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Veleron Holding, B.V. v. BNP Paribas SA

United States District Court, S.D. New York

August 22, 2014

VELERON HOLDING, B. V. Plaintiff,
v.
BNP PARIBAS SA, et al., Defendants.

OPINION AND ORDER

RONALD L. ELLIS, Magistrate Judge.

Plaintiff Veleron Holding, B. V. ("Veleron") brings this action against Defendants Morgan Stanley, Morgan Stanley Capital Services, Inc., Morgan Stanley & Co., Incorporated, Morgan Stanley & Co. (together "Morgan Stanley") for securities fraud.[1] Before the Court is Morgan Stanley's request for an order to compel Veleron to produce documents concerning communications with foreign attorneys that it has withheld on the basis of attorney-client privilege and work product immunity. For the following reasons, Morgan Stanley's request is GRANTED.

I. BACKGROUND

Morgan Stanley claims that Veleron has improperly withheld documents concerning communications with individuals who appear to be Veleron's "in-house" or "outside" counsel based in foreign jurisdictions, specifically Russia and the Netherlands. (Def. Letter to the Court, June 26, 2014, at 1-2, Ex. A.) These documents were listed in Veleron's privilege log, which was produced on February 11, 2014. ( Id. at 1; Pl. Letter to the Court, July 3, 2014, at 1.) Morgan Stanley claims that Veleron did not state the source of law on which its privilege assertions were based or provide information on whether the attorneys were licensed to practice, and, if so, in which jurisdictions. ( Id. at 1-2.) Morgan Stanley wrote to Veleron on May 16, 2014, challenging Veleron's assertions of privilege in the documents at issue. (Def. Letter to the Court, June 26, 2014, at Ex. C.) Referring to the documents, Morgan Stanley asserted that "Russian law does not recognize attorney-client privilege or work product immunity for legal advice or work product provided by Russian-qualified in-house attorneys or unlicensed outside counsel, " and "the Netherlands does not recognize any attorney-client privilege or work product immunity for legal advice or work product provided by unlicensed attorneys." ( Id. ) Morgan Stanley additionally asserted that United States law has only limited protections for legal advice and work product provided by attorneys who are not admitted in any United States jurisdiction. ( Id. ) Morgan Stanley requested that Veleron provide information on 1) the sources of law on which its claim of privilege relied; and 2) information on whether the attorneys at issue were licensed, and if so, in which jurisdictions.

On May 22, 2014, Veleron objected to Morgan Stanley's request, arguing that such information was not required under either Federal Rule of Civil Procedure 26(b)(5) or Local Civil Rule 26.2, and Morgan Stanley's demand was improper because it was not made on a specific "document-by-document" basis. ( Id. at Ex. D.) On June 26, Morgan Stanley requested an order to compel Veleron to produce the documents at issue. (Docket No. 200.) Veleron objected on June 30, asserting that Morgan Stanley had failed to meet and confer with Veleron before requesting the order. (Docket No. 201.) In response, Morgan Stanley asserted that it had met and conferred with Veleron on April 25, 2014, and through its May 16, 2014 letter requesting additional information. (Docket No. 202.) On July 3, 2014, Veleron objected substantively to Morgan Stanley's request. (Docket No. 203.)

II. DISCUSSION

"[T]he burden is on a party claiming the protection of a privilege to establish those facts that are the essential elements of a privileged relationship." Von Bulow by Auersperg v. Von Bulow, 811 F.2d 136, 144 (2d Cir. 1987) (internal quotations omitted). Once an assertion of privilege is challenged, the withholding party must "submit evidence... establishing only the challenged elements of the applicable privilege or protection, with the ultimate burden of proof resting with the party asserting the privilege or protection." A.I.A. Holdings, SA. v. Lehman Bros., Inc ., 97-CV-4978 (LMM) (HBP), 2002 WL 31385824, at *6 (S.D.N.Y. Oct. 21, 2002), supplemented sub nom. A.I.A. Holdings v. Lehman Bros, Inc ., 97-CV-4978 (LMM) (HBP), 2002 WL 31556382 (S.D.N.Y. Nov. 15, 2002).

Morgan Stanley challenged Veleron's assertions of privilege in the documents at issue on May 16, 2014. (Def. Letter to the Court, June 26, 2014, at Ex. C.) Once Morgan Stanley challenged Veleron's claims of privilege, by asserting that Russian and Dutch law did not recognize attorney-client privilege or work product immunity for the attorney communications at issue, Veleron was required to submit evidence establishing the challenged elements of the privilege. A.I.A. Holdings, S.A. v. Lehman Bros., Inc., 2002 WL 31385824, at *6. Veleron failed to do so, and has thus failed to sustain the claim of privilege.

A. Morgan Stanley has satisfied its obligations.

Veleron argues that the Court must deny Morgan Stanley's request for an order to compel because Morgan Stanley failed to meet and confer with Veleron regarding the disputed documents. Morgan Stanley claims that it met and conferred with Veleron about the dispute on April 25, 2014, and that it referred to this meeting in its May 16, 2014 letter. (Def. Letter to the Court, July 1, 2014.) Morgan Stanley's May 16, 2014 letter stated: "As we have discussed during previous meet and confer conferences, the Privilege Log and its accompanying legend suggest that Veleron has withheld from production on the purported bases of attorney-client privilege and work product immunity a large number of communications that appear to have originated from foreign-qualified attorneys...." (Def. Letter the Court, June 26, 2014, Ex. C.) Veleron claims that although the Parties met and conferred on April 25, 2014 about other discovery issues, the Parties never substantively discussed this particular issue. (Pl. Letter to the Court, July 3, 2014, at n.2.)

Under Rule 37, a motion to compel must include "a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action." Fed.R.Civ.P. 37(a)(1). Courts have excused the meet-and-confer requirement "where temporal exigencies required speedy action and where efforts at informal compromise would have been clearly futile." Prescient Partners, L.P. v. Fieldcrest Cannon, Inc., 96-CV-7590 (DAB)(JCF), 1998 WL 67672, at *3 (S.D.N.Y. Feb. 18, 1998). Ordinarily, however a motion to compel must be denied where the parties have failed to meet and confer. Id.

The Court finds Morgan Stanley's assertion that the parties met and conferred to be credible. Based on the July 15, 2014 Telephone Conference, it is clear that any further discussions by the Parties would not have resolved the issue. The principle separating the Parties was not amenable to compromise: either the privilege applied or it did not. Veleron gave no indication that it would yield on its claim of privilege in the absence of a court order.

B. Morgan Stanley was not required to challenge the disputed documents on a document-by-document basis.

Veleron argues that Morgan Stanley was required to challenge the assertion of privilege by identifying each document that did not meet the elements of the privilege. This is incorrect, if a class of documents share a common characteristic, they may be challenged on the basis of that characteristic. This could include, for example, documents challenged because there is an assertion that the privilege was not applicable during a certain time period, or with respect to a certain individual, or because of any clearly defined criteria. Here, Morgan Stanley identified the categories of documents it was challenging in its May 16, 2014 letter as "communications that appear to have originated from foreign-qualified attorneys, including Russian in-house counsel and purported outside' counsel from Russia and the Netherlands." (Def. Letter to the Court, June 26, 2014, at Ex. C.) Morgan Stanley also attached to its letter a list of the individual attorneys for whom it sought licensure information. By identifying the documents both by individual attorney and generally by attorney status as foreign-qualified, in-house and outside counsel, Morgan Stanley provided sufficient information to notify Veleron which documents it was challenging. Requiring Morgan Stanley to identify each individual document would be unnecessarily time-consuming. ...


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