Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_08-cv-01510/USCOURTS-cand-3_08-cv-01510-60/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN RE 

CHARLES SCHWAB CORPORATION 

SECURITIES LITIGATION.

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This Document Relates To All Cases.

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No. C 08-01510 WHA

ORDER RE WELLS

SUBMISSION

Plaintiffs have moved to compel production of material that defendants withheld on the

basis of attorney-client privilege. Plaintiffs allege that defendants waived the privilege as to these

materials by revealing the substance of advice of counsel to the SEC via their Wells submission

of November 19, 2009, and the testimony of several individual defendants to the SEC. After

consideration of the excerpts of the Wells submission and testimony transcripts submitted by

plaintiffs in support of their motion, this order finds that defendants did not waive the privilege.

To be sure, defendants’ Wells submission was carefully crafted to leave the impression

that three sets of lawyers — including funds’ in-house lawyers, funds’ outside counsel and the

independent trustees’ separate outside counsel — had blessed the change in concentration policy. 

A close reading, however, shows that at no time did the Wells submission actually reveal the

substance of what counsel advised. Though it would be inconsistent with the overall impression

left by the Wells submission, the fact remains that counsel might have advised a different course

of action, or advised as to potential risks of the course taken. Still, the actual advice given was

not revealed. Therefore, this orders finds no waiver occurred by reason of the Wells submission.

Case 3:08-cv-01510-WHA Document 429 Filed 03/01/10 Page 1 of 2
United States District Court

For the Northern District of California

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Plaintiffs also identified five individual defendants whose SEC testimony allegedly

waived the privilege by similarly revealing the substance of attorney advice. Again, however,

examination of these testimony excerpts demonstrates that no attorney advice was actually

revealed. For example, defendant Randall Merk, who was a trustee and then president and CEO

of the funds, merely testified that he reviewed a memorandum from outside counsel prior to a

board meeting and that the legal advice contained in the memorandum was discussed during the

meeting. However, he never actually disclosed any of the substance of what that legal advice

was, and in fact pointedly refused to do so (Lopez Decl. Exh. F, Merk Dep. 64–65). The other

four individual defendants who testified before the SEC — Charles Schwab, Michael Wilsey,

Gerald Smith and Donald Stephens — also did not divulge the content of attorney advice. That

these defendants disclosed the mere fact that they consulted their counsel without revealing the

substance of the advice was insufficient to waive the privilege.

For the foregoing reasons, plaintiffs’ motion to compel on the basis that defendants

waived attorney-client privilege through disclosure to the SEC is DENIED. 

IT IS SO ORDERED.

Dated: March 1, 2010. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:08-cv-01510-WHA Document 429 Filed 03/01/10 Page 2 of 2