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In re Sanctuary Belize Litigation

United States District Court, D. Maryland

December 10, 2019




         By e-mail, pro se Defendant Andris Pukke has asked the Court to determine whether communications between himself, pro se Defendant Peter Baker and pro se Defendant Michael Santos are protected by the joint defense privilege as an extension of either the attorney-client privilege or the work-product privilege. The Court will construe this e-mail inquiry as a Motion for a Protective Order. The Federal Trade Commission ("FTC") has responded in Opposition, ECF No. 701, and Pukke has Replied, ECF No. 734.[1] On December 6, 2019, the FTC filed a surreply, ECF No. 742, and Pukke filed another response.[2] For the following reasons, the Court holds that the communications between the pro se Defendants are not privileged.

         I. Factual and Procedural History

         The facts of this case are set out in the Court's Opinion granting a Preliminary Injunction, In re Sanctuary Belize Litig., 2019 WL 3714392 (D. Md. Aug. 2, 2019). Among other things, Pukke allegedly controlled the operations of the Sanctuary Belize Enterprise ("SBE"). including communications with lot owners about corporate structure, legal affairs, lot ownership structure, dissolution of SBE-related entities, payments for equipment shipped to Belize, review of lot sale contracts, authorization of commissions for telemarketers, dealing with consumers who wanted to sell their lots, dealing with the taxes of SBE entities, addressing HOA fee disputes, making design decisions, choosing office space, making rent payments, deciding raises for SBE employees, and reviewing architectural plans. Id. at 17.

         Baker held numerous positions of control in several of the entities comprising SBE and was apparently involved in Sanctuary Belize marketing and sales operations, including owning Global Property Alliance, Inc. ("GPA"), one of the SBE Defendants responsible for marketing and sales of Sanctuary Belize. Id. at 18. Baker has also, under oath, accused Pukke of siphoning money from the Project and has claimed that filings and bank records showing him (Baker) having an ownership stake in SBE entities were falsified. See Id. at 22; see also ECF No. 557 at 6 (Baker's filing on August 22, 2019 stating that "Pukke resented Baker...and used Baker's name to funnel millions to himself and outside investments that Baker was not part of).

         Santos apparently worked as Director of Communications for GPA and as Director of Business Development for GPA, Buy Belize, LLC ("Buy Belize"), and Buy International, Inc. ("Buy International"). See In re Sanctuary Belize Litig., 2019 WL 1934673, at *1 (D. Md. Apr. 30, 2019). Pukke allegedly controlled these three corporations, which purportedly marketed lots and tours of the lots located at the real estate development known as "Sanctuary Belize." Id.

         Pukke is now suggesting that communications between himself, Baker and Santos are protected under the common-interest/joint defense privilege as an extension of the attorney-client privilege or the work-product privilege. He argues that because he and the two other Defendants are proceeding pro se in this case, they are, in effect, their own lawyers. Furthermore, he says, because much of the communications inter se pertain to strategies in the case, their communications should be privileged. In addition, Pukke requests, if the Court finds that these communications are not privileged, that the FTC be ordered to turn over to him their internal communications as well.

         II. Joint Defense Privilege

         The joint defense privilege, or common interest rule or doctrine, protects communications between parties who share a common interest in litigation. In re Grand Jury Subpoena: Under Seal, 415 F.3d 333, 341 (4th Cir. 2005). However, the joint defense privilege "presupposes the existence of an otherwise valid privilege, and the rule applies not only to communications subject to the attorney-client privilege, but also to communications protected by the work-product doctrine." In re Grand Jury Subpoenas, 89-3 & 89-4, John Doe 89-129, 902 F.2d 244, 249 (4th Cir. 1990).

         The Fourth Circuit has held that the joint defense privilege extends to civil co-defendants, and not just with respect to communications between their lawyers. See Id. (stating "persons who share a common interest in litigation should be able to communicate with their respective attorneys and with each other to more effectively prosecute or defend their claims"). The proponent of the privilege, however, has the burden to establish the privilege applies and that there is a common interest. See Sheet Metal Workers Int'l Ass'n v. Sweeney, 29 F.3d 120, 125 (4th Cir. 1994); see also Hanwha Azdel, Inc. v. C & D Zodiac, Inc., 617 Fed.Appx. 227, 243 (4th Cir. 2015).

         First, there is the question of what constitutes a "common interest." The Fourth Circuit has said the common interest must be about a legal matter. See United States v. Aramony, 88 F.3d 1369, 1392 (4th Cir. 1996). Common ownership or complete control, such as when wholly owned subsidiaries operate as a single entity, can establish common interest. See Neuberger Berman Real Estate Income Fund, Inc. v. Lola Brown Tr. No. IB, 230 F.R.D. 398, 416 (D. Md. 2005). But the FTC argues, with support of case law from this Court, that defendants must share "identical" legal interests at the time of disclosure absent common ownership or complete control. See Glynn v. EDO Corp., 2010 WL 3294347, at *7 (D. Md. Aug. 20, 2010); see also Elat v. Ngoubene, 2013 WL 4478190, at *2 (D. Md. Aug. 16, 2013); see also Beyond Sys., Inc. v. Kraft Foods, Inc., 2010 WL 3059344, at *3 (D. Md. Aug. 4, 2010); see also Schlossberg v. B.F. Saul Ins. Agency of Md., Inc., 2015 WL 1522879, at *6 (D. Md. Apr. 1, 2015); see also Neuberger Berman Real Estate Income Fund, 230 F.R.D. at 416. But see Sheet Metal Workers Int'l Ass'n v. Sweeney, 29 F.3d 120, 124 (4th Cir. 1994).

         The Court need not get into the weeds on this. Both the record in this case and the FTC's Response contain a multiplicity of facts that demonstrate a lack of a common legal interest, in additional to a lack of an identical common legal interest and a lack of common ownership or complete control. Throughout the case, as the FTC points out, Pukke and his cohorts have been pointing their fingers at one another over the matter of control over entities and people; in short, they have been "advancing adverse theories of the case." In an August 22, 2019 filing, more than a month after Baker alleged in his deposition that he and Pukke started to work together pro se, Baker accused Pukke of misappropriating funds and using his identify without authorization. The FTC also points to a recent deposition on October 15, 2019, where Baker stated that he did not think that his interests and Pukke's are aligned.[3] To be clear, the Court notes Baker's use of the present tense, i.e. "our interests are not aligned" (emphasis added).

         The FTC also argues that for the common interest privilege to apply, there must have been an understanding that the co-defendants shared legal interests and were exchanging information in furtherance of those legal interests. The Court agrees. In Am. Mgmt. Servs., LLC v. Dep't of the Army, the Fourth Circuit held that "there must be an agreement or a meeting of the minds" for the common interest doctrine to apply and that mere "indicia of joint strategy as of a particular point in time are insufficient to demonstrate that a common interest agreement has been formed." 703 F.3d 724, 733 (4th Cir. 2013) (internal citations and quotations omitted); see also Maxtena, Inc. v. Marks, 2013 WL 1316386, at *6 (D. Md. Mar. 26, 2013). In the same recent deposition, Baker said that Pukke did not tell him he considered the texts to be confidential until the weekend before October 15, 2019. Notably, Baker and Santos have stayed entirely silent on this issue, and no one has put forth evidence that there was a meeting of the minds.[4]

         Pukke, in his Reply, writes in a few short paragraphs that he and Baker do have common interests, [5] stating that, since starting their pro se representations, they "have reconciled many of those misunderstandings and their interests are undeniably aligned." Pukke suggests that they now have "common goals and defense," namely dismissal of the case. But Pukke does not rebut any of the FTC's evidence with evidence of his own nor does he provide any further detail on how or when their interests became aligned. As to Santos, Pukke does not explain how he and Santos share a common legal interest, or even maintains they have a ...

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