In re M & L Business Mach. Co., Inc.
| Decision Date | 03 November 1993 |
| Docket Number | Civ. A. No. 91-K-1065,91-K-2204. Bankruptcy No. 90-15491 CEM. |
| Parties | In re M & L BUSINESS MACHINE COMPANY, INC., Debtor. Christine J. JOBIN, Plaintiff, v. BANK OF BOULDER, et al., Defendants. Richard J. DEMMITT, Plaintiff, v. BANK OF BOULDER and Christine J. Jobin, Defendants. |
| Court | U.S. District Court — District of Colorado |
Joseph C. French, Boulder, CO, for Bank of Boulder.
Christine J. Jobin, pro se.
Martin A. Bloom, Bloom Murr & Accomazzo, Denver, CO, for Demmitt.
This matter is before me on the Bank of Boulder's motion to permit the filing of exhibits under seal and motion for protective order. The Bank is a defendant in two adversary proceedings, one brought by Christine J. Jobin, trustee for the estate of M & L Business Machines, Inc. ("Trustee") and the other by Richard J. Demmitt, an investor in M & L. In its motion for protective order, the Bank argues that two letters written by counsel for the Bank and three memoranda written by former employees of the Bank addressed to counsel are protected by the attorney-client and work product privileges. The Bank requests leave to file these and related documents under seal. For the reasons stated below, I grant the motions.
M & L Business Machines Company, Inc. filed its Chapter 7 bankruptcy petition on October 1, 1990. M & L converted its case to a Chapter 11 reorganization and, on December 18, 1990, the Trustee was appointed. On September 26, 1991, she reconverted the case to a Chapter 7 liquidation after learning that much of M & L's inventory consisted of boxes of bricks and dirt. Since that time, the Trustee has commenced over 500 adversary proceedings seeking to recover assets for the benefit of the estate.
In early 1991, M & L and its principals and affiliates became the target of a criminal investigation. During the months preceding M & L's bankruptcy, the Bank handled several of M & L's accounts. By letter agreement dated May 6, 1991 (the "Letter Agreement"), the Bank agreed to provide the U.S. Attorney with certain information in its records relevant to the government's investigation. The Bank's cooperation was expressly made subject to the requirement that any information provided under the Letter Agreement be treated as privileged, subject to protection under Fed.R.Crim.P. 16(a)(2) and not be disseminated except as required under federal law or the rules of criminal procedure. After being presented this and other information, a grand jury issued criminal indictments against a number of M & L principals, agents and affiliates in Criminal Case No. 92-CR-075 (the "Criminal Case").
On October 28, 1992, the Trustee moved to examine and copy all records presented to the grand jury in the Criminal Case in connection with another adversary proceeding, Civil Action No. 92-K-1467, brought against the Resolution Trust Corporation (RTC). On November 23, 1992, a magistrate judge denied the motion and directed the Trustee to subpoena the U.S. Attorney for the production of the grand jury files. She did so on November 25, 1992. The U.S. Attorney moved to quash the subpoena. The magistrate judge denied the motion to quash on December 18, 1992. Due to confusion over the scope of the magistrate's order, the Trustee agreed to seek only those documents which the RTC had provided to the grand jury. Shortly thereafter, the Trustee then moved in the Criminal Case for access to all of the grand jury files. On January 29, 1993, the court in the Criminal Case granted the Trustee's motion. The Bank did not receive notice or otherwise participate in the proceedings concerning the Trustee's access to the grand jury files.
On March 12, 1991, the Trustee commenced the instant adversary proceeding against the Bank seeking to recover preferential transfers. She later amended her complaint to add claims for fraudulent transfers, post-petition transfers and equitable subordination. On February and March 1993, the Trustee served written discovery on the Bank which included questions about two letters ("the Letters") and three memoranda (the "Memoranda") which the Bank now claims are privileged. The Letters were written by counsel for the Bank to the Bank's vice-president for human resources and concerned the Bank's response to a claim for unemployment insurance benefits by a former bank officer who had supervised the M & L account. The Memoranda were drafted, at the request of counsel for the Bank, by two former officers and one former employee and describe these individuals' dealings with M & L.
The Trustee obtained the Letters and Memoranda in February 1993 when, having been granted permission by the court in the Criminal Case, she reviewed all of the grand jury files. These documents were contained in several boxes labeled "Personnel Files," which also included other background information on the three employees who had written the Memoranda. On July 29, 1993, the Bank filed the instant motion for protective order, asserting that the Letters and Memoranda are protected from discovery by the attorney-client privilege and work product immunity.
The Bank first requests my permission to file under seal certain exhibits connected with its motion under seal in order to protect their privileged nature and to avoid compromising the ongoing investigation in the Criminal Case. These exhibits include the Letter Agreement, the Letters, the Memoranda and one additional letter (for which the Bank makes no claim of privilege) sent to the Colorado Department of Labor and Employment. The Bank argues that the Trustee will not be prejudiced by this request because she has already gained access to the Letters and Memoranda. The Bank acknowledges that the Trustee has not obtained the Letter Agreement and therefore suggests I permit her to view it subject to the limitation that its contents not be disclosed to any other party.
The Trustee does not specifically oppose this motion, but states in her response that she believes the Bank provided the Letters and the Memoranda under a grand jury subpoena and not under the Letter Agreement. Because the U.S. Attorney has been unwilling to confirm her suspicions, the Trustee represents that she will file, on September 2, 1993, a motion in the Criminal Case for authority to review any subpoenas directed to the bank as well as the Letter Agreement. She further adds that her response to the Bank's motion for protective order is preliminary at this point because she has been unable to review these documents.
I grant the Bank's motion for leave to file documents under seal to the extent that I will review them in camera. Since, with the exception of the Letter Agreement, the Trustee already has access to these documents, I question the need to make them part of the court's record by filing them under seal. Whether the Trustee should be permitted to view the Letter Agreement is a matter that must be determined by the court in the Criminal Case, since it is part of the record there. I note, however, that on its face, the Letter Agreement supports the Bank's contention that it provided information to the U.S. Attorney to effectuate a criminal referral and not because it was compelled by a grand jury subpoena. The Trustee has yet to provide any evidence to the contrary. Therefore, I assume for the purposes of the Bank's motion for protective order that the Letters and Memoranda were provided under the Letter Agreement and not by subpoena. If the Trustee obtains permission in the Criminal Case to review the Letter Agreement and the subpoenas, if any, and, based on that review, believes this assumption to be incorrect, she may move for modification of this order to the extent my reasoning herein is affected by that assumption.
In its motion for protective order, the Bank first argues that the Letters and Memoranda are privileged attorney-client communications under Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981). In Upjohn, the Supreme Court held that corporate counsel for Upjohn was not required to divulge files underlying an internal investigation into improper payments by a subsidiary, the results of which were voluntarily disclosed to the SEC. Reversing the court of appeals' decision that the files were not protected to the extent they contained interviews of personnel not within Upjohn's "control group," the court noted that the attorney-client privilege "exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice." Id. at 390, 101 S.Ct. at 683. Thus, the Court reasoned, the privilege can exist between counsel and middle or lower-level employees if those employees "would have the relevant information needed by corporate counsel if he is adequately to advise the client with respect to such actual or potential difficulties." Id. at 391, 101 S.Ct. at 683.
With these concepts in mind, clearly the Memoranda fall within the attorney-client privilege. Like the investigation in Upjohn, the Memoranda were produced at the request of the Bank's counsel to determine the nature and extent of the Bank's involvement in any potentially improper activities of M & L. See id. at 394, 101 S.Ct. at 685; First Chicago Int'l v. United Exchange Co., 125 F.R.D. 55, 56-58 (S.D.N.Y.1989) (). There is even less question that the Letters are subject to the...
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...substantial equivalent by other means." Carbajal v. Warner, 2015 WL 1945129, at *3 (D. Colo. 2015), quoting In re M & L Bus. Mach. Co., Inc., 161 B.R. 689, 693 (D.Colo.1993). The steps a defendant must take are as follows:Once a court has determined that the law enforcement privilege applie......