The opinion of the court was delivered by: Cheryl L. Pollak United States Magistrate Judge
On October 26, 2009, seven plaintiffs filed a Complaint under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-68, against Poly Prep Country Day School ("Poly Prep"), Poly Prep's former headmaster, William M. Williams ("Williams"), Poly Prep's current headmaster, David B. Harman ("Harman"), and members of Poly Prep's Board of Trustees ("the Board").*fn1 (Compl.*fn2 ¶¶ 5, 15-18). Since the Complaint was filed in 2009, five more plaintiffs have joined the lawsuit, bringing the total number of plaintiffs to twelve. Plaintiffs have also amended their Complaint to add claims against three additional defendants, former Chairman of the Poly Prep Board of Trustees, Harry Petchesky, Esq., former general counsel for Poly Prep, Robert Herrmann, Esq., and former Poly Prep administrator, Michael Novello. Plaintiffs' claims stem from the alleged sexual abuse perpetrated by Philip Foglietta ("Foglietta"), Poly Prep's football coach and physical education instructor from 1966 through 1991, who is now deceased. (Id. ¶¶ 3, 22).
Currently pending before this Court are two motions filed by
plaintiffs. The first motion seeks an Order permitting certain
discovery based on the "crime/fraud exception" to the attorney-client
and work product privileges; and the second motion seeks an Order
imposing sanctions upon defendants and defendants' attorneys for
allegedly committing a fraud upon the Court in this case.*fn3
Defendants have cross-moved for sanctions to be imposed upon
plaintiffs for the positions they have taken in pursuit of sanctions
and additional discovery.
For the reasons set forth below, plaintiffs' motion for additional discovery is granted in part and denied in part. With respect to plaintiffs' motion for sanctions based upon an alleged fraud on this Court, the Court reserves decision on the motion and Orders the parties to appear for an evidentiary hearing scheduled to begin July 19, 2012. The parties are further Ordered to exchange witness lists on or before June 15, 2012. Defendants' requests for sanctions are denied.
The factual allegations underlying this case are set forth more fully in the Court's April 13, 2011 Memorandum and Order. For purposes of these motions, the Court summarizes the basic claims as follows.
Defendant, Poly Prep, is a college preparatory school for fifth through twelfth grade students, located in Brooklyn, New York. (Am. Compl. ¶¶ 1, 18). From 1966 through 1991, Philip Foglietta was employed as a football coach and physical education instructor at Poly Prep. (Id. ¶ 26). Plaintiffs allege that, as early as 1966, members of Poly Prep's administration were notified by students, their parents, and by other unidentified individuals that Foglietta was sexually abusing certain students.*fn4 (Am. Compl. ¶¶ 28-29, 41, 45-47, 70-72, 75-76, 81, 94).
Plaintiffs allege that in 1966, plaintiff William Jackson ("Jackson"), then an eighth grade student at Poly Prep, and his parents met with then Headmaster Scull and then Athletic Director Harlow Parker ("Parker"), at which time Jackson accused Foglietta of repeated sexual abuse, providing graphic and explicit details. (Id. ¶¶ 45-47). Plaintiffs claim that Skull, Parker, and the then Poly Prep Board of Trustees falsely notified Jackson and his parents that the school had investigated Jackson's allegations and found them not to be credible. (Id. ¶ 49). According to plaintiffs, Jackson was told to refrain from making further allegations and that he would face serious consequences, including possible expulsion, if he continued to accuse Foglietta of sexual misconduct. (Id.)
Plaintiffs also claim that in 1973, the parents of another Poly Prep student, John Marino ("Marino"), met with then Headmaster William Williams and Mr. Parker and explained that their son had told them that Foglietta was sexually abusing boys on school grounds. (Id. ¶ 71). Plaintiffs allege that defendant Williams and Mr. Parker, who is now deceased, told the Marinos that their son was a liar and threatened to expel him in the event that he persisted in spreading such "rumors." (Id.) Plaintiffs allege that Marino's parents met with defendant Williams and Parker a second time in 1974, at which time Marino's parents once again informed the school of Marino's claims that Foglietta was abusing students. (Id. ¶¶ 74, 75). Headmaster Williams and Parker again discounted Marino's claims and told the Marinos that John Marino was "on thin ice." (Id. ¶ 75). Plaintiffs also allege that John Marino's father, John Anthony Marino, worked for the New York City Parks Department and knew Foglietta in that capacity. (Id. ¶ 76). Plaintiffs allege that John Anthony Marino communicated with Parker outside of Poly Prep, expressing his concerns about Foglietta's propensity to sexually abuse boys, and Parker told him to leave the issue alone. (Id.)
Plaintiffs claim, and Williams confirmed in his deposition, that Williams received one or more letters in the 1970s that accused Foglietta of "doing terrible things to your students." (Id. ¶ 81; Am. Compl., Ex. S*fn5 at 84-86). Although Williams testified at his deposition that he interpreted the letters as alleging verbal rather than sexual abuse, he threw out the letters, testifying that "unsigned complaints just should be tossed." (Am. Compl., Ex. S at 87-88). Approximately one year later, in the 1970s, Williams received an anonymous phone call in which the caller reiterated language similar to that found in the letters, accusing Foglietta of "doing terrible things to our kids." (Id. at 105-08). Williams claims that after speaking with Parker, he was not concerned about the safety of the students and did not memorialize either the phone call or the letters in any way at that time. (Id. at 107-09).
Poly Prep and defendant Williams have denied Jackson's and Marino's claims. Indeed, despite acknowledging at least one meeting with Marino, Williams testified at his deposition that "the first time, and only time, that they -- anybody had identified themselves as somebody who had been molested in the school" (Am. Compl., Ex. S at 99), was in February 1991, when plaintiff David Hiltbrand ("Hiltbrand") sent a letter to then Headmaster Williams, identifying himself as a victim of abuse by Foglietta. Mr. Hiltbrand's 1991 letter to Williams alleged that in 1966, he was sexually abused by Foglietta on several occasions, and he identified other boys who were also abused by Foglietta. (Am. Compl. ¶¶ 96, 121, 237). At or around the same time that Poly Prep received Hiltbrand's 1991 letter, an anonymous letter, also alleging sexual abuse by Foglietta, was placed in faculty mailboxes. (Am. Compl., Ex. S at 122-126). Williams conceded that this letter was brought to his attention by another faculty member. (Id. at 126).
Mr. Hiltbrand alleges that he never received a written response from Mr. Williams to his 1991 letter. (Mulhearn Decl.,*fn6 Ex. C*fn7 ). Instead, according to Mr. Hiltbrand, he subsequently contacted Mr. Williams by telephone. Plaintiffs allege that during that telephone conversation, Williams told Hiltbrand that other complaints had been made against Foglietta and that Williams suspected that they might be true. (Id.; Am. Compl. ¶ 96). However, according to Hiltbrand, Williams allegedly told him that Hiltbrand was the first individual to actually come forward and identify himself, failing to mention the earlier reports of Jackson and Marino. (Am. Compl. ¶ 96). When Williams told Hiltbrand that Foglietta was still on staff at Poly Prep, Hiltbrand insisted that Foglietta be fired immediately. (Am. Compl. ¶ 98). According to plaintiffs, Williams assured Hiltbrand that the matter would be "dealt with." (Mulhearn Decl., Ex. C).
Thereafter, in 1991, Foglietta retired. Poly Prep announced Foglietta's departure in the 1991 fall/winter bi-annual alumni magazine. The announcement stated:
[F]our much loved people retired in June, 1991. They are: Philip Foglietta came to Poly in 1966. For twenty-five years, he taught physical education, but it is as football coach that he is remembered by so many Poly students. Assistant football coach for three years, he was named head coach in 1970. . . . and was named Coach of the Year twice by the Daily News. Everyone calls him "Coach" . . . . [One alumni said]: "Coach elicited enormous respect and loyalty from his players. Poly football was Coach! He had more influence over kids than anyone else at Poly because he worked hard to make you the best you could be."
(Am. Compl. ¶ 105, Ex. B*fn8 ). In addition, the school hosted an alumni event in Foglietta's honor at the Downtown Athletic Club shortly after he left the school. (Am. Compl. ¶ 102). After Foglietta's death in 1998 (Am. Compl. ¶ 31), Poly Prep established the Philip A. Foglietta Memorial Fund in his honor. (Id., Ex. S at 185).
In May 2002, Mr. Hiltbrand's lawyer, David Berger, Esq., sent a letter to defendant David
B. Harman, who was then Headmaster, reiterating the accusations that Hiltbrand had made in his 1991 letter to defendant Williams. (Mulhearn Decl., Ex. C). The Board of Trustees of Poly Prep asked Headmaster Williams to prepare a memorandum memorializing his recollection of the events that transpired in connection with Mr. Hiltbrand's February 1991 letter. (Pls.' Mem.*fn9 at 8-9). In the initial memorandum, dated May 27, 2002, Williams wrote: "At no time before or after David's [Hiltbrand] letter have I ever received a letter, or been told directly, from any alumnus or former student of Poly, that he had been assaulted by Philip Foglietta. The only awareness during the 20 years prior to 1991 came from an unsigned letter from a parent accusing Coach Foglietta of molesting students." (Mulhearn Decl., Ex. H*fn10 ). According to plaintiffs, the Board asked Williams to revise the memorandum, which he did, eliminating the reference to "assault" and "molesting." (Mulhearn Decl., Ex. I*fn11 ). The revised memoranda, dated June 6, 2002, stated: "The only reports I had received during my 20 years at Poly prior to David's letter were two unsigned letters from parents (possibly the same one) who reported that that [sic] children had been abused by Coach Foglietta." (Id.)
By letter dated June 6, 2002, Headmaster Harman responded to Mr. Berger's letter, stating in part: "Mr. Hiltbrand's letter of February 20, 1991, with the exception of two previously received anonymous letters, remains the only known accusation of Mr. Foglietta. No other charges, formal or informal, were ever made, as far as I have been able to determine." (Am. Compl. ¶ 113, Ex. D*fn12 ). In addition to this statement, Mr. Harman's letter also claimed that Foglietta had been removed involuntarily from his position at least in part because of the allegations of his sexual misconduct, in direct contradiction to Poly Prep's earlier public representations praising Foglietta upon his retirement from his position in June 1991. (Am. Compl. ¶¶ 26, 101, 105, 115). Regarding Mr. Williams' response to Hiltbrand's 1991 letter and telephone calls, Mr. Harman's letter states:
Mr. Williams recalls that he had received two anonymous letters, and he did confront Mr. Foglietta with one of the letters. . . . Upon receipt of Mr. Hiltbrand's letter, Mr. Williams quickly convened a meeting with the Athletic Director and several other coaches to question them about the accusations stated in Mr. Hiltbrand's letter. While those present acknowledged there had been rumors about Mr. Foglietta, Mr. Williams recalls, no one had direct or even second hand knowledge of any sexual abuse by Coach Foglietta. . . . Later, once Mr. Williams and Mr. Hiltbrand spoke by phone, again according to Mr. Williams, Mr. Hiltbrand agreed to a course of action proposed by Mr. Williams, Mr. Williams' clear impression from that conversation was that Mr. Hiltbrand did not want to "press the issue" and, in turn, have Mr. Williams fire Mr. Foglietta immediately for cause, as he explicitly offered to do.
Rather, Mr. Hiltbrand agreed that the involuntary removal of Mr. Foglietta in June, albeit in the form of an immediate retirement, from his responsibilities at Poly Prep was sufficient. (Id., Ex. D). Mr. Hiltbrand denies that he ever agreed to this, contending that he wanted Foglietta fired. (Am. Compl. ¶ 100).
In 2002, Headmaster Harman received correspondence from plaintiff Joseph Paggioli ("Paggioli"), who was a student at Poly Prep from 1970 until his graduation in 1976. (Id. ¶¶ 150-151, 154; Pls.' Mem. at 8). Paggioli alleged that Foglietta sexually abused him two or three times a week on school grounds and once in Paggioli's New Jersey home during the period from 1970 through 1974. (Am. Compl. ¶¶ 152, 154; Pls.' Mem. at 8). Upon making these allegations, Paggioli, through his lawyer, threatened to litigate the matter unless Poly Prep agreed to a settlement. (Pls.' Mem. at 8).
On or about September 12, 2002, in response to Hiltbrand's demand for an investigation into Foglietta's alleged sexual abuse and Paggioli's threats of litigation, Poly Prep hired Peter T. Sheridan ("Sheridan"), a sole practitioner and former Assistant United States Attorney, to conduct an investigation in collaboration with defendant Robert Herrmann of Menaker & Hermann LLP, Poly Prep's outside counsel. (Mulhearn Decl., Ex. E*fn13 ). Poly Prep instructed Mr. Sheridan to investigate the extent to which members of the faculty or administration were aware of sexual misconduct or abuse by Foglietta. (Id.) Defendant Harman appears to have prepared a list of people for Sheridan to interview and provided him with contact information for those individuals. (Eftekhari Decl.,*fn14 Ex. 2*fn15 at 204-05).
Defendants agree that Sheridan was retained in 2002 to gather information regarding the Poly Prep faculty's and administration's awareness, if any, of the alleged abuse. (Defs.' Mem.*fn16 at 3). However, defendants insist that the investigation was conducted so that "Poly Prep's counsel could provide legal advice to the school and its Board of Trustees concerning the threatened litigation and appropriate communications to the school community regarding the allegations." (Id.) Defendants further contend that Mr. Sheridan understood in 2002 that he was to conduct a series of interviews as "part of a preliminary investigation" in order to provide legal advice to Poly Prep. (Id.)
In the course of his investigation, Sheridan interviewed seven faculty and staff members, including former Headmaster Williams, Harlow Parker, Edward Ruck, Steven Andersen, Harry Petchesky, Ralph Dupee, a former faculty member and coach, and Joan Wright, a former Dean and Assistant Head of School. (Pls.' Mem. at 10; Defs.' Mem. at 4). Sheridan's notes from these interviews and from his investigation have since been lost or destroyed.
Approximately one month after Mr. Sheridan began his investigation, on October 28, 2002, Poly Prep first disclosed the allegations of abuse to the Poly Prep community in a letter sent to the school's alumni, stating that the school had "recently received credible allegations" of sexual abuse taking place at Poly Prep.*fn17 (Mulhearn Decl., Ex. M*fn18 ). The letter to alumni also stated that "[t]he Board [of Trustees] agreed to conduct an investigation, which is ongoing." (Id.) After this letter was distributed, other former students came forward, alleging that they had also been sexually abused at Poly Prep by Foglietta.
Following the filing of the Complaint in this action, defendants moved to dismiss all of plaintiffs' claims, arguing that plaintiffs have failed to allege the elements necessary to sustain a claim under RICO, and contending that plaintiffs' state law tort claims should be dismissed as barred by the statute of limitations. On May 25, 2010, this Court granted in part plaintiffs' motion for limited discovery to determine whether there was sufficient evidence to support a claim of equitable estoppel that could defeat defendants' statute of limitations defense.
Based on that limited discovery, plaintiffs moved for sanctions for defendants' alleged spoliation of evidence. Included among the evidence allegedly spoliated were the two anonymous letters received by Williams in the 1970s, the letter placed in the faculty mailboxes, and Sheridan's notes of his investigation. By Order dated April 13, 2011, the Court granted plaintiffs' request for certain additional discovery to address the spoliation of evidence.
Having now obtained that additional discovery, plaintiffs seek discovery of certain documents for which the defendants have asserted a privilege and seek further sanctions in the form of entry of a judgment in plaintiffs' favor. Both motions are based on plaintiffs' contention that the defendants had knowledge of Foglietta's abuse as early as the 1970s but turned a blind eye to the allegations and failed to act because Foglietta and his role as coach of Poly Prep's prestigious football team were seen as assets to the school. Plaintiffs allege that not only did the school and its administrators take steps to cover up and conceal Foglietta's criminal conduct and the allegations of sexual abuse, but that once the allegations threatened to become public, certain school administrators allegedly engaged in a pattern of activity deliberately designed to protect the school and prevent victims of Foglietta's abuse from placing blame on the school. In addition to the loss or deliberate destruction of critical documents, the school is alleged to have initiated an investigation that was carefully cabined through the school's suggestions as to witnesses and allegedly terminated prematurely in an effort to conceal the extent of the school's knowledge of the allegations. Plaintiffs allege that as part of this investigation, the school sent misleading letters to alumni designed to discourage witnesses and victims from coming forward and pursuing their claims. Plaintiffs contend that there is probable cause to believe that documents for which defendants have claimed a privilege were communications in furtherance of this fraudulent cover-up and therefore should be disclosed.
Plaintiffs further contend that this pattern of fraudulent activity and efforts to cover up the extent of the school's knowledge have continued throughout this litigation in an effort on the part of defendants to prevent plaintiffs from establishing their equitable estoppel arguments. Among the conduct cited by plaintiffs to support their claim that defendants have committed fraud on this Court is the lies allegedly told by various witnesses during their depositions and the creation of or offering of inaccurate or false documents in lieu of documents that have been lost or destroyed.
Having reviewed the evidence and considered the arguments of the parties as set forth below, the Court finds that plaintiffs have provided a sufficient factual basis to suspect that prior to the filing of this case, there was a period of time in which the school and/or certain administrators may have tried to cover up Foglietta's crimes and conceal the school's knowledge and that counsel may have been consulted or may have given advice that furthered the cover-up. Under these circumstances, an in camera review is required to determine if the requested documents fall within the crime-fraud exception. However, with respect to plaintiffs' claims of fraud on the court, the Court concludes that issues of credibility are paramount in making such a determination. Accordingly, an evidentiary hearing is required.
I. Plaintiffs' Motion for Additional Discovery
Plaintiffs move to compel the production of certain privileged documents contained in the
files of defendants and of Poly Prep's various attorneys based on the crime-fraud exception to the attorney-client and work product privileges. (Pls.' Mem. at 3).
A. The Crime-Fraud Exception
The crime-fraud exception to the attorney-client privilege "strips the privilege from attorney-client communications that 'relate to client communications in furtherance of contemplated or ongoing criminal or fraudulent conduct.'" In re Enron Corp., 349 B.R. 115, 127 (S.D.N.Y. 2006) (quoting John Doe, Inc. v. United States, 13 F.3d 633, 636 (2d Cir. 1994)). Thus, documents that "would otherwise be protected from disclosure by the attorney-client privilege are not protected if they relate to communications in furtherance of a crime or fraud." Duttle v. Bandler & Kass, 127 F.R.D. 46, 53 (S.D.N.Y. 1989); see also United States v. Richard Roe, Inc. ("In re Richard Roe, Inc."), 68 F.3d 38, 40 (2d Cir. 1995); Greenwood v. State of N.Y., No. 84 CV 9143, 1992 WL 203859, at *5 (S.D.N.Y. Aug. 10, 1992). The purpose of the crime/fraud exception to the privilege is to "assure that the 'seal of secrecy' between lawyer and client does not extend to communications 'made for the purpose of getting advice for the commission of a fraud' or crime." United States v. Zolin, 491 U.S. 554, 563 (1989) (internal citations omitted); see also Maine v. Moulton, 474 U.S. 159, 189 (1985) (stating "[t]he privilege takes flight if the relation [between attorney and client] is abused. A client who consults an attorney for advice that will serve him in the commission of a fraud will have no help from the law. He must let the truth be told").
There are two prerequisites for the exception to apply: (1) "'there must be a reasonable basis to suspect the perpetration or attempted perpetration of a crime or fraud;'" and (2) the communications must be in furtherance of that crime or fraud. In re Enron Corp., 349 B.R. at 127 (quoting Ivers v. Keene Corp. ("In re Bairnco Corp. Sec. Litig."), 148 F.R.D. 91, 100 (S.D.N.Y. 1993)). With respect to first prong of the test, there must be a showing that the client "was engaged in planning a fraudulent scheme when seeking advice from counsel or attempted fraud after receiving the benefit of counsel's work." Id. (citations omitted). To satisfy the second prong, there must be a showing that the "communications reasonably relate to the subject matter of the possible violations." In re Bairnco Corp. Sec. Litig., 148 F.R.D. at 100 (citations omitted).
A litigant seeking disclosure need only show that there is "probable cause to believe" that a fraud or a crime has been committed or attempted and that the communications sought to be disclosed were in furtherance of that crime or fraud. In re Richard Roe, 68 F.3d at 40; Duttle v. Bandler & Kass, 127 F.R.D. at 53 (citing In re Grand Jury Subpoenas Duces Tecum, 798 F.2d 32, 34 (2d Cir. 1986); In re John Doe Corp., 675 F.2d 482, 491, n. 7 (2d Cir. 1982)). "[I]f a prudent person [has] a reasonable basis to suspect the perpetration or attempted perpetration of a crime or fraud, and that the communications were in furtherance thereof," In re Grand Jury Subpoena Duces Tecum, Dated Sept. 15, 1983, 731 F.2d 1032, 1039 (2d Cir. 1984), then the burden has been satisfied and the documents are subject to disclosure. Duttle v. Bandler & Kass, 127 F.R.D. at 53; see also Greenwood v. State of N.Y., 1992 WL 203859, at *5 (holding that "this standard 'require[s] that a prudent person have a reasonable basis to suspect the perpetration or attempted perpetration of a crime or fraud, and that the communications were in furtherance thereof'") (citation omitted).
The fraud or crime need not be completed successfully in order for this exception to apply; an attempt or contemplated fraudulent activity is sufficient to trigger the exception to the privilege. See In re Grand Jury Subpoena Duces Tecum, Dated Sept. 15, 1983, 731 F.2d at 1039; Duttle v. Bandler & Kass, 127 F.R.D. at 53. However, once the fraudulent conduct is no longer ongoing, communications rendered in the course of giving legal advice to a client are protected by the privilege; "communications with respect to advice as to past or completed frauds are within the privilege." In re Grand Jury Subpoena Duces Tecum, Dated Sept. 15, 1983, 731 F.2d at 1041; see also Duttle v. Bandler & Kass, 127 F.R.D. at 53 (stating "when fraudulent or criminal conduct is no longer ongoing, communications related to legitimate attempts to provide legal defense to the alleged perpetrators are immune from discovery").
In addition to demonstrating probable cause that a crime or fraud has been committed, the party seeking disclosure must establish a "'purposeful nexus'" between the criminal or fraudulent activity and the communications sought to be disclosed. Duttle v. Bandler & Kass, 127 F.R.D. at 53 (citing In re Grand Jury Subpoenas Duces Tecum, 798 F.2d at 34). Thus, "[o]nly if the attorney-client communication is 'reasonably relate(d)' to the crime or fraud will the privilege be overridden." Id. at 56 (citing In re Sealed Case, 676 F.2d 793, 815 (D.C. Cir. 1982)).
The majority of courts have suggested that the crime/fraud exception applies only where the client's objective in communicating with his attorney is furthering the client's fraud. See, e.g., In re Grand Jury Subpoenas Duces Tecum, Dated Sept. 15, 1983, 731 F.2d at 1039 (holding that the crime/fraud exception applies only where there is "probable cause to believe that a crime or fraud had been committed and that the communications [with counsel] were in furtherance thereof"); see also In re Richard Roe, 68 F.3d at 40, 41 (holding that the exception only applies where the documents or communications were "intended in some way to facilitate or to conceal the criminal activity;" "it is not sufficient that the documents provide relevant evidence of the fraud"). However, other courts have held that "legal advice that furthers a fraudulent goal is not privileged, regardless of the innocence of the client seeking the advice." Duttle v. Bandler & Kass, 127 F.R.D. at 56; see also In re Sealed Case, 754 F.2d 395, 402 (D.C. Cir. 1985) (stating that the party seeking disclosure "is not required to make a specific showing of the client's intent in consulting the attorney").
Moreover, it is clear that the exception applies "even if the attorney is unaware that his advice is sought in furtherance of a crime or fraud." Avramides v. First Nat'l Bank of Maryland, No. 87 Civ. 5732, 1997 WL 68559, at *1 (S.D.N.Y. Feb. 19, 1997). Thus, the courts have made it clear that the "intent of the attorney is irrelevant; a communication relating to advice innocently provided by a lawyer loses its privileged status if used by the client in furtherance of crime or fraud." Duttle v. Bandler & Kass, 127 F.R.D. at 53 (citing In re Grand Jury Proceedings, 604 F.2d 798, 802 (3d Cir. 1979); United States v. Loften, 518 F. Supp. 839, 848 (S.D.N.Y. 1981)). Similarly, the "purported innocence of [defendant's] personnel is irrelevant as long as the legal advice they were seeking was nevertheless advancing the fraudulent activity."
In United States v. Zolin, the Court established the standard for dealing with claims under the crime-fraud exception, setting forth a two-step procedure for determining when to engage in an in camera review of the documents. 491 U.S. at 572; see also Avramides v. First Nat'l Bank of Maryland, 1997 WL 68559, at *1. First, "'the judge should require a showing of a factual basis adequate to support a good faith belief by a reasonable person' that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies." United States v. Zolin, 491 U.S. at 572. "Once that showing is made, the decision whether to engage in in camera review rests in the sound discretion of the district court." Id. (noting that the judge should consider the volume of the materials the court has been asked to review, the relative importance to the case of the alleged privileged information, and the likelihood that the evidence produced through in camera review, together with other available evidence, will establish that the crime-fraud exception does apply).
Courts following the holding in United States v. Zolin have held that in camera review is an appropriate means for the court to determine whether allegedly privileged communications fall within the exception. See, e.g., Avramides v. First Nat'l Bank of Maryland, 1997 WL 68559, at *1 (ordering the documents produced to the court for in camera review based on the court's finding of "'a factual basis adequate to support a good faith belief by a reasonable person' that the requested documents may reveal that the crime-fraud exception applies"); Greenwood v. State of N.Y., 1992 WL 203859, at *5. After reviewing the documents in camera, the court must determine whether the two prongs of the test for the crime/fraud exception have been met.
Avramides v. First Nat'l Bank of Maryland, 1997 WL 68559, at *2. In Avramides v. First National Bank of Maryland, the court ordered production of documents based on the crime/fraud exception upon finding that (1) there was probable cause to believe that a fraud on the court was perpetrated, and (2) there was probable cause to believe that the client communications or attorney work product were intended to facilitate or conceal the fraud and in fact were in furtherance of the fraud. 1997 WL 68559, at *2.
In Duttle v. Bandler & Kass, the court found several categories of documents involving communications with counsel not to be privileged in light of a fraudulent investment scheme. Among these were (1) communications between the corporation and counsel regarding its sales staff because the salesmen were being used as instrumentalities of the fraud; (2) communications with counsel regarding licenses to continue trading because such advice advanced the fraudulent activity; and (3) efforts at cover-up, including legal advice in an effort to shield the company from further inquiry. 127 F.R.D. at 54. The court noted that "[c]ommunications concerning litigation designed to defend [the company] against charges of fraud would normally be privileged. However, when those communications are themselves used to subvert the judicial process, the privilege is lost." Id. (citing In re Sealed Case, 754 F.2d at 400-01 (holding that the destruction of documents in litigation furthers fraud)).
Similarly, the "[u]se of the fact of an investigation to allay the concerns of third parties about possible criminal acts, to create the appearance of compliance with laws requiring disclosure, or to cover up a crime disclosed through a protected communication in the course of an investigation will cause the corporation to lose the privilege." Id. at 55 (citing In re John Doe Corp., 675 F.2d at 492). In Greenwood v. State of N.Y., the court found that a disciplinary proceeding that was "part of an effort to 'cover up' the responsibility of others for a patient's death. . . . could constitute probable cause to believe that defendants had committed a crime or fraud and that the communications and other materials in the file of the attorney who prosecuted the disciplinary proceeding were made in furtherance of the crime or fraud." 1992 WL 203859, at *5-6.
B. Plaintiffs' Claims of Fraud
Plaintiffs present a number of arguments that they allege demonstrate that the defendants
engaged in an effort to cover up the criminal activities of Foglietta, and to mislead alumni and potential victims into believing that the school was not aware of his conduct.
1. Sheridan Investigation
Plaintiffs assert that Mr. Sheridan's investigation was a sham "designed to cover up defendants' prolonged and ongoing fraud." (Pls.' Mem. at 8). They cite to a number of factors that lead them to this conclusion. First, plaintiffs note that Mr. Sheridan was never told of the two conflicting memoranda prepared by Headmaster Williams in 2002. (Id. at 10). Plaintiffs also claim that defendants failed to identify obvious potential witnesses, and withheld other key facts from Mr. Sheridan, including: (1) that Bart Moroney and Harry Barnieri, two assistant football coaches who worked with Foglietta, were still on staff; (2) that Michael Junsch, Hiltbrand's classmate and a Poly Prep coach since 1975, was on staff; and (3) that James Esposito, an assistant football coach under Foglietta, was also available to be interviewed. (Id. at 11-12).
Plaintiffs also allege that defendant Herrmann, who was Poly Prep's counsel and Mr. Sheridan's principal liaison with the school, selectively determined who Sheridan should interview. Plaintiffs allege that the individuals chosen for Sheridan to interview -- Steven Andersen, Harlow Parker, Edward Ruck, Ralph Dupee, Joan Wright,*fn19 William Williams, Poly Prep Headmaster from 1971 to 2000, Poly Prep's then Headmaster, David Harman, and Harry Petchesky, Esq., a member of the Poly Prep Board -- were "carefully cherry-picked . . . Poly Prep loyalists [who] would stick to the script that no one at Poly Prep had any knowledge of allegations against Foglietta prior to Hiltbrand's February 1991 letter." (Id. at 10-11). In addition, the faculty and high level administrators were never told of Mr. Sheridan's investigation, including the then head of the Middle School, Lawrence Patton. (Id.) ...