*1 This case is before the court on judgment-creditor Export Development Canada's (“Export Development”) motion to compel, which also seeks sanctions. Doc. 1; Doc. 2. In April 2021, Export Development sued East Coast Power & Gas, LLC (“East Coast Power & Gas”) for breach of contract in the United States District Court for the Southern District of New York. See Doc. 2-1 ¶ 3; S.D.N.Y. Case No. 1:21-cv-03758, Doc. 1 ¶ 1. In June 2021, based on the parties' stipulations, the court entered judgment against East Coast Power & Gas for $11.8 million, with interest. See Doc. 2-1 ¶ 3; S.D.N.Y. Case No. 1:21-cv-03758, Doc. 13. The pending motion to compel is part of the post-judgment discovery that has taken place since then. At issue are documents created by RAS Management Advisors LLC (“RAS”), an accounting firm and a non-party to the underlying action.

For the reasons stated below, Export Development's motion to compel is GRANTED and the motion for sanctions is DENIED.

I. BACKGROUND

A. The RAS Analysis

East Coast Power & Gas is a New York energy supplier that experienced “severe financial issues” in early 2020. Doc. 2-1 ¶ 2. At the time, Signature Bank (“Signature”) was East Coast Power & Gas's primary lender, id. ¶ 4, and Hahn & Hessen LLP (“Hahn & Hessen”)—now Thompson Coburn Hahn & Hessen LLP (“Thompson Coburn Hahn & Hessen”)—was Signature's counsel. See Doc. 13 ¶ 1.

Hahn & Hessen engaged the services of RAS to analyze East Coast Power & Gas's financial state. Id. According to the engagement letter signed January 31, 2020 (the “Engagement Letter”), RAS agreed to “undertake a review of [East Coast Power & Gas's] financial accounting and reporting systems, especially the causation as to the required adjustments now identified by [East Coast Power & Gas] with respect to its previously reported financial results and apparently stemming from accounting errors ....” Doc. 13-1 at 2. RAS also agreed to “undertake a review and analysis of [East Coast Power & Gas's] accounts receivable ... to ensure that the net accounts receivable reported by [East Coast Power & Gas] in its collateral information included in its 2019 and 2020 borrowing base certificates reflects accurate and reliable information.” Id. at 2–3.

The Engagement Letter expressed RAS's understanding that its “work under this agreement is performed at [Hahn & Hessen's] direction, and that all work performed by us under this agreement ... is privileged and confidential.” Id. at 3. RAS understood that its work was “protected by the attorney-client privilege and by the work-product doctrine,” and agreed to “not reveal any of [its] work to another person, except as authorized by [Hahn & Hessen] in writing or as required by legal process after prior written notice to [Hahn & Hessen].” Id. John P. Amato, a member of the Thompson Coburn Hahn & Hessen firm, states in his affidavit that his firm “engaged [RAS] for its accounting expertise to help provide legal advice to Signature in connection with its loan to distressed borrower, East Coast Power & Gas,” Doc. 13 ¶ 1, and that “[Hahn & Hessen] needed to understand what was happening for purposes of assessing the lender-borrower relationship at a time there was likely going to be litigation relating to [East Coast Power & Gas] and its guarantors.” Id. ¶ 5.

*2 Export Development learned about RAS's analysis of East Coast Power & Gas during post-judgment discovery, while reviewing documents that Signature produced in response to Export Development's subpoena issued on July 12, 2022 (“Signature Subpoena”). See Doc. 13-3 at 2, 7. The Signature Subpoena requested financial documents related to East Coast Power & Gas, and Signature produced “nearly 8,000 pages of documents on a rolling basis” from August to October 2022. Doc. 13 ¶ ¶ 9–12. Among the documents that Signature produced was the “Corporate Credit Offering Memorandum,” which referred to meetings involving East Coast Power & Gas and several banks in early 2020. Doc. 2-2 at 2. The memorandum stated: “The bank group engaged RAS Management to ... provide a review and validation of [East Coast Power & Gas's] 13 week cash flow and borrowing base calculations. RAS was instructed to verify the collateral, with particular focus on the unbilled A/R.” Id. According to the memorandum, Signature and other banks determined “[b]ased on analysis provided by RAS,” that East Coast Power & Gas's “borrowing base needed to be adjusted.” Id.

On September 8, 2022, Export Development asked Signature via email to locate and produce documents related to the RAS analysis. See Doc. 13-3 at 7. On September 23, 2022, Signature replied that it was “still gathering all documents as the Banker has been traveling for work.” Id. at 5. Signature also informed Export Development that the requested documents “may be subject to the attorney-client and work product privileges.” Id. On November 7, 2022, Export Development asked Signature whether it “intends to withhold [the RAS] documents on privilege grounds and, if so, when we can expect to receive a privilege log.” Id. at 4–5. Signature provided the privilege log on January 3, 2023, id. at 2–3, which listed as privileged a “[d]raft report regarding a summary of issues and recommendations for matters pertaining to East Coast Power & Gas, created by [RAS] on Hahn & Hessen LLP's request, to assist Hahn & Hessen LLP with providing legal advice to Signature Bank.” Doc. 13 ¶ 17.

B. The RAS Subpoena

On March 16, 2023, the Federal Deposit Insurance Corporation (“FDIC”) informed Thompson Coburn Hahn & Hessen that Signature was “closed by the New York Department of Financial Services” and that the FDIC was “charged with the duty of winding-up the affairs of [Signature] as expeditiously as possible.” Doc. 13-4 at 2. The letter from the FDIC stated that the FDIC “transferred substantially all of [Signature's] assets to a newly created bank, Signature Bank, N.A. (the “Bridge Bank”).” Id. It continued, “As a result, all asset-related legal work you were performing for [Signature], such as pursuing collection of a loan or a judicial foreclosure, is now likely the responsibility of the Bridge Bank ....” Id. The two exceptions noted were any litigation work related to defensive claims and any legal work related to assets that the FDIC retained. Id. at 2–3. Thompson Coburn Hahn & Hessen immediately notified Export Development that “Signature no longer existed” and that the subpoena issued to Signature was therefore a “dead letter.” Doc. 13 ¶ 24.

The same day, on March 16, 2023, Export Development served RAS with a subpoena. See Doc. 2-4. Although the court issuing the subpoena was the United States District Court for the Southern District of New York, compliance was required in Huntsville, Alabama. See id. at 2. Specifically, the subpoena commanded that RAS produce the following materials on March 31, 2023: “[f]or the period January 1, 2019, onwards, all financial analyses, including reports and draft reports, conducted Concerning East Coast”; “[a]ll underlying Documents Concerning the preparation of any financial analyses responsive to the preceding request”; “[f]or the years ending December 31, 2018, onwards, all financial statements Concerning East Coast”; “[f]or the period January 1, 2019, onwards, all e-mails and Communications exchanged between any person acting on behalf of or employed by [RAS], and any person acting on behalf of or employed by East Coast, Concerning East Coast's cash flow, borrowing base calculations, assets, liabilities, or financial condition in general.” Id. at 8.

*3 RAS served written objections to the subpoena via a letter dated March 27, 2023, and signed by Timothy D. Boates, President of RAS. See Doc. 2-8. RAS's objections were “on the grounds that [the subpoena] is overly broad, unduly burdensome and seeks materials protected from disclosure by the attorney client privilege and work product doctrines.” Id. at 3. RAS attached a copy of the Engagement Letter to “show[ ] that RAS was retained by [Thompson Coburn Hahn & Hessen] to help [the firm] provide legal advice to its client Signature Bank.” Id. RAS also informed Export Development that, due to its policy of destroying all records one year after the date of the last invoice, the only documents it retained were “electronic copies of our engagement letter, invoices, a final copy of our report (dated March 30, 2020) which is being withheld as noted, and certain email correspondence that is being provided to [Thompson Coburn Hahn & Hessen] for their review.” Id. RAS stated that it was “not at liberty to waive” any rights related to attorney client privilege or the work product doctrine. Id. at 4.

Mr. Boates repeated the substance of this letter in an affidavit signed March 29, 2023. See Doc. 2-9 at 2–3. He stated that RAS was “advised by counsel at [Thompson Coburn Hahn & Hessen]” that the “final copy of [RAS's] report dated March 30, 2020]” was “protected from disclosure by the attorney client privilege and work product doctrines.” Id. According to Mr. Amato, a member of Thompson Coburn Hahn & Hessen, “RAS naturally informed [his firm] that it had received the RAS Subpoena, which seeks documents that were created in the course of its engagement by [Hahn & Hessen].” Doc. 13 ¶ 26.

C. The Transfer of the East Coast Power & Gas Loan to Flagstar

On April 16, 2023, the FDIC notified Thompson Coburn Hahn & Hessen that “the [Signature] Bridge Bank was closed by the Office of the Comptroller of the Currency,” and that “the [FDIC] entered into a purchase and assumption agreement with Flagstar Bank” on March 20, 2023. Doc. 13-5 at 2. As a result, Flagstar “assumed substantially all deposits and certain loan portfolios of Signature Bridge Bank,” and would be “responsible for matters relating to loans and deposit accounts that it assumed.” Id. at 3. During Mr. Amato's subsequent communications with the FDIC, Thompson Coburn Hahn & Hessen “discovered that Signature's loan to [East Coast Power & Gas] was included in the assets that had been transferred to Flagstar.” Doc. 13 ¶ 30.

After Export Development filed this motion to compel on April 20, 2023, see Doc. 1, Thompson Coburn Hahn & Hessen notified Export Development that “Flagstar now owns the loan [that Signature made to East Coast Power & Gas], along with the attendant privilege,” and that the firm was “retained [by Flagstar] to defend this motion to compel.” Doc. 13 at ¶ 31. It was Flagstar, not RAS, that filed a response to Export Development's motion to compel. See Doc. 12.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 69(a)(2) provides that “[i]n aid of the judgment or execution, the judgment creditor ... may obtain discovery from any person—including the judgment debtor—as provided in these rules or by the procedure of the state where the court is located.” Rule 45 in turn allows the use of subpoenas to command a non-party to produce “documents, electronically stored information, or tangible things at a place within 100 miles of where the person resides, is employed, or regularly transacts business in person.” Fed. R. Civ. P. 45(c)(2)(A).

“A person commanded to produce documents ... may serve on the party or attorney designated in the subpoena a written objection to inspecting, copying, testing, or sampling any or all of the materials ... or to producing electronically stored information in the form or forms requested.” Fed. R. Civ. P. 45(d)(2)(B). “The objection must be served before the earlier of the time specified for compliance or 14 days after the subpoena is served.” Id. If an objection is made, “the serving party may move the court for the district where compliance is required for an order compelling production or inspection.” Fed. R. Civ. P. 45(d)(2)(B)(i).

*4 To withhold subpoenaed information as privileged or protected as trial-preparation material, a person must: “(i) expressly make the claim; and (ii) describe the nature of the withheld documents, communications, or tangible things in a manner that, without revealing information itself privileged or protected, will enable the parties to assess the claim.” Fed. R. Civ. P. 45(e)(2)(A).

III. ANALYSIS

Export Development makes four arguments in its opening brief. First, Export Development argues that “[d]ocuments concerning RAS's analysis of [East Coast Power & Gas's] financial condition and accounting errors are plainly relevant.” Doc. 2 at 9. Second, Export Development argues that RAS's “general objections” to the subpoena not only “fail to explain how any request is overbroad or unduly burdensome,” but also “manifestly lack merit.” Id. at 10–11. Third, Export Development argues that “Signature's and the FDIC's failure to move to quash waives any privilege objections they might have asserted.” Id. at 12. Fourth, Export Development argues that “[i]f they appear, Signature, the FDIC, and [Thompson Coburn Hahn & Hessen] should be sanctioned for their extrajudicial attempts to influence RAS's response to the subpoena.” Id. at 14.

Flagstar responds that it now holds Signature's privileges because it acquired Signature's assets, including the East Coast Power & Gas loan. See Doc. 12 at 10. Flagstar argues that “[n]either Signature nor RAS was obligated to initiate motion practice to preserve the privilege because they provided timely responses and objections,” Doc. 12 at 15, and that the RAS report is protected by attorney-client privilege and work-product privilege. See id. at 10–14. Specifically, Flagstar argues that “[c]ommunications to non-lawyers, such as consultants like RAS, can be brought within the attorney-client privilege,” id. at 10, and that “[t]he RAS Report is precisely the type of document that is work product because it was prepared by an expert retained by [Hahn & Hessen] to assist [Hahn & Hessen] in rendering legal advice to Signature at a time when litigation was on the horizon due to its borrower's financial distress.” Id. at 13. Flagstar maintains that it “never directed Signature or RAS ... to ‘ignore’ the subpoenas.’ ” Id. at 16.

Export Development's reply raises three arguments. First, Export Development argues that “Flagstar lacks any standing in this proceeding.” Doc. 16 at 5. Second, Export Development argues that Flagstar, unlike RAS, “was required to file a motion,” id. at 9, so that “Flagstar waived any objections by failing to file a timely motion to quash or for a protective order.” Id. at 7. Third, Export Development argues that “Flagstar failed to discharge its burden of proving the subpoenaed records are actually privileged,” as to both attorney-client privilege and the work-product privilege. Id. at 10.

A. Standing

The court first addresses whether Flagstar has standing in this proceeding. Standing to object to a subpoena issued to a third party exists where “the party alleges a personal right or privilege with respect to the materials subpoenaed.” Garber v. Nationwide Mut. Ins. Co., No. 5:21-cv-00546-HNJ, 2022 WL 1420916, at * 3 (N.D. Ala. Mar. 24, 2022) (cleaned up); see also Bishop v. Baldwin, No. 20-CV-61254, 2020 WL 7320932, at *5 (S.D. Fla. Dec. 10, 2020); Cellairis Franchise, Inc. v. Duarte, 193 F. Supp. 3d 1379, 1381 (N.D. Ga. 2016).

*5 Export Development argues that Flagstar lacks standing because it failed to establish that Signature's privilege transferred to Flagstar when it acquired Signature's assets. See Doc. 16 at 5–7. But standing does not require a party to succeed on the merits of a claim. See Muransky v. Godiva Chocolatier, Inc., 979 F.3d 917, 924 (11th Cir. 2020) (“At the pleading stage of a case, ‘general factual allegations of injury' can suffice [to show standing.]”) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)). Flagstar has standing because it plausibly and clearly alleges that it holds Signature's privileges and that those privileges apply to the subpoenaed materials. See id. (“[G]eneral factual allegations must ‘plausibly and clearly allege a concrete injury.’ ”) (quoting Thole v. U.S. Bank N.A., 140 S. Ct. 1615, 1621 (2020)).

B. Waiver

Export Development relies on Centennial Bank v. Servisfirst Bank Inc., No. 8:16-cv-88-T-36JSS, 2016 WL 4163560, at *4 (M.D. Fla. Aug. 5, 2016) to support its argument that Flagstar waived its objections by failing to seek a protective order or file a motion to quash. See Doc. 16 at 9. But that reliance is misplaced.

In Centennial Bank, the district court held that “the operation of the Rules illustrates that a non-party subject to a subpoena and a party whose interests are implicated by a subpoena must act independently to protect their respective interests and that the acts of one do not protect the other's interest.” 2016 WL 4163560, at *4. That is, “[a] party cannot object to a subpoena duces tecum served on a nonparty, but rather, must seek a protective order or make a motion to quash.” Id. (quoting Moon v. SCP Pool Corp., 232 F.R.D. 633, 636 (C.D. Cal. 2005)). The court did not hold that a party waives assertions of privilege by not seeking a protective order or filing a motion to quash. The court denied the motion to quash for untimeliness. See id. Acknowledging that Rule 45(d)(3) does not set a “date certain” for a motion to quash, the court held that the party's “lapse—of over three months from the date it became aware of the subpoenas and over two months from the date of compliance— cannot be considered ‘timely.’ ” Id.

District courts in this circuit find waiver upon “[f]ailure to serve written objections to a subpoena within the time specified by Fed. R. Civ. P. 45,” not upon failure to seek a protective order or file a motion to quash. Patel v. Bhakta, No. 1:15-cv-562-MHC-ECS, 2015 WL12159208, at *2 (N.D. Ga. Apr. 29, 2015) (quoting Ala. Educ. Ass'n v. Bentley, No. CV-11-S-761-NE, 2013 WL 246417, at *4 (N.D. Ala. Jan. 22, 2013)); see also 9A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2463 (3d ed. 2023) (“A failure to object within the fourteen-day period usually results in waiver of the contested issue.”).

Export Development served the subpoena on RAS on March 16, 2023, with a compliance date of March 31, 2023. Doc. 2-5 at 5. Notwithstanding Flagstar's failure to move to quash before Export Development moved to compel on April 20, 2023, RAS timely served written objections to the subpoena on March 27, 2023. Flagstar did not waive the privilege.

C. Privilege

“In a diversity action, state law governs the privileged nature of materials sought in discovery.” In re Fink, 876 F.2d 84, 85 (11th Cir. 1989); see also Fed. R. Evid. 501 (“[I]n a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.”).

Both Export Development and Flagstar assert that New York law on privilege applies. See Doc. 12 at 11 n.1; Doc. 16 at 4. Accordingly, the court will apply New York law on the issue of whether the subpoenaed materials are privileged, either as attorney-client communication or work product prepared in anticipation of litigation.

*6 Under New York law, the party asserting attorney-client privilege must establish “that the communication at issue was between an attorney and a client” to facilitate “the rendition of legal ... services, in the course of a professional relationship, that the communication is predominantly of a legal character, that the communication was confidential and that the privilege was not waived.” Ambac Assurance Corp. v. Countrywide Home Loans, Inc., 57 N.E.3d 30, 34–35 (N.Y. 2016) (cleaned up). New York courts “narrowly construe[ ]” attorney-client privilege because it “shields from disclosure pertinent information and therefore constitutes an obstacle to the truth-finding process.” Id. at 34 (cleaned up).

Whether Signature's attorney-client privileges transferred to Flagstar after the latter assumed its loans is relevant only if the subpoenaed materials were within the scope of Signature's attorney-client privilege in the first place. “[Attorney-client] privilege can protect communications between a client and his accountant, or the accountant and the client's attorney, when the accountant's role is to clarify communications between attorney and client.” United States v. Ackert, 169 F.3d 136, 139 (2d Cir. 1999). That is, the accountant's role must be that of “a translator or interpreter of client communications.” Id. at 140; see also United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961) (“Accounting concepts are a foreign language to some lawyers in almost all cases .... Hence the presence of an accountant ... while the client is relating a complicated tax story to the lawyer, ought not destroy the privilege ....”).

According to RAS, the only documents it now possesses are the “engagement letter, invoices, a final copy of our report (dated March 30, 2020) which is being withheld as noted, and certain email correspondence that is being provided to [Thompson Coburn Hahn & Hessen] for their review.” Doc. 2-8 at 3. Flagstar has not established that any of these documents fall into the category of communications where RAS translated information that Signature had. Indeed, RAS's engagement letter states that its objectives are to undertake “a review of ... causation as to the required adjustments ... stemming from accounting errors” and “analysis ... to ensure that ... information included in [East Coast Power & Gas's] 2019 and 2020 borrowing base certificates reflects accurate and reliable information.” Id. at 5–6. Determining whether information is accurate and reliable requires expertise that goes beyond the scope of translation. Accordingly, the subpoenaed materials are not shielded by attorney-client privilege.

Under New York law, “attorney work product” is distinct from “trial preparation materials” in that the former is “not obtainable” whereas the latter may be disclosed upon a showing of “substantial need” and “undue hardship.” People v. Kozlowski, 898 N.E.2d 891, 904 (N.Y. 2008) (“[W]hen particular work product is generated for litigation, [New York] courts have tended to classify it as trial preparation material, unless it contains otherwise privileged communications.”). “The burden of establishing the application of the [work-product] exemption rests on the party resisting discovery.” Doe v. Poe, 664 N.Y.S.2d 120, 122–23 (N.Y. App. Div. 1997). “The ... mere assertion that items constitute an attorney's work product, or are materials prepared for litigation, will not suffice.” Id. at 123.

New York law protects some materials created by non-lawyers as trial preparation materials. For instance, an attorney's communications with a non-lawyer who was “retained not only as a litigation consultant ... but as an expert witness, a testifying expert, as of the time he began working on the assignment” are protected materials prepared for trial. Beller v. William Penn Life Ins. Co., 828 N.Y.S.2d 869, 871 (N.Y. Sup. Ct. 2007). Accounting reports that are prepared by consultants “at the behest of the [party's] lawyers for the sole purpose of auditing [the opposing party] in preparation for trial” are also protected. J.R. Stevenson Corp. v. Dormitory Auth., 492 N.Y.S.2d 385, 390 (N.Y. App. Div. 1985).

*7 But New York law does not protect materials created by non-lawyers on the grounds that a law firm directed the non-lawyers at a point when litigation appeared imminent. See ACE Secs. Corp. v. DB Structured Prods., Inc, 40 N.Y.S.3d 723, 729 (N.Y. Sup. Ct. 2016). In ACE Securities Corp., the court held that documents analyzing mortgage loan breach claims, created by non-lawyers, were not protected work products. See id. In so holding, the court found as dispositive the fact that defendant “had a long-standing business practice of conducting Breach Analyses.” Id. at 731. The court rejected the defendant's argument that the breach analyses at issue were protected because “they were created by newly hired re-underwriting consultants at the direction of [a law firm]” when “litigation appeared ‘imminent.’ ” Id. at 730.

In the light of this case law, Flagstar has not met its burden to establish work-product privilege. Indeed, after having asserted that New York law governed this motion to compel, Flagstar ignores the relevant case law. Flagstar makes no attempt to show that verifying the accuracy and reliability of a borrower's financial documents was not a part of Signature's long-standing business practice as a bank. If anything, the Corporate Credit Offering Memorandum suggests that Signature did not use the RAS analysis for the sole purpose of preparing for litigation, because it adjusted East Coast Power & Gas's borrowing base in light of that analysis. See Doc. 2-2 at 2. Flagstar concedes as much when it argues that “[t]he work-product privilege is not broken even if RAS's analyses and the RAS Report had a secondary benefit of providing Signature with business guidance.” Doc. 12 at 14. But Flagstar does not cite any New York legal authority for its broad reading of work-product privilege. Accordingly, the subpoenaed materials are not protected work product.

D. Sanctions

Export Development asserts that Thompson Coburn Hahn & Hessen should be sanctioned for its “extrajudicial attempts to influence RAS's response to the subpoena.” Doc. 2 at 14. Specifically, Export Development argues that Thompson Coburn Hahn & Hessen circumvented this court's authority by ghostwriting RAS's letter that objected to the subpoena. See id.

Export Development's assertions are unpersuasive. RAS's objections merely repeated what the Engagement Letter asserted: that the work it did for Hahn & Hessen was confidential and protected by the attorney-client privilege and the work product doctrine. Nor was it inappropriate for RAS to notify Thompson Coburn Hahn & Hessen about the subpoena and for the firm to reiterate what the Engagement Letter stated. Export Development has not shown that sanctions are warranted because Thompson Coburn Hahn & Hessen has acted “in bad faith, vexatiously, wantonly, or for oppressive reasons.” Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1223 (11th Cir. 2017) (quoting Marx v. Gen Revenue Corp., 568 U.S. 371, 382 (2013)). Accordingly, Export Development's motion for sanctions is DENIED.

IV. CONCLUSION

Because the subpoenaed materials are not privileged, Export Development's motion to compel is GRANTED.

DONE and ORDERED this 7th day of December, 2023.