Without waiver, discovery of bona fide privileged documents is usually a dead end. That principle would seem to be especially rock-solid when those documents are the subject of a subpoena addressed to adversary counsel in related litigation (in this case, to enforce a foreign judgment). But in Chevron v. Donziger, et al., a judgment enforcement action that has been anything but ordinary (here and here), Judge Kaplan ruled that where there is probable cause that the foreign judgment was procured by fraud, and the documents sought relate to that fraud, neither work product protection nor attorney-client privilege applies.  

In 2011, an Ecuadorian court entered an $18.2 billion judgment against Chevron in an environmental action brought by 47 individuals (the “Lago Agrio Plaintiffs” or “LAPs”).  The Patton Boggs firm acted as co-counsel for the LAPs in the Ecuadorian case and has taken the lead role in subsequent American proceedings to enforce the judgment. In the case at hand, one of a cascade of motions and litigations arising out of the judgment, Chevron asserted RICO and common law fraud claims against the LAPs and one of their attorneys, alleging that the Ecuadorian judgment was fraudulently obtained. Patton Boggs is a named RICO co-conspirator but not a defendant. Accordingly, Chevron subpoenaed Patton Boggs for documents relating to services the law firm provided to plaintiffs in the Ecuadorian litigation. Patton Boggs resisted compliance on attorney-client privilege and work product grounds.

To resolve the dispute, Judge Kaplan engaged in what he called a “painstaking, step-by-step process”:

First, the court found “probable cause” in the existing factual record to believe there was fraud or other criminal activity in the procurement of the Ecuadorian judgment.  For example, Chevron adduced evidence that the LAPs’ representatives threatened the judge with a judicial misconduct complaint in order to coerce him into appointing a hand-picked expert.  That expert, who was charged with undertaking an “independent” assessment of alleged environmental conditions, submitted a report attributing $27.3 billion in damages to Chevron.

Second, Judge Kaplan limited the subpoena’s scope to the subjects as to which Chevron had established probable cause to suspect fraud or criminal activity.  There is no legitimate claim of privilege as to those documents because they “relate to the crime or fraud and [therefore] were in furtherance of the crime or fraud.”

Third, the court found that Chevron had established substantial need for the documents it sought and that it could not obtain their equivalent elsewhere.  Patton Boggs “has had a hand in almost every major development” and was a “unique source of evidence of the alleged fraud that is available nowhere else.”  A finding of substantial need destroys any remaining ordinary work product claim, whether the documents furthered a crime or fraud or not.
According to Judge Kaplan: If probable cause exists as to the commission of a fraud or crime, it is not necessary to show also that a lawyer from whom otherwise privileged or protected documents may be sought was a culpable or knowing participant in the fraud or crime. On that basis, the court ordered Patton Boggs to produce all documents responsive to the now-narrowed subpoena.  Patton Boggs was also ordered to submit a privilege log of all documents that it claims did not relate to fraud and are otherwise subject to attorney-client privilege.

(My colleague, Jason Gerstein ably crafted this entry.)