Sanctions, But Not Striking of Pleadings, Warranted for Failure to Properly Produce or Log Privileged Documents

On January 12, 2023, Justice Melissa A. Crane of the New York County Commercial Division issued a decision in Lis v. Lancaster, 2023 N.Y. Misc. LEXIS 182, permitting the plaintiff to make a motion for sanctions in the form of its reasonable attorneys’ fees in making a discovery motion where the opposing party improperly withheld documents pursuant to the attorney-client privilege without properly logging those documents on a privilege log. The Court denied the motion insofar as it asked the Court to strike the defendants’ pleadings pursuant to CPLR 3126. The Court explained:

Plaintiff argues that defendants' "willful" and "contumacious" discovery conduct and lack of candor to the court warrant striking their pleadings pursuant to CPLR 3126. Defendants oppose the motion and crossmove for an order sanctioning plaintiff for making his own ["frivolous"] motion for sanctions.

Defendants' arguments in opposition to the motion are unavailing. They claim that several of the relevant documents are privileged as attorney work product, but never asserted that privilege until the eve of this motion when it sought to claw back certain L&L documents. The parties' confidentiality order in this case does not contain any claw-back provision governing the procedure to retract inadvertent disclosures (see Doc 512 [confidentiality order]). Further, defendants do not now cross-move for a protective order to shield those documents (see e.g. New York Times Newspaper Div. of New York Times Co. v Lehrer McGovern Bovis, Inc., 300 AD2d 169, 172, 752 N.Y.S.2d 642 [1st Dept 2002]). Even assuming that the work product privilege applies to those documents, defendants were obligated to list them on an updated privilege log. They did not.

The other documents, including emails between Lancaster and L&L, are also not protected by privilege. While the attorney-client privilege could have applied to these emails, defendants waived that privilege (see NYSCEF Doc 410 [referee's report finding that defendants waived attorney-client privilege], confirmed by this court's decision and order resolving MS 08 and affirmed on appeal]).

Accordingly, defendants should have produced at least some of the documents in the L&L production, and if they wanted to protect other L&L documents under the attorney work product doctrine, they should have identified them in an updated privilege log.

Nevertheless, the court declines to strike defendants' pleadings pursuant to CPLR 3126 for defendants' failures regarding their L&L production. Such a drastic remedy is not warranted here. However, the court finds that it is appropriate to impose sanctions, in the form of costs and fees, for defendants' frivolous L&L discovery conduct (see 22 NYCRR 130-1.1). Because plaintiff did not seek or support this alternative relief in this motion, there is no basis in this record to now award plaintiff attorneys' fees. Accordingly, plaintiff is permitted to make a new motion for sanctions, in the form of its reasonable attorneys' fees and costs for making Motion Seq. No. 09 and 10, in a new motion within 20 days of the date of this decision and order.

When withholding documents from discovery based on the attorney-client privilege, parties must promptly provide a log of the documents withheld in accordance with the Commercial Division rules. Failure to do so risks waiving the attorney-client privilege, and sanctions for improperly withholding documents. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning the attorney-client privilege or sanctions.