Navient Sols., LLC v. Law Offices of Jeffrey Lohman, P.C.

• Decision Date: 11 March 2020
• Docket Number: Civil Action No. 1:19-cv-461 (LMB/TCB)
• Court: U.S. District Court — Eastern District of Virginia
• Parties: NAVIENT SOLUTIONS, LLC, Plaintiff, v. THE LAW OFFICES OF JEFFREY LOHMAN, P.C., et al., Defendants.

NAVIENT SOLUTIONS, LLC, Plaintiff, v. THE LAW OFFICES OF JEFFREY LOHMAN, P.C., et al., Defendants.

Civil Action No. 1:19-cv-461 (LMB/TCB)

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

March 11, 2020

MEMORANDUM OPINION AND ORDER

THIS MATTER is before the Court on the Honorable Judge Brinkema's order (Dkt. 154) remanding Defendants The Law Offices of Jeffrey Lohman, P.C. and Jeffrey Lohman's (collectively, "Lohman") objection (Dkt. 136) to the undersigned, as well as Lohman's Motion to Strike Letter Not in Compliance with Local Rules (Dkt. 175). Because of this matter's procedural posture and Judge Brinkema's order, the undersigned construes Lohman's objection as a motion for reconsideration and will therefore rule on the issues raised before Judge Brinkema in the first instance. For the reasons articulated below, both motions are denied.

I. RELEVANT BACKGROUND AND PROCEDURAL POSTURE

A. The Litigation Generally

Plaintiff Navient Solutions, LLC ("Plaintiff"), a federal loan servicer, originally brought this action in April of 2019. (See Dkt. 1.) On December 13, 2019, Plaintiff filed a Second Amended Complaint bringing claims against eighteen defendants pursuant to the Racketeer Influenced and Corrupt Organizations Act ("RICO") and other common-law causes of action. (Dkt. 100.)

In short, Plaintiff alleges that the defendants operated a fraudulent scheme via mail and wire fraud to manufacture federal lawsuits under the Telephone Consumer Protection Act ("TCPA"). Defendants allegedly recruited student-debtors into signing up for a sham "debt-relief" program and told them to stop making loan payments to Plaintiff (despite the detrimental impact on their credit scores), pay the defendants instead, and follow a script to induce telephone calls from Plaintiff that would—and ultimately did—form the basis for claims under the TCPA. The attorney defendants within the scheme would ultimately file federal lawsuits or initiate arbitration proceedings to recover statutory penalties under the TCPA. In other words, Plaintiff alleges that the defendants manufactured lawsuits via a sham consumer-protection scheme to make money and fraudulently get student-debtors "out" of paying back their loans to Plaintiff. Defendants, on the other hand, assert they brought valid claims and represented student-debtor clients to remedy Plaintiff's TCPA violations.

Out of the named defendants, five are relevant here: (1) The Law Offices of Jeffrey Lohman, P.C., (2) Jeffrey Lohman; (3) Jeremy Branch; (4) Alyson Dykes, and (5) Ibrahim Muhtaseb.¹ As the name suggests, The Law Offices of Jeffrey Lohman, P.C. is a law firm. At the times relevant to this litigation, Jeffrey Lohman was the managing attorney at the firm. Defendant Branch is an attorney and a current employee (as far as the Court is aware) of Lohman's law firm. (See Dkt. 119 at 1.) Dykes and Muhtaseb are also attorneys and formeremployees of the law firm. (See id. at 2.) These attorney-defendants allegedly worked on or supervised the underlying TCPA matters giving rise to this litigation. (Dkt. 100 ¶¶ 13-16.)

Originally, the law firm of Woods, Smith, Henning & Berman LLP ("WSHB") represented these five defendants. Upon deciding there could be a conflict of interest between the law firm, Jeffrey Lohman, and the firm's other attorney-employees (Branch, Dykes, and Muhtaseb), the five Lohman Defendants decided to obtain separate counsel "on substantive matters." (Dkt. 166 at 7.) However, "for purposes of economic efficiency," WSHB would continue to represent the collective Lohman Defendants on discovery matters. (Id.) The parties apparently entered a "joint defense agreement" to this effect. (Id. at 8.) Accordingly, on November 21, 2019, Lohman's new counsel on substantive matters—Thomas F. Urban and Jeffrey Ernest Grell—entered a notice of appearance and pro hac vice motion, respectively. (Dkts. 72-73.) The Court granted Mr. Grell's pro hac vice motion and WSHB's motion to withdraw as counsel for Lohman. (Dkts. 74-76.)

B. Briefing, Arguments, and Procedural Background Regarding Plaintiff's Motion to Compel

Plaintiff's Motion. On December 13, 2019, Plaintiff filed a motion pursuant to Federal Rule of Civil Procedure 37, requesting that the Court enter an order "compelling production of all documents withheld by Defendants The Law Offices of Jeffrey Lohman, P.C., Jeffrey Lohman, Alyson Dykes, and Ibrahim Muhtaseb on the basis of the attorney-client privilege" ("AC privilege").² (Dkt. 90.) In discovery, Plaintiff requested that the collective Lohman Defendants produce communications and other documents that they exchanged with existing,former, or potential student-debtor clients broadly regarding:

• the consequences of defaulting on student loans serviced by Plaintiff;

• resolutions of debt-relief matters or TCPA claims; and

• the student-debtor client's satisfaction with the resolution of debt-relief matters or TCPA claims.

(See Dkt. 92 at 6.)

Lohman objected to these various discovery requests by stating: "These documents are protected by the attorney-client privilege and will not be produced."³ (See, e.g., Dkt. 93-1 at 106-08 (Exhibit H, The Law Offices of Jeffrey Lohman, P.C.'s Responses to Plaintiff's Requests for Production of Documents); Dkt. 93-1 at 122-24 (Exhibit I, Jeffrey Lohman's Responses to Plaintiff's Requests for Production of Documents).) Of relevance here, Plaintiff argued that the documents were discoverable and that the Court should compel their production under the crime-fraud exception to the AC privilege.

Defendants' Opposition. On December 18, 2019, Branch, Dykes, and Muhtaseb filed an opposition to Plaintiff's motion to compel. (Dkt. 106.) Apparently, because the collective Lohman Defendants believed this to be a discovery motion, WSHB—counsel for Branch, Dykes, and Muhtaseb on all matters, and then-counsel for Lohman on only discovery matters—was primarily responsible for opposing Plaintiff's motion to compel. The opposition brief included the following footnote: "Defendants Jeffrey Lohman and The Law Offices of Jeffrey Lohman join in this opposition. All defendants are collectively referred [to] as the 'Lohman Defendants.'" (Id. at 2 n.1.)

In responding to Plaintiff's crime-fraud exception argument, the collective Lohman Defendants argued that the crime-fraud exception to the AC privilege could not apply because Plaintiff had not alleged that the firm's clients gave information to the attorneys in furtherance of a crime or fraud. They also asserted that Plaintiff had not met its prima facie evidentiary burden to establish a crime or fraud. In sum, the collective Lohman Defendants argued that the crime-fraud exception did not apply because (1) the exception was legally inapplicable and (2) Plaintiff did not demonstrate sufficient facts to surpass its evidentiary burden.

The First Hearing and Order. After briefing, the parties appeared for a hearing before the undersigned on December 20, 2019. (See Dkt. 108.) On the same day, the undersigned entered an order (1) continuing the motion to compel until Friday, January 10, 2020; (2) requiring the parties to submit supplemental briefing by January 6, 2020; (3) ordering the collective Lohman Defendants to produce a finalized privilege log by December 30, 2019; and (4) requiring the collective Lohman Defendants to "submit a copy of the privilege log, a declaration as to why the documents are privileged, and the documents themselves for in camera review to the undersigned's chambers by Monday, January 6, 2020." (Dkt. 109.)

The Collective Lohman Defendants' Conflict. According to Lohman's latest filing before this Court, on December 27, 2019, "a substantial conflict arose between Lohman and WSHB." (Dkt. 166 at 8.) Purportedly, the collective Lohman Defendants terminated their joint defense agreement and responsibility for handling Lohman's discovery issues shifted from WSHB to Lohman's counsel, Mr. Urban and Mr. Grell.

Subsequent Communications with Counsel and Supplemental Briefing. In early January, through communications with counsel, the Court was made aware that Lohman's "new" counsel (for discovery matters) planned on producing a substantial number of documents that WSHB hadpreviously withheld on the basis of the AC privilege. Lohman's counsel indicated they needed time to produce the documents, but that the scope of Plaintiff's motion to compel would be significantly narrowed. After discussions with counsel for Lohman and Plaintiff, the Court postponed the January 10 hearing until January 17 in the interest of narrowing the dispute.

On January 6, pursuant to the Court's order, the parties submitted supplemental briefs updating the Court on the progress of document production and the motion to compel. The parties filed three briefs. (Dkts. 118-20.) First, Plaintiff's supplemental brief largely reiterated the arguments regarding the crime-fraud exception. Plaintiff further argued that because Lohman's privilege log was inadequate and contained documents that were not privileged at all, the Court should immediately order production of all relevant documents.⁴ Plaintiff lastly informed the Court that despite producing a privilege log, Lohman had yet to produce most of the promised documents. Second, Lohman's brief—after describing the collective Lohman Defendants' previous discovery production as unacceptable—informed the Court that Lohman was trying to produce documents as quickly as possible. (Dkt. 120.)⁵ Lohman's brief also reiterated the above argument that the crime-fraud exception did not apply. Finally, Branch, Dykes, and Muhtaseb's supplemental brief simply stated that as current or former employees of The Law Offices of Jeffrey Lohman, P.C., they "lack[ed] control over the documents" and therefore the Court could not compel them to produce the documents. (Dkt. 119 at 1-2.) Accordingly, Branch, Dykes, andMuhtaseb argued that the Court should deny Plaintiff's motion to compel as...