In Massachusetts Mutual Life Insurance Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 11-30285 (D. Mass. Sept. 23, 2013), the court held that, although plaintiff repeatedly cited the results of a forensic review conducted by an outside consultant in its complaint, the undisclosed portions of the review and related materials were protected from disclosure because plaintiff told the court that it did not intend to rely on the review as evidence at trial. In this case, which involved the sale of mortgage backed securities, prior to filing its complaint plaintiff conducted a detailed forensic review of the collateral underlying the securitizations at issue. The review analyzed information from public sources as well as proprietary sources, and determined that the underlying collateral did not satisfy various representations made by defendant in its offering materials. Plaintiff cited the results of the review throughout its complaint and, in an ancillary proceeding, asserted that the review demonstrated that the complaint satisfied the Twombly and Iqbal standard that the complaint “stated a claim to relief that was plausible on its face.” Defendant argued that plaintiff’s reference to the review put the review at issue and waived any privilege or protection. The court disagreed. Applying Federal Rule of Evidence 502(a), the court held that, while plaintiff waived the information actually disclosed in the complaint, “fairness” did not require the disclosure of any additional non-disclosed information relating to the same subject matter. Under FRE 502(a), disclosure of privileged information in a federal proceeding waives undisclosed privileged information only if the disclosure is voluntary, the undisclosed material relates to the same subject matter, and fairness requires additional disclosure. Here fairness did not require further disclosure because plaintiff made it clear that it did not intend to introduce the review into evidence or otherwise rely on it in the case. This distinguished this case from those in which reference to a privileged review or investigation waived the entirety of the review by putting the review “at issue”, because those disclosing parties intended to rely on the disclosed information as evidence in the case. The court explained that this result makes practical sense, because it enables a plaintiff to meet its pre-filing due diligence duties, and to demonstrate that its complaint satisfies the Twombly and Iqbal standard, without fear of waiving privilege with respect to the entirety of the pre-filing investigation.
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Forensic review cited in complaint not discoverable if no intent to rely on at trial.
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