Aileron Investment, LLC v. American Lending Center, LLC
8:22-mc-00007
M.D. Fla.Apr 1, 2022Background:
- Aileron Investment Management sued American Lending Center (ALC) in underlying litigation alleging ALC and certain Aileron officers created a shell company to divert fees, asserting claims including aiding-and-abetting breaches of fiduciary duty, tortious interference, and breach of fiduciary duty.
- Aileron served a deposition notice for nonparty Justin Blackhall (former/acting counsel and an ALC executive) seeking documents/communications about Omnibus Assignment Agreements, Silver Hawk, Quarles & Brady, and related entities/payments.
- ALC and Blackhall moved for protective orders asserting attorney-client, work-product, and joint-defense privileges, and that some requests were irrelevant or duplicative of materials already produced.
- The court considered whether ALC’s prior reliance-on-counsel affirmative defense and designation of Blackhall as a fact witness waived privileges and if the requested discovery was relevant and proportional.
- The court ordered limited production: communications/documents tied to Blackhall’s representation of ALC concerning the Omnibus Assignment Agreements must be produced; communications with Quarles & Brady remain privileged; requests about certain non-party entities and compensation were allowed as relevant; clearly duplicative requests were protected.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ALC waived attorney-client/work-product privilege by asserting advice-of-counsel defense and listing Blackhall as fact witness | Aileron: ALC impliedly waived privilege as to communications relevant to its reliance-on-counsel defense and because Blackhall is a designated fact witness | ALC/Blackhall: Any waiver is limited; listing Blackhall as fact witness or past business relations does not broadly waive privileges | Court: Waiver limited. ALC waived privilege for communications relating to Blackhall’s legal representation of ALC in handling the Omnibus Assignment Agreements; otherwise privilege preserved |
| Whether communications between Blackhall and Quarles & Brady must be produced | Aileron: Requests seek nonprivileged, relevant communications | ALC/Blackhall: Those communications are privileged and not waived | Court: Protective order GRANTED as to Topics 2 and 3; Quarles & Brady communications remain protected |
| Relevance of documents concerning non-parties/affiliated entities (Sunstone, Silver Hawk, others) | Aileron: Documents show financial benefit/motive and are relevant and proportional | Blackhall: Topics seek irrelevant information about non-parties and are disproportionate | Court: Topics 5–8 and 16 are relevant and proportional; protective order DENIED for those topics |
| Whether requests are duplicative because Aileron already possesses responsive documents | Aileron: Separate production from Blackhall needed to verify all compensation sources | Blackhall: He already produced tax returns and compensation documents; certain topics are duplicative | Court: Protective order GRANTED for duplicative Topics 4, 14, and 17; Topics 15 and 16 required production |
Key Cases Cited
- Mut. Serv. Ins. v. Frit Ind., 358 F.3d 1312 (11th Cir. 2004) (courts have broad discretion to manage discovery)
- Cox v. Admin. U.S. Steel & Carnegie, 17 F.3d 1386 (11th Cir. 1994) (party may waive attorney-client privilege by injecting an issue requiring protected communications)
- United States v. Garrett, 571 F.2d 1323 (5th Cir. 1978) (burden on party seeking protective order to show good cause)
- Inmuno Vital, Inc. v. Telemundo Group, Inc., 203 F.R.D. 561 (S.D. Fla. 2001) (fairness/prejudice governs scope of privilege waiver)
- Fojtasek v. NCL (Bahamas) Ltd., 262 F.R.D. 650 (S.D. Fla. 2009) (joint-defense doctrine is an extension of work-product protection)
- Liu v. SEC, 140 S. Ct. 1936 (2020) (background on EB-5 investor program cited)