United States District Court, D. Arizona
ORDER
Honorable Steven P. Logan United States District Judge
On June
14, 2018, the Government filed a motion (the
“Motion”) to resolve certain attorney-client
privilege issues. (Doc. 195) In response, Defendants Michael
Lacey (“Lacey”) and James Larkin
(“Larkin”) filed a cross-motion (the
“Cross-Motion”) to prohibit the relief sought in
the Motion and seek discovery. (Doc. 235) The Motion was
fully briefed on August 17, 2018, and the Cross-Motion was
fully briefed on September 27, 2018. The Court heard oral
argument on the Motion and Cross-Motion at a hearing on
October 5, 2018. For the reasons set forth below, the Motion
is denied, and the Cross-Motion is granted in part and denied
in part.
I.
Background
On
March 28, 2018, a federal grand jury returned a ninety-three
count indictment against several Defendants, including Lacey
and Larkin, alleging that the Defendants engaged in various
crimes related to the operation of the website Backpage.com,
including conspiracy, facilitating prostitution, and money
laundering. (Doc. 3) The indictment also includes forfeiture
allegations.[1] Id. On April 5, 2018, Carl Ferrer
(“Ferrer”), the CEO of Backpage.com
(“Backpage”), pleaded guilty to conspiracy to
facilitate prostitution and money laundering. (Doc. 235 at
14; CR 18-464-SPL, Doc. 7) The charges against Ferrer were
based on his work at Backpage. Id.
During
the Government's investigation, it obtained search
warrants for the email accounts of several Defendants and
Backpage personnel. (Doc. 195 at 1) A filter team was put in
place to identify any email communication that appeared to be
privileged. (Doc. 195 at 2) The filter team conducted an
initial review of the material seized by the search warrants,
and it removed any items that it deemed privileged
attorney-client communication from the discovery that was
eventually turned over to the investigation team.
Id.
The
Government filed the Motion seeking an order stating that (i)
Backpage's attorney-client privilege has been waived with
respect to certain email communication obtained under the
aforementioned search warrants, and (ii) the Government may
have access to the communication that was classified as
privileged by the filter team. (Doc. 195 at 13) In response
to the Motion, the Defendants filed the Cross-Motion for an
order (i) preventing the Government's review of any
privileged communication, and (ii) requesting discovery of
the Government's communication with Ferrer regarding the
joint defense agreement and the attorney-client relationships
of the Defendants. (Doc. 235 at 25, 28) In addition, several
Defendants filed joinders to the Cross-Motion.[2] On October 5,
2018, the Court heard argument on the pleadings, and the
arguments made by each party were taken under advisement.
II.
Motion to Resolve Attorney-Client Privilege Issues
The
Government moves for an order from the Court allowing access
to the privileged communication because (i) Ferrer, as CEO
and 100% owner of Backpage, executed a written waiver of the
company's attorney-client privilege; (ii) Judge David
Campbell of the District of Arizona recently decided that
Backpage had waived attorney-client privilege for several
documents that were the subject of the warrants because the
documents had been previously shared with third-party public
relations firms and investment banks; and (iii) a Washington
state court previously found that Backpage waived attorney
client privilege on several similar communications when it
proffered its in-house counsel, Elizabeth McDougall, as a
Rule 30(b) witness for a deposition. (Doc. 195 4-9) Each of
these arguments will be addressed in turn.
A.
Standard of Review
The
Court recognizes that there is little to no precedent that is
directly applicable to the facts presented in this case, and
many of the issues presented by the Motion and Cross-Motion
require an exercise of the Court's discretion. As a
general matter, a party is not entitled to discovery of
information protected by the attorney-client privilege.
Wharton v. Calderon, 127 F.3d 1201, 1205 (9th Cir.
1997). It is also well settled that the intentional public
disclosure of privileged communication results in waiver of
the attorney-client privilege and the work product immunity
“as to all other communications on the same
subject.” United States v. Kerr, 2012 WL
2919450, at 1 (D. Ariz. July 17, 2012) (citing Hernandez
v. Tanninen, 604 F.3d 1095, 1100 (9th Cir.2010)).
However, this waiver extends only “to communications
about the matter actually disclosed.” Chevron Corp.
v. Pennzoil Co., 974 F.2d 1156, 1162 (9th Cir.1992).
And, the Ninth Circuit has cautioned against finding a
complete waiver of the attorney-client privilege by noting
that “[t]he breadth of the waiver finding, untethered
to the subject-matter disclosed, constitutes a particularly
injurious privilege ruling.” Hernandez, 604
F.3d at 1101.
B.
Ferrer Waiver
The
Government argues that it should have access to the
privileged information at issue because Ferrer executed a
written waiver of Backpage's attorney-client privilege as
part of his cooperation with the Government. (Doc. 195 at 5)
In response, the Defendants argue that the terms of the joint
defense agreement (the “JDA”) between Lacey,
Larkin and Ferrer prevent Ferrer from waiving Backpage's
attorney-client privilege. (Doc. 235 at 23) The Defendants
also argue that the terms of the JDA prevent Ferrer from
disclosing privileged information because the terms of the
agreement state that privileged information cannot be
disclosed by a party withdrawing from the JDA unless all
parties to the agreement consent to the disclosure of the
privileged information.[3] (Doc. 235 at 13)
The
Court has already recognized the validity of the JDA in its
earlier Order. (Doc. 338) Ferrer is bound by the terms of the
JDA, which he executed during his tenure with Backpage. Based
on the Court's in camera review of the JDA, the
Court finds that the plain text of the JDA states that the
materials shared between the parties to the JDA are to be
protected from disclosure unless the disclosing party first
obtains the written consent of all parties who may be
entitled to a claim of privilege over the materials. It is
undisputed that Ferrer did not obtain the written consent of
the listed parties to the JDA before executing his written
waiver of attorney-client privilege. On this basis, the
Government's argument for access to the privileged
communication fails. The Government argues that there is a
distinction between joint-defense privileges and
attorney-client privileges, and that the communication at
issue is not covered under the JDA. (Doc. 269 at 9) However,
the terms of the JDA demonstrate that the emails themselves
are protected from disclosure. Ferrer's participation in
the JDA not only established joint-defense privileges, but
also set forth other protections for information and
communication exchanged between parties to the agreement.
Therefore, for the limited purpose of addressing the
Government's access to the privileged emails at issue,
the Court finds that the Government cannot use Ferrer's
written waiver of attorney-client privilege to circumvent the
terms of the JDA.[4]
C.
Judge ...