United States District Court, D. Colorado
IN RE APPLICATION OF LOUIS BACON FOR AN ORDER PURSUANT TO 28 U.S.C. § 1782 TO CONDUCT DISCOVERY FOR USE IN FOREIGN PROCEEDINGS Petitioner,
CATHY ARCHER, Respondent.
KRISTEN L. MIX UNITED STATES MAGISTRATE JUDGE
matter is before the Court on Respondent's Motion
for a Protective Order [#23] (the “Motion”).
Petitioner timely filed a Response [#41] in opposition to the
Motion [#23], and Respondent filed a Reply [#43]. The Court
has reviewed the Motion [#23], the Response [#41], the Reply
[#43], the entire case file, and the applicable law, and is
sufficiently advised in the premises. For the reasons set
forth below, the Motion [#23] is DENIED.
Louis Bacon (“Petitioner”) commenced this action
on November 11, 2017, pursuant to 28 U.S.C. § 1782.
See Ex Parte Application [#1]. The ex parte
application was submitted to assist Petitioner in connection
with two defamation lawsuits (the “Bahamian
Actions”) he filed in the Bahamas against a Bahamian
publisher named Wendall Jones (“Jones”) and the
media outlets owned and operated by Mr. Jones. Id.
at 1-2. Mr. Jones is the publisher of the Bahama
Journal and, according to Petitioner, is a proxy of
Peter Nygård (“Nygård”). Id.
at 3-4. Mr. Nygård is the alleged orchestrator of a
smear campaign against Petitioner. Id. He allegedly
conducts the campaign through proxies in an effort to hide
his own involvement. Id.
maintains that Mr. Nygård's alleged smear campaign
continues through columns published by Respondent Cathy
Archer (“Respondent”) in the Bahama
Journal. Ex Parte Application [#1] at 5.
Respondent is a citizen of the Bahamas and writes a biweekly
column for the Bahama Journal under the byline P.J.
Malone. Decl. of Respondent [#7-1] at 2. Petitioner
considers some of Respondent's columns defamatory. Ex
Parte Application [#1] at 5.
to Petitioner's subpoena, the Court previously ordered
Respondent to produce documents and communications related to
Petitioner, the “smear campaign, ” Mr.
Nygård, Mr. Jones, and others. See generally
Order [#17] (providing a more detailed background on the
Bahamian Actions). Respondent produced these documents, along
with a purported confidential indemnification agreement (the
“Agreement”) which came into her possession
through the following circumstances.
Agreement appears to have been created in California by
Lavely & Singer, P.C. (“L&S”) and Mr.
Nygård, relating to separate litigation in that
jurisdiction. Motion [#23] at 2. Mr. Nygård
then sent the Agreement to Richard Good (“Good”),
who, along with L&S, served as counsel for Mr.
Nygård. Decl. of Richard I. Good [#34] at 2.
Mr. Good contends that he received the Agreement “as a
confidential attorney-client communication.”
Id. at 2. On March 27, 2017, Respondent received the
Agreement from the office of Mr. Good in an email response to
her request for copies of documents relating to a California
lawsuit between Petitioner and Bianca McKinney. Ex. 1 to
Decl. of S. Shackelford [#41-1] at 1. On September 17,
2017, this Court ordered Respondent to produce documents
related to Petitioner, the “smear campaign, ” Mr.
Nygård, and others. See generally Order [#17].
Respondent provided these documents to her attorney, Kenneth
Morris (“Morris”), along with the Agreement.
Decl. of Kenneth R. Morris [#37] at 1-2. Mr. Morris
reviewed the documents produced by Respondent for privilege,
identified the Agreement as potentially confidential, and
contacted Mr. Good to inquire whether his office had intended
to disclose the Agreement to Respondent. Id. at 2.
Mr. Good stated that disclosure of the Agreement to
Respondent must have been inadvertent, and Mr. Morris
informed Mr. Good that the Agreement would be removed from
the production. Id. Mr. Morris failed to do so,
however, and the Agreement was produced to Petitioner's
attorneys. Id. On January 11, 2019, Mr. Morris
notified counsel for Petitioner of the purported inadvertent
disclosure and requested immediate return of the Agreement,
but counsel for Petitioner refused to comply. Id. at
present Motion [#23], Respondent moves for a protective order
to claw back the Agreement on behalf of L&S, the author
of the document and one purported holder of privilege
therefor. Motion [#23] at 2. Respondent argues that
California's substantive law of privilege applies to this
clawback dispute and that the Agreement is protected as
privileged under both attorney-client privilege and attorney
work product doctrine. Id. at 3-7. Respondent also
claims that the inadvertent disclosure of the Agreement did
not operate as a waiver and that the crime-fraud exception is
not applicable. Id. at 8-11. Petitioner contends
that the federal common law of privilege applies and that the
Agreement is not protected under either attorney-client
privilege or attorney work product doctrine.
Response [#41] at 2-7. Petitioner also argues that
the disclosure of the Agreement operated as a waiver and that
the Agreement is discoverable under the crime-fraud
exception. Id. at 8-11.
the Court holds that Respondent has no standing to assert the
privilege rights of third parties to this dispute, the Court
does not address the issues of whether the Agreement is
protected under either attorney-client privilege or work
product doctrine, whether the disclosure of the Agreement
operated as a waiver of privilege, or whether the Agreement
is otherwise discoverable under the crime-fraud exception.
Court first addresses whether California law or federal
common law with respect to privilege applies to this dispute.
The Court then addresses Respondent's standing to assert
the privilege rights of third parties to this dispute.
Choice of Law
argues that California state law controls the issue of
privilege in this action because L&S, party to and
purported privilege holder of the Agreement, is located in
California, and because Petitioner's attorneys are making
use of the document to defend against claims in California
state court. Motion [#23] at 3. Thus, Respondent
argues that California has a strong interest in having its
privilege law apply. Id. Petitioner contends that
federal common law governs questions of privilege because
Petitioner brought this case pursuant to 28 U.S.C. §
1782, a federal statute. Response [#41] at 3.
Tenth Circuit has not directly addressed the issue of whether
federal or state privilege law applies where one party
received a purportedly privileged document due to the other
party's alleged inadvertent disclosure pursuant to a
federal court-ordered subpoena, and where the receiving party
subsequently used the document in a separate state court
proceeding. In Motley v. Marathon Oil Co., the Tenth
Circuit held that where a plaintiff asserts both a federal
and a state claim, the court should look to the law of the
state in deciding privilege issues as to the state causes of
action. 71 F.3d 1547, 1551 (10th Cir. 1995). However, this
holding is ...