Ceglia v. Zuckerberg et al

Filing 313

REPLY to Response to Motion re 294 Fifth MOTION to Compel and For Other Relief filed by Facebook, Inc., Mark Elliot Zuckerberg. (Snyder, Orin)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
-----------------------------------PAUL D. CEGLIA,
Plaintiff,
v.
MARK ELLIOT ZUCKERBERG and
FACEBOOK, INC.,
Defendants.
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Civil Action No. 1:10-cv-00569RJA

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR FIFTH
MOTION TO COMPEL AND FOR OTHER RELIEF

Thomas H. Dupree, Jr.
GIBSON, DUNN & CRUTCHER LLP
1050 Connecticut Avenue, NW
Washington, DC 20036
[phone]
Terrance P. Flynn
HARRIS BEACH PLLC
726 Exchange Street
Suite 1000
Buffalo, NY 14210
[phone]
March 19, 2012

Orin Snyder
Alexander H. Southwell
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue, 47th Floor
New York, NY 10166-0193
[phone]

REPLY MEMORANDUM OF LAW
Ceglia’s opposition brief to Defendants’ Fifth Motion to Compel confirms that Ceglia
remains in violation of this Court’s expedited discovery orders—and that he will not comply
with those orders unless he is compelled to do so. Defendants’ motion should be granted, just as
Defendants’ four prior motions to compel have been granted.
I.

Ceglia Must Provide A Corrected Declaration Identifying All Webmail Accounts He
Has Used Since 2003.
Ceglia’s February 22 supplemental declaration, see Doc. No. 310-6, does not fulfill

Ceglia’s obligation under the August 18 Order to “identify all email accounts accessible through
web-based interfaces that Plaintiff has used since 2003.” Doc. No. 117, ¶ 5 (emphasis added);
see Doc. No. 295 at 4–7. The Court’s rationale for requiring Ceglia to list all webmail accounts
in one declaration is to require him to identify in one place all evidence supporting his claims, so
that he cannot later “discover” new, undisclosed evidence. But Ceglia’s February 22 declaration
lists only the concealed webmail accounts. He thus remains in violation of this Court’s order to
accurately identify—in one declaration—all webmail accounts that he has used since 2003.
In addition, Ceglia has committed new, freestanding violations: he has failed to “facilitate
access” to the concealed webmail accounts, as the August 18 Order requires. Doc. No. 117, ¶ 5.
First, Ceglia provided an incorrect consent form for the account [e-mail].
See Ex. A to Decl. of M. Benjamin (Mar. 19, 2012). Defendants told Ceglia on March 2 that
Yahoo! had rejected his consent form, but Ceglia did not correct his error until March 7, after
significant wrangling with Defendants’ attorneys. See Benjamin Decl., ¶¶ 4, 5, 8.
Second, this Court ordered Ceglia to email consents to Google, Inc. by February 28,
2012, in order to facilitate Stroz Friedberg’s access to the two concealed Gmail accounts
([e-mail] and [e-mail]). See Doc. No. 302 at 1–2. On March

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6, Defendants asked Ceglia to confirm that he had complied with that Order. See Ex. C to
Benjamin Decl. Ceglia’s attorney Dean Boland did not respond to their request, and Defendants
again sought confirmation on March 7. See Ex. D to Benjamin Decl. Later that day, Boland
emailed two contradictory responses. He first claimed that “The Google authorization email was
sent long ago. You were made aware of that.” Id. But fewer than three hours later, Boland
emailed Defense counsel asking, “To what email address should [Ceglia’s] google [sic] consent
be emailed?”, Ex. E to Benjamin Decl. That second email establishes that Ceglia had not in fact
complied with this Court’s February 27 Order as Boland had represented.
Because of Ceglia’s non-compliance, Defendants have been unable to assess whether the
contents of those accounts undermine the accuracy of Ceglia’s testimony that he “did not recall
the existence of any of these email accounts” when he “complet[ed] any prior declarations,” Doc.
No. 310-6, ¶ 3, or to search those contents for more evidence of fraud in the first place.
In short, Ceglia should be compelled to identify in one declaration all webmail accounts
he has used since 2003 to prevent Ceglia from later discovering “new” evidence supporting his
claims, and to explain his multiple failures to comply with the Court’s order.
II.

Ceglia Has Failed To Justify His Assertions Of Attorney-Client Privilege With
Competent Evidence.
Ceglia “does not oppose this Court’s in camera review,” Doc. No. 310, at 8, of the

documents over which Defendants contend Ceglia has improperly invoked the attorney-client
privilege, see Doc. No. 295 at 8–10. (Ceglia has since abandoned his claim over one of those
documents (Document 337).) This Court should therefore review the remaining ten documents
in camera, specifically, item numbers 360, 379, 334, 348, 373, 400, 401, 402, 403, and 405.
The Court should also reject Ceglia’s groundless privilege assertions over those ten
documents. As the Court has already held, see Doc. No. 107 at 2, Ceglia (the party invoking the

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privilege) has “[t]he burden of establishing the existence of an attorney-client privilege, in all of
its elements.” United States v. Int’l Bhd. of Teamsters, 119 F.3d 210, 214 (2d Cir. 1997). That
showing “must be based on competent evidence, usually through affidavits, deposition testimony
or other admissible evidence.” Allied Irish Banks, P.L.C. v. Bank of Am., N.A., 252 F.R.D. 163,
169 (S.D.N.Y. 2008). “The burden cannot be met by ‘mere conclusory or ipse dixit assertions’
in unsworn papers authored by attorneys.” Id. (quoting von Bulow by Auersperg v. von Bulow,
811 F.2d 136, 147 (2d Cir. 1987)).
The Court should reject each of Ceglia’s newest privilege claims for the same reason it
rejected his prior privilege claims, see Doc. No. 107, at 2–3: With one irrelevant exception
discussed below, Ceglia provides no evidence to support a finding of even one element—let
alone all elements—of the attorney-client privilege with regard to every challenged document.
The universe of support for Ceglia’s claims is in essence three-and-one-half pages of “mere
conclusory or ipse dixit assertions in unsworn papers authored by” Boland. See Doc. No. 310 at
5–8. There is simply no evidence before the Court that could support factual findings in Ceglia’s
favor on each element for each challenged document.
For instance, with regard to Documents 373, 400, 401, 402, 403, and 405, Ceglia rests on
the naked, unsworn assertion that those emails “occurred while Mr. Ceglia was considering
whether to formally retain Mr. [David] Grable as counsel.” Doc. No. 310 at 5. No evidence
establishes that this is so. Ceglia did not submit a declaration regarding his relationship with
David Grable, an attorney at Quinn Emanuel who appears to be a personal relation of Jim
Grable, Ceglia’s former attorney at Connors & Vilardo. Nor did David Grable, Jim Grable, or
any of Ceglia’s former or current attorneys (including Paul Argentieri) submit a declaration
regarding the Grable-Ceglia relationship generally or these communications specifically.

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Ceglia’s showing regarding Document 348, an email between James Kole, Ceglia, and
Amanda C. Wornhoff, is similarly deficient. This email dates from February 15, 2007, after
Kole left Sidley Austin and joined the Illinois Attorney General’s Office. Notably, Ceglia does
not even hint that Mr. Kole provided legal advice to Ceglia in Document 348. And of course,
this Court has already held that numerous emails between Ceglia and Kole—even those sent
while Kole was in private practice at Sidley Austin—are not privileged communications.1
Similarly, no evidence establishes that Document 334—a communication from Ceglia to
Argentieri that concerns “a hushmail account,” perhaps the [e-mail] account that
Ceglia concealed from Defendants—was sent for the purpose of obtaining legal advice.
The only challenged documents that are even arguably supported by evidence are
Documents 360 and 379, emails “to which Jason Holmberg was a party.” Doc. No. 310 at 6.
Holmberg is the President and Owner of PA Pellets (LLC), a manufacturer of wood fuel pellets
in Pennsylvania whom Argentieri purportedly hired in February 2011 “as a consultant and/or at
times, to perform executive secretarial duties.” Doc. No. 311, ¶ 17. Argentieri did not submit a
consulting agreement in support of this self-serving assertion, absurd on its face given
Holmberg’s apparent lack of legal training and likely connection to Ceglia through the woodpellet industry.2 But even if Argentieri’s assertion is accepted as true, Holmberg’s status as
Argentieri’s occasional agent does not justify Ceglia’s privilege and work product claims over
1 See Doc. No. 107 at 1–3 (rejecting Ceglia’s privilege claim over March 3, 2004 emails from

Ceglia to Kole); Doc. No. 208, ¶ 15 (rejecting Ceglia’s privilege claim over March 5, 2004 email
from Kole to Ceglia).
2 As Defendants have previously described, see Doc. No. 49, ¶¶ 5–8, the New York State

Attorney General obtained a temporary restraining order against Paul and Iasia Ceglia and their
business, Allegany Pellets, LLC, for defrauding dozens of consumers out of approximately
$200,000. Ceglia was also arrested and charged criminally in connection with this matter.

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Documents 360 and 379 for at least two reasons.
First, Argentieri’s declaration describes Holmberg’s purported role as his agent only with
regard to the Lawsuit Overview document. The declaration is silent regarding Holmberg’s role
in preparing or creating Documents 360 and 379. Accordingly, the evidentiary vacuum
discussed above also exists for these two documents. Second, Ceglia’s brief does not actually
state that Holmberg wrote Documents 360 and 379 at Argentieri’s request, such that the Court
could potentially find each element of the attorney-client privilege. Instead, Ceglia’s brief very
carefully—using the passive voice—implies that connection without actually asserting it:
according to the brief, Holmberg “has served as Mr. Argentieri’s consultant and agent on matters
pertaining to this litigation. Documents 360 and 379 are communications that were prepared in
the context of this position, at the behest of an attorney.” Doc. 310, at 6–7 (emphasis added).
Ceglia does not tell the Court precisely who “prepared” the emails—a critical question, given the
elements of an attorney-client privilege claim—or what aspect of Holmberg’s role “in the
context of this position” would justify the privilege. Nor does Ceglia claim that Argentieri is the
“attorney” at whose “behest” the emails were “prepared.” Thus, Ceglia’s brief does not assert
that Holmberg’s role with regard to Documents 360 and 379 occurred at the direction of Ceglia’s
lawyers—the minimum showing needed to support a privilege finding.
Relatedly, Ceglia’s brief notes that he has asked Defendants to return or destroy copies of
a March 6, 2011 email from Holmberg to Argentieri and Ceglia that Celia produced to
Defendants. He argues that the email is privileged (given Holmberg’s role as Argentieri’s
“executive secretar[y]”); that the email was inadvertently produced by Argentieri’s technical
consultant Edward Flaitz; and that because the production was inadvertent, Ceglia has not
waived any privilege that attached to that email. See id. at 7 n.1. Ceglia’s argument is baseless.

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Federal Rule of Evidence 502(b) governs whether the attorney-client privilege is waived
by an inadvertent disclosure. Under that Rule, a disclosure of privileged material made in a
federal proceeding “does not operate as a waiver” of the privilege if “(1) the disclosure is
inadvertent; (2) the holder of the privilege or protection took reasonable steps to prevent
disclosure; and (3) the holder promptly took reasonable steps to rectify the error, including (if
applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).” Fed. R. Evid. 502(b). “The
party claiming that its disclosure was inadvertent bears the burden of proving that each of the
three elements of Rule 502(b) has been met.” Williams v. Dist. of Columbia, 806 F. Supp. 2d 44,
48 (D.D.C. 2011); see also Allied Irish Banks, 252 F.R.D. at 162 (stating that it is “the burden of
the party asserting a privilege to establish that it has not been waived”). Of course, Rule 502’s
waiver analysis is necessary only if the party invoking the privilege first establishes that the
disclosed material is in fact privileged; if it is not, waiver is irrelevant. See Peterson v. Bernardi,
262 F.R.D. 424, 427 (D.N.J. 2009).
Ceglia’s attempt to clawback Holmberg’s March 6 email fails at that initial step. He has
introduced no evidence from which this Court could conclude that Holmberg’s March 6 email
satisfies every element of the attorney-client privilege. That failure alone should end the matter.
Even assuming Holmberg’s March 6 email were privileged, Ceglia’s clawback attempt
fails because he has not carried his burden under Rule 502(b). In particular, Ceglia’s attorneys
did not take “reasonable steps to prevent disclosure,” R. 502(b)(2), and failed to “promptly [take]
reasonable steps to rectify the error,” R. 502(b)(3).
First, Argentieri’s steps were not reasonable. Flaitz attests that Argentieri instructed him
“over the telephone” to produce “only . . . the attachment” to the March 6 email—the Lawsuit
Overview document—and that he “inadvertently copied the” March 6 email “with the attachment

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‘Lawsuit Overview.pdf’ and had it burned onto a cd and gave it to Mr. Argentieri’s secretary.”
Doc. No. 312, ¶¶ 6–7. But the email was not produced to Stroz Friedberg on CD. Rather, as
established in the Declaration of Bryan Rose, Flaitz actually forwarded the March 6 email from
Argentieri’s email account to Mr. Rose on December 16, 2011. See Decl. of B. Rose, ¶ 7 (Mar.
19, 2012). Those actual facts establish the unreasonableness of Argentieri’s steps to prevent
disclosure: only one file in one email was at issue, but Argentieri could not be bothered to
personally supervise the production or ensure that his instructions were properly carried out. See
Williams, 806 F. Supp. 2d at 50 (holding that disclosing party failed to show that its efforts to
prevent disclosure were reasonable where it “provided no factual basis for the Court to conclude
. . . that the error was ‘reasonable given the size of the production’ ”); cf. Liz Claiborne, Inc. v.
Mademoiselle Knitwear, Inc., No. 96-Civ.-2064, 1996 WL 668862, at *5 (S.D.N.Y. Nov. 19,
1996) (“Courts have most often upheld [privilege] protection despite inadvertent disclosure when
a small number of privileged documents were inadvertently disclosed as part of a large
production of discovery materials, and the disclosure of the privileged documents was careless,
not egregious.”).
Second, Ceglia did not “promply [take] reasonable steps to rectify the error.” Fed. R.
Evid. 502(b)(3). Federal district courts in New York generally measure delay in claiming the
privilege “from the time the producing party learns of the disclosure.” Valentin v. Bank of N.Y.
Mellon Corp., No. 09-Civ.-9448, 2011 WL 1466122, at *3 (S.D.N.Y. Apr. 14, 2011), aff’d, 2011
WL 2437644 (S.D.N.Y. May 31, 2011) (internal quotation marks omitted). Here, because Flaitz
forwarded the March 6 email directly from Argentieri’s email account, Argentieri should have
had same-day knowledge of the disclosure (on December 16, 2011). At a minimum, Boland
learned of the disclosure of Holmberg’s March 6 email on January 4, 2012, when Stroz

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Friedberg produced the December 16 email simultaneously to all parties in its native-file format.
See Rose Decl., ¶ 6. Yet Plaintiff did not seek the email’s return until March 12, 2012—nearly
three months after Argentieri should have learned of the disclosure, or two months and eight
days after Boland did. Courts have repeatedly held that similar delays in seeking the return of
inadvertently disclosed material waived the privilege. See Jacob v. Duane Reade, Inc., No. 11Civ.-0160, 2012 WL 651536, at *6 (S.D.N.Y. Feb. 28, 2012) (holding that “Defendants did not
act diligently in rectifying the inadvertent disclosure” when they waited two months and eight
days to seek the return of privileged material); LaSalle Nat’l Bank Assn. v. Merrill Lynch
Mortgage Lending, No. 04-Civ.-5452, 2007 WL 2324292, at *2, *5 (S.D.N.Y. Aug. 13, 2007)
(holding that a one-month delay to demand the return of a document that was first viewed in a
deposition as “possibly” an attorney-client communication constituted a waiver of the privilege);
Liz Claiborne, 1996 WL 668862, at *5 (waiting one month to request the return of privileged
notes supported a finding of waiver).
In sum, the Court should review the ten challenged documents in camera. Given
Ceglia’s failure to provide any evidence to support his specific privilege assertions, the Court
should hold that each of those documents is not privileged. Those documents should be
produced to Defendants immediately. The Court should also hold that Holmberg’s March 6
email is not privileged, or that Ceglia has waived any such privilege because he has failed to
establish that its production was inadvertent under Rule 502(b).
III.

Ceglia Must Submit An Amended Declaration Identifying Jason Holmberg And All
Other Custodians of “Lawsuit Overview.”
Defendants’ motion establishes that Ceglia remains in non-compliance with the August

18 Order because he failed to disclose that Holmberg possessed a copy of the “Lawsuit
Overview” document, which contains an electronic copy of the purported contract. Defendants

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also explained that Boland’s February 2 email suggests the existence of yet another unidentified
custodian of the purported Work for Hire agreement because it states that Holmberg had one
electronic copy of it “that he retained after receiving it via email.” See Doc. No. 295, at 10–15.
Ceglia’s opposition brief mentions those issues twice. Neither is responsive to
Defendants’ arguments. First, Ceglia claims that “[a]ll copies of [the Lawsuit Overview]
document in Ceglia’s custody and control were already provided to Defendants in previous
productions pursuant to this court’s orders long before they filed their Fifth Motion to Compel.”
Doc. No. 310 at 3. Second, he claims that “Defendants demand all copies of the ‘Lawsuit
Overview’ document and a declaration regarding the authorship of that document. Mr.
Argentieri authored the Lawsuit Overview.pdf.” Id. at 8 (citation omitted).
Ceglia’s responses evade the critical point: he still has not submitted an amended
declaration that identifies all custodians of electronic copies of the purported Work for Hire
agreement, as required by the August 18 Order. See Doc. No. 117, ¶ 2. Ceglia’s supplemental
declaration attached as Exhibit E to his opposition brief does not cure that violation; it fails to
identify each custodian (known to Defendants) of the Lawsuit Overview document. See Doc.
No. 310-5. Ceglia thus should be compelled to submit a corrected declaration that identifies in
one place all custodians of electronic copies of the Lawsuit Overview document.
In addition, Argentieri’s declaration compounds the confusion regarding the potential
existence of yet another undisclosed custodian of “Lawsuit Overview.” As discussed in
Defendants’ motion, Boland stated in a February 2 email that Holmberg had one electronic copy
of Lawsuit Overview “that he retained after receiving it via email.” Doc. No. 295 at 14. But
Argentieri’s declaration conflicts with Boland’s email: Argentieri attests that he “wrote” the
component parts of Lawsuit Overview “primarily by hand and/or faxed documents to Mr.

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Holmberg as I can’t type,” Doc. No. 311, ¶ 18 (emphasis added), after which “Holmberg . . .
formatted my work into a pdf” and thus “did put it together,” id., ¶¶ 20–21. If Argentieri’s
sworn statements are correct, Holmberg could not have “receive[d]” a pdf copy of Lawsuit
Overview document “via email” as Boland claimed in his February 2 email. The identity of the
person who sent the document to Holmberg—such that he “receiv[ed] it via email”—remains a
mystery. Ceglia should be compelled to provide a supplemental declaration explaining those
contradictions. Alternatively, the Court may wish to examine Argentieri and Boland about their
contradictory statements regarding the document’s authorship.
CONCLUSION
Defendants’ Fifth Motion to Compel should be granted. The Court should also award to
Defendants all other relief to which they may be entitled.
Dated:

New York, New York
March 19, 2012
Respectfully submitted,
/s/ Orin Snyder
Orin Snyder
Alexander H. Southwell
Matthew J. Benjamin
Amanda M. Aycock
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue, 47th Floor
New York, NY 10166-0193
[phone]

Thomas H. Dupree, Jr.
GIBSON, DUNN & CRUTCHER LLP
1050 Connecticut Avenue, NW
Washington, DC 20036
[phone]
Terrance P. Flynn
HARRIS BEACH PLLC
726 Exchange Street
Suite 1000
Buffalo, NY 14210
[phone]

Attorneys for Defendants Mark Zuckerberg and Facebook, Inc.

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