Schoenmann ex rel. Estate of UCBH Holdings, Inc. v. Federal Deposit Insurance
Docket: No. C 10-03989 CRB (MEJ)
Court: District Court, N.D. California; January 5, 2014; Federal District Court
On September 19, 2013, a joint discovery letter was filed regarding a subpoena from the FDIC-Receiver to non-party Doreen Woo Ho, who withheld documents based on objections from Plaintiff/Trustee E. Lynn Schoenmann. Following a telephonic conference, the court granted the FDIC-Receiver permission to file a Motion to Compel and set a schedule for briefing and a hearing. The FDIC-Receiver filed this motion on November 4, 2013, and the Trustee submitted her opposition on November 11, 2013. After a hearing on November 21, 2013, the court denied the Motion to Compel.
The background reveals that the Trustee represents the bankruptcy estate of UCBH Holdings, Inc., following the closure of United Commercial Bank (UCB) by the California Department of Financial Institutions in November 2009, which appointed the FDIC-Receiver. The ongoing discovery dispute involves communications between the Trustee, her attorney, and Ms. Ho, who was contacted to sign a declaration drafted by the Trustee's lawyer. The FDIC-Receiver had issued a third-party subpoena seeking documents related to Ms. Ho's testimony and communications about the lawsuit.
The Trustee objected to the subpoena concerning work product materials, and Ms. Ho’s attorney indicated that she was withholding 19 pages of emails exchanged with the Trustee and her lawyer, citing the need to protect the Trustee’s asserted privileges. Ms. Ho's counsel later provided a privilege log detailing the withheld documents, which included several emails and drafts of a declaration. Currently, Ms. Ho does not object to the production of these documents but withholds them to safeguard the Trustee's privileges, prompting the FDIC-Receiver's request for an order to compel their production.
The work product doctrine, outlined in Rule 26(b)(3) of the Federal Rules of Civil Procedure, protects materials prepared by a party or their representative in anticipation of litigation, specifically shielding attorneys' mental impressions, conclusions, and legal theories from discovery. This doctrine, however, offers only qualified protection; a party seeking access must demonstrate the relevance of the materials and a substantial need that cannot be met through alternative means. The party claiming work product protection bears the burden of proof.
In this context, the Trustee asserts that any declarations from Ms. Ho and information obtained from her communications are protected work product. The FDIC-Receiver challenges this by arguing that the Trustee waived any protection when communicating with a third-party witness, asserting that the purpose of these communications was to persuade Ms. Ho to provide a statement for the case, thus invoking Rule 612 of the Federal Rules of Evidence, which allows discovery of such documents. They also argue that, regardless of the applicability of the work product doctrine, the defendants have a substantial need for the materials to assess Ms. Ho's credibility.
Ultimately, the Court concludes that the email communications and draft declarations exchanged between Ms. Ho and the Trustee, as well as the Trustee’s attorney, qualify as work product and are therefore protected from disclosure.
Draft affidavits prepared by defense counsel for non-party witnesses are considered work product, as established in *Inst. for Dev. of Earth Awareness v. PETA*, which denied the plaintiffs' request to compel their production. The work product doctrine protects materials relevant to affidavit drafting, including communications with counsel, prior drafts, and notes. Recent case law consistently affirms that draft affidavits and related communications are protected. The court also recognized a declaration signed by Ms. Ho as work product, rejecting the FDIC-Receiver's claims that the Trustee waived this protection through communication with Ms. Ho. Furthermore, the court found that the FDIC-Receiver did not demonstrate a substantial need to overcome the work product protection, particularly since they had the opportunity to depose Ms. Ho but chose not to. Consequently, the court denied the FDIC-Receiver's motion to compel the production of the draft emails, declarations, and related materials.
Regarding attorney-client privilege, the FDIC-Receiver contended that the Trustee's late assertion of privilege—after the first draft of the discovery letter—constituted a waiver. They noted that she did not claim attorney-client privilege during initial objections to the subpoena or at the August 2013 conference.
The FDIC-Receiver argues that the attorney-client privilege claimed by the Trustee is inapplicable, asserting that the privilege applies solely to confidential communications between a client and an attorney for legal advice, not to information obtained from a witness in anticipation of litigation. The FDIC-Receiver emphasizes that Ms. Ho was not a client of the Trustee or her attorney and that her communications were aimed at preparing her statement rather than seeking legal advice. Furthermore, the FDIC-Receiver contends that any privilege based on Ms. Ho's previous employment cannot be invoked to withhold information from the FDIC-Receiver, as she served as the CEO of both the Bank and its holding company during the relevant time.
In response, the Trustee claims that she properly asserted an objection based on attorney-client privilege regarding Ms. Ho's materials, arguing that communications with her, as a former employee of UCBH, are privileged. The Trustee maintains that the nature of Ms. Ho's request for legal advice is irrelevant since the communications were intended to gather pertinent information for litigation.
The Court agrees with the Trustee that objections to the privilege were timely asserted; however, it ultimately concludes that the privilege does not apply because Ms. Ho was not seeking legal advice from the Trustee or her counsel. Additionally, the Trustee seeks to prevent the FDIC-Receiver from inquiring about Ms. Ho’s communications, alleging improper ex parte communications by the FDIC. The FDIC-Receiver counters that such a prohibition would protect an adverse witness from cross-examination.
The Court partially grants the Trustee's request, ruling that the FDIC-Receiver cannot question Ms. Ho about her communications with the Trustee and her counsel to maintain the protections of the work-product doctrine, while still allowing the FDIC-Receiver to access any factual information Ms. Ho possesses. Consequently, the Court denies the FDIC-Receiver's Motion to Compel.
