SGM Holdings LLC et al v. Andrews et al

Filing 91

ORDER. Plaintiffs' Request is GRANTED IN PART and DENIED IN PART. By August 22, 2022, Defendants shall produce the Non-Privileged Documents and the Partially Privileged Documents as instructed in this Order. SO ORDERED. (Signed by Magistrate Judge Sarah L Cave on 8/17/22) (yv)

Case 1:15-cv-08142-PAC-SLC Document 91 Filed 08/17/22 Page 1 of 9

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SGM HOLDINGS LLC, RICHARD FEATHERLY,
LAWRENCE FIELD, PREMIER NATURAL RESOURCES
LLC, and SYNDICATED GEO MANAGEMENT
CORPORATION,
CIVIL ACTION NO.: 15 Civ. 8142 (PAC) (SLC)
Plaintiffs,

ORDER

-vA JAMES ANDREWS, RICHARD GAINES, and KARL
SCHLEDWITZ,
Defendants.

SARAH L. CAVE, United States Magistrate Judge.
I.INTRODUCTION
Plaintiffs SGM Holdings LLC, Syndicated Geo Management Corporation, Richard
Featherly, Lawrence Field, and Premier Natural Resources LLC (“Plaintiffs”) brought this action
against Defendants A. James Andrews (“Andrews”), Karl Schledwitz (“Schledwitz”), and Richard
Gaines (“Gaines”, together with Andrews and Schledwitz, “Defendants”) pursuant to N.Y. Jud.
Law § 487 based on allegedly deceitful statements made to this Court in DNV Investment
Partnership v. SGM Holdings LLC, 15 Civ. 1255 (PAC) (HBP) (S.D.N.Y.) (the “DNV Action”).
(ECF No. 1). Plaintiffs were named as defendants in the DNV Action, and Defendants were
counsel to the plaintiffs in the DNV Action (the “DNV Plaintiffs”). (Id. ¶ 1).

Case 1:15-cv-08142-PAC-SLC Document 91 Filed 08/17/22 Page 2 of 9

Before the Court is Plaintiffs’ request for an order compelling Defendants to produce
certain documents that Defendants have withheld as privileged. (ECF No. 85 (the “Request”)).
For the reasons set forth below, the Request is GRANTED IN PART and DENIED IN PART.
II.BACKGROUND
On April 2, 2014, the DNV Action was filed in the United State District Court for the
Western District of Tennessee. (See DNV Action, ECF No. 1). Schledwitz appeared on behalf of
the DNV Plaintiffs. (See Id. at 35). On June 20, 2014, the DNV Action defendants moved to
dismiss the DNV Action. (DNV Action, ECF No. 26 (the “DNV Action MTD”)).
On February 20, 2015, the DNV Action was transferred to this District. (See DNV Action,
ECF No. 47). During his deposition in this action, Schledwitz testified that, “when the [DNV
Action] got moved to New York, [he] made it known . . . that [he] no longer wanted to be involved
in the case.” (ECF No. 85-3 at 3). He did, however, “ask[] to be kept apprised.” (Id. at 4).
On June 25, 2015, Plaintiffs filed a crossclaim (the “Crossclaim”) in the DNV Action against
Defendants, alleging that Defendants violated N.Y. Judiciary Law § 487 by making “knowingly
false and fabricated factual allegations” on behalf of the DNV Plaintiffs. (See DNV Action,
ECF No. 68 ¶ 1). On July 10, 2015, Defendants moved to dismiss the Crossclaim (the “Crossclaim
MTD”), arguing inter alia, that it was procedurally improper. (DNV Action, ECF Nos. 73, 74).
In October 2015, Plaintiffs “agreed to dismiss the [Crossclaim] and bring a new action, to avoid
wasting the parties and the Court’s time with irrelevant procedural issues.” (DNV Action,
ECF No. 81 at 1).
On October 15, 2015, Plaintiffs commenced this action. (ECF No. 1). Plaintiffs’ claim in
this action is identical to their Crossclaim in the DNV Action. (Compare id. with DNV Action, ECF

2

Case 1:15-cv-08142-PAC-SLC Document 91 Filed 08/17/22 Page 3 of 9

No. 68). On December 9, 2015, the Honorable Paul A. Crotty dismissed the Crossclaim and stayed
this action pending resolution of the DNV Action MTD. (See ECF min. entry Dec. 9, 2015).
On March 17, 2017, Judge Crotty granted the DNV Action MTD (DNV Action, ECF No. 85) and, on
July 19, 2016, directed the parties in this action to proceed with this action. (ECF No. 16).
On May 13, 2022, Plaintiffs sought to compel Defendants to provide a detailed log of the
emails and documents that Defendants had withheld as privileged (the “Materials”).
(ECF No. 74). On June 3, 2022, the Court directed Defendants to identify three categories of
documents within the Materials. (ECF No. 82). 1 On June 10, 2022, Defendants advised that this
search of the Materials yielded 76 emails (the “Emails”), and provided a log (the “Privilege Log”)
as to those Emails. (ECF Nos. 83 – 83-2). On June 14, 2022, the Court directed Plaintiffs to identify
any documents on the Privilege Log whose privilege they challenged. (ECF No. 84).
On June 24, 2022, Plaintiffs requested production of, inter alia, “all documents from
February 20, 2015 through October 15, 2015,” i.e., the period between when the DNV Action was
transferred to this District and when Plaintiffs commenced this action (the “First Category of
Challenged Documents”, and “the 52 emails [on the Privilege Log] dated after October 15, 2015”
(the “Second Category of Challenged Documents,” together with the First Category of Challenged
Documents, the “Challenged Documents”). (ECF No. 85 at 2–3 (the “Request”)). 2 With respect

The categories were: (i) communications sent to or received by Schledwitz; (ii) communications
containing or referencing comments made by Schledwitz regarding any documents filed in the DNV
Action; and (iii) communications concerning the “March 18, 2015 Letter” (see ECF No. 63-4 at 2–3). (ECF
No. 82 at 1)
2
Plaintiffs also asked the Court to direct Defendants to review the Materials for a third category of
documents, i.e., communications concerning two additional letters, dated July 14, 2015 and October 20,
2015. (ECF No. 85 at 2). On July 5, 2022, the Court denied that aspect of Plaintiffs’ Request. (ECF No. 87
at 2–3).
1

3

Case 1:15-cv-08142-PAC-SLC Document 91 Filed 08/17/22 Page 4 of 9

to the First Category of Challenged Documents, Plaintiffs argue, without citation to any legal
support, that Defendants “are estopped from contradicting their own sworn testimony that []
Schledwitz did not represent the DNV plaintiffs during this time period[,]” and, thus, should
produce all communications involving Schledwitz during that period. (ECF No. 85 2–3). Plaintiffs
also argue that, “under New York law, the common interest privilege does not apply because
there was no pending or reasonably anticipated litigation at the time.” (Id. at 3). With respect
to the Second Category of Challenged Documents, Plaintiffs argue that “any communications in
which [] Schledwitz was being consulted about or communicating about proposed filings in the
underlying DNV action should be produced.” (Id. at 3). Plaintiffs argue that, even if these
communications were between an attorney and client, “only those pertaining to the
representation” would be privileged. (Id.)
On July 1, 2022, Defendants responded to the Request. (ECF No. 86). Regarding the First
Category of Challenged Documents, Defendants dispute Plaintiffs’ argument that the privilege
ceases to exist “when an attorney withdraws from a case.” (Id. at 2). With respect to the Second
Category of Challenged Documents, Defendants argue that these “communications should
remain confidential.” (Id. at 3).
On July 6, 2022, at the Court’s direction, Defendants submitted the Challenged
Documents for in camera review. (ECF No. 87 at 3).
III.LEGAL STANDARDS
“In diversity cases such as this, where state law governs the claims, the Court looks to
state law for determining privilege.” Kleeberg v. Eber, No. 16 Civ. 9517 (LAK) (KHP), 2019 WL
2085412, at *6 (S.D.N.Y. May 13, 2019). The parties do not dispute that New York law governs.

4

Case 1:15-cv-08142-PAC-SLC Document 91 Filed 08/17/22 Page 5 of 9

(ECF Nos. 85; 86). See People ex. rel. Spitzer v. Greenberg, 50 A.D.3d 195, 198 (2d Dep’t 2008)
(noting that “New York courts routinely apply the law of the place where the evidence in question
will be introduced at trial or the location of the discovery proceeding when deciding privilege
issues”) (citation omitted).
“The elements of the attorney-client privilege under New York law are the existence of
an attorney-client relationship, a communication made within the context of that relationship
for the purpose of obtaining legal advice, and the intended and actual confidentiality of that
communication.” Bowne of New York City, Inc. v. AmBase Corp., 161 F.R.D. 258, 264 (S.D.N.Y.
1995) (citing People v. Osorio, 75 N.Y.2d 80, 82–84 (1989)). “Although the privilege was designed
to promote full and frank communications between a client and counsel, and thereby “promote
broader public interests in the observance of law and administration of justice,” it is narrowly
construed because the application of the privilege renders protected relevant information
undiscoverable. Kleeberg, 2019 WL 2085412, at *6 (quoting Upjohn Co. v. United States, 449 U.S.
383, 389 (1981)).
“Federal law governs the applicability of the work product doctrine in all actions in federal
court.” Wultz v. Bank of China Ltd., 304 F.R.D. 384, 393 (S.D.N.Y. 2015) (citing Allied Irish Banks,
P.L.C. v. Bank of Am., N.A., 252 F.R.D. 163, 173 (S.D.N.Y. 2008)); see Fed. R. Evid. 501. The
attorney 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).
“[D]ocuments and tangible things that are prepared in anticipation of litigation or for trial by or
for another party or its representative” are eligible for work product protection. Sokol v. Wyeth,

5

Case 1:15-cv-08142-PAC-SLC Document 91 Filed 08/17/22 Page 6 of 9

Inc., No. 07 Civ. 8442 (SHS) (KNF), 2008 WL 3166662, at *10 (S.D.N.Y. Aug. 4, 2008) (quoting Fed.
R. Civ. P. 26(b)(3)(A)). The purpose of the work product protection is “to preserve a zone of
privacy in which a lawyer can prepare and develop legal theories and strategy ‘with an eye toward
litigation,’ free from unnecessary intrusion by his [or her] adversaries.” United States v. Adlman,
134 F.3d 1194, 1196 (2d Cir. 1998) (quoting Hickman v. Taylor, 329 U.S. 495, 510–11 (1947));
Gucci Am., Inc. v. Guess?, Inc., 271 F.R.D. 58, 74 (S.D.N.Y. 2010) (explaining that the “core
purpose” of the doctrine “is to ‘prevent exploitation of a party’s efforts in preparing for trial’ by
precluding the adversary from obtaining such material absent substantial need”) (quoting
Admiral Ins. Co. v. U.S. District Ct. for the Dist. of Ariz., 881 F.2d 1486, 1494 (9th Cir. 1989)). “The
party asserting work-product protection must demonstrate that the material at issue ‘(1) [is] a
document or a tangible thing, (2) that was prepared in anticipation of litigation, and (3) was
prepared by or for a party, or by his representative.’” McGowan v. JPMorgan Chase Bank, N.A.,
No. 18 Civ. 8680 (PAC) (GWG), 2020 WL 1974109, at *3 (S.D.N.Y. Apr. 4, 2020) (quoting Allied
Irish Banks, 252 F.R.D. at 173 (internal citations omitted)).
IV.APPLICATION
As an initial matter, the Court rejects Plaintiffs’ unsupported argument that all
communications between Defendants from February 20, 2015 through October 15, 2015 must
be produced. (ECF No. 85 at 2–3). First, Plaintiffs cite no authority—and the Court has found
none—for the proposition that the attorney-client privilege and work-product protections were
automatically destroyed when Schledwitz withdrew his appearance as counsel for the DNV
Plaintiffs. Second, Plaintiffs’ argument that “there was no pending or reasonably anticipated
litigation at the time” is simply untrue. (Id. at 3). Indeed, among the limited Challenged

6

Case 1:15-cv-08142-PAC-SLC Document 91 Filed 08/17/22 Page 7 of 9

Documents from this period are communications between Defendants’ concerning the
Crossclaim in the DNV Action, and to a Fed. R. Civ. P. 11 “safe harbor” letter that preceded the
Crossclaim. (ECF No. 83-1). Accordingly, Plaintiffs’ argument that Defendants’ communications
from this period receive no protection lacks merit. See Adlman, 134 F.3d at 1196–97 (“Analysis
of one’s case ‘in anticipation of litigation’ is a classic example of work product, and receives
heightened protection under Fed. R. Civ. P. 26(b)(3).”) (internal citation omitted).
Nevertheless, following its in camera review, the Court has determined that portions of
some of these communications are not privileged or otherwise protected and must be produced.
The Court finds that: (a) 41 documents are privileged in their entirety and need not be
produced; (b) two (2) documents are not covered by any privilege and must be produced in their
entirety (the “Non-Privileged Documents”); and (c) portions of 14 documents are privileged and
the non-privileged portions must be produced (the “Partially Privileged Documents”).
Defendants shall adhere to the following instructions:
1. Defendants properly withheld on grounds of attorney-client privilege and/or work
product protection Privilege Log entry nos. 20, 23, 24, 26, 27, 30–32, 36–40, 42–45,
48, 49, 54–61, 63–76, and are not required to produce these documents.
2. Defendants SHALL PRODUCE IN FULL Privilege Log entry nos. 25 and 28, to which no
privilege applies.
3. Defendants SHALL PRODUCE WITH REDACTIONS the following privilege log entries,
which include emails that were properly withheld based on the attorney-client and/or
work-product privileges:

7

Case 1:15-cv-08142-PAC-SLC Document 91 Filed 08/17/22 Page 8 of 9

a. Privilege Log entry no. 21 shall be produced, with the top two emails on page
1 redacted.
b. Privilege Log entry no. 22:
i. The email with the file name “DNV Investment Partnership, et al. v.
SGM Holdings LLC, et al (1)” shall be produced, with the top four emails
on page 1 redacted.
ii. The email with the file name “DNV Investment Partnership, et al. v.
SGM Holdings LLC, et al (2)” shall be produced, with the top two emails
on page 1 redacted.
c. Privilege Log entry no. 29 shall be produced, with the top email on page 1
redacted;
d. Privilege Log entry no. 33 shall be produced, with the top two emails on page 1
redacted;
e. Privilege Log entry no. 34 shall be produced, with the top email on page 1
redacted;
f. Privilege Log entry no. 35 shall be produced, with the top two emails on page 1
redacted;
g. Privilege Log entry no. 41 shall be produced, with all emails on page 1 and the
top email appearing on page 2 redacted;
h. Privilege Log entry no. 46 shall be produced, with the top email on page 1
redacted;

8

Case 1:15-cv-08142-PAC-SLC Document 91 Filed 08/17/22 Page 9 of 9

i.

Privilege Log entry no. 47 shall be produced, with the top three emails on
page 1 redacted;

j.

Privilege Log entry no. 50 shall be produced, with all emails on page 1 and the
top two emails on page 2 redacted;

k. Privilege Log entry no. 51 shall be produced, with all emails on page 1 and the
top two emails appearing on page 2 redacted;
l.

Privilege Log entry nos. 52 and 53, which Defendants provided in a single
document with the file name “Fwd_request for status update; discovery
generally” shall be produced, with the top email on page 1 redacted; and

m. Privilege Log entry no. 62 shall be produced, with the top email on page 1
redacted.
V.CONCLUSION
For the reasons set forth above, Plaintiffs’ Request is GRANTED IN PART and DENIED IN
PART. By August 22, 2022, Defendants shall produce the Non-Privileged Documents and the
Partially Privileged Documents as instructed in this Order.
Dated:

New York, New York
August 17, 2022

SO ORDERED.
_________________________
SARAH L. CAVE
United States Magistrate Judge

9