Securities & Exchange Commission v. Gupta

281 F.R.D. 169, 2012 U.S. Dist. LEXIS 119672, 2012 WL 990779
CourtDistrict Court, S.D. New York
DecidedMarch 26, 2012
DocketNo. 11 Civ. 7566(JSR)
StatusPublished
Cited by16 cases

This text of 281 F.R.D. 169 (Securities & Exchange Commission v. Gupta) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Securities & Exchange Commission v. Gupta, 281 F.R.D. 169, 2012 U.S. Dist. LEXIS 119672, 2012 WL 990779 (S.D.N.Y. 2012).

Opinion

MEMORANDUM ORDER

JED S. RAKOFF, District Judge.

On February 24, 2012, the parties in this insider trading civil enforcement action deposed Lloyd Blankfein, Chief Executive Officer of Goldman Sachs, a non-party to this proceeding. During that deposition, counsel for defendant Gupta asked Blankfein if he had met with anyone other than his attorneys in connection with preparing for the deposition. See Transcript of Deposition of Lloyd Blankfein dated Feb. 24, 2012 (“Blankfein Dep.”) at 12. Blankfein answered that he had met with attorneys from the Securities and Exchange Commission (“SEC”), prosecutors from the United States Attorney’s Office for the Southern District of New York (“USAO”)' — including a prosecutor in the pending criminal insider trading against defendant Gupta — and at least one agent from the Federal Bureau of Investigation (“FBI”). When Gupta’s attorney asked Blankfein what the SEC and USAO attorneys asked him at these meetings and what documents they showed him, the SEC attorneys objected, invoking their own work product protection pursuant to Rule 26(b)(3), Fed. R.Civ.P., as well as the USAO’s work product [171]*171protection pursuant to their “common interest” with them, and directed Blankfein not to answer the questions. In a joint telephone conference with the Court held on February 28, 2012, defendants Gupta and Rajaratnam moved to compel Blankfein to answer the questions. The Court directed the parties to submit letter briefs in support of their respective positions. Having reviewed the parties’ briefs, which have been docketed, the Court rejects the assertions of work product protection and hereby directs Blankfein to answer any questions about his deposition preparation meetings with representatives from the SEC and the USAO.

Work product protection is a judicially created doctrine (since codified at Rule 26(b)(3), Fed.R.Civ.P.) that provides a lawyer with a zone of privacy in her work, “free from unnecessary intrusion by opposing parties and their counsel.” Hickman v. Taylor, 329 U.S. 495, 510-11, 67 S.Ct. 385, 91 L.Ed. 451 (1947); accord In re Grand Jury Proceedings, 219 F.3d 175,190 (2d Cir.2000). It is distinct from and extends more broadly than attorney-client privilege. Grand Jury Proceedings, 219 F.3d at 190 (citing United States v. Nobles, 422 U.S. 225, 238 & n. 11, 95 S.Ct. 2160, 45 L.Ed.2d 141 (1975)). Here, the SEC argues that the topics the SEC and USAO attorneys discussed with Blankfein and the documents they showed him are protected work product, as they reveal the attorneys’ legal opinions, thought processes, and strategy. See United States v. Dist. Council of N.Y.C., No. 90 Civ. 5722(CSH), 1992 WL 208284, at *6-7, 1992 U.S. Dist. LEXIS 12307, at *19 (S.D.N.Y. Aug. 18, 1992) (noting that although work product protection typically applies to documents and things, deposition questions that seek unjustified disclosure of opinions or thought processes of counsel trigger work product protection).

Work product protection, however, may be waived if the work product is voluntarily disclosed. In this Circuit, the privilege is waived where there is “deliberate, affirmative, and selective use of privileged work-product materials by a party.” Grand Jury Proceedings, 219 F.3d at 191; see also In re Steinhardt Partners, L.P., 9 F.3d 230, 234 (2d Cir.1993). Here, defendants argue that the SEC and the USAO waived any privilege they may have been able to assert when they shared their work product with Blankfein, a third-party witness in this ease. The Second Circuit has not yet specifically addressed whether disclosing work product to a third-party witness is a “deliberate, affirmative, and selective use” of work product that constitutes waiver. Both Grand Jury Proceedings and Steinhardt, however, cite with approval In re Sealed Case, an opinion of the D.C. Circuit, which held that “a party waives its work product protection in civil litigation if it discloses the privileged material to anyone without ‘common interests in developing legal theories and analyses of documents.’ ” In re Sealed Case, 676 F.2d 793, 817 & n. 97 (D.C.Cir.1982) (quoting United States v. AT & T Co., 642 F.2d 1285,1300 (D.C.Cir.1980)).

Steinhardt is particularly instructive. The defendants in Steinhardt were sued in a private class action for allegedly manipulating the market in two-year Treasury notes. Steinhardt, 9 F.3d at 232. During the SEC’s preliminary investigation of the allegations underlying the class action, the defendants prepared and furnished to the SEC a memorandum and exhibits that addressed some of the SEC’s questions. Id. When the private plaintiffs in the class action sought production of that memo in discovery, defendants asserted work product protection. Id. The Second Circuit held that the defendants had waived any work product protection when they voluntarily shared their memo with the SEC, an adversary. Id. at 235 (“Once a party allows an adversary to share the otherwise privileged thought processes of counsel, the need for privilege disappears.”); accord In re Refco Inc. Sec. Litig., No. 07 MDL 1902(JSR), 2012 WL 678139, at *3 (S.D.N.Y. Feb. 28, 2012) (holding privilege waived where plaintiffs’ counsel shared legal strategy with a third-party witness against whom plaintiffs had tolled claims).

In dicta, however, the Court in Steinhardt noted that there “may” not be waiver where the disclosing party and the government “share a common interest in developing legal theories and analyzing information, or situations in which the government and the dis[172]*172closing party have entered into an explicit agreement that the government will maintain the confidentiality of the disclosed materials.” Steinhardt, 9 F.3d at 236 (emphasis supplied) (citing Sealed Case, 676 F.2d at 817). Here, however, neither Lloyd Blankfein nor Goldman Sachs share any such common interest with the SEC or the USAO that saves these disclosures from waiver. Blankfein is simply a third-party witness in this case. He is represented by his own attorneys, not the Government, and neither he nor his attorneys takes a position in the instant dispute. See Blankfein Dep. at 17. Goldman Sachs is not pursuing its own independent claims against Gupta, nor is it coordinating with the SEC or USAO in developing legal theories or analyzing information. See AT & T Corp., 642 F.2d at 1300 (holding no waiver where MCI Corp. shared its work product with Department of Justice antitrust attorneys, as DOJ and MCI had “common interests” in pursuing their respective public and private antitrust claims against AT & T).

The SEC and the USAO chose to meet with Blankfein in the days and weeks before his deposition and go over his testimony. They were under no obligation to do so. See Grand Jury Proceedings, 219 F.3d at 191 (contrasting subpoenaed grand jury testimony with voluntary disclosure). This “deliberate, affirmative, and selective” use of work product waives the SEC’s ability to now assert the privilege against the defendants.

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281 F.R.D. 169, 2012 U.S. Dist. LEXIS 119672, 2012 WL 990779, Counsel Stack Legal Research, https://law.counselstack.com/opinion/securities-exchange-commission-v-gupta-nysd-2012.