Opinion
22-CV-7948(VEC)
01-10-2023
EXTREME REACH, INC., Plaintiff, v. PGREF I 1633 BROADWAY LAND, L.P.; 1633 BROADWAY OWNER I, LP; and 1633 BROADWAY OWNER II, LP, Defendants.
SEALED OPINION & ORDER
VALERIE CAPRONI, UNITED STATES DISTRICT JUDGE:
Plaintiff Extreme Reach, Inc. (“Extreme Reach”), a tenant that leases two floors in a building owned by Defendants, brought suit against Defendants seeking a declaratory judgment that Plaintiff had properly terminated the operative lease agreement. See Complaint, Dkt. 1. During the course of discovery, Defendants produced an email that spurred a weekslong kerfuffle over the propriety of Defendants' redactions of several other documents on the grounds of attorney-client privilege. Pursuant to the Undersigned's Individual Practices, the parties contacted chambers, and a hearing regarding the discovery dispute took place by telephone on November 10, 2022, see Dkt. 24, followed by a Pretrial Conference on November 18, 2022, see Dkt. 27. After inspecting the documents in camera, the Court outlines below its conclusions with respect to the disputed documents.
Copies of all documents and communications reviewed, in camera, by the Court will be retained and filed in a manner consistent with this Opinion and Order, i.e., with material redacted that the Court concludes is privileged. That filing shall also include Defendants' letter submissions. See infra, n. 3.
I. BACKGROUND
Extreme Reach leases the fifth and sixth floors of a building owned by Defendants. See Compl. ¶ 2. Extreme Reach alleges that it properly provided Defendants with a termination notice and early payout of more than $7 million but that Defendants intentionally refused to accept the termination so that it could hold Extreme Reach to the lease for the duration of its term. See Pl. Dec. 12, 2022 Letter at 1, Dkt. 38. Plaintiff seeks a declaratory judgment that the lease contract has been terminated. Compl. ¶ 75. Defendants counterclaimed for a declaratory judgment that Plaintiff's purported termination notice was not effective because it was not provided in accordance with the provisions of the lease. See Answer ¶¶ 39-53, Dkt. 20.
On November 10, 2022, the Court held a discovery conference during which Plaintiff argued that Defendants improperly redacted several documents as privileged. See Order, Dkt. 24. Plaintiff's request for production was spurred by an email that Defendants disclosed that Plaintiff argues substantiates Plaintiff's legal theory: specifically, that Defendants intentionally thwarted Plaintiff's ability timely to wire transfer the termination fee. That email, dated July 14, 2022, was sent by Susan Conlon, Property Operations Associate, to, among others, Kaitlin McManus, Legal Assistant to Bernard Marasco, Defendants' Senior Vice President & General Counsel (hereinafter, the “Conlon Email”). Conlon informed the recipients that she had not complied with a request by Daisy Alba of Extreme Reach for wire transfer information. See Ex. C to Pl. Dec. 12, 2022 Letter, Dkt. 38-3. That email was then forwarded to Marasco. Plaintiff argued that the redacted documents likely were of a piece with the Conlon Email and fell within the crime-fraud exception to the attorney-client privilege. Plaintiff requested that the documents be ordered produced in full or, alternatively, be provided to the Court for in camera review. Defendants opposed Plaintiff's request and maintained that the documents were properly redacted to protect privileged communications with counsel.
Because the parties did not request a court reporter for the call, there is no transcript of the conference.
Defendants have not argued that the document was produced inadvertently.
On November 18, 2022, the parties appeared for a conference, during which the Court ordered Defendants to produce the documents at issue for in camera inspection. See Order, Dkt. 27; Hearing Tr., Dkt. 32. On November 21, 2022, Defendants provided the Court with unredacted copies of documents bearing Bates numbers PGREF00219-224, 230-232, 237-238, and 303-340, with the contents over which Defendants asserted privilege highlighted in yellow. See November 21, 2022 ex parte Letter.
To shield potentially privileged documents, Defendants' submissions in connection with the in camera review were submitted to chambers ex parte. After the publication of this Opinion and Order, Defendants must file those ex parte submissions on the public docket, redacting only the material the Court has held to be privileged.
After in camera inspection, the Court determined that the 17 documents fell into two categories: the Court ordered Defendants either to produce the first set of documents to Plaintiff in unredacted form or to explain why they were protected by attorney-client-privilege; for the second category of documents, the Court ordered Defendants to show cause why the crime-fraud exception did not apply. See Order, Dkt. 29. Defendants responded on December 5, 2022. See Defs. Redacted Letter, Dkt. 35. In their response, Defendants argued that the documents comprising the first category “show that factual information was forwarded to Mr. Marasco and others for the sole purpose of permitting Mr. Marasco to formulate and provide legal advice.” See id. Defendants described the second category of documents as emails “notifying [Mr. Marasco] of an ACH payment from [P]laintiff and explicitly requesting Mr. Marasco's legal advice,” and asserted that no document “demonstrates any criminal or fraudulent activity” or “that Defendants engaged in bad faith.” Id. Defendants submitted no declarations from any employees to support their position regarding the purposes of the communications. The Court is, thus, left to rely entirely on the contents of the documents to evaluate whether they are privileged communications.
These include documents bearing the following Bates numbers: PGREF00220 (specifically, the email dated July 12, 2022, at 1:33 PM from McManus to Marasco); PGREF00223 (same); PGREF00308 (same); PGREF00230; PGREF00238; PGREF00303-05; and PGREF00337-39. See Order, Dkt. 29.
These include documents bearing the following Bates numbers: PGREF00237; PGREF00310; PGREF00324-328; PGREF00329-331; PGREF00333; and PGREF00335. See Order, Dkt. 29.
The Court ordered Defendants to file on the public docket a redacted version of their December 5, 2022 Letter in order for Plaintiff to respond to the portion addressing the documents Defendants argued were not subject to the crime-fraud exception. See Order, Dkt. 34.
Defendants represented that they have produced to Plaintiff in full the following documents pursuant to the Court's November 29, 2022 Order: PGREF00303, PGREF00304, PGREF00305, PGREF00337, PGREF00338, and PGREF00339. See Defs. Nov. 28, 2022 ex parte Letter at 2 n.1.
II. GOVERNING LAW
Because this Court's subject matter jurisdiction is premised on diversity, New York law on privilege governs, although “New York law on attorney-client privilege is substantially similar to the federal doctrine.” AP Links, LLC v. Russ, 2012 WL 3096024, at *2 n.6 (E.D.N.Y. July 30, 2012) (quoting Bowne of New York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 470 (S.D.N.Y. 1993)).
In New York, “[t]he attorney-client privilege shields from disclosure any confidential communications between an attorney and his or her client made for the purpose of obtaining or facilitating legal advice in the course of a professional relationship.” Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 27 N.Y.3d 616, 623 (2016) (citing N.Y. C.P.L.R. § 4503(a)(1)). The privilege, however, is to be “narrowly construed.” Id. at 624. That an attorney is present on the communication does not shield it from disclosure; to qualify, the communication must be “generated for the purpose of obtaining or providing legal advice as opposed to business advice.” Argos Holdings Inc. v. Wilmington Tr. Nat'l Assoc., 2019 WL 1397150, *3 (S.D.N.Y. Mar. 28, 2019) (quoting In re Cnty. of Erie, 473 F.3d 413, 419 (2d Cir. 2007)).
Communications between an in-house counsel and an employee may be privileged even where “the sole purpose of the communication” is not to “obtain[] or provid[e] legal advice.” Pac. Life Ins. Co. v. Bank of N.Y. Mellon, 2020 WL 6875170, at *2 (S.D.N.Y. Nov. 23, 2020) (slip copy); see also Upjohn Co. v. United States, 449 U.S. 383, 391 (1981). But because inhouse counsel often possesses both business and legal responsibilities, the scope of the privilege is “limited to that which is necessary to achieve its purpose . . . the need to apply it cautiously and narrowly is heightened in the case of corporate staff counsel, lest the mere participation of an attorney be used to seal off disclosure.” Parneros v. Barnes & Noble, Inc., 332 F.R.D. 482, 491 (S.D.N.Y. 2019) (quoting Rossi v. Blue Cross & Blue Shield of Greater N.Y., 73 N.Y.2d 588, 593 (1989)). “[T]he touchstone is whether the predominant purpose of the communication is to render or solicit legal advice.” Pac. Life Ins. Co., 2020 WL 6875170 at *2 (citation omitted).
Attorney work product is also privileged and protected from disclosure under federal law. See Fed.R.Civ.P. 26(b)(3); see also Schaeffler v. United States, 806 F.3d 34, 43 (2d Cir. 2015). “Documents prepared in anticipation of litigation are work product, even when they are also intended to assist in business dealings.” Schaeffler, 806 F.3d at 43. By contrast, “documents that are prepared in the ordinary course of business or that would have been created in essentially similar form irrespective of the [prospect of] litigation” are not protected by the attorney work product doctrine. Id.
B. Crime-Fraud Exception
The crime-fraud exception “strips the attorney-client privilege from any communications that ‘relate to client communications in furtherance of contemplated or ongoing criminal or fraudulent conduct.'” Madanes v. Madanes, 199 F.R.D. 135, 147 (S.D.N.Y. 2001) (quoting In re John Doe, Inc., 13 F.3d 633, 636 (2d Cir. 1994)). The purpose of the crime-fraud exception is to ensure that the privilege does not extend to communications “made for the purpose of getting advice for the commission of a fraud or crime.” Id. (quoting United States v. Jacobs, 117 F.3d 82, 87 (2d Cir. 1997), abrogated on other grounds by Loughlin v. United States, 573 U.S. 351 (2014)).
Parties seeking in camera review to determine whether documents fall within the crimefraud exception must demonstrate “a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies. Once that showing is made, the decision whether to engage in in camera review rests in the sound discretion of the district court.” In re Gen. Motors LLC, 2015 WL 7574460, at *4 (S.D.N.Y. Nov. 25, 2015) (quoting United States v. Zolin, 491 U.S. 554, 572 (1989)). After review of the documents, the Court may then decide whether “there is ‘probable cause to believe' that a fraud or crime has been committed or attempted and that the communications sought to be disclosed were in furtherance of that crime”; if so, then they “are subject to disclosure.” See Zimmerman v. Poly Prep Country Day Sch., 2012 WL 2049493, *7 (E.D.N.Y. June 6, 2012) (quoting In re Richard Roe, 68 F.3d 38 (2d Cir. 1995)).
The Second Circuit has endorsed an expansive view of the crime-fraud exception, suggesting that it could apply to “some conduct beyond crime and fraud,” including to “communications in furtherance of an intentional tort that undermines the adversary system itself.” See Madanes, 199 F.R.D. at 149 (collecting cases and applying the exception in an alleged conspiracy to breach lawyer's duty of confidentiality); see also Irving Trust v. Gomez, 100 F.R.D. 273, 276 (S.D.N.Y. 1983) (applying crime-fraud exception to “intentional or reckless tortious behavior” by bank that “abdicated its responsibility to [plaintiff] as a customer”). Accordingly, courts may invoke the exception to compel disclosure of documents evincing the commission of an intentional tort, even where a crime or fraud has not been specifically found. See Madanes, 199 F.R.D. at 149.
III. DISCUSSION
The documents at issue largely consist of email threads involving Defendants' in-house counsel, Bernard Marasco, and other managers and employees of Defendants. Most, if not all, of the emails in question stem from Plaintiff's requests for Defendants' wiring instructions.
On November 22, 2022, the Court ordered Defendants to identify the parties included on each of the emails produced. See Order, Dkt. 28. In their November 28, 2022 ex parte response, Defendants identified Bernard A. Marasco, Esq., as Senior Vice President & Counsel, along with, as relevant here, Kaitlin McManus, Legal Assistant to Mr. Marasco; Kaitlin Kilian, Senior Associate; Peter Brindley, Executive Vice Present; Aarti Balachandran, Vice President; Ermelinda Berberi, Senior Vice Present & Chief Accounting Officer; Jose Sestayo, Treasury Manager; and David Lieberman, Property Manager. See Defs. Nov. 28, 2022 ex parte Letter at 1-2. Mr. Lieberman served as Defendants' 30(b)(6) witness. See Pl. Dec. 12, 2022 Letter, Dkt. 38.
As a general matter, there is no indication in any of the emails that the parties understood them at the time to be privileged. While not dispositive, the absence of any attorney-client privilege label, legend, stamp, notation, or other designation that would suggest that the communications were intended to be protected from disclosure further undermines Defendants' claims that the communications were made “for the sole purpose of permitting Mr. Marasco to formulate and provide legal advice.” See Defs. Dec. 5, 2022 Letter at 2; Cf. LaSalle Bank Nat'l Ass'n v. Merril Lynch Mortg. Lending, Inc., 2007 WL 2324292, *4 (S.D.N.Y. Aug. 13, 2007) (finding that the “failure to notate the subject document with any sign of its attorney-client or attorney work product nature” weighed in favor of finding privilege waiver due to lack of precautions taken by disclosing party to prevent inadvertent disclosure). The Court will address each set of documents in turn.
A. Emails Bearing Bates Numbers PGREF00220, PGREF00223, PGREF00230, PGREF00238, and PGREF00308
In their December 5, 2022 Letter, Defendants claim that the emails bearing Bates numbers ending 220, 223, 230, 238, and 308 “show that factual information was forwarded to Mr. Marasco and others for the sole purpose of permitting Mr. Marasco to formulate and provide legal advice.” The Court disagrees.
Emails strings bearing Bates numbers ending 220, 223, and 308 are duplicate iterations of the same email thread that began with a July 12, 2022, email from Jorge Martell (“Martell”) of Extreme Reach to Peter Brindley, Defendants' Executive Vice President (“Brindley”), and Marasco with the subject line: “Extreme Reach - Early termination Notice - 5th/6th floors 1633 Broadway” (hereinafter, the “Martell Email”). Martell asked the Defendants to “confirm [their] wiring instructions” in connection with Extreme Reach's early termination notice. The Martell Email was promptly forwarded by McManus, Marasco's legal assistant, to Marasco and Brindley, stating: “[w]e received the attached notice just now in office from Extreme Reach regarding the below.” McManus's email lacks any indicia that she was seeking legal advice. By all appearances, that email was purely a business communication and, therefore, not privileged. Accordingly, each iteration of McManus's July 12, 2022 email must be produced.
Pages bearing Bates numbers ending 220, 223, and 308 comprise the following documents: PGREF00219-221, PGREF00222-224, and PGREF00307-309.
McManus is not included as a recipient of the Martell Email; the Court presumes she had access to Marasco's email account due to her role as Marasco's legal assistant.
The Court finds that the remaining redactions on each of these email threads, spanning Bates ranges PGREF00307-08, PGREF00222-23, and PGREF00219-20 (including up to the earliest-in-time email sent by Marasco on July 12, 2022 at 1:34 PM) reflect attorney work product bearing on Defendants' legal strategy. Those emails were, therefore, properly redacted.
The document bearing Bates number ending 230 was also improperly redacted. This document is another iteration of the Martell Email, which Mark Weiss at Cushman & Wakefield forwarded to Defendants' Senior Vice President Douglas Neye (“Neye”), copying Martell and Peter Goldberger, an individual who does not appear to be linked to any party in this case. Neye then forwarded the email to Brindley, Marasco, and Assistant Vice President Sean Kirk (“Kirk”), writing: “FYI. Wonder if he meant Brindley instead of Goldberger? Will not respond until we speak.” Neye's email was redacted by Defendants prior to production, but the only logical reading of the first sentence of that email was that it was intended to ensure that Peter Brindley, whom Neye believed to be the intended recipient, received the communication. Nor does the second sentence suggest that Neye was seeking legal advice of any kind. Defendants have not offered any explanation for how this email “contain[s] factual information” that was sent to Marasco “for the sole purpose of permitting Mr. Marasco to formulate and provide legal advice.” See Defs. Dec. 5, 2022 Letter at 2. Had Mr. Marasco been the only recipient of Neye's email, that conclusory argument might gain some traction. But there is no indication from Neye's email that his predominant purpose was to solicit legal advice, nor does the email reflect any litigation strategy. Accordingly, the document bearing Bates numbers PGREF00230-232 must be unredacted and produced in its entirety.
Cushman & Wakefield appears to be Defendants' real estate agent in connection with the building at issue in this case.
The second sentence, “will not respond until we speak,” might have presented a closer case, standing alone, but for Defendants' production of the Conlon Email. To the extent any privilege attached to emails formulating Defendants' strategy of erecting roadblocks to Plaintiff's desire to terminate its lease early, including by tactically timed refusals to respond to requests from Plaintiff, the privilege was waived by production of the Conlon Email.
Similarly, no portion of the document bearing Bates number ending 238 is privileged. The original email was sent from Daisy Alba (“Alba”) of Extreme Reach to Kaitlin Kilian, Senior Associate of Property Operations for Defendants (“Kilian”), on July 14, 2022, at 10:32 AM, with the subject line “Funds.” The email stated, in part: “Please be advised that we sent you two payments . . . to cover the termination payment for the current lease. Please confirm if you have received the funds.” Kilian promptly forwarded the email to McManus, Marasco, and Brindley, copying Property Manager David Lieberman (“Lieberman”), writing, in part: “Please see below from Extreme Reach as an FYI. I will not respond.” Again, Defendants have offered no explanation for why Kilian's email is protected by attorney-client privilege. Kilian informed the recipients that she “will not respond,” but she does not suggest in any way that she is seeking Marasco's legal advice. That she copied other operational and managerial employees further supports the conclusion that this is a business communication, not a legal one. See, e.g., In re Allergan PLC Sec. Litig., 2021 WL 4121300, at *5 (S.D.N.Y. Sept. 9, 2021) (finding email not privileged in part because in-house counsel was “just one of numerous” employees who received it so as to be kept “apprised of the conversation”). In short, the document bearing Bates number PGREF00238 must be unredacted and produced in full.
As noted in footnote 15, supra, to the extent Defendants' documents discussing or reflecting their strategy of ignoring Plaintiff were privileged, the privilege was waived when the Conlon Email was produced.
B. Emails Bearing Bates Numbers PGREF00237, PGREF00310, PGREF00324-328, PGREF00329-331, PGREF00333, and PGREF00335
The second category of documents for which the Court ordered Defendants to explain why the crime-fraud exception does not apply largely includes communications regarding Extreme Reach's wire transfer. Defendants characterize these documents as “email chains between Mr. Marasco and PGI employees regarding payments from plaintiff.” Defs. Dec. 5, 2022 Letter at 3. Putting aside Defendants' vague and conclusory insistence that these documents are not subject to the crime-fraud exception, Defendants hardly provided any context or explanation for why these documents are privileged in the first instance. Instead, Defendants insist in conclusory fashion that the documents fail to “demonstrate[] any criminal or fraudulent activity, and do[] not support plaintiff's contention that Defendants engaged in bad faith.” Id. Absent any legitimate justification for the redactions, or any attorney-client marking or indicia, and given the need to construe the attorney-client privilege “cautiously and narrowly,” Parneros, 332 F.R.D. at 491, the Court finds that Defendants have not made a persuasive showing that these documents are privileged.
Turning first to the document bearing Bates number PGREF00237, which appears to be an earlier-in-time iteration of the thread at Bates number ending 335, the Court finds after in camera review that no portion of the email is covered by attorney-client privilege. The initial email at the bottom of the page, sent from Vice President Aarti Balachandran (“Balachandran”) to Senior Vice President & Chief Accounting Officer Ermelinda Berberi (“Berberi”) and Treasury Manager Jose Sestayo (“Sestayo”), is partially and improperly redacted. Balachandran's email consists of a single notation that an “ACH Credit [was] received” for $7.5 million; Defendants, without explanation, redacted the portion of the notation that attributes the payment to Extreme Reach. The Court sees no reason why attributing the payment to Extreme Reach constitutes attorney work product or a privileged communication rather than an informational business communication.
Casting further doubt on the privileged nature of this communication, the same information conveyed in the redacted portion of the email appears in its unredacted subject line: “Extreme Reach ACH credit received for $7.5 million.” But even if the email at Bates number ending 237 were privileged, that privilege was waived when Defendants produced an identical and unredacted version at Bates number ending 335.
Likewise, the top email at Bates number ending 237, sent from Berberi to Marasco (copying Brindley and Wilbur Paes, COO/CFO & Treasury Finance Executive), was also improperly redacted as privileged. Berberi forwarded the message from Balachandran about the ACH credit and stated: “[w]e have been monitoring the 1633 Broadway lockbox account and noticed this morning that Extreme Reach sent us an ACH payment of $7.5M relating to the termination fee. We will contact the bank to reject this payment unless you advise us otherwise.” In response to Berberi's email, which is found at Bates ending 335, Marasco stated, “[p]er discussion, please do not reject the payment.”
Contrary to Defendants' contention, there is simply no indication in this exchange that the predominant purpose of Berberi's email was to procure legal rather than business advice. Even if the “discussion” Marasco referred to was an attorney-client privileged communication that occurred in the past, there is no indication from this email exchange, or from Defendants' submissions, that the exchange in the e-mail was for the purpose of seeking or rendering legal advice. The email itself, without context, merely reflects the rendering of business advice not to reject the payment once received. Because the Court finds that no portion of the emails at Bates ending 237 and 335 are privileged, the Court need not address whether the crime-fraud exception would apply if they were privileged.
Similarly, none of the emails in the document PGREF00329-332 has any indicia of being a privileged communication or work product. In the unredacted portion of the email thread, on Bates number ending 331, Alba of Extreme Reach asked Lieberman to confirm receipt of two of Extreme Reach's wire transfers. Lieberman responded that he would “have to speak to [his] team and get back to you.” Lieberman then forwarded the email to Marasco, McManus, Sestayo, Assistant Vice President Ramon Duran (“Duran”), and Senior Property Controller Jolene Joseph-Baveghems (“Joseph”), copying Kilian, and wrote the purportedly privileged message: “Morning. FYI.” The subsequent emails on this thread are also redacted, despite reflecting nothing more than internal confirmation that “[t]he two payments [from Extreme Reach] showed up in the lockbox account” and Lieberman's response that he “presume[d] we should not be confirming anything back to” Extreme Reach. McManus, apparently writing on behalf of Marasco, responded that Lieberman “should hold off on confirmation for now.”
This email appears to have been sent from Marasco's account, as the originating email indicates that it was sent from Marasco's email address, but it is McManus, Marasco's legal assistant, whose signature appears at the bottom of the response.
Again, none of these emails discusses, requests, or renders legal advice. Defendants have not provided any cogent explanation for these redactions, and there is no evidence to suggest that Defendants could successfully articulate one. They are non-privileged business communications; thus, the Court need not determine whether these emails fall within the crimefraud exception.
To the extent the emails arguably reflect internal communications executing a strategy of attempting to thwart Plaintiff's ability to terminate the lease early, they are of a piece with the Conlon Email; production of that email waived privilege over that subject matter, to the extent the communication was privileged at all. See In re Grand Jury Proceedings, 219 F.3d 175, 182 (2d Cir. 2000) (“[A] party cannot partially disclose privileged communications . . . and then shield the underlying communications from scrutiny of the opposing party.”) (citation omitted); see also Arkin Kaplan Rice LLP v. Kaplan, 988 N.Y.S.2d 22, 23 (1st Dep't 2014) (disclosure of email that revealed party's understanding of a call with a mediator “waived the privilege with respect to any documents in the file pertaining to the subject matter of the email”); c.f. John Doe Co. v. United States, 350 F.3d 299, 303 (2d Cir. 2003) (a party forfeits privilege due to “unfairness to the adversary of having to defend against the privilege holder's claim without access to pertinent privileged materials that might refute the claim”).
Even if Lieberman's inquiry about whether to confirm receipt of the wire transfers were privileged, that privilege would likely have been waived when Lieberman testified at his 30(b)(6) deposition, over his attorney's objection but without a direction not to answer, that “[a]t the direction of in-house counsel” he did not provide Plaintiff advance confirmation of the wire instructions, despite it being customary to do so. See Lieberman Tr. at 52:13-53:8, 69:3-22, 71:10-72:21, Dkt. 38-2.
Likewise, the email exchange at Bates number ending 333, internal communications between Kilian and Marasco that indicated that Plaintiff's wire transfers were en route, reflect what is predominantly a business communication. Marasco asked Kilian whether Kilian had informed “Jose to be on the watch for the wires.” Kilian responded that she “had let him know to be on the lookout” and would forward Jose the email from Extreme Reach that affirmatively informed Defendants that Plaintiff had sent the two payments relating to the termination fee. Marasco responded, “Good.” There is no indication whatsoever that Kilian was requesting legal advice when alerting Marasco to the incoming payments from Extreme Reach, nor does Marasco supply her with legal advice. The emails merely reflect a business communication designed to ensure that the appropriate employee (presumably Jose Sestayo, Treasury Manager) was made aware of the incoming wires. Thus, the document bearing Bates number PGREF00333-34 must be unredacted and produced.
The bottom email on Bates ending 333 is a duplicate of the Kilian email discussed above at Bates number ending 238 that was sent to McManus, Marasco, Brindley, and Lieberman; the Court has previously explained why that email is not privileged. See supra at 10.
The redactions in the emails on Bates numbers ending 310 are likewise improper. At the bottom of page 310, Alba at Extreme Reach asked Kilian for confirmation that she “will be processing the step down once received.” Alba then sent a nudging email the following day, which Kilian forwarded to Marasco and others. Killian's email, which Defendants redacted, stated: “FYI we have not responded.” Again, there is zero indication that Kilian was requesting any legal advice whatsoever; she merely stated the fact that no response had been provided to Extreme Reach. The Court likewise finds that Marasco's response to Kilian is not privileged, despite Defendants' insistence that Marasco's email “explicitly set[s] forth Defendants' legal position.” Defs. Dec. 5, 2022 Letter at 3. Marasco did not provide legal advice or convey any legal strategy; Marasco instead directed Kilian how to respond to Extreme Reach: “We are taking the position that the lease has not been terminated and is in full force and effect. We can respond to them that we will process the reduction provided they comply with the applicable lease provisions. Business as usual.” It is telling that Marasco characterized this as “business as usual,” because the Court agrees that this email is precisely that: business as usual. These emails must be produced without redactions, as there is no indication that they reflect attorney-client communications or work product.
Again, as noted above, emails reflecting Defendants' execution of a strategy to obstruct Plaintiff's ability to terminate the lease early are of a piece with the Conlon Email, which waived any claim of privilege over that subject matter. See In re Grand Jury Proceedings, 219 F.3d at 182; Kaplan, 118 A.D.3d at 493.
The position articulated by Marasco reflects the very position Defendants have taken in this litigation - that Plaintiff's efforts to terminate the lease were not effective. See Answer ¶¶ 39-53. There is, no doubt, legal analysis behind that position, but an articulation of one's legal position with a direction that it be communicated to one's adversary is not a privileged communication.
Finally, the email chains comprised of Bates numbers ending 324-328 with the subject line “Extreme Reach - ACH Credit” must also be produced without redactions. This email exchange relates to Defendants' internal discussions about how to record Extreme Reach's wire transfer in Defendants' books and records. The unredacted portions of the email exchange at Bates number ending 327-28 reflect Jolene Joseph's instruction to Balachandran, Sestayo, and Kilian to “apply the cash to Extreme Reach using ‘ONA' CR Code.” Lieberman later forwarded the communication to Marasco, McManus, and Duran, asking, “[a]re you all OK with posting their payment this way?” Lieberman's email and the ensuing exchange, all of which were redacted, bear solely on the accounting decision whether and how to book the wire transfer. Notwithstanding the fact that Marasco is included on the exchange, there is no indication that Lieberman was seeking legal as opposed to accounting advice. Nor did Marasco offer legal advice or discuss legal strategy in response - Marasco simply asked what the “ONA” code means, whether “we have to post anything at all?”, and “[c]an we not post it at all for a few days?” After Duran confirmed that the payment could remain “unposted for now,” Marasco responded that “[w]e may return the funds by check next Monday or Tuesday.” Defendants have provided no explanation for why those communications are either attorney-client privileged or work product.
Although the Court could possibly conjure up an argument for why the internal booking of funds that were unquestionably received could constitute attorney work product, it is not the Court's responsibility to formulate Defendants' argument. The conclusory argument they provided, that the documents reflect the “[p]roviding [of] information to counsel to solicit legal advice; [f]ormulation of legal advice by counsel; [and the] [r]endering of legal advice by counsel,” Defs. Nov. 28, 2022 Letter, is not persuasive.
To the extent any of the emails found within the document bearing Bates numbers ending in 324-328 could possibly be deemed privileged, Plaintiff would likely have a valid argument for applying the crime-fraud exception to compel disclosure. Plaintiff claims that Defendants “deliberately refused to confirm their wire instructions” in an effort to thwart Plaintiff from complying with the lease agreement's notice and termination provision. See Pl. Dec. 12, 2022 Letter at 1. According to New York's “prevention doctrine,” such conduct could be viewed as a violation of the implied contractual obligation not to frustrate a counterparty's ability to perform a condition precedent. See Ide v. Brit. Airways PLC, 529 F.Supp.3d 73, 86-87 (S.D.N.Y. 2021); see also Int'l Techs. Mktg, Inc. v. Verint Sys., Ltd., 157 F.Supp.3d 352, 367 (S.D.N.Y. 2016) (“The broader principal at issue, as courts have recognized, is that ‘a party to a contract cannot rely on the failure of another to perform a condition precedent where he has frustrated or prevented the occurrence of the condition.'” (quoting Kooleraire Serv. & Installation Corp. v. Bd. of Ed. of City of N.Y., 28 N.Y.2d 101 (1971))), aff'd, 850 Fed.Appx. 38 (2d Cir. 2021).
Defendants' emails discussing whether and when to post Extreme Reach's payment, in a case in which Defendants' planned argument was that Plaintiff failed to timely notify Defendants and pay the termination fee pursuant to the agreement, could be evidence of the kind of tort that “undermines the adversary system itself” such that disclosure could be warranted. See Madanes, 199 F.R.D. at 149. The Court, however, need not definitively decide whether the crime-fraud exception applies here as the Court finds that the documents are not privileged.
IV. CONCLUSION
For the foregoing reasons, Defendants are hereby ORDERED to produce in full the following documents consistent with this Opinion and Order, by no later than January 25, 2023: PGREF00308 (McManus Email from July 12, 2022 at 1:33 PM); PGREF00223 (same); and PGREF00220 (same); PGREF00230; PGREF00238; PGREF00308; PGREF00237; PGREF00310; PGREF00324-328; PGREF00329-331; PGREF00333, and PGREF00335.
This Opinion and Order, other than the first and last two paragraphs, will be filed under seal until January 24, 2023, with access restricted to Defendants only so as to give Defendants time to decide whether they wish to seek a stay to pursue an appeal. If no stay has been sought by 5:00 p.m. on January 24, 2023, this Opinion and Order will be unsealed in full.
The Clerk of Court is respectfully directed to restrict access to the unredacted version of this opinion so that it is viewable only by Defendants.
SO ORDERED.