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Hoot Winc, LLC v. RSM McGladrey Financial Process Outsourcing

November 16, 2009


The opinion of the court was delivered by: Hon. William McCurine, Jr. U.S. Magistrate Judge, U.S. District Court



A. Procedural History

On September 28, 2009. The Court held a telephonic discovery conference. [Doc. No.74.] The Court permitted letter briefing regarding a) the adequacy of Plaintiff's privilege log; and b) the applicability of the work product privilege to billing records and reports conducted by CBIZ. Id. After conducting and in camera review of documents as well as careful consideration of the briefing and exhibits provided by the parties, the Court orders production of some of the documents identified herein.

B. Plaintiff's Argument

Plaintiff contends Third Party tax consultant CBIZ/Mayer Hoffman McCann has produced all the documents in its possession regarding its engagement by Hoot Winc with the exception of 16 documents produced for in camera review, which Plaintiff contends are protected by the attorney-client or attorney-work product privileges. Plaintiff asserts Defendant seeks to take unfair advantage of the work performed by CBIZ in anticipation of litigation. Plaintiff also argues the sufficiency of its privilege log, asserting that all information available to it was disclosed in the privilege log, thereby establishing its sufficiency as a matter of law.

C. Defendant's Argument

Defendant contends no claim of privilege attaches to the documents in CBIZ's possession and instead assert CBIZ's billing records and reports are directly relevant to Hoot Winc's damages claim based upon fees paid to CBIZ to remedy alleged accounting/book-keeping mistakes made by Defendant and therefore, must be produced. Defendant further argues any privilege which may have attached to the financial reports and billing records at issue are waived by virtue of Plaintiff's materially deficient and inadequate privilege log.


Attorney-Client Privilege Does Not Apply The attorney-client privilege "protects the confidentiality of communications between attorney and client made for the purpose of obtaining legal advice." Evergreen Trading, LLC v. United States, 80 Fed. Cl. 122, 128 (2007); See also Genentech, Inc. V. U.S. Intern. Trade Com'n, 122 F.3d 1409, 1415 (1997); Am. Standard Inc. V. Pfizer, Inc, 828 F.2d 734, 745 (1987). In order for the privilege to attach, the elements of the attorney-client privilege must be met. The elements are: (1) The asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers; c) for the purpose of securing primarily either (i)an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) Not waived by the client. See 8 Wright & Miller, Fed. Prac & Proc., Civ. 2d § 2017, p. 2 (quoting U.S. v. United States Shoe Machinery Co., 89 F.Supp. 357, 358, D.C. Mass. (1950)) Because the privilege withholds relevant information from the fact-finder, the attorney-client privilege "protects only those disclosures necessary to obtain informed legal advice which might not have been made absent the privilege." Fisher v. United States, 840 F.2d 1424, 1428 (1988) (citing United States v. Osborn, 561 F.2d 1334, 1339 (9th Cir. 1977)).

Plaintiffs claim that attorney client privilege protects all their submitted documents from disclosure. In particular, Plaintiff contends the retainer agreement between accountants Mayer Hoffman McCann PC ("Mayer") and Eagen O'Malley & Avenatti, LLP is protected under the attorney-client privilege.*fn1

However, the Ninth Circuit has repeatedly held retainer agreements are not protected by the attorney-client privilege or work product doctrine. Ralls v. United States, 52 F.3d 223, 225 (1995); See also United States v. Blackman, 72 F.3d 1418, 1424 (9th Cir. 1995); In re Michaelson, 882 F.2d 882 (9th Cir. 1975.) Because the attorney-client privilege has not been applied to retainer agreements, Plaintiff's document 1 is not protected by that privilege.

The attorney-client privilege is also inapplicable to documents 2 through 16. Mayer Hoffman McCann PC has been retained by Eagen O'Malley & Associates, LLP to aid in Plaintiff's case. All the notes, reports and data compiled by Mayer have been taken from documents and correspondence between Plaintiff and Defendant. The underlying communications have already been disclosed to both parties, and the attorney-client privilege does not apply. However, because several documents were created by Mayer in anticipation of ...

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