Opinion
Case No. 08-10949.
June 3, 2009
Edwin J. Harron, Young Conaway Stargatt , Taylor, LLP, Wilmington, DE, Attorneys for Harry J. Pappas and Stella A. Pappas.
Richard F. Casher, Kasowitz, Benson, Torres , Friedman LLP, New York, New York, Attorneys for Fortress Credit Corp.
Dear Counsel:
This letter is in reference to the Court's in camera review of the documents Fortress Credit Corp. identified as privileged in response to Debtor Harry J. Pappas' document requests. The attached spreadsheet lists documents Fortress identified as with-holdable that, upon review, I have determined should not be withheld. For each document, the attached spreadsheet: (1) identifies the page number on the privilege or redaction log supplied by Fortress on which the document was identified as with-holdable, the chart reference number assigned to that document by Fortress, and the beginning and ending document reference number (both as assigned by Fortress) of the pages to be removed from withheld documents; and (2) briefly explains why the document(s) in that page-range is (are) not with-holdable.
Of note, I have determined that drafts of documents prepared for eventual release to third parties — such as loan documents, acceleration notices, and guarantee demands — are not protected by the attorney work product doctrine or the attorney-client privilege.
The attorney work product doctrine protects a "zone of privacy within which to think, plan, weigh facts and evidence, candidly evaluate a client's case, and prepare legal theories." . . . The scope of this doctrine . . . is confined to "materials prepared in anticipation of litigation or for trial." . . . The privilege does not shield from discovery documents that were "prepared in the regular course of . . . business, rather than specifically for litigation, even if it is apparent that a party may soon resort to litigation."
Western Trails, Inc. v. Camp Coast To Coast, Inc., 139 F.R.D. 4, 9 (D.D.C. 1991) (quoting Coastal States Gas Corp. v. Dept. of Energy, 617 F.2d 854, 864 (D.C. Cir. 1980) and Fann v. Giant Food, Inc., 115 F.R.D. 593, 596 (D.D.C. 1987)). Thus, drafts of documents are not protected by the attorney work product doctrine.
In addition, a majority of courts, including all circuit courts that have addressed the issue, have held that "[p]reliminary drafts of letters or documents which are to be published to third parties lack confidentiality." North Carolina Elec. Membership Corp. v. Carolina Powers and Light Co., 110 F.R.D. 511, 516 (M.D. N.C. 1986). See also United States v. Under Seal (In re Grand Jury Proceedings), 33 F.3d 342, 354-55 (4th Cir. 1994) (reaffirming that drafts of documents which contain information that reasonably could be expected to be imparted to third parties are not protected by the attorney-client privilege); United States v. Lawless, 709 F.2d 485, 487 (7th Cir. 1983) ("When information is transmitted to an attorney with the intent that the information will be transmitted to a third party (in this case on a tax return), such information is not confidential.");United States v. Pipkins, 528 F.2d 559, 563 (5th Cir. 1976) ("[C]ourts have refused to apply the privilege to information that the client intended his attorney to impart to others.");Colton v. United States, 306 F.2d 633, 638 (2d Cir. 1962) ("Not all communications between an attorney and [her or] his client are privileged. Particularly in the case of an attorney preparing a tax return . . . a good deal of information transmitted to an attorney by a client is not intended to be confidential, but rather is given for transmittal by the attorney to others. . . . Such information is, of course, not privileged."); Heidelberg Harris, Inc. v. Mitsubishi Heavy Indus., Ltd., 1996 WL 732522, at *3 (N.D. Ill. Dec. 9, 1996) (holding that a draft of a purchasing agreement was not entitled to attorney-client privilege); Shore Acres Nursing Home, Inc. v. Continental Medical Systems, Inc., 1992 U.S. Dist. LEXIS 3243, at *13 (E.D. Pa. March 17, 1992) (noting with apparent approval that the court in Republican Party v. Martin, 136 F.R.D. 421, 427 (E.D. N.C. 1991), "held that drafts of documents which were intended to be submitted to third parties were likewise not privileged"). Further, in RCA Corp. v. Data Gen. Corp., 1986 U.S. Dist. LEXIS 23244, at *18-19 (D. Del. 1986), the District of Delaware stated: "a draft of a document, like the final version of the document, is not privileged to the extent that it contains information included with an eye towards disclosure in the final document." Accordingly, I find that drafts of any documents prepared for eventual release to third parties are not protected by the attorney-client privilege, and, thus, are not with-holdable.
With this in mind, the documents that should not be withheld fall into the categories bulleted below. Some of the documents were attached to emails that are protected by the attorney-client privilege; the attached spreadsheet identifies those documents that were attached to with-holdable emails by the phrase "Email is ACP" and the document range to be removed from withheld documents demarcated by the beginning and ending document reference numbers does not include the accompanying email. If those words are not included, the email also is not protected by the attorney-client privilege; these emails merely state what the attached document is — such as, "Attached is an amendment to the Reallocation Agreement."
In addition, some emails among Fortress employees and various lenders merely copy attorneys or, occasionally, do not copy any attorneys. To the extent these emails do not direct questions to the copied attorneys, discuss legal advice previously rendered, discuss whether legal advice should be sought in the future, or are not included within an email chain that was directed at some point to attorneys, such emails are not protected by the attorney-client privilege and I have included them among the documents that are not with-holdable. For example, in an already redacted email, a lender emailed Fortress regarding the date used for the balances on DIP allocation; no attorneys were copied and no legal advice was discussed or sought.
The categories of documents not with-holdable are:
• Drafts of amendment to reallocation agreement
• Drafts of instructions to agents/indemnity
• Drafts of PTSC undertaking letter
• Drafts of individual guarantee demand and individual guarantee termination and release
• Drafts of acceleration notice
• Drafts of intercreditor agreement
• Drafts of Pappas-Fortress credit facility term sheet and Pappas-Fortress credit agreement
• Drafts of Pappas-Fortress reservation letter
• Drafts of DIP financing term sheet, DIP financing, and DIP credit agreement
• Drafts of pledge and security agreement
• Drafts of subsidiary guarantee and security agreement
• Drafts of default notice
• Drafts of reservation of rights letter
• Drafts of discussion paper regarding forbearance and forbearance agreement
• Drafts of pre-negotiation agreement and pre-negotiation letter to Pappas
• Drafts of affiliate pledge agreement
• Drafts of deposit control agreement
• Drafts of bidding procedures
• Drafts of Pappas engagement letter
• Drafts of waiver letter
• Drafts of second lien
• Drafts of assignment and acceptance agreement
• Emails between Fortress and lenders or consultants; attorneys sometimes copied or forwarded
• Emails between Fortress employees; attorneys sometimes copied
As noted by Fortress, because only specific categories and types of communications were subject to the Debtors' document requests, some of the withheld documents may include information that needs to be redacted to remove non-responsive material. Accordingly, Fortress should review the documents (based on beginning and ending document reference numbers) I have indicated are not privileged, redact as necessary, and then produce them to the Debtors. Privilege Log of Fortress Credit Corp. — Withheld Documents Chart Chart Pg. Ref. No. Beg. Doc. Ref. End Doc. Ref. Reason Not With-holdable Privilege Log of Fortress Credit Corp. — Redacted Documents Chart Chart Pg. Ref. No. Beg. Doc. Ref. End Doc. Ref. Reason Not Withholdable
2 20 PAP00031774 PAP00031781 Draft of amendment to reallocation agreement 3 21 PAP00031783 PAP00031789 Draft of amendment to reallocation agreement 3 25 PAP00031860 PAP00031867 Draft of instructions to agents/indemnity 3 26 PAP00031868 PAP00031875 Draft of instructions to agents/indemnity 4 27 PAP00031876 PAP00031886 Draft of instructions to agents/indemnity; Draft of PTSC undertaking letter 4 28 PAP00031887 PAP00031894 Draft of instructions to agents/indemnity 5 33 PAP00032001 PAP00032008 Draft of instructions to agents/indemnity; Email is ACP 5 34 PAP00032015 PAP00032028 Draft of instructions to agents/indemnity; Email is ACP 5 36 PAP00032034 PAP00032047 Draft of instructions to agents/indemnity; Email is ACP 7 43 PAP00032222 PAP00032225 Draft of individual guarantee demand; Draft of acceleration notice; Email is ACP 9 50 PAP00032330 PAP00032344 Draft of Pappas-Fortress facility termsheet 9 53 PAP00032449 PAP00032466 Draft of DIP financing term sheet; Email is ACP 9 54 PAP00032467 PAP00032487 Draft of DIP financing term sheet; Email is ACP 12 65 PAP00033790 PAP00034125 Draft of DIP credit agreement; Draft of pledge and security agreement; Draft of subsidiary guarantee and security agreement; Email is ACP 13 66 PAP00034244 PAP00034248 Draft of default notice and reservation of rights letter 13 68 PAP00034255 PAP00034257 Draft of default notice and reservation of rights letter; Email is ACP 13 70 PAP00034262 PAP00034268 Draft of default notice and reservation of rights letter; Email is ACP 14 77 PAP00035371 PAP00035377 Draft of discussion paper regarding forbearance 14 78 PAP00035378 PAP00035384 Draft of discussion paper regarding forbearance 14 80 PAP00035446 PAP00035459 Draft of discussion paper regarding forbearance; Email is ACP 15 89 PAP00035505 PAP00035511 Draft of discussion paper regarding forbearance; Email is ACP 15 90 PAP00035532 PAP00035548 Draft of pre-negotiation agreement; Email is ACP 15 94 PAP00035575 PAP00035577 Draft of pre-negotiation letter to Pappas; Email is ACP 15 96 PAP00035589 PAP00035591 Draft of pre-negotiation letter to Pappas; Email is ACP 17 116 PAP00036106 PAP00036155 Draft of Pappas-Fortress credit agreement 17 123 PAP00036448 PAP0036489 Draft of Pappas-Fortress credit agreement; Email is ACP 25 230 PAP00038692 PAP00038772 Draft of forbearance agreement; Email is ACP 28 266 PAP00039907 PAP00039915 Draft of PTSC undertaking letter; Email is ACP 28 267 PAP00039917 PAP00039920 Draft of acceleration notice 28 269 PAP00039923 PAP00039926 Draft of individual guarantee demand 29 279 PAP00039979 PAP00039982 Email between Fortress and lender; attorneys copied 30 290 PAP00040101 PAP00040136 Draft of Fortress-Pappas facility; Draft of individual guarantee termination and release; Draft of intercreditor agreement; Email is ACP 32 317 PAP00040453 PAP00040460 Draft of instructions to agents/indemnity 32 318 PAP00040464 PAP00040469 Draft of instructions to agents/indemnity; Email is ACP 33 320 PAP00040477 PAP00040482 Draft of instructions to agents/indemnity; Email is ACP 36 368 PAP00041275 PAP00041276 Email between Fortress employees; attorneys copied 36 369 PAP00041279 PAP00041313 Draft of summary chart to be sent to Pappas; Email is ACP 39 406 PAP00041942 PAP00041945 Draft of acceleration notice; Draft of individual guarantee demand; Email is ACP 41 436 PAP00042378 PAP00042391 Draft of Fortress-Pappas facility termsheet; Email is ACP 42 446 PAP00042482 PAP00042511 Draft of Fortress-Pappas facility termsheet 55 533 PAP00043212 PAP00043233 Draft of DIP financing 58 568 PAP00043458 PAP00043511 Draft of DIP financing; Email is ACP 59 571 PAP00043522 PAP00043572 Draft of DIP financing; Email is ACP 72 666 PAP00044285 PAP00044314 Draft of affiliate pledge agreement; Email is ACP 81 760 PAP00046617 PAP00046625 Draft of deposit control agreement; Email is ACP 83 797 PAP00048270 PAP00048305 Draft of DIP financing 84 798 PAP00048518 PAP00048550 Draft of DIP financing; Email is ACP 85 804 PAP00048633 PAP00048664 Draft of DIP financing; Email is ACP 85 807 PAP00049007 PAP00049077 Draft of DIP financing 89 829 PAP00050467 PAP00050643 Draft of DIP credit agreement; Email is ACP 92 854 PAP00051032 PAP00051196 Draft of DIP credit agreement; Email is ACP 96 887 PAP00052825 PAP00052966 Draft of DIP credit agreement; Email is ACP 100 933 PAP00055259 PAP00055865 Draft of subsidiary guarantee and security agreement; Draft of pledge and security agreement; Draft of DIP credit agreement; Email is ACP 106 1033 PAP00097802 PAP00097834 Draft of DIP financing; Email and draft motion are ACP 106 1037 PAP00109205 PAP00109381 Draft of DIP credit agreement; Email is ACP 108 1094 PAP00167464 PAP00167475 Email from ABC to Fortress and attached valuations; email forwarded to attorneys 108 1095 PAP00167807 PAP00167818 Attached valuations from forwarded email from ABC to Fortress; Attorney reply ACP 109 1107 PAP00169665 PAP00169672 Draft of bidding procedures; Email is ACP 110 1117 PAP00196823 PAP00196899 Draft of forbearance agreement; Email is ACP 110 1141 PAP00206887 PAP00206967 Draft of forbearance agreement; Email is ACP 111 1153 PAP00208749 PAP00208911 Draft of forbearance agreement; Email is ACP 114 1262 PAP00247816 PAP00247399 Draft of forbearance agreement; Email is ACP 116 1301 PAP00298572 PAP00298611 Draft of Pappas-Fortress credit agreement; Email is ACP 116 1308 PAP00313321 PAP00313384 Draft of forbearance agreement 117 1324 PAP00321304 PAP00321309 Draft of amendment to reallocation agreement; Email is ACP 118 1377 PAP00344093 PAP00344107 Draft of instructions to agents/indemnity; Email is ACP 120 1421 PAP00370648 PAP00370651 Draft of acceleration notice; Draft of demand for payment; Email is ACP 120 1425 PAP00370698 PAP00370701 Draft of acceleration notice; Draft of demand for payment; Email is ACP 120 1436 PAP00377106 PAP00377118 Draft of Pappas-Fortress facility; Email is ACP 123 1519 PAP00427749 PAP00427867 Draft of Pappas-Fortress credit agreement; Draft of Local Marketing Agreement; Email is ACP 129 1580 PAP00489322 PAP00489322 Email between Fortress and lender; attorneys copied 130 1601 PAP00512644 PAP00512657 Draft of Pappas-Fortress credit agreement; Email is ACP 133 1649 PAP00519688 PAP00519693 Draft of Pappas-Fortress credit agreement; Email and attached table ACP 137 1699 PAP00611299 PAP00611308 Draft of Pappas-Fortress credit agreement; Email is ACP 138 1706 PAP00614939 PAP00614993 Draft of forbearance agreement; Email is ACP 138 1707 PAP00615301 PAP00615358 Draft of forbearance agreement; Email is ACP 138 1708 PAP00615397 PAP00615454 Draft of forbearance agreement; Email is ACP 138 1711 PAP00615610 PAP00615617 Draft of PTSC undertaking letter; Email is ACP 138 1714 PAP00616227 PAP00616284 Draft of forbearance agreement; Email is ACP 140 1748 PAP00631512 PAP00631517 Draft of PTSC undertaking letter 141 1756 PAP00631656 PAP00631659 Draft of PTSC undertaking letter; Email is ACP 141 1757 PAP00631663 PAP00631666 Draft of PTSC undertaking letter; Email is ACP 142 1780 PAP00637266 PAP00637269 Draft of acceleration notice; Draft of demand for payment; Email is ACP 143 1789 PAP00637704 PAP00637716 Draft of amendment to reallocation agreement; Draft of instructions to agents/indemnity; Email is ACP 143 1793 PAP00637979 PAP00637982 Draft of instructions to agents/indemnity; Email is ACP 143 1795 PAP00720427 PAP0072C452 Draft of Pappas engagement letter; Email is ACP 144 1797 PAP00725134 PAP00725160 Draft of Pappas engagement letter; Email is ACP 144 1798 PAP00725161 PAP00725175 Draft of Pappas engagement letter 144 1799 PAP00725176 PAP00725203 Draft of Pappas engagement letter 146 1805 PAP00738039 PAP00738040 Draft of Pappas-Fortress reservation letter; Email is ACP 150 1854 PAP00778641 PAP00778647 Draft of waiver letter 150 1856 PAP00778659 PAP00778665 Draft of waiver letter 150 1862 PAP00778852 PAP00778857 Draft of waiver letter 151 1865 PAP00779893 PAP00779898 Draft of waiver letter; Email is ACP 156 2114 PAP01234483 PAP01234488 Draft second lien; Email is ACP 157 2220 PAP01239312 PAP01239320 Draft of PTSC undertaking letter; Email is ACP 157 2252 PAP01258666 PAP01259055 Draft of DIP Credit Agreement; Email is ACP 157 2261 PAP01348978 PAP01348998 Draft of Pappas-Fortress credit agreement; Email is ACP 1 4 PAP00031944 PAP00031953 Draft of Pappas-Fortress facility; Email is ACP 7 138 PAP00044015 PAP00044016 Email between Fortress and lender 21 421 PAP00393383 PAP00393383 Email between Fortress and lender; attorneys copied 21 424 PAP00438143 PAP00438145 Email between Fortress and lenders 23 437 PAP00481761 PAP00481764 Email between Fortress employees; attorneys copied 23 444 PAP00486957 PAP00486958 Email between Fortress and lenders; attorneys copied 24 447 PAP00487469 PAP00487470 Email between Fortress and lender; attorneys copied 24 464 PAP00517149 PAP00517149 Email between Fortress employees; attorneys copied 25 495 PAP00598865 PAP00598865 Email between Fortress employees 28 561 PAP00735407 PAP00735410 Email between Fortress and lenders; attorneys copied 28 563 PAP00735421 PAP00735423 Email between Fortress and lenders; attorneys copied 29 579 PAP00751474 PAP00751475 Email between Fortress and lenders; attorneys copied 30 599 PAP00883043 PAP00883048 Draft assignment and acceptance agreement; Email is ACP 31 655 PAP01221747 PAP01221750 Email between Fortress employees; attorneys copied 31 657 PAP01223146 PAP01223148 Draft of reservation of rights letter; Email is ACP 31 669 PAP01224235 PAP01224236 Email between Fortress and lenders; attorneys copied 34 799 PAP01242046 PAP01242046 Email between Fortress and lenders 35 800 PAP01242106 PAP01242106 Email between Fortress and lenders