Laatz v. Zazzle, Inc.

Background

Nicky Laatz moved to compel Zazzle, Inc. to provide unredacted copies of 14 documents for in camera review, meaning private review by the court. The documents appeared on Zazzle’s privilege log and had been produced with redactions or withheld in full. Zazzle opposed the motion and relied on its privilege log and a declaration from outside counsel Thomas Nolan.

The disputed entries were divided into two groups. Laatz challenged Entries 5, 240, 254, 260, 273, 462, 611, and 663 because, in her view, Zazzle had not identified the attorney whose advice was reflected in or sought by the documents. She challenged Entries 1, 4, 181, 270, 271, and 272 based on her contention that the documents might show that Zazzle’s in-house counsel advised employees about conduct underlying her claims for fraudulent misrepresentation, fraudulent concealment, and promissory fraud.

Legal standard

Because the case involved federal-question jurisdiction, the court applied federal common law governing attorney-client privilege. That privilege generally protects confidential communications between attorneys and clients made for the purpose of giving or receiving legal advice. The party claiming privilege bears the burden of showing that the privilege applies, ordinarily through a privilege log or other evidence identifying the attorney and client, the nature of the document, its recipients, and its date.

A party challenging privilege may request in camera review. To obtain that review, the challenging party need only provide a factual basis for a reasonable, good-faith belief that examining the documents may reveal evidence that the privilege does not apply. This is a lower standard than proving that the privilege does not apply or that the crime-fraud exception applies. The court considers factors including the amount of material, its relevance, and the likelihood that review will reveal useful evidence.

Court’s analysis

For Entries 5, 240, 254, 260, 273, 462, 611, and 663, the court found that Zazzle’s failure to identify the attorney involved meant that Zazzle had not adequately made an initial showing that attorney-client privilege applied. The court also noted that the documents might contain nonprivileged business communications mixed with legal advice, and that the privilege log did not describe the subject matter in enough detail. The small number of redactions and the likely relevance of the communications supported in camera review.

For Entries 1, 4, 181, 270, 271, and 272, the court considered Laatz’s argument under the crime-fraud exception. That exception can remove attorney-client protection when legal advice is sought or used to further a criminal or fraudulent scheme. The court emphasized that Laatz did not need to prove that the exception applied at this stage. She needed only to show that review might produce evidence supporting the exception.

The court found that Laatz met that lower standard. It relied on her reference to Zazzle’s own documents and interactions with her, the timing and context of the redacted communications, and indications that in-house counsel Liana Larson may have provided legal advice to Zazzle executives and employees. The court also noted that the presiding judge had previously found Laatz’s three fraud claims plausible and denied Zazzle’s motion to dismiss those claims.

Order

The court granted Laatz’s request for in camera review of all 14 entries: 1, 4, 5, 181, 240, 254, 260, 270, 271, 272, 273, 462, 611, and 663. Zazzle was ordered to submit unredacted copies to Judge DeMarchi’s chambers by August 22, 2024, with the privilege-log entry identified and the material Zazzle claimed should remain redacted or withheld clearly marked. The court did not yet determine whether the material was privileged or whether the crime-fraud exception applied. It stated that it would issue further directions after completing its review, if appropriate.