United States District Court, S.D. New York
December 14, 2005.
REINO DE ESPANA, Plaintiff,
AMERICAN BUREAU OF SHIPPING, et al., Defendants.
The opinion of the court was delivered by: RONALD ELLIS, Magistrate Judge
OPINION AND ORDER
Plaintiff Reino de España ("Spain") brings this case arising
from the casualty and sinking of the Prestige off the coast of
Spain in 2002 against American Bureau of Shipping ("ABS"), and
other defendants. By letter dated November 10, 2005, ABS
maintains that it inadvertently produced ten pages of privileged
e-mail communication, and twenty-four pages of privileged
handwritten notes. It claims that these documents are protected
by attorney-client privilege and attorney work-product because
they reflect the transmission of confidential legal advice
related to the Prestige litigation. ABS asks the Court to order
Spain to return or destroy these allegedly privileged documents.
For the reasons which follow, ABS's request is hereby DENIED.
On March 4, 2005, ABS discovered its October 2004 production of
8,317 pages of documents to Spain included allegedly privileged
e-mail communication bates-stamped ABS 0231009-0231014 and ABS
0231015-0231018. ABS asserts that the e-mails include legal
advice regarding ABS's potential liability based on the adoption
of different safety standards for vessels. By letter dated March 4, 2005, ABS notified Spain that
it discovered the inadvertently disclosure of the e-mail
documents. ABS requested the immediate return or destruction of
the original documents and duplicate copies. On May 11, 2005, ABS
inadvertently produced documents bates-stamped ABS
0297424-0297432, which are duplicate copies of the same bulker
safety e-mails previously produced.
On May 16, 2005, ABS learned that twenty-four pages of
handwritten notes bates-stamped ABS 0108354-0108360, ABS
0108432-0108440, ABS 0108922-0108924, ABS 0109046-0109048, ABS
0109071-0109073, ABS 0109083, and ABS 0109093 had been
disclosed to Spain in a production of 24,017 pages of documents
on April 16, 2004. The notes summarize ABS's discussions with
counsel regarding its strategy for addressing media inquiries
related to the Prestige casualty. By e-mail dated May 17, 2005,
ABS notified Spain of the inadvertent production, and requested
the return or destruction of these documents.
ABS renewed its request for the return or destruction of the
allegedly privileged e-mails and notes on July 5, 2005. Spain
responded by letter dated July 8, 2005, analyzing each document,
and explaining that they were not privileged because they
represent ABS's non-legal discussions of business-related issues.
On July 19, 2005, ABS notified Spain that it would seek
resolution of this dispute by the Court without responding to the
arguments Spain raised in its letter. On November 10, 2005, ABS
brought the dispute to the Court's attention, and requested that
the Court order Spain to return or destroy allegedly privileged
documents. On November 16, 2005, in order to ascertain whether
ABS's documents are privileged, the Court ordered the submission
of the disputed documents for in camera review. On November 18,
2005, after conducting an inspection of the documents, the Court
ordered ABS to submit a sworn affirmation setting forth the background, preparation, and intended purpose
of the handwritten notes. The Court also granted Spain's request
to submit an affidavit regarding its reliance on the disclosed
documents, and allowed the parties to supplement their legal
analysis of privilege.
A. E-mail Communications
The attorney-client privilege protects from disclosure
confidential communications made between client and counsel for
the purpose of obtaining or providing legal advice or services.
See United States v. Construction Prods. Research, Inc.,
73 F.3d 464, 473 (2d Cir. 1996). ABS "bear[s] the burden of
demonstrating that the [documents at issue] are privileged and
that the privilege has not been waived." In re Phillip Servs.
Corp. Secur. Litig., 2005 WL 2482494, at *1 (S.D.N.Y. Oct. 7,
ABS claims that its officials sought legal advice from general
counsel via e-mail after reviewing a bulker safety news article.
Spain contends that the e-mails discuss non-legal,
business-related issues. After conducting an in camera review
of the documents, the Court finds that ABS's contentions are
without merit. The e-mails contain non-legal discussions of
business-related issues. More specifically, the e-mails contain a
discussion of the bulker safety news article. The discussion
focuses primarily on ABS's relative advantage or disadvantage
vis-a-vis its competitors if it adopts different bulker safety
standards. The recipients of the e-mail communications include
Frank Iarossi, ABS Chairman and CEO; Robert Somerville, ABS
President; Steven McIntyre, ABS Director of Regulatory Affairs;
Donald Liu, Senior Vice President of Technology and Chief
Technology Officer; Stewart Wade ("Wade"), ABS Vice President of
Marketing Development and Communication; and Thomas Miller
("Miller") ABS General Counsel. The inclusion of ABS employees outside the legal
department as recipients further support the conclusion that the
e-mails contain business advice. See Lyondell-Citgo Refining,
LP v. Petroleos de Venezuela, S.A, et al., 2004 WL 3019767, at
*1 (S.D.N.Y. Dec. 29, 2004). The attorney-client privilege
attaches when a client requests legal as opposed to business
advice. "If the communication concerns business matters, the
privilege does not apply." Atronic Int'l, GMBH v. SAI
Semispecialists of America, 2005 WL 2738914, at *3 (E.D.N.Y.
Oct. 18, 2005).
ABS argues that the e-mails comprise mainly legal advice and
that the presence of some business advice does not obviate the
privilege. It relies primarily on two cases, Stratagem Dev.
Corp. v. Heron Int'l N.V., 153 F.R.D. 535 (S.D.N.Y. 1994), and
Studiendgesellschaft Kohle mbH v. Novamont Corp., 1980 U.S.
Dist. LEXIS 15042 (S.D.N.Y. Nov. 17, 1980). This reliance is
misplaced. In Stratagem, the court found that the document
"clearly reflects legal advice." 153 F.R.D. at 543. In
Studiendgesellschaft, the "communications at issue were between
client and attorney, and the subject was the settlement of a
legal dispute and how best to achieve that settlement." 1980 U.S.
Dist. LEXIS 15042, at *9. What both cases have in common is that
the court found that the subject matter of the communications
centered around legal advice. Contrary to ABS's contentions,
legal issues do not predominate in the e-mails. Accordingly, the
communications are not protected by the attorney-client
B. Handwritten Notes
The handwritten notes disclosed by ABS were prepared by Wade,
ABS's primary spokesperson following the Prestige casualty. ABS
contends that the notes discuss legal matters combined with
Wade's purview of public relations, and that most of the notes
summarize discussions with ABS counsel concerning legal strategy for
addressing media inquiries regarding the Prestige. The first
set (ABS 108354-108357) and the third set (ABS 0109822-0109824)
reflect telephone discussions among Wade, ABS counsel, and a
public relations firm. The second set (ABS 0108432-0108440),
fifth set (ABS 0109071-0109073), sixth set (ABS 0109083), and
seventh set (ABS 0109093) of notes reflect conversations between
Wade and Miller. The fourth set of notes (ABS 109046-ABS 109048)
address a conversation between Wade and a journalist. ABS asserts
both the attorney-client privilege and work-product privilege
with respect to these notes.
1. The Attorney-Client Privilege
After conducting an in camera inspection of the notes, the
Court finds that the notes contain discussions of non-legal
issues, including business, press and public relations
strategies. ABS claims that relevant non-legal considerations may
be incorporated into counsel's legal analysis without loss of the
privilege. ABS also maintains that there is no requirement for
the privilege to be apparent on the face of the document. See
Cuno, Inc. v. Pall Corp., 121 F.R.D. 198, 202 (E.D.N.Y. 1998).
Cuno concerned a patent infringement suit, and involved
documents "contain[ing] the usual interchange which occurs
between an inventor and his patent attorney." Id. Unlike the
position and function of ABS's general counsel, "the domain of
patent lawyer is a highly technical one. The determination of
whether an invention is new, useful and unobvious necessarily
requires an analysis of the technical aspects of the invention."
Id. This case is distinguishable. The non-legal matters here
are not integral to the privilege claim, and not protected by the
attorney-client privilege. 2. The Work-Product Privilege
ABS also asserts the work-product privilege with respect to the
handwritten notes. To invoke the work-product privilege, a party
generally must show that the documents were prepared principally
or exclusively to assist in anticipated or ongoing litigation.
See MSF Holding Ltd. v. Fiduciary Trust Company Int'l., 2005
WL 3046287, at *1 (S.D.N.Y. Nov. 10, 2005). ABS maintains that
Wade prepared each note in anticipation of litigation. The Court
finds this argument unpersuasive. ABS has not shown that the
notes "would not otherwise have been prepared in a substantially
similar form." Id. The Court finds that in light of the
Prestige casualty, ABS would have created notes concerning
press and public relations strategies in the normal course of
business without the threat of litigation. "The information
detailed is not the sort that would be sought only because
litigation was anticipated." Id. at *2.
C. Waiver of Privilege
ABS contends that it inadvertently produced the allegedly
privileged documents. The voluntary production of a privileged
document "removes all confidentiality from the document and
clearly effects a waiver of any privilege otherwise applicable."
Eigenheim Bank v. Halpern, 598 F. Supp. 988, 991 (S.D.N.Y.
1984). The privilege is not waived if the disclosure is
inadvertent. See Lois Sportswear, U.S.A., Inc. v. Levi Strauss
& Co., 104 F.R.D. 103, 105 (S.D.N.Y. 1985). The privilege is
waived "if the disclosing party failed to take reasonable steps
to maintain the confidentiality of the assertedly privileged
documents." Asian Vegetable Research & Dev. Ctr. v. Inst. of
Int'l Educ., 1995 WL 491491 at *7 (S.D.N.Y. Aug. 17, 1995). The
Court should consider the number of documents involved as well as
the time frame in which the production takes place. See United States v. Rigas,
281 F. Supp. 2d 733, 738 (S.D.N.Y. 2003). Admittedly, a vast number
of documents had to be reviewed by ABS in this litigation. ABS
maintains that during the review of documents for production
counsel distinguished privileged and non-privileged documents,
and supervised the manual and electronic segregation of the
documents. ABS does not provide any additional information to
support its contention that it exercised reasonable precautions
to prevent inadvertent disclosure. ABS produced duplicate copies
of documents previously inadvertently disclosed, failed to
include the documents in its privilege log, and did not mark the
documents as privileged. The procedure ABS used to safeguard the
confidentiality of the materials was inadequate, and effects a
waiver of any privilege otherwise applicable.
Spain argues that ABS's failure to seek timely judicial
intervention supports a finding of waiver. See In re Grand
Jury (Impounded), 138 F.3d 978 (3rd Cir. 1998). Although ABS
notified Spain of its privilege claims and "continued to assert
it in subsequent communications, these assertions were
insufficient to protect [its] rights." Id. at 982. "Judicial
enforcement of the privilege was the only remedy that [ABS] could
have obtained" to foreclose Spain's use of the documents. Id.
Spain's "continued use of the documents directly undermined the
purpose of" the privilege asserted. Id. ABS's inordinate delay
in seeking judicial intervention, therefore, supports a finding
of waiver of any privilege otherwise applicable to the e-mails
and handwritten notes.
After conducting an in camera review of the documents, the
Court finds that the e-mails bates-stamped ABS 0231009-0231014, ABS 0231015-0231018, and ABS
0297424-0297432, and the handwritten notes bates-stamped ABS
0108354-0108360, ABS 0108432-0108440, ABS 0108922-0108924, ABS
0109046-0109048, ABS 0109071-0109073, ABS 0109083, and ABS
0109093, are not protected by the attorney-client or work-product
privilege. ABS's request that the Court order Spain to return or
destroy the documents is hereby DENIED.
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