HM Compounding Servs., LLC v. Express Scripts, Inc.
HM Compounding Servs., LLC v. Express Scripts, Inc.
2018 WL 3208379 (E.D. Mo. 2018)
February 21, 2018
Limbaugh, Sr., Stephen N., Special Master
Summary
A Special Master was appointed to review the documents on Express Scripts' privilege log in camera. The Special Master determined which documents were protected by attorney-client privilege or work-product protection and which documents should be produced to HM Compounding Services, LLC and HMX Services, LLC. The Special Master's determinations were recorded in the relevant privilege logs and the Express Scripts were ordered to produce unredacted copies of all documents identified as not privileged or subject to work product protection.
HM COMPOUNDING SERVICES, LLC, et al. Plaintiff,
v.
EXPRESS SCRIPTS, INC., Defendants
v.
EXPRESS SCRIPTS, INC., Defendants
No. 4:14-CV-01858
United States District Court, E.D. Missouri, Eastern Division
Filed: February 21, 2018
Limbaugh, Sr., Stephen N., Special Master
SPECIAL MASTER’S MEMORANDUM AND ORDER
*1 1. This Memorandum and Order will provide my conclusions and background explanation for each document reviewed in camera for privilege claims in the above referenced case. I have made such determinations pursuant to my duties and powers outlined in Judge John A. Ross’s appointment order to “resolve the parties’ outstanding discovery issues, including, but not limited to, the manner and method of completing an in camera review of the documents on Express Scripts’ privilege log.” Appointment Order, Aug. 14, 2017, pp. 2, 3 (Dkt. 390). Pursuant to this order, I “possess and may exercise, to the extent permitted by law, Federal Rule of Civil Procedure 53, and the United States Constitution, all powers to make such orders as may be necessary and appropriate to fulfill duties assigned to the Special Master under this Memorandum and Order, subject to review by the Court.” Id. Should any party object to any part of the following order, a written objection is required within seven (7) days of the date of this order with a response to such objection filed within seven (7) days of the filing of the objection. Id.
2. As confirmed in Judge Ross’s adoption of my Memorandum and Order, “a document’s “responsiveness” or “relevance” will not be within the purview of my review of that document – only its status as “privileged” will be considered still at-issue and analyzed accordingly.” Special Master’s Memorandum and Order, Oct. 2, 2017, p. 1 (Dkt. 408).
3. Furthermore, “I will consider only the evidence provided relating to each document in determining whether Defendant has met its burden to show that the claimed privilege applies. This information must be sufficiently detailed to support each element of each privilege or protection asserted.” Id.
LEGAL BACKGROUND
4. In order to meet its burden to show that a privilege applies, Express Scripts must “provide facts that would establish each element of the claimed privilege as to each document ....” Fid. Nat. Title Ins. Co. v. Captiva Lake Invs., LLC, 2012 WL 3562207, at *3 (E.D. Mo. Aug. 17, 2012).
5. Federal law governs any work-product claims. Pemberton v. Republic Servs., Inc., 308 F.R.D. 195, 200 (E.D. Mo. 2015) (citation omitted).
6. Missouri state law governs any attorney-client privileges. “[I]n a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” Fed. R. Evid. 501. Only state law claims are part of this phase in the above-captioned case’s proceedings, with Missouri providing the “rule of decision” over the key contractual claims. Therefore Missouri state law will govern attorney-client privilege claims regarding these claims. Baker v. Gen. Motors Corp., 209 F.3d 1051, 1053 (8th Cir. 2000) (“In this diversity case, we apply federal law to resolve work product claims and state law to resolve attorney-client privilege claims.”) (citation omitted). I used federal attorney-client privilege precedent as persuasive authority where appropriate.
THE ATTORNEY-CLIENT PRIVILEGE
*2 7. The attorney-client privilege is an ancient common law privilege dating back to the reign of Elizabeth I of England. E.g., State v. Longo, 789 S.W.2d 812, 814-15 (Mo. Ct. App. 1990) (citations omitted). Although codified in Missouri at Missouri Revised Statute Section 491.060, this codification does not limit the common law rule. Longo, 789 S.W.2d at 815 (citing State ex rel. Great American Insurance Co. v. Smith, 574 S.W.2d 379, 382 (Mo. 1978)(en banc)). The attorney-client privilege “is to be construed broadly to encourage its fundamental policy of encouraging uninhibited communication between the client and his attorney.” Longo, 789 S.W.2d at 815 (citation omitted).
8. The attorney-client privilege attaches to: “1) Information transmitted by voluntary act of disclosure; 2) between a client and his lawyer; 3) in confidence; and 4) by a means which, so far as a client is aware, discloses the information to no third parties other than those reasonably necessary for the transmission of the information or for the accomplishment of the purpose for which it is to be transmitted.” Id. All four elements must be present and “surrounding circumstances should be considered as they indicate the existence, or nonexistence, of any one of the elements.” Id.
9. The attorney-client privilege protects communications, not underlying facts that exist independently of the attorney-client relationship. Great American Ins. Co., 574 S.W.2d at 385 & n.8 (“[D]iscoverable factual information can [not] be made privileged by being recited by the attorney or the client in their confidential communications .... The privilege is limited to protecting attorney-client communications.”)
10. Draft documents may also be protected by attorney-client privilege “if they were prepared or circulated for the purpose of giving or obtaining legal advice and contain information or comments not included in the final version.” Andritz Sprout-Bauer. Inc. v. Beazer E., Inc., 174 F.R.D. 609, 633 (M.D. Pa. 1997) (citation omitted). That being said, a “document which is not privileged does not become privileged by the mere act of sending it to an attorney.” St. Louis Little Rock Hosp., Inc. v. Gaertner, 682 S.W.2d 146, 151 (Mo. Ct. App. 1984) (citations omitted).
11. In the corporate context, the attorney-client privilege is applicable only if “(1) the communication was made for the purpose of securing legal advice; (2) the employee making the communication did so at the direction of his corporate superior; (3) the superior made the request so that the corporation could secure legal advice; (4) the subject matter of the communication is within the scope of the employee’s corporate duties; and (5) the communication is not disseminated beyond those persons who, because of the corporate structure, need to know its contents.” DeLaporte v. Robey Bldg. Supply, Inc., 812 S.W.2d 526, 531 (Mo. Ct. App. 1991) (citing Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 609 (8th Cir. 1978)).
12. Corporate communications between non-lawyers can also be protected by the attorney-client privilege if they “transmit” legal advice or are “regarding advice received from an attorney.” E.g., Med. Protective Co. v. Bubenik, No. 4:06CV01639 ERW, 2007 WL 3026939, at *2 (E.D. Mo. 2007); Music Sales Corp. v. Morris, No. 98CIV.9002(SAS)(FM), 1999 WL 974025, at *7 (S.D.N.Y. 1999) (“The distribution within a corporation of legal advice received from its counsel does not, by itself, vitiate the privilege.”) (citations omitted).
*3 13. In the in-house counsel context, due to the mixed nature of an in-house counsel’s role as both legal and business advisor, the claiming party must make a clear showing that the communication was primarily for legal advice, rather than primarily relating to “extraneous matters” (to an attorney-client privilege claim) such as business, financial, or accounting issues. See St. Louis Little Rock Hosp., Inc. v. Gaertner, 682 S.W.2d 146, 150-51 (Mo. Ct. App. 1984); State v. Fingers, 564 S.W.2d 579, 582 (Mo. Ct. App. 1978); State ex rel. Koster v. Cain, 383 S.W.3d 105, 120-21 (Mo. Ct. App. 2012); In re Vioxx, 501 F. Supp. 2d 789, 797 (E.D. La. 2007).
14. While a client usually waives attorney-client privilege when it voluntarily shares a communication with a third party, there is no waiver “where the third party shares a common interest in the outcome of the litigation and where the communication in question was made in confidence.” Lipton Realty, Inc. v. St. Louis Housing Auth., 705 S.W.2d 565, 570 (Mo. Ct. App. 1986) (citations omitted). Such a common interest “must be a legal interest, not a commercial interest.” Green Edge Enterprises. LLC v. Rubber Mulch Etc., LLC, No. 4:02CV566TIA, 2006 WL 2623855, at *1 (E.D. Mo. 2006)(citations omitted). The burden remains on the party claiming privilege to “demonstrate[e] how the requested information is protected by the common interest privilege.” E.g., id.
ATTORNEY WORK PRODUCT PROTECTION
15. Federal Rule of Civil Procedure 26(b)(3) precludes discovery of “documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative.” Intangible work product, to include an attorney’s “mental impressions,” is also protected. Hickman v. Taylor, 329 U.S. 495, 510 (1947). The work product protection lasts beyond the present litigation even to “future, unrelated litigation.” In re Murphy, 560 F.2d 326, 335 (8th Cir. 1977). Furthermore, “[t]he work product doctrine is to be applied in a commonsense manner in light of reason and experience as determined on a case-by-case basis.” Pittman v. Frazer, 129 F.3d 983, 988 (8th Cir. 1997) (citation omitted).
16. The party seeking work product protection bears the burden of “establishing that the documents were prepared in anticipation of litigation.” Pemberton v. Republic Servs., Inc., 308 F.R.D. 195, 201 (E.D. Mo. 2015). The work-product doctrine does not come into play upon a remote prospect of future litigation but only when “the materials were prepared in anticipation of litigation, i.e., because of the prospect of litigation.” PepsiCo, Inc. v. Baird, Kurtz & Dobson LLP, 305 F.3d 813, 817 (8th Cir. 2002). “The test for determining if documents were prepared in anticipation of litigation is whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.” Monsanto Co. & Monsanto Tech. LLC v. E.I. Du Pont De Nemours & Co., No. 4:09CV00686 ERW, 2011 WL 4408184, at *3 (E.D. Mo. 2011) (citation omitted).
17. The work product doctrine can apply to work done by nonlawyers if such work reveals an attorney’s “tactical and strategic thoughts.” Toensing v. United States Dep’t of Justice. 999 F. Supp. 2d 50, 57 (D.D.C. 2013)(citation omitted). Protected work “may include business records that were specifically selected and compiled by the other party or its representative in preparation for litigation and that the mere acknowledgment of their selection would reveal mental impressions concerning the potential litigation.” Petersen v. Douglas Cty. Bank & Tr. Co., 967 F.2d 1186, 1189 (8th Cir. 1992) (citation omitted).
*4 18. On the other hand, documents prepared or assembled in the “ordinary course of business or for other nonlitigation purposes” are not protected under the work product doctrine. Id. (citation omitted).
SPECIAL MASTER REVIEW PROCEDURE
19. Following a production schedule agreed to by the parties (Exhibit 1) Express Scripts provided HM Compounding with its Phase I privilege log on November 15, 2017. On November 22, 2017, HM Compounding responded, challenging some entries on the privilege log. Pursuant to an agreement between the parties, on November 30, 2017, Express Scripts provided additional documentation to HM Compounding supporting the claimed privileges. After reviewing these additional materials, HM Compounding then provided Express Scripts with its final list of challenged entries. These challenged entries, and supporting documentation, were then provided to me for review in camera as Phase I documents and were highlighted on the privilege log. Letter from Express Scripts, Dec. 8, 2017 (Exhibit 2).
20. This back-and-forth process between HM Compounding and Express Scripts, to narrow and specify the privilege claims still in controversy, was repeated for the remaining claims via a revised schedule (Exhibit 3). Phases II and III were combined into a single privilege log, and the final list of challenged privilege claims for Phases II and III, along with supporting documentation, was received by me on January 19, 2018 (Exhibit 4). The final list of challenged privilege claims for Phase IV, along with supporting documentation, was received by me on January 30, 2018 (Exhibit 5).
21. Phase I was initially provided to me in hard-copy, which comprised several boxes of documents. I decided it would be more efficient to use electronic document review software, so I requested that Express Scripts provide Phase I, and all future Phases, in digital form. Express Scripts then provided to me a standard concordance load file with the usual production fields plus the native file, an unredacted image file and a redacted image file (single page TIFFs) for each document. In addition Express Scripts provided the text of the unredacted file in a field called “fulltext” (on a document-level, not a page-level), the text of the redacted file in a field called “redacttext,” and a .csv file containing a list of pages (by “page ID,” Bates number or “DocID”) that contained redactions. Using this data as provided for each Phase, Lawgical Choice, Armstrong Teasdale LLP’s e-discovery vendor, uploaded all documents into a cloud-based program that allowed me and my team to review each document “as produced” (with redactions) side-by-side with the unredacted document.
22. Using the previously described legal principles, I reviewed in camerathose documents corresponding to the highlighted entries on each of the three privilege logs I received (Phase I, Phases II and III, and Phase IV). To increase efficiency and reduce time I directed a team of four other Armstrong Teasdale attorneys to review documents. We reviewed individual privilege claims using the electronic document review software and recorded determinations into the relevant privilege log. Each attorney was well-versed in the relevant legal principles as described above and had read all supporting documentation the parties provided. We had recurring team meetings, which allowed me to review and affirm my team’s determinations as to Express Scripts’ assertion of privileges or protections.
*5 23. We used a short-hand coding “menu” (Exhibit 6) to record determinations in Column N on the three attached Privilege Determination Logs (“Special Master Phase I,” (Exhibit 7), “Special Master Phases II-III,” (Exhibit 8) and “Special Master Phase IV” (Exhibit 9)). The Court and the parties can match the numbers in column N of the respective Privilege Determination Logs to the coding menu in Exhibit 6 to ascertain my final determination and rationale. Exhibit 6 should not be understood as a restrictive or binding list of options, but instead as a one-page distillation of relevant legal principles. We used all relevant legal principles, as described supra, and not just these short-hand reference notes, in our analysis.
24. As reflected in the privilege logs, Express Scripts claimed work-product protection and/or attorney-client privilege over each yellow highlighted document or redaction, and only the claimed protection and/or privilege was/were examined. Where no redaction was present on the “produced” document, but a protection or privilege was still claimed, I reviewed the claim as if the relevant information had been redacted. Where a privilege log entry for a given document did not align with the complete details of that document as produced by Express Scripts, I used context and the available information to determine the portion of the document to which the asserted privilege or protection applied, attributing the circumstances to scrivener’s errors.
25. Many yellow highlighted entries on the three received privilege logs were duplicates of other highlighted entries. I reviewed each entry independently. When these duplicate entries were discovered, I recorded my final determination in connection with the highest Bates-numbered duplicate. This final determination controls for any duplicates of the relevant entry found elsewhere on any of the three privilege logs.
26. With regard to each of the three Special Master Privilege Determination Logs described above, I have used red highlighting to alert the Court and the parties to my determinations that require the production of unredacted documents, subject to Court approval, as described below.
ORDER
27. Subject to Court approval, it is hereby ordered that Express Scripts produce to HM Compounding Services, LLC and HMX Services, LLC unredacted copies of all documents identified on the three attached Privilege Determination Logs (Exhibits 7, 8 and 9) as not privileged or subject to work product protection. The time granted for production shall be set by the Court.
CERTIFICATE OF SERVICE
I hereby certify that on this 21st day of February, 2018, a true and correct copy of the foregoing was filed with the Clerk of Court via the Court’s CM/ECF system for electronic service on all counsel of record. The Express Scripts privilege logs and documents as to Phases I, II, III and IV, provided contemporaneously with the letters and related documents attached as Exhibits 2, 4 and 5 hereto, are not included in the e-filings due to the enormous volume of documents involved. Counsel for Defendant has possession of the relevant logs and documents and counsel for Plaintiffs have possession of the relevant logs and all documents except the unredacted copies. Should the Court need hard copies of the logs or documents referred to therein, they can be provided by Defense counsel. Exhibits 7, 8 and 9 hereto (the Special Master Privilege Determination Logs) are not a part of this e-filing but are contained in a compact disc which I am personally delivering this day to the Clerk of Court for filing, and which have been today placed for overnight delivery to the parties’ Counsel.