In re Carvana Co Securities Litigation

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
United Association National Pension Fund, et
al.,
Plaintiffs,
v.
Carvana Company, et al.,
Respondents.
No. CV-22-02126-PHX-MTL
ORDER
Pending before the Court is Plaintiffs’ “Motion to Compel Production of Documents
Withheld as Privileged for In Camera Review and to Appoint Special Master.”1 (Doc. 363.)
In their Motion, Plaintiffs seek a court order finding that Defendants’ April 9, 2026,
privilege log is insufficient, necessitating either a broad disclosure of documents
Defendants have categorized as privileged, or submission of those documents for in camera
review by either this Court or a special master. (Id. at 6.) In particular, Plaintiffs assert that
Defendants have “lump[ed] 48,666 documents into nine overbroad and amorphous
‘categories,’” which they allege violates Ninth Circuit precedent. (Id. at 6–7.) Defendants
oppose the Motion, asserting that they have already broadly disclosed over 100,000
documents, and that any errors within their privilege log may be remedied by additional
requests for review by Plaintiffs. (Doc. 397 at 6–8.)
Considering the parties’ written submissions, and in light of the parties’ agreement
on the appointment of a special master during oral arguments conducted on May 22, 2026,
1 Discovery matters in this action have been referred to this Court by the presiding
United States District Judge. (Doc. 125.)
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this Court holds as follows. First, although the Court does not find that Defendants’
privilege log is insufficient to the degree warranting broad waiver of their privilege
assertions, the Court finds that their privilege log’s error rate paired with the fact that, after
nine revisions in eight weeks, the issue remains unresolved, necessitates in camera review
to determine whether all of the documents in the log are privileged. Second, in balancing
the parties’ needs to expeditiously address discovery matters by the August 18, 2026,
deadline to complete fact discovery, (doc. 239 at 4), with the Court’s finite judicial
resources and inability to review potentially 48,666 documents by the discovery deadline,
the Court finds the appointment of a special master pursuant to Fed. R. Civ. P. 53 warranted
here.2
I. BACKGROUND.
This action, in which Plaintiffs aver that Defendants violated the Securities
Exchange Act of 1934, is based on an alleged “pumping” and “dumping” of stock by
Defendants. (Doc. 105 at 2–3.) Following the Presiding Judge’s December 16, 2024, order
granting Defendants’ Motion to Dismiss Plaintiffs’ Amended Complaint in part, (doc.
105), the parties have been engaged in a contentious discovery campaign. During this time,
this Court has chimed in on multiple disputes, including disputes on confidential witnesses
and their depositions (docs. 192, 394, 395, 432) hyperlinked attachments (docs. 196, 255),
search terms to be applied (doc. 298), and electronically stored information custodians
(doc. 212), to name a few.
Now, before the Court is a discovery dispute regarding Defendants April 9, 2026,
privilege designations within their privilege log. (Doc. 363.) The privilege log
encompasses over 60,000 documents over nearly 2,000 pages of minute font. See generally
(doc. 366-7.) The log itself lumps together all withheld documents into nine broad
categories, ranging from only 251 documents in one category to 19,628 in another. (Id. at
2.) This is not Defendants’ first privilege log. In fact, Defendants have revised their
privilege log nine times since they disclosed their initial version on February 13, 2026.
2 This second matter is one that the parties agreed upon during oral arguments.
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(Doc. 363 at 6, 9.) A number of the revisions were prompted by Plaintiffs upon finding
potential errors within Defendants’ privilege log. (Doc. 440 at 7.) This included an instance
where Defendants, at Plaintiffs’ request, reviewed 211 documents that they labeled
privileged, only to find that none of the 211 were actually privileged. (Id.)
Because of the allegations of error in Defendants privilege log that this matter has
come before the Court.
II. LEGAL STANDARDS.
“The attorney-client privilege is the oldest of the privileges for confidential
communications known to the common law.” Upjohn Co. v. United States, 449 U.S. 383,
389 (1981). “The attorney-client privilege protects confidential disclosures made by a
client to an attorney in order to obtain legal advice, as well as an attorney’s advice in
response to such disclosures.” United States v. Chen, 99 F.3d 1495, 1501 (9th Cir. 1996)
(cleaned up). The privilege’s “purpose is to encourage full and frank communication
between attorneys and their clients and thereby promote broader public interests in the
observance of law and administration of justice.” Upjohn, 449 U.S. at 389. In other words,
“[c]lients must be able to consult their lawyers candidly, and the lawyers in turn must be
able to provide candid legal advice.” United States v. Christensen, 828 F.3d 763, 802 (9th
Cir. 2016). “A communication from the attorney to the client that does not contain legal
advice may be protected if it ‘directly or indirectly reveals communications of a
confidential nature by the client to the attorney.” Id. (quoting In re Fischel, 557 F.2d 209,
212 (9th Cir. 1977)) (cleaned up).
Under federal law, the attorney-client privilege has eight essential elements:
(1) Where legal advice of any kind is sought (2) from a professional legal
adviser in his capacity as such, (3) the communications relating to that
purpose, (4) made in confidence (5) by the client, (6) are at his instance
permanently protected (7) from disclosure by himself or by the legal adviser,
(8) unless the protection be waived.
Fischel, 557 F.2d at 211.
“The party asserting the attorney-client privilege has the burden of proving that the
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privilege applies to a given set of documents or communications.” In re Grand Jury
Investigation, 974 F.2d 1068, 1070 (9th Cir. 1992). Additionally, the party asserting the
attorney-client privilege “must provide sufficient information to enable other parties to
evaluate the applicability of the claimed privilege or protection.” Burlington N. & Santa
Fe Ry. v. United States Dist. Court, 408 F.3d 1142, 1148 (9th Cir. 2005) (citation omitted)
(cleaned up).
“The claim of privilege must be made and sustained on a question-by-question or
document-by-document basis; a blanket claim of privilege is unacceptable.” Christensen,
828 F. 3d at 802 (citation omitted). Regarding assertions of privilege in a privilege log, the
“objecting party must produce a privilege log that ‘expressly makes the claim’ and
‘describes the nature of the documents’ being withheld with enough information to ‘enable
other parties to assess the claim.’” Scanlon v. Curtis Int’l, Ltd., No. 1:19-cv-00937-, 2020
U.S. Dist. LEXIS 235758, at *24 (E.D. Cal. Dec. 15, 2020) (quoting Fed. R. Civ. P.
26(b)(5)(A)) (cleaned up).
In short, “[t]he scope of the privilege should be strictly confined within the
narrowest possible limits.” Id. (citation omitted).
III. DISCUSSION.
Plaintiffs ask the Court for two potential remedies for the alleged flaws in
Defendants’ privilege log. First, they ask that the Court waive Defendants’ privilege over
all documents listed as privileged in Defendants’ privilege log and order their disclosure.
(Doc. 363 at 18–20.) Alternatively, Plaintiffs request either the Court or a special master
review 48,666 of the documents withheld in camera to determine if they are being
improperly withheld. (Id. at 20–22.)
Regarding Plaintiffs’ first request, the Court does not find that this situation warrants
such an extreme remedy. Based upon a “holistic reasonable analysis”3 of the situation, the
3 In Burlington, the Ninth Circuit Court of Appeals noted that the a court should
consider the following factors in determining whether waiver of the attorney-client
privilege in a case like this is warranted:
the degree to which the objection or assertion of privilege enables the litigant
seeking discovery and the court to evaluate whether each of the withheld
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Court neither finds that Defendants’ privilege log is wholly devoid of detail on Defendants’
assertions of privilege nor that the alleged defects in Defendants privilege log warrants the
disclosure of nearly 50,000 documents. Finally, the Court does not find that the flaws in
Defendants’ privilege log were intended to “nedless[ly] waste [the parties’] time” nor were
a “tactical manipulation of the rules and the discovery process[.]” Burlington, 408 F.3d at
1149. Given this, the Court shall not order a sweeping waiver of Defendants’ privilege
assertions over 48,666 documents.
As for the request for in camera review, the Court agrees that such process is
warranted. “To empower the district court to review the disputed materials in camera, the
party opposing the privilege need only show a factual basis sufficient to support a
reasonable, good faith belief that in camera inspection may reveal evidence that
information in the materials is not privileged.” In re Grand Jury Investigation, 974 F.2d at
1075. “If the party makes such a showing, the decision whether to conduct the review rests
within the discretion of the district court.” Id. Circumstances to consider when deciding
whether to engage in in camera review include, “among other things, the volume of
materials the district court has been asked to review [and] the relative importance to the
case of the alleged privileged information[.]” United States v. Zolin, 491 U.S. 554, 572
(1989).
Plaintiffs have met their burden here. Based upon the high error rate found in prior
reviews of Defendants’ privilege log, paired with the fact that Defendants have already
revised the log nine times, is a sufficient factual basis “to support a reasonable, good faith
belief that in camera inspection may reveal evidence that information in the materials is
documents is privileged (where providing particulars typically contained in
a privilege log is presumptively sufficient and boilerplate objections are
presumptively insufficient); the timeliness of the objection and
accompanying information about the withheld documents (where service
within 30 days, as a default guideline, is sufficient); the magnitude of the
document production; and other particular circumstances of the litigation that
make responding to discovery unusually easy (such as, here, the fact that
many of the same documents were the subject of discovery in an earlier
action) or unusually hard.
Burlington, 408 F.3d at 1149.
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not privileged.” See In re Grand Jury Investigation, 974 F.2d at 1075. Upon reviewing the
Zolin considerations, the Court finds that the volume does not prohibit in camera review—
especially if Plaintiffs select certain, high emphasis, documents to review first—and that
the documents in question may be highly relevant and valuable to Plaintiffs’ claims and
Defendants’ defense. Hence, the Court shall order Plaintiff’s are entitled to in camera
review of the 48,666 documents Plaintiffs have identified in Defendants’ privilege log.
While the Court shall order in camera review of these documents, due to finite
judicial resources, the Court would be unable to address all 48,666 documents before the
close of discovery in this action. The volume of work on other matters in this case, along
with the Court’s substantial docket, prevents this Court from reviewing this volume of
documents. Given this, the appointment of a special master pursuant to Fed. R. Civ. P. 53
is warranted here. See Fed. R. Civ. P. 53(a)(1)(C) (“[A] court may appoint a master . . . to:
address pretrial and posttrial matters that cannot be effectively and timely addressed by an
available district judge or magistrate judge of the district.”). Because Plaintiffs are the
moving party here, they shall bear the cost of the special master. But Plaintiffs are entitled
to request the special master review fewer than 48,666 documents at Plaintiff’s discretion
to reduce the cost.
The parties shall meet and confer by May 28, 2026, at 5:00pm, to attempt to
mutually agree to appoint an individual as a special master. If the parties cannot reach an
agreement, on or before June 1, 2026, they shall provide notice to the Court. In that notice,
they shall provide the names of two individuals each that the Court may choose from.
During the parties’ meet and confer, they shall discuss the timeframe for special master
review.
Accordingly,
IT IS ORDERED that Plaintiffs’ Motion to Compel Production of Documents
Withheld as Privileged for In Camera Review and to Appoint Special Master (doc. 363) is
GRANTED IN PART as to Plaintiffs’ request for in camera review by a special master
of the 48,666 documents referenced in Plaintiff’s Motion.
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IT IS FURTHER ORDERED that Plaintiffs, as the moving party, shall bear the
costs of the special master. Plaintiffs are entitled to reduce the number of documents to be
reviewed.
IT IS FURTHER ORDERED that the parties shall meet and confer by MAY 28,
2026, at 5:00pm, to attempt to mutually agree upon an individual to appoint as special
master. If the parties agree upon an individual to appoint as special master, they must notify
the Court by JUNE 1, 2026. The parties shall submit a proposed order that (1) certifies
that that the special master does “not have a relationship to the parties, attorneys, action, or
court that would require disqualification of a judge under 28 U.S.C. § 455,” Fed. R. Civ.
P. 53(a)(2); (2) outlines an appropriate timeline for special master review; and (3) provides
for a three-day objection period for Defendant’s to object to any disclosure by the special
master, with any objection to be filed ex parte with this Court for in camera review.
IT IS FURTHER ORDERED that, if the parties cannot mutually agree upon an
individual to appoint as a special master, they shall provide, at most, two individuals each
for a total of four potential special masters on or before JUNE 1, 2026, at 5:00pm. The
parties shall each provide a brief statement of the background of their candidates and a
statement of the basis for any objection to the opponent’s candidates. The brief statement
in opposition must be four pages in length or less and may include a discussion of the cost
of any specific special master.
Dated this 22nd day of May, 2026.
Honorable John Z. Boyle
United States Magistrate Judge
Case 2:22-cv-02126-MTL Document 467 Filed 05/22/26 Page 7 of 7