The Hon. Lewis J. Leman of the Southern District of New York recently reaffirmed the court’s finding that there was probable cause to believe that the plaintiff in Eletson Holdings v. Levona Holdings1 committed fraud by withholding documents and presenting perjured testimony during arbitration. The ruling comes after Judge Liman’s in camera review of a sampling of documents over which the attorney-client privilege had been claimed, including Reed Smith’s ex parte submissions with attempts to explain why the crime-fraud exception did not apply to each of the sample documents in question.
Background
The case follows a dispute between two shipping companies over a series of charter party agreements for transporting liquefied petroleum gas. The disagreement was first heard in arbitration. Despite Levona’s allegations that Eletson misled the arbitration panel by hiding key documents and presenting false testimony, the panel issued an award against Levona.
Arguing that the arbitration was tainted by fraud, Levona challenged the award.
Levona’s Challenge
Eletson, represented by its counsel Reed Smith, sought to defend the award and maintain attorney-client privilege over certain communications. Levona countered, arguing that many of the communications were subject to the crime-fraud exception, under which statements made by a client to an attorney in furtherance or concealment of a crime are not protected.
With respect to his review of specific communications over which Eletson claimed attorney-client privilege, Judge Liman concluded that:
“These documents include communications regarding the drafting of an affidavit alleged to be false and misleading, responses to document production that were intended to be fraudulent and to conceal fraudulent conduct, a conversation among lawyers and client where testimony to be given and that is alleged to be false was discussed, communications regarding the recitation of facts alleged to be false, and documents concerning the concealment of fraudulent conduct after the conclusion of the arbitration.”
Considering these findings, Levona asked the court to issue a blanket order “directing the production of all the documents on the privilege log (except those from the sample the Court has found not to be subject to the crime-fraud exception).” However, to override attorney-client privilege, Judge Liman acknowledged that the court must determine “whether each communication at issue was made in furtherance of a crime or fraud.”
In furtherance of this review, Judge Liman ordered the parties to meet and confer with respect to a process regarding the review of the remaining documents over which privilege had been claimed and challenged.
Conclusion
Judge Liman’s decision underscores that the attorney-client privilege can sometimes be pierced when advice is sought in the furtherance of a crime or fraud. At the same time, and even where a general showing of probable cause has been established, a causal nexus between the particular communication and the criminal or fraudulent design is maintained.
1 Eletson Holdings v. Levona Holdings, No.23-7331 (S.D.N.Y. Sept. 19, 2025).
