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FIRST AMERICAN CORP. v. SHEIKH ZAYED BIN SULTAN AL

May 4, 1998

FIRST AMERICAN CORP., et al., Plaintiffs,
v.
SHEIKH ZAYED BIN SULTAN AL-NAHYAN, et al., Defendants. CLARK M. CLIFFORD and ROBERT A. ALTMAN, Plaintiffs, v. FIRST AMERICAN CORP. and FIRST AMERICAN BANKSHARES, Inc., Defendants.



The opinion of the court was delivered by: GREEN

MEMORANDUM OPINION AND ORDER

 These consolidated cases are two of a group of aftershocks generated by the international financial earthquake that was the collapse of the Bank of Credit and Commerce International ("BCCI"). Civil Action No. 93-1309 was brought by plaintiffs (collectively "First American") against 30 defendants alleging a complex course of conduct, and series of transactions, in violation of federal and state law. See First American Corp. v. Al-Nahyan, 948 F. Supp. 1107, 1112-15 (D.D.C. 1996) (explaining allegations in fuller detail); see also First American Corp. v. Al-Nahyan, 175 F.R.D. 411 (D.D.C. 1997). Defendants Clark M. Clifford ("Clifford") and Robert A. Altman ("Altman") are two of the four active defendants remaining in that case.

 Civil Action No. 95-0877 was brought by Clifford and Altman against First American for indemnification under Virginia law for the costs of defending against the criminal prosecution brought against them by the State of New York. First American has asserted a series of counterclaims roughly tracking its allegations in No. 93-1309 and also challenging the reasonableness of the attorneys' fees paid by Clifford and Altman in their defense of the criminal proceedings.

 These cases were consolidated for discovery by Order of November 26, 1996. Subsequently, they were also consolidated for trial, set to commence on October 5, 1998.

 Presently pending is Clifford and Altman's motion for reconsideration, in part, of an order by Magistrate Judge Attridge requiring them to produce certain documents arising from the New York criminal proceedings. The crux of the dispute is whether Clifford and Altman have waived the protection from disclosure they may have otherwise enjoyed under a New York statute, assuming federal common law would recognize such a privilege, by filing an indemnification action against First American. Magistrate Judge Attridge concluded that the documents were not shielded, and this Court agrees. The motion for reconsideration must be denied.

 BACKGROUND

 Among the many consequences of the momentous collapse of BCCI and related entities was a criminal prosecution brought by the State of New York against Clifford and Altman for their respective roles as officers and directors of, among other entities, First American. Because of Clifford's failing health, the cases against the two were severed. The case against Altman went to trial in March 1993. Certain counts were dismissed by the court during the trial. The remaining counts were submitted to the jury, which acquitted Altman on August 14, 1993. The State subsequently dismissed the pending charges against Clifford. During the pendency of the Altman trial, on June 25, 1993, First American filed its Complaint in Civil Action No. 93-1309.

 During the course of discovery in these consolidated cases, First American served document requests on Clifford and Altman seeking, inter alia, discovery material Clifford and Altman or their counsel received from the Office of the District Attorney of New York ("DANY") in the course of the criminal proceedings against them. *fn1" Clifford and Altman refused to produce those materials in reliance upon N.Y. Crim. Proc. L. §§ 160.50, 160.60 ("Sealing Statute"), which provides that the record from a criminal proceeding in which the charges have been dismissed, or in which the defendant has been acquitted, shall be placed under seal. This discovery dispute ensued. Magistrate Judge Attridge resolved it by ordering Clifford and Altman to produce "all documents provided them or their counsel by the New York prosecutor in connection with the criminal proceedings brought against them in New York." First American Corp. v. Al-Nahyan, Civ. No. 93-1309 (Order of Sept. 12, 1997). It is that aspect of the Order that Clifford and Altman ask this Court to review.

 DISCUSSION

 These cases were referred to Magistrate Judge Attridge for discovery pursuant to Rule 72(a) of the Federal Rules of Civil Procedure. The reference authorized the Magistrate Judge to determine non-dispositive pretrial matters, and his orders are final unless objected to within 10 days or unless this Court determines them to be clearly erroneous or contrary to law. See FED. R. CIV. P. 72(a); DIST. CT. OF D.D.C. R. 503. Clifford and Altman timely raised their objection to one portion of the September 12, 1997 Order. The issues presented by Clifford and Altman's motion involve a mix of legal conclusions and factual determinations. The former are considered de novo, and the latter are reviewed for clear error.

 A. The New York Sealing Statute

 The Sealing Statute on which Clifford and Altman rely to resist discovery provides that "upon the termination of a criminal action or proceeding against a person in favor of such person . . . the record of such action or proceeding shall be sealed." NYCPL § 160.50(1). The statute further provides that:

 
(c) all official records and papers , including judgments and orders of a court but not including published court decisions or opinions or records and briefs on appeal, relating to the arrest or prosecution , including all duplicates and copies thereof, on file with the division of criminal justice services, any court, police agency, or prosecutor's office shall be sealed and not made available to any person or public or private agency;
 
(d) such records shall be made available to the person accused or to such person's designated agent, and shall be made available to [certain government ...

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