[Editor’s Note: This article has been republished with permission. It was originally published November 9, 2023 on the eDiscovery Assistant Blog]
This week’s decision comes to us from the case titled 6340 NB LLC v. Cap. One, N.A. This is a decision from November 16, 2023, from United States Magistrate Judge James Wicks. This week’s issues include failure to produce, privilege log, attorney-client privilege, cost recovery, proportionality, attorney work product, and in-camera review.
At issue here is the ground lease of two residential parcels of land to be acquired by 6340 NB and rezoned to allow for the construction of a Capital One bank branch with a cafe in the town of Hamstead. The lease was signed in 2017 between the parties and, after a number of delays and extensions, 6340 NB filed the zoning application with the town on July 24, 2019 — two years after the lease was signed.
The town then held a hearing roughly six months later on December 17, 2019. Capital One argued that at the hearing the town would not agree to the rezoning. 6340 alleges that progress was made during the hearing and the town was generally supportive. Fast forward to a little over a month later — January 31, 2020 — and Capital One served a termination notice of the ground lease for the failure of 6340 NB to timely perform its obligations under the lease. 6340 NB then brought this action to recover damages based on Capital One’s alleged breach of contract and anticipatory repudiation of a ground lease and its subsequent amendments. Try saying that three times fast.
Capital One has counterclaimed against 6340 NB, alleging fraud and breach of contract in connection with the alleged performance under the ground lease.
What are the facts that are before us on this motion? We’re before the Court on two competing motions to compel. The plaintiffs have moved for in-camera review of documents that Capital One is withholding based on privilege. They’re asking the Court to look at those documents and determine whether or not they are properly withheld based on privilege and to compel the production of those documents, specifically around Capital One’s decision to terminate the lease. Those documents are currently marked confidential and privileged. Capital One’s motion seeks to compel documents that 6340 NB has withheld as privileged and denoted on a privilege log.
The language here from Judge Wicks really makes me smile. At the outset of his decision, he remarks that, “Discovery kerfuffles have permeated this case, with each side engaging in linguistic fisticuffs for quite some time over a handlist of issues”.
The grounds for this decision are interesting because just last week on our third year anniversary episode, I mentioned that we’re seeing a lot more requests for in-camera review and discussions on categorical privilege logs. Both of those issues are present here.
6340 NB’s Motion To Compel
Let’s start with the motion from 6340 NB. This is the second time that 6340 NB has brought this motion. It was originally denied by the Court as premature. It’s now renewed its motion, claiming that Capital One is playing a “shell game” to hide information regarding the decision and rationale to terminate the lease. 6340 NB provided multiple instances of efforts made by Capital One to support its argument. In essence, 6340 NB argued that Capital One responded to an interrogatory listing names who were involved in the decision to terminate, but depositions of those individuals all revealed that they had absolutely no role in the termination. 6340 NB also noted that the timing of the privileged communications included on the log suggested that there was consideration of the termination three months before the town hearing, but that they were currently being withheld from production. Capital One responded by saying that it named five individuals that it “believed” to be involved in the decision to send the notice and that “changed over time”. It also argued that it has produced all non-privileged documents and that its privilege log adequately explains why the other documents are being withheld based on privilege.
The Court’s analysis here is pretty brief, to be honest, and it talks a little bit about 6340 NB’s behavior during the depositions. The Court starts with a standard of review and explains that the decision whether to even engage in an in-camera review rests with the District Court’s sound discretion. An in-camera review would ensure that there is “a bona fide request for legal advice and not a subterfuge to evade discovery obligations.” Recall that that’s exactly what 6340 NB is accusing Capital One of doing here.
To determine whether the in-camera review was needed, the Court looked at Capital One’s privilege log to determine whether privilege had been sufficiently identified. The Court also looked to Local Civil Rule 26.2, which requires the parties to include the following in their privilege logs: the type of document, the general subject matter of the document, the date of the document, the author of the document, addressees of the document, and the relationship of the author or addressees to one another. With that basis — looking at the rule and looking at the substance of Capital One’s privilege log — the Court declined to engage in an in-camera review of documents from Capital One.
The Court found that Capital One had complied with the local rules in its privilege log, and that conducting such a review would merely be a “fishing expedition” that would not yield any new information since 6340 had already received documents and taken extensive depositions of Capital One’s personnel. In short, the Court found that 6340 NB had not made a sufficient showing to justify the in-camera review. The Court also cites the case law and notes that undertaking an in-camera review should not be taken lightly. For in reviewing for privilege, the Court is given unfettered access to privileged communications between attorney and client. In order to justify such a review, the movant must make an evidentiary showing that there is some basis to suspect the communications withheld are in fact not privileged. That showing is absent here.
If you’re seeking in-camera review, the layout of case law in this decision is one that you’re going to want to pay attention to, particularly if you’re in the Second Circuit. It’s really well laid out by the Court and something worth noting.
Capital One’s Motion to Compel
Let’s turn to Capital One’s motion to compel. Capital One’s motion seeks communications related to three separate events and asks the Court to order 6340 NB to provide a detailed privilege log rather than the categorical privilege log that 6340 NB produced.
Both parties make factual arguments in response, but I really want to focus on the categorical privilege log issue. In response to Capital One’s motion, 6340 NB argues that the parties stipulated to a categorical privilege log. The Court found that 6340 NB had properly asserted privilege and that its logs complied with the local rules, again, looking at the local Rule 26.2 that’s there in the Court.
The Court also agreed that the parties had stipulated to provide categorical privilege logs and cited to case law in the Second Circuit holding that categorical privilege logs are acceptable and appropriate in certain circumstances if it provides information about the nature of the withheld documents sufficient to enable the receiving party to make an intelligent determination about the validity of the assertion of the privilege. As a result of the party’s agreement and the fact that the privilege log was sufficient, the Court denied Capital One’s motion.
What are our takeaways from this case? Here, the Court really looked at both motions through the privilege logs provided by both parties and used that as a basis to deny both motions. This is the first time we’ve really seen that. More often than not, when parties come to the court seeking in-camera review, that review is granted. I think it’s worth paying attention here to the fact that the Court both denied the review, but also that they provided a fairly decent layout of the case law in the Second Circuit on why that review was denied.
6340 NB provided more facts on its motion, seeking to show that Capital One was playing a shell game, but they really weren’t persuasive for the Court. What it comes down to here is that it was the privilege log and how detailed the privilege log was — whether it actually met the standards of the local rule — as to determining whether or not the Court would allow for in-camera review here. It doesn’t seem like the facts that 6340 NB put forward really assisted at all in the analysis. It was all down to the privilege log as far as the Court was concerned.
The Court also laid out what’s needed in order to get an in-camera review. As I mentioned, if you’re arguing in favor of an in-camera review or trying to prevent one, take a look at how the law is laid out in this case.
Also note that the Southern District of New York and the Eastern District of New York, which share local rules, provide for categorical privilege logs in their local rules. Check your jurisdiction’s rules and the case law to see whether or not you can use a categorical privilege log.
Finally, if you agree to a categorical privilege log and you aren’t happy with the results, you aren’t going to be able to walk that back. We’ve had discussions multiple times in the context of ESI protocols and 502(d) orders, and the Court finds it here as well. You will be held to what you agree to, so make sure that you’re thinking it all the way through to the end of the litigation before sending that thumbs-up emoji or any other form of agreement — you know that’s a reference to the Canadian case.