Gonsalves v. Block

Background

The parties asked the court to resolve whether Block could subpoena documents and communications exchanged between lead plaintiff NYC Funds’ counsel and Block’s nine former employees. The dispute concerned four requests in subpoenas served on those non-party former employees: Requests for Production 1, 2, 5, and 6.

The underlying lawsuit alleges that Block, Jack Dorsey, and Amrita Ahuja made materially false and misleading statements about Cash App’s compliance programming, leading to enforcement actions and a substantial drop in Block’s stock price. In investigating the claims, NYC Funds’ counsel and investigators communicated with nine former Block employees, and the amended complaint included factual allegations based on information counsel said they obtained from those employees.

Legal standard

The attorney work-product doctrine generally protects documents and tangible things prepared by a party or its representative in anticipation of litigation or for trial. The protection can include interview notes, summaries, analyses, and verbatim witness statements. It is not absolute: it may be waived through certain disclosures or by putting the protected material directly at issue. Protected material may also be discoverable if the requesting party shows a substantial need for it and cannot obtain its equivalent without undue hardship. Even then, an attorney’s mental impressions, conclusions, opinions, and legal theories remain protected.

Work-product protection

The parties agreed that the underlying facts relevant to the claims and defenses—including the specific facts alleged in the amended complaint—were not protected. The court distinguished those facts from the communications themselves and from documents selected and provided to counsel during the investigation.

The court held that, to the extent the subpoenas sought documents provided by the former employees to counsel or investigators during the investigation, or communications between the former employees and counsel or investigators concerning that investigation, those materials were protected work product. The information shared by the former employees was not itself protected. But requests for the communications themselves, or for a curated group of documents defined by the fact that the documents had been provided to counsel, sought protected material. The court noted that the problem could be addressed by modifying the document requests.

Waiver

The court rejected Block’s arguments that the protection had been waived. There was no indication that counsel had disclosed the communications to Block or others in a way that substantially increased the opportunity for potential adversaries to obtain them. The court also found no implied waiver based on the amended complaint. Although the underlying facts and statements attributed to the former employees were at issue, counsel’s communications with those employees were not at issue in any claim or defense at that time.

Substantial need

Block argued that it needed the materials to determine which allegations were attributed to which former employee, prepare for depositions, evaluate whether the amended complaint accurately characterized the employees’ information, and identify information that might undermine the allegations. The court was not persuaded that Block had shown a substantial need. Block knew the former employees’ identities and could assess the allegations by obtaining relevant documents and questioning the employees about the facts and any information that might undermine NYC Funds’ claims.

Disposition

The court granted NYC Funds’ request for a protective order regarding Requests for Production 1, 2, 5, and 6 in the subpoenas directed to the former employees. The opinion does not state that the entire subpoenas were quashed or that all discovery from the former employees was prohibited.