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Paul D. Ceglia v. Mark Elliot Zuckerberg

August 12, 2011


The opinion of the court was delivered by: Leslie G. Foschio United States Magistrate Judge


Defendants contend that Plaintiff's assertion of Privilege Log Item Nos. 1-4 as within the attorney-client privilege should be rejected. As this is a diversity action, the court is required to apply New York privilege to this question pursuant to Fed.R.Evid. 501; however, as federal and New York caselaw construing N.Y.C.P.L.R. 4503 (New York's statutory formulation of the privilege) are essentially similar, see In re Pfohl Bros. Landfill Litig., 175 F.R.D. 12, 21 (W.D.N.Y. 1997) (citing caselaw), the court applies federal caselaw in this circuit. As relevant, the privilege requires that only confidential communications with an attorney for the purpose of seeking legal advice or services are within its scope. See United States v. Int'l Bhd. of Teamsters, 111 F.3d 210, 214 (2d Cir. 1997). The burden is on the party asserting the privilege to demonstrate the requirements for the privilege have been satisfied. Id.

Privilege Log Item No. 1 ("Item 1"). Item 1 is an email from Plaintiff. The addressee is not stated, however, the Plaintiff asserts the addressee was Plaintiff's attorney, Jim Kole. The email refers to a StreetFax contract, the contract at issue in this case. Because the email merely transmits another document - the contract - to an attorney, it neither seeks confidential legal advice nor constitutes a confidential communication relating to such advice. Plaintiff has failed to establish otherwise. Accordingly, Item 1 is not within the attorney-client privilege.

Privilege Log Item No. 2 ("Item 2"). Item 2 purports to be a copy of a one-page document described by the Privilege Log as page 1 of a contract between Plaintiff and Mark Zuckerberg. As there is no indicated in either Item 1 or Item 2 that the document (Item 2) was submitted on a confidential basis to an attorney from whom Plaintiff was seeking advice or legal services such as reviewing or drafting the contract, Plaintiff has failed to establish the requisites for assertion of the privilege as to this document.

Privilege Log Item Nos. 3 and 4 ("Item 3" "Item 4"). Item 3 purports to be am March 3, 2004 email from Plaintiff to Mr. Kole advising Plaintiff will send page two of a contract. Item 4 purports to be a copy of page 3 of the StreetFax contract signed by Plaintiff and Mark Zuckerberg dated April 28, 2003. Neither document indicates the email or contract are evidence that confidential legal advice or services are being requested. Specifically, the contract, already signed by Zuckerberg, by definition cannot be considered as a confidential communication nor does Plaintiff demonstrate, as is Plaintiff's burden, that by sending both pages of the executed contract, Plaintiff sought legal advice or assistance from Mr. Kole regarding the completed transaction. Thus, neither Item 3 or 4 are within the privilege.

Confidentiality Designation of Other Items Listed on Plaintiff's Privilege Log.

Defendant contends that none of Plaintiff's designations of 120 items in Plaintiff's privilege log as confidential under the Joint Stipulated Protective Order ("the Order") (Doc. No. 86), and, as such, should be nullified by the court. Under the Order, entered pursuant to Fed.R.Civ.P. 26(c), Order at 1, the parties were permitted to designate as confidential any "documents, materials, or information the designating" party "believes in good faith" contains information "that is not publically available (such as proprietary or confidential business, technical, sales marketing, financial, commercial, private, or sensitive information, or information that is otherwise reasonably designable as confidential)." Order ¶ 3. Disputes as to the validity of such designations are to be submitted to the court for resolution. Order ¶ 5.

Whether to enforce a protective order is "'committed to the sound discretion of the trial court.'" S.E.C. v., 273 F.3d 222, 231 (2d Cir. 2001) (quoting In re "Agent Orange" Prod. Liab. Litig., 821 F.2d 139, 147 and citing authorities). A protective order entered pursuant to Fed.R.Civ.P. 26(c) may be entered only for good cause that the protection sought is necessary to protect information entitled to such protection against disclosure outside the purposes of the relevant litigation such as the types of information listed in Fed.R.Civ.P. 26(c). See Kamyr AB v. Kamyr, Inc., 1992 WL 317529, *4 (N.D.N.Y. Oct. 30, 1992). The propriety of such designation depends on the nature of the issues in a particular case as where the claims entail, inter alia, "an in-depth investigation of the defendant's business structure, operations, and policies." Brookdale Univ. Hosp. and Med. Ctr., Inc. v. Health Insurance Plan of Greater New York, 2008 WL 4541014, *2 (E.D.N.Y. Oct. 27, 2008). Good cause for including a document within the scope of a protective order entered pursuant to Rule 26(c) "exists 'when a party shows that disclosure will result in a clearly defined specific and serious injury.'" In re September 11 Litigation, 262 F.R.D. 274, 277 (S.D.N.Y. 2009) (quoting In re Terrorist Attacks on September 22, 2001, 454 F.Supp.2d 220, 222 (S.D.N.Y. 2006)).

Although, in the instant case, the court found good cause for entry of the Order, as the parties are aware, the court made no review of or determination prior to entry that any of the 120 documents subsequently designated as confidential ostensibly based on Plaintiff's good faith belief that each was entitled to such designation, was, in the court's view, confidential for purposes of the Order. Where a party challenges inclusion of information in a protective order courts consider several factors in deciding whether a party's designation should be set aside based on improvidence in granting the order, the existence of an extraordinary circumstance, or compelling need. Martindell v. Int'l Tel. & Tel. Corp. 594 F.2d 291, 296 (2d Cir. 1979). This requirement, however, applies only if a party has reasonably relied on the designations of confidentiality in the protective order. In re September 11 Litigation, 262 F.R.D. at 277 (citing, 273 F.3d at 229). In determining whether a party has reasonably relied on such designation, courts consider the scope of the protective order, the language of the order, the extent of the court's inquiry before entry of the order and the "nature of the reliance on the order." Id. at 277 (quoting In re EPDM Antitrust Litig., 255 F.R.D. 308, 318 (D.Conn. 2009)). As the court made no prior determination of whether any of the challenged items were properly designated as confidential, the court need not address whether the Order was improvidently granted or whether Defendants have demonstrated a compelling need for full disclosure.

Here, the Order requires that the designation of confidentiality be based on a good faith belief that the designated material contains confidential information that is not publically available "such as proprietary or confidential business, technical, sales, marketing, financial, commercial, private, or sensitive information, or information that is otherwise reasonably designable as confidential." Order ¶ 3. The court has reviewed all of the 120 items asserted by Plaintiff as confidential under the Privilege Log including Items 1-4 asserted as subject to the attorney-client privilege. The court finds that some qualify as information as to which Plaintiff could have entertained a reasonable belief constituting confidential information within the scope of the Order, while others do not.

First, Items 1-4 related to a signed agreement between Plaintiff and Defendant Zuckerberg for software development and in connection with a StreetFax product. As the document was allegedly executed by Zuckerberg, Plaintiff could not entertain a reasonable belief that it was a confidential private document, particularly in light of the fact that a copy of the executed agreement was attached by Plaintiff to the Complaint in this action. The emails to Mr. Kole do not reveal any technical, personal or sensitive information. Moreover, given that the court has not reviewed and approved such designation, Plaintiff could not reasonably have relied on the confidential designation he now asserts in these documents. For these reasons, Plaintiff also lacks any good faith reasonable belief as to the confidential nature of Items 5 - 11, unsigned versions of the same agreement.

Items 12 - 38 represent copies of electronic communications among Plaintiff, Defendant Zuckerberg and several persons involved in development of the StreetFax website product. These items represent communications addressed to a variety of personal and technical matters arising as the parties attempted to develop the StreetFax software and website called for by their contract. As such, Plaintiff could have held a good faith belief they constituted personal and technical as well as some proprietary information covered by the Order, and Plaintiff's confidentiality designation for these items is therefore sustained.

Items 39 - 45 are printouts of computer generated test results relating to development activities associated with the StreetFax contract. As such they reasonably qualify as confidential technical material under the Order.

Item 46 is a partially retrieved copy of page 2 of the StreetFax contract which appears to be signed by Defendant Zuckerberg. For the reasons stated ...

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