The opinion of the court was delivered by: HOWARD G. MUNSON
MEMORANDUM-DECISION AND ORDER
Before the court are cross-motions involving an unusual discovery controversy. During the time period relevant to this lawsuit, defendants Bartlett, Pontiff, Stewart, Rhodes & Judge, P.C. and Paul Pontiff, Esq. (collectively, "the attorney defendants" or "Bartlett, Pontiff") served as attorneys for, among others, co-defendants Raymond J. Whalen, Silver Bow Resources & Chemical Corporation, and Whalen Drilling and Mining Corporation (collectively, "the Whalen defendants"). Plaintiffs' second amended complaint includes numerous allegations of wrongdoing by Bartlett, Pontiff undertaken during the existence of their attorney-client relationship with the Whalen defendants.
Plaintiffs served detailed discovery requests upon all defendants and, as a result of this court's orders dated November 1, 1991 and November 19, 1991, Documents ("Docs.") 131 and 132, the Whalen defendants produced volumes of materials without asserting any protective privilege.
After negotiating unsuccessfully with plaintiffs regarding the discovery requests served upon them, Bartlett, Pontiff filed the instant motion for an order authorizing them to disclose documents and testify about their role in all aspects of the events which gave rise to this lawsuit, notwithstanding the attorney-client privilege which ordinarily would protect from disclosure any confidential communications between attorney and client. The attorney defendants seek this order as part of their effort to defend themselves against plaintiffs' allegations of wrongdoing, consistent with DR 4-101(C)(2)
and (4) of the Model Code of Professional Responsibility. Alternatively, the attorney defendants move for a protective order pursuant to Fed.R.Civ.P. 26(c) to protect from disclosure all documents in their possession on the ground that such documents are privileged communications between attorney and client.
Plaintiffs cross-move pursuant to Fed.R.Civ.P. 37(a) for an order compelling the production of all documents in the possession or control of Bartlett, Pontiff which are responsive to plaintiffs' discovery requests dated June 26, 1991. Arguing that Bartlett, Pontiff served as counsel for Silver Bow Partnerships as well as the various Whalen defendants, thus making the individual Partnership Programs and limited partners co-holders of the attorney-client privilege, plaintiffs contend that the privilege cannot now be used to withhold documents from them. Moreover, any communications with Silver Bow Resources & Chemical Corporation in its fiduciary capacity as general managing partner of Silver Bow Partnerships cannot be withheld from plaintiffs, as the communications were made on the Partnerships' behalf. Plaintiffs also argue that, because the communications were allegedly part of the ongoing perpetration of fraud by Silver Bow Resources & Chemical Corporation, such communications are excluded from the protection of the attorney-client privilege. Finally, plaintiffs contend that since the Whalen defendants purport to have produced every piece of paper in their possession regarding the issues in this case, they waived any attorney-client privilege protection that would apply and the attorney defendants therefore have no ground upon which to assert the privilege. For all of these reasons, plaintiffs move to compel discovery. Plaintiffs seek an award of costs and attorney's fees under Rule 37(a)(4) in the event that their motion to compel is granted. Plaintiffs also move for Rule 11 sanctions against counsel for defendants Bartlett, Pontiff and Paul Pontiff, on the ground that the blanket assertion of attorney-client privilege protection in response to the entirety of plaintiffs' discovery requests is baseless and objectively unreasonable.
The court heard oral argument on these motions on May 8, 1992 in Syracuse, New York. Thereafter, counsel for plaintiffs withdrew the cross-motion for an award of costs and attorney's fees as well as the cross-motion for Rule 11 sanctions. See Letter dated May 12, 1992, Doc. 155. For the reasons stated below, the court grants in part plaintiffs' remaining cross-motion to compel discovery and directs Bartlett, Pontiff to respond to plaintiffs' outstanding discovery requests. The court also grants the motion by Bartlett, Pontiff for an order authorizing them, in their effort to defend themselves against plaintiffs' allegations of wrongdoing, to all disclose documents and testify about their role in all aspects of the events which gave rise to this lawsuit.
The Supreme Court has repeatedly recognized the attorney-client privilege as a principle of common law to be applied "in the light of reason and experience" pursuant to Fed.R.Evid. 501. E.g., United States v. Zolin, 491 U.S. 554, 562, 105 L. Ed. 2d 469, 109 S. Ct. 2619 (1989). The central purpose behind the attorney-client privilege, as articulated by the Court, is "to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice." Upjohn Co. v. United States, 449 U.S. 383, 389, 66 L. Ed. 2d 584, 101 S. Ct. 677 (1981). By protecting such confidential communications from disclosure, the privilege facilitates attorneys being fully informed by their clients of all pertinent information, upon which the attorneys are better able to render sound legal advice or advocacy. See id. at 389-91; United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir.), cert. denied, 116 L. Ed. 2d 39, 112 S. Ct. 63 (1991). The Supreme Court cautions, however, that "since the privilege has the effect of withholding relevant information from the factfinder, it applies only where necessary to achieve its purpose." Fisher v. United States, 425 U.S. 391, 403, 48 L. Ed. 2d 39, 96 S. Ct. 1569 (1976). For example, communications made in furtherance of the commission of a crime or fraud are excepted from the attorney-client privilege's seal of secrecy whether or not the attorney was aware of the client's improper purpose, because protection of such communications does not promote observance of law and administration of justice. See Zolin, 491 U.S. at 563; In re Grand Jury Proceedings, 680 F.2d 1026, 1028 (5th Cir. 1982) (quoting United States v. Hodge & Zweig, 548 F.2d 1347, 1354-55 (9th Cir. 1977).
In cases involving issues of federal law, courts in the Second Circuit generally have adopted the following detailed test to analyze disputes involving the attorney-client privilege:
The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication related to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion of law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.
United States v. Falzone, 766 F. Supp. 1265, 1271 (W.D.N.Y. 1991) (quoting United States v. Jones, 696 F.2d 1069, 1072 (4th Cir. 1982); Thomas v. F.F. Financial, Inc., 128 F.R.D. 192, 192-93 (S.D.N.Y. 1989) (quoting Drimmer v. Appleton, 628 F. Supp. 1249, 1251 (S.D.N.Y. 1986)); In re White, 42 Bankr. 494, 499 (Bankr. E.D.N.Y. 1984). A waiver may be effected through voluntary disclosure by the client, through the client's express consent to disclose, or through implication gleaned from the client's actions. In re Von Bulow, 828 F.2d 94, 101 (2d Cir. 1987).
In the case at bar, there is no dispute regarding the first two prongs of the test. Everyone agrees that the Whalen defendants were clients of Bartlett, Pontiff and that communications were made between them pursuant to the attorney-client relationship. It is the third prong of the test where the parties' positions diverge. Bartlett, Pontiff asserted the attorney-client privilege to protect from disclosure nearly all of the documents requested by plaintiffs in the June 26, 1991 production request. See Response to Plaintiffs' Rule 34 Demand, dated January 28, 1992, attached to Doc. 143 as part of Exhibit ("Exh.") C. For example, in response to item 2 of plaintiffs' document request seeking all correspondence and other documents between Bartlett, Pontiff and investors in the Silver Bow Partnerships, the attorney defendants responded in part, "in addition, the Demand seeks information which is protected by the attorney-client privilege." Id. While plaintiffs present the hotly contested argument that they are co-holders of the attorney-client privilege and that the privilege therefore cannot be used to withhold the requested documents from them, the court finds a more concrete and compendious method of ruling on a large number of plaintiffs' discovery requests.
As set forth above, the attorney-client privilege protects only those communications which occur between attorney and client in a confidential manner. E.g., Falzone, 766 F. Supp. at 1271. The privilege cannot be used to prevent disclosure of communications with third parties, or to prevent disclosure of communications that were conveyed between attorney and client in the presence of third parties or later released to third parties. Nelson v. Greenspoon, 103 F.R.D. 118, 123-24 (S.D.N.Y. 1984). Because item 2 of plaintiffs' document request does not seek communications between attorney and client, but rather seeks correspondence and other documents between Bartlett, Pontiff and investors in the Silver Bow partnerships, the attorney-client privilege clearly does not apply. Similarly, the attorney-client privilege does not apply to items 3, 4, 5, 6, 7, 15, 21, 24, 25, 26, 27, 31, 32, 35, 36, and parts of items 1, 8, 9, 11, 12, 14, 16, 17, 18, 19, 22, 23, 28, 29, 30, 33, and 34 of plaintiffs' document production request, because such items seek communications with third parties or conveyed to third parties. See Exh. C attached to Doc. 143. Thus, the court finds that ...