Abdo v. Fitzsimmons
- Thomas Hixson
- 3:17-cv-00851
- U.S. District Court · Northern District of California
- 3
In Abdo v. Fitzsimmons, Judge Hixson granted a subpoena motion and denied plaintiffs’ motion to strike advice-of-counsel defenses.
The order affected defendants seeking documents from Latham & Watkins, Latham as the subpoena recipient, and plaintiffs challenging defendants’ advice-of-counsel defenses in the two related cases.
What happened
Abdo v. Fitzsimmons and a related case involved investors’ claims that former Delivery Agent directors and officers made fraudulent statements that led them to buy securities. Defendants subpoenaed documents from Delivery Agent’s former law firm, Latham & Watkins, while plaintiffs sought to strike defendants’ advice-of-counsel defenses or prevent related evidence at trial.
The court held that Delivery Agent’s bankruptcy and cessation of operations created a presumption that its attorney-client privilege and work-product protection no longer applied. The court also found that the party asserting a privilege had not shown why one existed. It therefore granted defendants’ motion to compel Latham to produce documents responsive to the subpoenas and denied plaintiffs’ motion to strike.
Judge Thomas S. Hixson ruled on the motions without oral argument and vacated the scheduled hearing. The order addressed the discovery dispute in both related cases.
The detailed version
- Abdo v. Fitzsimmons · No. 3:17-cv-00851
- Thomas Hixson
- Oct. 1, 2019
Background
The opinion concerns two related cases in which investors alleged that former directors and officers of Delivery Agent, Inc. made fraudulent misrepresentations on which the investors relied when purchasing millions of dollars in securities. Delivery Agent had filed for Chapter 11 bankruptcy in September 2016 and had ceased functioning.
In both cases, defendants moved to compel Latham & Watkins, Delivery Agent’s former counsel, to produce documents responsive to subpoenas. Latham argued that it had to take steps to preserve any privilege belonging to its former client. In the Rising Tide case, plaintiffs moved under Federal Rule of Civil Procedure 12(f) to strike defendants’ advice-of-counsel defenses. In the alternative, they asked the court to prevent defendants from presenting advice-of-counsel evidence at trial. Plaintiffs in the Abdo case filed a notice joining that motion.
Court’s Analysis
The court explained that Rule 45 governs subpoenas to nonparties, but that the scope of discovery under a subpoena is the same as the scope permitted by Rule 26(b). Rule 26(b)(1) permits discovery of nonprivileged information relevant to a claim or defense and proportional to the needs of the case.
The court applied a presumption that evidentiary protections such as attorney-client privilege and the work-product doctrine no longer remain viable when a corporation has entered bankruptcy and ceased functioning. The court also explained that the party asserting a privilege bears the burden of proving that the privilege applies.
Delivery Agent’s trustee had indicated that he did not intend to waive any applicable privilege. But the court found that the trustee had not provided a basis for concluding that a privilege existed. The court further noted defendants’ representation that the trustee’s counsel did not believe the estate would benefit from litigating who held the privilege over particular advice given years earlier to the now-defunct company.
Disposition
The court granted defendants’ motion to compel Latham & Watkins to produce documents responsive to the subpoenas. The court denied plaintiffs’ motion to strike, reasoning that the order likely resolved the plaintiffs’ stated inability to conduct discovery into defendants’ advice-of-counsel defense. The court vacated the October 10, 2019 hearing and stated that the matters were suitable for decision without oral argument. Judge Thomas S. Hixson issued the order.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.