Judge Rakoff on Limits To Subpoena Discovery and Law Firm Privilege
In complex commercial actions, parties often litigate in multiple venues. Judge Rakoff’s decision in Krys v. Sugrue, one of the many cases arising from the failure of Refco, a commodities and futures broker, rejects the tactic of seeking discovery in one venue to support claims in another. The Refco cases are consolidated in the S.D.N.Y. under rules applicable to multi-district litigation (MDL).
In Krys, plaintiffs sued their former law firm, Gibson Dunn, for malpractice relating to Refco matters. The case, however, was referred out of the MDL to arbitration on the law firm’s motion. Nonetheless, Plaintiffs, parties to other MDL actions, sought enforcement in the MDL of their subpoena for an internal Gibson Dunn memorandum reflecting the firm’s preliminary thoughts concerning its representation of plaintiff’s predecessor companies. The subpoena was served before the malpractice case was transferred to arbitration, and Gibson Dunn was not otherwise a party to the MDL.
Judge Rakoff, reversing a Special Master’s ruling, granted Gibson Dunn’s motion to quash the subpoena as to its internal memo. The court found that the document had no relevance to the MDL – the action which the subpoena was served – and that plaintiffs could not use the MDL to obtain discovery that was relevant only to their arbitration proceeding. “‘[W]hen the purpose of a discovery request is to gather information for use in proceedings other than the pending suit, discovery is properly denied.’”
The court also rejected plaintiffs’ claim that the document should be produced because “a client has presumptive access to [its] attorney's entire file on the represented matter…” The court found that such access does not apply “documents intended for internal law office review and use.” Judge Rakoff found that “[t]he need for lawyers to be able to set down their thoughts privately in order to assure effective and appropriate representation warrants keeping such documents secret from the client involved.”