Ceglia v. Zuckerberg et al

Filing 379

REPLY/RESPONSE to re 367 Appeal of Magistrate Judge Decision to District Court filed by Facebook, Inc., Mark Elliot Zuckerberg. (Attachments: # 1 Certificate of Service)(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’ MEMORANDUM OF LAW IN OPPOSITION TO CEGLIA’S
OBJECTION TO THE MAGISTRATE JUDGE’S APRIL 19, 2012 ORDER

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]
May 16, 2012

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

TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT .................................................................................................... 1
FACTS ............................................................................................................................................ 2
STANDARD OF REVIEW ............................................................................................................ 7
ARGUMENT .................................................................................................................................. 8
I.

The Waiver Order Is Not Clearly Erroneous. ............................................................. 9

II.

Ceglia’s Two Remaining Arguments Do Not Support Overruling The
Waiver Order. ........................................................................................................... 14

CONCLUSION ............................................................................................................................. 16

i

TABLE OF AUTHORITIES
Page
Cases
Allied Irish Banks, P.L.C. v. Bank of Am., N.A.,
252 F.R.D. 168 (S.D.N.Y. 2008) ................................................................................................ 8
Arnold v. Krause, Inc.,
233 F.R.D. 126 (W.D.N.Y. 2005)......................................................................................... 7, 13
Easley v. Cromartie,
532 U.S. 234 (2001) .................................................................................................................... 7
F.T.C. v. TRW, Inc.,
628 F.2d 207 (D.C. Cir. 1980) .................................................................................................. 13
Flaherty v. Filardi,
388 F. Supp. 2d 274 (S.D.N.Y. 2005) ........................................................................................ 7
Gucci Am., Inc. v. Guess?, Inc.,
271 F.R.D. 58 (S.D.N.Y. 2010) .................................................................................................. 8
In re Horowitz,
482 F.2d 72 (2d Cir. 1973) ......................................................................................................... 5
In re Refco Secs. Litig.,
— F.R.D. —, 2011 WL 4527287 (S.D.N.Y. 2011) ...................................................... 10, 11, 12
Lavigna v. State Farm Mut. Auto. Ins. Co.,
736 F. Supp. 2d 504 (N.D.N.Y. 2010) ........................................................................................ 8
NXIVM Corp. v. O’Hara,
241 F.R.D. 109 (N.D.N.Y. 2007) ............................................................................................... 8
Occidental Chem. Corp. v. OHM Remediation Servs. Corp.,
175 F.R.D. 431 (W.D.N.Y. 1997)............................................................................................... 6
Robbins & Meyers, Inc. v. J.M. Huber Corp.,
274 F.R.D. 63 (W.D.N.Y. 2011)........................................................................................... 6, 14
Rubin v. Valicenti Advisory Servs., Inc.,
471 F. Supp. 2d 329 (W.D.N.Y. 2007) ....................................................................................... 8
U.S. Postal Serv. v. Phelps Dodge Refining Corp.,
852 F. Supp. 156 (E.D.N.Y. 1994) ....................................................................................... 8, 13

ii

TABLE OF AUTHORITIES
(continued)
Page
United States v. Ackert,
169 F.3d 136 (2d Cir. 1999) ................................................................................... 10, 11, 12, 16
United States v. Constr. Prods. Research, Inc.,
73 F.3d 464 (2d Cir. 1996 ........................................................................................................... 4
United States v. Int’l Bhd. of Teamsters,
119 F.3d 210 (2d Cir. 1997) ....................................................................................................... 5
United States v. Kovel,
296 F.2d 918 (2d Cir. 1961) ..................................................................................... 9, 10, 11, 12
United States v. Schwimmer,
892 F.2d 237 (2d Cir. 1989) ................................................................................................... 6, 8
Virgin Atl. Airways, Ltd. v. Nat’l Mediation Bd.,
956 F.2d 1245 (2d Cir. 1992) ..................................................................................................... 7
Rules
Fed. R. Civ. P. 72(a) ....................................................................................................................... 8

iii

PRELIMINARY STATEMENT
Plaintiff Paul Ceglia contends that two documents that his lawyer shared with Jason
Holmberg — a wood pellet salesman from Pennsylvania who is not a lawyer — are protected by
the attorney-client privilege because Holmberg was purportedly serving as a legal secretary or
providing unspecified “consulting” services. Judge Foschio was entirely correct in rejecting this
preposterous claim — the latest in Ceglia’s egregious abuses of the discovery process. See, e.g.,
Doc. No. 283 at 22 (sanctioning Ceglia for demonstrating “a plain lack of respect” for court
orders “which cannot be countenanced”).
This entire lawsuit is a fraud built upon a forged “contract” and “emails” manufactured
by Ceglia, as set forth in detail in Defendants’ motion to dismiss. See Doc. No. 319. Indeed, one
of the very documents at issue in Ceglia’s objections reveals

REDACTED

The order that is currently before this Court arises from Defendants’ fifth motion to
compel Ceglia’s production of documents that further establish the fraud (all five of which have
been granted). After conducting a careful in camera review of the documents in question, Judge
Foschio concluded that Ceglia had failed to carry his burden of establishing that they were
protected by the attorney-client privilege.
That conclusion is plainly correct and well within Judge Foschio’s broad discretion under
Rule 72(a). Holmberg is not an attorney; he is not a consultant; and he is not a legal secretary.
He is a seller of wood pellets that Ceglia enlisted to help shop his fraudulent lawsuit to firms
willing to help him try to extort a settlement from Defendants.1 Ceglia failed to introduce any

1

Ceglia also is a former wood pellet salesman, although his career in that field ended when he faced
criminal and civil charges brought by the Allegany County District Attorney’s Office and the New York Attorney

1

evidence demonstrating that Holmberg was functioning as a legal secretary or consultant in
connection with the two documents at issue — Items 360 and 379 — and any such claim would
be absurd on its face. This is simply a case where the privilege was waived because Ceglia
shared the documents with a third party, and his after-the-fact fiction that the third party was a
“legal secretary” or “consultant” are too little, too late. Judge Foschio’s order should be
affirmed.
FACTS
1.

In July 2011, based on Defendants’ substantial showing of fraud, Judge Foschio

ordered limited, targeted discovery to allow Defendants to assemble evidence that the purported
Work for Hire contract referred to in Ceglia’s Amended Complaint, and the purported emails
excerpted therein, were forgeries that Ceglia was using to perpetrate a massive fraud on this
Court. Doc. No. 83. Expedited discovery confirmed the fraud. Among other things, Defendants
found two identical copies of the authentic contract between Ceglia and Zuckerberg: one on
Ceglia’s hard drive, and another on the email servers of the international law firm Sidley Austin,
where Ceglia had emailed it to a former Sidley Austin lawyer in 2004. That authentic contract
does not mention Facebook. Rather, consistent with Zuckerberg’s declaration explaining his
limited interactions with Ceglia, Doc. No. 46, it concerns only programming work that
Zuckerberg agreed to do for Ceglia on a now-defunct website called StreetFax. This and other
objective scientific and forensic evidence — which establishes Ceglia’s fraud beyond any
conceivable doubt — is described in detail in the memorandum of law in support of Defendants’
pending motion to dismiss. See Doc. No. 319 at 1–20, 28–51.

General’s Office for defrauding citizens in upstate New York through a scam involving the sale of wood pellets used
to heat homes. See Doc. No. 45 at 15.

2

But that evidence was not obtained easily. Ceglia stonewalled and obstructed discovery
for over ten months at every turn. His bad-faith litigation misconduct was so egregious that two
of his lawyers withdrew from the case, attesting in sworn declarations that Ceglia had instructed
them not to comply with court orders. See id. at 20. The Court sanctioned Ceglia for his
contumacious misconduct; it fined him $5,000 and ordered him to pay nearly $93,000 of
Defendants’ attorney’s fees, see Doc. Nos. 283, 292, 370, 371, after finding that Ceglia had
demonstrated “a plain lack of respect” for court orders “which cannot be countenanced,” Doc.
No. 283 at 22. Ceglia’s extensive record of willful, bad-faith litigation misconduct is cataloged
in Defendants’ memorandum of law supporting their motion to dismiss. See Doc. No. 319 at 51–
66.
2.

Ceglia’s repeated, flagrant refusals to comply with the Court’s expedited

discovery orders required Defendants to file five motions to compel. Doc. Nos. 95, 128, 154,
243, 294. The Court granted all of those motions. Doc. Nos. 107, 117, 152, 208, 272, 317, 357.
The issue here relates to part of the order granting Defendants’ fifth motion to compel.
As relevant, Defendants’ fifth motion challenged Ceglia’s assertion of attorney-client
privilege over eleven documents that Ceglia withheld from a February 2012 production of
documents from his web-based email accounts. See Doc. No. 295 at 1–2, 4–6, 8. Defendants
later discovered that one of those emails

REDACTED

3

Privilege Log Item 379 at 19-20 (emphasis added).

REDACTED
Ceglia has refused to produce the

REDACTED so Defendants do not know its contents. But the surrounding context suggests
REDACTED

Because Defendants had not yet seen that email when they filed their motion, they noted
Ceglia’s history of improperly designating documents as privileged and this Court’s prior orders
overruling those improper privilege designations. See id. at 8 (citing Doc. Nos. 208, ¶¶ 14–15;
107). In opposing Defendants’ fifth motion, Ceglia dropped his privilege assertion over one of
those eleven documents. He also stated that he “does not oppose this Court’s in camera review
of” the ten remaining “documents to evaluate such designations.” See Doc. No. 310 at 8. The
Court thus ordered Ceglia to produce the remaining documents for in camera review. Doc. No.
317 at 2.
3.

Following its thorough in camera inspection, the Court granted in part

Defendants’ request to overrule Ceglia’s privilege assertions. Doc. No. 357 (“Waiver Order”).
The Waiver Order began by carefully analyzing the applicable case law on the attorney-client
privilege. It stated that “[a] party invoking the attorney-client privilege must demonstrate three
essential elements, including (1) a communication between a client and counsel, (2) intended to
be and kept confidential, and (3) made for the purpose of obtaining or providing legal advice or
services.” Id. at 4 (citing United States v. Constr. Prods. Research, Inc., 73 F.3d 464, 473 (2d
Cir. 1996) (other citations omitted)). The Waiver Order also stated that “[t]he burden of
establishing each element of the privilege, including the absence of any waiver, is upon the party

4

asserting the privilege.” Id. at 4–5 (citing United States v. Int’l Bhd. of Teamsters, 119 F.3d 210,
214 (2d Cir. 1997) (other citations omitted)). And it quoted the well-established principle that
“[w]hen information that is otherwise protected by the attorney-client privilege is disclosed to
third parties, the element of confidentiality is destroyed, and the privilege is waived.” Id. at 5
(citing In re Horowitz, 482 F.2d 72, 81 (2d Cir. 1973) (other citations omitted)).
Applying those established legal principles, Judge Foschio held that six of the ten
challenged documents were privileged, and need not be produced; one of the ten was privileged
in part, and should be produced in redacted form; and three of the ten were not privileged and
must be produced in full. See id. at 6. Ceglia’s objections here concern only two of the
documents that the Court held must be produced in full — privilege log Items 360 and 379.
Judge Foschio carefully analyzed Ceglia’s privilege claims over Items 360 and 379. See
id. at 8–11. He described Item 360 as “an email dated March 17, 2011, from Plaintiff to one
Jason Holmberg (‘Holmberg’), whom Plaintiff asserted is Plaintiff’s attorney’s agent, the subject
of which email is ‘file for DLA’ with two files attached.” Id. at 8. And he described Item 379 as
“an April 19, 2011 email from Argentieri to Plaintiff with the subject ‘Fwd: Follow-up’ and
containing emails with [e-mail], [e-mail],
[e-mail], and [e-mail] with attachments.” Id.
The Waiver Order summarized the parties’ arguments on whether Items 360 and 379
were privileged. It noted Defendants’ contention that any attorney-client privilege over Items
360 and 379 was waived when those documents were disclosed to Holmberg, a non-lawyer. Id.
at 9. It also expressly acknowledged Ceglia’s contention that disclosing those items to Holmberg
did not waive any privilege because “his counsel, Argentieri, retained Holmberg as a consultant
and agent with regard to the instant litigation.” Id. at 8–9. And it cited Defendants’ argument

5

that there was no evidence before the Court establishing Holmberg’s role as Argentieri’s agent in
connection with Items 360 and 379, and no “indication Holmberg prepared Item 360 or 379 at
Argentieri’s request.” Id. at 9.
After summarizing the parties’ arguments, Judge Foschio recognized Second Circuit case
law establishing that “[t]he attorney-client privilege may protect ‘communications made to
agents of an attorney . . . hired to assist in the rendition of legal services.’” Id. (quoting United
States v. Schwimmer, 892 F.2d 237, 243 (2d Cir. 1989) (other citations omitted)). “As such, ‘the
attorney-client privilege can attach to reports of third parties made at the request of the attorney
or the client where the purpose of the report was to put in usable form information obtained from
the client.’” Id. (quoting Occidental Chem. Corp. v. OHM Remediation Servs. Corp., 175 F.R.D.
431, 436 (W.D.N.Y. 1997) (internal quotation marks and citation omitted)). But Judge Foschio
correctly concluded that Ceglia had failed to carry his burden of introducing evidence showing
that Holmberg played such a role with regard to Items 360 and 379:
[T]he record is completely devoid of any explanation as to why Holmberg’s
services were retained in connection with the two documents attached to the
March 17, 2011 email submitted as Item 360, or why the information contained in
the emails comprising Item 379 were also circulated to Holmberg, much less that
Holmberg had any “need to know” the information disclosed therein.
Id. at 10 (quoting Robbins & Meyers, Inc. v. J.M. Huber Corp., 274 F.R.D. 63, 93–94 (W.D.N.Y.
2011)).
The Court also held that Ceglia had waived any claim that Items 360 and 379 were
protected by the attorney work product doctrine because he had failed to assert such protection in
his original privilege log. Id. “Accordingly, even if Items 360 and 379 were ever protected by
the attorney-client privilege and work product doctrine, the protection has been waived by the
disclosure of the information to a third party, Holmberg, without establishing Holmberg had any

6

need to know the information or had been retained to render professional services with regard to
the documents.” Id. at 10–11 (emphasis added).
Ceglia filed a one-page motion seeking “clarification” of the Waiver Order. Doc. No.
358. Ceglia asked the Court to “clarify” that he could redact from Item 379 certain emails that
he claimed had not been provided to Holmberg. See id. at 2. The Court construed Ceglia’s
motion as one for reconsideration; it denied the motion, finding that “Plaintiff has failed to meet
his heavy burden of establishing reconsideration is needed ‘to correct clear error or prevent
manifest injustice.’” Doc. No. 361 (“Reconsideration Order”) at 5 (quoting Virgin Atl. Airways,
Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992)).
4.

Ceglia’s objections followed. See Doc. No. 367. He challenges only the Waiver

Order’s conclusion that Items 360 and 379 are not protected by the attorney-client privilege; he
does not object to Judge Foschio’s holding that he waived any work product protection that may
have attached to those two documents. See id.
STANDARD OF REVIEW
This Court reviews the Waiver Order under the familiar “‘clearly erroneous or contrary to
law’” standard. See Arnold v. Krause, Inc., 233 F.R.D. 126, 129 (W.D.N.Y. 2005) (citing 28
U.S.C. § 626(b)(1); Fed. R. Civ. P. 72(a)) (Arcara, J.). “A magistrate judge’s order is ‘clearly
erroneous’ where ‘on the entire evidence, the [district court] is left with the definite and firm
conviction that a mistake has been committed.’” Id. (quoting Easley v. Cromartie, 532 U.S. 234,
243 (2001) (other internal quotation marks omitted)). “Pursuant to this ‘highly deferential’
standard of review, ‘magistrates are afforded broad discretion in resolving nondispositive
disputes and reversal is appropriate only if their discretion is abused.’” Id. (quoting Flaherty v.
Filardi, 388 F. Supp. 2d 274, 283 (S.D.N.Y. 2005)); see also Rubin v. Valicenti Advisory Servs.,

7

Inc., 471 F. Supp. 2d 329, 333 (W.D.N.Y. 2007) (“Under the ‘clearly erroneous’ standard of
review of Rule 72(a), the magistrate judge’s findings should not be rejected merely because the
court would have decided the matter differently.”). Ceglia’s objections do not satisfy those
exacting standards.
ARGUMENT
The party asserting the attorney-client privilege bears the burden of establishing — by
competent evidence — both the existence of each element of the privilege, and that the privilege
has not been waived. See, e.g., Allied Irish Banks, P.L.C. v. Bank of Am., N.A., 252 F.R.D. 168,
168–69 (S.D.N.Y. 2008). Although the privilege extends to communications between a client
and an attorney’s agent in certain circumstances, see, e.g., Schwimmer, 892 F.2d at 243,
disclosure of privileged material to most third parties waives the privilege. See, e.g., U.S. Postal
Serv. v. Phelps Dodge Refining Corp., 852 F. Supp. 156, 162 (E.D.N.Y. 1994) (“[T]he fact [that]
the document is sent to a third party ordinarily removes the cloak of confidentiality necessary for
protection under the attorney-client privilege.”). And whether the attorney-client privilege
attaches to a communication, or whether any privilege has been waived, must be determined on a
document-by-document basis. See, e.g., Gucci Am., Inc. v. Guess?, Inc., 271 F.R.D. 58, 75
(S.D.N.Y. 2010); NXIVM Corp. v. O’Hara, 241 F.R.D. 109, 131 (N.D.N.Y. 2007).
Judge Foschio applied those settled, straightforward legal principles in resolving
Defendants’ fifth motion to compel. Accordingly, there is no basis to overturn the Waiver Order
as “contrary to law.” Fed. R. Civ. P. 72(a). See Lavigna v. State Farm Mut. Auto. Ins. Co., 736
F. Supp. 2d 504, 509-10 (N.D.N.Y. 2010) (“Under a contrary to law standard, a district court can
reverse a magistrate judge’s order only if the order fails to apply the relevant law.”).

8

I.

The Waiver Order Is Not Clearly Erroneous.
Instead of challenging Judge Foschio’s application of the legal principles outlined above,

Ceglia’s objects to Judge Foschio’s determination that “‘the evidentiary record is completely
devoid of any explanation as to why Holmberg’s services were retained in connection with the
two documents attached to the March 17, 2011 email submitted as Item 360, or why the
information contained in the emails comprising Item 379 were also circulated to Holmberg.’”
Doc. No. 367 at 7 (quoting Waiver Order at 10) (emphases added). Ceglia contends that this
finding overlooks two pieces of evidence: a declaration from Argentieri attesting that he hired
Holmberg “as a consultant and/or at times, to perform executive secretarial duties,” Argentieri
Decl. ¶ 3 [Doc. No. 311], and a declaration from Holmberg attesting that Argentieri “retained
[Holmberg’s] services as a consultant to assist [Argentieri] in prosecuting Paul Ceglia’s lawsuit.”
Holmberg Decl. ¶ 2 [Doc. No. 341]; see Doc. No. 367 at 9–10.
Ceglia is mistaken. The Court expressly acknowledged Ceglia’s argument and quoted
from Argentieri’s declaration. Waiver Order at 8–9. Thus, any contention that the Waiver Order
must be overruled because Judge Foschio somehow missed record evidence is factually
incorrect; Judge Foschio specifically cited the only evidence upon which Ceglia bases his
objections.
Judge Foschio reasonably and correctly ruled that those two statements in Holmberg’s
and Argentieri’s declarations are insufficient to justify Ceglia’s privilege assertions over Items
360 and 379. Ceglia disagrees, arguing that the Waiver Order’s view of those two declarations is
inconsistent with United States v. Kovel, 296 F.2d 918 (2d Cir. 1961). See Doc. No. 367 at 9–10.
In Kovel, the Second Circuit held that when a client sought tax advice from a tax lawyer,
the client’s confidential communications to an accountant at the lawyer’s direction would be
covered by the attorney-client privilege if the accountant was “then to interpret [the
9

communications] so that the lawyer may better give legal advice.” 296 F.2d at 922. The Court
emphasized: “What is vital to the privilege is that the communication” to the non-attorney agent
“be made in confidence for the purpose of obtaining legal advice from the lawyer.” Id.
Later cases — that Ceglia does not cite — have clarified Kovel’s scope. In United States
v. Ackert, 169 F.3d 136 (2d Cir. 1999), tax counsel for Paramount Pictures (Meyers) had several
conversations with an investment banker (Ackert) “to gain information and to better advise his
client” concerning the tax consequences of an investment proposal that Ackert had pitched to
Paramount. Id. at 139. When the IRS later subpoenaed Ackert in connection with an audit of
Paramount, Paramount asserted attorney-client privilege over the conversations between Meyers
and Ackert. See id. at 138. The Second Circuit rejected Paramount’s privilege assertion, stating
that “a communication between an attorney and a third party does not become shielded by the
attorney-client privilege solely because the communication proves important to the attorney’s
ability to represent a client.” Id. at 139. It held that the communications between Meyers and
Ackert were not privileged under Kovel — even though Meyers had consulted with Ackert to
obtain “information Paramount did not have about the proposed transaction and its tax
consequences” for his client’s benefit — because “Ackert’s role was not as a translator or
interpreter of client communications.” Id. at 139–40.
A recent district court decision applied Ackert in factual circumstances materially
indistinguishable from those here. See In re Refco Secs. Litig., — F.R.D. —, 2011 WL 4527287
(S.D.N.Y. 2011). In Refco, the defendants contended that an attorney for some plaintiffs
(Ginsberg) had waived the attorney-client privilege by disclosing certain documents to a nonparty (Knight). See id. at *1. In response, Ginsberg relied on Kovel and contended “that Knight

10

was his ‘consultant,’ and that the attorney-client privilege was not waived when he shared
information with a consultant.” Id. at *2.
The district court rejected Ginsberg’s argument, reasoning that Ackert had “expressly
limited” Kovel’s applicability to circumstances where the attorney relied on the consultant “to
‘translate or interpret information given to [the attorney] by his client.’” Id. (quoting Ackert, 169
F.3d at 138–39). Because “there is no evidence suggesting that Ginsberg relied on Knight to
translate or interpret information given to him by his clients,” Refco held that Ginsberg’s
disclosure to Knight had waived the privilege claim. Id. at *3.
To be sure, the court noted Ginsberg’s statements during oral argument and in a
declaration suggesting that he “relied on Knight’s experience and specialized knowledge.” Id.
But even that did not justify Ginsberg’s privilege assertion under Ackert because
[w]hat does not appear . . . is any evidence that there was information Ginsberg
could not understand without Knight translating or interpreting the raw data for
him. Accordingly, by sharing his client’s information with a third party, Ginsberg
waived attorney-client privilege for that information.
Id.
The same is true here. The two declaration statements that “describe Mr. Holmberg’s
role generally,” Doc. No. 367 at 13, as a “consultant” do not constitute “evidence suggesting that
[Argentieri] relied on [Holmberg] to translate or interpret information given to him by his
clients,” or “evidence that there was information [Argentieri] could not understand without
[Holmberg] translating or interpreting the raw data for him.” Refco, — F.R.D. —, 2011 WL
4527287, at *3. Indeed, as Judge Foschio reasoned, the Argentieri and Holmberg declarations
fail even to explain “why Holmberg’s services were retained in connection with” Items 360 and
379, Waiver Order at 10, much less that Holmberg’s “consulting” duties included necessary
translation or interpretation work in connection with those documents. Accordingly, Judge
11

Foschio’s description of “the evidentiary record” as “completely devoid of any explanation” that
warrants application of the privilege under Ackert is entirely accurate. Id.
Ceglia’s after-the-fact claim that Argentieri retained Holmberg to “liaise via email with
potential additional representation,” Doc. No. 367 at 9, only proves the point. No such
description of Holmberg’s consulting services with respect to Items 360 and 379 appears in
either declaration. As a result, the declarations do not even try to explain how Holmberg’s
purported “lias[ing] via email with potential additional representation” constituted “translating or
interpreting” information that Argentieri “could not understand” without Holmberg’s assistance.
Refco, 2011 WL 4527287, at *3.
Nor does Holmberg’s purported role as a “secretary” provide a basis for reversing the
Waiver Order. First, the evidence on this issue is conflicting: unlike Argentieri, Holmberg did
not describe himself as a “secretary,” but instead referred to himself only as a “consultant.” Doc.
No. 341, ¶ 2. Second, Argentieri’s description was itself equivocal: he stated that “Holmberg
was hired by me as a consultant and/or at times, to perform executive secretarial duties.” Doc.
No. 311, ¶ 17 (emphasis added). But no evidence in the record describes whether Holmberg’s
role in connection with Items 360 and 379 occurred in his one of his “times” acting as a secretary
(assuming he ever did), or in his purported role of “consultant.”2

By personally adopting only the title “consultant,” Holmberg has tacitly acknowledged that he
was not a legal secretary (Argentieri already had one on staff), a paralegal, or even an
“employee” of Argentieri’s law firm. Thus, he implicitly excluded himself from the many
classes of attorney agents whose role in helping the client “obtain[] legal advice from the
lawyer,” Kovel, 296 F.2d at 922, is self-evident — and who thus may receive confidential client
communications without waiving the privilege, even without explaining their roles in detail.
Accordingly, Ceglia’s argument that the Waiver Order somehow establishes a precedent that an
attorney must “explain why his or her secretary, paralegal, or assistant was hired — and why that
agent needed access to any given document — in order to support the application of attorneyclient privilege,” Doc. No. 367 at 10, is inapposite.
2

12

Such ambiguity about Holmberg’s role further confirms the correctness of Judge
Foschio’s holding. “Courts that have considered the application of the attorney-client privilege
to independent outside consultants have been cautious in extending its application.” U.S. Postal
Serv. v. Phelps Dodge Refining Corp., 852 F. Supp. 156, 161 (E.D.N.Y. 1994) (citing F.T.C. v.
TRW, Inc., 628 F.2d 207, 212 (D.C. Cir. 1980)). Where an evidentiary record allows a court to
“conceive of circumstances that might warrant application of an attorney-client privilege,” “[b]ut
other circumstances, equally plausible from the record . . . , fall outside any reasonable definition
of the privilege,” the resulting “ambiguity is troublesome and, in the end, is the source of [the
court’s] resolution of the question.” TRW, 628 F.2d at 213.
The burden is on the proponent of the attorney-client privilege to
demonstrate is applicability. Where, as here, we have not been provided with
sufficient facts to state with reasonable certainty that the privilege applies, this
burden is not met. As noted earlier [Ceglia’s] claim lies [at best] on the outer and
indistinct boundary of the law of attorney-client privilege. Particularly where this
is so, it is our responsibility to tread carefully, with as much precision as the facts
before us permit. Where, by contrast, no precision is possible where the absence
of facts presents a focused analysis a court should be slow to define and to apply
new law.
Id. (affirming a refusal to apply the privilege) (citation omitted). Here, the facts provide no
precision in assessing Holmberg’s role in connection with Items 360 and 379 — whether as a
“consultant” or a “secretary.” Thus, Argentieri’s equivocal description of Holmberg as a
“secretary” provides no basis for overruling the Waiver Order.
In sum, Ceglia’s post hoc characterizations of two pieces of ambiguous, largely vacuous
evidence do not undermine Judge Foschio’s sound conclusion that the evidentiary record is
“completely devoid of any explanation” regarding Holmberg’s role as a translator or interpreter
in connection with Items 360 and 379. On this record, the Waiver Order would satisfy even de
novo review; it is thus well within the “broad discretion” afforded to Judge Foschio by Rule
72(a)’s “highly deferential” clear error standard of review. Arnold, 233 F.R.D. at 129 (Arcara,
13

J.) (internal quotation marks omitted). Because “the entire evidence” leaves no basis for “the
definite and firm conviction that a mistake has been committed,” id. (internal quotation marks
omitted), this Court should affirm the Waiver Order.
II.

Ceglia’s Two Remaining Arguments Do Not Support Overruling The Waiver
Order.
Ceglia also objects to the Waiver Order on two other grounds. First, he contends that

Judge Foschio “improperly applied a ‘need to know’ standard to Mr. Holmberg.” Doc. No. 367
at 11–12. But Judge Foschio merely stated an accurate fact: Ceglia failed to introduce any
evidence from which the Court could have concluded that Holmberg had a “need to know” the
contents of Items 360 and 379, so those Items could not have been privileged under Robbins &
Meyers, Inc. v. J.M. Huber Corp., 274 F.R.D. 63, 83–84 (W.D.N.Y. 2011). In other words,
Judge Foschio never held that Ceglia had to prove Holmberg’s “need to know” as a prerequisite
to establishing the privilege; instead, he concluded that Ceglia had failed to introduce other
evidence that might have supported a different basis for asserting the privilege. Hence, the
Waiver Order’s statement that the record is “completely devoid of any explanation as to why
Holmberg’s services were retained in connection with” Items 360 and 379, “much less that
Holmberg had any ‘need to know’ the information contained therein.” Waiver Order at 10
(emphasis added).
Ceglia also objects because Judge Foschio noted that the Lawsuit Overview document is
not privileged when describing Ceglia’s failure to justify his privilege assertion over Items 360
and 379. See Waiver Order at 9–10. Ceglia claims that Judge Foschio then erred by “not
explain[ing] how or why the confidentiality of the Lawsuit Overview document is relevant to
assessing whether Privilege Log Items 360 and 379 are privileged.” Doc. No. 367 at 13.

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Ceglia misreads the Waiver Order. Judge Foschio simply distinguished the record
concerning the two documents. Giving Ceglia the benefit of the doubt, Judge Foschio stated that
the Holmberg and Argentieri declarations provide some evidence that “Holmberg may have been
retained by Argentieri to type the Lawsuit Overview and convert it into a pdf format.” Waiver
Order at 9–10. In contrast, “the record is completely devoid of any” similar evidence regarding
Items 360 and 379 — there was simply “no explanation as to why Holmberg’s services Ceglia
were retained in connection with” Items 360 and 379. Id. at 10. Thus, Judge Foschio never held
that Items 360 and 379 could be privileged only if Ceglia had established that the Lawsuit
Overview document was confidential or privileged. Rather, he contrasted evidence concerning
the Lawsuit Overview document with the (lack of) record evidence concerning Items 360 and
379 when “assess[ing privilege] on a document-by-document basis,” Doc. No. 367 at 13 — the
very process Ceglia claims the Court should have followed.

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CONCLUSION
Defendants respectfully request that this Court affirm Judge Foschio’s order requiring the
disclosure of privilege log Items 360 and 379. The Waiver Order correctly holds that disclosure
of Items 360 and 379 to Holmberg waived the privilege because the record is “completely devoid
of any explanation” of Holmberg’s role in connection with those two documents. Accordingly,
under Ackert, Ceglia has failed to introduce evidence sufficient to justify application of the
privilege to those two items. In addition, this Court should affirm Judge Foschio’s order denying
Ceglia’s motion for reconsideration (Doc. No. 361); Ceglia’s objection brief does not present any
legal argument specifically attacking that Reconsideration Order.
Dated:

New York, New York
May 16, 2012
Respectfully submitted,
/s/ Orin Snyder
Orin Snyder
Alexander H. Southwell
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]

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