DANIEL E. KNOWLES, III, United States District Magistrate Judge
Presently before the Court is the plaintiff scrap metal companies' Motion in Support of the Applicability of the Crime Fraud Exception. The defendant attorneys filed opposition memoranda and the matter is now deemed submitted for decision on the briefs. For the following reasons, the plaintiffs' Motion for Application of the Crime Fraud Exception is hereby DENIED.
I. BACKGROUND
The focus of the captioned R.I.C.O. lawsuit is the conduct of trial attorneys in eleven underlying allegedly frivolous and baseless lawsuits filed against the Southern Scrap entities in other venues. The allegations of the eleven underlying lawsuits run the gamut, alleging everything from mass exposure toxic torts to discriminatory hiring practices. According to the plaintiff scrap metal companies, not a single one of the underlying cases filed against them by the defendant trial attorneys has any merit. Plaintiffs submit that in filing and orchestrating the prosecution of the underlying litigation, the defendants exceeded any legitimate role they may have had as diligent adversaries by filing baseless claims and, in so doing, committed mail fraud ( 18 U.S.C. § 1341) and wire fraud ( 18 U.S.C. § 1343) in furtherance of their scheme to bring extortionate pressure to settle cases, inflicting heavy costs in terms of legal expenses for defense against the false and fraudulent claims. Additionally, Southern Scrap claims violations of the Hobbs Act, 18 U.S.C. § 1951, referring to attempts by defendant attorneys to induce the Southern Scrap entities to settle the fraudulent underlying lawsuits by threats of more litigation.
II. CONTENTIONS OF THE PARTIES
Plaintiffs crime/fraud allegations seek application of the exception to documents relating to defendant Stephen Rastanis' representation of Constance (Connie) Friederichson, the former wife of Richard (Yogi) Freiderichson, the former president of SSX, L.C. Plaintiffs aver that defendant Stephen Rastanis ("Rastanis") was engaged in a conspiracy with his client — Connie Freiderichson — to violate a temporary restraining order (TRO) issued in the underlying Banks case, utilizing Ms. Freiderichson to circumvent the discovery stay order entered in that case.
Banks was a toxic exposure case filed on behalf of 6,000 plaintiffs, who lived or owned property near or frequented the area in the vicinity of Southern Scrap's yard in Baton Rouge, Louisiana. The Banks petitioners alleged that they suffered personal injuries, inter alia, caused by airborne hazardous and/or toxic chemical emissions from scrap metal operations conducted on the premises of Southern Scrap's Baton Rouge facility. As in another underlying suit — Harmason — defendant attorneys alleged unsafe practices, failure to warn and concealing the release of toxins or hazardous substances.
The defendants contend that the plaintiffs have failed to present a prima facie case as ordered pursuant to the October 16, 2002 scheduling order. Defendants argue that Southern Scrap's efforts have failed in this regard for the following reasons, to wit: (1) failure to present a court order staying discovery; (2) failure to present any discovery promulgated in violation of any such court order; and (3) failure to present a TRO.
Defendants note that the Banks case, which was filed against Southern Scrap on September 20, 1995, passed muster pursuant on Louisiana Civil Code article 863 on July 30, 1998, when the state court judge denied Southern Scrap's motion to dismiss. The defendants argue that the plaintiffs unsupported allegations cannot form the basis for the application of the crime/fraud exception. Defendants underscore the fact that no sanction or disqualification ever issued from the Banks court and submit that plaintiffs are simply recycling old arguments rejected in the underlying case. Essentially, defendants contend that the plaintiffs' conspiracy and fraud claims are without any basis in fact.
III. ANALYSIS: The Crime-Fraud Exception
Counsel for plaintiffs maintains that the communications by the defendant Rastanis and his client Connie Freiderichson, which would have been privileged under the attorney-client relationship, come within the crime-fraud exception to the attorney-client privilege, and thus, are exempted from the attorney-client privilege. In the attorney-client privilege context, the crime/fraud exception permits disclosure of any communications between the attorney and client if the client seeks advice from the attorney in carrying out a crime of fraud. The test is whether the client's purpose is the furtherance of a future fraud or crime; it is not enough that a communication merely provides evidence of fraud. However, this focus on the client's purpose appears to be driven by the fact that the attorney-client privilege is, of course, held by the client and not the attorney.
See United States v. Zolin, 491 U.S. 554, 563 (1989) (noting that the privilege "does not extend to communications made for the purpose of getting advice for the commission of a fraud or crime").
See In re BankAmerica Corp. Sec. Litig., 270 F.3d 639, 642 (8th Cir. 2001); In re Richard Roe, Inc., 68 F.3d 38, 40 (2nd Cir. 1995) ("If it did, the privilege would be virtually worthless because a client could not freely give, or an attorney request, evidence that might support a finding of culpability. Instead, the exception applies only when the court determines that the client communication or attorney work product in question was itself in furtherance of the crime of fraud.").
In re Grand Jury Proceedings, 43 F.3d 966 (5th Cir. 1994).
The party challenging a privilege must (1) make an independent prima facie case that a crime [or fraud] has been committed, and (2) then demonstrate that the privileged information bears a relationship to the alleged crime or fraud. Included as part of the prima facie case of fraud is evidence of an intent to deceive. In Zolin, the Supreme Court clearly contemplated a two-part procedure to establish the applicability of the crime-fraud exception.
See Zolin, 491 U.S. at 564, 570; Ward v. Succession of Freeman, 854 F.2d 780, 790 (5th Cir. 1988), cert. denied, 490 U.S. 1065 (1989); Derrick Manufacturing Corp. v. Southwestern Wire Cloth, Inc., 934 F. Supp. 813 (S.D. Tex. 1996).
In re Rigby, 199 B.R. 358, 361 (E. D. Tex. 1995) ( citing Industrial Clearinghouse, Inc. v. Browning Mfg. Div. of Emerson Elec. Co., 953 F.2d 1004, 1008 (5th Cir. 1992)).
Zolin, 491 U.S. at 564, 570 (requiring the proponent of the exception to make a "threshold showing" before a court may conduct an in camera review and an "ultimate showing" that the exception applies).
The standard employed by the Fifth Circuit is that a "prima facie case is met when the party with the burden `will prevail until contradicted and overcome by other evidence . . . [a] case which has proceeded upon sufficient proof to that stage where it will support finding if evidence to contrary is disregarded." Tests enunciated by the First, Third, Eleventh and Federal Circuits are comparable and provide that the plaintiff must show (1) evidence that, if believed by a trier of fact, would establish that fraud was ongoing or planned at the time the documents were created, and (2) the communications were made in furtherance thereof. Once proven, the crime fraud exception can overcome both the attorney-client and the work product privileges.
In re Grand Jury Proceedings, 641 F.2d 199, 203 (5th Cir. 1981) ( quoting Black's Law Dictionary (4th ed. 1968)).
See In re Grand Jury Proceedings, 183 F.3d 71, 78 n. 6 (1St Cir. 1999); Haines v. Liggett Group, Inc., 975 F.2d 81, 95-96 (3rd Cir. 1992); In re Grand Jury Investigation, 842 F.2d 1223, 1226 (11th Cir. 1987); In re Sealed Case, 676 F.2d 793, 815 (D.C. Cir. 1982).
In re Rigby, supra.
Southern Scrap's allegations of fraud for purposes of the instant motion are specifically limited to the alleged Freiderichson/Rastanis "conspiracy to violate the TRO in Banks by employing Ms. Freiderichson as a discovery tool, and by attempting discovery in Banks where discovery had been stayed by Court Order." Plaintiffs have failed to demonstrate the threshold showing that an injunctive decree or court order staying discovery was in effect during the pertinent time period. Moreover, this Court cannot ignore the fact that the very same arguments raised by Southern Scrap in the Banks proceeding have failed to thresh out a contempt ruling, sanction or disqualification order in the underlying proceedings to date. An in camera review of privileged documents pertaining to Connie Freiderichson's divorce case, visits to Tim Smith and Peterson's Pensacola, Florida residence, and any reports of Rastanis' results pertaining to the aforesaid investigation is not warranted absent some evidence that there was a discovery stay order or TRO enjoining further investigation in effect during the pertinent time frame. More to the point, in the absence of an order enjoining further investigation or discovery, any documents evidencing such an investigation or discovery, even if believed by a trier of fact, would not establish fraud or a crime. Accordingly,
See Plaintiffs' Memorandum in Support of Applicability of the Crime/Fraud Exception, at p. 7.
This finding is not preclusive for purposes of trial on the merits; this ruling is made solely in the context of this evidentiary dilemma.
IT IS ORDERED that the plaintiffs' Motion for Application of the Crime Fraud Exception is hereby DENIED.