CIVIL ACTION NO: 04-0069
United States District Court, E.D. Louisiana
Filed July 03, 2007
Kyle Melbourne Keegan, Christopher D. Kiesel, J. Brian Juban, Keegan, DeNicola, Kiesel, Bagwell, Juban & Lowe, LLC, Baton Rouge, LA, for Xcaliber International Limited, LLC.
Kyle Melbourne Keegan, Christopher D. Kiesel, J. Brian Juban, Keegan, DeNicola, Kiesel, Bagwell, Juban & Lowe, LLC, Baton Rouge, LA, Jason Hicks, Troutman Sanders, LLP, Richmond, VA, for CigTec Tobacco LLC, Carolina Tobacco Company.
Gol Sheikhivigeh Hannaman, Stacie L. deBlieux, Louisiana Department of Justice, Michael Brent Hicks, Richard A. Curry, McGlinchey Stafford, PLLC, Baton Rouge, LA, Gary D. Wilson, Wilmer, Cutler, Pickering, Hale & Dorr, LLP, Washington, DC, Lauren B. Bailey, Arthur F. Schafer, Lafayette, LA, for Attorney General State of Louisiana
*1 Before the Court is the continued portion of Plaintiff’s Motion to Compel Production Pursuant to Plaintiff’s First Amended and Restated Requests for Production (doc. # 57) first heard on November 1, 2006, and continued several times at the request of the parties. The defendant, the Attorney General of the State of Louisiana, filed an opposition memorandum.
In 1998 Louisiana and other states signed a Master Settlement Agreement (“MSA”) with the four major tobacco manufacturers, Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company, Philip Morris Incorporated, and R.J. Reynolds Tobacco Company (“collectively the “participating manufacturers,” or “PM’s”). Under the terms of the MSA the participating manufacturers agreed to make a fixed payment of $4.5 billion in 2000 which increased yearly until reaching $9 billion per year. Each PM was responsible for a certain percentage of the payment based on its market share in the overall market. Each state received a percentage of the payment.
The MSA also placed restrictions on lobbying, trade association activities, advertising, and the relinquishment of legal challenges to state laws regulating tobacco. To offset any cost disadvantages to the PM’s for signing the MSA and paying into the settlement fund, the states agreed to enact certain legislation requiring those tobacco manufacturers that did not sign the agreement to either (1) sign the MSA and becoming subsequent participating members, (“SPM’s”) or (2) deposit a specified sum per cigarette sold in the state into an escrow account.
The escrow amount deposited into the state would be released to the state in the event it obtained a judgment against the nonparticipating manufacturer (“NPM”) or they reached a settlement. If no judgment was obtained or settlement reached within twenty-five years, the money would be released to the NPM. Louisiana enacted the legislation which contained the following provision relevant to this suit:
(b) To the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow in a particular year was greater than the state’s allocable share of the total payments that such manufacturer would have been required to make in that year under the Master Settlement Agreement (as determined pursuant to section IX(i)(2) of the Master Settlement Agreement, and before any of the adjustments or offsets described in section IX(i)(3) of that agreement other than the inflation adjustment) had it been a participating manufacturer, the excess shall be released from escrow and revert back to such tobacco product manufacturer
La. Rev. Stat. 13:5063(C)(2)(b) (amended 2003) (emphasis added).
The plaintiff, Xcaliber International, Limited, L.L.C., contends that this provision ensured that monies held in escrow by the state would be limited to the state’s allocable share under the MSA. The Attorney General contends that this provision allows those NPM that sell only in a few states to recoup most of the money they place in escrow. For example, if an NPM sells 100% of its tobacco products in Louisiana it is entitled to recoup all of the money placed into escrow except for Louisiana’s share under the MSA which is approximately 2.26%.
*2 In 2003, Louisiana amended the statute to read:
[t]o the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow on account of units sold in the state in a particular year was greater than the Master Settlement Agreement payments, as determined pursuant to section IX(i) of that agreement, including after final determination of all adjustments, that such manufacturer would have been required to make on account of such units sold had it been a participating manufacturer, the excess shall be released from escrow and revert back to such tobacco product manufacturer
La. Rev. Stat. 13:5063(C)(2)(b) (emphasis added).
After the amendment, Xcaliber
and other NPMs filed the subject lawsuit contending that amendment eliminates any refund of escrowed payments to the state and that they are required to pay more into escrow than a PM or SPM doing business in Louisiana. Thus, they contend that the object of the amendment is to force them to become a SPM and abide by the rules set down in the MSA and waive their constitutionally protected rights under the First Amendment. The plaintiffs also alleged that this was done to prevent NPMs from competing against PMs thereby preserving and increasing the market shares of the PMs and protecting the payments received by the states under the MSA.
The District Court dismissed the plaintiffs’ claims against the Attorney General, and Xcaliber appealed the dismissal. The Fifth Circuit reversed the District Court’s dismissal and remanded the case.
Xcaliber propounded the subject discovery on June 19, 2096. While the Attorney* General provided some answers to the interrogatories and requests for admission it supplied no documents responsive to its request for production. Accordingly, Xcaliber filed the subject motion to compel.
At the November 1, 2006 hearing, Xcaliber informed the Court that the Attorney General continued to withhold a significant amount of documents based on attorney client privilege and/or the work product doctrine.
Xcaliber indicated that the Attorney General provided a 300 or 400 page privilege log sometime after it first provided some documents. However, soon after providing the log the Attorney General demanded its return because he contended that the privilege log itself was a confidential document. Thus, Xcaliber contended that it did not have time to conclude whether the privilege log provided the information required by the Rules such that it could not determine whether a document was, in fact, privileged or otherwise protected.
The Court concluded that in the absence of a valid privilege log neither party was in any position to argue whether a document was privileged or protected and continued the motion. (See Rec. Doc. No. 71). The Court also ordered that the Attorney General provide a proper privilege log to Xcaliber by November 3, 2006.
*3 At the request of the parties, the Court continued the motion several times finally setting the motion for hearing on April 4, 2007. The parties timely submitted their respective supplemental memorandum on the issues of privilege or protection.
After reviewing the briefs submitted by the parties, the Court determined that neither party had submitted a copy of a privilege log as contemplated by Rule 26 which requires that:
[W]hen a party withholds information otherwise discoverable under these rules by claiming that it is privileged or subject to protection as trial preparation material, the party shall make the claim expressly and shall describe the nature of the documents, communications, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection.
Fed. R. Civ. P. 26(b)(5).
A member of the Court’s staff contacted the parties to determine whether a privilege log was ever produced. The parties indicated that the Attorney General had simply produced two CD’s of approximately 4,000 documents that were allegedly privileged or subject to work product protection. The documents were copies of emails with the body removed, leaving only the headers. The Attorney General did not produce a log.
The Court then continued the motion until April 18, 2007 and ordered that the Attorney General provide a privilege log that complies with Rule 26 to Xcaliber by April 16, 2007, or certify that he is unable to produce a privilege log. (See Rec. Doc. No. 98). On April 16, 2007, the Attorney General faxed a letter to this Court certifying that the log was not yet complete but did not indicate when it would be complete nor did he certify as ordered that he is unable to do so.
Thus, after two Orders by this Court along with multiple extensions of time to ensure that the Attorney General complied with the Federal Rules to designate by privilege log those documents it believes are subject to the attorney client privilege and/or work product doctrine, another deadline passed with the privilege log remaining incomplete. Further, the Attorney General did not provide a suggestion when the complete log would be provided.
Instead, the Attorney General submitted on CD the redacted documents and documents containing only header information which precludes this court from accessing the appropriateness of the legal protections sought by the Attorney General.
The Court notes that failure to produce a privilege log can result in waiver of the privileges asserted. Bregman v. District of Columbia, 182 F.R. D.352, 363 (D.D.C. 1998) (noting that a party’s “failure to comply with Fed.R.Civ.P. 26(b)(5), requiring him to file a privilege log, bars in itself any claim of privilege, whatever its basis.”); Mass. School of Law at Andover, Inc. v. American Bar Ass’n, 914 F.Supp. 1172, (E.D. Pa. 1996) (noting that failure to assert a privilege properly may amount to a waiver of that privilege).
*4 At this time the discovery at issue was propounded over one year ago. To date, no privilege log has been provided. The Court concludes that to the extent the Attorney General sought to assert the application of the attorney client privilege and work product doctrine the objections are waived because of its failure to comply with the Federal Rule 26. Thus, unredacted copies of the emails that are responsive to the plaintiffs’ discovery must be produced
IT IS ORDERED THAT the remaining part of Plaintiff’s Motion to Compel Production Pursuant to Plaintiff’s First Amended and Restated Requests for Production (doc. # 57) is GRANTED. The defendant has 15 days from the signing of this order to produce unredacted copies of the emails that are responsive to the plaintiffs’ discovery.
Xcaliber is a tobacco manufacturer selling tobacco products in Louisiana since 2003.
The Court notes that the Attorney General did not produce some documents based on assertions of confidentiality. However, this issue was resolved by the entry of an appropriate protective order. (See Rec. Doc. No. 73).
The letter is attached to this Order so that the record is complete.
The Court further notes that while the Attorney General apparently could not make a proper determination of privilege being in receipt of the discovery for almost one year, it apparently sought to shift the burden to this Court for determination of the applicability of privilege.
End of Document.