In Prospect Capital Corp. v Morgan Lewis & Bockius LLP 2025 NY Slip Op 32996(U) July 24, 2025 Supreme Court, New York County Docket Number: Index No. 653941/2022 Judge Margaret A. Chan gives a primer on “at issue” privilege issues, how emails are currently handled under CPLR 2104 and how complicated discovery of written documents can be.

“The parties are now in discovery. In mid-2024, defendants filed a Rule 14 letter requesting an order compelling Prospect to produce categories 2·7, 9·10, 12· 22, 26, and 28·30 from Prospect’s categorical privilege log, each of which related to advice to or from Prospect’s attorneys (NYSCEF # 122, Defs’ Rule 14 Letter). Defendants argued that Prospect had waived attorney-client privilege over the relevant categories by placing them “at issue” and under the concurrent representation doctrine, and that the majority of categories had to be produced pursuant to an earlier “stipulation” between the parties (id at 2 of the letter). The “stipulation” in question consisted of an oral agreement between counsel during a February 1, 2024 meet and confer and which was reduced to writing in an email from defendants to Prospect on February 7, 2024 (Email Stipulation) (see NYSCEF # 144, Email Stipulation). Prospect did not respond to that email nor sign any formal stipulation.

Prospect objected, almost exclusively arguing that it did not place the relevant documents at issue (NYSCEF # 123, Prospect Rule 14 Letter, at 1-3). Prospect did not clearly or obviously make any arguments regarding the email stipulation raised by defendants (see jd). The court held a Rule 14 conference on November 20, 2024, and issued an order later that day ruling in favor of Prospect on some categories and defendants on others (the Rule 14 Order) (NYSCEF # 139, Rule 14 Order). Specifically, the Rule 14 Order determined that categories 2 through 7, 9, 10, 12, and 14 were not subject to “at issue” waiver and/or were not relevant, but nevertheless had to be produced pursuant to the Email Stipulation (jd at 2-3). The Rule 14 Order also determined that categories 15, 19, and 20 had to be produced pursuant to “at issue” waiver, but with specific limitations Ud.). Finally, the Rule 14 Order denied production of categories 13, 16-18, 21, 22, 26, and 28-30 because these categories fell under neither category Ud. at 3-4). During the November 20 conference, Prospect asked the right to appeal, hence, the parties were granted leave to bring this motion and cross-motion and were advised by this court that the decision would be consistent with the conference order Ud at 1). Prospect filed this motion, and then defendants cross-moved for clarification the Rule 14 Order’s findings that certain categories were irrelevant was not an evidentiary ruling. Prospect argues for the first time in its motion that the Email Stipulation is unenforceable pursuant to CPLR 2104 (NYSCEF # 141, Prospect’s Br., at 9-12). Prospect further argues that even if the requirements of CPLR 2104 had been met, the terms of the Email Stipulation are ambiguous given that the parties appear to have different understandings of what was agreed to. Prospect additionally argues that categories 15, 19, and 20 are not “at issue” in large part because they do not relate to advice about the turnover provision. CPLR 3101(a) provides that “[t]here shall be full disclosure of all evidence material and necessary in the prosecution or defense of an action.” To be considered “material and necessary,” the information sought must “bearD on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity” (Kapon v. Koch, 23 NY3d 32, 38 [2014], quoting Allen v CrowellColljer Puhl. Co., 21 NY2d 403, 406 [1968]). Disclosure is thus not limited to “evidence directly related to the issues in the pleadings” (Allen, 21 NY2d at 408). At the same time, “unlimited disclosure is not permitted” (Harrjs v Pathmark, Inc., 48 AD3d 631, 632 [2d Dept 2008]), and “under [New York] … discovery statutes and case law, … the need for discovery must be weighed against any special burden to be borne by the opposing part” (Kavanagh v Ogden AlHed Mmntenance Corp., 92 NY2d 952, 954 [1998Hcitations omitted]; see also Preamble to Rule 11 of the Commercial Division [“It is important that counsel’s discovery requests … are both proportional and reasonable in light of the complexity of the case and the amount of proof that is required for the cause of action”]).”

“Regarding categories 2 through 7, 9, 10, 12, and 14, the court now reverses course and denies access to these categories of documents. CPLR 2104 states that “[a]n agreement between parties or their attorneys relating to any matter in an action … is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered” (CPLR 2104). Regarding the “subscribed” requirement, the First Department has held in the context of settlement stipulations that a party “subscribes” to an email stipulation where the party’s attorney “hits ‘send’ with the intent of relaying a settlement offer or acceptance, and their email account is identified in some way as their own” (Phila. Ins. Indem. Co. v Kendall, 197 AD3d 75, 80 [1st Dept 2021]). The Third Department also recently held that silence in the face of a stipulation does not amount to assent to its terms absent a “duty to speak” (Matter of Estate of Eckert, 217 AD3d 1151, 1153 [3d Dept 2023], lv to appeal dismissed, 40 NY3d 1024 [2023], quoting Matter of Albrecht Chem. Co. /Anderson Trading Corp.}, 298 NY 437, 440 [1949]). Applying that logic here, an attorney may accept other types of stipulations by sending a response email, but does not accept by failing to respond. Here, Prospect did not send a response email accepting the terms of the stipulation as laid out in defendants’ February 7, 2024 Email Stipulation. While it is clear the parties had a conversation and even came to some oral agreement that defendants believed was fully reduced to writing, Prospect’s failure to respond is a failure to subscribe to the terms as specifically forth in the Email Stipulation. Therefore, the stipulation is unenforceable pursuant to CPLR 2104. By extension, the cross-motion for resettlement is denied as moot.”

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