Ceglia v. Zuckerberg et al

Filing 544

REPLY to Response to Motion re 511 Eighth 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’ REDACTED REPLY MEMORANDUM
IN SUPPORT OF THEIR EIGHTH MOTION TO COMPEL

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]
September 20, 2012

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

INTRODUCTION
Plaintiff Paul Ceglia continues to suppress responsive communications regarding the
Kasowitz firm’s withdrawal by maintaining baseless privilege and confidentiality designations.
In order to do so, Ceglia mischaracterizes those communications and contradicts his prior sworn
account of Jason Holmberg’s involvement in this case. Because Ceglia waived any applicable
privilege that would have attached to the three withheld communications and has failed to justify
his improper confidentiality designation of the April 13 Kasowitz Letter, Defendants’ Eighth
Motion to Compel should be granted in its entirety.
I.

This Court Should Order Ceglia To Produce The Three Withheld
Communications.
A.

The Three Withheld Communications Are Responsive To This Court’s
Expedited Discovery Orders.

Ceglia’s long-standing obligations under this Court’s expedited discovery orders are
clear. This Court’s August 18, 2011 Order directed Ceglia to identify and produce “all electronic
copies or images of the purported contract,” “all electronic versions or purported versions of any
contract,” and “all electronic versions of any emails or purported emails” among the relevant
parties. See Doc. No. 117 ¶¶ 2-3. Moreover, in its August 15, 2012 Order granting Defendants’
Seventh Motion to Compel, this Court held that because the April 13 Kasowitz Letter “is
relevant to the genuineness of the dispute[d] contract,” it “should have been produced to
Defendants” or claimed as privileged. Doc. No. 478 at 4.
The context surrounding Item 379 and the April 13 Kasowitz Letter, as well as the
content of the letter itself, demonstrate that the three withheld communications contain or attach
responsive documents, are “relevant to the genuineness of the dispute[d] contract,” and thus
should have been produced to Defendants months ago. First,

REDACTED

REDACTED

so far as Defendants can discern,
makes this plain:
•

On March 30,

•

Later that evening,

•

On April 11, DLA Piper and Lippes Mathias replaced Mr. Connors, noticed their
appearances in this case, and filed the First Amended Complaint.

•

One day later, on April 12,

REDACTED

•

Later that evening,

REDACTED

•

The next day, on April 13,

REDACTED

REDACTED

REDACTED

This is the April 13 Kasowitz Letter, which
Ceglia recently produced after refusing to do so for months, in defiance of two
separate standing orders from this Court.
See also Unredacted Memorandum ISO Defendants’ Eighth Motion to Compel at 7-9.
In the face of this precise chronology of

REDACTED

Ceglia implausibly

asserts that the three withheld communications “do not discuss the Kasowitz firm’s withdrawal.”
Doc. No. 540 at 6-7. This assertion defies both common sense and the documented timeline

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detailed above. Again,

REDACTED

Notwithstanding Ceglia’s dubious characterization, it is highly likely that the three
withheld communications are “relevant to the genuineness of the dispute[d] contract,” contain
images of the authentic StreetFax Contract and emails between the parties, and are responsive to
this Court’s orders. As such, Ceglia should have produced those documents to Defendants, or
logged them on the grounds of privilege, more than a year ago.
B.

Ceglia Waived Privilege Over The Three Withheld Communications In Two
Ways.

In opposition, Ceglia maintains that all three withheld communications are privileged.
Doc. No. 540 at 4-7. That is incorrect. As this Court has already determined, Ceglia waived the
protection of the attorney-client privilege and work-product doctrine over the withheld
communications in two ways: by failing to include them in a proper privilege log and by
disclosing the subject matter of the information discussed in those withheld communications to
Jason Holmberg, a third-party non-lawyer.
1.

Ceglia’s Failure To Include Any Of The Three Communications On
Any Privilege Log.

Ceglia asserts that it was “impossible” for him to have designated the three withheld
communications as privileged because those communications were not specifically identified by
Stroz Friedberg in its inspection of Ceglia’s electronic assets. Doc. No. 540 at 3. This
assertion—which mirrors Ceglia’s Rule 72 Objections to Judge Arcara, in which he seeks to
overturn this Court’s orders compelling disclosure of the April 13 Kasowitz Letter, see Doc. No.

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506—is absurd. There are at least two standing orders in this case requiring Ceglia to produce
documents, independent of Stroz Friedberg’s inspection: (1) the July 1, 2011 Order granting
Defendants’ motion for expedited discovery and requiring Ceglia to produce “the original, native
electronic files consisting of or containing the purported emails described in the Amended
Complaint and all electronic copies of the purported emails” (Doc. No. 83 at 2) and (2) the
August 18, 2011 Order explicitly ordering Ceglia to produce his electronic assets “pursuant to
the Electronic Asset Inspection Protocol . . . except that . . . Plaintiff shall produce directly to
Defendants all electronic copies or images of any Contract in the possession, custody, or control
of Plaintiff’s attorneys or other agents” (Doc. No. 117, ¶ 3). Both Orders unambiguously
required Ceglia to produce the three withheld communications directly to Defendants. In the
event Ceglia chose to withhold documents on the basis of a purported privilege, he was required
to identify those documents on a privilege log to be timely delivered to Defendants. See Fed. R.
Civ. P. 26(b)(5)(A); W.D.N.Y. Local R. Civ. P. 26(e)(2).
Ceglia cannot now claim to have just become aware of this obligation. He has prepared
and provided multiple privilege logs to Defendants during this litigation. For example, eleven
days after the Court’s August 18, 2011 Order, Ceglia provided Defendants with a privilege log of
55 documents. To be clear, Ceglia prepared that log in full; it is not based on any inspection or
identification of responsive documents by Stroz Friedberg. That log—like all of the others that
Ceglia has prepared and proved in this case—does not include any of the three withheld
communications. See Doc. No. 529 at 16.
These facts are indisputable—and indeed, Ceglia makes no attempt to dispute them. He
continues to mischaracterize the expedited discovery ordered by this Court, going so far as to
claim that it would have been “impossible” to log the three withheld communications. This

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assertion is self-serving and demonstrably false. As this Court has repeatedly found, see Doc.
Nos. 357 at 10-11, 361 at 4-5, Ceglia’s failure to include the three withheld communications in a
proper privilege log waived the protection of the attorney-client privilege and work-product
doctrine. See also United States v. Construction Prod. Research, Inc., 73 F.3d 464, 473 (2d Cir.
1996) (failure to provide adequately detailed court-ordered privilege log waives privilege).
2.

Ceglia’s Disclosure To Holmberg, A Third-Party Non-Lawyer

This Court properly found that because Ceglia disclosed the information contained in
Item 379 to Holmberg, Ceglia waived privilege over all information to which Holmberg was
“privy,” even when Holmberg was not a “direct []or indirect recipient of any specific email.”
Doc. No. 361 at 4; see also Robbins & Myers, Inc. v. J.M. Huber Corp., 274 F.R.D. 63, 95-96
(W.D.N.Y. 2011). Ceglia challenged this Court’s finding of subject-matter waiver by filing Rule
72 Objections to this Court’s April 19 Decision and Order granting Defendants’ Fifth Motion to
Compel (Doc. No. 357). See Doc. No. 367. District Judge Arcara affirmed this Court’s April 19
Decision and Order “in its entirety.” Doc. No. 480 at 5 (affirming that “Judge Foschio correctly
concluded that absent information indicating Argentieri employed Holmberg consistently as a
legal assistant or secretary, or that Argentieri sought Holmberg’s secretarial assistance with
respect to Items 360 and 379, the attorney-client privilege does not apply”); see also Bowne of
New York City, Inc. v. Ambase Corp., 150 F.R.D. 465, 478–95.1
More than five months after this Court’s initial finding of subject-matter waiver, and with
a fresh declaration from Holmberg in hand, Ceglia now asserts that Holmberg was not privy to
any information concerning Kasowitz’s withdrawal. Ceglia’s belated attempt to unwind his
privilege waiver must be rejected. Indeed, Ceglia’s latest account of Holmberg’s shifting role in
1

Ceglia alleges that Defendants pursued “the now discredited claim . . . that the Kasowitz Letter was disclosed to
Holmberg.” Doc. No. 540 at 6. That is false. Defendants at no point alleged that the Kasowitz Letter was
disclosed to Holmberg—only that the subject matter of Kasowitz’s retention and withdrawal was disclosed to
Holmberg. See, e.g., Doc. No. 512 at 10.

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this litigation is belied by the extensive evidence that Defendants and this Court have already
amassed.
To begin, before submitting the Holmberg declaration in opposition to Defendants’
Eighth Motion to Compel (Doc. No. 541), Ceglia surrendered multiple opportunities to explain
to this Court exactly what Holmberg knew about the Kasowitz withdrawal. In fact, Ceglia failed
to submit a declaration from Holmberg on four separate occasions: in support of his motion for
clarification of this Court’s April 19 Order, his Rule 72 Objections to this Court’s April 19
Order, his opposition to Defendants’ Sixth Motion to Compel, and his opposition to Defendants’
Seventh Motion to Compel. See Doc. Nos. 358, 367, 432, 466. And when Ceglia finally first
submitted a declaration from Holmberg regarding the Kasowitz withdrawal—in support of his
Rule 72 Objections to this Court’s August 15, 2012 Order—Holmberg merely attested to what
was obvious from Item 379 itself: that he had not directly received the April 13 Kasowitz Letter.
See Doc. No. 508. But as Defendants noted in their opposition to Ceglia’s Rule 72 Objections,
Holmberg’s first declaration was inapposite, since “it did not dispute a key factual finding made
by Judge Foschio in ruling that Ceglia waived any privilege over the April 13 Kasowitz Letter:
that ‘Holmberg had access to the majority of the emails contained within [Item 379] . . . . [and]
was privy to the information contained therein.’” Doc. No. 529 at 15-16 (quoting Doc. No. 371
at 4). In other words, in that first declaration, Holmberg never contested that he had access to the
information contained within Item 379 pertaining to the subject matter of Kasowitz’s
withdrawal—which was the basis for Judge Foschio’s ruling of subject-matter waiver.
Now, having repeatedly relinquished opportunities to submit relevant testimony from
Holmberg, Ceglia has filed a declaration in which Holmberg attests that he “never discussed the
subject matter of the Kasowitz lawyers declining to represent Paul Ceglia with any person.”

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Doc. No. 541, ¶ 4.2 But this declaration was signed by Holmberg only after Defendants
explicitly alerted Ceglia to the deficiencies in Holmberg’s prior declaration. It should therefore
be rejected as untimely.
Moreover, even if this Court were to consider Holmberg’s untimely declaration, the facts
to which Holmberg now swears contrast sharply with the record evidence and Ceglia’s own prior
statements. Holmberg, a wood-pellets salesman who is not a lawyer, was heavily involved in
Ceglia’s recruitment and retention of Kasowitz. On March 6, 2011, Holmberg emailed Paul
Argentieri the so-called “Lawsuit Overview” document, a “dossier [Holmberg] put together to
present the case to law firms.” See Doc. No. 331. Two days later, on March 8, REDACTED

See Doc. No. 383-1 at 4–5.

REDACTED

Id. at 52–53. On March 18,

REDACTED

Id. at 89. On March 21
and 22,

REDACTED
Id. at 41–42. Finally, on March 28,

REDACTED

Id. at 22–23.

2

As this Court well knows, the Kasowitz firm did not “declin[e] to represent Paul Ceglia,” as Holmberg attests.
See Doc. No. 541, ¶ 4; see also Doc. No. 540 at 5 (referring to “the subject matter of the reasons for the
Kasowitz law firm declining to represent Plaintiff”). Rather, the Kasowitz firm
REDACTED
See Doc.
No. 513-1.

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Two days later, on March 30,

REDACTED
And yet Holmberg—
REDACTED

—now claims that he “never discussed” the Kasowitz firm’s withdrawal. Indeed,
Holmberg goes so far as to assert that he was not aware, until recently, that the Kasowitz firm
discovered the authentic StreetFax Contract or even that the Contract existed. This is simply not
credible.
Furthermore, Ceglia’s own prior sworn account of Holmberg’s involvement in this case
conflicts with his current story. Less than seven months ago, Ceglia claimed privilege over the
“Lawsuit Overview” document and Item 379, documents involving detailed discussion about the
retention of outside law firms. See Doc. No. 310. In support of that privilege claim, Ceglia told
this Court that Holmberg was Argentieri’s “consultant and agent on matters pertaining to this
litigation.” Doc. No. 310 at 6-7. Under oath, Holmberg described his role as a retained
consultant retained “to assist [Argentieri] in prosecuting Paul Ceglia’s lawsuit.” Doc. No. 341,
¶ 2. This Court rejected Ceglia’s privilege claims, despite Ceglia’s characterization of
Holmberg’s broad agency, finding that Ceglia had failed to submit relevant evidence of
Holmberg’s retention as an agent for Kovel purposes. Doc. No. 357 at 9-11. In denying Ceglia’s
Rule 72 Objections, Judge Arcara affirmed that finding “in its entirety.” Doc. No. 480 at 5.
Now that it is convenient to jettison Holmberg from his core legal team, Ceglia claims
that the very same lawyers Holmberg had recruited and helped to retain withdrew without
Holmberg ever knowing about it. Doc. No. 540 at 5. This is absurd. Holmberg appears to shift

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from privileged agent to neglected bystander, depending on the documents Ceglia seeks to
suppress.
This Court’s well-supported factual finding remains undisturbed: Holmberg is a thirdparty non-lawyer who was privy to the subject matter of the Kasowitz firm’s retention and
withdrawal, such that Ceglia has waived any privilege that may have otherwise applied.
II.

This Court Should Overrule Ceglia’s Improper Designation Of The April 13
Kasowitz Letter As Confidential.
A party who designates a document as confidential bears the burden of justifying that

designation. See Koch v. Greenberg, 2012 U.S. Dist. LEXIS 58608, at *5 (S.D.N.Y. Apr. 13,
2012). As this Court explained in overruling most of Ceglia’s initial confidential designations,
that burden must be discharged with evidence of a “clearly defined specific and serious injury”
resulting from disclosure. Doc. No. 107 at 4 (citing In re September 11 Litigation, 262 F.R.D.
274, 277 (S.D.N.Y. 2009) (internal quotation marks and citation omitted).
Ceglia does not even attempt to meet his burden. Instead, he simply asserts that “[t]he
[April 13] Kasowitz letter and the information contained therein is not publicly available,
contains sensitive information and was reasonably designated as confidential.” Doc. No. 540 at
7–8. But Ceglia fails to identify with specificity any “sensitive” information contained in the
April 13 Kasowitz Letter, or any harm that will result from that letter’s disclosure. Needless to
say, the desire to avoid “adverse publicity” or to conceal evidence of one’s criminal misconduct
is not “sufficient to justify judicial protection from disclosure.” Koch, 2012 U.S. Dist. LEXIS
58608, at *6 (citation omitted).3 Otherwise, a litigant would be able to cloak himself in
protection of a protective order to conceal evidence of his fraud—an allowance which would
engender truly perverse incentives.
3

See also In re Pasquale J. Vatsala Vescio, 220 B.R. 195, 201 (Bankr. D. Vt. 1998) (providing access to
documents that allegedly demonstrated fraud committed on sister federal court, and refusing “to permit any
order of ours to shield a party from accountability to the Court of which we are a unit”).

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Failing to articulate any legitimate basis for maintaining his confidentiality designation,
Ceglia is left to accuse Defendants of seeking to manufacture “a public relations press release
detailing the contents” of the April 13 Kasowitz Letter. Doc. No. 540 at 8. Ceglia’s claim that
Defendants supposedly intend to issue a press release is not only misplaced but hypocritical,
given that Ceglia currently appears to be advertising for “a seasoned writer” to draft a press
release about “the effect a coming decision is going to have on [Facebook’s] stock price.” See
Supplemental Declaration of Alexander H. Southwell, Ex. A; see also Ex. B. These tactics are
consistent with Ceglia’s long-standing objective—reflected in the “Lawsuit Overview”
document—to extort a settlement from Defendants. This Court should overrule Ceglia’s
improper confidentiality designations of the April 13 Kasowitz Letter.
CONCLUSION
For the reasons set forth herein, and in Defendants’ Eighth Motion to Compel and For
Other Relief (Doc. No. 512), Defendants respectfully request that this Court order Ceglia to
immediately produce to Defendants, along with all attachments and/or embedded images:
REDACTED
In addition, Defendants request that the Court overrule Ceglia’s improper
designation of the April 13 Kasowitz Letter as confidential, and award Defendants their
attorneys’ fees and costs related to their Eighth Motion to Compel. In the alternative, the Court
should inspect

REDACTED
in camera to assess Ceglia’s privilege claims.

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Dated:

New York, New York
September 20, 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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