[*1]
Delta Fin. Corp. v Morrison
2007 NY Slip Op 51955(U) [17 Misc 3d 1113(A)]
Decided on October 11, 2007
Supreme Court, Nassau County
Warshawsky, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on October 11, 2007
Supreme Court, Nassau County


Delta Financial Corporation, in its individual capacity and as Initial Member of Delta Funding Residual Exchange Company, LLC, Plaintiff,

against

James E. Morrison, Delta Funding Residual Management, Inc. and Delta Funding Residual Exchange Company, LLC, Defendants.



Delta Funding Residual Exchange Company, LLC, and Delta Funding Residual Management Inc., Plaintiffs,

against

Delta Financial Corporation, Sidney A. Miller, Hugh Miller, Marc E. Miller, Richard Blass, and Arnold B. Pollard, Defendants.



Delta Funding Residual Exchange Company, LLC, Plaintiff,

against

KPMG LLP, Defendant.




011118/2003



Attorneys for Delta Financial are:

Loeb & Loeb, LLP

Attn.: Eugene Licker, Esq.

345 Park Avenue

New York, New York 10154

Certilman Balin Adler & Hyman

Attn.: M. Allan Hyman, Esq.

90 Merrick Avenue

East Meadow, New York 11554

Attorneys for Delta Funding and James Morrison are:

Thomas A. Brown

Orans, Elsen & Lupert LLP

875 Third Avenue

New York, New York 10022

Tel: 212-586-2211

Fax: 212-765-3662

Christopher A. Byrne, Esq., P.C.

1725 K Street NW

Washington, D.C. 20006

Gary C. Tepper Esq.

Arent Fox

1050 Connecticut Ave. NW

Washington, D.C. 20036

Attorney for KPMG is:

Hogan & Hartson, Esqs.

Attn.: Dennis H. Tracey, Esq.

875 Third Avenue

New York, New York 10022

Ira B. Warshawsky, J.

In or about July 2003, Delta Financial Corporation ("DFC") filed a lawsuit against James Morrison ("Mr. Morrison"), Delta Funding Residual Exchange Company, LLC ("DFREC"), and its management company, Delta Funding Residual Management, Inc. ("DFRM") (collectively known hereinafter as the "LLC") after the LLC withheld certain distributions allegedly due to DFC under the terms and conditions of the LLC operating agreement. Thereafter, on or about September 11, 2003, the LLC commenced its own action for approximately $110 million plus interest for, inter alia, fraud and breach of contract regarding an exchange of assets between the LLC and DFC in and about August 23, 2001 (the "2001 Exchange").

In and about July, 2004, the LLC commenced an action against the accounting firm of KPMG ("KPMG"), the auditor of DFC, for approximately $110 million plus interest for, inter alia, negligent misrepresentation and professional negligence with regard to KPMG's year 2000 audit of DFC and the certification of various SEC documents related to the 2001 Exchange. All matters have been consolidated before this Court. Familiarity with the facts is assumed and only relevant facts will be restated when necessary.

DFC's Objection to LLC's

Designation Of Documents as Privileged.

In or about November, 2006, DFC served a subpoena (the "Subpoena") upon non-party Jeffries & Company, an investment bank ("Jeffries") (an entity with a 30% interest in the LLC), which requested the production of documents responsive to the Subpoena (the "Responsive Documents") as well as the deposition of Harrison Bubrosky ("Mr. Bubrosky"), an alleged member of a litigation committee of the LLC ("Litigation Committee"), which its very existence is questioned by DFC and KPMG[FN1]. In response to the Subpoena, Counsel for Jeffries produced a number of documents to DFC and withheld a small amount of documents, which according to Jeffries, were privileged (the "Jefferies Privileged Documents"). The Jefferies Privileged Documents are not the subject of this decision.

Apparently, in addition to Jeffries conducting its review of the Responsive Documents to determine whether an assertion of privilege was warranted, the Responsive Documents were made available to counsel for the LLC for its own review for privilege prior to the Responsive Documents being produced. As a result of its review, LLC directed that over 50 documents be withheld from the production of Responsive Document to DFC based upon the LLC's assertion of privilege.

After the receipt of the documents and the privilege log which logged the withheld documents, DFC objected to the assertion of privilege over documents that were withheld from the production of Responsive Documents (hereinafter referred to as the "Disputed Documents".) Counsel for the parties agreed to have the Court-Appointed Discovery Referee, Michael Cardello III, Esq., conduct an in-camera review of the Disputed Documents to determine the issue of [*2]privilege. The Discovery Referee directed the LLC to submit for an in-camera review the Disputed Documents along with a brief and concise cover sheet for each document to substantiate the assertion of privilege to the Discovery Referee. After the commencement and upon completion of his in-camera review, Mr. Cardello determined that several fundamental issues needed to be resolved by the Court prior to any determination being made regarding privilege with respect to the Disputed Documents. Specifically, Mr. Cardello believed that the Court needed to rule upon issues regarding; (1) if and when a Litigation Committee was formed; and if formed, (2) who were members of the Litigation Committee and at what time. The Court agrees. Accordingly, notwithstanding Mr. Cardello involvement as the Discovery Referee in this matter, considering the issues that need to be addressed and decided before a decision can be rendered regarding the assertion of privilege over the Disputed Documents, the Court has determined that this decision should come from the Court and not the Discovery Referee, Mr. Cardello.

DISCUSSION

The CPLR directs that there shall be "full disclosure of all matter material and necessary in the prosecution or defense of an action . . ." CPLR §3101(a). The test is one of usefulness and reason. See Allen v. Crowell-Collier Publications, Co., 21 NY2d 403, 406, 288 NYS2d 449, 235 NE2d 430 (1968). Section §3101(a) embodies the policy determination that liberal discovery encourages fair and effective resolution of disputes on the merits, minimizing the possibility for ambush and unfair surprise. See 3A Weinstein Korn & Miller, NY Civ. Prac. §§3101.01-3101-03.

The CPLR establishes three categories of protected materials: privileged matter, which is afforded absolute immunity from discovery, CPLR §3101(b); attorneys' work product, which is also afforded absolute immunity, CPLR §3101(c); and trial preparation material, which is subject to disclosure only on a showing of substantial need and undue hardship in obtaining substantial equivalent material by other means; CPLR §3101(d)(2). See Spectrum Systems International Corp. v. Chemical Bank, 78 NY2d 371, 575 NYS2d 809, 581 NE2d 1055 (1991). Obvious tension exists between the policy favoring full disclosure and a policy permitting parties to withhold relevant information. See Spectrum at 813. Consequently, the burden of establishing any right to protection is on the parties asserting it; the protection claim must be narrowly construed; and its application must be consistent with the purposes underlined immunity. Id.; Priest v. Hennessy, 51 NY2d 62, 69, 431 NYS2d 511, 409 NE2d 983 (1980); Matter of Jacqueline F., 47 NY2d 215, 417 NYS2d 884, 391 NE2d 967 (1979); Koump v. Smith, 25 NY2d 287, 294, 303 NYS2d 858, 250 NE2d 857 (1969).

The burden that the LLC must meet cannot be satisfied by counsel's conclusory assertions of privilege; rather the proponent of the privilege must set forth with competent evidence establishing the elements of the privilege. See Martino v. Kalbacher, 225 AD2d 862, 639 NYS2d 144 (3rd Dep't 1996); see also von Bulow v. von Bulow, 811 F.2d 136, 141 (2d Cir. 1987).

Is There a Blanket Litigation Committee Privilege?

As this Court held in the Prior Decision dated January 26, 2007, it finds, once again, that there is no per se or "blanket privilege" for every communication between "members of a litigation committee just based solely upon their membership in a litigation committee." Delta Financial v. James E. Morrison et al., Index Nos.: 011118/2003, 003084/2004, & 18599/2005; Short Form Order dated January 26, 2007, J. Warshawsky, p. 10. (defined, supra as the "Prior [*3]Decision"). However, this Court further held that:

[i]t is essential that the proponents of the privilege set forth facts and evidence to support the invocation of the attorney-client privilege. Notwithstanding that non-lawyers are conducting a conversation; a communication is the subject to the attorney-client privilege if the record is clear that a conversation with counsel is the subject of the communication between the non-lawyers.

See Delta Financial, Short Form Order dated January 26, 2007 at pps 10-11.

Therefore, if it is determined that a litigation committee exists, the Court must make a determination regarding whether the documents at issue are subject to the attorney-client privilege with the burden to establish the privilege and protect the documents on the proponent of the privilege. In other words, the Court must determine if a protected communication with counsel is the subject of the communication in question between members of the Litigation Committee.

The Protections Afforded

By the Attorney-Client Privilege

The attorney-client privilege, the oldest among common law evidentiary privileges (8 Wigmore Evidence §2290 (McNaughton Rev. 1961) fosters the open dialog between lawyer and client that it is deemed essential to effective representation. See Matter of Vanderbilt, 57 NY2d 66, 453 NYS2d 662, 439 NE2d 378 (1982); Priest at 67. As the New York Court of Appeals set forth in Spectrum Systems, "CPLR §4503(a) states that a privilege exists for confidential communications made between attorney and client in the course of professional employment, and CPLR §3101(b) vests privilege matter with absolute immunity". Spectrum Systems at 814. In order for the privilege to apply, the communication from attorney to client must be made for "the purpose of facilitating the rendition of legal advice or services, in the course of a professional relationship". Rossi v. Blue Cross & Blue Shield of Greater New York, 73 NY2d 588, 542, NYS2d 508, 540 NE2d 703 (1989). The communication itself must be primarily or predominately of legal character. Id. at 594. The attorney-client privilege insulates from disclosure a discreet category of communications between attorney, client, and in some instances, third parties that assist the attorney to formulate and render legal advice. See United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961); see also Westinghouse Electric Corp. v. Republic of Philippines, 951 F.2d 1414, 1424 (3d Cir. 1991); Delta Financial Corp. v. James Morrison et. al, 13 Misc 3d 441, 820 NYS2d 745 (Nassau Cty. Sup. Ct. 2006). The privilege does not apply merely because a statement was uttered by or to an attorney (or an attorney's agent). Nor does it attach simply because a statement conveys advice that is legal in nature. See HPD Laboratories v. Clorox Corporation, 202 F.R.D. 410 (D.N.J. 2001).

The privilege is not limited, however, to communications directly between the client and counsel. It also encompasses communications between attorney and a client's agent or representative provided that the communications are intended to facilitate the provision of legal services by the attorney to the client. See U.S. v. Adlman, 68 F. 3d 1495 (2d Cir. 1995); Golden Trade, S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 518 (S.D.NY 1992). It does not, however, cover communications between a non-lawyer and a client that involve the conveyance of legal advice offered by the non-attorney, except perhaps when the non-lawyer is acting under the supervision or the direction of an attorney. See e.g., National Hockey League Players Association v. Bettman, 1994 WL 38130 at *12 (S.D.NY February 4, 1994); Stryker Corp. v. [*4]Intermedics Orthopedics, Inc. 145 F.R.D. 298, 305 (E.D.NY 1992). Furthermore, the privilege protects from disclosure communications among corporate employees that reflect advice rendered by counsel to the corporation. See Bank Brussels Lambert v. Credit Lyonnais, 160 F.R.D. 437 (S.D.NY 1995); see also In re: Grand Jury 90-1, 758 F. Supp. 1411, 1413 (D. Colo. 1991). "A privileged communication should not lose its protection if an executive relays legal advice to another who shares responsibility for the subject matter underlying the consultation". See SCM Corp. v. Xerox Corp., 70 F.R.D. 508, 518 (D. Conn 1976.). This follows from the recognition that since the decision making power of the corporate client may be diffused among several employees, the dissemination of confidential information to such persons does not defeat the privilege. See SCM Corp. 70 F.R.D. at 518.

The Protections Afforded by

the Attorney Work Product Privilege

The Court also reviewed the Disputed Documents to determine if the attorney work-product doctrine affords any protection to the documents. For instance, in the context of a properly constituted litigation committee, certain documents may be afforded protection from disclosure pursuant to the attorney work-product doctrine. However, according to Weinstein Korn & Miller, CPLR §3101(c) should be construed as narrowly as possible to include only those materials prepared by the attorney, acting as an attorney and containing his or her analysis and trial strategy. See Weinstein Korn & Miller §3101.44; see also Aetna Cas. & Sur. Co. v. Certain Underwriters at Lloyds, 263 AD2d 367, 692 NYS2d 384 (1st Dep't 1999).

The basic New York law on the scope of work-product immunity is guided by Hickman v. Taylor, 329 U.S. 495, 67 S. Ct. 385, 91 L.Ed. 451 (1947), the leading case on work-product immunity in federal practice. According to Hickman, the work-product of an attorney consists of interviews, statements, memoranda, correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible things. The burden of showing an appropriate immunity, whether under CPLR §3101(c) or any other immunity provision is on the party asserting it. See generally Koump v. Smith, 25 NY2d 287, 303 NYS2d 858, 250 NE2d 859 (1969). Bald assertions that documents constitute attorney work-product or material prepared for litigation will not suffice. See Salzer v. Farm Family Life Insurance Co., 280 AD2d 844, 721 NYS2d 409 (3rd Dep't 2001); Zimmerman v. Nassau Hospital, 76 AD2d 921, 429 NYS2d 262 (2nd Dep't 1980).

A lawyer can perform work of a legal nature as well as a non-legal nature. The legal work performed by the lawyer need not be done directly by the lawyer himself or herself, but can qualify for the attorney work-product exclusion even if done by a non-lawyer, acting under the direction of a lawyer. See Weinstein Korn & Miller, §3101.44(b). In the case of the United States v. Nobles, 422 U.S. 225, 95 S.Ct. 2160, 45 L.E.d.2d 141 (1975) for example, the Supreme Court of the United States ruled that the federal work-product doctrine exempts from disclosure the report of an investigator retained by the attorney for the defendant in a criminal case. The investigator had interviewed a witness to the armed robbery of which the defendant

was accused. The essence of the conversations was preserved by the investigator in a written [*5]report. The Supreme Court stated that:

[a]t its core, the work-product doctrine shelters the mental processes of the attorney, providing a privileged area within which he can analyze and prepare his client's case. But the doctrine is an intensely practical one, grounded in the realities of litigation in our adversary system. One of those realities is that attorneys must often rely on the assistance of investigators and other agents in the compilation of materials in preparation for trial. It is therefore necessary that the doctrine protect material prepared by agents for the attorney as well as those prepared by the attorney himself.

Therefore, if the Court found evidence in the transcripts or in the documents themselves that the work-product of the Litigation Committee was the subject of work performed by an attorney or completed at the behest of an attorney, documents may be subject to certain protection that they would not otherwise.

DECISION


As discussed above, before this Court is able to address privilege claims of the LLC, it must determine if, in fact, a Litigation Committee was established and, if so, when was it created, and, if it was created, who was serving on the committee and when. In its analysis of this issue, the Court has, in part, focused upon Harrison Bubrosky ("Mr. Bubrosky") and his involvement, if any, on a Litigation Committee. Based upon the testimony of Mr. Bubrosky (see deposition transcript dated 6/19/07, pp. 171-182), he became a member, at the earliest, of a litigation group, (not a litigation committee)[FN2] at or just prior to the time the lawsuit against DFC was commenced by the LLC.[FN3] According to Mr. Bubrosky's testimony, the conversations of the litigation group were about whether to commence an action against DFC. In the Court's view, Mr. Bubrosky was consulted because Jeffries owned approximately 30% of the membership interests of the LLC.

According to Mr. Bubrosky, the litigation group consisted of Wayne Teetsel ("Mr. Teetsel") and him (see Bubrosky Tr. 6/19/07 pp. 173), who both approved the hiring of Christopher Byrne, P.C. by James Morrison ("Mr. Morrison") as litigation counsel for the LLC. ("Mr. Byrne") Apparently, Mr. Morrison had recommended Mr. Byrne. According to Mr. Bubrosky, he did not remain a member of this litigation group for long because it was determined by the LLC that KPMG was potentially a defendant in a lawsuit by the LLC and Mr. Bubrosky had a conflict. Apparently, KPMG was and is the current auditor for Jeffries and Mr. Bubrosky was instructed by management at Jeffries to "just walk away" (see Bubrosky Tr. 6/19/07 pp 181) from the litigation group after it was determined that "KPMG was involved [*6]potentially with the litigation of the LLC" (see Bubrosky Tr. 6/19/07 pp 174). The action against KPMG was actually filed in or about July, 2004. Does this mean there was a Litigation Committee or group as Mr. Bubrosky had articulated, as of September or December 2003? The answer is a resounding "no."

As discussed above, Mr. Cardello has provided the Court with the Disputed Documents and transcripts of deposition testimony in these consolidated matters to aid the Court in its determination[FN4]. During its in-camera review of the Disputed Documents, the Court reviewed a document labeled Document No. 77, which is an e-mail chain between Mr. Morrison, and Mr. Teetsel and Mr. Bubrosky dated March 28, 2005. The earlier e-mail in the chain is from Mr. Bubrosky to Mr. Morrison with a copy to Mr. Teetsel regarding a decision in the Kirkland Ellis and Morgan Stanley litigation in Florida that Mr. Bubrosky though maybe useful in the issues in this case. However, the reply by Mr. Morrison to Mr. Bubrosky and Mr. Teetsel approximately one and one-half hours later is telling on the issue of the so-called Litigation Committee.[FN5]

In the reply, Mr. Morrison answered a question about the Kirkland Ellis and the Morgan Stanley litigation in Florida and then asked the following question:

Question for you both to consider...I, the Board, would like to establish a "litigation committee" or something similarly named. The purpose would be to work closely with counsel and me to monitor the details of the litigation as it goes forward. Is this something you all can and will do? I am looking into the implications of this re attorney-client privilege now but should have an answer by tomorrow. [emphasis in original]

Thus, it is clear to the Court that as of March 28, 2005, no litigation committee/group had been established. In addition, Mr. Bubrosky has testified that he was not a part of any litigation group subsequent to July, 2004 (the commencement of the KPMG action), which means that based upon the March 28, 2005 e-mail (Document No. 77), Mr. Bubrosky was never part of any litigation committee/group.

Furthermore, did Mr. Morrison report to the two largest members of the LLC about the progress and/or status of the pending litigations? The answer to that would appear to be yes. Did these two men, Messrs. Teetsel and Bubrosky on behalf of their respective employers, have any decision-making role with respect to the litigations? The Court believes that the answer to that question is a limited yes. Based upon deposition testimony, apparently, Messrs. Teesel and Bubrosky helped interview and select counsel for the LLC, but beyond that, it appears that they had no involvement at all. [*7]

Does this mean that there could have been some privileged communications between Mr. Morrison and Mr. Teetsel and/or Mr. Bubrosky? For example, if an LLC attorney, perhaps Mr. Byrne or one of the others (e.g., Arent Fox or Dechert) provided legal advice and/or information to Mr. Morrison, who in turn gave such information to Mr. Teetsel and/or Mr. Bubrosky, would such a communication be considered privileged? "... [A] privileged communication does not lose its privileged status merely because it is relayed between executives who share responsibility for operating a corporation." Liberman v. Goldstein, 80 NY2d 429 (1992). The answer to that question is a resounding No as neither Mr. Teetsel nor Mr. Bubrosky were officers or employers of the LLC.

The Court is aware that one could argue that because of the membership interests held by the employers of these two men (Jeffries and Stonehill) that they share responsibility for operating the LLC. The Court soundly rejects this theory. Mr. Morrison was in charge of the LLC and ran it alone. There was no other decision-maker or anyone pulling the strings. In fact, according to counsel for the LLC, Mr. Morrison was the "chief cook and bottle washer" for the LLC. Was there a waiver, express or implied, by the LLC in sending e-mail communications to Mr. Teetsel and Mr. Bubrosky, a non-member of any litigation committee? The Court finds that the answer to that question is also a resounding Yes. Does the use of the word "resounding" seem somewhat repetitious? Perhaps. But after the Court has spent countless hours reviewing over fifty worthless claims of privilege, "resounding" has a sonorous ring to it.

Any attorney-client privilege that may have existed through the Litigation Committee after March 28, 2005 with respect to Mr. Teetsel could not have been maintained when those communications were also sent to Mr. Bubrosky as well as to Mr. Teetsel. The inclusion of Mr. Bubrosky creates a waiver. As discussed earlier, this Court finds that Mr. Bubrosky was never a member of any litigation committee/group and as such, any privileged communication sent to him as well as Mr. Teetsel destroys the privilege. Therefore, any correspondence sent to Mr. Bubrosky and Mr. Teetsel by Mr. Morrison where the claimed protection is solely "litigation committee privilege" or "attorney-client privilege", must be denied. The Court believes Mr. Bubrosky's lack of involvement in any litigation committee/group is clear. However, the Court also believes that Mr. Teetsel's involvement or lack of involvement in any litigation committee is not clear, other than the fact Mr. Teetsel's involvement, if any, must have occurred after March 28, 2005. As all but one of the Disputed Documents (the reduced number of documents) were dated either March 28, 2005 or earlier, there is no need to determine Mr. Teetsel's involvement in any litigation committee because the e-mail communications included Mr. Bubrosky, which created a waiver. Because the one post March 28, 2005 e-mail also included Mr. Bubrosky, who was never a member of any litigation committee or group, any privilege that may have existed was waived.

The Court will review each document individually.

DOCUMENT NO. 44

This e-mail communication dated July 8, 2004 is from Mr. Morrison, as CEO of the LLC, to representatives of the two largest members of the LLC, Messrs. Teetsel and Bubrosky. It contains multiple numbered paragraphs including a litigation update and an inquiry from counsel for the LLC to its members. As stated above, the Court finds that the earliest a litigation committee could have been constituted was after March 28, 2005 pursuant to Document No. 44. Therefore, since no litigation committee could have exist at the time of the communication, no privilege is applicable to this communication and Document No. 44 shall be produced.

DOCUMENT NO. 45

Document No. 45 is the same as Document No. 44, but is now being forwarded to David Schwartz, in-house counsel for Jeffries. Jeffries has not objected to the production of Document No. 45 and the Court finds that the LLC has no standing to object. However, even if the LLC had standing, the same analysis as set forth for Document No. 44 is applicable to Document No. 45. Therefore, Document No. 45 shall be produced.

DOCUMENT NO. 50

Document No. 50 is an e-mail communication dated July 21, 2004 that is generally a business report from the CEO of the LLC, Mr. Morrison, to the two largest members of the LLC (Stonehill and Jeffries). The date of the communication is prior to the earliest time that a Litigation Committee could have been formed (See Document No. 77). Even if a Litigation Committee existed at the time, which it did not, because Document No. 50 was also sent to Mr. Bubrosky, who was never a member of any litigation committee/group, any privilege that may have existed was waived. Therefore, Document No. 50 shall be produced.

DOCUMENT NO. 67

Document No. 67 is a communication from Mr. Morrison to Messrs. Bubrosky and Teetsel dated January 12, 2005 which highlights business issues as well as reports on status of KPMG and DFC litigations. In the Court's view, if a litigation committee existed at the time of the communication and Messrs. Bubrosky and Teetsel were on the litigation committee at the time of the communication, the Court would agree that the third, fourth and sixth paragraphs of this communication would be privilege and should be produced in redacted form because the update mostly likely originated from counsel. However, as discussed above, it is the Court's belief that no litigation committee or group existed until at least March 28, 2005 (see Document No. 77). Therefore, no privilege could protect Document No. 67 from production. Thus, Document No. 67 must be produced.

DOCUMENT NO. 77

Document No. 77 was in discussed in-depth earlier. In the Court's view, Document No. 77 sets forth that the earliest the so called Litigation Committee could have established was March 28, 2005. Therefore, the Court believes, as discussed above, that a Litigation Committee/Group could not have existed on or prior to March 28, 2005 and therefore, no privilege could have attached to Document No. 77. Even if a Litigation Committee or group exist prior to March 28, 2005, it is clear to the Court that Mr. Bubrosky was not a member of any such committee or group. Therefore, Document No. 77 must be produced.

DOCUMENT NO. 86

Document No. 86 is a communication from Mr. Morrison to Messrs. Teetsel and Bubrosky dated April 19, 2005. Arguably at this point in time, (after March 28, 2005) a Litigation Committee may have existed. However, its existence is of no import with respect to [*8]whether Document No. 86 should be protected[FN6].

Assuming, arguendo, that a properly constituted litigation committee existed at the time of this communication, the inclusion of Mr. Bubrosky, who in the Court's view was never a member of any litigation committee or group (or by his own testimony, off the litigation group since July, 2004), would amount to a waiver of any privilege. Therefore, Document 86 must be produced.

CONCLUSION

The Court would like to note a few items at the conclusion of this decision. First, the Court wants all counsel to know that it reviewed in-camera all of the documents submitted to the Discovery Referee, which amount to over fifty. The decision to reduce the number of documents to which counsel for the LLC was attempting to assert privilege came too late in the process. It must be noted that the countless hours the Court spent (at night and on the weekend) reviewing these documents is easily the biggest waste of this Court's time in over twenty years on the bench. The Court realizes that LLC's counsel places little value on this court's time. However, I do. The actions of the counsel for the LLC were frivolous (22 NYCRR 130-1.1(a) and (c) (1, 2 and 3)). The arguments were created out of whole cloth. The e-mail of March 28, 2005, indicates that no litigation committee existed before that date, yet they dare argue to the court a litigation committee privilege on e-mails, some dated nine months earlier. Furthermore, the attorney-client privilege claim is also without foundation as the court has ruled. Counsel for the LLC has ten (10) days from the date of this decision to submit to the Court why sanctionsshould not be imposed on the LLC and its counsel. This Court urges counsel to give long and serious thought before bringing such a challenge and argument before me in the future.

The LLC has seven (7) days from the date of this Order to produce to DFC the Document Nos. 44, 45, 50, 67, 77, and 86 as ordered above, as well as all other documents to which the claim of privilege has been withdrawn.

Dated: October 11, 2007

J.S.C.

Footnotes


Footnote 1: The issue of LLC's Litigation Committee was the subject of a Short Form Order dated January 26, 2007 by this Court which expressly stated in that decision that the Court made no determination regarding the validity of the existence of the Litigation Committee (the "Prior Decision"). This decision, unlike the Prior Decision, does make a determination regarding when the earliest the Litigation Committee may have been established and who may have been a member, which is discussed in detail below.

Footnote 2: Mr. Bubrosky made the distinction between a Litigation Group and Litigation Committee by stating that the former was less formal than the latter. (Bubrosky Tr. 6/19/07 pp. 172).



Footnote 3: While Mr. Bubrosky recalls December 2003 as the date that he began his involvement with the litigation group, Mr. Bubrosky had also testified that his involvement with the litigation group predated the commencement of the action against DFC. However, the LLC commenced the action against DFC in September, 2003.

Footnote 4: Originally, the Discover Referee and the Court were provided with over fifty documents for the in-camera review. After the Discovery Referee and the Court conducted their independent in-camera reviews of the original Disputed Documents and in fact, after the Court had prepared a decision with respect to all of the Disputed Documents, new counsel for the LLC withdrew its assertion of privilege to all but six (6) of the documents. Needless the say, the Court was not pleased that the decision to narrow the number of documents for the in-camera review came in the eleventh hour.



Footnote 5: Counsel for the LLC has asserted that the reply by Mr. Morrison as well as the original e-mail from Mr. Bubrosky is privileged. The Court does not agree.

Footnote 6: The Court expressly states that it makes no ruling on whether a litigation committee actually existed subsequent to March 28, 2005.