Seaman v. National Collegiate Student Loan Trust 2007-2

Background

The opinion concerns two consolidated proposed class actions. The plaintiffs alleged that the defendants orchestrated a scheme to obtain state-court default judgments fraudulently, including by submitting false or deceptive affidavits. They alleged that employees of Transworld Systems, Inc. falsely claimed personal knowledge of information in those affidavits and that Forster & Garbus LLP was essential to the alleged scheme because it filed pleadings and affidavits that the plaintiffs considered deceptive and procedurally and evidentially inadequate.

The plaintiffs challenged Transworld’s discovery production. They requested three categories of documents: documents about how Transworld selected law firms for its nationwide attorney network; documents showing when Transworld recalled accounts because it lacked proof of indebtedness; and documents showing law firms’ requests for additional materials when state-court consumer defendants sought discovery from the trusts.

Magistrate Judge’s Discovery Order

Magistrate Judge Barbara C. Moses ruled that Transworld had to produce documents concerning its selection of Forster, but not documents concerning the other two categories. The order did not explain the reasons for those decisions.

The plaintiffs objected under Rule 72(a) of the Federal Rules of Civil Procedure. That rule allows a district judge to change or set aside a magistrate judge’s ruling on a non-dispositive pretrial matter if it is clearly wrong or contrary to law. The district court noted that magistrate judges generally have broad discretion in resolving discovery disputes and that review is highly deferential.

District Court’s Analysis

The plaintiffs argued that limiting the first category to documents about Forster was improper because their allegations concerned a nationwide class and a broader network of law firms. Transworld argued that the claims involved only acts in New York and that the requested documents were not relevant. The court noted that Judge Moses had previously found that the amended consolidated complaint alleged a nationwide class, which undermined Transworld’s relevance argument concerning non-New York documents.

As to the second and third categories, Transworld argued that the documents were protected by attorney-client privilege because they concerned legal advice, litigation strategy, and confidential communications. The plaintiffs disputed that Judge Moses had based her decision on privilege. Because Judge Moses’s order gave no explanation, the district court said it could only speculate about whether the decisions rested on relevance, privilege, or both.

Disposition

Judge Gardephe sustained the plaintiffs’ objections to the extent that he returned the matter to Judge Moses for an explanation of the bases for the decisions concerning all three categories of documents. The order did not itself require Transworld to produce the requested materials and did not decide the plaintiffs’ underlying allegations.