AZIMA v. DEL ROSSO et al
Filing
431
MEMORANDUM OPINION AND ORDER signed by JUDGE WILLIAM L. OSTEEN, JR on 01/27/2025, that Defendants' Objections to or Appeal of Special Master's Report and Decision #1, (Doc. 320 ), are OVERRULED and the Spec ial Master's decision is AFFIRMED. IT IS FURTHER ORDERED that RAK must appear before this court to assert its attorney-client privilege, if it so desires, no later than February 19, 2025, by filing a motion and brief explaining its assertion of privilege. IT IS FURTHER ORDERED that Defendants shall notify RAK of this order and serve a copy of this order on RAK. Following completion of service, Defendants shall file proof of notification and service with this court. (cc)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
FARHAD AZIMA,
Plaintiff,
v.
NICHOLAS DEL ROSSO and VITAL
MANAGEMENT SERVICES, INC.,
Defendants.
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1:20-cv-954
MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
Before this court is Defendants’ Objections to or Appeal of
Special Master’s Report and Decision #1. (Doc. 320.) For the
reasons stated herein, the appeal is denied.
PROCEDURAL HISTORY
On December 29, 2023, this court ordered the appointment of
a Special Master pursuant to Federal Rule of Civil Procedure 53.
(Doc. 313.) The Special Master was appointed specifically to
“assist the parties to regulate discovery for the remainder of
this case.” (Id. at 1.)1 The court’s order stated that “[a]ny
All citations in this Memorandum Opinion and Order to
documents filed with the court refer to the page numbers located
at the bottom right-hand corner of the documents as they appear
on CM/ECF.
1
appeals from the rulings of the Special Master will be taken in
accordance with the Joint Agreement of the Parties.” (Id. at 6.)
The parties’ Joint Agreement provides that “[e]ither party
may, within seven calendar days of a decision of the special
master, appeal that decision” to this court. (Doc. 312-1 at 2.)
The Special Master filed her Report and Decision #1 (“Report
#1”), (Doc. 316), on February 8, 2024. Defendants Nicholas Del
Rosso and Vital Management Services, Inc. filed an appeal of
Report #1 on February 13, 2024, (Defs.’ Objs. to or Appeal of
Special Master’s Report and Decision #1 (“Def.’s Objs.”) Doc.
320), and Plaintiff Farhad Azima filed a response to the appeal
on February 20, 2024, (Doc. 322). The court heard oral argument
on the appeal on August 15, 2024, and took the matter under
advisement. At a motions hearing on January 23, 2025, this court
issued its oral ruling overruling Defendants’ objections and
adopting the finding of the Special Master.
STANDARD OF REVIEW
“When reviewing a party’s timely objection to a special
master’s report and recommendation, the Court must decide de
novo any objections to the Special Master’s factual finding(s).”
Daedalus Blue, LLC v. Microstrategy Inc., No. 2:20-cv-551, 2023
WL 5337826, at *2 (E.D. Va. Aug. 18, 2023) (citing Fed. R. Civ.
P. 53(f)). “Similarly, the Court must decide de novo any
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objections to conclusions of law recommended by the Special
Master.” Id. However, as set forth in the Order appointing the
Special Master in this case, the court will set aside the
Special Master’s rulings on procedural matters only for abuse of
discretion. See Fed. R. Civ. P. 53(f)(5); (Doc. 313 at 7). “In
acting on a master’s order . . . the court . . . may adopt or
affirm, modify, wholly or partly reject or reverse, or resubmit
to the master with instructions.” Fed. R. Civ. P. 53(f)(1).
ANALYSIS
Defendants appeal the portions of Report #1 “concluding
that (1) Defendants were ‘not authorized to assert any
privileges’ belonging to non-party Government of Ras Al Khaimah
and its related instrumentalities (‘RAK’), and (2) that RAK must
‘appear before the Court to assert any privileges.’” (Def.’s
Objs. (Doc. 320) at 1 (quoting Report #1 (Doc. 316) at 17).)
Defendants argue that they can assert RAK’s attorney-client
privilege2 because Defendants “were engaged by Dechert LLP
(‘Dechert’)—counsel for RAK—to facilitate the representation and
provision of legal advice to RAK,” and so “with RAK’s express
Separately, Defendants assert that “even apart from
attorney-client privilege, Defendants ‘are competent to assert
protections over their own work product.’” (Defs.’ Objs. (Doc.
320) at 5.) It does not appear that Plaintiff disputes this
argument or that it was addressed by the Special Master in
Report #1.
2
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authorization and at RAK’s direction, Defendants withheld or
otherwise redacted RAK’s privileged information in response to
Plaintiff’s discovery requests.” (Defs.’ Objs. (Doc. 320) at 2.)
Certain relevant facts are not disputed. RAK engaged
Dechert LLP to provide some type of legal services. Dechert, in
turn, engaged Defendants “in connection with and to facilitate
legal advice provided by Dechert to RAK.” (Defs.’ Ex. 1, Ruzumna
Decl. (Doc. 320-2) ¶ 6.) Plaintiff has propounded discovery to
Defendants which Defendants contend is privileged by virtue of
the relationship between RAK and Dechert as attorney and client.
Notably, RAK has not appeared nor intervened in this action to
assert privilege following the declaration of privilege by
Defendants. Dechert has not intervened to assert privilege,
although it has appeared as a non-party to object to discovery
propounded by Plaintiff directly to Dechert. No evidence has
been presented as to the specific responsibilities of Defendants
to Dechert, nor have Dechert or RAK provided any details as to
the full terms of engagement between Dechert and Defendants.
Defendants provided the following evidence of RAK’s alleged
authorization to Defendants for Defendant’s use in asserting
RAK’s privilege on its behalf to the Special Master:
(1) a February 13, 2023 letter from RAK’s counsel,
Allen & Overy LLP, based in the United Arab Emirates;
and (2) a July 19, 2023 letter from RAK’s counsel in
the United States, Patterson Belknap Webb & Tyler
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LLP—both of which reiterated that RAK “asserts, and
does not waive, all applicable privileges and
protections as to any documents or information in
[Defendants’] possession, custody, or control,” and
directed Defendants that they “do[] not have
authority to waive such privileges or protections
when responding” to discovery requests.
(Defs.’ Objs. (Doc. 320) at 4–5.) Defendants also provided “a
lengthy and detailed privilege log” cataloging documents that
“were identified, reviewed and approved by counsel for RAK,” and
explained that “counsel for RAK selected the documents that they
are asserting the privilege over.” (Id. at 5–6 (quotations
omitted).)
On appeal, Defendants offer the Declaration of Daniel
Ruzumna, attorney for RAK, who states that “Defendants have in
their possession, custody, or control documents reflecting
confidential communications and other documents created in
connection with their support of Dechert’s legal representation”
of RAK. (Defs.’ Ex. 1, Ruzumna Decl. (Doc. 320-2) ¶ 6.)
“Accordingly, with respect to documents redacted or withheld by
Defendants for RAK’s privilege, RAK’s counsel expressly
authorized and instructed those assertions on multiple
occasions, orally and in writing, starting with generalized
authorizations and instructions in February 2023 and July 2023
before the scope of responsive documents had been determined,
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and concluding with a document-by-document review by RAK’s
counsel for privilege.” (Id. ¶ 21.)
After evaluating the evidence presented to her alongside
the limited case law available, see, e.g., Gibbs v. Stinson, No.
3:18-cv-676, 2021 WL 4853575 (E.D. Va. Oct. 17, 2021), the
Special Master concluded that “Defendants are not authorized to
assert any privileges belonging to RAK (or related parties),”
and directed Defendants to “advise the RAK Parties that they
have 20 days from February 27, 2024 to appear before the Court
to assert any privileges.” (Doc. 316 at 17.) It is this
conclusion and direction which Defendants appeal to this court.
“[U]nder normal circumstances, an attorney’s advice
provided to a client, and the communications between attorney
and client are protected by the attorney-client privilege.”
Veolia Water Sols. & Techs. Support v. Siemens Indus., Inc., 63
F. Supp. 3d 558, 567 (E.D.N.C. 2014) (quoting In re Grand Jury
Proceedings, 102 F.3d 748, 750 (4th Cir. 1996)). “Protection
‘may . . . be extended to protect communications by a lawyer to
his client, agents or superiors, or to other lawyers in the case
of joint representation if those communications reveal
confidential client communications.’” Id. (quoting United States
v. (Under Seal), 748 F.2d 871, 874 (4th Cir. 1984)). Similarly,
“North Carolina law recognizes that privileged information can
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be shared with the agent of an attorney or client without
vitiating the privilege.” U.S. Tobacco Coop., Inc. v. Certain
Underwriters at Lloyd’s, No. 5:19-cv-430, 2021 WL 1341360, at
*11 (E.D.N.C. Apr. 9, 2021) (citing State v. Murvin, 304 N.C.
523, 531, 284 S.E.2d 289, 294 (1981)).
Importantly, if attorney-client privilege is established,
“[t]he party claiming the privilege must be a client who has
sought legal advice.” Williams v. Big Picture Loans, LLC, 303 F.
Supp. 3d 434, 444 (E.D. Va. 2018) (citing N.L.R.B. v. Interbake
Foods, LLC, 637 F.3d 492, 501–02 (4th Cir. 2011)). See also
Bethune-Hill v. Va. State Bd. of Elections, 114 F. Supp. 3d 323,
346 (E.D. Va. 2015) (“[T]he attorney-client privilege must be
asserted and established by the privilege holder.”). In the
alternative, “it is universally accepted that the attorneyclient privilege may be raised by the attorney” on the client’s
behalf. Fisher v. United States, 425 U.S. 391, 402 n.8 (1976);
see also In re Grand Jury Proceedings, 727 F.2d 1352, 1354–55
(4th Cir. 1984).
Here, the Special Master correctly determined that
Defendants do not have standing to assert RAK’s attorney-client
privilege on its behalf. Defendants “were engaged by Dechert LLP
(‘Dechert’)—counsel for RAK—to facilitate the representation and
provision of legal advice to RAK in connection with actual or
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contemplated litigation outside of the United States.” (Defs.’
Objs. (Doc. 320) at 2.) Defendants do not provide further detail
as to the nature and circumstances of this engagement beyond the
assertion that Defendants were “investigative consultants hired
by RAK’s counsel” and, as a result, are “party to the attorneyclient relationship.” (Defs.’ Objs. (Doc. 320) at 3.) While
Defendants may have contributed to Dechert’s provision of legal
services to RAK, Defendants can point to no legal authority
indicating that an “investigative consultant” hired by an
attorney is a party to the attorney-client relationship who can
assert attorney-client privilege on the client’s behalf. Rather,
Defendants repeatedly insist that they are a party to this
relationship in a conclusory fashion based on documentation that
RAK has authorized Defendants to assert its privilege. RAK’s
authorization, however, cannot circumvent the legal requirement
that the party asserting attorney-client privilege be either the
attorney or the client. As the Special Master correctly
determined, Defendants have not demonstrated that their
investigative consultant services render them eligible to assert
RAK’s privilege as the “attorney” party to the attorney-client
relationship.
Relatedly, this court finds that this process within which
Defendants assert privilege on behalf of another, that is on
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behalf of RAK and Dechert, in the absence of RAK and Dechert,
deprives the court of a reasonable ability to conduct an inquiry
to determine whether the exercise of privilege is appropriate.
It is not at all clear what an investigative consultant is or
what it means to facilitate the representation and provision of
legal advice to RAK in connection with actual or contemplated
litigation outside of the United States. “Facilitate” is subject
to a number of different interpretations.
IV. RAK’s OPPORTUNITY TO APPEAR
In Report #1, the Special Master directed Defendants to
prepare a privilege log and provide that log to the Plaintiff
and the RAK Parties. (Doc. 316 at 17.) The Special Master
further directed Defendants to “advise the RAK Parties that they
have 20 days from February 27, 2024 to appear before the Court
to assert any privileges.” (Id.) Defendants apparently prepared
the privilege log as directed; however, RAK did not appear as
directed.
Report #1 was filed on February 8, 2024, and Defendants’
Objections to or Appeal of Special Master’s Report and Decision
#1 and Request for Stay was filed on February 13, 2024. (Doc.
320.) Defendants also filed a Notice of Defendants’ Objections
to or Appeal of Special Master’s Report and Decision #1 and
Request for Stay that same day. (Doc. 319.) This court did not
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stay Report #1, and on March 18, 2024, the time frame for RAK to
appear ended without an appearance by RAK. RAK has still not
appeared in this case in any fashion. Although this court
believes there are grounds to find RAK has waived any further
right to appear, to avoid any confusion this court will grant
one additional time period within which RAK may appear. This
court will direct Defendants to notify RAK of this order and the
opportunity to appear. Defendants shall file a certificate with
this court demonstrating notification to RAK of this order.
V. CONCLUSION
For the foregoing reasons,
IT IS ORDERED that Defendants’ Objections to or Appeal of
Special Master’s Report and Decision #1, (Doc. 320), are
OVERRULED and the Special Master’s decision is AFFIRMED.
IT IS FURTHER ORDERED that RAK must appear before this court
to assert its attorney-client privilege, if it so desires, no
later than February 19, 2025, by filing a motion and brief
explaining its assertion of privilege.
IT IS FURTHER ORDERED that Defendants shall notify RAK of
this order and serve a copy of this order on RAK. Following
completion of service, Defendants shall file proof of
notification and service with this court.
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This the 27th day of January, 2025.
__________________________________
United States District Judge
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