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Allied Irish Banks, p.l.c. v. Bank of America

March 26, 2008


The opinion of the court was delivered by: Gabriel W. Gorenstein, United States Magistrate Judge


Allied Irish Banks, p.l.c. ("AIB") brought this action against Citibank, N.A. and Bank of America, N.A. ("BofA") for claims arising out of a rogue trading scheme perpetrated by one of AIB's traders, John Rusnack. PricewaterhouseCoopers LLP ("PwC-US") was one of AIB's auditors. During discovery, BofA served a document subpoena on an entity called PricewaterhouseCoopers International Limited ("PwCIL"). PwCIL withheld certain responsive documents under the work product doctrine and attorney-client privilege. BofA then filed this motion to compel the production of these documents. Shortly thereafter, PwC-US filed a motion to intervene to stop the disclosure of some of the documents withheld by PwCIL on the ground that they are protected by the work product doctrine. For the reasons below, BofA's motion to compel (Docket # 65) is granted in part and denied in part. PwC-US's motion to intervene (Docket # 77) is granted. Its motion for a protective order will be the subject of further proceedings as set forth below.


A. Facts

PwCIL is a "UK-registered limited liability company, the members of which are the independently-organized professional services entities that use the PricewaterhouseCoopers name." See Declaration of Lawrence W. Keeshan, filed Aug. 30, 2007 (Docket # 69) ("Keeshan Decl."), ¶ 5. PwCIL does not provide client-related services, and thus did not provide any services to AIB or its affiliates. Id. ¶¶ 5, 17. Instead, PwCIL "facilitates and coordinates its member firms' activities, including protection of the PricewaterhouseCoopers brand." See Non-Party PricewaterhouseCoopers International Limited Response to Bank of America, N.A.'s Motion to Compel the Production of Documents, filed Aug. 30, 2007 (Docket # 71) ("PwCIL Resp."), at 2; Keeshan Decl. ¶ 5. PwCIL is overseen by its Chief Executive Officer, its Global Board and a group called the Global Leadership Team. Keeshan Decl. ¶ 5.

During the period of time at issue in this case, the Global Board was composed of partners, principals, or employees of PwCIL's member firms, who served for fixed terms and acted as directors under British law. Keeshan Decl. ¶ 7. Members of the Global Board worked principally for their member firms, not the Global Board itself. Id.

The Global Leadership Team consisted of PwCIL's CEO, individuals the CEO appointed to manage PwCIL's affairs, and the Territory Senior Partners of the major PwCIL member firms or regional groupings. Id. ¶ 10. The CEO and "his management team" (but not the Territory Senior Partners) spent substantially all of their time working on PwCIL's affairs, although they remained partners or employees of their member firms and were paid by those firms. Id. The Global Leadership Team acted "both directly and through a number of subordinates." Id. ¶ 12. These "subordinates" were partners or employees of the member firms, some of whom worked full time on PwCIL matters and others of whom divided their time between PwCIL and the member firms. Id.

PwCIL's "Managing Partner -- Operations," Amyas Morse, was responsible for PwCIL's risk management with respect to legal issues, and chaired the "Global Operations Committee." Id. ¶ 14. This Committee consisted of operations leaders from larger PwCIL member firms who advised Morse on the needs and priorities of member firms in addition to consulting with each other about common responses to shared risk issues such as litigation and insurance matters. Id. ¶ 15. PwCIL also coordinated assistance between member firms through the Global Board and the Global Leadership Team. Id. ¶ 16.

Lawrence W. Keeshan was both the Global General Counsel for PwCIL and a principal of PwC-US from July 1, 1998 until September 20, 2006. Id. ¶¶ 2-3. PwC-US -- along with PricewaterhouseCoopers Ireland Ltd. ("PwC-Ireland") -- provided auditing services for AIB and its affiliates. Id. ¶ 17. As Global General Counsel for PwCIL, Keeshan provided legal counsel to the Global Board, the Global Leadership Team and the Global Operations Committee. Id. ¶ 16. Keeshan learned of Rusnack's fraudulent trading scheme in February 2002, id. ¶ 17, and thereafter "PricewaterhouseCoopers-affiliated professionals were contacted by and cooperated with US government agencies conducting civil and criminal investigations into the Allfirst fraud," id. ¶ 18.

B. Procedural History

BofA filed this motion to compel in August 2007.*fn1 BofA ultimately withdrew its motion as to certain documents and now seeks production of the following documents, numbered according to PwCIL's August 2007 privilege log (see Revised Privilege Log, dated Aug. 24, 2007 (attached as Ex. A to White Decl.) ("Revised Privilege Log")): Document ## 1-7, 9, 11-41, 43-47, 49-56, 58-59, 62, 69-71. See BofA Reply at 21-22.

Shortly after BofA filed its motion to compel, PwC-US filed a motion to intervene in the case in order to obtain a protective order to preclude the disclosure of a subset of these documents: specifically, Document ## 7, 11-17, 19, 22-30, 32-41, 43-47, 49, 52-56, 58, 62. See Non-Party PricewaterhouseCoopers LLP's Memorandum of Law in Support of Motion to Intervene and for a Protective Order, filed Oct. 3, 2007 (Docket # 80) ("PwC-US Mem."), at 1 n.1.*fn2 On December 21, 2007, at the request of the Court, PwCIL submitted copies of the documents to the Court for in camera review.

The documents at issue can be divided into three categories. The first consists of communications between Keeshan and the Global Board and Global Leadership team regarding AIB. The second category consists of communications between Keeshan, other persons at PwCIL, and employees of PwC-US, PwC-Ireland and/or PricewaterhouseCoopers LLP (UK) ("PwC-UK"). This category includes documents responding to a request by Keeshan that attorneys from member firms prepare legal summaries of claims against their respective firms. Third are documents sent to or shared with the PricewaterhouseCoopers network's insurance provider, L & F Indemnity Limited. Keeshan Decl. ¶ 28.


A. Adequacy of Privilege Log

Before discussing each of the three categories of documents, we begin by addressing BofA's argument that the insufficiency of some of PwCIL's descriptions in the privilege log should result in a denial of protection. BofA Mem at 14-16.

PwCIL's privilege log contains, as applicable to each document listed, information on the type of document, its date, its author, its recipients, persons copied on the document, persons to whom the document was forwarded, the author of the responsive portion of any attachment, and a description of the subject matter of the document. While the log does not provide every piece of factual information necessary to demonstrate all aspects of the claims of privilege, the log does provide enough detail "to permit a judgment as to whether the document is at least potentially protected from disclosure." United States v. Constr. Prod. Research, Inc., 73 F.3d 464, 473 (2d Cir.1996). Cases rejecting claims of privilege based on the inadequacy of the privilege log alone typically involve an absence of basic information such as names of recipients, dates, or subject matters of documents -- or a failure to produce a log at all. See, e.g., Aurora Loan Services, Inc. v. Posner, Posner & Associates, P.C., 499 F. Supp. 2d 475, 479 (S.D.N.Y. 2007); OneBeacon Ins. Co. v. Forman Int'l Ltd., 2006 WL 3771010, at *3, *7, *8 (S.D.N.Y. Dec. 15, 2006). While a claim of privilege may be rejected based on lesser inadequacies, the Court exercises its discretion not to do so here in light of the fact that both sides have now made full submissions on the claims of privilege. See, e.g., NXIVM Corp. v. O'Hara, 241 F.R.D. 109, 131 (N.D.N.Y. 2007).

B. Communications Within PwCIL and the Attorney-Client Privilege

The first category of documents consists of communications between PwCIL's in-house counsel, Keeshan, and the Global Board and Global Leadership Team of PwCIL (Document ## 18, 29, 30, 37, 49 and 70-71). PwCIL asserts attorney-client privilege with respect to these documents. We begin by discussing the law governing attorney-client privilege.

1. Law Governing the Assertion of the Attorney-Client Privilege

Because this Court's subject matter jurisdiction is based upon diversity, see Complaint, filed May 23, 2003 (Docket # 1), ¶ 10, state law provides the rule of decision concerning the claim of attorney-client privilege. See Fed. R. Evid. 501; Dixon v. 80 Pine St. Corp., 516 F.2d 1278, 1280 (2d Cir. 1975). While neither party has addressed the choice of law issue in its motion papers, this Court previously applied New York privilege law to a motion to compel in this case, see Allied Irish Banks v. Bank of Am., N.A., 240 F.R.D. 96, 102-03 (S.D.N.Y. ...

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