Export Development Canada v. East Coast Power & Gas, LLC

Background

Export Development Canada (EDC) moved to compel East Coast Power & Gas, LLC (East Coast) to produce a document identified on East Coast’s privilege log as a “Draft Attorney Memorandum For Legal Analysis.” East Coast claimed that the document was protected by attorney-client privilege, which generally protects confidential communications made for obtaining or providing legal advice, and by the work-product doctrine, which can protect materials prepared for litigation.

The court reviewed the document privately, the parties’ briefing and exhibits, correspondence about the document, and a declaration from Michael Kowal, East Coast’s in-house counsel. The court also considered a discovery ruling from a state-court case involving East Coast and another creditor. In that earlier matter, a special master had found that the document was not protected by attorney-client privilege or work-product protection.

Court’s Analysis

The court found that East Coast’s privilege-log description was misleading or, at minimum, failed to provide the general subject matter required by Local Rule 26.2(a)(2)(A). The court also concluded that the document should be produced for several reasons.

First, the court characterized the document as a business analysis of the reasons for East Coast’s financial collapse. It was based on a forensic investigation by nonlawyers Jay Corn and Rachel Baier. East Coast had identified only Corn and Baier, and not Kowal, in response to an interrogatory asking who participated in the investigation. The court found that this response conflicted with Kowal’s statement that the investigation was conducted by him.

Second, the court found that the document contained no legal advice, discussion, or analysis. The risks discussed in the document were financial rather than legal, and the document was prepared for the stated purpose of winding down East Coast.

Third, the court found that East Coast had not established work-product protection. Although Kowal stated that he prepared a factual analysis of accounting documents to assess East Coast’s current and future legal exposure to creditor claims, the court found no legal analysis, reference to an expected legal case, or other sign that the document had been prepared for litigation with creditors. The court relied instead on East Coast’s publicly filed counterclaim, which stated that East Coast began a forensic investigation after discovering severe financial problems and that the investigation revealed alleged misconduct by East Coast’s former chief executive officer. The court concluded that, if the document had been prepared in anticipation of litigation, the relevant litigation was the federal case brought by the former chief executive officer, not potential creditor litigation.

The court found East Coast’s reliance on Appellate Advocates v. New York Department of Corrections and Community Supervision misplaced because that case involved documents containing counsel’s legal analysis and advice, which the court found absent here. The court also stated that Kowal’s declaration did not justify a different result from the special master’s earlier finding.

Ruling

Judge Robert W. Lehrburger ordered East Coast to produce the document. The handwritten comments on the document were not to be redacted. The court stated that the parties’ remaining arguments were either meritless or moot.