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Firefighters' Retirement System v. Citco Group Ltd.

United States District Court, M.D. Louisiana

January 5, 2018

FIREFIGHTERS' RETIREMENT SYSTEM, ET AL.
v.
CITCO GROUP LIMITED, ET AL.

          RULING AND ORDER ON MOTION TO COMPEL

          ERIN WILDER-DOOMES UNITED STATES MAGISTRATE JUDGE.

         Before the court is a Motion to Continue Submission Date on Motion to Compel Privileged Documents or Alternative Motion to Compel Privileged Documents (the “Motion to Compel”)[1]filed by plaintiffs, Firefighters' Retirement System (“FRS”), Municipal Employees' Retirement System of Louisiana (“MERS”), and New Orleans Firefighters' Pension & Relief Fund (“NOFF”) (collectively, “Plaintiffs”). Defendants, Citco Technology Management, Inc. (“CTM”), Citco Banking Corporation N.V. (“Citco Banking”), Citco Fund Services (Cayman Islands) Limited (“CFS Cayman”), and The Citco Group Limited (“Citco Group”) (collectively, the “Citco Defendants”) have filed an Opposition.[2] For the reasons set forth herein, Plaintiffs' Motion to Compel is GRANTED IN PART AND DENIED IN PART.

         I. Background

         By their instant Motion to Compel, [3] Plaintiffs ask either that the court: (1) require that Citco categorize its privileged documents into 13 categories (and have the Citco Defendants, as opposed to counsel, certify as to the accuracy of the categorizations); or (2) issue an order compelling production of documents listed on Citco's privilege log and/or review certain documents in camera. On December 12, 2017, the parties participated in a status conference in this matter and the Motion to Compel was discussed. During that status conference, the court explained that before considering any in camera review, the sufficiency of the privilege log would have to be determined. If the descriptions set forth in the log were insufficient, then the court would decide whether the party asserting the privilege should be given a chance to revise the log. If the descriptions were sufficient, then the court would consider whether the party seeking production had established an exception to the privilege. The court allowed the parties to present argument regarding the adequacy of Citco's privilege log and the potential applicability of the fiduciary duty and crime-fraud exceptions. Counsel for Plaintiff confirmed that all entries on the privilege log at issue in the Motion to Compel remained at issue. On December 20, 2017, the undersigned ordered the Citco Defendants to provide additional information regarding their privilege log.[4] On December 28, 2017, the Citco Defendants provided a revised “Exhibit 1” which identified in-house counsel and also provided a chart setting out the general function of each individual identified on the Citco Defendants' privilege log.[5]

         II. Law and Analysis

         A. Request for Categorization

         Plaintiffs' first request is that the Citco Defendants be required to categorize the documents listed in Citco's privilege log using 12 substantive categories and a thirteenth “catch-all” category. Plaintiffs propose the following 12 categories:

(1) Reasons for the Leveraged loan in the amount of $20 million to Citco Bank being called in 2007;
(2) Review of the terms of the 2008 Series N Offering between January 1, 2008 and May 1, 2008;
(3) Scope of the terms of the Subordination of the Series 4, 5, and 6 Shares to the Series N Shares;
(4) Use of the proceeds of the 2008 Series N Offering;
(5) Consents of the Series 4, 5, and 6 Shareholders to the term of the Series N Offering;
(6) Source of proceeds to purchase Richcourt Holding and compliance with Know Your Customer Rules of the Patriot Act (March 1, 2008 to September 1, 2008);
(7) Execution of the Exclusivity Agreement to purchase Richcourt by Fletcher and Citco between March 1, 2008 and May 1, 2008;
(8) Reasons for the termination of the Administrative Agreement between January 1, 2009 and December 31, 2009;
(9) Default on RBS Loan and unwinding of Global Hawk;
(10) Receipt of fees payable to Citco on unwinding of Global Hawk;
(11) Decision or rationale for redeeming Series 4, 5, and 6 shares without notifying Series N Shareholders; and
(12) Liability of Richcourt entities or Citco for any deficiency on the RBS Loan.

         Plaintiffs request that the Citco Defendants put any documents that do not fall within any of these 12 categories into a “catch-all” category, and also that the Citco Defendants themselves certify as to the accuracy of the categorization. Plaintiffs' only explanation regarding the need for the proposed categorization as set forth in their briefing is that “if the Court were to order Citco to categorize the documents…the parties could continue to hone the privilege log entries that are really at issue. The Louisiana Funds believe that once this is done, they will be able to eliminate large amounts of log entries from Catch All Category based upon the dates.”[6] During the December 12, 2017 conference, counsel for Plaintiffs also stated that the proposed categories would help the court conduct an in camera review of approximately 450 documents.

         In opposition to this particular request, the Citco Defendants contend that Plaintiffs' brief “completely misrepresents the recent meet-and-confer process regarding Citco's privilege log.”[7]The Citco Defendants confirm that they “did not agree to the requested client certification” because such “review would have been conducted by Citco's attorneys.”[8] The Citco Defendants assert that they offered to “bucket the documents into categories if Plaintiffs agreed to withdraw their request that Citco revise its entire privilege log” and that during the parties' November 14, 2017 conference, “both parties agreed to not file any motions to compel regarding privilege logs in light of the parties' ongoing discussions.”[9] In opposition to the Motion to Compel however, the Citco Defendants state they are “no longer willing to voluntarily undertake this exercise in order to avoid costs associated with motion practice, now that Plaintiffs have unilaterally abandoned the meet-and-confer process.”[10] During the December 12, 2017 conference, counsel for the Citco Defendants confirmed that although the Citco Defendants were initially amenable to Plaintiffs' proposed categorization, they could no longer could agree to such request following the filing of Plaintiffs' Motion to Compel and the Citco Defendants' efforts in revising entries on their privilege log.

         Plaintiffs have provided no authority, and the court is aware of none, that would require the Citco Defendants to categorize the documents set forth in their privilege log pursuant to the categories requested by Plaintiffs. As discussed with the parties during the December 12, 2017 conference, this court will not consider an in camera review of the documents listed on the Citco Defendants' privilege log without first determining the sufficiency of the log descriptions themselves.[11] Accordingly, the court proceeds with considering the sufficiency of the Citco Defendants' privilege log, and the potential applicability of the exceptions to privilege advocated by Plaintiffs.

         B. The Majority of Citco Defendants' Descriptions as Set Forth in Exhibits 1, 2, and 4 are Sufficient; however, the Undersigned Will Proceed with an In Camera Review of a Limited Set of Documents and Will Require the Citco Defendants to Revisit Log Entries on Which Third Parties Appear.

         In support of their Motion to Compel, Plaintiffs have not submitted the Citco Defendants' actual privilege log. Instead, it appears that Plaintiffs have compiled four primary exhibits reflecting log entries which Plaintiffs contend are insufficient.[12]

         First, Plaintiffs assert that log entries compiled on Plaintiffs' Exhibits 1[13] and 2[14] contain insufficient descriptions because these entries indicate that the Citco Defendants are asserting attorney-client privilege over documents received by or prepared by in-house counsel. Plaintiffs argue that the descriptions in the Citco Defendants' privilege log related to these documents are insufficient because the descriptions do not satisfy the Citco Defendants' burden of establishing that the documents were for the primary purpose of legal, rather than business, advice. The documents included in Plaintiffs' Exhibit 1 (321 documents) are documents received by in-house counsel (either sent to in-house counsel or on which in-house counsel was copied); the documents included in Plaintiffs' Exhibit 2 (267 documents) are those prepared by in-house counsel but which Plaintiffs contend were not prepared in anticipation of litigation or for the predominate purpose of obtaining legal advice. Second, with respect to the documents included in Plaintiffs' Exhibits 4(a) through 4(e), [15] Plaintiffs assert these entries are insufficient because the Citco Defendants have used generic, boilerplate objections. A review of the list of log entries included in Plaintiffs' Exhibit 4(a) through 4(e) reveals that these entries were also included as log entries in Plaintiffs' Exhibits 1, 2, or 3.

         Although Plaintiffs have obviously taken great pains to re-organize the Citco Defendants' log into the various exhibits, Plaintiffs have not focused on any particular entry in any of the exhibits. Instead, Plaintiffs generally argue that the descriptions are “generic” or “boilerplate” and that given Citco's business (as a plan administrator), establishing that correspondence by or with Citco in-house counsel was for the primary purpose of legal, rather than business, advice is almost impossible. In their opposition to the Motion to Compel, the Citco Defendants attach revised logs corresponding to Plaintiffs' Exhibit 1-4.[16] Additionally, in response to this court's December 20, 2017 Notice and Order, the Citco Defendants submitted a Revised Exhibit 1 highlighting in-house counsel as well as a chart setting out the general function of each individual identified on the Citco Defendants' privilege log.[17]

         Rule 501 of the Federal Rules of Evidence requires a federal court sitting in diversity to apply the appropriate state's law concerning the scope and application of the claimed attorney-client privilege. The Louisiana Code of Evidence states:

A client has a privilege to refuse to disclose, and to prevent another person from disclosing, a confidential communication ... made for the purpose of facilitating the rendition of professional legal services to the client, as well as the perceptions, observations, and the like, of the mental, emotional, or physical condition of the client in connection with such a communication....

         La. Code Evid. art. 506(B). Under Louisiana law, the party asserting the privilege has the burden of proving its applicability. Smith v. Kavanaugh, Pierson & Talley, 513 So.2d 1138, 1143 (La. Sept. 9, 1987).

         In BDO, the Fifth Circuit left the initial determination regarding whether the privilege log was sufficient to the district court on remand, and set forth some general rules regarding the assertion of privilege. The court explained that “[f]or a communication to be protected under the privilege, the proponent ‘must prove: (1) that he made a confidential communication; (2) to a lawyer or his subordinate; (3) for the primary purpose of securing either a legal opinion or legal services, or assistance in some legal proceeding.'” 2017 WL 5494237 at * 3 (citing United States v. Robinson, 121 F.3d 971, 974 (5th Cir. 1997)). The party claiming the privilege bears the burden of proof, and this is a highly fact-specific inquiry. Id. Ambiguities with respect to whether the elements of a privilege claim have been met are construed against the proponent of the privilege. Id. Once the privilege is established, the burden shifts to the party seeking the documents to prove an applicable exception. Id. Generally, Plaintiffs assert that the Citco Defendants' privilege log fails to meet Defendants' burden of establishing the documents therein are privileged under the standards set forth in BDO.[18]

         “There is no presumption that a company's communications with counsel are privileged.” Id. * 4. “‘[C]ommunications by a corporation with its attorney, who at the time is acting solely in his capacity as a business advisor, [are not] privileged, '…nor are documents sent from one corporate officer to another merely because a copy is also sent to counsel…” Id. at * 4 (internal citations omitted). “[A] privilege log's description of each document and its contents must provide sufficient information to permit courts and other parties to ‘test[ ] the merits of' the privilege claim” and “courts have stated that simply describing a lawyer's advice as ‘legal, ' without more, is conclusory and insufficient to carry out the proponent's burden of establishing attorney-client privilege.” Id. (internal citations omitted). See also, Chemtech Royalty Associates, L.P. v. United States, Civil Action No. 05-944, 2010 WL 11538363, at * 7 (M.D. La. Sept. 23, 2010) (explaining that when in-house counsel have responsibilities extending beyond rendering legal advice, “courts require a clear showing that the attorney was acting in his professional legal capacity” but that when “non-legal services such as…business advice that must be given along with legal advice in order for the legal advice to be understood by a client, are mixed with legal services, it does not render the legal services any less protected by the privilege. In fact, they are both protected when they are inextricably intertwined.”); Swoboda v. Manders, Civil Action 14-19, 2016 WL 2930962, at * 5, n. 41 (M.D. La. May 19, 2016) (recognizing that not all communications between an attorney and his client are privileged, “‘[f]or example, no privilege attaches when an attorney performs investigative work in the capacity of an insurance claims adjuster, rather than as a lawyer.'”) (citing In re Allen, 106 F.3d 582, 602 (4th Cir. 1997)); U.S. v. Davis, 636 F.2d 1028, 1043 (5th Cir. 1981) (explaining that work papers produced by an attorney in the course of preparing client's tax returns were not privileged “because although preparation of tax returns by itself may require some knowledge of the law, it is primarily an accounting service. Communications relating to that service should therefore not be privileged, even though performed by a lawyer.”). Attorney client privilege does not extend to materials assembled in the ordinary course of business, or which provide purely factual data. See, U.S. v. Louisiana, Civil Action No. 11-470, 2015 WL 4619561, at * 5 (M.D. La. July 31, 2015).

         Pursuant to Local Civil Rule 26(c):

A party withholding information claimed privileged or otherwise protected must submit a privilege log that contains at least the following information: name of the document, electronically stored information, or tangible things; description of the document, electronically stored information, or tangible thing, which description must include each requisite element of the privilege ...

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