TIFD III-E Inc. v. United States
Docket: Nos. CIV.A. 3:01CV1839 (SRU), CIV.A. 3:01CV1840 (SRU)
Court: District Court, D. Connecticut; July 15, 2004; Federal District Court
The United States is seeking access to 139 documents claimed as privileged by TIFD III-E Inc., which TIFD argues contain legal advice and are protected under the common interest rule despite some being shared with third parties. The government contends that TIFD has waived its privilege by putting its counsel's advice at issue in defending the legitimacy of a 1993 transaction with General Electric Capital Corporation (GECC) that the government alleges was designed to evade taxes. TIFD maintains that it has not put the advice of counsel at issue and that all documents contain legal advice. The court acknowledges that the matter is complex, with some documents being privileged and others not, and many remaining indeterminate based on the current record. The key legal issue revolves around whether TIFD forfeited its privilege claim by asserting factual claims regarding the transaction's purpose. The court notes that the doctrine of air-issue forfeiture prevents a party from selectively invoking attorney-client privilege to the detriment of its adversary, requiring fairness in disclosure. The government argues it is unfair for TIFD to produce evidence of a legitimate business purpose while withholding documents that may reveal tax avoidance intent. However, the court indicates that merely placing intent at issue does not automatically forfeit attorney-client privilege, stressing that such a forfeiture would undermine the privilege's utility, especially for criminal defendants. Fairness does not necessitate that a party must disclose all communications with counsel merely because it has raised its motivations. A party cannot selectively disclose communications to demonstrate intent while withholding others that are privileged. In **Sanofi-Synthelabo v. Apotex, Inc.**, partial disclosure of privileged communications led to the forfeiture of privilege regarding the entire communication. Similarly, **Pitney-Bowes, Inc. v. Mestre** found privilege forfeited when privileged communications were the only direct proof regarding a raised issue. TIFD has complied by providing non-privileged documents and has not claimed reliance on counsel's advice nor disclosed selective legal counsel communications. The government has access to all non-privileged evidence related to TIFD's intent, and withholding privileged communications does not equate to unfairness. Regarding the common interest rule, TIFD argues that certain communications with a foreign bank's counsel are privileged. This rule permits sharing of privileged communications with third parties sharing a common legal interest, as noted in **United States v. Schwimmer**. However, the relationship between GECC and the foreign bank appears to be business-oriented, lacking the necessary cooperation on a common legal strategy. Consequently, any claimed privilege over these communications has been waived. For other withheld documents, insufficient information exists to determine if they are purely business-related or intended for legal advice. Further factual support from TIFD is required before a ruling on privilege can be made regarding these documents. As a result, TIFD is ordered to release documents 894 and 895 due to waiver of privilege from third-party disclosure. No additional document production is mandated at this time, although both parties are encouraged to resolve disputes over the remaining documents in good faith. This ruling aligns with the in camera review conducted.