Callahan v. HSBC Holdings plc

Background

Stephen Callahan moved to compel discovery, asking the court to order HSBC Securities (USA) Inc. to produce documents withheld as protected by attorney-client privilege and the attorney work-product doctrine. The dispute concerned HSBC’s investigation of Callahan’s trading after a CME inquiry and HSBC’s stated reliance on that investigation as the factual basis for suspending and terminating him. Callahan argued that HSBC had placed the privileged material “at issue” and therefore had implicitly waived the privilege by using it as both a shield and a sword against his retaliation theory.

Privilege and Work Product

The court explained that an implied waiver may occur when fairness requires disclosure of protected communications, including when a party relies on legal advice or asserts a good-faith belief that its conduct was lawful. But the court distinguished those situations from HSBC’s position here. HSBC was not relying on advice of counsel or asserting that it believed its conduct was legally permissible. Instead, HSBC argued that its investigation supplied a factual basis for its decision regarding Callahan’s conduct.

The court concluded that this factual reliance did not place the privileged investigation materials at issue. It also distinguished cases involving investigations of workplace harassment, where an employer’s defense may make the reasonableness of the investigation itself central to the case. The court said Callahan’s hope of finding evidence that the investigation or termination was pretextual was speculative. It further found that HSBC had produced responsive non-privileged materials, including interview memoranda and a March 2022 investigation report, and that Callahan could take depositions about the investigation and termination. Those materials and depositions gave Callahan a fair opportunity to challenge HSBC’s decisionmaking without requiring disclosure of privileged material.

The court separately rejected Callahan’s arguments concerning work product. It held that HSBC had not waived work-product protection, that Callahan had not shown a substantial need for the protected documents, and that he had not shown selective disclosure or deficient privilege logs.

Disposition

The court denied Callahan’s motion to compel discovery. It also denied HSBC’s request for fees and expenses under Federal Rule of Civil Procedure 37(a)(5)(B), finding that Callahan’s motion was made in good faith and was not so lacking in substantial justification as to warrant an award. Judge J. Paul Oetken directed the Clerk of Court to terminate the motion at ECF No. 82.