Opinion ID: 3027635
Heading Depth: 2
Heading Rank: 2

Heading: Plaintiffs’ Threshold Showing.

Text: In the underlying actions, plaintiffs allege that the Bank violated various federal securities laws when BankAmerica failed to disclose before the merger its full relationship with Shaw and the losses it was sustaining on its loans to Shaw. To support these claims, plaintiffs rely heavily on a September 15, 1998, press release which failed to disclose the Shaw losses; on Shaw’s August and September 1998 profit and loss statements reflecting its losses; and on testimony by BankAmerica employees that they urged or recommended disclosure of BankAmerica’s relationship with Shaw and the magnitude of Shaw’s third quarter losses. According to the Bank’s privileged document log, most or all of the eleven documents in question were created between August 28 and October 30, 1998, and contain or reflect attorneyclient communications relevant to these disclosure issues. The documents themselves are not in the record before us. Plaintiffs argue that the district court properly ordered disclosure of the eleven documents under the crime-fraud exception because “discovery in this case has established that the bank had extensive knowledge of the losses suffered prior to the shareholders’ vote on the merger but that, acting in coordination with its attorneys, decided to delay recognition and public disclosure of the losses until after [] the merger closed.” The Bank argues that plaintiffs have made no showing that it communicated with counsel in furtherance of an on-going fraud, as opposed to merely seeking legal advice as to its disclosure obligations under the federal securities laws.