Securities and Exchange Commission v. Alderson et al

Filing 113

ORDER: IT IS HEREBY ORDERED that DVU must produce the Related Documents to theparties in this matter, no later than January 17, 2020. The Court disagrees with DVU that the Related Documents are beyond the temporal scope of its waiver. The Court also disagrees with DVU that it does not have an adversarial relationship with Alderson. While DVU is not a party to this case, Alderson has, throughout this litigation, rightly or wrongly, asserted advice of counsel or other similar arguments in an attem pt to shift responsibility for any wrongdoing from him to DVU. DVU has, in turn, resisted such efforts, which has embroiled DVU and Alderson in endless privilege and other disputes. In that context, the Court finds that DVU and Alderson are sufficien tly adversarial so as to create a risk that protected documents are being selectively disclosed for DVU's benefit. The Court also disagrees with DVU that production of the Related Documents, which have already been found and are fewer than 20 pa ges in total, constitutes an undue burden. In sum, DVU has failed to carry its burden to show that the Related Documents should be withheld from production despite being relevant to this case and despite being within the scope of its privilege waiver. And as set forth herein. SO ORDERED. (Signed by Judge Valerie E. Caproni on 1/14/2020) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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SECURITIES AND EXCHANGE COMMISSION,:
:
Plaintiff,
:
:
-against:
:
BENJAMIN ALDERSON and
:
BRADLEY HAMILTON,
:
:
Defendants.
:
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VALERIE CAPRONI, United States District Judge:

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 01/14/2020
18-CV-4930 (VEC)
ORDER

WHEREAS Defendants Alderson and Hamilton seek the production or un-redaction of
fourteen documents in the possession of non-party Brite Advisors USA, Inc. (“DVU”), Dkt. 105
at 1;
WHEREAS the Court denied production of twelve of the fourteen documents and
ordered the submission of the two remaining documents (“Related Documents”)1 to the Court for
in camera review, Dkt. 108;
WHEREAS the Related Documents are relevant to the claims and defenses in this matter,
particularly the SEC’s claim that Defendant Alderson aided and abetted DVU’s violations of 15
U.S.C. § 80b-4 and 17 C.F.R. § 275.204-2, which govern the maintenance of books and records
relating to DVU’s investment advisory business, from June 2013 to March 2017, see Compl. ¶¶
79–83, 99–104;

1

The Related Documents are identified as (1) CTRL00478418, and (2) CTRL01156482, CTRL01156483,
and CTRL01156542. See Dkts. 105 at 2, 106 at 2.

WHEREAS DVU bears the burden of showing that the documents being withheld are
privileged and that privilege has not been waived2;
WHEREAS DVU has previously waived privilege as to documents concerning certain
subjects, including “the creation and maintenance of books and records, as alleged in the
Complaint,” “during the time period July 2012 to November 23, 2015” (“Time Period”), see Dkt.
106-2 at 2–3;
WHEREAS the documents in dispute were created on April 13, 2016, and July 11–12,
2016;
WHEREAS DVU does not dispute that the Related Documents pertain to the subjects for
which it has waived privilege, though it contends that the Related Documents are beyond the
Time Period, see Dkt. 106 at 2;
WHEREAS DVU contends that Alderson cannot benefit from the doctrine of selective
waiver because DVU is not an “adversary” seeking to disclose documents strategically in order
to gain a litigation advantage, Dkt. 106 at 4; and
WHEREAS DVU contends that disclosure of the disputed documents would cause undue
burden and expense pursuant to Rule 45, Dkt. 106 at 4;
IT IS HEREBY ORDERED that DVU must produce the Related Documents to the
parties in this matter, no later than January 17, 2020. The Court disagrees with DVU that the
Related Documents are beyond the temporal scope of its waiver. DVU’s subject-matter waiver
applied to “all communications and documents . . . concerning the Subjects during the time
period July 2012 to November 23, 2015.” Dkt. 106-2 at 1. Although the Related Documents are

2

See United States v. Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., AFL-CIO, 119
F.3d 210, 214 (2d Cir. 1997).

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communications that occurred after November 23, 2015, they discuss past practices and therefore
relate back to “the creation and maintenance of books and records” “during” the Time Period.
To the extent DVU contends that its waiver applies only to documents created during the
Time Period, rather than to documents pertaining to the designated subjects during the Time
Period, the Court also finds that a limited expansion of the Time Period is appropriate in this
case. In Chesapeake Energy Corp. v. Bank of New York Mellon Tr. Co., the primary case on
which DVU relies, the district court declined to expand the end date applicable to a privilege
waiver because doing so “would . . . breach [Plaintiff’s] privilege as to core opinion work
product without conferring any benefit upon” Defendant. No. 13-CV-1582, 2013 WL 1609250,
at *5–6 (S.D.N.Y. Apr. 15, 2013) (concluding after in camera review that documents were
privileged and “have no bearing on the issues before the Court”). Unlike the documents in
Chesapeake Energy, the documents here are relevant to one of the claims that the SEC is
currently prosecuting against Defendant Alderson.3 Cf. id. at *5 (“Unless fairness requires it, the
Court will not modify the agreed-upon scope of the waiver.”).
The Court also disagrees with DVU that it does not have an adversarial relationship with
Alderson. While DVU is not a party to this case, Alderson has, throughout this litigation, rightly
or wrongly, asserted advice of counsel or other similar arguments in an attempt to shift

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The Court also notes that several courts have rejected temporal limitations on subject-matter waivers.
Bowne of New York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 487 (S.D.N.Y. 1993) (“As for the temporal scope
of the waiver, although the stated waivers . . . purported to be limited to the period until [nonparties’] termination
from [Defendant’s employ], there is no basis for imposing such a limitation on the implied waiver.” (citing
McCormick-Morgan, Inc. v. Teledyne Indus., Inc., 765 F. Supp. 611, 613–14 (N.D. Cal. 1991) and Smith v. Alyeska
Pipeline Serv. Co., 538 F. Supp. 977, 980–82 (D. Del. 1982), aff’d, 758 F.2d 668 (Fed. Cir. 1984))). There may also
be a distinction between applying temporal limits to documents’ creation dates, versus using temporal boundaries to
define the subject matter being waived. An example of the former would be a waiver as to all documents created
during 2014 and 2015 pertaining to the maintenance of books and records; an example of the latter would be a
waiver as to all documents concerning books and records practices in effect during 2014 and 2015. The former
appears to be a more tenuous example of a subject-matter waiver because the date stamp on a document does not
define the document’s “subject matter” or contents, which could be about events occurring in the distant past or
future. In any event, the Court need not and does not decide whether temporal limitations can ever be an appropriate
parameter for a subject-matter waiver.

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responsibility for any wrongdoing from him to DVU. DVU has, in turn, resisted such efforts,
which has embroiled DVU and Alderson in endless privilege and other disputes. In that context,
the Court finds that DVU and Alderson are sufficiently adversarial so as to create a risk that
protected documents are being selectively disclosed for DVU’s benefit. See In re Steinhardt
Partners, L.P., 9 F.3d 230, 235 (2d Cir. 1993) (“[S]elective assertion of privilege should not be
merely another brush on an attorney’s palette, utilized and manipulated to gain tactical or
strategic advantage.”).
The Court also disagrees with DVU that production of the Related Documents, which
have already been found and are fewer than 20 pages in total, constitutes an undue burden.
In sum, DVU has failed to carry its burden to show that the Related Documents should be
withheld from production despite being relevant to this case and despite being within the scope
of its privilege waiver.
SO ORDERED.
_________________________________
VALERIE CAPRONI
United States District Judge

Date: January 14, 2020
New York, New York

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