CCR International, Inc. v. Elias Group, LLC

Background

This opinion resolves a discovery dispute about Elias Group’s claims of attorney-client privilege. The CCR Parties—CCR Development Group, Inc., CCR International, Inc., and Jose Fuertes—filed a letter motion asking the court to compel Elias Group to produce more than 100 documents marked as privileged. Elias Group defended its privilege claims and offered the documents for review in private by the court. The court reviewed 16 representative documents, Elias Group’s privilege log, and Elias Group’s explanation of the documents.

The documents concerned negotiations and due diligence leading to the agreements at issue in the litigation, as well as their immediate aftermath. Eight documents involved Elias Group’s accountant, Craig Savell. The main issue for those documents was whether including the accountant defeated privilege. The other eight involved communications among Elias Group’s principal, Richard Hahn, and Elias Group’s lawyers. Elias Group had labeled some of those documents as protected attorney work product, but the court treated that labeling as a good-faith error and analyzed them under attorney-client privilege instead.

Legal standard

Attorney-client privilege protects confidential communications between a client and lawyer made to obtain or provide legal advice. The party asserting the privilege bears the burden of establishing it. The court explained that the privilege generally requires a communication between client and counsel, an intent that the communication remain confidential, and a purpose of obtaining or providing legal advice rather than business advice. The court also explained that communications involving an accountant or other third party may remain protected when that person is assisting the lawyer in providing legal services.

Rulings on accountant documents

The court held that the redacted portions of Documents A2, A4, and A7 were privileged. A2 involved requests for and provision of legal advice between Hahn and Elias Group’s lawyers, along with a question from a lawyer to Savell about legal documents. A4 involved a lawyer asking Savell to help interpret financial documents so the lawyer could provide legal advice. A7 contained legal advice from Elias Group’s lawyers to Hahn, with Savell copied. The court found that Savell’s involvement assisted the provision of legal advice and that Elias Group properly withheld these portions.

For Documents A1, A3, and A6, the court held that Elias Group had not met its burden of showing that the brief “FYI” or similar forwarding language was privileged. The surrounding circumstances made it at least as likely that Savell was included for business purposes as for assistance with legal advice. Elias Group therefore improperly withheld those brief messages. The court limited this ruling to similarly sparse forwarding language sent to the accountant; it stated that a similar brief message sent only among lawyers could likely be privileged.

The court held that Document A5 contained both privileged and non-privileged material. Hahn’s message to Savell about his thinking concerning a potential counteroffer concerned how much to pay and when, rather than legal advice. Only one sentence directed to “David” sought legal advice and was properly redacted. Elias Group was ordered to produce the rest of A5 without redactions.

The court also found an improper redaction in Document A8: an email from Jose Fuertes to Richard Hahn during negotiations. The court stated that Elias Group had no privilege over an email sent by CCR’s principal. The remaining redactions in A8 involved legal advice from Elias Group’s lawyers and were proper.

Attorney-only documents

The court held that all eight attorney-only exemplar documents were protected by attorney-client privilege. They included explicit requests for and provision of legal advice, as well as communications among Elias Group’s lawyers keeping one another informed about legal developments in the negotiations. Elias Group met its burden for these documents, and its redactions were proper.

Disposition

The court granted in part and denied in part the CCR Parties’ motion to compel. It ordered Elias Group to review the challenged documents again and make an enhanced production based on the rulings concerning the 16 exemplar documents by December 23, 2019. The court directed the parties to meet and confer about production-request answers that remained outstanding because the court could not determine what relief the CCR Parties sought on that issue. Judge Paul A. Engelmayer directed the clerk to terminate the motion pending at Docket 216.