Free Response to Motion - District Court of Colorado - Colorado

Case 1:01-cv-01451-REB-KLM

Document 736-3

Filed 07/06/2005

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EXHIBIT 2

Case 1:01-cv-01451-REB-KLM

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Not Reported in F.Supp. 1987 WL 12199 (N.D.Ill.) (Cite as: 1987 WL 12199 (ND.Itl.))

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United States District Court, N.D. Illinois, Eastern Division. Raymond ALLEN, et al., Plaintiffs, v. BURNS FRY, LTD., et al. Defendants. No. 83 C 2915. June 8,1987. MEMORANDUM OPINION BRIAN BARNETT DUFF, District Judge. *1 On January IS, 1987, Robert J. Fenn, former inhouse counsel for Burns Fry, Limited ("Burns Fry") and a defendant in this lawsuit, filed a motion for removal of counsel on the ground that Breed, Abbott & Morgan ("Breed Abbott"), lawyers for Burns, Fry, Fenn, and others, might have a potential conflict of interest. In support of his motion, Fenn attached a copy of a letter dated August 24, 1982 that he sent to Breed Abbott on behalf of Bums Fry. Burns Fry moved immediately for a protective order, asserting that the August 24 letter was protected by the attorney-client privilege. This court granted the protective order, but lifted it in part four days later so that the litigants and attorneys in this lawsuit could review the document at issue. Before the court is another motion by Burns Fry for a protective order that essentially would continue the requirements of the first one. Miller-Jesser, Inc. and several other defendants (collectively "Miller-Jesser") oppose the motion, and also have moved to strike the affidavit of Frederick J. Troop, ~FNH submitted in support of the motion for a protective order. This court will examine the motion to strike first. DISCUSSION I. MOTION TO STRIKE AFFIDA VIT Although the Troop affidavit does not meet the standards set out in Fed.R.Civ.P. 56(e), it will not be stricken. ~ which requires affidavits to be based on personal knowledge, set forth admissible facts, and show affirmatively that the affiant is competent to testify, applies to affidavits made in

connection with summary judgment motions. There is no particular reason why the ~ standards should be applied here. Troop is not going to testify regarding this matter at trial, nor is he attempting to demonstrate the existence of a material fact. Moreover, this court equally could apply RMJ~5ffl, which does not require the afliant to set forth evidentiary facts. See IOA Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2740 at p. 530 (I983). Aside from Rule 56(e), however, Miller-Jesser is correct in asserting that certain statements made by Troop are a bit conclusory, and that the affidavit is not based on Troop's "personal knowledge" but merely on his "knowledge". The latter point is of small consequence; Troop is an officer of the corporation speaking on matters known to the corporation. He had to take an oath in order to make the affidavit, and there is no indication that he acted in bad faith such as would require this court to strike the affidavit. See Fed.R.Civ.P. 56(g). As to the first point, this court recognizes that certain statements are framed in general terms and will treat them accordingly. II. MOTION FOR A PROTECTIVE ORDER Miller-Jesser argues that Burns Fry has not made a prima faeie showing that the Fenn letter is privileged and that, even if such a showing has been made, the privilege was lost through waiver or through the applicability of the crime or fraud exception. Each of these contentions is without merit. *2 A. The Prima Facie Case [FN2] The attorney-client privilege applies to a document which (I) was for the purpose of seeking legal advice; (2) was between a client and an attorney acting in his professional capacity; (3) concerned legal matters; and (4) is maintained in confidence. Federal Trade Commission v. Shaffner. 626 F,2d 32, 37 (7th Cir.1980). It is undisputed that the Fenn letter meets the first three elements of this test. Thus the only matter at issue is whether Burns Fry has met its burden of showing that the document was maintained in confidence. See United States v. Lawless, 709 F.2d 485, 487 (7th Cir.1983) (party seeking to invoke the privilege has the burden of establishing all of its elements).

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Case 1:01-cv-01451-REB-KLM
Not Reported in F.Supp. 1987 WL 12199 (N.D.III.) (Cite as: 1987 WL 12199 (N.D.IIl.))

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Miller-Jesser argues that in order to claim the privilege, Burns Fry must show that it followed specific procedures designed to keep the Fenn letter confidential. (Miller-Jesser Memorandum in Opposition at 11-12; Surreply Memorandum at 3.) None of the cases cited by Miller-Jesser, however, support such a proposition. In O'Leary v. Purcell, 108 F.R.D. 641 (M.D.N.C.I985), for example, the court ruled that the document at issue was not confidential because an officer of the defendant corporation knew that a former employee had the document and never attempted to retrieve it. f4~ai 645. Similarly, the court in In re Victor, 422 F.Supp. 475 (S.D.N.Y.I976), reasoned that any claim of privilege was untenable because the relevant papers had been left in a public hallway. Id. at 476. The facts in this case easily are distinguishable from those in O'Leary and Victor. There is no evidence suggesting that the letter was sent to anyone else, or that other persons involved in this lawsuit saw a copy prior to January of this year. As soon as Fenn filed his motion for removal of counsel, Burns Fry sought an emergency protective order to re-establish the confidentiality of the letter, Finally, Troop's affidavit specifically states Fenn was not authorized to disclose the contents of any legal memoranda prepared while he was at Burns Fry, or to take them with him when he left. On these facts, Burns Fry is not required to show anything more. It has met its burden of showing that the August 24 letter is privileged. In addition, there are no separate, non-privileged parts of the letter which should be disclosed. The document has no discrete factual portions and MillerJesser does not attempt to identify any. More importantly, the presence of factual information in the August 24 letter does not vitiate the privilege. The purpose of making attorney-client communications confidential is "to protect not only the giving ofprofessional advice to those who can act on it, but also the giving of information to the lawyer to enable him to give sound and informed advice." Upjohn Co. v. United States, 449 U.S. 383, 390 (1981) (citations omitted). This court therefore declines to redact any part of the letter for the purpose of disclosing the rest. *3 B. Exceptions I. Waiver This court further finds that Burns Fry has not

waived the attorney-client privilege with respect to the August 24 letter. As was recently stated by the Supreme Court, the power to waive the corporate attorney-client privilege rests with the corporation's management and is normally exercised by its officers and directors. The managers, of course, must exercise the privilege in a manner consistent with their fiduciary duty to act in the best interests of the corporation and not ofthemselves as individuals. Commodity Futures Trading Commission v. Weintraub, 471 U.S. 343. 348-49 (1985) (footnote and citation omitted). A manager's power to waive the privilege terminates when he leaves his job. ld.at 349 n. 5. Fenn's formal title at Burns Fry was Corporate Compliance Officer; thus he was empowered to waive the attorney-client privilege. He lost that power, however, when he left Bums Fry's employ in April, 1986. Because the letter at issue was not made public until January, 1987, Fenn did not effect a valid waiver. [FN3] 2. crime or Fraud Exception Burns Fry also did not lose its privilege by reason of the crime or fraud exception to the attorney-client confidentiality rule. This exception applies only when the client seeks legal advice in furtherance of the crime or fraud, not when he desires to defend himself against past misconduct. In re Special September 1978 Grand .Jurv, 640 F.2d 49. 59 (7th Cir. 1980). Miller-Jcsser has the burden of showing that the fraud exception is applicable here. Id. Contrary to Miller-Jesser's assertions, neither the letter itself nor Fenn's motion for removal of counsel suggests that Burns Fry participated in a fraud. Nowhere does the letter say, or even imply, that the Canadian bills and bonds at issue in this case actually were purchased. Likewise, Fenn's motion claimed that Breed Abbott may be partially liable for any damages awarded in this case; it did not say that Breed Abbott took part in a fraud perpetrated by Burns Fry. Additional materials submitted in camera by Burns Fry buttress these findings. [FN4] In addition, even if Burns Fry did engage in fraudulent conduct, it took place in December, 1981, eight months prior to Fenn's letter. Miller-Jesser thus has failed to make a prima facie showing that the document at issue was prepared in furtherance of a

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Case 1:01-cv-01451-REB-KLM
Not Reported in F.Supp. 1987 WL 12199 (N.D.Ill.) (Cite as: 1987 WL 12199 (N.fl.JIL)) crime or fraud, C. Relief

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The parties and attorneys involved in this lawsuit are directed to return all copies of the letter to counsel for Burns Fry, and Robert Fenn is ordered to submit all future filings with this court for in camera review prior to service. The attorneys in this case are expected to work out their differences over the Fenn deposition in advance and to submit a copy of their agreement to this court for approval. CONCLUSION Burns Fry's motion for a protective order is granted.

EN].. Mr.

Troop is Burns Fry's Director of Finance and Administration. FN2. Federal law regarding the attorneyclient privilege applies because this suit is based primarily on federal question jurisdiction. See Memorial Hospital for McHenrv County v. Shadur, 664 F.2d 1058, 1061 n. 3 (7th Cir.l981) (federal law applies both to federal claims and pendent state claims in a federal question lawsuit). FN3. Alternately, even if Fenn had the power to waive Burns Fry's privilege in January, 1987, he did not do so in this case because he acted in light of his own interests, not those of Burns Fry. FN'~This court concludes that it was proper to consider Burns Fry's in camera submissions. See In re Walsh, 623 F.2d 489. 494 n. 5 (7th Cir], cert. denied, 449 U.S. 994 (1980). 1987 WL 12199 (N.D.Ill.) END OF DOCUMENT

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