PHOENIX (LN) — Plaintiffs in a securities-fraud class action against Carvana Co. waived work-product protection over all investigator memoranda tied to a single confidential witness's title-and-registration statements, a federal magistrate judge ruled Friday, rejecting Carvana's bid to sweep in every confidential-witness file the plaintiffs' investigators ever produced.
The case centers on plaintiffs' allegations that Carvana violated the Securities Exchange Act of 1934 through a scheme of pumping and dumping its stock, with part of the alleged misconduct involving the sale of vehicles before Carvana possessed the titles to those cars. The presiding district judge previously held that the confidential witnesses' accounts were probative of defendants' scienter, and the title-and-registration allegations survived a partial dismissal of the amended complaint.
The waiver dispute crystallized at the April 11 deposition of Confidential Witness No. 4, who repeatedly said the witness did not remember, and was not personally involved with, the alleged pre-title vehicle sales. Plaintiffs' counsel responded by handing CW-4 and defense counsel a February 10, 2023, investigator memorandum memorializing earlier statements CW-4 had made about those title-and-registration practices. That document also referenced an earlier December 13, 2022, investigator memo.
Carvana argued the disclosure triggered a wholesale waiver under Federal Rule of Evidence 502(a), citing In re Symbol Technologies — a 2017 Eastern District of New York decision where plaintiffs had disclosed five of 14 confidential-witness interview memos, and the court, finding the situation unusual, ordered disclosure of the remaining nine. Plaintiffs countered that their waiver was narrowly confined to the 2023 memo alone.
U.S. Magistrate Judge John Z. Boyle declined both positions. The subject matter of the waiver, he wrote, is CW-4's statements and allegations regarding title-and-registration violations — nothing more, nothing less. Because the 2023 memo was disclosed specifically to refresh CW-4's memory on those title-and-registration assertions, and because the memo itself referenced earlier communications on the same topic, fairness required that the 2022 memo and any other investigator memoranda addressing CW-4's title-and-registration allegations follow it into disclosure.
The court's order cited Ninth Circuit precedent for the principle that a court must be careful to impose a waiver no broader than needed to ensure the fairness of the proceedings before it, and applied that ceiling to hold the line at CW-4's title-and-registration-related files. Investigator memoranda on the other confidential witnesses remain protected.
Boyle distinguished Symbol Technologies on its facts: that case involved plaintiffs who had disclosed more than a third of their confidential-witness interview memos, all of which bore directly on the amended complaint's allegations — an unusual situation the court found compelled full disclosure of the rest. Here, by contrast, plaintiffs made a single targeted disclosure for a specific deposition purpose, and the 2023 memo contained no information about other witnesses or other investigator files.
The court also rejected plaintiffs' argument that Carvana should have objected at the deposition to the use of the 2023 memo to refresh CW-4's recollection, calling that contention unavailing because defendants have no obligation under the Federal Rules of Evidence to object to a party's voluntary disclosure of its own work product.
Plaintiffs must submit all CW-4 investigator memoranda to the court for in camera review by May 15.