Sampedro v. Silver Point Capital, L.P. ( 2020 )

19-4339(L)
Sampedro v. Silver Point Capital, L.P.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
AMENDED SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS
PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE
32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE
FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE
A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 4th day of June, two thousand twenty.
PRESENT:
RALPH K. WINTER,
RICHARD C. WESLEY,
RICHARD J. SULLIVAN,
Circuit Judges.
_____________________________________
Luis Javier Martinez Sampedro,
Movant-Appellant-Cross-Appellee,
v. Nos. 19-4339-cv,
20-8-cv, 20-29-cv
Silver Point Capital, L.P., Contrarian
Capital Management, LLC, David
Reganato, Norman Raul Sorensen Valdez,
Respondents-Appellees-Cross-Appellants.
_____________________________________
FOR MOVANT-APPELLANT- VINCENT LEVY, Holwell Shuster &
CROSS-APPELLEE: Goldberg LLP, New York, NY (Scott M.
Danner, Holwell Shuster & Goldberg
LLP, New York, NY, Sean M. Fisher,
Brenner, Saltzman & Wallman LLP,
New Haven, CT, on the brief).
FOR RESPONDENTS-APPELLEES- DUANE L. LOFT (Andrew Villacastin,
CROSS-APPELLANTS: on the brief), Boies Schiller Flexner LLP,
New York, NY, for Respondents-
Appellees-Cross-Appellants Silver Point
Capital, L.P., Contrarian Capital
Management, LLC, and David
Reganato.
Jason C. Hegt, Latham & Watkins LLP,
New York, NY, for Respondent-Cross-
Appellant Norman Raúl Sorensen
Valdez.
Cross-appeals from the United States District Court for the District of
Connecticut (Janet Bond Arterton, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is
AFFIRMED.
Movant-Appellant-Cross-Appellee Luis Javier Martinez Sampedro
(“Sampedro”) appeals from a December 27, 2019 order of the United States District
Court for the District of Connecticut (Arterton, J.) overruling, in relevant part,
Sampedro’s objections to an order by the magistrate judge (Spector, M.J.).
Specifically, Sampedro challenged the magistrate judge’s denial of his motion to
compel production of documents withheld on privilege grounds from Silver Point
Capital, L.P. (“Silver Point”), Contrarian Capital Management, LLC
(“Contrarian”), and David Reganato (together, the “Fund Respondents”).
Together with Norman Raúl Sorensen Valdez (“Sorensen,” and with the Fund
Respondents, “Cross-Appellants”), 1 the Fund Respondents cross-appeal from the
district court’s July 30, 2019 order granting Sampedro permission to provide
discovery – which he obtained under 28 U.S.C. § 1782 for use in a litigation in a
Spanish commercial court (the “Spanish Litigation”) – to the Comisión Nacional
del Mercado de Valores (“CNMV”), a Spanish regulatory authority. We assume
the parties’ familiarity with the underlying facts, procedural history, and issues on
1 Sorensen is not implicated in the part of the district court’s order that Sampedro appeals
in his opening brief. However, he joins the Fund Respondents’ brief as to the argument
that the district court erred in allowing the continued availability of section 1782
discovery, and as to the Fund Respondents’ cross-appeal.
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appeal, to which we refer only as necessary to explain our decision.
We review the district court’s denial of discovery under 28 U.S.C. § 1782 for
abuse of discretion. Kiobel by Samkalden v. Cravath, Swaine & Moore LLP, 895 F.3d
238, 244 (2d Cir. 2018). A district court abuses its discretion if “it based its ruling
on an erroneous view of the law or on a clearly erroneous assessment of the
evidence, or rendered a decision that cannot be located within the range of
permissible decisions.” United States v. Vilar, 729 F.3d 62, 82 (2d Cir. 2013)
(internal quotation marks omitted).
I. Continued Availability of Section 1782 Discovery
As a threshold matter, we conclude that the district court did not abuse its
discretion in permitting section 1782 discovery to continue and in considering
Sampedro’s motion to compel documents withheld for privilege in the section
1782 proceeding. For the district court to have authority to grant an application
under section 1782, the statute requires, among other things, that “the discovery is
for use in a foreign proceeding before a foreign [or international] tribunal.” Mees
v. Buiter, 793 F.3d 291, 297 (2d Cir. 2015) (alteration in original) (internal quotation
marks omitted). Sampedro’s initial application under section 1782 requested
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discovery “for use” in the Spanish Litigation. Subsequently, the court in the
Spanish Litigation (the “Spanish Court”) denied Sampedro’s request to introduce
into evidence documents obtained from the section 1782 proceeding, stating that
“the documents . . . are not considered necessary, nor useful, nor pertinent,” in
light of “the abundant documentary evidence that already exists in the
proceedings.” App’x at 1218. Cross-Appellants argue that the Spanish Court’s
decision denying the admission of those documents rendered the section 1782
discovery no longer “for use” in the foreign proceeding on which Sampedro’s
application was based. We disagree.
As our precedents make clear, discovery need not be admissible to be “for
use” in a litigation, as “there is no statutory basis for [such a] requirement.”
Brandi-Dohrn v. IKB Deutsche Industriebank AG, 673 F.3d 76, 82 (2d Cir. 2012); see
also Certain Funds, Accounts &/or Inv. Vehicles v. KPMG, L.L.P., 798 F.3d 113, 122 (2d
Cir. 2015). Regardless of whether a foreign tribunal may deny admission of a
document in the future, or whether it already has, “[t]he plain meaning of the
phrase ‘for use in a proceeding’” remains unchanged. Mees, 793 F.3d at 298.
That phrase simply “indicates something that will be employed with some
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advantage or serve some use.” Id. Thus, the district court did not abuse its
discretion in determining that, because Sampedro will still “prepare witnesses,
craft questions, and present his case” in the ongoing Spanish Litigation, he would
have the opportunity “to place a beneficial document – or the information it
contains – before a foreign tribunal.” Special App’x at 71 (citing In re Accent
Delight Int’l Ltd, 869 F.3d 121, 131 (2d Cir. 2017)).
II. Adequacy of Fund Respondents’ Privilege Log
Sampedro argues that the Fund Respondents failed to carry their burden of
asserting attorney-client privilege, and that the district court’s acceptance of the
Fund Respondents’ belated privilege log is inconsistent with this Court’s decision
in United States v. Construction Products Research, Inc., 73 F.3d 464 (2d Cir. 1996).
We disagree.
“To facilitate its determination of privilege, a court may require an
adequately detailed privilege log in conjunction with evidentiary submissions to
fill in any factual gaps.” Constr. Prods. Research, 73 F.3d at 473 (internal quotation
marks omitted). The log should identify each document and the individuals on
the communications to sufficiently allow the court to determine if the document is
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“at least potentially protected from disclosure.” Id. (internal quotation marks
omitted).
In Construction Products, we upheld the district court’s finding that a
privilege log was deficient where the log contained generic descriptions. But we
did so in light of the “particularly . . . glaring absence of any supporting affidavits
or other documentation” that would justify an assertion of privilege. Id. at 474.
Here, by contrast, Fund Respondents submitted “supplemental fact declarations
from Respondents’ witnesses;” further, the magistrate judge “worked extensively
with the parties in this litigation,” presided over two hearings at which Fund
Respondents provided additional detail about log entries, and conducted “its own
in camera review of hundreds of documents.” Fund Respondents’ Br. at 33–34
(internal quotation marks omitted); see also Special App’x at 11. On this record,
we cannot say that the district court abused its discretion in accepting the log.
III. Director Documents
Turning to the merits, Sampedro challenges the Fund Respondents’
assertion of privilege over communications between Linklaters and the directors
of Codere – excluding Sampedro and his brother – regarding the brothers’
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termination (“Director Documents”). Sampedro argues that because he was a
director on the dates of those communications, he was within the privilege and
should have access to the documents. We disagree.
First, we are unpersuaded by the federal common law Sampedro cites in
support of his position. We recognize that district courts within this Circuit have
acknowledged the general “doctrine that treats a director and a corporation as
‘joint clients’ of the company's attorneys for purposes of privilege claims.”
Newmarkets Partners, LLC v. Sal. Oppenheim Jr. & Cie. S.C.A., 258 F.R.D. 95, 104
(S.D.N.Y. 2009); Am. S.S. Owners Mut. Prot. & Indem. Ass'n, Inc. v. Alcoa S.S. Co.,
232 F.R.D. 191, 197 (S.D.N.Y. 2005). Analogizing from law governing “joint
clients”– which allows clients who are represented by the same attorney and share
a common interest to assert privilege over information disclosed amongst
themselves against the “outside world,” but not against each other if they later
become adverse – these courts have found that “as a general matter, a corporation
cannot assert the privilege to deny a director access to legal advice furnished to
the board during a director’s tenure.” Newmarkets Partners, 258 F.R.D. at 104
(internal quotation marks omitted). But it was not error to conclude that the
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general rule did not apply here, where only a subset of the board retained
Linklaters for the specific purpose of obtaining legal advice related to terminating
the Sampedro brothers. Indeed, under such circumstances, the considerations
animating the joint client analogy are not present. Linklaters did not act for all
directors in common, and the information being sought was never previously
furnished to the adverse directors.
Nor do we find error in the district court’s conclusion that “open adversity”
was not required for the directors to invoke attorney-client privilege against the
Sampedro brothers. Sampedro cites no binding precedent in this Circuit in
support of his position, largely looking to Delaware law instead. But even if
Delaware law were controlling, the rationale for requiring open adversity does not
apply here. See In re CBS Corp. Litig., No. CV 2018-0342-AGB, 2018 WL 3414163,
at *5–6 (Del. Ch. July 13, 2018) (explaining that the privilege inquiry considers
whether the excluded directors could “have had a reasonable expectation that they
were clients of [the company’s disclosed counsel] at a given time”).
In this case, the magistrate judge reasonably concluded that “[a] subset of
the board, not including the Martinez Sampedro brothers, were the clients.”
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Special App’x at 11–12. Accordingly, Sampedro could not have had a reasonable
expectation that Linklaters was representing his interests. Indeed, the record
suggests that Sampedro was not aware of Linklaters’s representation until it was
revealed during this litigation; certainly, Linklaters never represented Sampedro
or his brother. The district court therefore did not err in declining to apply the
privilege rules urged by Sampedro.
IV. G3M Documents
Sampedro also seeks access to communications, which were reviewed in
camera, involving G3M, a third-party consulting firm retained by Codere.
Sampedro argues that G3M’s involvement in the communications broke the
attorney-client privilege, and that the district court erred in denying his motion to
compel production of these documents.
When a communication is “made in confidence for the purpose of obtaining
legal advice from the lawyer,” the inclusion of a third party on that communication
does not necessarily destroy the attorney-client privilege, so long as the inclusion
is “necessary, or at least highly useful, for the effective consultation between the
client and the lawyer.” United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961).
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“[C]ommunications by the client” to his counsel and a third-party “reasonably
related to [the] purpose” of having the third-party “interpret [the
communications] so that the lawyer may better give legal advice” remain
protected. Id. However, the privilege does not extend to communications
where the third party merely provides additional “information [the client] did not
have” for the lawyer to “advise his client . . . about the legal and financial
implications” of an action. United States v. Ackert, 169 F.3d 136, 138–40 (2d Cir.
1999).
We find nothing in the record to suggest that the magistrate judge
misapplied the law when reviewing documents in camera. Fund Respondents
submitted an affidavit stating that G3M “was essential in interpreting” “large
quantities of data” regarding “Codere’s business, financial performance, and
organizational structure,” and “was indispensable in . . . interpreting Codere’s
financial [and organizational] data” so that Linklaters could tailor its legal advice.
Sampedro Br. at 43–44. This supports the conclusion that G3M served a
specialized purpose akin to an accountant who deciphers financial information so
that the lawyer can effectively counsel the client. See Kovel, 296 F.2d at 922. And
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because G3M is described as clarifying Codere’s data for Linklaters – i.e., “as a
translator or interpreter of client communications” – its role is distinct from the
banker’s in Ackert, where the in-house counsel sought out the banker to gain
“information [the client] did not have.” 169 F.3d at 139–40. Accordingly,
Sampedro’s argument fails.
V. Leave to Disclose Section 1782 Discovery to the CNMV
Cross-Appellants appeal the district court’s determination permitting
Sampedro to disclose section 1782 discovery to the CNMV. Specifically, Cross-
Appellants contend that the magistrate judge erred in finding that the CNMV
process constituted a “proceeding” under section 1782.
But "[s]ection 1782(a) does not limit the provision of judicial assistance to
``pending’ adjudicative proceedings;” rather, a proceeding needs only to be
“within reasonable contemplation.” Intel Corp. v. Advanced Micro Devices, Inc., 542
U.S. 241, 258–59 (2004). Given the district court’s factual findings regarding the
CNMV process, we find no basis to disturb its ruling.
As the district court noted, “[t]he parties [did] not dispute that an ongoing
CNMV sanction proceeding would constitute a ‘proceeding.’” Special App’x at
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67. Accordingly, the inquiry turned on “whether the CNMV has in fact initiated
a sanction proceeding or has at least taken sufficient steps to put such a proceeding
‘within reasonable contemplation.’” Id. (quoting Intel, 542 U.S. at 259). Relying
on an affidavit submitted by Cross-Appellants, the magistrate judge found that
Sampedro’s filing of a complaint triggered a preliminary review that would result
in the CNMV deciding whether to “initiate a sanctioning proceeding, the outcome
of which would be reviewable by a Spanish court.” Id. at 69. Because the review
was pending and the CNMV had not “informed the Petitioner that there are
insufficient grounds to initiate a sanctioning procedure or that otherwise it will
not investigate,” the magistrate judge reasonably concluded that a proceeding was
“within reasonable contemplation.” Id. (internal quotation marks omitted).
VI. Conclusion
We have reviewed the remainder of the parties’ arguments and find them
to be without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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