brief on scope of questioning of terry collingsworth

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

DRUMMOND COMPANY, INC.,

Plaintiff,

v.

TERRENCE P. COLLINGSWORTH, et al.,

Defendants.

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Case No 2:11-cv-3695-RDP

FILED WITH REDACTIONS

PURSUANT TO COURT

ORDER

DEFENDANTS’ BRIEF IN RESPONSE TO COURT’S ORAL INSTRUCTIONS OF

AUGUST 17, 2015 TO BRIEF THE SCOPE OF QUESTIONING OF MR.

COLLINGSWORTH

Kenneth E. McNeil, Pro Hac Vice

Texas State Bar No. 13830900

Stuart V. Kusin, Pro Hac Vice

Texas State Bar No. 11770100

SUSMAN GODFREY LLP

1000 Louisiana Street, Suite 5100

Houston, Texas 77002-5096

Telephone: 713/651-9366

Facsimile: 713/654-6666

[email protected]

[email protected]

Lindsey Godfrey Eccles

Pro Hac Vice

WASB No. 33566

SUSMAN GODFREY LLP

1201 Third Avenue

Suite 3800

Seattle, Washington 98101

Telephone: 206/516-3880

Facsimile: 206/516-3883

[email protected]

Robert K. Spotswood

Michael T. Sansbury

William T. Paulk

SPOTSWOOD SANSOM &

SANSBURY LLC

One Federal Place

1819 Fifth Avenue North, Suite 1050

Birmingham, Alabama 35203

Tel: 205-986-3620

Fax: 205-986-3639

[email protected]

[email protected]

[email protected]

Attorneys for Terrence P. Collingsworth and Conrad & Scherer LLP

FILED 2015 Aug-21 PM 12:27U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 2:11-cv-03695-RDP-TMP Document 313 Filed 08/21/15 of 26

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Of Counsel for Defendants Terrence P. Collingsworth and Conrad & Scherer LLP

Christopher S. Niewoehner

Admitted pro hac vice

Steptoe & Johnson LLP

115 South LaSalle Street, Suite 3100

Chicago, IL 60604

Tel: 312-577-1240

Fax: 312-577-1370

[email protected]

Kendall R. Enyard

Savannah E. Marion



1330 Connecticut Avenue NW

Washington, DC 20036

Tel: 202-429-6405

Fax: 202-429-3902

[email protected]

[email protected]


iii

TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................................................................................... iv

INTRODUCTION .......................................................................................................................... 1

BACKGROUND ............................................................................................................................ 3

ARGUMENT .................................................................................................................................. 5

I. Drummond has not satisfied the Eleventh Circuit’s test for invoking the crime-fraud

exception. .................................................................................................................................... 6

A. Drummond has not identified evidence that, if believed by a trier of fact, would

establish the elements of some violation that was ongoing or about to be committed. ........... 7

1. Drummond has not even identified the alleged violation, much less the elements of

that violation. ................................................................................................................... 8

2. Drummond has not produced evidence which, if unexplained, would be prima facie

proof of the existence of the exception. ......................................................................... 10

B. Even if Drummond had identified the alleged crime and produced prima facie evidence,

the Defendants should be given a chance to rebut that evidence. ......................................... 11

C. Drummond has not shown that the information at issue was created in furtherance of the

unidentified and unestablished crimes or frauds. .................................................................. 13

II. Even if Drummond could establish that information was exchanged in furtherance of a

crime or fraud, this Court would be required to conduct an in camera review of the

information. ............................................................................................................................... 16

III. Even if Drummond overcame all of the hurdles with respect to the Defendants’ work

product, it would need to overcome the same hurdles with respect to the Defendants’ clients.19

CONCLUSION ............................................................................................................................. 19


iv

TABLE OF AUTHORITIES

Cases

Clark v. United States,

289 U.S. 1 (1933) .............................................................................................................. 10

Cox v. Adm’r U.S. Steel & Carnegie,

17 F.3d 1386 (11th Cir. 1994) ................................................................................... passim

Criswell v. City of O’Fallon, Mo.,

No. 4:06CV01565 ERW, 2008 WL 250199 (E.D. Mo. Jan. 29, 2008) ............................ 10

Gutter v. E.I. Dupont De Nemours,

124 F. Supp. 2d 1291 (S.D. Fla. 2000) ..................................................................... 7, 9, 10

Haines v. Liggett Grp. Inc.,

975 F.2d 81 (3d Cir. 1992 ................................................................................................. 17

Harvey v. Standard Ins. Co.,

275 F.R.D. 629 (N.D. Ala. 2011)........................................................................................ 5

In re BankAmerica Corp. Secs. Litig.,

270 F.3d 639 (8th Cir. 2001) ............................................................................................ 14

In re Grand Jury Investigation (Schroeder),

842 F.2d 1223 (11th Cir. 1987) ................................................................................. passim

In re Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983,

731 F.2d 1032 (2d Cir. 1984)............................................................................................ 13

In re Grand Jury Subpoena,

419 F.3d 329 (5th Cir. 2005) .......................................................................... 12, 13, 14, 15

In re Grand Jury Subpoenas,

561 F.3d 408 (5th Cir. 2009) ............................................................................................ 18

In re Green Grand Jury Proceedings,

492 F.3d 976 (8th Cir. 2007) ...................................................................................... 17, 18

In re Richard Roe, Inc.,

68 F.3d 38 (2d Cir. 1995)............................................................................................ 14, 16

Jinks-Umstead v. England,

232 F.R.D. 142, 145-46 (D.D.C. 2005) ............................................................................ 12


v

Magnetar Techs. Corp. v. Six Flags Theme Park Inc.,

886 F. Supp. 2d 466 (D. Del. 2012) .................................................................................. 12

Matter of Feldberg,

862 F.2d 622 (7th Cir. 1988) .............................................................................................. 8

Med. Lab. Mgmt. Consultants v. Am. Broad. Companies, Inc.,

30 F. Supp. 2d 1182 (D. Ariz. 1998) ............................................................................ 9, 10

RCA Corp. v. Data Gen. Corp.,

Civ. A. No. 84-270-JJF, 1986 WL 15684 (D. Del. Oct. 27, 1986) ................................... 11

Research Corp. v. Gourmet's Delight Mushroom Co.,

560 F. Supp. 811 (E.D. Pa. 1983) ....................................................................................... 9

Shell Oil Co. v. Par Four P’ship,

638 So. 2d 1050 (Fla. Dist. Ct. App. 1994) ........................................................................ 6

United States v. Soudan,

812 F.2d 920 (5th Cir. 1986) .............................................................................................. 9

United States v. Zolin,

491 U.S. 554 (1989) .............................................................................................. 16, 17, 18

Rules

Ala. R. Prof. Conduct 1.8(f) ............................................................................................................ 8

Fed. R. Civ. P. 9(b) ......................................................................................................................... 9

Fed. R. Evid. 104(a) ...................................................................................................................... 18

Treatises

Restatement (Third) of Law Governing Lawyers § 72 cmt. c (2000) ............................................. 5

Restatement (Third) of Law Governing Lawyers § 75 (2000) ........................................................ 5


1

INTRODUCTION

Defendants Terrence Collingsworth and Conrad & Scherer, LLP, submit the following

brief in response to the Court’s oral instructions to the parties on August 17, 2015, to brief the

scope of questions Mr. Collingsworth should be compelled to answer at his deposition.

Collingsworth’s communications with his client, Albert van Bilderbeek, regarding van

Bilderbeek’s dispute with Drummond are protected by the attorney-client privilege and

the work product doctrine. Collingsworth’s communications with other lawyers at

Conrad & Scherer, which is a defendant in this case, about briefing prepared in this case

are also protected by the attorney-client privilege and work product doctrine.

If this Court intends to invoke the crime-fraud exception, whether for purposes of

Collingsworth’s deposition or at the hearing on Drummond’s sanctions motion, then it

must proceed in accordance with the established procedures.

Those procedures require at least six essential steps:

o The Plaintiffs must specifically define the crime at issue.

o The Plaintiffs must establish in detail the prima facie evidence of that crime.

o The Defendants must be given an opportunity to provide a reasonable explanation

of the evidence.

o The Plaintiffs must establish that the information at issue was exchanged in

furtherance of the crime or fraud.

o If the Court is convinced that the information was exchanged in furtherance of a

crime or a fraud, the Court must inspect in camera the information that was

allegedly communicated in furtherance of the crime at issue before disclosing it to

the other side.

o This Court must issue an order making specific, detailed findings with respect to

each piece of information at issue.

In following those essential steps, the Court must take into account the following legal

principles:

o The crime-fraud exception is very, very rarely used in civil litigation.

The Defendants have not located a single case in which the Eleventh

Circuit has allowed a civil litigant to invoke the crime-fraud exception

successfully.


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The Eleventh Circuit has affirmed no civil cases invoking a crime-fraud

exception.

To the contrary, the Eleventh Circuit has only affirmed civil cases that

denied a crime-fraud exception – and there are hardly any of those.

o The crime or fraud must be specifically delineated—for example, perjury under

18 U.S.C. § 1621.

It is improper to conflate a potential ethical violation—such as a deliberate

and intentional failure to disclose discovery—with a criminal violation.

In order for a fraud to support this exception, the fraud must be of serious

nature and must have been undertaken with the specific intent to engage in

fraudulent activity.

o There must be actual evidence developed in the record satisfying the elements of

the alleged crime or fraud.

o Only then is this court permitted to look at specific privileged information, and

only then in camera.

o The crime-fraud exception should not be invoked where the legality of the

conduct at issue is fuzzy or uncertain. This is especially important in uncharted

territory like this case where the search for the truth is hampered by dangerous

criminal elements, threats of violence, and systematic corruption.

The Defendants are concerned that, in the rush for the upcoming hearing on the Motion

for Sanctions, the application of these clear legal principles to these six essential steps is

being overlooked.

The harm from waiver of privilege and production of documents before these steps are

completed creates the “toothpaste and tube” problem: once it is out, it cannot be put back

in.

If this Court truly is transforming the sanctions hearing over nondisclosure and spoliation

into an issue of crime or fraud, then the Court must put the Plaintiffs to their burden and

then allow the Defendants to respond.

Furthermore, if there is a shift toward some kind of “criminal sanctions,” defendants are

entitled to immediate guidance from the Court because the rules of the road change and

much stricter, rigorous new procedures must be applied.

The Court should not skirt the rigorous process outlined above simply because the

immediate dispute arose over privilege objections in a deposition dealing with the two

issues – Collingsworth’s communications with Albert van Bilderbeek and internal

Conrad & Scherer communications regarding briefing in this case.


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Colombia is a deeply troubled place for witnesses. Hundreds of people associated with

labor unions have been killed. Two Colombian courts have insisted that prosecutors investigate

Drummond. One Drummond official has been arrested and is under investigation in Colombia. A

Peace & Justice Commission body has demanded that more prosecution be done of those aiding

and abetting the AUC. A United States statute on terrorist activity has designated the AUC as a

terrorist organization, and it is a federal crime for any United States company to assist the AUC.

In that kind of troubled Colombian context, providing witness assistance payments is not

a crime—defendants have established this through the expert report of Professor Charles W.

Wolfram. See Exhibit 1 (Wolfram Decl.) Collingsworth did not commit a crime in arranging for

these witness assistance payments. Colombia is a tough world, and Collingsworth was operating

in uncharted territory in an effort to obtain justice for the families who, without dispute, have

been the victims of extreme injustice and violence. Witnesses and lawyers involved in

Drummond-related matters in Colombia faced real danger and threats; Colombia is rife with

inherent and systematic obstacles to pursuing a human rights; and Collingsworth was unable to

obtain truthful testimony from witnesses without providing for their, or their families’ safety.

The unrebutted declarations of Javier Peña, a former top DEA official, and Steven T’kach, the

former head of the Federal Witness Protection Program, underscore these points. See Exhibit 2

(Peña Decl.), Exhibit 3 (T’kach Decl.). There is simply no basis for invoking the crime-fraud

exception in these unprecedented circumstances.

BACKGROUND

During the deposition of Terrence Collingsworth, this Court was consulted over a dispute

regarding the scope of questions Collingsworth could be compelled to answer over privileged

objections with respect to two types of communications.


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The first type of communication was with Albert van Bilderbeek. Albert van Bilderbeek

is a client of Conrad & Scherer and Mr. Collingsworth. See Exhibit 4 (Decl. Albert van

Bilderbeek) ¶ 1. As a client, van Bilderbeek expected and believed that his conversations with

Mr. Collingsworth were protected by the attorney-client privilege and work-product doctrine. Id.

¶ 4. Collingsworth had this same understanding and expectation. See Doc. 69 (Collingsworth

Decl.) ¶ 72 & Doc. 69-51 (Attorney-Client Agreement); Exhibit 5 (Aug. 17, 2015 Collingsworth

Dep. Tr.) 316:20-23 (asserting privilege over communications with van Bilderbeek).

Collingsworth represented van Bilderbeek in connection with van Bilderbeek’s dispute

with Drummond regarding Drummond’s theft of oil concessions from van Bilderbeek’s business

and the false imprisonment of van Bilderbeek’s brother, Hendrik. Exhibit 4 ¶ 2; Doc. 69 ¶ 72. In

that regard, Collingsworth communicated to Jaime Blanco Maya (“Blanco”) that Collingsworth

thought that Albert van Bilderbeek would assist Blanco with funds towards his attorney’s fees if

Blanco was able to investigate the facts regarding Drummond’s illegal acquisition of the Llanos

Oil Company's oil concession in Colombia and provide that information to van Bilderbeek. Doc.

174-2 (Defs.’ 2nd Am. Supp. Objs. & Resps. Drummond Third ROG No. 2), at 5. Collingsworth

does not know the details of the final agreement reached between van Bilderbeek and Blanco. Id.

The second type of communication was with attorneys at Conrad & Scherer regarding the

preparation of, or knowledge of information in, briefs and other documents prepared in this case.


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ARGUMENT

The Court should not require Collingsworth to testify about the two types of

communications described above. Collingsworth’s communications with van Bilderbeek, his

client, regarding Blanco’s provision of investigation services to van Bilderbeek in connection

with van Bilderbeek’s dispute with Drummond are protected by the attorney-client privilege and

work product doctrine. Harvey v. Standard Ins. Co., 275 F.R.D. 629, 631 (N.D. Ala. 2011) (“The

attorney-client privilege applies to confidential communications between an attorney and his

client relating to a legal matter for which the client has sought professional advice.” (internal

citation and quotation marks omitted)). Simply because Blanco was also a witness in this libel

case does not destroy the privilege that exists over these communications. Restatement (Third) of

Law Governing Lawyers § 72 cmt. c (2000) (explaining that as long as communication was for

legal advice and was “not predominately for another purpose,” communication would be

protected).

Collingsworth’s communications with other lawyers at Conrad & Scherer, which is a

defendant in this case, regarding preparation of briefs and knowledge about the contents of briefs

are also protected by the attorney-client privilege and the work product doctrine. See Restatement

(Third) of Law Governing Lawyers § 75 (2000) (“If two or more persons are jointly represented

by the same lawyer in a matter, a communication of either co-client that otherwise qualifies as


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privileged . . . and relates to matters of common interest is privileged as against third persons,

and any co-client may invoke the privilege….”); Shell Oil Co. v. Par Four P’ship, 638 So. 2d

1050, 1050 (Fla. Dist. Ct. App. 1994) (“Confidential communications between lawyers and

clients are privileged from compelled disclosure to third persons. This privilege covers

communications on legal matters between corporate counsel and corporate employees.”).

Defendants recognize, however, that the Court may have been more interested in the

potential application of the crime-fraud exception rather than basic privilege and work product

principles. Thus, defendants’ brief focuses mainly on that issue.

This Court does not have a sufficient basis to apply the crime-fraud exception here to the

communications described above. First, the Plaintiffs have not met their burden of identifying a

crime or fraud. Second, the Plaintiffs have not proven a crime or a fraud. Third, the Defendants

have not been given an opportunity to respond to the evidence of a crime or fraud. Fourth, the

Plaintiffs have not proven that any of the information at issue was used in furtherance of a crime

or a fraud. Fifth, this Court has not verified, via in camera inspection, that the information at

issue was used in furtherance of a crime or a fraud.

I. Drummond has not satisfied the Eleventh Circuit’s test for invoking the crime-fraud

exception.

The Eleventh Circuit applies a two-part test for invoking the crime-fraud exception. Cox

v. Adm’r U.S. Steel & Carnegie, 17 F.3d 1386, 1416 (11th Cir. 1994), op. modified on reh’g, 30

F.3d 1347 (11th Cir. 1994); In re Grand Jury Investigation (Schroeder), 842 F.2d 1223, 1226

(11th Cir. 1987). The test is comprised of the following:

First, there must be a prima facie showing that the client was engaged in criminal

or fraudulent conduct when he sought the advice of counsel, that he was planning

such conduct when he sought the advice of counsel, or that he committed a crime

or fraud subsequent to receiving the benefit of counsel's advice. Second, there


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must be a showing that the attorney’s assistance was obtained in furtherance of

the criminal or fraudulent activity or was closely related to it.

Cox, 17 F.3d at 1416 (quoting Schroeder, 842 F.2d at 1226). The first prong “is satisfied by a

showing of evidence that, if believed by a trier of fact, would establish the elements of some

violation that was ongoing or about to be committed.” Schroeder, 842 F.2d at 1226 (citations

omitted). “The second prong is satisfied by a showing that the communication is related to the

criminal or fraudulent activity established under the first prong.” Id. at 1227.

A. Drummond has not identified evidence that, if believed by a trier of fact,

would establish the elements of some violation that was ongoing or about to

be committed.

The Eleventh Circuit has held the “prima facie showing” necessary to invoke the crime-

fraud exception “is satisfied by a showing of evidence that, if believed by a trier of fact, would

establish the elements of some violation that was ongoing or about to be committed.” Schroeder,

842 F.2d at 1226 (citations omitted). “That showing must have some foundation in fact, for mere

allegations of criminality are insufficient to warrant application of the exception.” Id. (citations

omitted). The Eleventh Circuit did not elaborate upon this ultimate burden in Cox because the

plaintiffs there failed to produce sufficient evidence showing the documents sought were made in

furtherance of or closely related to any crime or fraud “to permit even an in camera review of the

communications involved.” 17 F.3d at 1416-17.

Lower courts in the Eleventh Circuit, however, have elaborated upon the burden of proof

necessary ultimately to apply the crime-fraud exception and overcome privilege. See, e.g., Gutter

v. E.I. Dupont De Nemours, 124 F. Supp. 2d 1291 (S.D. Fla. 2000). In Gutter, the Southern

District of Florida found the prima facie standard adopted by the Eleventh Circuit “contemplates

a hearing in which both parties are given the opportunity to present evidence and argument on


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whether the evidence, if believed by trier of fact, would be sufficient to support a finding that the

elements of the crime/fraud exception were met.” Id. at 1307 (citation omitted). Thus:

In practice, this means that the party opposing the privilege on the crime/fraud

exception has the initial burden of producing evidence which, if unexplained,

would be prima facie proof of the existence of the exception. The burden of

persuasion then shifts to the party asserting the privilege to give a reasonable

explanation of its conduct.[] If the court accepts the explanation as sufficient to

rebut the evidence presented by the party opposing the privilege, then the

privilege remains. If the court does not find the evidence is sufficient to rebut the

prima facie case, then the prima facie case still exists and the privilege is lost.

Id. (citing Matter of Feldberg, 862 F.2d 622, 626 (7th Cir. 1988) (holding after prima facie

showing crime-fraud exception applies, party asserting privilege must come forward with

explanation to rebut: “If the court finds the explanation satisfactory, the privilege remains.”)).

1. Drummond has not even identified the alleged violation, much less the

elements of that violation.

Before the Court can determine whether the elements of a violation have been

established, the violation itself must be identified. Drummond has not identified any criminal

statute that the Defendants have violated and has not identified any fraud that the Defendants

have committed with respect to the information at issue.

First, the communications with van Bilderbeek concerned whether van Bilderbeek would

pay someone else’s legal fees. Paying someone else’s legal fees is not a crime; indeed, it is not

even unethical, as the Rules of Professional Conduct in most jurisdictions allow a third party to

pay someone else’s legal fees. See, e.g., Ala. R. Prof. Conduct 1.8(f). Nor is it illegal to pay a

non-witness for investigation services, including locating witnesses, which is what Blanco was

hired by van Bilderbeek to do. Thus, Collingsworth’s conversations with van Bilderbeek about

Blanco’s provision of investigative services, and van Bilderbeek’s payment of Blanco’s criminal

legal fees as compensation for those services, were not made in furtherance any crime.


9

Second, Drummond has not identified any crime or fraud that was committed in the

Defendants’ legal filings. The level of “fraud” sufficient to invoke the crime-fraud exception

must be high. See Research Corp. v. Gourmet's Delight Mushroom Co., 560 F. Supp. 811, 820

(E.D. Pa. 1983) (“As its name connotes, [the crime-fraud exception] encompasses only serious

unlawful activity. Hence, for the privilege to take flight, unlawful conduct, not mere inequity,

must be demonstrated.”). In determining whether “fraud” sufficient to invoke the crime-fraud

exception exists, “[t]he client’s intent is central to this inquiry.” Gutter v. E.I. Dupont De

Nemours, 124 F. Supp. 2d 1291, 1311-12 (S.D. Fla. 2000) (citing United States v. Soudan, 812

F.2d 920, 927 (5th Cir.1986)). Thus, the communications or work product created must be

“conducted with the express purpose of promoting intended or continuing criminal or fraudulent

activity.” Med. Lab. Mgmt. Consultants v. Am. Broad. Companies, Inc., 30 F. Supp. 2d 1182,

1207 (D. Ariz. 1998). In addition, under the Federal Rules of Civil Procedure, fraud must be

pleaded with particularity. Fed. R. Civ. P. 9(b). “‘[T]he purpose behind requiring such

particularity is to provide a defendant fair notice of the substance of a plaintiff's claim so that the

defendant can formulate a defense.’” Bartronics, Inc. v. Power-One, Inc., 245 F.R.D. 532, 537

(S.D. Ala. 2007) (quoting MedImmune, 271 F. Supp. 2d at 772).

Drummond has not alleged what fraud was allegedly committed in Collingsworth’s

communications with Conrad & Scherer lawyers related to briefs prepared for this case. Without

knowing the precise nature of the alleged fraud, the Defendants and this Court are unable to

determine whether the specific misrepresentations at issue indeed constitute fraud. Nor can they

determine whether the fraud at issue rises to a level sufficient to invoke the crime-fraud

exception.


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Finally, although Collingsworth did not commit a crime or engage in fraud, to the extent

there is room for debate due to the highly unusual circumstances of obtaining truthful testimony

from witnesses in the tough world of Colombia, the crime fraud exception is still inapplicable.

Where the law is unsettled with regard to whether certain conduct is illegal, the crime-fraud

exception—which is a “narrow” exception, Criswell v. City of O’Fallon, Mo., No. 4:06CV01565

ERW, 2008 WL 250199, at *5 (E.D. Mo. Jan. 29, 2008), cannot apply. See Med. Lab. Mgmt.

Consultants, 30 F. Supp. 2d at 1207 (holding that where “it is not plausible that Defendants

‘knew or should have known’ that they would be liable for fraud,” crime-fraud exception was not

applicable).

2. Drummond has not produced evidence which, if unexplained, would be

prima facie proof of the existence of the exception.

Because Drummond has not identified the crimes or frauds at issue, it has not identified

the evidence that, in its view, establishes all of the elements of those crimes or frauds. Such

evidence—as opposed to allegations—is essential to invoking the crime-fraud exception. From

the inception of the crime-fraud exception in 1933, the Supreme Court has held “‘it would be

absurd to say that the privilege could be got rid of merely by making a charge of fraud.’” Clark

v. United States, 289 U.S. 1, 15 (1933) (citation omitted). “To drive the privilege away, . . . there

must be ‘prima facie evidence that it has some foundation in fact.’” Id. (citation omitted); see

also Schroeder, 842 F.2d at 1226 (“mere allegations of criminality are insufficient to warrant

application of the exception”).


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B. Even if Drummond had identified the alleged crime and produced prima

facie evidence, the Defendants should be given a chance to rebut that

evidence.

Lower courts in the Eleventh Circuit applying this prima facie standard have found “the

party opposing the privilege on the crime/fraud exception has the initial burden of producing

evidence which, if unexplained, would be prima facie proof of the existence of the exception.”

Gutter, 124 F. Supp. 2d at 1307. Only then does the “burden of persuasion” shift “to the party

asserting the privilege to give a reasonable explanation of its conduct.” Id. Because Drummond

has not met its initial burden, the Defendants have not been given sufficient notice of their

alleged wrongdoing so that they can be given an opportunity to explain it.

Nevertheless, it is likely that the Defendants, if given an opportunity, could provide “a

reasonable explanation of [their] conduct.” Id. For instance, as discussed above, it is not illegal—

it is not even unethical—to pay the attorneys’ fees of another party. If Drummond were to argue

that Albert van Bilderbeek’s payments to Mr. Blanco were in exchange for testimony, the

evidence would clearly contradict that argument. Mr. Otero has explained the context for Mr.

Blanco’s reasonable concern that his testimony about Drummond would expose him to greater

criminal penalties, which meant that he would incur additional attorney’s fees. See Doc. 189-2

(Supp. Decl. of Ivan Otero Mendoza) ¶¶ 50-73. Mr. Blanco thus did not want to testify until he

had the attorney’s fees to protect himself, but Mr. Blanco did not condition what he said on

payment. Id. ¶¶ 64-69. Rather, he gave his information first, and wished only to delay his

testimony until he had the resources to address the consequences in his criminal case. Id. And,

van Bilderbeek agreed to make these payments in order to obtain Blanco’s investigation services

for van Bilderbeek’s own potential case against Drummond.


12

Similarly, if Drummond were to argue that the Defendants violated discovery orders and

made false statements, it could not establish fraud. First, discovery violations typically do not

give rise to the crime-fraud exception: “Generally, an erroneous judgment made in good faith

does not suffice to establish fraudulent intent. Likewise, the crime-fraud exception is not

triggered by the mere showing that an attorney has failed to produce certain documents in the

course of extensive discovery . . . .” RCA Corp. v. Data Gen. Corp., Civ. A. No. 84-270-JJF,

1986 WL 15684, *2 (D. Del. Oct. 27, 1986) (citations omitted); see Jinks-Umstead v. England,

232 F.R.D. 142, 145-46 (D.D.C. 2005) (“This court has not found any precedent, nor has

plaintiff provided any, that supports the expansion of the crime-fraud exception to errors made

during the discovery process.”). This is true even when a party destroyed documents and

allegedly provided false interrogatories, knowingly concealed information, and fraudulently

induced a settlement. See Magnetar Techs. Corp. v. Six Flags Theme Park Inc., 886 F. Supp. 2d

466, 487-88 (D. Del. 2012) (holding that party did not make a prima facie case of crime or fraud

despite these actions).

Second, because the Defendants have now corrected those regrettable statements through

disclosures, supplementary interrogatory responses, and privilege logs provided to Drummond

and this Court, no fraud has been committed. Indeed, the Defendants came forward to correct the

mistaken representations in this case, which is powerful evidence of Defendants’ good faith.

That information was provided in time for this Court and Drummond to use it, both with respect

to this issue and any other. Collingsworth did not even benefit from his mistaken statements,

since, whether the payments were made to three witnesses or six does not affect the

appropriateness of those payments. Moreover, Drummond has suffered no harm from the

mistake because Defendants disclosed the additional payments before the crime-fraud motions


13

were decided. While Collingsworth’s inaccurate statements harmed his credibility with this

Court, they harmed nothing else.

C. Drummond has not shown that the information at issue was created in

furtherance of the unidentified and unestablished crimes or frauds.

“[T]he proper reach of the crime-fraud exception when applicable does not extend to all

communications made in the course of the attorney-client relationship, but rather is limited to

those communications and documents in furtherance of the contemplated or ongoing criminal or

fraudulent conduct.” In re Grand Jury Subpoena, 419 F.3d 329, 343 (5th Cir. 2005); see also In

re Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983, 731 F.2d 1032, 1038-41 (2d Cir.

1984) (holding “[a]dvice sought in furtherance of a future or ongoing fraud is unprivileged;

communications with respect to advice as to past or completed frauds are within the privilege”).

Therefore, even if Drummond has established all that it needs to establish—and this Court rejects

the Defendants’ explanation—this Court must still examine every communication to determine

whether it was made in furtherance of the crime or fraud at issue.

The Fifth Circuit in In re Grand Jury Subpoena “address[ed] the propriety of the scope of

the crime-fraud exception to the attorney-client and work product privileges on a record where

the grand jury subpoena compel[led] disclosure of all communications between the attorney and

his client . . . rather than discrete communications related to a particular issue or limited to

particular media.” 419 F.3d at 340. Previous cases had “all involve[d] the question of the

applicability and/or scope of the crime-fraud exception to specified documents or conversations

already limited to a certain time or context, rather than a challenge to a discovery request or a

subpoena seeking disclosure in toto.” Id. The Fifth Circuit rejected the government’s argument

that the attorney-client and work product privileges simply disappear with a prima facie showing,

and found the lower “court’s application of the crime-fraud exception was overly broad because


14

it lacked the requisite specificity to reach only communications and documents no longer

protected by the attorney-client and work product privileges.” Id. at 344.

First, “unlike the government suggest[ed], no case stands for the proposition that, when a

prima facie showing is made . . . the privilege entirely disappears, subjecting everything in

connection with that client's representation with that attorney to disclosure.” Id. Second, “[i]n

assessing the proper scope of the crime-fraud exception's application to the attorney-client and

work product privileges,” the Fifth Circuit looked to its “sister circuits, which bolster[ed] [its]

conclusion” that “the reach of the crime-fraud exception does not extend to all communications

made in the course of the attorney-client relationship, but rather must be limited to those

communications made and documents produced in furtherance of the ongoing or future crime or

fraud, no longer protected by the privileges.” Id. at 344-45.

For example, the Second Circuit in In re Richard Roe, Inc., 68 F.3d 38 (2d Cir. 1995),

held “the crime-fraud exception does not apply simply because privileged communications

would provide an adversary with evidence of a crime or fraud,” but rather “applies only when the

court determines that the client communication or attorney work product in question was itself in

furtherance of the crime or fraud.” Id. at 40 (emphasis in original). And the Eighth Circuit in In

re BankAmerica Corp. Secs. Litig., 270 F.3d 639 (8th Cir. 2001), vacated a disclosure order

because the district court “focused only on plaintiffs’ threshold showing of fraud” and “then

assumed, without any further showing by plaintiffs, that all contemporaneous attorney-client

communications ‘could be construed’ as in furtherance of the alleged fraud.” Id. at 643.

The Fifth Circuit concluded, therefore, that “the proper scope of the crime-fraud

exception must necessarily be limited to those attorney-client communications and work

products reasonably related to the furtherance of the ongoing or future crime or fraud at issue.”


15

In re Grand Jury Subpoena, 419 F.3d at 347; see also id. at 346 (labeling what it “had previously

termed the second element of the prima facie test as the proper scope of the crime-fraud

exception's application to the work product privilege”); Schroeder, 842 F.2d at 1226 (requiring

as the second element “a showing that the attorney’s assistance was obtained in furtherance of

the criminal or fraudulent activity or was closely related to it”). Thus, any loss of privilege under

the crime-fraud exception extends only to those documents directly created “‘in furtherance of

the criminal or fraudulent activity or [] closely related to it.’” Cox, 17 F.3d at 1416; Schroeder,

842 F.2d at 1226. “Otherwise, to put it simply, the crime-fraud exception swallows the privilege

rule.” In re Grand Jury Subpoena, 419 F.3d at 347.

Therefore, even if Drummond somehow were able to present prima facie evidence of the

exception’s applicability, Drummond still would not be able to obtain all of Defendants’

privileged communications and documents related to the alleged crime or fraud. See id. at 338

(rejecting argument that “once the prima facie showing is made that the crime-fraud exception

applies, the attorney-client and work product privileges no longer exist” and “the privileges

disappear as to all communications”). The Fifth Circuit was unable to identify, nor does there

exist, any case “stand[ing] for the proposition that, when a prima facie showing is made . . . the

privilege entirely disappears, subjecting everything in connection . . . to disclosure.” Id. at 344.

Instead, Drummond would only be entitled to that information that was exchanged in furtherance

of that crime or fraud. Drummond has not established that any of the information at issue was

exchanged in furtherance of any (unidentified and unestablished) crime or fraud.


16

II. Even if Drummond could establish that information was exchanged in furtherance

of a crime or fraud, this Court would be required to conduct an in camera review of

the information.

Any order by this Court requiring the disclosure of the Defendants’ privileged materials

must be limited to those documents directly related to the specific crime or fraud that the

evidence establishes was ongoing or anticipated when such documents were created. See, e.g., In

re Grand Jury Subpoena, 419 F.3d at 338-40 (reversing district court’s opinion ordering

compliance with a subpoena that compelled “disclosure of all communications between the

attorney and his client . . . rather than discrete communications related to a particular issue”). To

ensure any disclosure order possesses “the requisite specificity to reach only communications

and documents no longer protected by the attorney-client and work product privileges,” id. at

344, this Court must “specify the factual basis for the crime or fraud that the documents or

communications are deemed to have furthered, [and] which of the parties asserting claims of

privilege possessed a criminal or fraudulent purpose with respect to those documents or

communications . . . .” In re Richard Roe, 68 F.3d at 41. Given that Drummond has not met the

threshold for a prima facie application of the crime-fraud exception, the Court need never reach

this issue. However, with respect to any party, any lifting of work product privilege based on the

crime-fraud exception must be extremely narrow and focus only on the documents or

communications that furthers the specific crime or fraud proven to have occurred. To comply

with these requirements, this Court must conduct an in camera inspection of the information at

issue, including, with respect to proposed testimony, reviewing answers to questions posed by

Drummond in camera. Before conducting that inspection, though, this Court must find that

Drummond has made the necessary threshold showing of a crime or fraud.


17

In United States v. Zolin, 491 U.S. 554 (1989), the Supreme Court rejected “[a] blanket

rule allowing in camera review as a tool for determining the applicability of the crime-fraud

exception,” holding that “[t]here is no reason to permit opponents of the privilege to engage in

groundless fishing expeditions, with the district courts as their unwitting (and perhaps unwilling)

agents.” Id. at 571-72 (emphasis added). “In fashioning a standard for determining when in

camera review is appropriate,” the Court “conclude[d] that a lesser evidentiary showing is

needed to trigger in camera review than is required ultimately to overcome the privilege.” Id.

The Court devised the following standard:

Before engaging in in camera review to determine the applicability of the crime-

fraud exception, “the judge should require a showing of a factual basis adequate

to support a good faith belief by a reasonable person,” Caldwell v. District Court,

644 P.2d 26, 33 (Colo.1982), that in camera review of the materials may reveal

evidence to establish the claim that the crime-fraud exception applies. Once that

showing is made, the decision whether to engage in in camera review rests in the

sound discretion of the district court. The court should make that decision in light

of the facts and circumstances of the particular case, including, among other

things, the volume of materials the district court has been asked to review, the

relative importance to the case of the alleged privileged information, and the

likelihood that the evidence produced through in camera review, together with

other available evidence then before the court, will establish that the crime-fraud

exception does apply.

Id. at 572.

The Eleventh Circuit considered the crime-fraud exception and the Zolin standard for in

camera review in Cox. 17 F.3d at 1416-17. The plaintiffs in Cox argued the crime-fraud

exception applied because the defendant union “made numerous false statements” through its

counsel, “as part of an effort to conceal their illegal actions.” Id. at 1416. The district court

refused to apply the exception “because ‘there [was] no evidence showing the communication

furthered any crime or fraud, or . . . was connected with any crime or fraud.’” Id. The Court of

Appeals also found “plaintiffs ha[d] failed to produce any evidence that” the communications at


18

issue “furthered or were closely related to an effort on the Union’s part to conceal the illegal

actions of its negotiators.” Id. at 1417. The Eleventh Circuit affirmed the district court’s decision

“refusing to permit even an in camera review of the communications involved.” Id.

“Although the Court [in Zolin] did not specify the level of proof necessary to trigger the

crime-fraud exception, it suggested that a higher burden than that required for in camera review

would be necessary to overcome the privilege.” In re Green Grand Jury Proceedings, 492 F.3d

976, 983 (8th Cir. 2007); see also Zolin, 491 U.S. at 572 (stating “a lesser evidentiary showing is

needed to trigger in camera review than is required ultimately to overcome the privilege”);

Haines v. Liggett Grp. Inc., 975 F.2d 81, 96 (3d Cir. 1992) (“The district court in this case

correctly observed that ‘the decision to engage in in camera review implicates a much more

lenient standard of proof than the determination to apply the crime/fraud exception’”) (citation

omitted).

“[B]efore a district court may engage in in camera review at the request of the party

opposing the privilege, that party must present evidence sufficient to support a reasonable belief

that in camera review may yield evidence that establishes the exception’s applicability.” Zolin,

491 U.S. at 574-75. This threshold showing to obtain in camera review must be met by using

only non-privileged evidence. See id. at 573 (finding Fed. R. Evid. 104(a) “establishes that

materials that have been determined to be privileged may not be considered in making the

preliminary determination of the existence of a privilege”). Drummond has not made the

threshold showing. See Cox, 17 F.3d at 1416-17 (affirming the district court’s decision “refusing

to permit even an in camera review of the communications involved” where plaintiffs “failed to

produce any evidence” showing “the communications furthered any crime or fraud”). The Court


19

should not permit Drummond “to engage in [a] groundless fishing expedition[], with the district

court[] as their unwitting (and perhaps unwilling) agent[].” Zolin, 491 U.S. at 571.

III. Even if Drummond overcame all of the hurdles with respect to the Defendants’

work product, it would need to overcome the same hurdles with respect to the

Defendants’ clients.

When work product is at issue, the crime-fraud exception applies differently from how it

applies to the attorney-client privilege. ‘“Because the work product privilege protects not just the

attorney-client relationship but the interests of attorneys to their own work product,’ both the

attorney and the client hold the privilege.” In re Green Grand Jury Proceedings, 492 F.3d at 980

(citation omitted). “‘Thus, a waiver by the client of the work product privilege will not deprive

the attorney of his own work product privilege, and vice versa.’” In re Grand Jury Subpoenas,

561 F.3d 408, 411 (5th Cir. 2009) (citation omitted). If this Court were to conclude that the

Defendants created the work product at issue in furtherance of a crime or a fraud, that conclusion

alone would be insufficient to require production of the information. Before production can be

required, this Court must also conclude that the Defendants’ client or clients exchanged the work

product in furtherance of a crime or fraud. Drummond can make no such showing.

CONCLUSION

The Defendants respectfully request that, in evaluating the applicability of the crime-

fraud exception in this case, this Court (1) require the Plaintiffs to specifically identify the

alleged crime or fraud, (2) require the Plaintiffs to make a prima facie showing that the alleged

crime or fraud was committed, (3) allow the Defendants an opportunity to rebut the Plaintiffs

evidence, and (4), if it is persuaded that a crime or fraud was committed, conduct an in camera

inspection of the information to determine whether that information was exchanged in

furtherance of the alleged crime or fraud.


20

DATE: August 21, 2015. Respectfully submitted,

/s/ William T. Paulk

Robert K. Spotswood

Michael T. Sansbury

William T. Paulk

SPOTSWOOD SANSOM & SANSBURY LLC

1819 5th Ave. N.

Suite 1050

Birmingham, AL 35203

Phone (205) 986-3620

Fax (205) 986-3639

[email protected]

[email protected]

[email protected]

Attorneys for Terrence P. Collingsworth and

Conrad & Scherer, LLP

OF COUNSEL FOR DEFENDANTS:

Kenneth E. McNeil, Pro Hac Vice

Texas State Bar No.: 13830900

Stuart V. Kusin, Pro Hac Vice

Texas State Bar No.: 11770100

1000 Louisiana Street, Suite 5100

Houston, Texas 77002-5096

Telephone: 713/651-9366

Facsimile: 713/654-6666

Lindsey Godfrey Eccles, Pro Hac Vice

WASB No. 33566

SUSMAN GODFREY LLP

1201 Third Avenue

Suite 3800

Seattle, Washington 98101

Telephone: 206/516-3880

Facsimile: 206/516-3883

[email protected]

Christopher S. Niewoehner



21


115 South LaSalle Street, Suite 3100

Chicago, IL 60604

Tel: 312-577-1240

Fax: 312-577-1370

[email protected]

Kendall R. Enyard

Savannah E. Marion



1330 Connecticut Avenue NW


Tel: 202-429-6405

Fax: 202-429-3902

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that, on August 21, 2015, I electronically filed the foregoing with

the Clerk of Court using the CM/ECF system, which will send notification of such filing to the

following:

William Anthony Davis, III

H. Thomas Wells, III

Benjamin T. Presley

STARNES DAVIS FLORIE LLP

P.O. Box 59812

Birmingham, AL 35259

(205) 868-6000

fax: (205) 868-6099

Sara E. Kropf

LAW OFFICE OF SARA KROPF PLLC

1001 G St. NW, Suite 800


(202) 627-6900

/s/ William T. Paulk

William T. Paulk


brief on scope of questioning of terry collingsworth

Documents

pro hac vice texas state

susman godfrey llp

avenue suite

defendants terrence

conrad scherer llp christopher

collingsworth kenneth

rdptmp document

avenue north