Kahle v. Cargill, Inc.
- Jed Rakoff
- 1:21-cv-08532
- U.S. District Court · Southern District of New York
- 8
In Kahle v. Cargill, Judge Aaron ruled that work-product protection covered redacted transaction notes, so Cargill could not obtain them.
Philip von Kahle did not have to disclose the redacted “NOTES” column to Cargill. The ruling also set additional filing and discovery-scheduling requirements for the parties.
What happened
Kahle v. Cargill, Inc. concerns Cargill’s request for unredacted notes in a spreadsheet tracking Coex Coffee International’s financial transactions. Philip von Kahle, acting for Coex’s creditors, had produced the spreadsheet with its notes redacted.
Cargill argued that the notes were not prepared because of expected litigation and that it needed them because reviewing the underlying records would be difficult and costly. Kahle argued that the notes were prepared by a financial adviser at the direction of counsel in anticipation of litigation and that Cargill already had the records needed to obtain equivalent information.
The court ruled that the notes were protected work product and that Cargill had not shown a substantial need for them or that it could not obtain equivalent information by reviewing produced documents. Judge Stewart D. Aaron therefore ruled that Kahle did not have to produce an unredacted spreadsheet, and ordered a revised redacted declaration and proposed discovery schedules.
The detailed version
- Kahle v. Cargill, Inc. · No. 1:21-cv-08532
- Jed Rakoff
- Apr. 24, 2022
Background
Philip von Kahle brought the action as assignee for the benefit of the creditors of Coex Coffee International, Inc. The case seeks to avoid three limited guarantees and to avoid and recover $91,593,168.18 in alleged fraudulent transfers between Coex and Cargill.
Cargill served requests for documents. In response to one request, Kahle withheld an Electronic Transactions Summary, an Excel spreadsheet created by Michael Moecker & Associates, Inc., Kahle’s financial adviser in administering Coex’s estate. Kahle later produced the spreadsheet with comments in the column labeled “NOTES” redacted. The spreadsheet contained 67,330 lines of financial transactions, and Moecker had entered notes on 25,450 lines.
The parties disputed whether the redacted notes were protected by the work-product doctrine or attorney-client privilege. The court reviewed both the redacted and unredacted spreadsheets and ordered Kahle to explain why the notes should remain protected.
Parties’ Positions
Kahle submitted a declaration from Jonathan Feldman, an attorney who represented Kahle and whose firm acted as general counsel in the related assignment proceeding. Feldman stated that financial information indicating a large deficit and competing secured-creditor claims led him to conclude that litigation was likely. He said Moecker prepared the notes at his direction to analyze the flow of funds.
Cargill argued that Moecker would have prepared the notes even if litigation had not been expected. Cargill also argued that, even if the notes were protected, it had a substantial need for them because obtaining equivalent information from the produced documents and data would be difficult.
Legal Standard
Federal Rule of Civil Procedure 26(b)(3) generally protects documents and tangible things prepared because of anticipated litigation or for trial. The opposing party may obtain such material only by showing a substantial need to prepare its case and an inability to obtain the substantial equivalent without undue hardship. The protection can cover factual investigation as well as an attorney’s mental impressions and legal theories.
Ruling
The court held that Kahle established work-product protection for the “NOTES” column. It found that Moecker prepared the column at Feldman’s request because of the prospect of litigation. The court did not decide whether the notes also qualified as opinion work product or were protected by attorney-client privilege because the work-product ruling resolved the dispute.
The court further held that Cargill had not shown a substantial need or undue hardship. Kahle had produced the documents from which the notes were derived, along with indices to those documents. The court concluded that Cargill could obtain substantially equivalent information by reviewing those materials. The possibility that the notes would save Cargill time and money did not satisfy the undue-hardship requirement.
The court ruled that Kahle need not produce an unredacted version of the spreadsheet. It also directed Kahle to file a revised redacted version of Feldman’s declaration and directed the parties to submit a joint proposed discovery schedule or separate proposals if they could not agree.
Read the full 8-page opinion on CourtListener, the free public archive maintained by the Free Law Project.