and class counsel, which bear on whether it
was Kraus or the named plaintiffs . . . who controlled the putative class action against Swiss
Life.” Swiss Life Mem. at 5 (footnote omitted).
Swiss Life relies on both Fed. R. Civ. P. 69 and 28 U.S.C. § 1782 as bases for the
subpoena. See Swiss Life Mem. at 3-6. “The scope of discovery under Rule 69(a)(2) is
constrained principally in that it must be calculated to assist in collecting on a judgment.” EM
Ltd. v. Republic of Arg., 695 F.3d 201, 207 (2d Cir. 2012) (citations omitted), aff’d sub nom
Republic of Arg. v. NML Capital, Ltd., 134 S. Ct. 2250 (2014). As one court has noted, “under
Rule 69(a) and existing case law, the general rule is that non-party discovery is limited to a
search for the defendant’s hidden assets.” Costomar Shipping Co., Ltd. v. Kim-Sail, Ltd., 1995
3
WL 736907, at *3 (S.D.N.Y. Dec. 12, 1995). We thus question whether Rule 69 provides an
appropriate avenue to obtain all the information Swiss Life seeks from Mahon.
It is not necessary to reach this question, however, because Swiss Life also relies on 28
U.S.C. § 1782 to justify the subpoena. That statute provides in relevant part: “[t]he district court
of the district in which a person resides or is found may order him to give his testimony or
statement or to produce a document or other thing for use in a proceeding in a foreign or
international tribunal . . . .” 28 U.S.C. § 1782(a). Case law holds that “a district court is
authorized to grant a § 1782 request” when the petitioner demonstrates that
(1) the person from whom discovery is sought reside[s] (or [is] found) in the
district of the district court to which the application is made, (2) the discovery [is]
for use in a proceeding before a foreign tribunal, and (3) the application [is] made
by a foreign or international tribunal or any interested person.
Schmitz v. Bernstein Liebhard & Lifshitz, LLP, 376 F.3d 79, 83 (2d Cir. 2004) (alterations in
original) (internal quotation marks, citation, and ellipses omitted); accord In re Certain Funds,
Accounts, and/or Inv. Vehicles Managed by Affiliates of Fortress Inv. Grp. LLC, 2014 WL
3404955, at *3 (S.D.N.Y. July 9, 2014). These statutory elements are met inasmuch as Mahon is
found in this district, the discovery is for use in the U.K. proceeding, and the application is made
by Swiss Life, an interested person.
“[O]nce the statutory requirements are met, a district court is free to grant discovery in its
discretion.” Schmitz, 376 F.3d at 83-84 (alteration in original) (internal quotation marks and
citation omitted). In exercising such discretion, a district court should consider the factors
described by the Supreme Court in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241
(2004). See, e.g, Brandi-Dohrn v. IKB Deutsche Industriebank AG, 673 F.3d 76, 80-81 (2d Cir.
2012). These factors are as follows:
4
First, when the person from whom discovery is sought is a participant in the
foreign proceeding . . . the need for § 1782(a) aid generally is not as apparent as it
ordinarily is when evidence is sought from a nonparticipant in the matter arising
abroad. A foreign tribunal has jurisdiction over those appearing before it, and can
itself order them to produce evidence. . . .
Second, . . . a court presented with a § 1782(a) request may take into account the
nature of the foreign tribunal, the character of the proceedings underway abroad,
and the receptivity of the foreign government or the court or agency abroad to
U.S. federal-court judicial assistance. . . .
[Third,] a district court could consider whether the § 1782(a) request conceals an
attempt to circumvent foreign proof-gathering restrictions or other policies of a
foreign country or the United States.
[Fourth,] unduly intrusive or burdensome requests may be rejected or trimmed.
Intel Corp., 542 U.S. at 264-65 (internal citations omitted).
Here, the Intel factors weigh in favor of granting such discovery. Mahon is not a
participant in the U.K. proceeding and the proceedings abroad appear to be entirely appropriate.
The U.K. attorney has stated that the information sought will be “highly relevant to the
disposition of the U.K. proceeding.” Goldstone Decl. ¶ 7. He also stated that the U.K. court
“will welcome” this evidence, that U.K. procedural rules allow parties to submit relevant
evidence, and that U.K. courts are permitted to use foreign discovery devices to gather evidence.
Id. ¶ 8. There is no reason to believe that the effort to obtain discovery here will circumvent any
policies of the U.K. regarding discovery, nor is there reason to believe that it will circumvent any
policies of the United States.
Finally, we are unable to state on the current record that there is anything burdensome
about the request, as is described further below. Thus, 28 U.S.C. § 1782 provides statutory
authority for the subpoena.
5
III.
MAHON’S ASSERTION OF ATTORNEY-CLIENT PRIVILEGE
Mahon asserts that his communications with Kraus are privileged because Kraus was a
“policyholder representative” and thus “an agent of the policyholders.” Mahon Letter at 4. He
points to a declaration of Kraus stating that he communicated with Mahon “as a policyholder
liaison and representative who seeks to preserve and protect policy rights in the face of [Swiss
Life’s] wrongful conduct and breach of insurance contracts before the Court.” Id.; see Reply
Declaration in Support of Cross-Motion to Quash Subpoenas, filed Sept. 8, 2009 (Docket # 76)
(“Kraus 2009 Aff.”). Mahon notes that the communications between him and Kraus include
topics such as “litigation strategy,” “attorney thought processes,” “motion strategies,” and
“confidential client information.” Mahon Letter at 4.2
A.
Governing Law
Under Fed. R. Civ. P. 45(d)(3)(A)(iii), the court must quash a subpoena that “requires
disclosure of privileged or other protected matter, if no exception or waiver applies.” “[T]he
party invoking a privilege bears the burden of establishing its applicability to the case at hand.”
In re Grand Jury Subpoenas Dated Mar. 19, 2002 & Aug. 2, 2002, 318 F.3d 379, 384 (2d Cir.
2003) (citing United States v. Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of
Am., AFL-CIO, 119 F.3d 210, 214 (2d Cir. 1997)); accord Overton v. Todman & Co., CPAs,
P.C., 249 F.R.D. 147, 148 (S.D.N.Y. 2008). Under the federal common law of attorney-client
privilege, the party asserting the privilege must show that the communication as to which
privilege is asserted “(1) [was] a communication between client and counsel, which (2) was
2
Mahon alludes to the existence of “attorney work product” within the materials sought,
see Mahon Letter at 4, but nowhere makes an objection to the subpoena based on the work
product doctrine, see Fed. R. Civ. P. 26(b)(3). Accordingly, we do not discuss and do not reach
the question of whether any of the material sought consists of attorney work product.
6
intended to be and was in fact kept confidential, and (3) [was] made for the purpose of obtaining
or providing legal advice.” United States v. Constr. Prods. Research, Inc., 73 F.3d 464, 473 (2d
Cir. 1996) (internal quotation marks and citations omitted); accord Chevron Corp. v. Donzinger,
2013 WL 1087236, at *24 (S.D.N.Y. Mar. 15, 2013).3
The attorney-client privilege does not normally attach to privileged communications that
are disclosed to persons who are neither the attorney nor the client. See, e.g., Ratliff v. Davis
Polk & Wardwell, 354 F.3d 165, 170 n.5 (2d Cir. 2003). Nonetheless, the Second Circuit long
ago held that the privilege covers communications to agents of an attorney, such as an
accountant, where “the communication [is] made in confidence for the purpose of obtaining
legal advice from the lawyer.” United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961)
(communication to accountant hired to assist in the rendition of legal services); accord United
States v. Schwimmer, 892 F.2d 237, 243 (2d Cir. 1989) (“Information provided to an accountant
by a client at the behest of his attorney for the purposes of interpretation and analysis is
privileged to the extent that it is imparted in connection with the legal representation.”) (citation
omitted). The Second Circuit has explained the rationale for the rule as follows:
We have recognized that an attorney’s effectiveness depends upon his ability to
rely on the assistance of various aides, be they “secretaries, file clerks, telephone
3
Mahon and Swiss Life cite both federal and New York state law to support their
positions on the privilege issue, without discussing which law applies. We apply federal law
because the original complaint and the third-party complaint each sought damages under federal
statutes, even if state law claims were also asserted. See Class Action Complaint ¶ 2 (seeking
relief and damages under the Civil Rights Act of 1991, 42 U.S.C. § 1981, and New York
common law); Third-Party Complaint ¶¶ 4-6 (seeking indemnification from Kraus and Caruso
for breach of fiduciary duty and damages under the RICO Act, 18 U.S.C. § 1961). Where, as
here, a case includes federal and state law claims and the evidence sought is relevant to both,
“the asserted privileges are governed by the principles of federal law.” von Bulow v. von
Bulow, 811 F.2d 136, 141 (2d Cir. 1987) (citing cases); accord Complex Sys., Inc. v. ABN
AMRO Bank N.V., 279 F.R.D. 140, 150 (S.D.N.Y. 2011).
7
operators, messengers, clerks not yet admitted to the bar, and aides of other
sorts.” United States v. Kovel, 296 F.2d 918, 921 (2 Cir.1961). “[T]he privilege
must include all the persons who act as the attorney's agents.” 8 Wigmore,
Evidence § 2301 (McNaughton rev. 1961).
von Bulow, 811 F.2d at 145; accord In re Grand Jury Subpoenas Dated Mar. 9, 2001, 179 F.
Supp. 2d 270, 283 (S.D.N.Y. 2001) (privilege may cover “communications made to agents of an
attorney hired to assist in the rendition of legal services”) (internal quotation marks, ellipsis, and
citation omitted).
The same principle has been found to apply where the communications involve the agent
of a client rather than the agent of an attorney. The Supreme Court addressed this question in the
case of Upjohn Co. v. United States, 449 U.S. 383 (1981), in which it gave attorney-client
protection to communications from corporate employees to counsel where the employees
communicated “at the direction of corporate superiors in order to secure legal advice from
counsel.” Id. at 394; accord In re Copper Mkt. Antitrust Litig., 200 F.R.D. 213, 219 (S.D.N.Y.
2001) (protecting communications to and from consultant of corporation that was “essentially. . .
incorporated into” the corporation’s staff to “perform a corporate function that was necessary in
the context of the government investigation” at issue and whose communications were “for the
purpose of obtaining legal advice”); see also In re Bieter Co., 16 F.3d 929, 938-39 (8th Cir.
1994) (upholding claim of attorney-client privilege with respect to communications with a
consultant that had been retained by a real estate development company).
It is far less typical for protection to be sought for communications with persons who are
asserted to be agents of individuals, however. Corporations, after all, can only act through their
agents. See, e.g., Braswell v. United States, 487 U.S. 99, 110 (1988); Jones v. Niagara Frontier
Transp. Auth., 722 F.2d 20, 22 (2d Cir. 1983). Individuals, by contrast, normally will
8
communicate directly with their attorneys. See, e.g., In re Grand Jury Subpoenas Dated Jan. 20,
1998, 995 F. Supp. 332, 340 (E.D.N.Y. 1998) (“A private person . . . generally has no need for a
representative to communicate with an attorney.”). Nonetheless, courts in some instances have
protected communications made by (or to) agents of individuals for the purposes of giving or
seeking legal advice. Thus, In re Grand Jury Proceedings Under Seal, 947 F.2d 1188 (4th Cir.
1991), held that communications between an individual and his accountant that occurred as part
of the client’s efforts to obtain legal advice were privileged. See id. at 1191. Neighborhood
Development Collaborative v. Murphy, 233 F.R.D. 436 (D. Md. 2005), held that
communications involving a “financial consultant and adviser” who acted “as conduit of
information” between a client and his attorney were privileged where they were made for the
purpose of obtaining legal advice. Id. at 437, 440-41; accord Benedict v. Amaducci, 1995 WL
23555, at *1-2 (S.D.N.Y. Jan. 20, 1995) (communications involving an individual functioning as
“the equivalent of ‘an independent contractor,’ advising plaintiffs on financial matters and
preparing them for the prospect of litigation” would be protected as long as they were made at a
time “he was acting as plaintiffs’ representative with respect to litigation”); Carte Blanche
(Singapore) PTE., Ltd. v. Diners Club Int’l, Inc., 130 F.R.D. 28. 34 (S.D.N.Y. 1990) (individual
hired by a client to assist in a transaction for which legal advice was obtained was agent of client
for purposes of attorney-client communications); cf. SEC v. Wyly, 2011 WL 3366491, at *2
(S.D.N.Y. July 27, 2011) (presence of a client’s agent does not destroy attorney-client privilege
if that agent’s “presence was needed to facilitate effective communication of legal advice
between the attorney and the client”); see also Restatement (Third) of the Law Governing
Lawyers § 70 cmt. f (2000) (“A person is a confidential agent [of a client] for communication if
the person’s participation is reasonably necessary to facilitate the client’s communication with a
9
lawyer or another privileged person and if the client reasonably believes that the person will hold
the communication in confidence.”).4 In all of these cases, the third party was found or assumed
to be the “agent” of the client in the attorney-client relationship.
B.
Analysis
Mahon claims that the subpoenaed communications fall under the protection of
attorney-client privilege because of a principal-agent relationship between the plaintiffs and
Kraus. For an agency relationship to exist, however, at a minimum there must be a showing of
“the principal’s manifestation of intent to grant authority to the agent.” Commercial Union Ins.
Co. v. Alitalia Airlines, S.p.A., 347 F.3d 448, 462 (2d Cir. 2003) (citations omitted). The instant
case is highly unusual in that there is no evidence that the plaintiffs in this matter ever
manifested any intent to grant authority to Kraus to act as their agents for purposes of seeking
legal advice. Mahon, who of course bears the burden of proof, has presented no testimony or
affidavits from the plaintiffs themselves on this question. While Mahon presumably would have
been the recipient of any expressions of intent from his clients, he too provides no testimony that
any of the plaintiffs told him that they wished Kraus to act on their behalf. The affidavits of
Kraus himself are similarly devoid of any such evidence.
To be sure, Kraus and Mahon detail Kraus’s high degree of involvement in the litigation.
Thus, Mahon asserts that Kraus assisted him during the litigation by “coordinat[ing]
communications with policyholders and family members,” “contact[ing] expert witnesses in
4
One court has held that an individual may use an agent to communicate with a lawyer
only in “extraordinary cases, as, for example, where a client needs an interpreter, or where he is
so seriously injured that he cannot deal directly with counsel.” In re Grand Jury Subpoenas
Dated Jan. 20, 1998, 995 F. Supp. at 340 (citation omitted). It is not necessary to reach this issue
because, as described below, no agency relationship has been established between plaintiffs and
Kraus in the first place.
10
Europe,” and “coordinat[ing] translations of documents.” Reply Decl. ¶ 8. Kraus states his
communications with Mahon and his firm “were made in order to provide or further legal
services to protect the interests of the policyholders.” Kraus 2009 Decl. ¶¶ 3, 6. Kraus notes
that he helped plaintiff Moskovitz find legal counsel in the United States and that this was how
Mahon came to represent the plaintiffs in the instant case. See Declaration of Moses Kraus,
dated May 17, 2006 (annexed as Ex. A to Affidavit of Moses Kraus, filed July 31, 2008 (Docket
# 32) (“Kraus 2008 Aff.)), ¶¶ 25-26.
While this evidence does much to describe the relationship between Kraus and Mahon
during the litigation, it does nothing to describe the relationship between plaintiffs and Kraus —
more specifically, whether and in what manner plaintiffs authorized Kraus to act as their agent
for purposes of seeking or receiving legal advice from Mahon. Mahon states only that “Kraus
repeatedly confirmed that he served as liaison and policy representative” for the policyholders,
Mahon Letter at 3, not that plaintiffs ever confirmed this. As for Kraus, he too has never
claimed that the policyholders authorized his services. Instead, he states that the only reason he
helped the plaintiffs find counsel in the United States was “because he felt morally obligated to
assist the Caruso policyholders,” Kraus 2008 Aff. ¶ 21, not because each plaintiff in this case
asked him to do so. Thus, Kraus concedes that his “interest and conduct with respect to this
litigation and other U.S. litigations commenced by policyholders against La Suisse have been
solely based upon [his] perceived high moral obligation to assist the policyholders.” Id. ¶ 28
(emphasis added).
Given the lack of any evidence that plaintiffs authorized Mahon to act as their agent,
Mahon’s assertion that there was an agency relationship between plaintiffs and Kraus is
conclusory and fails for lack of proof. Nonetheless, while it was not required to do so, Swiss
11
Life has put into the record deposition testimony from several plaintiffs in which they
affirmatively state that they did not know who Kraus was. See Deposition of Joseph Moskovitz
(excerpt annexed as Ex. C to Conan Decl.) (did not know Kraus and had never asked Kraus to
act for him); Deposition of Malka R. Rottenberg (excerpt annexed as Ex. D to Conan Decl.) (had
never heard of Kraus); Deposition of Berl Frankel (excerpt annexed as Ex. F to Conan Decl.)
(did not know Kraus and had never spoken to him). Other plaintiffs testified that they came to
know of Kraus only after the litigation was already ongoing for several years, shortly before they
were deposed. See Deposition of Sarah Friedman s/h/a Sarah Feruwerger (excerpt annexed as
Ex. A to Conan Decl.) (did not know Kraus until he telephoned her approximately four weeks
before her deposition); Deposition of Israel Fried (excerpt annexed as Ex. B to Conan Decl.)
(first spoke with Kraus when Kraus telephoned him two weeks prior to his deposition and did
not know Kraus’s role in the litigation); Deposition of Moshe Eckstein (excerpt annexed as Ex. E
to Conan Decl.) (had never spoken to Kraus and did not know who he was until Kraus
telephoned him four weeks before his deposition); Deposition of Victor Frankel (excerpt
annexed as Ex. G to Conan Decl.) (first spoke to Kraus approximately four to five months before
his deposition). None of the deposition excerpts supplied with this motion suggest that any of
the plaintiffs authorized Kraus to act as their agent in this litigation.5
Notably, in a prior decision in this case that dealt in part with whether the plaintiffs could
act as class representatives, the court found that “[a]lthough this action was first filed in 2005,
none of the named plaintiffs were aware of the litigation until shortly before their respective
5
Mahon notes that the policyholders were children at the time the policies were issued.
See Reply Decl. ¶ 10. This fact is irrelevant as the issue critical to this motion is what occurred
between the plaintiffs and Kraus after this litigation was filed. There is no evidence that any of
the plaintiffs was a minor at the time the litigation started.
12
depositions in May and June of 2009.” Moskowitz v. La Suisse, Societe D’Assurances Sur La
Vie, 282 F.R.D. 54, 73 (S.D.N.Y. 2012). The court concluded that “the action was filed without
plaintiffs’ authorization and knowledge, they only learned of the lawsuit shortly before their
respective depositions, and most do not know who is financing the litigation or who makes the
decisions.” Id. (emphasis added). Mahon’s statement that “[t]he policyholders knew of the
litigation even if they did not know Mr. Kraus personally,” Reply Decl. ¶ 10, is contrary to this
finding and in any event fails to address the threshold question of whether the plaintiffs
authorized Kraus to act on their behalf.
The testimony of Kraus himself similarly points to a lack of connection between himself
and the plaintiffs. He gave a sworn statement that he “never met with any policyholders . . . with
respect to the solicitation, negotiation and/or sale of policies.” Kraus 2008 Aff. ¶ 8. He further
stated that he never transferred or received funds from policyholders in the United States. Id.
¶ 24. Kraus noted that he was a “wholesale broker,” id. ¶ 8; that wholesale brokers did not have
“direct contact with policyholders,” id. at 3 n.1; that his status as broker ended long before this
litigation began, id. ¶¶ 12, 13; and that he “never dealt directly with any of the U.S.
policyholders,” id. ¶ 18. The only suggestion that Kraus has had contact with the policyholders
since the time of the sale of the policies is that he helped some of them obtain loans on their
policies long before the instant lawsuit was filed, see id. ¶ 29, though it appears this was
accomplished through brokers, see id. ¶ 30. Eventually, Kraus helped some of them “find legal
counsel within the U.S.” Id. ¶ 21. None of this testimony suggests that the plaintiffs here
authorized Kraus to act on their behalf in dealing with their attorney about the conduct of this
litigation.
Mahon attempts to justify his assertion of the privilege because of the “general rule” that
13
“communications are deemed privileged if they tend to reveal client communications.” Mahon
Letter at 3 (citing P. & B. Marina, LP v. Logrande, 136 F.R.D. 50, 53 (E.D.N.Y. 1991)). But this
statement assumes that Kraus was Mahon’s “client,” which Mahon has never claimed. The mere
fact that Kraus was communicating with Mahon regarding the litigation, even if he did so on a
regular basis, does not by itself establish an attorney-client relationship between Kraus and
Mahon.
Mahon also asserts that the subpoena is invalid on the ground that a “party seeking
disclosure of protected materials must demonstrate a ‘particularized need.’” Mahon Letter at 5.
The case cited, however, Brown v. City of New York, 2007 WL 415080 (S.D.N.Y. Jan. 30,
2007), was reciting a standard relating to the production of grand jury materials, and is thus
irrelevant. There is no requirement that a “particularized need” be demonstrated in order to
obtain compliance with a subpoena for otherwise relevant and non-privileged documents.
In his reply declaration in opposition to Swiss Life’s subpoena, Mahon refers to a
decision in another case brought against Swiss life involving similar policies: Weiss v. La
Suisse, 161 F. Supp. 2d 305 (S.D.N.Y. 2001). See Reply Decl. ¶¶ 11-12. Mahon quotes a
lengthy portion of the Weiss opinion, in which the court found that the Weiss plaintiffs might
have properly purchased and sought payment on their policies. See id. ¶ 11. It is difficult to
discern why Mahon believes Weiss to have any significance here. Putting aside the fact that
Weiss involved a different group of plaintiffs and does not mention Kraus, its ruling appears to
be irrelevant to the question of agency. A portion of the Weiss opinion not quoted by Mahon
addresses the principal-agent relationship between the policyholders and their insurance brokers.
See 161 F. Supp. 2d at 311-12. But Weiss specifically declined to assume that any principalagent relationship that existed for the purchase of the insurance policies also existed in other
14
contexts. See id. at 317. Thus, Weiss has no relevance here.
Finally, Mahon makes some conclusory assertions regarding the burden of complying
with the subpoena. See Mahon Letter at 5. This argument, however, is devoid of any specifics
as to what steps he would have to take to comply with the subpoena and what their cost would be
in either money or time. Accordingly, the Court directs that Mahon produce the documents
called for by the subpoena within 30 days of the date of this decision. He may apply to the Court
for relief from this order in the event there is some aspect of the required production that is
unduly burdensome that he can identify with specificity and about which the parties cannot come
to an agreement. Any such application must be made within 14 days of the date of this decision.
IV.
CONCLUSION
For the foregoing reasons, Mahon's motion to quash Swiss Life's subpoena is denied.
Dated: December 1, 2014
New York, New York
15
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?