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United States District Court for the Northern District of Texas, Dallas Division
March 23, 1981
MDL No. 371
[*598] ORDER RE ATTORNEY-CLIENT, WORK-PRODUCT AND SPECIAL OFFICER PRIVILEGES
This securities fraud class action is being prosecuted by a certified class of buyers and sellers of various securities of LTV, Inc. against LTV, its steel subsidiary, Jones [**2] & Laughlin Steel Co. ("J&L"), LTV's accountants, Ernst & Whinney ("E&W") (formerly Ernst and Ernst) and various individuals who served as officers, directors or underwriters of LTV and J&L (during the three-year period of questioned accounting.) See In re LTV Securities Litigation, 88 F.R.D. 134 (N.D.Tex.1980).
The class alleges violations of the federal securities laws in connection with open market transactions in eight classes of LTV securities over a three year period beginning in 1974 and ending on July 17, 1978. At the core of the consolidated complaint is the claim that Defendants engaged in a "scheme and conspiracy" to defraud shareholders by overvaluing the inventories of J&L through a series of accounting manipulations.
LTV has refused to disclose certain information sought by the class, asserting both attorney-client and work-product privileges. The disputed discovery includes answers to deposition questions put to LTV's Vice President-Controller James F. Powers and documents submitted for in camera inspection. Anticipating additional claims of privilege, the class also requests a framework for future discovery.
The timing of LTV's decision to consult [**3] counsel in response to the events triggering this lawsuit bears closely on the validity of its current claims of privilege. Davis, Polk and Wardwell ("Davis Polk"), a New York City law firm, was hired near November 8, 1977, an engagement apparently triggered by service of SEC subpoenas on LTV, J&L [*599] and E&W. Davis Polk represented LTV during the SEC's investigation of LTV's methods of accounting for inventories of J&L Steel and superintended an intensive examination of LTV's files and financial procedures. LTV's Senior Vice President and General Counsel, G. Emmett Smith, Esq., his staff, and counsel for E&W, the Pittsburg law firm of Kirkpatrick, Lockhart, Johnson & Hutchison ("Kirkpatrick Lockhart") worked together in this task.
LTV's Vice President-Controller James F. Powers assisted, at the specific direction of LTV's chief executive officer. Powers' assignment included aiding attorneys in understanding the accounting in addition to reviewing certain prior financial statements of LTV and J&L. Powers was not employed by LTV during the period of questioned procedures, having joined LTV in July, 1977.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
89 F.R.D. 595 *; 1981 U.S. Dist. LEXIS 18577 **; 31 Fed. R. Serv. 2d (Callaghan) 1542; Fed. Sec. L. Rep. (CCH) P97,969; 8 Fed. R. Evid. Serv. (Callaghan) 748
IN RE LTV SECURITIES LITIGATION
attorney-client, disclosure, discovery, shareholders, communications, privileges, work-product, documents, inspection, confidential, investigate, legal advice, additional material, advice, Audit, records, good cause, stockholders, confidence, courts, joint defense, circumstances, anticipation, practices, consent decree, Memorandum, questions, matters, minutes, claim of privilege
Evidence, Privileges, Attorney-Client Privilege, Elements, General Overview, Exceptions, Legal Ethics, Client Relations, Duties to Client, Duty of Confidentiality, Criminal Law & Procedure, Accusatory Instruments, Indictments, Scope, Civil Procedure, Attorneys, Waiver, Government Privileges, Business & Corporate Law, Corporate Governance, Record Inspection & Maintenance, Discovery, Privileged Communications, Work Product Doctrine, Securities Law, US Securities & Exchange Commission, Administrative Proceedings, Investigative Authority, Commencement of Criminal Proceedings, Interrogation