Small Transcript of the Exchange between Weil Attorney and THJMW on Work Product release today.. Very interesting..
THJMW: Let me ask on the work product, because I think that is key to an issue I have on the debtors proposal. I did fully expect that the debtor would produce to the EC all of its work product and any document protected by attorney-client privilege. Because in my view they are your constituents as are the creditors and in the absence of that maybe I should reconsider my denial for the motion of an examiner and let an examiner get everybody’s privileged documents. The committee the EC is on the same side as the debtor, the ec is not the adversary in this issue, the FDIC and JPM may be, but why aren’t they entitled to those under the garner and other common interest cases?
Weil Attorney who has the point on this…Your Honor I actually think that the case law that does address this question precisely is very clear that they are not entitled to this info and they are not entitled to it for several reasons
1st this is work product that is not subject to the garner exception and I will address that first if you will allow me
THJW: Why should it not be produced to your co-client?
One reason is work product cannot be under the case law, the standard applicable to work product is a nearly absolute protection.
THJW: It is from protection by the other side, “this is not the other side!”
OK your honor let me address that specific question. The 1st garner factor is what the cases looked at, they are asking you this, they are the client here, they’re getting up and saying we’re the real client and so u should have turn over your work product. The situation here is that there are multiple constituencies and they are not even the Senior constituent. They’re subordinated to the creditors. So they are not really speaking out for the entire estate and while today they are saying there is a mutuality of interest this is what the case look at and I’ll give several cases including 3rd circuit cases. While today they are saying there is a mutuality of interest that justifies the invasion of privilege, they know better. What they said on Jan 21st “unsecured creditors and equity holders possess disordinate priorities and interests and the interests of shareholders and creditors completely conflict during the course of a chap 11 proceeding and they went on to justify their very existence by touting the fact that their interests conflict with other groups that are not representing their interests, so ….
THJMW: But you’re not representing the creditors, you’re representing everybody?
Exactly right your honor.
THJW: Then why are they not entitled to it?
They are not entitled to it because the case law that has looked at a situation like this where you have a fiduciary that has obligations to conflicting constituents. Has said that when you have a conflict like this, you don’t turn it over, so for example We cite the Wachtel vs Healthnet decision Where the 3rd circuit specifically distinguished garner on exactly this ground. The 3rd said garner was distinguishable on the grounds that the corp management owed their fiduciary obligations to a single discreet group. The shareholders of the corp and the 3rd said in sharp contrast disclosure was not warranted on the facts of Wachtel where there were multiple beneficiaries of the fiduciary relationship all seeking payment from the same pool of assets and disclosure of materials was not supported by some of those beneficiaries and we cite the 11th circuit where there are cases that address this exact question. “when you have significant stakeholder groups who are not in favor of compelling discovery garner simply doesn’t apply. Because in that type of situation you simply can’t say that the true client the one that really owns the privilege or owns the interest is the one requesting the info. The best you can say is you have a multiplicity of diverging interest and that’s exactly what we have here. And Your Honor the cases have recognized when there are multiple constituents and the general guidelines in the 3rd and the Supreme court has said this “that privilege rules and work product protection rules, they need to be clear, they need to be predictable and in a situation where you have somebody, a debtor and a counsel who have to negotiate different factions, they said “they don’t share our interests to date.”
THJW: This deals with the settlement of the litigation and the settlement of potential claims against JPM/FDIC?
Yes Your Honor
THJW: How are the shareholders and the creditors on a different side from the debtor on that litigation?
Your Honor they are on a different side in the following sense recognized as by the 11th circuit in Hoffs and the 3rd in Wachtel. What those cases recognize is that the fiduciary who in the center of this needs to be able to work and serve the best interests of the group as a collective and so when you have a conflict as between the constituents…
THJMW: With Emotion “How is there a conflict in the litigation?” Doesn’t everybody want to pursue.. Everybody’s on the same side of the litigation against JPM and FDIC….“Correct?”
Uh-UM Respectfully your honor… NO I don’t think so “cut-off” by thjmw
THJMW “How, How are they different
Let me give you an example, for example we’ve seen briefs from time to time the view has been expressed. what the equity has stated they want to do is “swing for the fences!”
THJMW: That’s a different issue that deals with the settlement; I’m talking about the litigation. Let’s start with the litigation.
In a litigation certain claims, when different groups right from the beginning from the conception the EC has recognized it has conflicting, not just different interest, but when you have groups with different interest that can apply to … cut-off again by THJW.
THJMW: Don’t say to me different interest in the litigation. Does everyone want the most money?
Everyone wants the most money
THJW: OK
And then the way you can try to get to the most money are judgement calls and strategy that could differ radically, in fact I think “cut-off by thjmw again”
HJMW: The debtor is suggesting we want to settle this litigation and I think the EC is entitled to your analysis of those claims and your analysis of why they should be settled.
Well-Well Your Honor “cut-off again”
THJMW: They’re one of your clients.
Your honor the case law that has addressed this, I don’t think that they “cut-off again”
THJMW: Is that case law exactly on point? Dealing with a bankruptcy case where the debtors are proposing to settle litigation that could benefit all?
Um-They are No! They are the closest case on point, they don’t cite a single case from any jurisdiction, over the protest of any constituency, the court none the less, compelled disclosure 1. It hasn’t happened where make history and go against the circuit court cases where they considered the very issue. That’s #1.. #2 I haven’t got to this yet, but garner which is what we are talking about here and is an exception to the attorney client privilege, Garner does not apply to work product at all, there’s no basis to apply the Garner test when you talk about work product. 3rd circuit has said it does not apply to work product.. The 5th circuit, 11th circuit, all the circuit courts that have addressed the question have held that it does not apply to work product and that is just about everything they’re looking for and on top of that your honor you don’t get to invoke the garner.. Even if it could apply to work product, the circuit courts are unanimous that it does not, even if you could apply it to work product cite clear rule 26, “this is what applies to work product and it rejected the good cause standard. Even if garner could apply there’s another prerequisite to applying garner. Which is and your honor wrote this in an appealate “to apply garner there needs to be a claim of breach of fiduciary duty and that claim needs to be a colorable claim, that is what garner said and if it is a colorable claim, then maybe you can show cause where it would make since to get discovery to prove that claim. Here all they said is they might want to, they might have questions about a settlement. The fact that you might have questions about a settlement, is not, has never been held enough to violate the privilege even under garner but again your honor.. we “cut-off by thjmw”
THJMW: How do you think you’re gonna put on a case at confirmation in support of the settlement? Without somebody testifying as to A. What the claims are B. How the debtor valued those claims and C. How the settlement is a reasonable resolution to those claims
You’re your Honor that’s a good point and if we did get to the point to where we put our work product at issue which we have not done so far, in fact that was the complaint “cut-off thjmw again”
THJMW: How are you going to prove it without
Well one way to prove it would be similar to the way you prove points when you put in briefs, well what we would do, is we would say well this is the claim and we saw these are the defenses, These are the legal issues, that way that previously some of this is done. That there have been previous hearings where claims have been put off on the board and there have been descriptions of the claims that have been raised and then cite to the court it is reasonable for anyone looking at the, to preclude this will be the likely value, if we cross that line, if we weighed if we put it at issue and crossed that line, then your honor you’ve got us, because we’ve decided to put it at issue, we haven’t and then again I want to emphasize we’re talking a lot about garner today, but garner does not the circuit court and including the 3rd circuit court of appeals. Has flatly said work product cannot be invaded by garner.. cut-off thjmw
THJMW: But it can be invaded by an examiner? So maybe I should reconsider if you’re not going to produce that for one of your constituents, then why should I not appoint an examiner to whom I will direct that you give everything which I thought I had directed May 5th that you give everything to the committee.
Your Honor The reason not to do it, would be the same reason that your honor previously articulated I believe the words were “this has been investigated to death.” And your honor just like “cut-off again thjmw”
THJMW: If it has been investigated to death, my suggestion was the fruit of that investigation should be produced to the parties. “It hasn’t been!”
Your Honor let me just be clear about, I hear I hear what you’re saying about giving them the fruits and let me just explain what we understood it to mean and what I think is a reasonable understanding and proposal. What the court has said the supreme court all the cases that talked about work product, they all said hey look of course you could say it would be more convenient if you could get the analysis, but your honor what they , they will do their own analysis, I would love to think that Quinn Emanuel internal memos and research is such hot stuff that without it they can’t do their own analysis, but of course they’ll do their own analysis, they need to do their own analysis, so your honor what do they need, what are the fruits of the investigation that they need, what they need are the underlying facts and when they get the underlying facts of these investigations that have been investigated to death, they take all that factual info and they can draw and they will draw their own opinion. Now in their justification your honor even if garner did apply one of the prongs in garner is need and by the way under the work product doctrine which is nearly absolute you have to show a far stronger showing than just Need and substantial hardship, look at the part of their brief when they talk about what is their supposed need. Your honor what you see is they don’t say they really need to look through my files, my legal analysis. What they say is we can do, they say they can do these analysis, they never say they can’t this isn’t like a dead witness, that’s when the courts have found on rareability, they say they can do it, but it might cost more and take a little more time. That is a plea of convenience, it’s not a showing of need. Your honor is there were an order here where you were requiring us to turn over work product materials it would go against what the 3rd circuit has flatly said which is work product is not subject to the garner exception and it is a near absolute protection “cut-off thjmw”
THJMW: It’s a protection from 3rd parties, not from your client, your client
He goes on and on about privilege
THJMW: Then you’re suggesting they do their own analysis after full discovery, so I guess confirmation will be next year.
Your honor as for the deadline, I’m not saying it will be next year, what I’m saying is this court I do not believe under US Supreme court precedent, under rule 26, under the 3rd where it says garner does not apply to work product under all the circuit court cases I have ever drafted where the materials can be turned over despite the protests of one of the constituencies. All of it says that it cannot, should not be done, where someone basically says I can do the analysis, I just think it would be more convenient. Every test, the work product test “cut-off thjmw”
THJMW: In all of those cases are against the other side. Hickman and Taylor were the other side wanted my investigation of the accident, let em do their own.
Your Honor respectfully that’s not the case. In Wachtel it was a multiple beneficiary case, it was not the other side. In copps let me explain what was at issue in copps It was not at all the other side, It wasn’t the other side. In copps you had a union and guess what the union was doing? Plaintiff union virtually 100% of the union members they sued to what, to challenge an agreement, we don’t like this agreement that the union representatives entered into with the company. They said we are the client, you own representatives, you owe this to us , you did this work for us. Right? So this was someone saying their the client and their argument was this one we’re on the same side and the court said when you have multiple constituencies garner doesn’t apply. Something about when one faction is against it, there are several and there are conflicting interests, the courts that have looked at this question said you don’t get to raise your hand and pretend you’re the client. These are not cases where they are the adversary and neither your honor is wachtel a 3rd circuit case. In wachtel you had a group of companies that would provide insurance or pension benefits and the holding was that when you have multiple fiduciaries who are all competing for the same set of money, you may owe duties to all of them but none of them can stand up and say I am the client and therefore I get this. These cases are very closely on point. Reasoning they looked at exactly what’s happening here.
THJMW: Said you’re repeating this, let me her from the others.
Then Rosen requested the 5 minute break…
Well there you go, I thought it would be a very good idea to put this exchange down on paper.
I will try and transcribe some interesting points of today’s hearing tomorrow when I get some time.. My brain and my fingers hurt..Night Night !!
~Fish~
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