In Re: Newman
While a Connecticut limited liability company has the ability to claim documents are subject to the attorney-client privilege, Connecticut General Statutes §34-144(d) expressly requires, inter alia, that a limited liability company render full information of all things affecting limited liability members to those members, to the extent the circumstances render it just and reasonable. In this Chapter 7 case of Douglas Newman, the debtor, Charles Barrow and Harbor Marketing, Inc., filed a motion to compel seeking documents held by the respondents, Thomas Walsh and Brody Wilkinson, P.C. These respondents objected, claiming that they represented North Branford Car Care, LLC and 2381 Foxon Road, LLC, and the documents sought were privileged or constituted materials protected under the attorney work product doctrine. The bankruptcy court rejected the respondents' contention that the movants, as mere members of these limited liability companies, and not "managers," were not entitled to privileged documents or work product of the limited liability companies' counsel. The Connecticut legislature was very specific in granting courts the "gatekeeper" role in limited liability company situations by including express language in C.G.S. §34-144(d) that "full information of all things affecting the members … shall [be] render[ed]…to the extent the circumstances render it just and reasonable[.]" The presenting issue was not a privilege question but as an access question under the statute. The documents were sought for use in litigation between members and the managing member based on the managing member's conduct in operating the companies, including solicitation of the members' investments in the companies. To allow a manager accused of fraud to utilize the limited liability company's privilege as a shield to insulate himself from fraud allegations brought by members would be palpably unjust, particularly where the companies themselves were not parties to the action. The court similarly disposed of the respondents' asserted work product objections. In citing the doctrine, the respondents placed their own interests in conflict with their clients' interest—namely, the limited liability companies' interests in fulfilling their statutory obligations to members. A confidentiality limitation was imposed restricting the use and dissemination of the materials ordered disclosed.