Summary
In A.I.A. Holdings v. Lehman Brothers, Inc., 2000 WL 1538003 (S.D.N.Y. 2000), the withholding party refused to provide any information other than that it was withholding a tape recording.
Summary of this case from U.S. v. Gericare Medical Supply, Inc.Opinion
No. 97 Civ. 4978 (LMM) (HBP).
October 27, 2000.
MEMORANDUM OPINION AND ORDER
I. Introduction
By letters dated August 30 and September 8, 2000, plaintiffs seek to compel production of the notes of an interview conducted of Ahmad Daouk by Berge Setrakian, an attorney representing Bear Stearns, in the Summer of 1997 and to compel a continued deposition of Setrakian. For the reasons set forth below, the motion is denied.
II. Facts
The approximately 250 plaintiffs in this action seek to recover losses they allegedly sustained as a result of the fraudulent conduct of their former securities/commodities broker, Ahmad Daouk. In substance, plaintiffs allege that they each gave various amounts of money to Daouk for securities and commodities transactions to be executed through one of the defendants. However, instead of executing the trade, Daouk either pocketed the money or kept all or part from the profits from the trades. Plaintiffs allege that Daouk was able to continue the fraud for several years by repeatedly lying about the status of the trading accounts and providing fabricated account statements that purported to have been issued by the defendants. The plaintiffs' aggregate losses are alleged to exceed $100 million; Daouk appears to be completely or substantially judgment proof.
In their First Amended Complaint, plaintiffs allege that the defendants, both of whom allegedly served as clearing brokers for Daouk, vested Daouk with actual and apparent authority to act on their behalf, and are liable for plaintiffs' losses on a variety of theories, including breach of fiduciary duty, fraud, constructive fraud, breach of contract, negligent hiring, retention and supervision and aiding and abetting Daouk's fraud and breach of fiduciary duty. Defendants deny all the material allegations of the complaint that relate to them.
Since a complete understanding of the details set forth in the First Amended Complaint is not necessary to the resolution of the pending discovery dispute, my summary of the allegations does not. attempt to address all the factual issues raised by the pleadings. Obviously, no opinion on the merits of any party's case is intended.
At least some of Daouk's fraudulent conduct came to light in 1995, when he was arrested by Lebanese authorities. Dacuk was subsequently incarcerated for approximately four and one-half years. During the summer of 1997, Berge Setrakian, a lawyer employed by Bear Stearns, visited Daouk in prison and questioned Daouk about certain of his activities. I ruled in April of this year that the 1997 interview between Setrakian and Daouk constituted work product and that neither Setrakian's notes nor Setrakian's testimony concerning the interview could be discovered in the absence of a showing of substantial need and unavailability from an alternative source.
The parties have now taken the "deposition" of Daouk. During the course of the deposition, Daouk was unable to recall the answers to certain questions. Plaintiffs argue that the failure of Daouk's memory gives rise to the "substantial need" exception to the work product doctrine and justifies the wholesale production of Setrakian's notes and the continued deposition of Setrakian.
I use the term "deposition" guardedly. Daouk's "deposition" was conducted in Morocco, and the parties dispute whether the proceeding constituted a "deposition" within the meaning of the Federal Rules of Civil Procedure. Daouk appeared for the "deposition" voluntarily and could not have been compelled to answer any question. No opinion on the admissibility of Daouk's testimony is intended.
III. Analysis
The scope of the work-product doctrine is set forth in Fed.R.Civ.P. 26(b)(3):
[A] party may obtain discovery of documents and tangible things otherwise discoverable under subdivision (b)(1) of this rule and prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent) only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means. In ordering discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.
The applicability of the work-product doctrine is exclusively governed by federal law. Bowne of New York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 471 (S.D.N.Y. 1993).
Where, as here, the applicability of the work-product doctrine has been established, factual material may, nevertheless, be ordered produced "upon a showing of substantial need and inability to obtain the equivalent without undue hardship." Upjohn Co. v. United States, 449 U.S. 383, 400 (1981). A witness's lack of memory is usually sufficient to support a finding that the information is not otherwise available. Xerox Corp. v. Int'l Bus. Mach., Inc., 64 F.R.D. 367, 377 (S.D.N.Y. 1974); Tribune Co. v. Purcigliotti, 93 Civ. 7222 (LAP) (THK), 1997 WL 10924 at *4 (S.D.N.Y. Jan. 10, 1997). However, where the material in issue discloses the mental impressions, conclusions, opinions or legal theories of an attorney or other representative of the party, a far greater showing is required to pierce the doctrine's protection, and there is some authority that the protection afforded such opinion work product may be absolute. See generally Upjohn Co. v. United States,supra, 449 U.S. at 400-02; Hickman v. Taylor, 329 U.S. 495, 510-13 (1947); United States v. Adlman, 134 F.3d 1194, 1204 (2d Cir. 1998).
In support of their application, plaintiffs cite 40 instances in which Daouk stated, in substance, that he did not recall the answer to a question. Three of these instances related to what he told Setrakian in the 1997 interview. Of the remaining 37 instances in which Daouk claimed a failure of memory concerning the facts underlying this action, 20 instances occurred during plaintiff's examination and 17 occurred during defendants' cross-examination.
Daouk Dep. 255:11-256:3, 257:9-257:18, 552:14-552:18.
Daouk Dep. 46:12-46:25, 52:8-52:17, 56:17-57:2, 58:22-59:11, 60:15-60:20, 62:17-62:24, 89:2-89:10, 106:11-107:19, 109:12-109:20, 121:7-122:6, 123:20-124:2, 181:6-181:10 247:8-247:19, 248:10-248:14, 311:9-311:23, 324:10-324:16, 325:3-325:17, 327:5-327:24, 330:20-331:5, 337:7-338:22.
Daouk Dep. 586:25-587:16, 588:23-590:4, 591:11-592:8, 601:2-601:12, 603:3-603:18, 613:3-613:16, 614:20-616:4, 652:16-652:17, 654:10-655:5, 768:19-768:25, 773:19-774:22, 842:12-843:6, 932:8-932:24, 934:21-936:9, 955:18-956:25, 960:19-961:10, 1212:9-1214:8.
The law is not well developed as to what constitutes "substantial need." Although a leading treatise has suggested that in order for a "substantial need" to exist, the information in issue must be an "essential element of the requesting party's prima facie case," 6 Moore's Federal Practice § 26.70 [5] [c] at 26-221 (Daniel R. Coquillette, et al. eds., 3rd ed. 2000), my own research has found no cases in this Circuit adopting this definition or even commenting on it. Nevertheless, I agree with defendants that in order to pierce the work product doctrine, the information in issue must do more than meet the broad standard of relevance applicable in discovery. See generally Daval Steel Products v. M/V Fakredine, 951 F.2d 1357, 1367 (2d Cir. 1991) (information is discoverable if there is "any possibility that the information sought may be relevant to the subject matter of the action" (inner quotes and citations omitted; emphasis in Daval)). As states by the 1970 Advisory Committee Notes to Rule 26(b)(3):
As to trial-preparation materials, however, the courts are increasingly interpreting "good cause" as requiring more than relevance. When lawyers have prepared or obtained the materials for trial, all courts require more than relevance; so much is commanded by Hickman. . . .
* * *
[T]he language of the [amended rule] suggests the factors which the courts should consider in determining whether the requisite showing has been made. The importance of the materials sought to the party seeking them in preparation of his case and the difficulty he will have obtaining them by other means are factors noted in the Hickman case. The courts should also consider the likelihood that the party, even if he obtains the information by independent means, will not have the substantial equivalent of the documents the production of which he seeks.See also Schlagenhauf v. Holder, 379 U.S. 104, 118 (1964) (good cause required by former Rule 34 not satisfied by mere showing of relevance);Baker v. General Motors Corp., 209 F.3d 1051, 1054 (8th Cir. 2000) ("substantial need" not shown where work product would merely corroborate other evidence in possession of requesting party); Director, Office of Thrift Supervision v. Vinson Elkins, LLP, 124 F.3d 1304, 1308 (D.C. Cir. 1997). ("substantial need" not shown where documents sought would reinforce known inconsistencies).
To the extent plaintiffs seek Setrakian's notes to fill in the gaps in Daouk's memory concerning (1) what he told Setrakian in 1997 and (2) questions asked during defendants' cross-examination, I conclude that "substantial need" has not been established. The fact that Daouk did or did not tell Setrakian something in 1997 has no independent relevance; rather it is Daouk's knowledge of the underlying events that is relevant. In addition, to the extent Daouk was unable to answer questions asked on cross examination, it is difficult to understand how plaintiffs could have a substantial need for this information when they never asked for it themselves.
This leaves the twenty (20) lapses of memory identified in footnote 4, above. Plaintiffs have made no attempt to explain how they have substantial need for this information, and substantial need is not self evident. For example Daouk physical location when he received money from his clients or what he did with particular funds after his initial wrongful transfer into his own account seems to have borderline relevance at best. Since plaintiffs have failed to establish one of the elements necessary to pierce Bear Stearns' claim of work product, their motion must be denied.
Daouk Dep. 56:17-57:2.
Daouk Dep. 58:22-59:11.
IV. Conclusion
Accordingly, for all the foregoing reasons, plaintiffs' application to compel production of the notes of Setrakian's 1997 interview with Daouk and the further deposition of Setrakian is denied.