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           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT     United States Court of Appeals
                                                       Fifth Circuit

                                                                                   FILED
                                                                                 June 2, 2015
                                      No. 14-31068
                                                                                Lyle W. Cayce
                                                                                     Clerk
BCR SAFEGUARD HOLDING, L.L.C.; JAC SAFEGUARD HOLDING,
L.L.C.; SAFEGUARD DEVELOPMENT GROUP II, L.L.C.,

              Plaintiffs - Appellants

v.

MORGAN STANLEY REAL ESTATE ADVISOR, INCORPORATED; PPF
SAFEGUARD, L.L.C.; CERTAIN UNDERWRITERS AT LLOYD'S OF
LONDON; SCOTT ALLEN BROWN,

              Defendants - Appellees




                   Appeal from the United States District Court
                      for the Eastern District of Louisiana
                              USDC No. 2:13-CV-66


Before STEWART, Chief Judge, and KING and ELROD, Circuit Judges.
KING, Circuit Judge:*
       Appellants, various entities that previously owned a stake in a self-
storage company, Safeguard, LLC, brought this suit alleging RICO and related
state law claims against: Appellee PPF Safeguard, LLC, which currently
wholly owns Safeguard; Appellee Morgan Stanley Real Estate Advisor, Inc.,


       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                No. 14-31068
which owns and controls PPF; and Appellees certain underwriters at Lloyd’s
of London, which provided insurance coverage for Safeguard.
      After suffering millions of dollars in damages due to Hurricane Katrina,
Safeguard delegated to Morgan Stanley the role of negotiating insurance
claims against Safeguard’s insurers (including the Lloyd’s Appellees).
Appellants allege that Appellees conspired to delay the resolution of
Safeguard’s insurance claims and to minimize the ultimate settlement payout
to Safeguard. Appellants also allege that the Lloyd’s Appellees pressured
Morgan Stanley to take full control of Safeguard, which Morgan Stanley
ultimately accomplished when, in the midst of the insurance litigation, it
directed PPF to buy out Appellants’ interest in Safeguard via a buy/sell clause
in Safeguard’s LLC Agreement. Appellants contend that, as a result of these
actions, they were denied the proceeds they were due under the insurance
policies, as well as the ability to maintain an ownership stake in Safeguard.
The district court dismissed Appellants’ complaint, concluding under various
theories that Appellants lack standing. The district court also granted an
injunction barring the use and disclosure of various purportedly privileged
communications relating to the insurance litigation. For the following reasons,
we AFFIRM in part and REVERSE in part the judgment below.
               I.       Factual and Procedural Background
A.    Factual Background
      1.    The LLC Agreement
      In 1989, Bruce Roch, Jr., founded the predecessor to Safeguard, LLC, a
self-storage company headquartered in New Orleans.            Soon after the
company’s founding, Jack Chaney joined Roch and helped build the company.
Roch and Chaney formed and became members in various Delaware LLCs—
Plaintiffs-Appellants BCR Safeguard Holding, LLC (“BCR”), JAC Safeguard
Holding, LLC (“JAC”), and Safeguard Development Group II, LLC
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(“Mountainside”) (collectively, the “BCR Parties” or “Appellants”)—which
collectively owned Safeguard.
      In May 2005, Defendant-Appellee Morgan Stanley Real Estate Advisor,
Inc. (“Morgan Stanley”) entered into an agreement to invest in Safeguard
through a holding company, Defendant-Appellee PPF Safeguard, LLC (“PPF”)
(collectively, the “Morgan Stanley Appellees”). 1 Effective May 31, 2005, PPF
and the BCR Parties entered into the Amended and Restated Limited Liability
Company Agreement of Safeguard Storage Properties, LLC (the “LLC
Agreement”).         Pursuant to the LLC Agreement, PPF purchased an
approximately 94% interest in Safeguard, with the BCR Parties maintaining
an approximately 6% interest. Roch served as Safeguard’s CEO and Chaney
served as Safeguard’s COO until mid-2009. Safeguard also had a four-person
Management Committee, which under the LLC Agreement was required to
include two members designated by BCR (Roch and Chaney) and two members
designated by Morgan Stanley (John Kessler and Appellee Scott Brown). BCR
was designated the “Administrative Member” of Safeguard and was thus “in
charge of all day-to-day operations,” having “the sole and exclusive right,
power, authority and discretion to conduct the business and affairs of
[Safeguard] . . . and to do all things necessary to carry on the business of
[Safeguard].” However, “Major Decisions”—including the decision to bring suit
in matters in excess of $250,000—could only be made with unanimous approval
of the Management Committee.
      The LLC Agreement also contains a “waterfall” provision for the
distribution of Safeguard’s proceeds to its members. Under that provision, the
BCR Parties were entitled to receive proceeds disproportionately high in
relation to their equity interest in Safeguard. Appellants allege that the effect


      1   PPF is managed by Morgan Stanley, which is PPF’s sole advisor.
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of the provision is that 60% of the net proceeds from any distribution event (in
excess of certain priority loans made by PPF) would be distributable pro rata
to all Safeguard members, but 40% of such proceeds would be distributed solely
to the BCR Parties.
      2.    Hurricane Katrina and the Insurance Litigation
      Given PPF’s interest in Safeguard, Morgan Stanley agreed to obtain
insurance coverage for Safeguard under its property and business interruption
insurance program. Certain underwriters associated with Lloyd’s of London
(the “Lloyd’s Appellees”) were among over a dozen insurers that participated
in the program.      In August 2005, due to Hurricane Katrina, Safeguard’s
business headquarters suffered millions of dollars in real and personal
property damage. Appellants allege that this damage also caused business
interruption losses totaling in excess of $350 million, and that such losses were
covered under the excess insurance policies provided by the Lloyd’s Appellees.
Pursuant to a decision of the Management Committee, Safeguard delegated to
Morgan Stanley the role of negotiating the insurance claims with the insurers.
      In August 2007, as the deadline for filing Katrina-related Louisiana
insurance lawsuits approached, Appellants learned that Morgan Stanley had
made little to no progress in pursuing Safeguard’s claims. After a dispute
within the Management Committee—including the BCR Parties’ threat of a
lawsuit against the Morgan Stanley Appellees—the Committee unanimously
approved the filing of a lawsuit against the insurers (the “Insurance
Litigation”). Appellants allege, however, that Morgan Stanley “did not want
to pursue Safeguard’s insurance claim, either through settlement or litigation,
in any meaningful way,” given that (1) Morgan Stanley had no equity interest
in Safeguard and would gain no direct proceeds from any insurance recovery;
and (2) a large recovery could “jeopardize Morgan Stanley’s ability to renew
participation in the insurance program” by its insurers “or, at a minimum,
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greatly increase the future cost of Morgan Stanley’s coverage.” Appellants also
allege that Brown “disregarded any conflicts of interest between Safeguard,
PPF, and Morgan Stanley” and “always acted to protect Morgan Stanley’s
interests, in violation of the duties he owed to all of the members of Safeguard.”
      Appellants further allege that the Lloyd’s Appellees took advantage of
this conflict of interest by pressuring Morgan Stanley to pursue the Insurance
Litigation less aggressively. Appellants support this allegation by referencing
various communications between AON (Morgan Stanley’s insurance broker),
Lloyd’s, and Morgan Stanley.          Appellants allege that, through these
communications, Morgan Stanley “comfort[ed] the Insurers that they did not
need to engage in serious consideration of settlement of Safeguard’s claims at
amounts that reflected the value of Safeguard’s business interruption[] claims”
and assured the insurers that “they could count on the litigation being
protracted and delayed through Morgan Stanley’s machinations until it could
gain full control of Safeguard.”
      Appellants were particularly concerned that Morgan Stanley was not
aggressively pursuing an approximately $350 million business interruption
claim for lost revenues. On December 23, 2009, the trial court in the Insurance
Litigation granted the insurers’ motion for partial summary judgment,
dismissing the lost business opportunity claim as too speculative as a matter
of law. The trial court also determined that Safeguard could only recover for
damages incurred during a limited recovery period provided for in the
insurance policy. On appeal, the Louisiana Fourth Circuit Court of Appeal (the
“Louisiana Court of Appeal”) reinstated the lost business opportunity claim,
determining that “genuine issues of material fact exist as to whether
Safeguard incurred a loss of business opportunities.”         Safeguard Storage
Props., L.L.C. v. Donahue Favret Contractors, Inc., 60 So. 3d 110, 121 (La. Ct.


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App. 2011). The court affirmed, however, the trial court’s ruling limiting the
coverage period. Id. at 123.
      In October 2012, the parties settled the Insurance Litigation. Under the
Settlement and Release Agreement (“Settlement Agreement”), Safeguard
released the insurers from “all past, present or future claims alleged or that
could have been alleged or claimed in the [Insurance Litigation].”
      3.    The Sale of Appellants’ Interest in Safeguard
      The LLC Agreement contains a Buy/Sell provision under which “either
PPF or the BCR parties . . . had the right to issue a Buy/Sell ‘Offer Notice’
declaring the intention to either purchase or sell their interest in Safeguard
from or to the other for . . . the cumulative, aggregate amount that the Notified
Party or the Notifying Party, as applicable, would be entitled to receive if the
Company were sold for an all-cash price.” During a 70-day “Election Period,”
the party receiving the “Offer Notice” may choose to either become the
“Purchasing Member” or the “Non-Purchasing Member.” In other words, the
party receiving the notice may choose to either sell its interest in Safeguard or
purchase the portion of Safeguard which it did not already own. A failure to
make an election “is deemed an election to be the Non-Purchasing Member.”
      PPF issued a Buy/Sell Offer Notice to Appellants on May 14, 2009—after
the initiation, but before the settlement, of the Insurance Litigation.
Appellants allege that Morgan Stanley, through PPF, sought to purchase
Appellants’ interest in Safeguard in order to: (1) control the Insurance
Litigation and reduce the insurers’ liability, thus protecting Morgan Stanley’s
business relationships with the insurers; and (2) allow Morgan Stanley to
refinance its line of credit. Appellants had until July 24, 2009 to elect whether
to become a Non-Purchasing Member or a Purchasing Member. According to
Appellants, Morgan Stanley knew Appellants would be practically impeded
from becoming Purchasing Members:
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             Morgan Stanley knew that, in order to buy out PPF’s almost
       95% share of Safeguard, the BCR parties would have to raise
       almost 19 times the amount that PPF would have to pay to buy out
       the BCR parties. On top of that, under the terms of the LLC
       Agreement, the BCR parties would have to find a lender to assume
       the approximately $290 million of Safeguard debt held by Prime
       [(PPF’s sole member)], something that PPF would not have to do if
       it bought the BCR parties’ interests.
              Doing either of those things was made even more difficult
       because Morgan Stanley had delayed and impeded Safeguard’s
       effective prosecution of the Insurance Litigation. Had Morgan
       Stanley not taken bad faith actions to undermine Safeguard’s
       aggressive pursuit of the Insurance Litigation, the proceeds from
       timely settlement or resolution of the Insurance Litigation would
       have been available through waterfall distribution to the BCR
       parties to use as funds to respond to the buy/sell [notice] as a
       “Purchasing Member.”        Instead, Morgan Stanley’s actions
       undermined and weakened Safeguard’s claims and therefore the
       BCR parties’ financial position.
       Appellants also allege that the Morgan Stanley Appellees hindered their
ability to raise sufficient capital to become Purchasing Members by, inter alia,
initiating the Delaware litigation discussed below. 2 Appellants failed to make
an election by July 24, 2009, and were thus deemed Non-Purchasing
Members. 3
       4.     The Louisiana & Delaware Actions
       On May 7, 2009, Appellants brought an action in the Civil District Court
for the Parish of Orleans against PPF and Morgan Stanley (the “Louisiana
Action”), in anticipation of PPF’s invocation of the Buy/Sell provision. In that


       2 Appellants further allege that, during the Election Period, Morgan Stanley (through
PPF and Brown) “issued capital calls beyond the scope of those allowed by the Safeguard LLC
Agreement, issued information and data requests to BCR of a burdensome nature and also
beyond the scope of those provided for in the LLC Agreement, and dramatically increased the
frequency of called Management Committee meetings.”
       3 The total purchase price is not alleged in the Amended Complaint. However, the

record indicates that the BCR Parties accepted at least $10 million in exchange for their
interest in Safeguard.
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case, Appellants alleged, inter alia, that Morgan Stanley and PPF had taken
action “to undermine Safeguard’s position in the Insurance Litigation and
destroy the value of that litigation.” On July 29, 2010, the court dismissed
Appellants’ claims without prejudice on the basis that those claims were
premature.       The Louisiana Court of Appeal affirmed the dismissal,
determining that the BCR Parties’ claims—which were premised on a
diminution of Safeguard’s insurance recovery—would not accrue until the
resolution of the Insurance Litigation.
      On May 14, 2010, PPF filed a lawsuit against the BCR Parties in the
Delaware Chancery Court (the “Delaware I Action”), seeking “a determination
that PPF had the right and ability to exercise the Buy/Sell provision . . . and,
further, that the Total Purchase Price established in the Offer Notice was
proper under the LLC Agreement.” 4             PPF alleged that the BCR Parties
“embarked on a course of conduct designed to frustrate” PPF’s right to invoke
the provision, including “their conduct and their claim for damages in the
tactically-filed Louisiana Action.” On March 14, 2011, by agreement of the
parties, the Delaware Chancery Court entered a Stipulated Judgment that
“[PPF’s] invocation of the Buy/Sell provision of the LLC Agreement on May 14,
2009 was proper” and “[PPF] acted appropriately in setting the Total Purchase
Price in the Buy/Sell transaction.” 5
B.    Procedural Background
      On January 11, 2013, Appellants filed the present suit in the United
States District Court for the Eastern District of Louisiana. In their Amended



      4  The district court took judicial notice of the filings in the Delaware I Action.
      5  PPF filed a second lawsuit in Delaware Chancery Court on July 6, 2009, against
BCR and Roch (the “Delaware II Action”), alleging mismanagement and self-dealing by Roch.
That action was ultimately dismissed due to PPF’s failure to comply with venue and
arbitration provisions contained in the LLC Agreement and in relevant employment
agreements.
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Complaint, filed on December 23, 2013, Appellants allege eleven causes of
action against Appellees: (1) violations of the Racketeer Influenced and
Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(b)-(c); (2) violations of
RICO, 18 U.S.C. § 1962(d); (3) violations of the Louisiana Racketeering Act,
La. Rev. Stat. § 15:1351; (4) breach of the implied covenant of good faith and
fair dealing; (5) tortious interference with contract; (6) breach of fiduciary duty;
(7) aiding and abetting breach of fiduciary duty; (8) civil conspiracy; (9)
detrimental reliance; (10) unjust enrichment; and (11) violations of the
Louisiana Unfair Trade Practices and Consumer Protection Law (“LUTPA”),
La. Rev. Stat. § 51:1401.
      1.    Injunction Regarding Challenged Communications
      In their original complaint, Appellants referenced ten communications
that the Morgan Stanley Appellees contended were privileged. Accordingly,
the Morgan Stanley Appellees moved for the complaint to be sealed and for an
injunction preventing Appellants’ use of those communications. On August 15,
2013, the district court granted the Morgan Stanley Appellees’ motion,
preliminarily and permanently enjoining Appellants from making any use of
the ten communications. Relevant to its analysis were two protective orders
to which the parties stipulated in the Louisiana Action—one in September
2009, and one in February 2010 (collectively, the “Protective Orders”). The
court concluded that “the Protective Orders clearly restrict the use of the
objected to material that was disclosed within the [Louisiana] Litigation to
that action . . . and cannot be used here.” The court therefore held that, absent
approval from the judge in the Louisiana Action, use of communications
produced in that litigation would violate the Protective Orders. The district
court also concluded that certain information not disclosed in the Louisiana
Litigation (and thus not subject to the Protective Orders) was nonetheless
privileged, based upon its review of the Morgan Stanley Appellees’ descriptions
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of the purportedly privileged material. The district court denied Appellants’
subsequent motion for reconsideration, noting that a “supplemental review
confirm[ed] the Court’s initial assessment that these documents” were
privileged.
      Appellants moved to amend the Protective Orders in the Louisiana
Action on January 14, 2014. The Louisiana court granted the motion in part,
amending the February 2010 Protective Order “to include a narrow exception
declaring that communications involving Safeguard, PPF, and Morgan Stanley
that may demonstrate a direct conflict of interest among the parties are not
subject to their shared common legal interest privilege.”       The court also
determined that all ten challenged communications fell within the exception,
and thus were not privileged.     On appeal, the Louisiana Court of Appeal
reversed in part, concluding that eight of the ten communications were
privileged.
      Appellants moved to dissolve the district court’s injunction based on the
amendment to the Protective Orders. The court denied the motion, concluding
that the amendment did not affect the four documents not produced subject to
the Protective Orders, as the court had “independently concluded” that the
communications were privileged. The court also determined that the eight
communications the Louisiana Court of Appeal deemed privileged “no longer
fall within the narrow exception articulated in the [Louisiana Action]” and thus
“come within the ambit of the protective orders.” The court then addressed the
two communications no longer subject to the Protective Orders. With respect
to one of the communications, the court noted that it had “independently
determin[ed] that it was subject to attorney-client privilege.” With respect to
the second communication, the court permitted its use in the present litigation,
given that both the trial and appellate courts in the Louisiana Action had


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determined that the communication fell within the exception to the February
2010 Protective Order.
       2.     Motions to Dismiss
       On February 5, 2014, the Morgan Stanley Appellees and the Lloyd’s
Appellees filed motions to dismiss the Amended Complaint for lack of standing
under Rule 12(b)(1), lack of personal jurisdiction under Rule 12(b)(2), and
failure to state a claim on which relief can be granted under Rule 12(b)(6). 6
The court resolved both motions in its September 2, 2014 order.
       With respect to Appellants’ claims against the Morgan Stanley
Appellees, the district court first considered whether, under Delaware law,
Appellants’ claims were direct (i.e., they could be brought by Appellants
directly) or derivative (i.e., they could only be brought by or on behalf of
Safeguard). The court began its analysis by determining that Appellants
“allege only a few underlying harms” in the case:
       First, [Appellants] contend that they [were] harmed because the
       Morgan Stanley [Appellees] undermined Safeguard’s recovery in
       the Insurance Litigation; thus, [Appellants] never received the
       distributions from the Insurance Litigation to which they were
       entitled. Second, [Appellants] aver that they were harmed because
       the Morgan Stanley [Appellees] invoked the Buy/Sell provision in
       bad faith, prevented [Appellants] from becoming “Purchasing
       Members,” and seized control of Safeguard; thus, [Appellants]
       were deprived of their future profit interest in Safeguard.
       The court concluded that the first alleged harm—“essentially . . . a
diminution of value claim”—was derivative, rather than direct, and therefore
could not be recovered by Appellants. The court next concluded that although
Appellants likely stated direct claims with respect to the second alleged harm
relating to the invocation of the Buy/Sell provision, the Delaware I Stipulated



       6 The Lloyd’s Appellees also argued that the Amended Complaint’s allegations of fraud
fail to meet the heightened pleading standard under Rule 9(b).
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Judgment precludes those claims under the doctrine of collateral estoppel. The
court reasoned that “by the plain language of the Stipulated Judgment, the
Delaware I Litigation determined that the invocation of the Buy/Sell provision
was ‘proper’ and that PPF ‘acted appropriately in setting the Total Purchase
Price in the Buy/Sell transaction.’” Thus, the Stipulated Judgment precludes
Appellants from “now argu[ing] that the price failed to compensate them for
the value of their interest in Safeguard,” especially given that, in the Delaware
I Action, PPF alleged that the BCR Parties were attempting to frustrate PPF’s
right to purchase Safeguard for a fair and adequate price. The court therefore
concluded that because Appellants could not establish an injury with respect
to the two harms alleged against the Morgan Stanley Appellees, Appellants
lack standing.
      With respect to the Lloyd’s Appellees’ Motion to Dismiss, the court first
noted that Appellants’ claims against the Lloyd’s Appellees concern essentially
the same harms as with respect to the Morgan Stanley Appellees. As for
Appellants’ alleged entitlement to insurance proceeds, the court concluded that
Appellants lacked standing because they were neither named insureds,
additional insureds, nor intended third-party beneficiaries under the
insurance policies. The court also concluded that, for the reasons discussed
above, collateral estoppel bars Appellants from contending they were harmed
“by the Buy/Sell transaction or the price paid for their interests in Safeguard.”
Therefore, the district court determined that Appellants lack standing with
respect to their claims against the Lloyd’s Appellees.
                           II.   Standard of Review
      “A district court may determine its jurisdiction based on (1) the
complaint alone; (2) the complaint supplemented by undisputed facts
evidenced in the record; or (3) the complaint supplemented by undisputed facts
plus the court’s resolution of disputed facts.” Rodriguez v. Christus Spohn
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Health Sys. Corp., 628 F.3d 731, 734 (5th Cir. 2010) (internal quotation marks
omitted). Where the lower court’s decision rests on one of the first two bases,
“in which case the court need not decide among conflicting factual positions,”
the reviewing court applies a de novo standard of review.             Id. (internal
quotation marks omitted). However, “if the court has relied . . . on its own
determination of disputed factual issues, [this court] must then . . . accept the
district court’s findings unless they are clearly erroneous.”         Id. (internal
quotation marks omitted) (first alteration in original). Here, although the
district court took judicial notice of, and relied upon, certain public records
outside the complaint, it did not resolve any factual disputes. Accordingly, we
review the district court’s dismissal for lack of standing de novo, “accept[ing]
all factual allegations in the plaintiff’s complaint as true.” Den Norske Stats
Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001).
       This court reviews a district court’s grant of injunctive relief for abuse of
discretion. Bluefield Water Ass’n, v. City of Starkville, 577 F.3d 250, 253 (5th
Cir. 2009). Any factual determinations underlying the grant of injunctive relief
are reviewed for clear error, while conclusions of law are reviewed de novo. Id.
                                III.      Discussion
A.     Standing
       “Standing under Article III of the Constitution requires that an injury
be concrete, particularized, and actual or imminent; fairly traceable to the
challenged action; and redressable by a favorable ruling.” Monsanto Co. v.
Geertson Seed Farms, 561 U.S. 139, 149 (2010). “An injury sufficient to satisfy
Article III must be concrete and particularized and actual or imminent, not
conjectural or hypothetical.” Susan B. Anthony List v. Driehaus, --- U.S. ---,
134 S. Ct. 2334, 2341 (2014) (internal quotation marks omitted). Here, the
parties dispute whether Appellants have alleged any injury, arguing that the
harms Appellants allege are: (1) precluded under collateral estoppel based on
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                                       No. 14-31068
the Delaware I Stipulated Judgment; (2) derivative, and thus are harms for
which only Safeguard can recover; and/or (3) barred because Appellants have
no standing to sue under the insurance policies. 7
       In order to evaluate whether Appellants have standing, we must first
ascertain the injuries alleged in the Amended Complaint. See Rohm & Hass
Tex., Inc. v. Ortiz Bros. Insulation, Inc., 32 F.3d 205, 209 (5th Cir. 1994) (“We
consider each alleged injury in turn to determine whether either is sufficient
to satisfy Article III standing.”). Appellants essentially allege two categories
of harm: (1) a “loss of the financial benefits that [Appellants] would have
received from a resolution of the Insurance Litigation but for the delay and
corruption of that litigation caused by Morgan Stanley’s misconduct” and other
costs relating to that delay; and (2) “the financial losses [Appellants] suffered
as a result of the bad faith actions taken by Morgan Stanley in connection with
the invocation of the Buy/Sell provision.” With respect to the first category,
Appellants seek “the value [they] would have received—either through a
Buy/Sell transaction or as quarterly distributions as a full or part member of
Safeguard—from the Insurance Litigation absent [Appellees]’ actions to
undermine the value of that litigation.” With respect to the second category,
Appellants seek “the value to [Appellants] of maintaining control of and
ownership interest[s] in Safeguard absent the bad faith actions of Morgan



       7 We need not decide whether Rule 12(b)(1)—as opposed to Rule 12(b)(6) or Rule 56—
is the appropriate procedural vehicle for raising this issue of collateral estoppel. The parties
have briefed collateral estoppel as an issue of standing, and the district court dismissed the
Amended Complaint on this basis. Because Appellants do not contest Appellees’ ability to
raise collateral estoppel under Rule 12(b)(1), we will analyze the issue under that standard.
See Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 570 n.2 (5th Cir. 2005) (“[The
plaintiff] did not challenge [the defendant]’s ability to argue res judicata in a motion to
dismiss rather than in their response or a motion for summary judgment. Therefore, we
review the district court’s dismissal of [plaintiff]’s claims under the 12(b)(6) standard.”
(internal citation omitted)). We note, however, that our collateral estoppel analysis would be
the same under either Rule 12(b)(6) or Rule 56.
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Stanley and Mr. Brown to cause the Buy/Sell to occur” and Appellants’ “loss of
the ability to be a ‘Purchasing Member’ of Safeguard and . . . entitle[ment] to
all future distributions from Safeguard.” In other words, Appellants seek to
recover: (1) the portion of the insurance proceeds to which they allege they are
entitled, and (2) harms related to their loss of an ownership interest in
Safeguard. We conclude that the Delaware I Stipulated Judgment bars both
categories of harm pursuant to the doctrine of collateral estoppel. Accordingly,
we need not reach Appellants’ various alternative arguments for affirming the
dismissal of the Amended Complaint.
       “In determining the preclusive effect of an earlier state court judgment,
federal courts apply the preclusion law of the state that rendered the
judgment.” Weaver v. Tex. Capital Bank N.A., 660 F.3d 900, 906 (5th Cir. 2011)
(per curiam). Under Delaware law, collateral estoppel applies if:
      (1) The issue previously decided is identical with the one presented
      in the action in question, (2) the prior action has been finally
      adjudicated on the merits, (3) the party against whom the doctrine
      is invoked was a party or in privity with a party to the prior
      adjudication, and (4) the party against whom the doctrine is raised
      had a full and fair opportunity to litigate the issue in the prior
      action.
Betts v. Townsends, Inc., 765 A.2d 531, 535 (Del. 2000) (internal quotation
marks omitted). Here, the parties dispute only the first prong—i.e., whether
the present suit requires relitigation of a question of fact essential to the
Delaware I Stipulated Judgment. 8 See Messick v. Star Enter., 655 A.2d 1209,
1211 (Del. 1995) (“Under the doctrine of collateral estoppel, if a court has
decided an issue of fact necessary to its judgment, that decision precludes




      8Before the district court, Appellants also argued that the fourth prong was not met,
but Appellants have abandoned that issue on appeal.
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relitigation of the issue in a suit on a different cause of action involving a party
to the first case.”).
       Our analysis begins and ends with the language of the Stipulated
Judgment, which states:
       [I]t is hereby stipulated and agreed by [PPF] and [the BCR
       Parties] . . . and ordered by the Court, as follows:
              1. [PPF]’s invocation of the Buy/Sell provision of the LLC
              Agreement on May 14, 2009 was proper.
              2. [PPF] acted appropriately in setting the Total Purchase
              Price in the Buy/Sell transaction.
              3. Once entered, this Order shall constitute a final,
              unappealable judgment in the above-captioned action, which
              shall be closed immediately thereafter. 9
By its plain terms, the Stipulated Judgment precludes the alleged harms for
which Appellants now seek to recover.
       A determination that the invocation of the Buy/Sell transaction was
“proper” and that the Total Purchase Price was “appropriately” set resolves
Appellants’ complaint regarding their loss of ownership interests in
Safeguard—the second alleged category of harm. By adjudicating that the
invocation of the Buy/Sell provision was “proper,” the Delaware I court
necessarily decided that Appellants were properly divested of any ownership
interests in Safeguard—the upshot of that provision’s invocation. Thus, any
harm relating to the loss of those ownership interests is precluded. Moreover,
Appellants seek to recover, inter alia, “all future distributions” to which they
would have been entitled absent the Buy/Sell transaction.                   However, as
Appellees argue, an “appropriately” set Total Purchase Price would necessarily


       9The Stipulated Judgment also contains various “whereas” clauses stating, inter alia,
that PPF sought “relief relating to its initiation and consummation of the Buy/Sell
transaction”—specifically, “a declaratory judgment that its invocation of the Buy/Sell
provision was proper and that the Total Purchase Price set in the Buy/Sell Notice was
appropriate.”
                                            16
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                                       No. 14-31068
take into account the present value of those future distributions. Appellants
respond that the issue “is not whether they received ‘fair compensation’ . . . in
the Buy/Sell transaction”; rather, they seek to recover “the value to the BCR
parties of maintaining control and ownership interest[s] in Safeguard.’” But
these are one and the same, as the purpose of the Buy/Sell transaction was to
fairly compensate Appellants for the “value” of such ownership interests.
Indeed, the fact that Appellants seek only damages, and not injunctive relief,
in their Amended Complaint makes clear that Appellants are seeking to
recover the monetary value of their interests in Safeguard—which the Total
Purchase Price represented. Appellants’ allegation that they are entitled to
future distributions, as well as any other ownership value in Safeguard, is
nothing more than a complaint that the Total Purchase Price did not
adequately compensate them for those interests—i.e., that the price was
inappropriately set—a proposition directly at odds with the Stipulated
Judgment.
       The first category of harm—the portion of the insurance proceeds to
which Appellants allege they are entitled—is also resolved by the Stipulated
Judgment. First, to the extent Appellants contend that the Morgan Stanley
Appellees improperly excluded, as a matter of accounting, Safeguard’s future
interest in the insurance proceeds in the valuation, the Stipulated Judgment
directly precludes this argument—as Appellants agreed that PPF “acted
appropriately” in setting the price. The Delaware court necessarily decided
that the Total Purchase Price adequately accounted for Safeguard’s value—
taking into account all appropriate assets. 10                 Indeed, in the amended



       10The LLC Agreement states that the Total Purchase Price shall be “equal to the
cumulative, aggregate amount that the Notified Party or the Notifying Party, as applicable,
would be entitled to receive if the Company were sold for an all-cash price, as specified in the
Offer Notice.”
                                              17
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                                      No. 14-31068
complaint in the Delaware I Litigation, PPF alleged that Roch was attempting
to “preemptively . . . price and control any Buy/Sell transaction by insisting
that any valuation of Safeguard’s assets be consistent with a valuation made
in the Katrina Coverage Litigation.” 11             Thus, it is clear that whether
Safeguard’s valuation properly incorporated the insurance proceeds as a
contingent asset was squarely at issue in the Delaware I Action. Appellants
cannot argue that the Total Purchase Price inadequately accounted for the
value of the insurance proceeds without arguing that the price was
inappropriately set. But even setting aside that issue, any claim for insurance
proceeds would also be precluded by the Stipulated Judgment’s determination
that the invocation of the Buy/Sell provision was “proper.” Appellants would
only have been entitled to those proceeds as owners of Safeguard and, as
discussed above, the Stipulated Judgment necessarily determined that
Appellants were properly divested of any ownership interests in Safeguard.
       Appellants argue that the Stipulated Judgment did not resolve the
claims here, as the Delaware I Action was limited to determining the parties’
rights under the LLC Agreement. But the judgment is not so limited; it broadly
states that the invocation of the Buy/Sell provision was “proper” and that PPF
“acted appropriately in setting the Total Purchase Price.” 12 In any event, even
if the Stipulated Judgment were limited to deciding rights under the LLC
Agreement, that judgment nonetheless resolved issues determinative of the
harms alleged here, as described above. That Appellants are now seeking
recovery on different (non-contractual) legal theories is inapposite, as



       11 PPF also quoted a letter in which Roch allegedly stated that “it is imperative that
the valuation include among Safeguard’s assets the Claims at a present value consistent with
the Expert Valuation.”
       12 Moreover, in the amended complaint in that action, PPF alleged that the suit was

prompted by the BCR Parties’ threat “that they deem [the] invocation [of the Buy/Sell
provision] . . . a contractual and fiduciary breach.” (emphasis added).
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                                      No. 14-31068
collateral estoppel “precludes relitigation of . . . issue[s] in a subsequent
suit . . . concerning a different claim or cause of action.” Betts, 765 A.2d at 534
(emphasis added).
       In asserting that the claims here are unrelated to those at issue in the
Delaware I Action, Appellants rely on statements contained in PPF’s
opposition to the BCR Parties’ motion to stay the Delaware I Action. 13 In that
brief, PPF argued that the Delaware Action should not be stayed due to the
pendency of the Louisiana Action (which the parties agree involved claims
similar to those raised in the present action). Appellants rely in particular on
PPF’s statement that “the Louisiana Action will require resolution of far more
complicated, yet unrelated, claims and issues that concern PPF and Morgan
Stanley’s conduct in obtaining insurance payment from Safeguard’s insurers.”
However, Appellants take this statement out of context. PPF’s main argument
in opposing a stay was not that the two actions were unrelated, but rather that
the Delaware I Action was first-filed. The above-quoted language was offered
to support PPF’s contention that the Delaware I Action could be resolved more
quickly than the Louisiana Action, as the Louisiana Action contained
additional “irrelevan[t] . . . insurance-related allegations.”               Nonetheless,
throughout its brief, PPF maintained that the central issues in both actions
were intertwined. 14 For example, PPF stated that the Louisiana Action was
“predicated on the allegedly ‘unfair price’ of the Buy/Sell transaction” and
“[w]hether PPF properly set the Total Purchase Price in the Offer Notice is




       13The Delaware I court never ruled on the motion to stay.
       14 Accordingly, Appellants’ contention (first made in their reply brief) that judicial
estoppel bars Appellees from contending that the two actions are related is inapplicable. See
Jethroe v. Omnova Solutions, Inc., 412 F.3d 598, 600 (5th Cir. 2005) (stating that judicial
estoppel applies where “the position of the party against which estoppel is sought is plainly
inconsistent with its prior legal position”).
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                                      No. 14-31068
precisely the determination PPF seeks in [the Delaware I] action.” 15 Indeed,
in support of their motion to stay, the BCR Parties asserted that the claims in
the two actions were “substantially identical” and that the Delaware I court
“could not grant the relief that PPF seeks in this action without holding that
the [BCR Parties] [are] not entitled to relief they expressly seek in the
Louisiana Action.” Accordingly, the briefing related to the motion to stay the
Delaware I Action does not alter our conclusion that collateral estoppel applies.
       Appellants also focus on the Louisiana courts’ dismissal of that action as
premature, given that the claims at issue there would not accrue until the
resolution of the Insurance Litigation. Appellants argue that because the
Insurance Litigation was not resolved (and thus Appellants had not yet
suffered harm) by the time of the Stipulated Judgment, the Stipulated
Judgment could not have resolved the claims in the present action. This
argument lacks merit. As discussed above, the alleged harm relating to the
insurance proceeds boils down to an allegation that PPF failed to incorporate
the present value of Safeguard’s future interest in those proceeds in setting the
Total Purchase Price. As with any contingent asset, the fact that the amount
of the proceeds was not precisely set at the time of Safeguard’s valuation would
not have prevented PPF from incorporating the present value of that asset into
the valuation.      Moreover, as we have stated, the Stipulated Judgment
precludes Appellants from asserting any claim of entitlement to the insurance
proceeds, as that judgment necessarily adjudicated that Appellants’ ownership
interests in Safeguard were properly divested.
       We do not venture to guess what prompted Appellants to enter into the
Delaware I Stipulated Judgment, although it is fair to assume that Appellants


       15PPF also contended that “the issue of whether the Total Purchase Price was
appropriately set by PPF is likely to take much longer to resolve in Louisiana than it is in
Delaware.”
                                            20
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                                   No. 14-31068
did not intend for that judgment to preclude all future claims against
Appellees. Even so, collateral estoppel is focused not on the parties’ subjective
intent, but on the objective question of whether the present claims require
litigation of issues essential to a prior judgment. See Betts, 765 A.2d at 535.
For the reasons discussed above, Appellants’ cannot recover for their alleged
harms without relitigating the propriety of the Buy/Sell transaction and the
Total Purchase Price—which the Delaware I Stipulated Judgment resolved.
Accordingly, because Appellants have failed to allege any injury that is not
barred by collateral estoppel, they do not have standing to bring this action.
B.     Privileged Communications
       Appellants also challenge the district court’s injunction barring the use
and disclosure in this action of nine communications among Morgan Stanley,
Safeguard, in-house counsel, and outside counsel. As an initial matter, the
Morgan Stanley Appellees correctly note that Appellants failed to address in
their opening brief the impact of the Louisiana Protective Orders on this issue.
Appellants focus only on the merits of whether the communications are
privileged as a matter of federal common law, ignoring the district court’s
decision to enjoin the use of eight communications deemed privileged by the
Louisiana Court of Appeal because they “come within the ambit of the
protective orders.” Accordingly, Appellants have waived any challenge to that
ruling—an independent basis for entering the injunction as to those eight
communications. See Tex. Democratic Party v. Benkiser, 459 F.3d 582, 594 (5th
Cir. 2006) (“We need not consider this argument because the [appellant]
effectively waived it by failing to raise it in its opening brief.”).
       This leaves for our review one remaining communication: the May 12,
2009, communication which the Louisiana Court of Appeal deemed not




                                         21
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                                        No. 14-31068
privileged, but which the district court deemed privileged. 16                             This
communication—which is not memorialized in any document, but which is
described by the parties in sealed filings submitted below—was made by
Safeguard’s corporate counsel to Morgan Stanley. Appellants argue that the
common legal interest privilege under the federal common law does not apply
to these communications, 17 as (1) the privilege only applies to defendants, and
(2) the privilege does not apply to communications evincing a conflict of interest
between the parties. 18 We must first address the Morgan Stanley Appellees’
contention that Appellants are judicially estopped from making these
arguments, as Appellants stipulated in the February 2010 Protective Order
that:
               Because [Morgan Stanley] is involved in the management of
        Safeguard, including with respect to Safeguard’s [Insurance]
        litigation, and because Safeguard’s insurance coverage is obtained
        through [Morgan Stanley], Safeguard and [Morgan Stanley] share
        a common legal interest in Safeguard’s insurance claims. As such,
        their communications with each other do not waive any privilege
        to which those communications would otherwise be entitled. La.
        Code of Evid. art. 506(B)(3).
However, judicial estoppel applies only where “the position of the party against
which estoppel is sought is plainly inconsistent with its prior legal position.”
Jethroe, 412 F.3d at 600.            Here, Appellants’ previous assertion that its
communications were privileged under Louisiana law is not plainly




        16The district court refused to enter an injunction with respect to the second
communication the Louisiana Court of Appeal deemed not privileged, and the Morgan
Stanley Appellees do not challenge that decision on appeal.
       17 The parties’ privilege arguments are premised exclusively on the federal common

law of privilege.
       18 Appellants also contend that the district court abused its discretion by failing to

engage in a communication-by-communication analysis in determining privilege. But this
assertion is belied by the district court’s orders, which make clear that the court “th[o]roughly
examined the communications” before making its privilege determinations.
                                              22
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                                    No. 14-31068
inconsistent with their current contention that the communications are not
protected under the federal common law. 19
      On the merits, whether the common legal interest privilege applies only
to co-defendants is a close question. This court has defined the privilege
narrowly, stating:
      According to our circuit precedents, the two types of
      communications protected under the [common legal interest]
      privilege are: (1) communications between co-defendants in actual
      litigation and their counsel; and (2) communications between
      potential co-defendants and their counsel. With respect to the
      latter category, the term “potential” has not been clearly defined.
      However, because the privilege is an obstacle to truthseeking, it
      must be construed narrowly to effectuate necessary consultation
      between legal advisers and clients.
In re Santa Fe Int’l Corp., 272 F.3d 705, 710 (5th Cir. 2001) (internal citations
and quotation marks omitted); see also United States v. Newell, 315 F.3d 510,
525 (5th Cir. 2002) (quoting same). However, this court has not expressly held
that the privilege is inapplicable to co-plaintiffs. See Stanley v. Trinchard, No.
CIV.A. 02-1235, 2005 WL 230938, at *1 (E.D. La. Jan. 27, 2005) (“[I]t is
questionable in the Fifth Circuit whether the common interest doctrine
extends to plaintiffs.”). Several courts—including lower courts in this circuit—
have held that the privilege extends to co-plaintiffs in litigation. See, e.g.,
United States v. Under Seal (In re Grand Jury Subpoenas, 89-3 & 89-4, John
Doe 89-129), 902 F.2d 244, 249 (4th Cir. 1990) (“[W]hether the jointly
interested persons are defendants or plaintiffs, . . . the rationale . . . remains
unchanged: persons who share a common interest in litigation should be able
to communicate with their respective attorneys and with each other to more




      19 The Morgan Stanley Appellees also assert that Appellants waived their argument
that the common legal interest privilege does not apply by failing to raise the argument
below. However, Appellants clearly raised the argument before the district court.
                                          23
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                                       No. 14-31068
effectively prosecute or defend their claims.”); In re Age Ref., Inc., 447 B.R. 786,
806 (Bankr. W.D. Tex. 2011) (“[C]ounsel for the Committee and counsel for the
Trustee seek to jointly pursue litigation on behalf of the estate to their joint
benefit.    The common interest doctrine would apply to protect privileged
information shared in the process of prosecuting estate claims.”).
       But we need not reach this issue. Even if we were to conclude that the
common legal interest privilege extends to some communications between
Morgan Stanley and Safeguard’s counsel, 20 the privilege does not apply to the
remaining communication at issue. Communications may be protected by the
common legal interest privilege only if those communications “‘further a joint
or common interest.’” In re Santa Fe Int’l Corp., 272 F.3d at 711–12 (quoting
Aiken v. Tex. Farm Bureau Mut. Ins. Co., 151 F.R.D. 621, 623 (E.D. Tex. 1993))
(emphasis added); see also Edward J. Imwinkelried, The New Wigmore:
Evidentiary Privileges § 6.8.1 (2d ed. 2014) (stating that, for the privilege to
apply, the communications must be “intended to further the parties’ common
interest”).    We have reviewed the parties’ summaries of the remaining
communication, 21 and we conclude that it was not made in furtherance of (but
rather is diametrically opposed to) the prosecution of the Insurance Litigation.




       20  Even if the common legal interest privilege extends to plaintiffs, we also question
whether the privilege could apply to any of the communications between Morgan Stanley and
Safeguard, which were not “co-plaintiffs” in the Insurance Litigation (Safeguard was the sole
plaintiff). Although Morgan Stanley had some interest in the litigation due to its interest in
Safeguard (via PPF), such an interest may be insufficient to give rise to the privilege. Cf.
Stanley 2005 WL 230938, at *1 (“Smith’s client, Burge, is not a co-plaintiff or potential co-
plaintiff with Stanley and Sheriff Strain. Smith and Burge have a financial interest in the
outcome of this litigation. This is an insufficient basis for finding a common legal
interest . . . .”). However, because we conclude that the communication at issue was not in
furtherance of any joint interest, we need not reach this issue.
        21 These summaries were filed under seal before the district court.

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                                      No. 14-31068
As such, the common legal interest privilege does not apply to this
communication. 22
       Accordingly, we reverse the district court’s grant of the injunction with
respect to this communication. We note, however, that this communication
has no bearing on the collateral estoppel issues discussed above, and thus does
not affect our conclusion that the Amended Complaint was properly dismissed.
                                   IV.        Conclusion
       For the foregoing reasons, the judgment of the district court is
AFFIRMED in part and REVERSED in part.                        Costs shall be borne by
Appellants.




       22The Morgan Stanley Appellees briefly argue that the communications are privileged
because Morgan Stanley was an agent of Safeguard’s counsel, relying on United States v.
Pipkins, 528 F.2d 559, 562 (5th Cir. 1976) (“[I]n appropriate circumstances the privilege may
bar disclosures made by a client to non-lawyers who . . . had been employed as agents of an
attorney.”). Although Safeguard delegated to Morgan Stanley “the role of negotiating the
insurance claims with the Insurers,” there is no evidence suggesting that Morgan Stanley
was an agent of Safeguard’s counsel for purposes of the Insurance Litigation.
                                             25
