Block on Trump's Asylum Ban Upheld by Supreme Court
The Second Circuit sent a clear message recently by overturning a lower federal court's ruling that Georg F.W. Schaeffler's sharing of privileged work-product with another party of "common legal interest" amounted to waiver.
The controversy arises out of facts that go as far back to the beginnings of the 2008 crash: the Lehman Brothers bankruptcy announcement.
Way Back When
Schaeffler, purportedly Germany's richest person, owned an overwhelming majority stake in his family's Shaeffler Group. He borrowed a fortune of 11 billion euro in a bid to overtake rival German automaker, Continental AG. What he did not know when he signed on the dotted line was that it was about to come crashing down with the announcement by Lehman Brothers that the company had filed Chapter 11, the final clearest signal that the 2007-09 crash was the real thing.
Schaeffler was hemorrhaging money and German laws precluded him from backing out of the deal. When he hired the accounting firm Ernst & Young and law firm Dentons US, he knew that he had to prepare for hard times with US tax authorities.
His creditors, the banks, had also arranged protection from suit by extending him an additional 250 million Euro. Shaffler then turned to face the IRS, which promptly issued a subpeona for all of his papers, including those papers specifically prepared by Ernst & Young related to the restructuring of Shaeffler including legal opinions. Shaeffler complied with some of the requests, but filed to quash the subpoena calling for the handover of the Ernst & Young memo.
A lower federal court had earlier found that Shaeffler had waived his privilege, but all three judges at the Circuit agreed that the E&Y memo definitely was work-product and that the circumstances surrounding its creation were essentially irrelevant but for the fact that various legal parties can have skin in the game even if they are not a named party. Thus, Shaeffler and his creditors shared a common legal interest that essentially supported the granted of the motion to quash.
Not Hurtin' for Money
Shaeffler is still Germany's richest individual and it is suggested that his family's stake in the company clocks is at 20 billion euros.