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TEACHERS INS. & ANNUITY ASSN. OF AMERICA v. SHAMRO
July 20, 1981
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, Plaintiff,
SHAMROCK BROADCASTING COMPANY, INC., Defendant
The opinion of the court was delivered by: CONNER
This case is presently before the Court on the motion of defendant Shamrock Broadcasting Company, Inc. ("Shamrock") to compel plaintiff Teachers Insurance and Annuity Association of America ("Teachers") to produce certain documents, Rule 37(d), F.R.Civ.P. At issue is whether Teachers waived the right to assert the attorney-client privilege with respect to documents which it previously turned over to the Securities and Exchange Commission ("SEC") in response to an agency subpoena. For purposes of this motion, it has been assumed that (1) absent a waiver, the attorney-client privilege would attach to the documents sought; (2) all the documents sought were in fact turned over to the SEC; and (3) Teachers turned them over without making any express claims of confidentiality or attorney-client privilege.
Teachers brought this action initially against the Starr Broadcasting Group, Inc. ("Starr") to recover damages for Starr's failure to honor Teachers' exercise of two Starr stock warrants at the exercise price to which Teachers contended it was entitled. After the lawsuit was commenced, Starr merged with Shamrock; the parties subsequently agreed to substitute Shamrock for Starr as the defendant in this action.
Shamrock asserts as an affirmative defense that the warrant exercise price claimed by Teachers, Starr's primary lender, was granted to Teachers by Starr only in the context of an overall agreement violative of the securities laws and of common-law principles. Starr avers that under that agreement, Teachers, in conspiracy with four individual principals and directors of Starr, consented to Starr's acquisition of certain unprofitable movie theatre and other investments made by those directors in return for an increase in the rate of return on Teachers' outstanding loans to Starr and a reduction in the exercise price of Starr stock warrants already held by Teachers. The 1975 transactions in which Starr acquired the investments of its four directors were the subject of an SEC investigation; in the course of that investigation, the SEC issued a subpoena on September 22, 1976 requiring Teachers to produce:
"(f)or the period January 1, 1970 to the present, all records, statements and documents, including but not limited to correspondence, notes, memoranda, loan office credit files, agreements and proposed agreements, contracts, applications, account information, studies, reports, statements of account, minutes of any loan committee or executive committee meetings, financial statements, appraisals, telephone logs, appointment calendars, cancelled checks, deposit slips and all other papers, records and documents, and drafts of any of the foregoing which relate directly or indirectly to any of the following:
"1. Loans to the Starr Broadcasting Group, Inc. and its subsidiaries and affiliates;
"2. Loans to any present or former officers or directors of the Starr Broadcasting Group, Inc.;
"3. Loans to Ryder Pictures, Inc.;
"4. Loans to Bryan Pictures, Inc.;
"5. Loans to Sitco Ltd. (the limited partnership through which, Shamrock alleges, the four Starr officers and directors acquired the movie theatres and other investment properties later transferred to Starr); and
"6. All other accounts (other than ordinary checking accounts) maintained by or in which there is a beneficial interest, for individuals or other entities affiliated with the Starr Broadcasting Group, Inc., its officers and directors; Ryder Pictures, Inc.; Bryan Pictures, Inc.; or Sitco, Ltd."
The subpoena further recites that the SEC may seek a court order directing compliance should Teachers not produce the documents called for; that the information sought was to be used "principally for the purpose of investigating possible violations of the federal securities laws"; and that the information obtained might also be used "(in) any proceeding where the Federal securities laws are in issue or in which the Commission or past or present members of its staff is ...
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