Elavon, Inc. v. Northeast Advance Technologies Inc.

Background

Defendants Joel and Rivky Friedman asked for two forms of discovery relief: a protective order concerning communications with Transmedia Payment Services, Ltd. ("Transmedia"), and an order requiring plaintiff Elavon, Inc. ("Elavon") to provide additional documents and answers to two interrogatories. The opinion states that Transmedia assisted the Friedmans in 2015 in disputing credit-card charges underlying Elavon’s fraud claims. The Friedmans later asserted that Transmedia had been engaged as a non-testifying expert, meaning an expert who would not testify at trial, and that communications with Transmedia were protected under the attorney-client privilege principles discussed in United States v. Kovel.

Protective Order

The court found that Transmedia was at most a mixed fact and expert witness because it had pre-existing factual knowledge from its 2015 work. The court held that the engagement letter between the Friedmans, The Silber Law Firm, and Transmedia was sufficient to establish a privileged relationship beginning December 19, 2019. But the Friedmans’ declarations and former attorney Mordy Flam’s declarations were insufficient to establish that a privileged relationship existed earlier. The court also stated that the engagement letter did not refer to any earlier protected relationship and that a subjective belief that communications were confidential was not enough.

As a result, the Friedmans could not withhold communications with Transmedia from before December 19, 2019, based on privilege. They could withhold later communications only if they identified them on a privilege log complying with Federal Rule of Civil Procedure 26(b)(5)(A) and Local Civil Rule 26.2. The court also ruled that Transmedia was subject to a deposition about facts relevant to the action, subject to the stated privilege limitation.

Motion to Compel

The court granted the request only to the extent that Elavon had to produce, if they existed, memoranda, manuals, or similar documents describing Elavon’s institutional interpretation of credit-card issuers’ rules concerning the use of credit cards for loans or investments and the cancellation of charges made for those purposes.

The court agreed that Elavon did not have to disclose documents concerning its risk-management guidelines or documents showing how it classified unrelated merchants under Mastercard’s MATCH system. The court also found Elavon’s responses to Interrogatories 4 and 9 sufficient and declined to require Elavon to identify individual employees who may have been involved in processing more than 400 chargebacks.

Disposition

Judge Paul E. Davison concluded: “The Friedmans’ motions are GRANTED IN PART and DENIED IN PART.” The clerk was directed to terminate the motion at Docket No. 393.