Federal Deposit Insurance v. Ernst & Whinney

137 F.R.D. 14, 1991 U.S. Dist. LEXIS 12330, 1991 WL 107797
CourtDistrict Court, E.D. Tennessee
DecidedMay 13, 1991
DocketNo. CIV-3-87-364
StatusPublished
Cited by8 cases

This text of 137 F.R.D. 14 (Federal Deposit Insurance v. Ernst & Whinney) is published on Counsel Stack Legal Research, covering District Court, E.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Federal Deposit Insurance v. Ernst & Whinney, 137 F.R.D. 14, 1991 U.S. Dist. LEXIS 12330, 1991 WL 107797 (E.D. Tenn. 1991).

Opinion

ORDER

JOE A. TILSON, United States Magistrate Judge.

This matter has been referred to the undersigned by order of this Court for resolution of all nondispositive pretrial matters [Doc. 275].

[16]*16This matter comes before the undersigned upon the motion of Ernst & Whin-ney to compel production of documents and answers to deposition questions [Doc. 539], the FDIC’s memorandum in opposition thereto [Doc. 569], Ernst & Whinney’s supplemental memorandum [Doc. 578], the FDIC’s supplemental memorandum [Doc. 580], and the second supplemental memorandum of Ernst & Whinney [Doc. 579].

The documents which are at issue are certain criminal reports and referrals made by the FDIC regarding suspected criminal acts at Butcher-related banks, including United American Bank, Knoxville. Ernst & Whinney seeks these documents on the basis that they are relevant to its defense that losses for which the FDIC has sued Ernst & Whinney were caused by fraud, not by Ernst & Whinney’s audit. The FDIC has opposed the production of these documents on the basis that they are protected by the attorney-client privilege.

It is clear that the documents in question are the types of documents that are covered by the attorney-client privilege. These documents were prepared by the FDIC for use in consultation with the FDIC’s attorneys, who are, in these kinds of matters, the United States Attorneys. Therefore, as found by Magistrate Judge Murrian in his earlier rulings, these documents are the types of documents protected by the attorney-client privilege, and Ernst & Whinney is not entitled to them unless the attorney-client privilege is waived. It is undisputed that all of the reports at issue were furnished by the FDIC not only to the United States Attorney’s Office, but also to other state and federal bank regulatory agencies. In addition, it is undisputed that some of these documents have been produced as exhibits at depositions; some of them have been produced inadvertently during the massive document production in this case; and some of these reports have been produced in related cases. Ernst & Whinney argues that the attorney-client privilege was waived as to all of these reports when the FDIC furnished these documents to other regulatory agencies. In the alternative, it argues that the privilege has been waived as to each document that has been produced by the FDIC, whether inadvertently or otherwise.

Since it is really quite clear that the attorney-client privilege attaches to these documents, the real issue before the undersigned at this time is whether or not the privilege has been waived, either by furnishing the documents to other state and federal regulatory agencies, or by inadvertently furnishing them in response to requests for production, or by filing them as exhibits to depositions.

It is correct that the general rule is that any disclosure by a client of confidential attorney communications will waive the attorney-client privilege. However, the undersigned is not willing to hold that the FDIC’s production of these reports to other banking regulatory agencies has waived its privilege. The production of these documents to other agencies by the FDIC was not done indiscriminately. Here, the evidence clearly shows that the FDIC produced these documents only to other agencies which had an absolute commonality of interest with the FDIC in dealing with potential criminal acts which occurred at these banks. The undersigned finds that it would be very counterproductive and chilling to hold that the FDIC waived its attorney-client privilege when it passed these documents on to other governmental agencies which clearly had an identity of interest with the FDIC as to these alleged criminal actions. If the FDIC was discouraged from having open communications with these other agencies relative to these alleged criminal actions because of a fear of waiver of its attorney-client privilege, the effects of such discouragement would be widespread.

As pointed out by the FDIC in its supplemental response [Doc. 580], the FDIC discloses these reports to other regulatory agencies in order to “protect and stabilize” the nation’s banking system. To hold otherwise would seriously undermine the FDIC’s ability to carry out this mandate. Therefore, the undersigned rejects Ernst & Whinney’s argument that the furnishing of the subject reports to other regulatory [17]*17agencies so compromised the confidential nature of the reports as to revoke the attorney-client privilege. In fact, this sharing of information is nothing more than the taxpaying public would hope for and expect among agencies which possess the same identity of interest, as these do.

As to Ernst & Whinney’s assertions that the privileged nature of these reports and referrals was waived by the FDIC’s making these documents available to officers and directors of the banks involved, the undersigned finds that the FDIC did not, in fact, make the documents themselves available to these officers and directors. Instead, it appears that the FDIC merely advised officers and directors of involved banks of the facts underlying the criminal reports and referrals and which caused the reports and referrals to be made in the first place. Clearly, the facts underlying the reports and referrals are discoverable, and both parties to this litigation have so agreed. Therefore, it is apparent that the FDIC’s discussion of these underlying facts with officers and directors has absolutely no effect on the maintenance of the attorney-client privilege as to the criminal reports and referrals at issue.

The next question of waiver involves the production of some of these criminal reports by the FDIC during the course of this litigation and in prior cases. In this regard, the undersigned will now address the specific documents which, in one manner or another, have been produced to Ernst & Whinney in this case, either in the course of discovery in this case or in related cases. In the opinion of the undersigned, there are five separate types of production at issue here. In addition, the undersigned will consider the David Meadows’ letter, which contains information about criminal reports and referrals; but this letter will be considered separately.

I. The fourteen criminal reports and referrals inadvertently produced in this case (CIV-3-87-365):

As pointed out by Magistrate Judge Murrian in FDIC v. Aetna Casualty & Surety Co.,

The factors that a court should consider when determining whether the attorney-client privilege has been waived because of inadvertent disclosure are:

(1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production;
(2) the number of inadvertent disclosures;
(3) the extent of disclosure;
(4) any delay and measures taken to rectify the disclosures; [and]
(5) whether the overriding interest of justice would or would not be served by relieving a party of its error.

Memorandum and Order at 6-7, FDIC v. Aetna Casualty & Surety Co., CIV-1-85-797 (Jan. 28, 1988, E.D.Tn.), citing Parkway Gallery v. Kittinger/Pennsylvania House Group, Inc., 116 F.R.D. 46, 50 (M.D.N.C.1987).

It is undisputed that the fourteen documents in question were inadvertently produced to Ernst & Whinney in this case.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Eden Isle Marina, Inc. v. United States
89 Fed. Cl. 480 (Federal Claims, 2009)
State ex rel. Allstate Insurance v. Gaughan
508 S.E.2d 75 (West Virginia Supreme Court, 1998)
STATE EX REL. ALLSTATE INS. v. Gaughan
508 S.E.2d 75 (West Virginia Supreme Court, 1998)
Fox v. Massey-Ferguson, Inc.
172 F.R.D. 653 (E.D. Michigan, 1995)
Wichita Land & Cattle Co. v. American Federal Bank
148 F.R.D. 456 (District of Columbia, 1992)
PacifiCorp v. Department of Revenue
838 P.2d 914 (Montana Supreme Court, 1992)

Cite This Page — Counsel Stack

Bluebook (online)
137 F.R.D. 14, 1991 U.S. Dist. LEXIS 12330, 1991 WL 107797, Counsel Stack Legal Research, https://law.counselstack.com/opinion/federal-deposit-insurance-v-ernst-whinney-tned-1991.