U.S. Bank National Association v. Triaxx Asset Management LLC et al

Filing 330

ORDER RE PRIVILEGE LOG granting in part and denying in part 315 Motion for Local Rule 37.2 Conference. The Trustee's letter-motion is GRANTED IN PART, as set forth above. The Clerk of Court is respectfully directed to close the motion at Dkt. No. 315. SO ORDERED.. (Signed by Magistrate Judge Barbara C. Moses on 3/31/2021) (ks)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

3/31/2021

U.S. BANK NATIONAL ASSOCIATION,
Plaintiff,
-against-

18-CV-4044 (BCM)
ORDER RE PRIVILEGE LOG

TRIAXX ASSET MANAGEMENT LLC,
et al.,
Defendants.
BARBARA MOSES, United States Magistrate Judge.
By letter-motion dated July 28, 2020 (Trustee Ltr.) (Dkt. No. 315), plaintiff U.S. Bank
National Association (U.S. Bank or Trustee), which brought this action in its capacity as trustee
of three collateralized debt obligations known as Triaxx Prime CDO 2006-1 (Triaxx 2006-1),
Triaxx Prime CDO 2006-2 (Triaxx 2006-2), and Triaxx Prime CDO 2007-1 (Triaxx 2007-1)
(collectively the CDOs), seeks an order compelling defendant Triaxx Asset Management LLC
(TAM), which is the Collateral Manager for the CDOs, and its affiliate, defendant Phoenix Real
Estate Solutions Ltd. (Phoenix) (collectively the TAM Parties) to amend their categorical privilege
log, see Trustee Ltr. Ex. A (Log), on the ground that the Log does not provide information
sufficient to allow the Trustee to assess the TAM Parties' claims of privilege, as required by Fed
R. Civ. P. 26(b)(5)(A). In the alternative, the Trustee requests that the TAM Parties be ordered to
"produce a log of the withheld documents' metadata." Trustee Ltr. at 4.
In their opposition letter-brief, dated July 31, 2020 (TAM Ltr.) (Dkt. No. 316), the TAM
Parties point out that the parties' Stipulated Discovery Order (Dkt. No. 272) expressly allows for
a categorical privilege log, and argue that the Log is not otherwise deficient. The TAM Parties
resist the request for alternative relief in the form of a metadata log on the ground that the Trustee
never asked for that relief during the parties' meet-and confer, and contend that preparing such a

log would be unduly burdensome because it would require a document-by-document metadata
view to make sure that the metadata did not itself reveal privileged information. TAM Ltr, at 4.
In its reply letter, dated August 4, 2020 (Trustee Reply Ltr.) (Dkt. No. 317), U.S. Bank
reiterates that the Log provides insufficient detail to evaluate the claimed privileges. The reply
letter does not further discuss the alternative request for a metadata log.
No conference is required. For the reasons discussed below, the letter-motion will be
granted in part, as follows.
The Log
The TAM Parties' Log covers more than 12,500 withheld documents, divided into 21
categories. For each category, the Log includes columns headed "Category Description,"
"Subject(s) of Documents or Communications," "Applicable Privileges or Immunities from
Discovery," "Number of Documents Withheld," and "Number of Documents Redacted." There is
no column for dates, because the "date range" for each category is the same: an eight-year period
from March 28, 2011 to September 4, 2019. Log at 1. However, it is extremely unlikely that the
documents in each of the 21 categories span the entire eight years, because several of the categories
include only a handful of documents, and Categories 19 and 20 each identify a single withheld
document. Other categories are extremely large. Category 7, for example, covers 3,390 withheld
documents and 37 redacted documents. 1
Category Descriptions. The "category descriptions" do not vary much between one
category and the next. For example, Category 3 (which covers 1,059 withheld documents) is
described as follows:

1

The Trustee's letter-application focuses on the withheld documents. The Court presumes that, as
to the redacted documents, the Trustee has adequate information to evaluate the claim of privilege.
2

Communications between Kobre & Kim (including Steven Perlstein*, Darryl
Stein*, Phil Huynh*, Josef Klazen*, Darryl Stein*, Sean Casey*, Michael S. Kim*,
Simon Cullingworth*, Gregory Lewis*, Carrie Tendler*, Jef Klazen*, Adriana
Riviere-Badell*), on the one hand, and/or Olshan Frome Wolosky (including John
Moon*, Kerrin Klein*), Miller & Wrubel (including John Moon*, Kerrin Klein*,
Charles Jacob* Kelsey Rowe*, Michael Ardeljan*, Jack Millman*, Sandra
Reeves), Talcott Franklin P.C. (including Talcott Franklin*), Triaxx Asset
Management LLC (including Nicholas Calamari*, Randy Tokar, Tom Priore),
ICP Capital (including Tom Priore, Barbara-Ann Wislosky), Phoenix Real Estate
Solutions Ltd. (including Vishal Garg, Nicholas Calamari*, Mingsung Tang,
Ziggy Jonsson, Dom Savino, Joe Russo, Arun Mittal), on the other hand, or
communications among such entities or documents that reflect a request for or
receipt of legal advice from such counsel and/or communications or documents
prepared in anticipation of litigation or for trial.
Log at 3 (emphasis in the original). The bolded names are the names of law firms and other entities;
the asterisks indicate that the named individual is a lawyer. There are no columns (as there typically
are in a document-by-document log) for the senders, addressees, or recipients of the withheld
documents. The Trustee asserts, and the TAM Parties do not deny, that the "category descriptions"
include "a non-exclusive laundry list of recipients from numerous entities," Trustee Ltr. at 3
(emphasis in the original), meaning that some of the documents within Category 3, for example,
may have been sent by or to individuals other than those listed in the description.
The descriptions of Categories 1-2, 4-9, 11-15, 17, 20, and 21 all follow the same format,
except that they include different firms or combinations of firms. For example, where Category 3
includes four law firms, TAM, Phoenix, and ICP Capital, Category 8 includes only one law firm
(Kramer Levin Naftalis & Frankel), Phoenix, and ICP Capital. Log at 8.
Subject(s) of Documents or Communications. For most of the categories, the "subject" of
the withheld material is described identically, as follows: "Activist litigations brought on behalf
of Triaxx Prime CDO 2006-1, Ltd., Triaxx Prime CDO 2006-2, Ltd., Triaxx Prime CDO 2007-1,
Ltd., and related strategies." The reference to "activist litigations" is to lawsuits brought on behalf
of the CDOs by TAM, with the assistance of Phoenix, against various nonparties. The conduct of
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those lawsuits is not directly in issue in this action. However, the manner in which Phoenix was
retained to assist with those lawsuits, and the way in which it has been paid for its services, are
central to the current litigation.
Applicable Privileges or Immunities from Discovery. For most of the categories, the
"applicable privileges" are listed identically as: "Attorney-client privilege; work product doctrine;
common interest doctrine." There is no attempt to indicate which privilege applies to which
documents within any category.
Categories 4, 10, 16, and 18 are slightly different from the rest. The "subject" of the 338
documents covered by Category 4 includes – in addition to the activist litigations – "prior
interpleader actions brought by U.S. Bank, N.A."
The description of Category 10 (which covers 968 withheld documents) does not include
any law firms. All of the withheld documents are among and between TAM, Phoenix, and two
other business entities, at least one of which (1/0 Capital) is another affiliate of the TAM Parties.
The only lawyer involved in the Category 10 communications is Nicholas Calamari, who (as the
TAM Parties acknowledge, see TAM Ltr. at 3), acts in both a legal and a business capacity for
both TAM and Phoenix. Moreover, the subject of the Category 10 communications includes – in
addition to the activist litigations – "Engagement of Phoenix Real Estate Solutions, Ltd.; Phoenix
Real Estate Solutions, Ltd.’s work on behalf of Triaxx Prime CDO 2006-1, Ltd., Triaxx Prime
CDO 2006-2, Ltd., Triaxx Prime CDO 2007-1, Ltd.; and matters relating to the pending action."
Log at 9. As noted above, these subjects are central to the dispute underlying the present action.
Moreover, since Phoenix was engaged in 2011, and this action was filed seven years later, in 2018,
it seems likely that Category 10 contains many documents that do not "relat[e] to the pending

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action" (except in the sense that they are relevant to the issues in the pending action) and were not
prepared in anticipation of it.
Category 16 (which covers 53 withheld documents) also appears to include intramural
communications only; that is, the description of the category is limited to communications among
and between the TAM Parties and other business entities, some of which may be affiliates, with
no lawyer involved apart from Calamari. The subject of all of the communications is the activist
litigations.
Category 18 does not include any communications at all. Rather it covers 4,723
"[d]ocuments prepared by or for" TAM, ICP Capital, and/or Phoenix, all of which, according to
the Log, are protected by the work product doctrine, id. at 13, meaning that they must have been
prepared for or in anticipation of the activist litigations. No outside lawyer is listed in connection
with Category 18.
Analysis
Where, as here, documents are withheld on the basis of privilege, Fed R. Civ. P. 26(b)(5)(A)
requires the withholding party to "describe the nature of the documents, communications, or
tangible things not produced or disclosed . . . in a manner that, without revealing information itself
privileged or protected . . . enable[s] other parties to assess the claim." The privilege log must
"establish the essential elements of the privilege," and "provid[e] sufficient detail to permit a
judgment as to whether the document[s] [are] at least potentially protected from disclosure." U.S.
v. Constr. Prods. Research, Inc., 73 F.3d 464, 473 (2d Cir. 1996). To that end, Local Civ. R.
26.2(a)(2)(A) ordinarily requires that the privilege log identify, for each document withheld, the
type of document, its general subject matter, date, author, addressees, and any other recipients, and,
where not otherwise apparent, the relationship of the author, addresses, and recipients to each other.

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The subject matter descriptor is ordinarily required to be fairly specific. Thus, for example, in In
re Int. Rate Swaps Antitrust Litig., 2018 WL 4179450 (S.D.N.Y. Aug. 23, 2018), Judge
Engelmayer ruled that "Email reflecting request for legal advice from Barclays' outside counsel
(Linklaters LLP) regarding CFTC ownership regulation" was an acceptable descriptor with respect
to a single withheld email, but "Email requesting legal advice regarding draft talking points"
required "additional context," which could be supplied by adding a clause such as "for ISDA/FIA
meeting." Id. at *2-3.
Local Civ. R. 26.2(c) permits the parties to agree (as they have here, see Stip. Disc. Ord.
¶ 25) to exchange categorical privilege logs, which group like documents into categories, instead
of listing each document individually. However, the party receiving a categorical log "may object
if the substantive information required by this rule has not been provided in a comprehensible
form." Local Civ. R. 26.2(c). The use of a categorical log does not obviate a party's "obligation to
provide 'sufficient detail to permit a judgment as to whether the document is at least potentially
protected from disclosure.'" In re Aenergy, S.A., 451 F. Supp. 3d 319, 325 (S.D.N.Y. 2020)
(quoting Constr. Prods. Research, 73 F.3d at 473).
Here, as in Aenergy, the Log's descriptions "are vague and repetitive," and the Court can
discern little "rhyme or reason behind its chosen groupings," 451 F. Supp. 3d at 326, almost all of
which relate to the same broad "subject," namely, the activist litigations, range over the same eightyear time period, and involve most of the same TAM Party personnel. The only "rhyme or reason"
apparent from the face of the Log is that each category represents a slightly different grouping of
parties and non-parties. While perhaps useful as an organizing principle for the drafter of the Log,

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these categories do little or nothing to assist the reader in determining whether the underlying
documents are or are not privileged. 2
The categorical privilege log at issue in Aenergy, which was prepared by GE, suffered from
similar deficiencies, in that the "vast majority" of the category descriptions stated in generic terms
that the withheld documents were "confidential internal documents between GE employees and
in-house counsel 'seeking or conveying legal advice'" about one or more of three broad subjects:
"the 'on-sale contracts,' the 'Credit Facility Agreement," or the 'AE-GE contracts.'" 451 F. Supp.
3d at 326. Judge Caproni concluded that the privilege log did "little to communicate the potential
basis for [the] privilege assessments" and consequently ordered GE to re-review the withheld
documents and produce a revised, document-by-document privilege log listing each of the 1300
withheld documents individually. Id. at 328 ("Although AE has not requested a document-bydocument list, the Court has lost confidence that GE will provide sufficient information regarding
withheld documents to inform AE of the basis for its privilege calls."). See also Fleisher v. Phoenix
Life Ins. Co., 2013 WL 42374, at *2-3 (S.D.N.Y. Jan. 3, 2013) (finding that Phoenix Life "forfeited
any claim of privilege or work product protection where its categorical privilege log was "both

2

The problem is particularly acute with respect to the categories which do not include any
communications without outside lawyers. As to these categories, the claim of privilege, with
respect to each withheld communication, may depend on which hat Nicholas Calamari was
wearing when he received or sent the communication. The TAM Parties state that they properly
evaluated this issue and determined whether Calamari was acting in a business or a legal capacity
when determining whether privilege applies, TAM Ltr. at 3, and fault U.S. Bank for "not
identify[ing] any category of documents that it believes were improperly withheld on that basis."
Id. As presented, however, the Log essentially demands that the Trustee accept the TAM Parties'
representation – that they properly reviewed Calamari's communications and made the right call
on each – without giving the Trustee any intelligible basis (such as the specific date of the
communication, the persons with whom Calamari communicated, or a non-generic description of
the subject to the communication) on which even to consider whether to challenge the designation.
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tardy and inadequate," listing only four "broad classes of documents" with "exceedingly general
and unhelpful" descriptors).
That said, proportionality is an issue in evaluating privilege logs, just as it is with respect
to other aspects of discovery. See Aenergy, 451 F. Supp. 3d at 328 (explaining that the court might
not have required a document-by-document log "were the task particularly burdensome," but "in
this case GE has withheld only 1300 documents and 800 document families"). As noted above, the
conduct of the activist litigations is not directly at issue in this action. Therefore, as to the 17
categories on the Log which include communications with outside counsel, and as to which the
subject of all of the withheld documents is the activist litigations, the Court will require only two
modifications to the Log. The TAM Parties must (1) provide an accurate date range for that
category; and (2) to the extent they have not already done so, include a complete list of the senders,
addressees, and other recipients of the communications within the category.
As to Category 18 (which covers 4,723 documents, all of which are described as work
product, rather than communications, concerning the activist litigations) the TAM Parties must (1)
provide an accurate date range for that category; and (2) to the extent they have not already done
so, include a complete list of the individuals "by" and "for" whom the withheld documents were
prepared.
As to Categories 4, 10, and 16 (comprising a total of 1,359 withheld documents), the TAM
Parties must produce a traditional, document-by document privilege log. Alternatively, if the
parties so stipulate, the TAM Parties may produce a metadata log as to these categories.
The TAM Parties' revised log shall be served no later than April 28, 2021.

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Conclusion
The Trustee's letter-motion is GRANTED IN PART, as set forth above. The Clerk of Court
is respectfully directed to close the motion at Dkt. No. 315.
Dated: New York, New York
March 31, 2021

SO ORDERED.

________________________________
BARBARA MOSES
United States Magistrate Judge

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