United States District Court, D. Connecticut
For General Electric Company, & Subsidiaries, Plaintiff: David J. Curtin, LEAD ATTORNEY, PRO HAC VICE, Morgan Lewis and Bockius LLP, Washington, DC; Michael C. D'Agostino, LEAD ATTORNEY, Morgan Lewis & Bockius LLP, Hartford, CT; Arie M. Rubenstein, Bryan McArdle, Charles S. Duggan, Leslie J. Altus, Mario J. Verdolini, Davis Polk & Wardwell, New York, NY.
For USA, Defendant: Kari Madrene Larson, LEAD ATTORNEY, United States Department of Justice, Tax Division, Washington, DC; Austin L. Furman, U.S. Department of Justice, Washington, DC; Christine L. Sciarrino, U.S. Attorney's Office-NH, New Haven, CT; Gabrielle Golda Hirz, U.S. Department Of Justice Tax Div Box 55 Ben F St DC, Tax Division, Washington, DC; Grover Hartt, United States Department of Justice / Tax Division-TX, Dallas, TX; Joshua D. Smeltzer, U.S. Dept. of Justice - Dallas, TX, Tax Division, Southwestern Region, Dallas, TX; Michael Andrew Lyons, U.S. Dpartment of Justice - Dallas, Tax Division, Dallas, TX.
RULING RE DISCOVERY DISPUTE
Jeffrey Alker Meyer, United States District Judge.
Plaintiff General Electric Company (" GE" ) and defendant United States are embroiled in a high-stakes dispute involving GE's claim for a tax refund with interest of approximately $660 million. The dispute stems from a series of complex corporate restructuring/sale transactions that occurred more than ten years ago.
The parties are now entangled in a discovery dispute involving a legal issue that does not appear (so far as the parties' briefings reflect) to have been previously addressed in any published decision--perhaps surprisingly so, because I would expect the issue to be framed with some frequency in complex litigation. The issue here supposes a lawsuit between Party A and Party B and that Party A issues a subpoena to a non -party seeking documents that may be subject to a claim of privilege by opposing Party B. It further supposes the right of Party B to conduct a privilege review of the subpoenaed documents before they are produced by the non-party to Party A to ensure that the document production does not include documents subject to a claim of attorney-client privilege.
The question, then, is whether Party B (or, more precisely, its counsel) may also--at the non-party's request--conduct a responsiveness review of the documents before they are produced to Party A. In short, is it proper for a non-party recipient of a document subpoena from Party A to delegate or outsource a portion of its compliance obligations to the opposing Party B and its counsel in the litigation?
Here, the issue arises in the context of the Government's complaint about GE's conduct with respect to two subpoenas served by the Government on two non-parties to this action: Westport Insurance Company (" Westport" ) and Cahill Gordon & Reindel LLP (" Cahill" ). Westport is a former subsidiary of GE and possesses
documents relating to a former GE insurance subsidiary of great importance to this litigation. Cahill is a major law firm that served as counsel to GE on a range of transactional matters in 2002 and 2003 that are also important to the tax dispute in this case.
After GE learned of the Government's subpoenas to Westport and Cahill, GE's litigation counsel--Davis Polk & Wardwell LLP (" Davis Polk" )--indicated to Westport and Cahill that GE wished to conduct a privilege review. As confirmed by affidavits from counsel who represent Westport and Cahill, both Westport and Cahill provided Davis Polk with tens of thousands of pages of documents--both paper and electronic--that they believed could potentially be responsive to the subpoenas but with the expectation that a large volume of documents that they had initially collected in bulk might not be responsive to the subpoenas. They did so with understanding that Davis Polk in the course of its privilege review would also conduct a review to determine what documents are responsive to the subpoena. Counsel for both Westport and Cahill have expressed concern about their own ability to conduct a responsiveness review due to the passage of time and their lack of familiarity with this litigation; they have stated that Davis Polk would be better positioned to conduct this review.
Although the Government does not contest GE's right to conduct a privilege review, it vehemently objects to GE or its counsel's involvement in deciding what documents are responsive to the subpoenas that it has served on Westport and Cahill. According to the United States, this involvement amounts to no less than " obstruct[ion]," " interference" and " abusive discovery tactics." Doc. #81 at 1. And it further contends that " [e]ven assuming it is proper to outsource responsiveness review to an entity not authorized to provide legal representation, and without first-hand knowledge of the subject of the request--it is certainly improper to outsource those responsibilities to the opposing party in the litigation." Id. at 2. For the reasons set forth below, I do not agree.
To begin with, it is not hard to understand why Westport and Cahill would gladly delegate to a third party the costly time-consuming process of determining what documents are responsive to the subpoenas. The interests of and costs imposed on third parties who have no stake in a lawsuit are appropriate considerations for this Court in its oversight of the parties' discovery process. See, e.g., Tucker v. Am. Int'l Grp., Inc., 281 F.R.D. 85, 92 (D. Conn. 2012).
Nor do I attribute inherently sinister motives to GE or its counsel. The United States does not contest the right of GE to conduct a privilege review, and it is only logical for GE counsel to conduct a responsiveness review of the documents before conducting a privilege review. Otherwise, GE would have to screen thousands of documents for ...