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May 25, 2017Download PDF

Class Counsel Should Not Overlook Relevance In Resisting Demands For Engagement Letters

Defendants in class actions typically demand copies of plaintiffs’ engagement letters under the theory that they might reveal a conflict of interest that undermines plaintiffs’ ability to represent the class and thus plaintiffs’ ability to satisfy the “adequacy” of representation requirement of Federal Rule of Civil Procedure 23(a)(4).

For their part, plaintiffs typically object to producing their engagement letters on the view that they are protected by the attorney-client privilege and attorney work product doctrine. Class counsel should be mindful, however, not to overlook relevance as an additional reason for resisting the production of engagement letters.

Aside from being privileged, engagement letters are generally not relevant under Rule 26. See In re: Takata Airbag Prod. Liab. Litig., No. 15-2599, 2016 WL 5844309, at *5 (S.D. Fla. May 23, 2016); In Re Riddell Concussion Reduction Litig., No. CV 13-7585 (JBS/JS), 2016 WL 7325512, at *2 (D.N.J. Jan. 19, 2016); Lee-Bolton v. Koppers Inc., No. l:10-CV-253-MCR-GRJ, 2015 WL 11110545, at *1 (N.D. Fla. June 10, 2015); In re Google AdWords Litigation, 2010 WL 4942516, at *4-5 (N.D. Cal. Nov. 12, 2010); Stanich v. Travelers Indem. Co., 259 F.R.D. 294, 322 (N.D. Ohio 2009); Piazza v. First America Title Insurance Co., No. 3:06CV756, 2007 WL 4287469, at *1 (D. Conn. Dec. 5, 2007); Mitchell-Tracey v. United Gen. Title Ins. Co., No. CIV. AMD-05-1428, 2006 WL 149105, at *2-3 (D. Md. Jan. 9, 2006); see also Newberg on Class Actions § 22:79 (4th ed.) (“Defendants often request discovery regarding fee arrangements between the plaintiffs and their counsel, but courts usually find such discovery to be irrelevant to the issue of certification.”) (collecting cases); Federal Judicial Center, Manual for Complex Litigation § 21.141 (4th ed.) (“Precertification inquiries into the named parties’ finances or the financial arrangements between the class representatives and their counsel are rarely appropriate[.]”).

Class counsel should insist that defendants come forward with some non-speculative reason to believe a conflict of interest exists that undermines adequacy and warrants the production of otherwise privileged materials. Absent such a showing, engagement letters are viewed by many courts as an improper “fishing expedition” and outside the scope of Rule 26 and not an appropriate discovery target. See Robin v. Doctors Officenters Corp., No. 84 C 10798, 1988 WL 74321, at *2 (N.D. Ill. July 11, 1988) (“[U]nless defendants have information that may seriously undermine a plaintiffs standing or create a conflict of interest, they may not engage in a broad ‘fishing expedition’ to turn up such facts.”); see also Fort Worth Employees’ Ret. Fund v. J.P. Morgan Chase & Co., No. 09 CIV. 3701 JPO JCF, 2013 WL 1896934, at *2 (S.D.N.Y. May 7, 2013) (denying motion to compel discovery concerning “the arrangement between the lead plaintiffs and their lawyers may be relevant to the fitness of lead plaintiffs or their counsel to represent the class” because defendant had “provided no non-speculative basis for raising such concerns” and because “the defendants [would] have the opportunity to question the lead plaintiffs at deposition on their adequacy to represent the class without the necessity of disclosure of the retainer and monitoring agreements.”).

To be sure, documents and information concerning potential conflicts of interest between class representatives and absent class members are and should be discoverable. It is a mistake, though to take for granted that engagement letters are categorically relevant to that inquiry.