Cranpark, Inc. v. Rogers Grp., Inc.
Cranpark, Inc. v. Rogers Grp., Inc.
2010 WL 11469139 (N.D. Ohio 2010)
February 2, 2010
Limbert, George J., United States Magistrate Judge
Summary
The court found that the allegedly missing ESI was not relevant to the issue of contract formation. Additionally, the court found that the re-transmittal of the ESI to a former employee constituted a waiver of the attorney-client privilege and ordered the production of the documents. The court also ordered the production of an email that was carbon-copied to Lauri Chaudoin, as the defendant had not established privilege.
Cranpark, Inc., Plaintiff,
v.
Rogers Group, Inc., Defendant
v.
Rogers Group, Inc., Defendant
CASE NO.: 4:04CV1817
United States District Court, N.D. Ohio, Eastern Division
Signed: February 02, 2010
Counsel
Michael B. Pasternak, Beachwood, OH, David Eduard Mills, Mills Law Office, Jonathon M. Yarger, Yarger Radel & Pentz, Cleveland, OH, for Plaintiff.Chad A. Readler, Jones Day, Columbus, OH, Lydia M. Floyd, David A. Kutik, Jones Day, Harry D. Cornett, Jr., Thomas W. Baker, Tucker Ellis, Cleveland, OH, for Defendant.
Limbert, George J., United States Magistrate Judge
ORDER [Re: ECF Dkt. #98]
*1 The above-captioned case is before the Court on Plaintiff Cranpark, Inc.'s (“Plaintiff”) Motion to Compel and for Sanctions. ECF Dkt. #98. For the following reasons the Court DENIES Plaintiff's motion:
I. Factual History and Procedural Background
The parties dispute much of the factual background in this case. The following factual synopsis is based upon the undisputed portions of the briefs on the instant motion. See ECF Dkt. #98 at 4–5; ECF Dkt. #109 at 3–6.
In late 1997 or early 1998, Rogers Group Inc. (“Defendant”) sales representative Tom Stump and a representative from Hardrives Paving and Construction, Inc. (“Hardrives”), Plaintiff's predecessor, discussed a business proposition. ECF Dkt. #98 at 4; ECF Dkt. #109 at 3. They discussed the potential of Hardrives installing a new asphalt plant in the Youngstown area and RGI supplying the necessary aggregate. Id.
Plaintiff contends that, over the following months, the parties worked out the details of a partnership and ultimately agreed to a location in downtown Youngstown, whereby Hardrives would install its new asphalt plant adjacent to Defendant's stone yard. ECF Dkt. #98 at 4. Plaintiff further contends that the parties attended numerous meetings, and made numerous joint presentations to both the City of Youngstown and Norfolk & Southern Railroad, the prospective rail carrier for the aggregate, and engaged in extensive research and analysis. Id. Plaintiff contends that in June, 1998, Defendant arranged for the parties to survey and inspect a number of potential Youngstown sites by helicopter. Plaintiff states that subsequent discussions between the parties revolved around, among other things, a mutually agreeable site, royalty amounts, price points for product, land costs, and anticipated rail improvement expenses. Id. at 5. Plaintiff contends that, ultimately, the Center Street site was agreed upon, and the parties' work culminated in a contractual agreement dated September 1, 1998. Id. The handwritten writing to which Plaintiff refers states as follows:
Tabular or Graphical Material not displayable at this time.
ECF Dkt. #98, Ex. 6. The writing has two signatures, purportedly of James Sabatine on behalf of Hardrives and Greg Gould, vice president of Defendant. ECF Dkt. #98 at 5; ECF Dkt. #109 at 4–5.
Plaintiff contends that it relied upon “the executed contract and reciprocal obligations therein” when it subsequently purchased an asphalt plant in December of 1998, entered into a license agreement with the City of Youngstown for the land, and revamped operations to accommodate the contract. ECF Dkt. #98 at 5. Plaintiff alleges that Defendant failed to perform its obligations under the contract and took the position that there was no contract. Id.
*2 On September 8, 2004, Plaintiff filed the instant suit as Hardrives' successor in interest. ECF Dkt. #1. The complaint alleges claims of breach of contract and promissory estoppel. Id.
On October 14, 2009, Plaintiff filed the instant motion contending that: (i) Defendant failed to produce certain documents during discovery and that those documents are now likely missing; and (ii) Defendant improperly asserted privilege relating to e-mail communications. ECF Dkt. #98. On October 26, 2009, Plaintiff filed a supplement to its motion. ECF Dkt. #102. On November 25, 2009, Defendant filed an opposition to Plaintiff's motion. ECF Dkt. #109. On December 7, 2009, Plaintiff filed a reply. ECF Dkt. #112.
II. LAW AND ANALYSIS
A. Spoliation
Federal Rule of Civil Procedure 26(b) sets forth the general scope of discovery, as follows:
Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense—including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).
Fed. R. Civ. P. 26(b)(1).
The case at bar involves claims under diversity jurisdiction. Therefore, the Court must consider whether state or federal law applies. The Sixth Circuit recently held that spoliation claims are governed by federal law, in contrast to its past persistent application of state law in the area. Adkins v. Wolever, 554 F.3d 650, 652 (6th Cir. 2009). However, Adkins was based on federal question jurisdiction, making its precedential value in relation to diversity cases unclear. Subsequently, the court remanded a diversity case to comport with Adkins' requirement that spoliation claims be addressed under federal law. Chrysler Realty Co., LLC v. Design Forum Architects, Inc., 341 Fed.Appx. 93, 95 (6th Cir. June 30, 2009), unreported. However, Chrysler Realty was unreported. Therefore, this Court is unaware of any binding precedent rendering federal law applicable to the issue of spoliation. Despite this uncertainty, the Court applies federal law in light of Chrysler Realty and a recent decision from a District Judge of this Court applying federal law to a spoliation claim in a diversity case. See Mann v. CSX Transp., Inc., Case No. 1:07–cv–3512, 2009 WL 3766056 at *6 (N.D.Ohio Nov. 10 2009).
When a party has notice of potential litigation, it has a duty to preserve evidence that may be relevant to future litigation. O'Brien v. Ed Donnelly Enterprises, Inc., 575 F.3d 567, 587 (6th Cir. 2009) (“The magistrate judge's opinion, adopted by the district court, reasons that destruction or loss of evidence before notice of the O'Brien lawsuit is not a basis for sanctions. O'Brien J.A. 60. That is true, but the issue here concerns when the defendant was or should have been on notice that litigation requiring the missing reports as evidence might ensue.”) citing John B. v. Goetz, 531 F.3d 448, 459 (6th Cir. 2008) (“As a general matter, it is beyond question that a party to civil litigation has a duty to preserve relevant information, including ESI, when that party has notice that the evidence is relevant to litigation or ... should have known that the evidence may be relevant to future litigation.”) (internal quotations omitted). “It is the responsibility of the parties to ensure that relevant ESI is preserved, and when that duty is breached, a district court may exercise its authority to impose appropriate discovery sanctions.” Goetz, 531 F.3d at 459. “[S]anctions should be considered only if the court finds a clear duty to preserve, a culpable failure to preserve and produce relevant ESI, and a reasonable probability of material prejudice to the adverse party.” Id. citing The Sedona Principles: Best Practices, Recommendations & Principles for Addressing Electronic Document Production, Second Edition 11, 28 (The Sedona Conference Working Group Series, 2007), available at http:// www. thesedona conference. org/ content/ misc Files/ TSC_ PRINCP_ 2nd_ed _607.pdf.
*3 If a party fails to preserve evidence, the district court may impose sanctions under Federal Rule of Civil Procedure 37(b) or the court's inherent power. Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 72 (S.D.N.Y.,1991). Sanctions include jury instructions permitting a rebuttable adverse inference arising from the act of spoliation. However, that sanction is exceptional, as the Southern District of New York noted:
In practice, an adverse inference instruction often ends litigation-it is too difficult a hurdle for the spoliator to overcome. The in terrorem effect of an adverse inference is obvious. When a jury is instructed that it may “infer that the party who destroyed potentially relevant evidence did so ‘out of a realization that the [evidence was] unfavorable,’ ” the party suffering this instruction will be hard-pressed to prevail on the merits. Accordingly, the adverse inference instruction is an extreme sanction and should not be given lightly.
Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 219–20 (S.D.N.Y. 2003) (hereinafter “Zubulake IV”) (internal footnote omitted) (emphasis added). The district court's imposition of spoliation sanctions under its inherent power is reviewed under an abuse of discretion standard. See Chambers v. NASCO, Inc., 501 U.S. 32, 55, 111 S.Ct. 2123, 2138, 115 L.Ed.2d 27 (1991).
Here, Plaintiff contends that the discovery produced to date proves that other documents exist that are responsive to Plaintiff's discovery requests and that those documents have not been produced. ECF Dkt. #98 at 6. Plaintiff reasons that “common sense dictates that when two parties work for months on a joint venture, paper is created, e-mails are generated, memoranda are created, and due diligence is performed.” Id. Plaintiff contends that Defendant has failed to produce missing e-mails, market study backup, CAD support, Macedonia site backup, and Notes and ACT files.[1] Id. at 6–11.
It appears that the parties agree that Defendant had a duty to preserve evidence once it was on notice of potential litigation. See ECF Dkt. #98 at 15; ECF Dkt. #109 at 13. But they disagree as to when the duty to preserve evidence was “triggered.” Plaintiff contends that Defendant had a duty to preserve evidence following February 19, 1999, when James Sabatine and Tom Stump discussed the agreement and Sabatine informed Stump that he had consulted with an attorney in anticipation of Defendant's breach. ECF Dkt. #98 at 14 citing ECF Dkt. #98, Ex. 7. Defendant contends that the duty to preserve evidence did not arise until the instant lawsuit was filed. ECF Dkt. #109 at 12–13 citing Cache la Poudre Feeds v. Land O' Lakes, Inc., 244 F.R.D. 614, 621 (D.Colo. 2007). Defendant contends that the duty to preserve evidence is generally triggered by the filing of a lawsuit, absent the existence of exceptions which do not apply to the case at bar. Id.
Defendant further contends that it has since produced several documents that render the instant motion to compel moot. ECF Dkt. #109 at 9–10. Plaintiff maintains that it is not moot because Defendant's document production confirms that documents have been lost. ECF Dkt. #112.
*4 The parties also disagree over the applicable standard governing the instant motion and to what extent that duty applied to Defendant's actions throughout this litigation. The parties disagree over the precedential value of the Southern District of New York's opinions in several cases known as the Zubulake litigation, where the court addressed the issue of spoliation. The Sixth Circuit first addressed the Zubulake line of cases on June 26, 2008, when the court decided Goetz. Therefore, it is unclear to what extent, if any, Zubulake applied to cases in this Circuit prior to Goetz. That decision could be essential to the outcome of the instant motion. However, under either the pre–Zubulake or the post–Zubulake standard, parties are only obligated to preserve evidence that they have reason to believe might be relevant to potential future litigation. Turner, 142 F.R.D. at 72–73 citing Danna v. New York Telephone Co., 752 F.Supp. 594, 616 n. 9 (S.D.N.Y.1990); Goetz citing Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423, 436 (2d Cir.2001); see also Zubulake IV, 220 F.R.D. at 216–18. Therefore, this Court ultimately finds it unnecessary to determine whether the pre–Zubulake or the post–Zubulake standard applies. For the sake of completeness, however, the Court will outline the applicable standards below.
Defendant contends that its conduct should be measured by the standard in place prior to Goetz. Defendant contends that, prior to the Goetz court's adoption of the Zubulake standard, courts in this Circuit considered the violating party's conduct along a “continuum of fault” and allowed an adverse inference only in instances of bad faith. ECF Dkt. #109 at 11 citing Welsh v. United States, 844 F.2d 1239, 1245–47 (6th Cir. 1988); Tucker v. General Motors Corp., 945 F.2d 405 (6th Cir. 1991); Eaton Corp. v. Appliance Valves Corp., 790 F.2d 874, 878 (Fed. Cir. 1986). Plaintiff contends that the distinction between pre–Zubulake standards and post–Zubulake standards does not affect the trigger date of the duty to preserve evidence. ECF Dkt. #112 at 4. However, Defendant appears to distinguish pre–Zubulake and post–Zubulake tests on the basis of culpability standards, not trigger dates. However, Plaintiff did acknowledge that some of the documents in this case were generated in 1998, and pre–Zubulake obligations apply to some extent. See ECF Dkt. #98 at 15. While the Court acknowledges Plaintiff's assertion that Zubulake did not affect trigger dates, the Court is unclear on Plaintiff's position regarding pre–Zubulake and post–Zubulake standards from a culpability standpoint.
Regardless, both pre–Zubulake and post–Zubulake standards require a showing of relevance. Prior to Zubulake, the Southern District of New York held that “no duty to preserve arises unless the party possessing the evidence has notice of its relevance.” Turner, 142 F.R.D. at 72–73 citing Danna v. New York Telephone Co., 752 F.Supp. 594, 616 n. 9 (S.D.N.Y.1990). Following Zubulake, the Sixth Circuit continues to require relevance: “As a general matter, it is beyond question that a party to civil litigation has a duty to preserve relevant information, including ESI, when that party has notice that the evidence is relevant to litigation or ... should have known that the evidence may be relevant to future litigation.” Goetz citing Fujitsu Ltd., 247 F.3d at 436; see also Zubulake IV, 220 F.R.D. at 216–18.
Therefore, whether the Court were to apply the Zubulake spoliation standard advocated by Plaintiff or the pre–Zubulake spoliation standard advocated by Defendant, the threshold question is whether Defendant had notice that the allegedly destroyed evidence was relevant. “When evidence is destroyed in bad faith ( i.e., intentionally or willfully), that fact alone is sufficient to demonstrate relevance. By contrast, when the destruction is negligent, relevance must be proven by the party seeking the sanctions.” Zubulake IV, 220 F.R.D. at 220 (internal footnotes omitted).
Here, Plaintiff makes no showing of intent or willfulness. See ECF Dkt. #98 at 18. (“Whether the evidence was destroyed by RGI intentionally or negligently, we do not yet know, but either way the ‘culpable state of mind’ element of the test is satisfied.”).[2] Plaintiff has not subsequently shown evidence of intent or willfulness. See ECF Dkt. #102, 112. Therefore, it is Plaintiff's responsibility to establish the relevance of the missing evidence. See Zubulake IV, 220 F.R.D. at 220.
*5 Plaintiff contends that “any evidence related to the negotiations prior to the execution of the agreement will be critical to Cranpark, as will evidence of the conduct of the parties after the agreement was signed, up until RGI bailed out of the deal in early 1999.” ECF Dkt. #98 at 19. The Court agrees with Plaintiff, but only to an extent. Only evidence of objective manifestations is relevant. Evidence of non-manifested subjective beliefs does not establish either of Plaintiff's causes of action.
In reaching the foregoing conclusion, the Court first examines Plaintiff's complaint. In Count One, Plaintiff asserts a claim for breach of contract, alleging that in the spring of 1998, Hardrives and Defendant reached an agreement for a business partnership to operate a rail to truck stone distribution terminal, with Hardrives operating an asphalt plant next to Defendant's distribution terminal and Defendant providing material as required. ECF Dkt. #1 at ¶1. The complaint further alleges that the parties reached an oral agreement and on September 1, 1998, they memorialized a portion of the agreement in a one page document establishing prices for aggregate to be supplied to the facility. Id. at ¶13. Plaintiff alleges that in the spring of 1999, Defendant chose to terminate the agreement. Id. at ¶19. As a result, Plaintiff alleges that it lost income from existing projects, increased expenses to complete its work, and lost future revenue from projects it could not bid. Id. at ¶20.
Under Ohio law, “a plaintiff must prove, by a preponderance of the evidence, the existence of a contract, performance by the plaintiff, breach by the defendant, and damage or loss to the plaintiff.” Savedoff v. Access Group, Inc., 524 F.3d 754, 762 (6th Cir. 2008) (internal citation omitted). In the case at bar, Plaintiff contends that the missing evidence is relevant because it shows that Defendant viewed the Cranpark–RGI joint venture as a binding contract and that it clearly intended to contract. ECF Dkt. #98 at 20. Therefore, the Court will consider the probative value of the allegedly missing evidence toward the issue of contract formation.
Plaintiff alleges Defendant has failed to produce missing e-mails, market study backup, CAD support, Macedonia site backup, and Notes and ACT files. Id. at 6–11; 19–20. Plaintiff has not shown how this evidence establishes the existence of a contract. One of the most fundamental principles of contract law is that agreements must be based on objective manifestations and non-manifested subjective beliefs are generally irrelevant. See 2 Williston on Contracts § 6:3 (4th ed.):
It is often said that an acceptance represents the offeree's intention to accept, suggesting that the offeree must have a subjective mental intention to accept. If formation of informal contracts depended upon intention, an actual intention on the part of the offeree would be necessary. However, since the formation of informal contracts depends not upon an actual subjective meeting of the minds, but instead upon outward, objective manifestations of assent, an actual intention to accept is unimportant except in those situations when the acts or words of the offeree are ambiguous.
On the other hand, a manifestation of apparent intention to accept is necessary, and no informal contract can be made without it. It is this requirement as much as any that prevents an offeree's silence, standing alone, from operating as an acceptance; thus, even though an offer states that the offeror will treat a failure to reply to the offer as an acceptance, no contract will ordinarily arise without an objectively manifested acceptance, since there has been no manifestation of apparent intention to enter into a contract. Under certain exceptional circumstances, if the offeree, though remaining silent, intended its silence to operate as an acceptance, the offeror, having specified that silence is a satisfactory means of indicating assent, cannot complain of its insufficiency as a manifestation of such acceptance.
*6 Id. (internal footnotes omitted) (emphasis added); see also Weiper v. W.A. Hill & Assoc., 661 N.E.2d 796, 802 (Ohio App. 1 Dist. 1995) (“Weiper's subjective expectations are not sufficient to give rise to an implied contract for postemployment commissions absent some colorable evidence of W.A. Hill's assent. Clearly there is no such evidence of record.”); Carman v. Progressive Cas. Ins. Co., Case No. 3–87–12, 1989 WL 36567 at *3–*4 (Ohio App. 3d Dist. Apr. 17, 1989), unreported ( “we conclude that the factors identified by the plaintiff as creating the “impression” of insurance coverage are insufficient to create a genuine issue as to the oral contract of insurance. The plaintiff's reliance on these factors is based on her subjective understanding of her conversation with Gebhardt. Even construing all of the testimony in a light most favorable to the plaintiff, without any objective criteria or evidence to support her subjective impression, the plaintiff fails to meet her burden under Civ.R. 56(E) to set forth specific facts which show that there is a genuine issue of fact... we find that the plaintiff relied upon her subjective understanding of the circumstances in concluding that an oral binder had been issued by ICB. We therefore must conclude that this factor also is insufficient to establish the existence of a genuine issue of fact for trial and therefore summary judgment was properly granted.”).
Under Ohio law, there are three types of contract claims:
[I]t is well-established that there are three classes of simple contracts: express, implied in fact, and implied in law. Hummel v. Hummel (1938), 133 Ohio St. 520, 525, 11 O.O. 221, 223, 14 N.E.2d 923, 925–926; Rice v. Wheeling Dollar Savings & Trust (1951), 155 Ohio St. 391, 44 O.O. 374, 99 N.E.2d 301. “In express contracts the assent to its terms is actually expressed in offer and acceptance. In contract implied in fact the meeting of the minds, manifested in express contracts by offer and acceptance, is shown by the surrounding circumstances which made it inferable that the contract exists as a matter of tacit understanding. In contracts implied in law there is no meeting of the minds, but civil liability arises out of the obligation cast by law upon a person in receipt of benefits which he is not justly entitled to retain and for which he may be made to respond to another in an action in the nature of assumpsit. Contracts implied in law are not true contracts; the relationship springing therefrom is not in a strict sense contractual but quasi-contractual or constructively contractual. In truth contracts implied in law are often called quasi contracts or constructive contracts. Columbus, Hocking Valley & Toledo Ry. Co. v. Gaffney, 65 Ohio St., 104, 61 N.E., 152.” Hummel, supra.
Legros v. Tarr, 44 Ohio St.3d 1, 6 (Ohio 1989) (emphasis added). In considering the formation of express and implied in fact contracts, Ohio courts look to the conduct of the parties and the existing circumstances to determine if one could reasonably believe that an agreement had been reached. “The uncommunicated subjective intentions of one party have no significance in determining the meaning of disputed terms.” G.F. Business Equipment, Inc. v. Liston, 454 N.E.2d 1358, (Ohio App. 10th Dist. 1982). The Legros court affirmed an appellate court's holding that no implied in fact contract existed because:
“[n]o circumstances existed which could have reasonably caused Burning Hills to believe it would have to compensate Legros or B & S [Butcher & Singer] for their services, since Burning Hills did not authorize Legros or B & S to act as its procuring agents.” The case relied on by the court of appeals, Ostendorf–Morris Co. v. Slyman (1982), 6 Ohio App.3d 46, 6 OBR 156, 452 N.E.2d 1343, dealt solely with the issue of an implied-in-fact contract, concerning a real estate broker who volunteered his services without the knowledge or assent of the defendants. Similarly, in Suter v. Farmers Fertilizer Co. (1919), 100 Ohio St. 403, 126 N.E. 304, the court held that a valid contract implied in fact had been established where the services of the broker involved were ratified and a written contract of compensation had been prepared, even though the broker's services were originally volunteered. This court noted: “If his services were rendered without employment, express or implied, as a mere volunteer and without acceptance under the circumstances named, he cannot recover.” Id. at 408–409, 126 N.E. at 305. In the instant case, since no “meeting of the minds” was shown between appellants and Burning Hills by the surrounding circumstances, no contract implied in fact existed.
*7 Legros v. Tarr, 44 Ohio St.3d at 6 (emphasis added). Likewise, the Ohio Court of Appeals for the Ninth District noted that both express and implied in fact contracts require a meeting of the minds, and the court looked to the conduct of the parties to determine if a meeting of the minds had occurred. Hammontree & Associates, Ltd. v. Stephens, Case No. 2222, 1987 WL 15106 at *2 (Ohio App. 9th Dist. 1987), unreported. The Court ultimately reviewed the facts of the case and determined that there was no meeting of the minds:
The facts in this case show that at least by November 1, 1984, Stephens became aware that Hammontree was surveying her land. However, Laurila testified that he thought that Hammontree was to divide both of Stephens' farms into parcels for the Stephens' family. Stephens on the other hand thought that Hammontree was to divide part of her unencumbered farm into residential lots. Thus, in this case a contract cannot be implied-in-fact because the parties through their conduct never manifested a meeting of the minds.
Id. More recently, the Ohio Court of Appeals for the Second Circuit reaffirmed the Legros court's position that “A contract implied-in-fact is a contract inferred from the surrounding circumstances, including the conduct and statements of the parties, which lead to a reasonable assumption that a contract exists between the parties by tacit understanding.” Wilson v. Street, Case No. 22768, 2009 WL 1393273 at ¶11, (Ohio App. 2d Dist. May 15, 2009) slip op.
Plaintiff has not shown how any of the allegedly missing evidence would contribute to a reasonable belief that either an express contract or an implied in fact contract existed. The allegedly missing evidence constitutes internal communications, communications with third parties, and internal research. Plaintiff contends:
... the mere existence of the missing information outlined above (i.e., e-mails, correspondence, memoranda, underlying data, etc. from prior to September 1, 1998) establishes relevancy in and of itself because such information would demonstrate that RGI was spending and devoting significant time, money, and resources toward the realization of the Cranpark–RGI joint venture agreement. These facts, as well as the one time existence of this information, prove that RGI viewed the Cranpark–RGI joint venture as a binding contract and that it clearly intended to contract, contradicting Gould's position that this was only a “concept with contingencies.”
ECF Dkt. #98 at 20. Although Plaintiff may have been aware that this communication and research was occurring, Plaintiff has not shown how the content of these communications or the body of research is probative toward its cause of action. If Plaintiff was unaware of the content of the communications or the body of research that Defendant had amassed, then that information could not have formed the basis for Plaintiff's reasonable belief that an agreement existed. In other words, Plaintiff has not shown how the evidence shows an objectively manifested meeting of the minds through the parties' conduct. See Legros,44 Ohio St.3d at 6 (“[n]o circumstances existed which could have reasonably caused Burning Hills to believe it would have to compensate Legros or B & S [Butcher & Singer] for their services, since Burning Hills did not authorize Legros or B & S to act as its procuring agents.”); Hammontree, 1987 WL 15106 at *2 (“Thus, in this case a contract cannot be implied-in-fact because the parties through their conduct never manifested a meeting of the minds.”); Wilson, 2009 WL 1393273 at ¶11 (“A contract implied-in-fact is a contract inferred from the surrounding circumstances, including the conduct and statements of the parties, which lead to a reasonable assumption that a contract exists between the parties by tacit understanding.”) (emphasis added); Weiper, 661 N.E.2d at 802 (“Weiper's subjective expectations are not sufficient to give rise to an implied contract for postemployment commissions absent some colorable evidence of W.A. Hill's assent. Clearly there is no such evidence of record.”). Of course, Plaintiff can still present evidence of which it was aware at the time of contractual negotiations to establish the basis for its own reasonable belief that an agreement had been reached. There is no reason to believe that the evidence of objective manifestations was contained only in Defendant's internal files. Of note, Plaintiff does not contend that any of the evidence sought was ever conveyed to Hardrives, thereby constituting an objective manifestation. If it were conveyed to Hardrives or to Cranpark, the Court fails to see a basis for a spoliation claim based upon evidence that was once in Plaintiff's possession.
*8 To the extent that Plaintiff argues that the evidence is necessary to show Defendant's intention to enter a contract to rebut Mr. Gould's contention that the September 1, 1998 writing was only a concept with contingencies, the Court finds that Plaintiff has failed to demonstrate how the missing evidence could establish Defendant's intent to contract, or how that evidence is legally relevant. Under Weiper, Defendant's subjective belief is not relevant to interpret the written agreement. Additionally, as Williston provides, subjective beliefs are relevant to show intent only in those situations where the acts or the words of the offeree are ambiguous. 2 Williston on Contracts § 6:3 (4th ed.). Plaintiff has not shown that Defendant was the offeree in this case or that its actions were sufficiently ambiguous to require proof of intent to contract through evidence of subjective beliefs.
Plaintiff contends that “[I]ndefiniteness in a communication is some evidence of an intent not to contract.” ECF Dkt. #98 at 21 citing Calimari and Perillo on Contracts § 2.9 at 51 (5th ed.) (emphasis added by the Court). Plaintiff goes on to assert that Calamari and Perillo's treatise recognizes that informalities may be cured by the conduct by the parties. Id. However, there is no indication that the evidence Plaintiff seeks was ever communicated from Defendant to Plaintiff. This treatise's consideration of indefiniteness in a communication is consistent with the Court's review of Ohio law, requiring objective manifestations to evidence a meeting of the minds. The treatise also provides:
Indefiniteness in a communication is some evidence of an intent not to contract. The more terms that are omitted in an agreement the more likely that the parties do not intend to contract. But even if the parties intend to contract, if the content of their agreement is unduly uncertain no contract is formed. This rule must be understood as a necessary limitation on freedom of contract because an agreement must be sufficiently definite before a court can determine if either party breached it. The traditional rule is that if the agreement is not reasonably certain as to its material terms there is a fatal indefiniteness and the agreement is void. The rule does not supply a precise standard. Indefiniteness is a matter of degree.
Calimari and Perillo on Contracts § 2.9 at 43–44 (6th. ed.) (internal citations omitted) (bold added, italics original). As Calimari and Perillo provide, the Court considers objective evidence, not subjective beliefs, in determining whether a contract is void for indefiniteness.
Assuming that Mr. Gould is permitted to testify regarding his belief that September 1, 1998 writing was a “concept with contingencies” and assuming that evidence of Defendant's subjective beliefs is relevant to rebut that assertion, Plaintiff has failed to show that the missing material was likely to contain any evidence establishing Defendant's intent to contract. Plaintiff states that it came close to locating a “smoking gun” by locating a memo from Tom Stump describing the September 1, 1998 document as a “skeleton of a supply agreement.” ECF Dkt. #98 at 21. This document is evidence showing that Defendant did not view the September 1, 1998 writing as a final agreement, but as a skeleton of an agreement. It does not support a finding of intent to contract. It only supports a finding of an intent to negotiate. Plaintiff has made no showing that subsequently generated documents would have demonstrated Defendant's intent to enter a final binding agreement. In fact, if the September 1, 1998 agreement did not result in an enforceable contract, Plaintiff has not pointed to subsequent objectively manifested conduct upon which it allegedly relied in believing that a contract was formed. And Plaintiff has not demonstrated a likelihood that such evidence is contained in Defendant's internal files.
*9 Plaintiff contends that Defendant's actions in researching the site and corresponding with the City of Youngstown and Norfolk & Southern Railroad demonstrate Defendant's intent to contract. This evidence no more demonstrates Defendant's intent to contract than it demonstrates Defendant's due diligence in investigating a potential contractual relationship prior to assenting to its terms. However, without a showing of intentional or willful destruction of the evidence, it is Plaintiff's burden to demonstrate the potential relevance of the allegedly missing evidence. Plaintiff has failed to show that this evidence would have been relevant toward establishing Defendant's intent to enter into a final binding agreement. Therefore, it cannot justify the exceptional discovery sanction of an adverse jury instruction permitting the jury to infer that the evidence would have established that an enforceable agreement existed.
Plaintiff contends that Defendant improperly focuses on the merits of the case in opposing the instant motion. ECF Dkt. #112 at 3. Plaintiff reasons that the instant motion is a discovery dispute, not a motion for summary judgment, and an attempt to argue the merits is fundamentally improper. Id. The Court finds that it is proper to discuss the merits. First, Plaintiff raised the issue of relevance in its opening brief. ECF Dkt. #98 at 18–20. Further, the Court cannot ignore the impact of the extraordinary remedy that Plaintiff seeks in asking the Court to instruct the jury that it may infer that the missing evidence would show the existence of an enforceable contractual relationship between Cranpark and RGI. ECF Dkt. #98 at 23. Such an instruction is very close to granting summary judgment in its practical effect. As the Zubulake IV court noted:
In practice, an adverse inference instruction often ends litigation-it is too difficult a hurdle for the spoliator to overcome. The in terrorem effect of an adverse inference is obvious. When a jury is instructed that it may “infer that the party who destroyed potentially relevant evidence did so ‘out of a realization that the [evidence was] unfavorable,’ ” the party suffering this instruction will be hard-pressed to prevail on the merits. Accordingly, the adverse inference instruction is an extreme sanction and should not be given lightly.
Zubulake IV, 220 F.R.D. at 219–20 (emphasis added). This drastic effect supports the Sixth Circuit's holding that an adverse jury instruction is inappropriate in instances where missing evidence does not “ provide th[e] Court with any foundation to infer that the missing evidence was adverse to Defendant.” Joostberns v. United Parcel Services, Inc., 166 Fed.Appx. 783, 796 (6th Cir. 2006). In fact, Plaintiff's own brief focuses on the merits by contending that “common sense dictates that when two parties work for months on a joint venture, paper is created, e-mails are generated, memoranda are created, and due diligence is performed.” ECF Dkt. #98 at 6. By assuming the formation of a contractual joint venture agreement to infer the existence of evidence, Plaintiff has put contract formation at issue. Therefore, the Court must carefully consider the merits of the case, particularly the potential relevance of the allegedly missing evidence. As discussed above, Plaintiff has failed to establish a foundation to permit a finding that the evidence sought would be relevant. Particularly, since Plaintiff seeks an instruction permitting the jury to infer that the missing evidence established that an enforceable contractual relationship between Cranpark and RGI, the Court notes that Plaintiff has failed to demonstrate how internally-held documents could show that a meeting of the minds occurred in this case. See Hammontree, 1987 WL 15106 at *2. Accordingly, the Court finds that Plaintiff has failed to meet its burden, and the Court denies its request for an adverse instruction at trial.
*10 As an additional note, even if there were some conceivable relevance to Defendant's internal documents, Plaintiff has made no showing that Defendant was on notice of its potential relevance to the instant litigation. There is absolutely no indication that Defendant was aware or could have been aware that its internal documents would have been relevant in determining whether an agreement had been reached when Ohio law considers if circumstances existed which would permit a reasonable party to infer that an agreement had been reached. See Legros, 44 Ohio St.3d at 6. In reaching this conclusion, the Court does not endorse an intentional or willful destruction of documents related to potential future litigation, because as discussed above, intentional or willful destruction of evidence is in and of itself sufficient to establish relevance. However, in this case, where Plaintiff has the burden of establishing relevance, it must also establish that Defendant had reasonable notice that the allegedly missing evidence was potentially relevant. Given Ohio law's requirement of mutual assent and its consideration of objective manifestations, the Court fails to see how Defendant had notice that its internal documents could have been relevant to proving the existence of a contract in this case.
As a final note in regard to Plaintiff's contract claim, the Court does not necessarily hold that the evidence sought was not discoverable. The discovery requests may have reasonably calculated to lead to the discovery of admissible evidence; however, since Plaintiff has not established a likelihood of relevance of the evidence principally sought, the drastic sanction of an adverse jury instruction is not warranted.
In Count Two of the complaint, Plaintiff claims promissory estoppel, alleging that it relied to its detriment on the representations of Defendant and the subsequent partial performance of Defendant. ECF Dkt. #1 at ¶26. Plaintiff further avers that Defendant intentionally induced Hardrives to commit itself to using Defendant as its exclusive supplier and to use its goodwill in the City of Youngstown to get Defendant's plant approved. Id. at ¶27. Plaintiff avers that the actions of both parties in pursuit of the agreement provided Hardrives with a reasonable basis for relying on the representations by Defendant as to the agreement. Id. at ¶28.
In Ohio, the elements of promissory estoppel are: (1) a clear and unambiguous promise; (2) reliance upon the promise; (3) reliance that is both reasonable and foreseeable; and (4) injury to the party as a result of the reliance. Kirkland v. St. Elizabeth Hosp., 120 F.Supp.2d 660, 670 (N.D.Ohio, 2000) citing Weiper, 661 N.E.2d 796. First, the Court notes that Plaintiff does not argue potential relevance of the allegedly missing evidence relating to its promissory estoppel claim. Further, Plaintiff seeks only a jury instruction pertaining to its contract claim. Therefore, the Court will not address the issue of relevance pertaining to promissory estoppel.
Lastly, the Court notes that Plaintiff has sought two additional sanctions: (i)an order permitting it to re-depose certain witnesses at Defendant's expense so that Plaintiff can determine what evidence was destroyed; and (ii)to bar Defendant from filing dispositive motions. ECF Dkt. #98 at 23. The Court declines to order Defendant to pay for additional depositions because Plaintiff has not demonstrated a reasonable likelihood that the allegedly missing documents contained relevant evidence, admissible evidence, or evidence reasonably calculated to lead to the discovery of admissible evidence.
With regard to Plaintiff's request that the Court bar Defendant from filing a dispositive motion, Plaintiff cites no authority for the proposition that this sanction is appropriate. The Court finds that even if a discovery violation has occurred, it would be inappropriate to prohibit Defendant from filing a dispositive motion. The Court does not know if summary judgment is appropriate in this case because that issue has not been presented. However, hypothetically speaking, if Defendant were to be entitled to summary judgment in this case, then a sanction prohibiting Defendant from filing a dispositive motion would only result in an unnecessary consumption of private resources and judicial resources in preparing for trial, where the Court would ultimately be faced with a motion for judgment as a matter of law. See Fed. R. Civ. P. 50, 56(C). In that situation, Plaintiff would not be entitled to submit its case to the jury because no genuine issue of material fact would exist for the jury to consider. Therefore, the Court fails to see how a sanction barring dispositive motions is appropriate.
B. In-camera Inspection of e-mails
Plaintiff seeks review of documents identified in a privilege log attached to its motion as exhibit 19. ECF Dkt. #98 at 13–14. The documents that Defendant has presented for the Court's review are accompanied by a different privilege log. Therefore, the Court is uncertain which documents are necessary to review. Consequently, the Court has reviewed all of the documents produced to determine if privilege applies.
Some of the e-mails produced constitute communications from Greg Gould, who was Defendant's vice president, to Robert Hartford, Jr. who was attorney of record (see Docket as to email address) and Russ Oldfield, Defendant's corporate counsel. The e-mails recite details of conversations Mr. Gould had with Tom Stump, a former sales representative for Defendant. However, Mr. Gould then forwarded the e-mails to Mr. Stump. Although Mr. Gould is an executive officer and a representative of Rogers Group whose communications with counsel are privileged, his re-transmittal of privileged communications to former employee Tom Stump raise the issue of waiver.
In Crabb v. KFC Nat. Management Co., 952 F.2d 403 (Table), 1992 WL 1321 at *3 (6th Cir. 1992), unreported, the Sixth Circuit Court of Appeals held that corporate executives could transmit attorney-client communications to other executive non-lawyers and the re-transmittal was within the reach of the privilege. However, to the Court's knowledge, Mr. Stump was not a corporate officer at any time, specifically at the time the e-mails were transmitted. Further, there is no indication that Mr. Stump had any decision-making authority on behalf of Defendant. See Samtrade, Ltd. v General Elec. Co., 150 F.R.D. 539, 545 (E.D.N.C. 1993) (“...documents subject to the privilege may be transmitted between non-attorneys (especially individuals involved in corporate decision-making) so that the corporation may be properly informed of legal advice and act appropriately.”) When considering that the purpose of providing protection for attorney-client communications is to promote open communications with the client (see Boone v. Vanliner Ins. Co., 744 N.E.2d 154, 161 (Ohio 2001)), the Court finds that re-transmitting the e-mail to a former employee does nothing in furtherance of that goal. See State v. Post, 513 N.E.2d 754, 761 (Ohio 1987) (“We hold that a client's disclosure to a third party of communications made pursuant to the attorney-client privilege breaches the confidentiality underlying the privilege, and constitutes a waiver thereof.”); see also Clark Equipment Co. v. Lift Parts Mfg. Co., Inc., No. 82 C 4585, 1985 WL 2917 at *5 (N.D.Ill. Oct. 1 1985) (“The reasoning of Upjohn does not support extension of the attorney-client privilege to cover post-employment communications with former employees of a corporate party. Former employees are not the client. They share no identity of interest in the outcome of the litigation. Their willingness to provide information is unrelated to the directions of their former corporate superiors, and they have no duty to their former employer to provide such information. It is virtually impossible to distinguish the position of a former employee from any other third party who might have pertinent information about one or more corporate parties to a lawsuit. Thus, this Court holds that post-employment communications with former employees are not within the scope of the attorney-client privilege.”).
*12 Further, there is no indication that Mr. Gould was collecting information from Mr. Stump at counsel's request. SeeSamtrade, 150 F.R.D. at 545 (“... in instances where the client is a corporation, documents subject to the privilege may be transmitted between non-attorneys to relay information requested by attorneys. ..”). Even if he was, Mr. Gould's re-transmittal of the information to Mr. Stump constitutes a waiver because Mr. Stump was not an employee of Rogers Group.
Insofar as Defendant asserts privilege under the work-product doctrine, waiver is also appropriate because there is no indication that the attorneys directly spoke with Mr. Stump in the conversations underlying the emails in Bates Labeled documents CP–RGI 0236, 0246, and there is no indication that it was necessary for any of the attorneys' notes of conversations with Mr. Stump to be re-transmitted to him. See U.S. v. Ary, 518 F.3d 775, 783 (10th Cir. 2008) (“Courts will imply waiver when a party claiming the protection has voluntarily disclosed work product to a party not covered by the work-product doctrine. Therefore, the Court orders Defendant to produce documents with Bates Labels CP–RGI 0236, 0243–0244, 0246. Defendant is ordered to produce these documents to Plaintiff on or before February 8, 2010.
Additionally, one email was carbon-copied to Lauri Chaudoin. The Court has no information concerning her identity. Defendant bears the burden of establishing privilege. U.S. v. Dakota, 197 F.3d 821, 826 (6th Cir. 1999) (“The burden of establishing the existence of the privilege rests with the person asserting it.”). Accordingly, the Court finds that this document is not privileged and orders its production along with the foregoing emails. Bates Label CP–RGI0238.
III. CONCLUSION
For the foregoing reasons, the Court DENIES Plaintiff's motion for sanctions. ECF Dkt. #98. The Court GRANTS Plaintiff's motion to compel production of allegedly privileged documents. The Court orders Defendant to produce documents with Bates Labels CP–RGI 0236, 0238, 0243–0244, 0246. Defendant is ordered to produce these documents on or before February 8, 2010.
IT IS SO ORDERED.
Footnotes
Plaintiff states that “ ‘ACT’ appears to be shorthand reference to a propriety [sic] and comprehensive software package used by companies to manage customer contact information, keep records of meetings, manage and access e-mails, and integrate with employee calendars, as well as other popular business software, like Outlook®, Word, Excel®, and Locus Notes®.”ECF Dkt. #98 at 9.
To the extent that Ohio law would apply, Plaintiff's admission establishes that spoliation does not apply because Ohio law requires a showing of: “(1) pending or probable litigation involving the plaintiff, (2) knowledge on the part of defendant that litigation exists or is probable, (3) willful destruction of evidence by defendant designed to disrupt the plaintiff's case, (4) disruption of the plaintiff's case, and (5) damages proximately caused by the defendant's acts[.]” Smith v. Howard Johnson Co., Inc., 67 Ohio St.3d 28, 615 N.E.2d 1037, 1038 (Ohio 1993) (emphasis added).