“Case No.:4:20-CV-02254-YGR: TENTATIVE ORDER GRANTING MOTION FOR SANCTIONS FOR PLAINTIFFS’ COUNSEL’S VIOLATION OF THE PROTECTIVE ORDER” —

• “Defendants move for sanctions for plaintiffs’ counsel’s alleged violations of the parties’ stipulated protective order governing this case. The motion is based on certain document disclosures plaintiffs’ counsel made to Department of Labor(‘DOL’) personnel. Having carefully considered the papers submitted and the pleadings in this action, and for the reasons set forth below, the Court hereby TENTATIVELY GRANTS the motion and orders plaintiffs’ counsel to reimburse defendants in an amount of $50,000,as explained further below.”
• “According to plaintiffs, the DOL is currently investigating defendants in this action for the same business practices forming the basis of this suit. DOL personnel therefore reached out to plaintiffs’ counsel and ‘requested that Plaintiffs enter into a Common Interest Agreement (‘CIA’) with the DOL to facilitate the DOL’s pre-existing investigation.'”
• “Plaintiffs’ counsel states that the DOL intimated it was against department policy to sign protective orders in private cases ‘and that the DOL instead conducts information-sharing with counsel under its own confidentiality and common-interest framework.’ Ostensibly, the CIA was meant to offer similar protections to the protective order. Plaintiffs and the DOL officials entered into the proposed CIA…”
• “Plaintiffs’ counsel acknowledges that pursuant to the CIA, they transmitted information which was designated confidential or for Attorneys’ Eyes Only pursuant to the protective order. Indeed, counsel transmitted hundreds of documents to DOL officials between August 2022 and April 2023. Per defendants, the transmissions were only discovered by coincidence.”
• “On December 3, 2024, in connection with a separate matter, DOL sent the United Defendants a document marked ‘Confidential –Attorneys’ Eyes Only’ with a Bates stamp from this action. This did not make any sense, because Defendants had never sent that document to DOL, it had never been disclosed publicly, and Plaintiffs’ counsel had never notified Defendants of any third-party disclosure nor challenged that document’s confidentiality designation.”
• “After further investigation and back and forth with DOL, on December 4, 2024, DOL confirmed they received the document from Plaintiffs’ counsel in this action. Following this discovery, defendants sought a court order mandating that plaintiffs provide a log of all disclosures, which the Court granted. Following delivery of the log, defendants moved for sanctions.”
• “It is beyond dispute that plaintiffs’ counsel violated the protective order. (See Lavin Decl. ¶ 3 (‘I recognize that I made an error in judgment in this case, and I intend never to repeat it.’).)”
• “While the Court recognizes plaintiffs’ counsel’s apology and acknowledgement of the poor judgment, the concession does not firmly admit the gravity of the violation. Counsel states they were acting in good faith and their wrongdoing is characterized by mistaken but reasonable, albeit incorrect,assumptions. The Court disagrees.”
• Even if not willful or malicious, counsel’s assumptions were not reasonable,and the suggestion to the contrary undercuts counsel’s apology.”
• “Finally, the Court notes the parties’ disagreement about a prior case involving a motion for sanctions against the same plaintiffs’ firm, Arnall Golden Gregory LLP. In that case, a Special Master found the firm violated that case’s protective order when it allowed certain corporate executives of the plaintiff to review documents designated as ‘attorneys’ eyes only.”
• “Ultimately, the Court agrees with defendants that TML Recovery presents a troubling pattern in plaintiffs’ firm’s behavior. Despite the district court not adopting the sanctions recommendation, this Court would have expected attorneys from the firm to have learned the importance of adhering to protective orders and with a resolve to avoid any future breaches. The throughline from the Special Master’s findings to this case involves Arnall Golden Gregory’s willingness to treat the terms of protective orders to which they themselves have stipulated as optional, and assume the role of arbiter over whether or not competing concerns justify the sharing of information outside the bounds of those agreements. This they may not do.”
• “As such, the Court finds a knowing and intentional breach of the protective order in this case. An award of sanctions is appropriate to deter further violations in this, and other cases. As shown in another case, failure to assess a penalty did not have a deterrent effect.”

“US Lawyers Walk Fine Line On Privilege, Work Product in Mexico” —

• “For multinational companies, the confidentiality of legal communications is a critical concern, especially when operations span jurisdictions with vastly different approaches to attorney-client privilege and the protection of legal work product.While the principle is foundational in the US, its application and enforcement is murky in Latin America, exposing companies to significant legal and practical risks during cross-border investigations.”
• “Attorney-client privilege and work product are cornerstones of the legal profession in the US, but their strength depends on where you are and who is providing the legal advice. For multinationals, understanding these differences—and planning accordingly—is essential to safeguarding sensitive communications and managing legal risk in cross-border investigations.”
• “In the US, attorney-client privilege protects confidential communications between clients and lawyers for the purpose of seeking or providing legal advice. The privilege belongs to the client, and only the client can waive it.”
• “In contrast, many Latin American countries have less robust and inconsistently enforced privilege protections. Although laws in places such as Mexico, Peru, and Chile require lawyers to keep client information confidential , privilege is often treated as a lawyer’s duty, not a client’s right. This distinction can have major consequences, especially when authorities or courts decide whether to safeguard the privilege and work product during investigations.”
• “The US concept of work product privilege is weak or largely absent in Latin America. In Mexico, for example, there is no direct equivalent, so materials prepared in anticipation of litigation—such as investigation notes, legal analyses, or strategy documents—may not be protected from disclosure if seized or requested in legal proceedings.”
• “Suppose a US-based multinational company operates in Mexico, where certain cartels are designated as terrorist organizations under US law, making any assistance to them strictly prohibited. In Mexico, however, it is said that cartels are deeply embedded in legitimate businesses, such as logistics providers.”
• “Imagine a multinational unknowingly using a cartel-controlled logistics company. Acting on cartel intelligence, Mexican authorities launch a sweeping investigation, raiding both companies and seizing records, computers, and communications between the multinational’s Mexican executives and in-house lawyers.”
• “This highlights a critical gap: In the US, such communications and work product would likely be protected, unless the crime-fraud exception applied. In Mexico, and much of Latin America, the situation is far less certain.”
• “The disparity in privilege protections across jurisdictions creates several risks for multinational companies:”
  • “Loss of Privilege: If authorities in countries with weaker privilege protections review privileged communications or work product, the company may lose the ability to assert privilege over those materials in subsequent proceedings.”
  • “Regulatory Exposure: Seized materials may be shared with US authorities, potentially triggering further investigations or prosecutions.”
  • “Reputational Damage: Public disclosure of internal legal communications can harm a company’s reputation and erode trust with stakeholders.”
  • “Internal Tensions: In-house lawyers in countries with weaker privilege protections may be caught between their duty to protect client confidences and their obligations under local law, which may require them to report suspicious activities.”
• “Multinational companies must adapt legal risk management to each jurisdiction, as relying on US-style protections abroad can be costly. While Mexico’s Article 77 Bis improves protection for external counsel in antitrust matters, significant gaps remain for in-house counsel and the law’s limited scope. The lack of a work product doctrine further heightens risk in Latin America.”

“ASIC Finds Many Auditors Failing To Demonstrate Compliance With Auditor Independence Obligations” —

• “Multiple auditors from audit firms of all sizes were unable to effectively demonstrate compliance with independence and conflict of interest obligations, a new ASIC [Australian Securities and Investments Commission] review has revealed.”
• “The findings, outlined in Report 817 Building trust: Auditor compliance with independence and conflict of interest obligations (REP 817), follow ASIC action against several auditors and audit firm identified as in likely breach of their obligations through this review.”
• “ASIC Commissioner Kate O’Rourke said that the audit sector directly contributes to the quality and integrity of financial reporting by companies and that it needs to observe independence requirements.”
• “‘Auditor independence underpins stakeholder trust and confidence in the audit process and the reliability of the financial information being audited. Unfortunately, our review found that many auditors failed to meet the basic independence requirements, and others failed to identify and critically evaluate potential threats to their independence.”
• “‘It is not enough for auditors to adopt a tick-a-box approach to complying with these important obligations. They must think more critically about whether they are independent and be alive to even the perception that their independence is compromised,’ said Ms O’Rourke.”
• “ASIC’s review found a disappointing number of likely breaches of prescriptive independence requirements. Fifteen auditors were found to be in likely breach of rotation requirements, relationship prohibitions or providing a prohibited non-audit service.”
• “Nine auditors failed to demonstrate how they complied with mandatory rotation requirements that prevent auditors from auditing a listed client for more than five consecutive years.”
• “Five auditors appeared to hold prohibited relationships with clients, including one auditor who was also an officeholder of their client.”
• “None of the 15 auditors flagged by ASIC as having breached their obligations had proactively reported the potential breaches to ASIC, despite receiving a reminder from ASIC in October last year.”
• “‘The failure of these auditors to report breaches to ASIC, including of the longstanding prescriptive independence obligations, is concerning,’ said Ms O’Rourke.”
• “As a result of this review, ASIC accepted the cancellation of a company auditor’s registration for independence failures, issued a $78,250 infringement notice to Nexia Perth over prohibited services, and entered into three court enforceable undertakings with auditors associated with Hall Chadwick (NSW)and the firm over audit rotation failures.”
• “ASIC is conducting additional inquiries into potential breaches identified during this review.”
• “‘Auditor independence is fundamental to audit quality and integrity. A strong focus on independence not only builds trust, it also fosters more rigorous challenge in the audit process thereby enhancing the preparation of high-quality financial information.”
• “‘We expect auditors to carefully consider this report and use its findings to address gaps in their compliance,’ Ms O’Rourke said.”
  “The final review cohort of 48 auditors included individual auditors as well as auditors from the following firms:
  • BDO Audit Pty Ltd
  • BDO Audit (WA) Pty Ltd
  • Connect National Audit Pty Ltd
  • Deloitte Touche Tohmatsu
  • Ernst & Young
  • Grant Thornton Audit Pty Ltd
  • Hall Chadwick (NSW)
  • Hall Chadwick WA Audit Pty Ltd
  • Kelly Partners (Sydney) Audit Partnership
  • KPMG Australia
  • Pitcher Partners
  • Nexia Perth Audit Services Pty Ltd
  • PKF Melbourne Audit & Assurance Pty Ltd
  • PricewaterhouseCoopers
  • RSM Australia Partners
  • Stantons International Audit and Consulting Pty Ltd
  • Trood Pratt Audit & Assurance Services Pty Ltd
  • William Buck (QLD) Pty Ltd
  • William Buck Audit (WA) Pty Ltd”