Samad Brothers, Inc. v. Bokara Rug Co. Inc

Filing 84

MEMORANDUM OPINION AND ORDER, that for the foregoing reasons, the Court finds that the Magistrates July 29th Order is clearly erroneous. Defendants Objection is therefore SUSTAINED. Plaintiff is directed to disclose, in accordance with this Opinion, the documents on the July 29, 2010 Privilege Log. The Clerk of Court is directed to close the motion at docket number 41. (Signed by Judge John F. Keenan on 12/13/10) (pl)

Case 1:09-md-02013-PAC Document 57 Filed 09/30/10 Page 1 of 45 Case 1:09-cv-05843-JFK-KNF Document 84 Filed 12/14/10 Page 1 of 11 USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: _________________ DATE FILED: 12/13/2010

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK UNITED STATES DISTRICT COURT ------------------------------X SOUTHERN DISTRICT OF NEW YORK SAMAD BROTHERS, INC., : -----------------------------------------------------------x : In re FANNIE MAE 2008Plaintiff, SECURITIES 08 Civ.09 Civ. 5843 (JFK) :: No. 7831 (PAC) LITIGATION : 09 MD 2013 (PAC) : -against: MEMORANDUM OPINION : : AND ORDER : OPINION & ORDER BOKARA RUG CO., INC., et al., : -----------------------------------------------------------x : Defendants. : ------------------------------X HONORABLEKEENAN, CROTTY, United States District Judge: JOHN F. PAUL A. United States District Judge: Before the Court is Bokara Rug Co., Inc., Jan Soleimani, BACKGROUND1 and Gabriel Vaknin's (collectively "Defendants") Objection to The early years of this decade saw a boom in home financing which was fueled, among the Magistrate Judge's July 29, 2010 Order ("Order") applying other things, by low interest rates and lax credit conditions. New lending instruments, such as work product protection to certain emails sought in discovery subprime mortgages (high credit risk loans) and Alt-A mortgages (low-documentation loans) from Plaintiff Samad Brothers ("Plaintiff" or "Samad"). For the kept the boom going. Borrowers played a role too; they took on unmanageable risks on the reasons that follow, Defendants' Objection to the July 29, 2010 assumption that the market would continue to rise and that refinancing options would always be Order is sustained, and the Court orders that the disputed available in the future. Lending discipline was lacking in the system. Mortgage originators did emails be produced. not hold these high-risk mortgage loans. Rather than carry the rising risk on their books, the I. BACKGROUND originators sold their loans into the secondary mortgage market, often as securitized packages Samad is in the business of importing and selling rugs. known as mortgage-backed securities ("MBSs"). MBS markets grew almost exponentially. (Third Am. Compl. ¶ 5.)1 Although Plaintiff's theory of the case But then the housing bubble burst. In 2006, the demand for housing dropped abruptly has evolved over time, Samad now alleges that Defendants are and home prices began to fall. In light of the changing housing market, banks modified their infringing on twenty-five copyrighted rug designs originally lending practices and became unwilling to refinance home mortgages without refinancing. In June 2009, Samad sued Defendants for copyright infringement, alleging Defendants sold rugs with Samad's designs. Samad has 1 Unless otherwise indicated, all references cited as "(¶ _)" or to the "Complaint" are to the Amended Complaint, amended the complaint three times. The Third Amended Complaint, dated June 22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true. filed on July 8, 2010, is the operative complaint. 1 1
1

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created by Vikram Kapoor of S.N. Kapoor Exports, who assigned all rights therein exclusively to Samad. 71.) During discovery, Plaintiff produced documents purportedly memorializing Mr. Kapoor's assignment of interest in the (Id. ¶¶ 13, 16-17,

disputed rug designs to Samad. in Supp. of Objection to

(See Decl. of Ronald W. Meister Judge's Order ("Meister

Magistrate

Decl.") ¶¶ 5-6.) with the

However, these documents were created by Samad of counsel, Mark S. Kaufman, after

assistance

commencing the instant lawsuit.

(Id. Ex. 1.)

Upon learning

that the documents were not contemporaneous with the alleged assignment, on April 5, 2010, Defendants served a subpoena on Mr. Kapoor Mr. requesting Kapoor and all documents on concerning the letters

between

Samad

which

Plaintiff's

ownership

claim is based. counsel, Mr.

(Id. Ex 2.) took an

It is undisputed that Samad's active role in assisting Mr. Mr.

Kaufman,

Kapoor in producing documents responsive to the subpoena.2

Kaufman served on Defendants, on Mr. Kapoor's behalf, objections and responses to Defendants' subpoena. document and below his signature it Mr. Kapoor signed that states: "Prepared by

2

Mr. Kaufman states that he communicated with Mr. Kapoor "in order to gather documents necessary to bring the claims at issue in the lawsuit, and to provide responses to Bokara's discovery." (Decl. of Mark S. Kaufman in Opp'n to Defs.' Objection to Order of Magistrate Judge Fox Dated July 29, 2010 ¶ 17.) 2

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Counsel:

Kaufman & Kahn, LLP."

(Id. Ex. 4.) (Id. Ex. 3.) of the

However, Mr.

Kaufman is not Mr. Kapoor's attorney. Also, Defendants sought

copies

communications

between Kapoor and Samad from Plaintiff.

In total, between

October 14, 2009 and July 22, 2010, Mr. Kaufman exchanged fortyeight emails with Mr. Kapoor. (See id. Ex. 5.) In response to

Defendants' document request seeking these emails, Mr. Kaufman asserted attorney work product protection. Privilege Log, Meister Decl. Ex. 5.) (See July 27, 2010 The Magistrate Judge

reviewed in camera the forty-eight emails listed on Plaintiff's July 27, 2010 privilege log to evaluate the work product

protection claim.

In a one-sentence order dated July 29, 2010,

without an accompanying opinion, the Magistrate Judge held that Plaintiff need not disclose the disputed email communications to Defendants. II. A. DISCUSSION

Standard of Review

This Court reviews the Magistrate Judge's non-dispositive, discovery ruling pursuant to Rule 72(a) of the Federal Rules of Civil Procedure. Under Rule 72(a), a court must "modify or set

aside any part of the order that is clearly erroneous or is contrary to law." "A Fed. finding R. is Civ. P. 72(a); 28 U.S.C. when,

§ 636(b)(1)(A).

`clearly

erroneous'

although there is evidence to support it, the reviewing court on

3

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the entire record is left with the definite and firm conviction that a mistake has been committed." Nikkal Indus., Ltd. v.

Salton, Inc., 689 F. Supp. 187, 189 (S.D.N.Y. 1988) (citation omitted). This is a highly deferential standard, and "[t]he

party seeking to overturn a magistrate judge's decision thus carries a heavy burden." U2 Home Entm't, Inc. v. Hong Wei Int'l

Trading Inc., No. 04 Civ. 6189, 2007 WL 2327068, at *1 (S.D.N.Y. Aug. 13, 2007). The Court notes, however, that application of

this deferential standard is somewhat more difficult in this case, as the Magistrate Judge provided no explanation for his ruling. B. The attorney The Attorney Work Product Doctrine work product doctrine "provides qualified

protection for materials prepared by or at the behest of counsel in anticipation of litigation or for trial." In re Grand Jury

Subpoenas Dated Mar. 19, 2002 & Aug. 2, 2002, 318 F.3d 379, 383 (2d Cir. 2003); see Fed. R. Civ. P. 26(b)(3). The U.S. Court of

Appeals for the Second Circuit has clarified that "documents should be deemed prepared `in anticipation of litigation,' and thus within the scope of [Rule 26], if `in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.'" United States

v. Adlman, 134 F.3d 1194, 1202 (2d Cir. 2003) (quoting 8 Charles

4

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Alan

Wright, &

Arthur Procedure

R. §

Miller 2024,

& at

Richard 343

L.

Marcus,

Federal a

Practice

(1994)).

Although

document may qualify for work product protection, the privilege is qualified in that attorney work product may be discoverable upon a showing that the party seeking discovery "has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other

means."

Fed. R. Civ. P. 26(b)(3)(A)(ii).

The limits of the work product doctrine are defined by "common sense and the practicalities of litigation." In re For

Steinhardt Partners, L.P., 9 F.3d 230, 235 (2d Cir. 1993). example, work product immunity is waived "when

protected

materials are disclosed in a manner which is either inconsistent with maintaining secrecy against opponents or substantially

increases the opportunity for a potential adversary to obtain the protected information." 194 F.R.D. 100, 103 Fullerton v. Prudential Ins. Co., 2000) (quoting Niagara Mohawk

(S.D.N.Y.

Power Corp. v. Stone & Webster Eng. Corp., 125 F.R.D. 578, 590 (S.D.N.Y. 1989)); see Plew v. Limited Brands, Inc., No. 08 Civ. 3741, 2009 WL 1119414, at *3 (S.D.N.Y. Apr. 23, 2009)

(Dollinger, Mag. J.) (work product protection may be waived "by disclosure to non-adversaries in circumstances that make it

likely that erstwhile protected materials will be revealed to an adversary").

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In objecting to the Magistrate Judge's Order, Defendants argue that: (1) the communications between Mr. Kaufman and Mr. Kapoor are not attorney work product; (2) sharing work product with a non-party constituted a waiver; (3) because of

Plaintiff's allegations the relationship between Mr. Kaufman and Mr. Kapoor is discoverable; and (4) they have substantial need for the documents. 1. After camera, attorney the The Email Communications Are Not Work Product independently Court finds reviewing that At the disputed emails are of in not their

these the

communications beginning

work

product.

correspondence, Mr. Kaufman instructed Mr. Kapoor to communicate with him alone, and not with Samad. According to Mr. Kaufman,

this would allow their exchanges to fall within the work product protection. Accordingly, Mr. Kaufman designated each email as However, that designation alone cannot Otherwise, any

"Attorney Work Product."

provide automatic protection to the documents.

party could designate a document as work product to prevent its production. Cf. In re Grand Jury Subpoena Dated Jan. 4, 1984,

750 F.2d 223, 224-25 (2d Cir. 1984) (holding that the burden on a party claiming protection of a privilege is "not discharged by mere conclusory or ipse dixit assertions" (internal citation

omitted)).

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Mr. Kaufman states that he corresponded with Mr. Kapoor to establish Plaintiff's claims and assist Mr. Kapoor in responding to Defendants' document requests. However, the Court is

concerned with the content of the emails, not the mere fact that Mr. Kaufman provided assistance in his capacity as Plaintiff's counsel. Indeed, there is very little in Mr. Kaufman's

correspondence with Mr. Kapoor that could be characterized as "mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the

litigation."

Fed. R. Civ. P. 26(b)(3)(B).

Mr. Kaufman's emails

to Mr. Kapoor discuss documents and information in Mr. Kapoor's possession that were created before the litigation began, and are responsive to Defendants' document requests. The emails,

almost entirely, solicit facts and supporting documents from Mr. Kapoor and request that Mr. Kapoor turn over documents that would in turn be produced to Defendants. The communications

with Mr. Kapoor are not strategic in nature and do not reflect his own attorney work product. In sum, these emails are outside

the scope of the attorney work product doctrine. 2. To mental the extent Communications with a Non-Party the or disputed litigation emails contain the any work attorney product

impressions

strategy,

protection was waived by disclosing them to Mr. Kapoor, who is a third party witness. Ricoh Co. Ltd. v. Aeroflex Inc., 219

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F.R.D. 66 (S.D.N.Y. 2003), is instructive on this point. that patent infringement case, defense counsel claimed

In work

product protection over emails he sent to a third party witness "in furtherance of an investigation of an affirmative defense in the present law suit." Id. at 70. The Ricoh court held that a

defense counsel waived any claim of work product protection by sharing his observations with a third party independent witness, particularly because the third party did not share a common interest with defendants such that they "could reasonably expect that information revealed to [the Id. non-party] would not be

disclosed to their adversary."

Similarly, Mr. Kaufman argues that his email communications with Mr. Kapoor were in furtherance of investigating Samad's claims. Here, nothing in the record suggests that Samad and Mr.

Kapoor share a common interest such that Mr. Kaufman should have expected their communications to remain confidential. Rather,

Defendants argue that Mr. Kapoor is not only the creator of the designs, but that he also has a business relationship with

Defendants as their rug supplier.

The Third Amended Complaint

injected Mr. Kapoor into this case as a significant witness. (Third Am. Compl. ¶ 17.) Mr. Kaufman assisted Mr. Kapoor in

deciding which documents were responsive to Defendants' subpoena and assisted in drafting objections. Mr. Kaufman was aware of There is little

Mr. Kapoor's importance in this litigation.

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indication that his actions toward Mr. Kapoor were committed to the principle of maintaining secrecy against adversarial

opponents. at 103.

See Ricoh, 219 F.R.D. at 70; Fullerton, 194 F.R.D.

Therefore, Mr. Kaufman waived any attorney-work product

protection over the disputed emails. 3. Counsel's Relationship with Mr. Kapoor

Moreover, the fact that Mr. Kaufman wished to keep his communications with Mr. Kapoor confidential is not dispositive. Mr. Kapoor's objections and responses to Defendants' document requests state inexplicably that they were prepared by Mr.

Kaufman as counsel.

Yet, as of the writing of this Opinion, Mr. Mr. Kaufman's actions where one did not

Kaufman is not Mr. Kapoor's counsel. suggest an attorney-client relationship

properly exist.

Throughout this litigation, Mr. Kaufman made it On June 11, 2010,

clear that he does not represent Mr. Kapoor.

in an email to defense counsel he stated that he was not Mr. Kapoor's attorney. Mr. Kaufman even indicated this to Mr.

Kapoor in several of the disputed emails. In Ricoh, defendants argued that the work product doctrine should apply because counsel made it clear to the non-party that their communications would be confidential. The court dismissed this argument. 219 F.R.D. at 70.

It held that "in the context

of a patent litigation, where prior art will be highly relevant both to the party asserting the infringement and the party

9

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defending

the

suit,"

the

defendants

could

not

have

expected Id.

their communications with the non-party to be confidential. at 71. Here, the facts are similar.

Mr. Kapoor's relationship As

with the parties is highly relevant to each of their claims. discussed above, Mr. Kapoor created the designs,

allegedly

assigned the ownership rights to Samad, and allegedly supplied the rugs to Defendants. Plaintiff In could light not of these overlapping assume that

relationships,

reasonably

information revealed to Mr. Kapoor would not be shared with Defendants. Therefore, the emails listed on the July 27, 2010,

privilege log are to be produced to Defendants.3 4. The attorney occurred. Defendants' Court work finds product Substantial Need that the if disputed they emails are not has

that and,

even

were,

waiver

Therefore, the Court need not reach the question of need for the documents and alternative means of

obtaining them. III. CONCLUSION For the foregoing reasons, the Court finds that the

Magistrate's July 29th Order is clearly erroneous. Objection is therefore SUSTAINED. Plaintiff is

Defendants' directed to

3

The last entry on the privilege log, dated July 22, 2010, is an email unrelated to this case, and need not be produced. 10

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