USA Law and Practice Contributed by: Steven Molo, Robert Kry, Megan Cunniff Church and Walter Hawes, MoloLamken LLP
• the existence of a future crime or fraud; and • that the communication or work product was made to further or induce that future crime or fraud. To determine the existence of a future crime or fraud, courts consider factors including: • whether the client was planning a criminal or fraudulent act when they sought the legal advice; • whether the client committed or attempted to com - mit a crime or fraud after receiving the advice; • whether the lawyer who provided the advice also engaged in misconduct in connection with the topic of the advice; and • whether the evidence shows the elements of a crime or fraud that was ongoing or imminent at the time of the communication. The second element – whether the communication was made to further or induce the illegal act – often turns on the client’s intent in communicating with their attorney. The crime-fraud exception applies even if the attorney had no knowledge of the client’s intent when the communication was made. With respect to work product protection, the exception applies where the work product was created in aid or furtherance of criminal or fraudulent activity. The crime-fraud exception may apply within the con - text of the litigation itself. For example, if a party to litigation represented through counsel that it could not find documents that had been requested in discovery, and that statement is revealed to be a misrepresen - tation, the opposing party may seek discovery into matters that would otherwise be protected from dis - closure. In that scenario, a court may find a waiver of the attorney-client privilege with respect to the party’s communications with counsel regarding the preserva - tion, destruction or location of the documents. 7. Special Rules and Laws 7.1 Rules for Claiming Punitive or Exemplary Damages Punitive or exemplary damages may be available in a civil fraud action in the United States, provided that additional requirements are met.
In New York, for example, courts may allow the recovery of punitive or exemplary damages where the defendant’s conduct was malicious, gross, wilful or wanton, or evinced a high degree of moral turpi - tude. Some decisions also indicate that the fraud must have been aimed at the general public, not just at the plaintiff alone. Federal due process principles gener - ally require the amount of punitive damages to bear a reasonable relationship to the compensatory award. As described in 1.2 Causes of Action After Receipt of a Bribe , federal civil RICO claims and antitrust claims allow for treble damages and attorney’s fees. While such damages are not explicitly punitive, many courts and legal scholars have noted that they are at least partly punitive in nature. 7.2 Laws to Protect “Banking Secrecy” In the United States, there is no general protection from disclosure for communications between banks and their clients; banks and other financial institutions are subject to the same discovery mechanisms as any other party. As discussed in 2.3 Obtaining Disclo- sure of Documents and Evidence From Third Par- ties , third-party financial institutions may be subject to subpoenas. Nonetheless, certain laws aimed at protecting con - sumers govern the disclosure of financial information. Under the Gramm-Leach-Bliley Act, parties may be required to redact certain personal, non-public infor - mation such as account numbers and Social Security numbers before disclosing documents in discovery. Parties to litigation also often agree to a protective order limiting the use or disclosure of such informa - tion. The federal Bank Secrecy Act protects from disclosure certain documents that banks generate when report - ing suspicious or fraudulent activities to the govern - ment. Courts have also recognised a “bank exam - iner privilege” that protects certain communications between banks and their regulators from disclosure. The Right to Financial Privacy Act similarly limits the government’s ability to access customers’ financial records without the customer’s consent or through a subpoena, search warrant or other formal written gov - ernment request. Organisations such as the Federal
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