When Attorney Work Product is not privileged under In Re Gawker Media LLC
St. John’s Law Student
American Bankruptcy Institute Law Review Staff
Potential Attorney-Client Privilege Exceptions in Bankruptcy Discovery
A court may authorize the production of an attorney’s work product if the documents affect the administration of a bankrupt’s estate. In In Re Gawker, the United States Bankruptcy Court for the Southern District of New York held that Federal Rule of Bankruptcy Procedure 2004 authorized production of an attorney’s documents because they affected the acts, conduct, property, financial condition, or matters affecting the administration of the bankruptcy estate.Gawker Media owned several media brands that published articles about celebrities on various websites.After Gawker published an unflattering article about him, wrestler Hulk Hogan, who was represented by Charles Harder, obtained a 115 million dollar judgment against Gawker, which led to Gawker filing for bankruptcy.When Gawker commenced developing payment plans for its creditors, it made certain creditor payments contingent on its successful recovery of damages from the potential causes of action against Thiel and Charles Harder, who financed Hogan’s lawsuit against Gawker, for their attempt to destroy Gawker’s business.
In the bankruptcy case, Gawker sought discovery from Harder as Hulk Hogan’s attorney because the formation of its repayment plans was contingent on the existence of a cause of action against Thiel.Gawker argued it could be entitled to a substantial amount of money in recovery if communication between Harder and Thiel revealed the extent of Thiel’s financing, which would have a significant effect on its bankruptcy case.Thiel and Harder argued that there was a limitation on discovery that precluded Gawker from having access to the documents, but the Court disagreed.Bankruptcy Rule 2004 provides that a court may order discovery from any entity related “to any matter which may affect the administration of the debtor’s estate, or to the debtor’s right to a discharge.”The Southern District found that a potentially successful claim against Thiel and Harder would directly affect the administration of Gawker’s estate because recovery of funds would influence the organization of a payment plan.Therefore, Thiel and Harder’s documents were subject to discovery.
In general, an attorney’s work product may be privileged. However, an attorney may be compelled to produce work product if it “affect[s] the administration” of a debtor’s estate notwithstanding that those documents would typically be privileged.
See In re Gawker Media LLC, Ch. 11 No. 16-1170, 2017 Bankr. LEXIS 1798 at *15 (S.D.N.Y. June 28, 2017)(discussing the application of Rule 2004(b) to the facts at issue).
See id. at *4-5.
See id. at *4 (describing “the Bollea Litigation,” which was filed by wrestler Hulk Hogan when Gawker published a video of him “engaged in a sexual act.”).
See id. at *8.
See id. at *8 (The Debtors’ Plan “contemplated future distribution and litigation proceeds” that would come from damage awards from potential causes of action against Thiel and Harder should discovery be granted and lead to their establishing such cause of action).
See id. at *12.
See id. at *17-19 (justifying Rule 2004’s application before Gawker’s assertion of a cause of action because the purpose of the rule is to allow for discovery to cure the lack of information that is needed to establish a cause of action).
See Gawker, 2017 Bankr. LEXIS 1798 at *16-20 (finding that production affects the administration of the debtor’s estate because “(t)he Plan Administrator seeks to conduct pre-litigation discovery in order to determine whether potential causes of action exist, and, if they do, whether to prosecute them.” The Court found that discovery relating to Thiel’s role was not barred because “lack of information” made it permissible to allow discovery, and Harder’s role as an attorney did not ‘“automatically insulate him.’”).
See Id. at *21 (imposing substantial limitations on the Plan Administrator’s ability to access information exchanged between Harder and his clients, but asserting that Gawker showed good cause for its own ability to access communication between Thiel and Harder under the Rule.).
SeeFed. R. Bankr. P.2004(b).