In re: Kwok
3:23-cv-01514
| D. Conn. | Mar 11, 2025Background
- G-Club Operations ("G-Club") appealed a Bankruptcy Court order ("G-Club Documents Order") that required turnover of documents in its possession, arguing those documents were protected by attorney-client privilege.
- The documents in question had been provided to HCHK Technologies, Inc. ("HCHK") under a Master Services Agreement (MSA), which included various operational and legal services for G-Club.
- As part of a settlement (under Rule 9019) in the bankruptcy related to Debtor Ho Wan Kwok, HCHK's assignee agreed to turn over its corporate documents, including G-Club's, to the Chapter 11 Trustee.
- G-Club was not a defendant in the adversary proceeding but objected to the Settlement Motion, claiming it had privilege over certain documents and the right to review them before disclosure.
- The Bankruptcy Court ruled that G-Club failed to meet its burden to establish attorney-client privilege and found that any such privilege was waived by disclosing the documents to HCHK.
- The District Court dismissed the appeal as the G-Club Documents Order was interlocutory (not a final order) and, alternatively, affirmed the Bankruptcy Court’s order on the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the G-Club Documents Order was final and appealable | G-Club argued it affected substantive rights and was not a mere discovery order. | Despins argued it was a non-final, interlocutory discovery order. | Order was interlocutory, not final or appealable as of right. |
| Whether G-Club had waived attorney-client privilege over documents | G-Club claimed HCHK only hosted documents for cloud services, not substantive access, preserving privilege. | Despins argued G-Club’s disclosure to HCHK under the MSA waived privilege. | Privilege was waived; G-Club did not meet burden to show otherwise. |
| Standard of review for privilege waiver findings | G-Club asserted de novo review was warranted due to contract interpretation. | Despins argued the abuse of discretion standard applied. | Abuse of discretion standard applied; Bankruptcy Court did not abuse discretion. |
| Whether Trustee had burden to prove actual access by HCHK | G-Club argued no waiver without proof HCHK accessed content. | Despins asserted broad access sufficed for waiver under MSA. | Court held ability to access under MSA was sufficient for waiver. |
Key Cases Cited
- In re Grand Jury Proceedings, 219 F.3d 175 (2d Cir. 2000) (findings on waiver of attorney-client privilege generally reviewed for abuse of discretion)
- Pure Power Boot Camp v. Warrior Fitness Boot Camp, 587 F. Supp. 2d 548 (S.D.N.Y. 2008) (voluntary disclosure to third party waives privilege)
- Schaeffler v. United States, 806 F.3d 34 (2d Cir. 2015) (abuse of discretion review for waiver of attorney-client privilege)
- In re Margulies, 566 B.R. 318 (S.D.N.Y. 2017) (district courts may affirm, modify, or reverse bankruptcy orders)
- In re Fugazy Express, Inc., 982 F.2d 769 (2d Cir. 1992) (bankruptcy court orders are final only if they dispose of discrete disputes)