Narrative Opinion Summary
The case involves a motion by Settlers seeking a protective order to use documents produced by the Federal Deposit Insurance Corporation (FDIC) in a Chapter 11 adversary proceeding. The FDIC claims the documents are privileged and should be returned, invoking a clawback provision. The documents were initially produced under subpoena by FDIC-R, the receiver for the predecessor bank that issued the loans in question. Settlers argue that the attorney-client privilege was transferred to Schaumburg Bank and waived due to the latter's failure to assert it timely, and they also invoke the crime-fraud exception. The FDIC-R counters that the privilege remained with them under 12 U.S.C. 1821(d)(2)(A), as the Purchase and Assumption Agreement did not explicitly transfer such rights. The case hinges on whether the FDIC-R transferred certain privileges to Schaumburg Bank and if the attorney-client privilege applies. The court must consider federal common law principles, including the potential waiver of privilege and the application of the crime-fraud exception. The outcome will determine if the ten documents can be admitted at trial, affecting the ongoing litigation regarding objections to claims under the Bankruptcy Code and related tortious interference allegations.
Legal Issues Addressed
Attorney-Client Privilege under Federal Rule of Evidence 501subscribe to see similar legal issues
Application: The FDIC-R asserts attorney-client privilege over documents produced under subpoena, arguing that this privilege was not transferred to Schaumburg Bank. The privilege is claimed under federal common law, which governs privilege claims in federal cases.
Reasoning: The attorney-client privilege asserted by FDIC-R is based on Federal Rule of Evidence 501, which states that federal common law governs privilege claims, while state law applies in civil cases regarding claims or defenses dictated by state law.
Crime-Fraud Exception to Attorney-Client Privilegesubscribe to see similar legal issues
Application: Settlers argue the crime-fraud exception applies to the privileged documents, requiring prima facie evidence to warrant an in camera review by the court, to assess if the communications were made to further a crime or fraud.
Reasoning: For the crime-fraud exception to apply, two conditions must be fulfilled: a crime or fraud must have been either attempted or committed, and the communications in question must have been made to further that crime or fraud.
Transfer of Privilege under Purchase and Assumption Agreementsubscribe to see similar legal issues
Application: Settlers argue that the attorney-client privilege was transferred from the predecessor bank to Schaumburg Bank by a Purchase and Assumption Agreement, but the FDIC-R contends the privilege remained with them absent explicit transfer.
Reasoning: Without an explicit transfer by the FDIC as receiver, the rights and privileges of the predecessor bank remained with the FDIC-R.
Waiver of Attorney-Client Privilegesubscribe to see similar legal issues
Application: Settlers claim that Schaumburg Bank waived any attorney-client privilege by failing to assert it in a timely manner, a claim the FDIC-R disputes, noting that a brief delay does not constitute waiver.
Reasoning: Waiver can be explicit or implied through conduct that demonstrates an intention to relinquish the right. In a specific case involving a Defendant Bank, a brief delay in asserting the privilege did not indicate an intention to waive it.