155 F.R.D. 195 (N.D.Cal. 1994), C 91-20377 RMW (EAI), Samuels v. Mitchell
|Docket Nº:||C 91-20377 RMW (EAI).|
|Citation:||155 F.R.D. 195|
|Opinion Judge:||INFANTE, United States Magistrate Judge.|
|Party Name:||Sidney SAMUELS et al., Plaintiffs, v. David T. MITCHELL et al., Defendants.|
|Attorney:||Robert Kaplan, Jonathan Levine, of Kaplan & Kilsheimer, Blake Harper, of Milberg, Weiss, Bershad, Hynes & Lerach, New York City, for plaintiffs. Tim Scott, Aileen Arrieta, James Jacobs, of Wilson, Sonsini, Goodrich & Rosati, Palo Alto, CA, for defendants.|
|Case Date:||April 12, 1994|
|Court:||United States Bankruptcy Courts, Ninth Circuit|
Plaintiffs moved to compel production of documents withheld by defendants. The District Court, Infante, United States Magistrate Judge, held that: (1) accounting firm did not act as " testifying expert," for purposes of rule governing discovery respecting trial preparation of experts, during defendant's arbitration; (2) documents withheld by defendants were subject to rule governing work-product doctrine, rather than rule governing discovery of trial preparation by experts; and (3) defendants did not waive work-product privilege respecting documents they withheld from discovery by disclosing documents to defendant's accounting firm.
Motion granted in part and denied in part.
ORDER RE IN CAMERA REVIEW OF DOCUMENTS WITHHELD BY SEAGATE
Plaintiffs' Motion to Compel Production of Withheld Documents was heard on January 24, 1994. Defendants contend that the documents plaintiffs seek are protected from disclosure by the attorney-client privilege or the work-product doctrine. Plaintiffs generally describe the withheld documents as: documents disclosed to third parties; documents created for a business purpose; documents prepared by Seagate that were not transmitted to any attorney; and documents concerning disputes with Control Data that were sent to, received from, or generated by third parties.
Pursuant to the court's order of January 24, 1994, defendants submitted copies of the contested documents to the court for in camera inspection. The contested documents are described in privilege logs which include the following information: (a) the date the document was generated, prepared, or dated; (b) the attorney involved; (c) the client involved; (d) the author; (e) the recipient; (f) persons or identities known to have been furnished or informed of the substance of the document; (g) the nature of the document and the subject matter; and (h) the privilege asserted. Defendants also submitted the declaration of James A. DiBoise, counsel for Seagate, in support of their claims of privilege.
Plaintiffs challenge most of defendants' claims of privilege on the grounds that the purportedly privileged documents were disclosed to third parties or prepared for a business purpose rather than in anticipation of litigation. These challenges are readily resolved by reviewing the documents in camera and applying basic principles of the attorney-client privilege and the work product doctrine.
However, plaintiffs' challenges to a particular group of documents prepared by Seagate or Seagate's outside counsel in connection with a private arbitration proceeding (the " Arbitration" ) between Seagate and a second company, Control Data, warrant further consideration. This latter group of Arbitration documents generally relate to Seagate's acquisition of Control Data, and were exchanged among Seagate, outside counsel, and accounting firm Ernst & Young. During the Arbitration hearing, Ernst & Young appeared to respond to the neutral arbitrator's questions regarding Seagate's written submissions, but was not sworn in as a witness.1 According to Mr. DiBoise, it was necessary for his law firm to consult with independent expert Ernst & Young regarding issues in the arbitration and to prepare Seagate's objections to Control Data's balance sheet.2
Pursuant to Rule 26(b)(1), Fed.R.Civ.P., parties may obtain discovery of all matters, not privileged, relevant to the subject matter of the litigation and reasonably calculated to lead to the discovery of admissible evidence. As with all evidentiary privileges, the burden of demonstrating the existence of an evidentiary privilege rests on the party asserting the privilege. See e.g. In re Horowitz, 482 F.2d 72 (2nd Cir.1973).
A. Attorney-Client Privilege
Plaintiffs essentially assert that Seagate waived its claim of attorney-client privilege
as to the Arbitration documents by disclosing the documents to a third party, Ernst & Young. However, several courts have held that the attorney-client privilege extends to communications with " one employed to assist the lawyer in the rendition of professional legal services." See e.g., Linde Thomson Langworthy Kohn & Van Dyke v. RTC, 5 F.3d 1508, 1514 (D.C.Cir.1993). A line of cases beginning with United States v. Kovel, 296 F.2d 918, 922 (2nd Cir.1961), has recognized that the attorney-client privilege is not automatically waived if an otherwise privileged document is disclosed to a third party. In Kovel, an accountant was employed by a law firm specializing in tax law. A grand jury investigating one of the law firm's clients subpoenaed the accountant to appear, but the accountant refused to answer any questions regarding communications by the client to the accountant. The court analogized an accountant to a foreign language interpreter, stating:
... we can see no significant difference between a case where the attorney sends a client speaking a foreign language to an interpreter to make a literal translation of the client's story; a second where the attorney, himself having some little knowledge of the foreign tongue, has a more knowledgeable...
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