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Drummond Company, Inc. v. Conrad & Scherer, LLP

United States Court of Appeals, Eleventh Circuit

March 23, 2018

DRUMMOND COMPANY, INC., Plaintiff - Appellee,
v.
CONRAD & SCHERER, LLP, Defendant-Appellant.

          Appeal from the United States District Court for the Northern District of Alabama D.C. Docket No. 2:11-cv-03695-RDP-TMP

          Before WILSON, JILL PRYOR and BARTLE, [*] Circuit Judges.

          JILL PRYOR, Circuit Judge:

          Drummond, Inc., sued Conrad & Scherer, LLP ("C&S"), a law firm, and its partner, Terrence Collingsworth, for defamation. In this appeal, C&S seeks interlocutory review of the district court's order concluding that the crime-fraud exception could defeat the firm's and Collingsworth's assertions in discovery of attorney-client privilege and attorney work product protection. The district court made a preliminary determination that the crime-fraud exception may apply to overcome their assertions of privilege and attorney work product protection and ordered a special master to perform an in camera review to determine whether the crime-fraud exception does apply. Although non-final orders generally are not immediately appealable, the district court certified its order for immediate appeal, and a motions panel of this Court granted C&S permission to bring an interlocutory appeal under 28 U.S.C. § 1292(b).

         After full briefing by the parties and with the benefit of oral argument, we conclude that interlocutory review is appropriate to address only one aspect of the district court's order. We vacate as improvidently granted the motion panel's order in part and elect not to exercise our discretion to review the question posed in that part: whether the district court erred in applying agency principles to conclude that C&S intended to commit a crime or fraud and created attorney work product or made communications in furtherance of the crime or fraud.[1] We decline to review this issue because it does not present a pure question of law suitable for review on an interlocutory basis under § 1292(b). Accordingly, we vacate the motion panel's earlier order in part and deny C&S's petition in part.

         We do address the other issue on which interlocutory review was granted, whether the crime-fraud exception may be applied to overcome C&S's assertion, as a defendant in this case, that its materials related to other lawsuits where it served as counsel are protected as attorney work product when the firm's clients in those lawsuits were innocent of any wrongdoing.[2] This question presents the pure legal issue of whether work product protection may be invoked when a lawyer and law firm are found to have engaged in a crime or fraud but there is no such finding as to the client or clients they represented. Following our precedent and persuasive decisions from other circuits, we conclude that the crime-fraud exception may defeat work product protection in this circumstance. We thus affirm the part of the district court's order determining that the crime-fraud exception could be applied to overcome C&S's claim of work product protection for materials related to lawsuits where C&S served as counsel despite the fact that its clients were innocent of wrongdoing.

         I. FACTUAL AND PROCEDURAL BACKGROUND

          This appeal arises out of a complex dispute that began when Collingsworth, a C&S partner, represented Colombian citizens who sued Drummond, an Alabama company, in federal court in Alabama, alleging that Drummond had supported paramilitary groups in Colombia that murdered private citizens. To provide the necessary context for our discussion, we recount the relevant history of the Colombian citizens' lawsuits against Drummond and Drummond's later lawsuit against Collingsworth and C&S.

         A. Collingsworth and C&S's Representation of Colombians Suing Drummond

         In his law practice, Collingsworth primarily represents victims of human rights abuses. He joined C&S as a partner to litigate such cases. Although the firm is based in Florida, he worked out of and managed its Washington D.C. office.

         While a partner at C&S, Collingsworth filed on behalf of Colombian citizens several lawsuits (the "alien tort cases") against Drummond, which operates coal mines around the world, including in Colombia. The plaintiffs sued Drummond under the Alien Tort Statute, 28 U.S.C. § 1350, and the Torture Victim Protection Act of 1991, Pub. L. No. 102-256, 106 Stat. 73 (1992) (codified at 28 U.S.C. § 1350 note), alleging that Drummond hired members of the paramilitary to provide security services around its mines in Colombia and that these individuals, acting as the agents of Drummond, killed civilians in violation of the laws of nations. See generally Doe v. Drummond Co., 782 F.3d 576, 579-81 (11th Cir. 2015).

         Collingsworth acted as the lead C&S attorney in these cases. William Scherer, the firm's managing partner, and other C&S attorneys entered appearances in the cases. As managing partner, Scherer delegated to Collingsworth the authority to litigate the cases.

         To support the claims against Drummond, Collingsworth developed evidence connecting Drummond to the paramilitary's violent actions. He secured testimony from several former members of the paramilitary, including Jairo de Jesus Charris, Libardo Duarte, Jose Gelvez Albarracin, Alcides Manuel Mattos Tabaraes ("Samario"), and Jhon Jairo Esquivel Cuadrado ("El Tigre"). These witnesses offered testimony that implicated Drummond. Additionally, Collingsworth relied on testimony from Jamie Blanco, who worked as a contractor for Drummond in Colombia. Blanco testified that Drummond sent him money that he was directed to use to pay the paramilitary for security services.

          In the alien tort cases, Drummond sought discovery about whether the plaintiffs or their attorneys had paid or given anything of value to these witnesses in exchange for their testimony. In response, the plaintiffs identified three witnesses who had been paid-Charris, Duarte, and Gelvez.[3] The plaintiffs claimed these payments were made to provide security to the family members of the witnesses who were in danger as a result of the witnesses' testimony. The plaintiffs in the alien tort cases did not identify any payments they made to Samario, El Tigre, or Blanco.

         Ultimately, Drummond prevailed in each of the alien tort cases.[4] But the dispute between Drummond, on the one hand, and C&S and Collingsworth, on the other, was only beginning.

         B. Drummond's Defamation Action Against Collingsworth and C&S

         1. Drummond Files a Defamation Action and Seeks Discovery About Witness Payments.

         While the alien tort cases were pending, Collingsworth wrote letters on C&S stationary to the Dutch government and a Japanese company accusing Drummond of supporting paramilitary groups that murdered hundreds of Colombian citizens. After Collingsworth sent these letters, Drummond sued Collingsworth and C&S for defamation in federal court in Alabama (the "defamation case").

         At the beginning of the defamation case, Collingsworth and C&S were jointly represented by outside counsel. Because of Collingsworth's central role in the underlying litigation and in writing the allegedly defamatory letters, he was the C&S partner primarily responsible for working with outside counsel. In their joint answer, Collingsworth and C&S denied liability and raised several defenses, including that the statements in the letters were true and that they had not acted maliciously.

         Attempting to prove that Collingsworth had known the statements in his letters were false and that he had acted with malice, Drummond served discovery requests about the methods Collingsworth and his litigation team had used in the alien tort cases to secure testimony from the witnesses, including information about any payments made to the witnesses. Collingsworth and C&S responded that they had previously disclosed all payments made to witnesses, pointing to their disclosures that payments had been made to Charris, Duarte, and Gelvez. In hearings and other filings with the district court, Collingsworth and C&S's outside counsel repeated that only Charris, Duarte, and Gelvez had received payments.

         2. Through Discovery, Additional Witness Payments Are Uncovered.

         As it turns out, all of these statements made in discovery were false. Eventually, Collingsworth and C&S admitted that El Tigre, Samario, and Blanco had also received payments. The payments were uncovered after Drummond subpoenaed a law firm that had served as C&S's co-counsel in the alien tort cases. That law firm produced an email showing that Collingsworth had asked co-counsel and Scherer for permission to pay approximately $100, 000 in attorney's fees on Blanco's behalf in a pending criminal case in Colombia. The co-counsel, copying Scherer, directed Collingsworth not to pay the fees because they would have to disclose these payments in the alien tort cases, which would damage Blanco's credibility and likely be seen as bribery.

         Drummond used this email, which Collingsworth and C&S had failed to produce in discovery, to argue that Collingsworth and C&S had been hiding information about witness payments. A few months later, Collingsworth and C&S admitted that El Tigre, Samario, and Blanco had received payments.

         At Collingsworth's direction, C&S had sent and continued to send Samario and El Tigre $1, 000 each per month. C&S wired the money from its operating account to an intermediary in Colombia, who delivered the money to Samario and El Tigre. C&S began making these payments during the alien tort cases and continued to make them while the defamation case was ongoing.

         Multiple partners and employees at C&S were aware of these payments. Shortly after the monthly payments began, Collingsworth sent an email to his co-counsel in the alien tort cases, copying Scherer, informing them that El Tigre and Samario would receive money each month until they were deposed. This email was forwarded to Scherer's son, another C&S partner, who then apparently had an associate research the propriety of witness payments. C&S employees who were responsible for sending the monthly wires also were aware that C&S was sending money to the intermediary to pay El Tigre and Samario.

         Blanco received no money directly from C&S or Collingsworth; instead, he received money from Albert van Bilderbeek, another Colombian client of Collingsworth's. After being told by co-counsel not to pay Blanco's attorney's fees, Collingsworth introduced Blanco to van Bilderbeek. Van Bilderbeek subsequently paid $150, 000 of Blanco's legal fees. While these payments were being made, Collingsworth served as intermediary between Blanco and van Bilderbeek. At one point, Blanco-waiting for money from van Bilderbeek-told Collingsworth that he would not finalize his declaration until van Bilderbeek paid him. After van Bilderbeek paid, Blanco signed a declaration that Collingsworth used in the alien tort cases.

3. Drummond Seeks Sanctions and Raises the Crime-Fraud Exception.

         After C&S and Collingsworth disclosed these additional witness payments, Drummond moved for sanctions, asserting that Collingsworth and C&S had made false statements to the court by failing to disclose these payments.[5] The court allowed Drummond to depose Collingsworth and Scherer about the witness payments and related issues.

         At his deposition, Collingsworth admitted that there had been payments made to witnesses that he and C&S had failed to disclose. With regard to the payments to El Tigre and Samario, Collingsworth testified that he had forgotten about the payments to the witnesses because they were made through an intermediary. With regard to van Bilderbeek's payments to Blanco for legal fees, Collingsworth claimed that he failed to disclose the payments because he thought that he had only been asked to identify payments that he made directly to witnesses, rather than payments made by third parties like van Bilderbeek. Scherer, who was deposed as the representative of C&S, explained that he had not known about the witness payments and that once he learned of the payments, he made sure that C&S promptly disclosed them to the court.

         Although Collingsworth and Scherer provided this general information, they refused to answer many categories of questions posed in discovery, claiming that the information Drummond sought was protected by the attorney-client privilege or the attorney work product doctrine. For example, Collingsworth refused to answer questions regarding communications about the witness payments that he had had with Ivan Otero, a Colombian attorney who served as a conduit for payments from C&S to El Tigre and Samario, or to identify who was involved in drafting the filings in the defamation action that contained misrepresentations about the witness payments. And Collingsworth and Scherer refused to answer questions about what caused them to realize that they had made inaccurate statements about the witness payments or the process that led them to correct their misstatements, claiming the ...


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