Civil Action No 3:03-0848
United States District Court, M.D. Tennessee, Nashville Division
Filed September 26, 2005
Adam L. Hoeflich, Andrew Keith Polovin, Carrie A. Jablonski, Christopher Denis Landgraff, J. Scott McBride, Mark L. Levine, Rebecca Weinstein Bacon, Bartlit Beck LLP, Chicago, IL, James M. Doran, Jr., Jennifer L. Weaver, Waller, Lansden, Dortch & Davis, LLP, Mark H. Wildasin, U.S. Attorney's Office, Nashville, TN, Michael J. Goecke, Scott L. Winkelman, Aimee Denise Latimer, Crowell & Moring, Washington, DC, for Plaintiff.
John M. Skenyon, Kevin M. Littman, Michael E. Zeliger, Fish & Richardson, P.C., Boston, MA, John R. Wingo, Stites & Harbison, PLLC, M. Clark Spoden, Burr & Forman, LLP, A. Scott Ross, Chandra N.T. Flint, Marc T. McNamee, Neal & Harwell, PLC, Nashville, TN, Jacob M. Mihm, Jessica Kristen Thomas, Kamau A. Coar, Kathleen Holper Champagne, Keith E. Edeus, Michael J. Philippi, Samera S. Ludwig, Shannon Capone Kirk, Stacey, Feeley Cavanagh, Ungaretti & Harris, Richard T. McCaulley, Stephen F. Sherry, Timothy J. Malloy, McAndrews, Held & Malloy, Ltd., Chicago, IL, for Defendants
REPORT NO. 1 AND RECOMMENDATIONS OF SPECIAL MASTER – ISSUE OF INADVERTENTLY PRODUCED PRIVILEGED DOCUMENTS
*1 By Order dated May 27, 2005, the Honorable Juliet Griffin, United States Magistrate Judge, appointed the undersigned as a Special Master under Rule 53 “to review all documents to which the plaintiff and defendant Cardinal Health 200 have asserted privilege, and any other materials provided to him by the parties ... and any other related matters agreed to by the parties.”
Because of the large volume of asserted privileged documents delivered to the Special Master by the parties, the Special Master proposed – and counsel for the parties agreed (subject to the Court's approval, schedule and convenience) - that he would issue three separate Reports and Recommendations to the Court. They are as follows:
• Report No. 1 (this Report) – This Report addresses the following issues:
(a) Whether any of the claimed inadvertently produced documents by DuPont described in and attached to the March 17, 2005, Affidavit of Rebecca Weinstein Bacon (attached as Exhibit B to DuPont's Memorandum in Support of Motion for Return of Inadvertently Produced Documents) are privileged;
(b) Whether any of the claimed inadvertently produced documents by DuPont described in and attached to the March 18, 2005, Affidavit of Carl J. Lukach (attached as Exhibit F to DuPont's above Memorandum are privileged; and
(c) Whether DuPont waived the attorney-client communications privilege about any subjects by its intended production of Mr. Lukach's handwritten memorandum of his telephone conversation with Michael Hudson on September 19, 2003, which he sent to attorney Justin Miller (pages DNW 3010648-0651) and Mr. Lukach's related handwritten notes (DNW 3010652-0657) (all attached as Exhibit G to DuPont's above Memorandum).
Following this Report, by agreement of the parties, it is the Special Master's plan to separately prepare and submit the following two additional Reports and Recommendations to the Court by August 31, 2005:
• Report No. 2 – Issue: Whether any of the documents listed by defendant Cardinal Health 200 on its privilege log and delivered to the Special Master are privileged.
• Report No. 3 – Issue: Whether any of the documents listed by plaintiff DuPont on its privilege log and produced to the Special Master are privileged.
For the Client-Attorney Communications Privilege
The law applicable to the determination of client-attorney privileged communications is similar throughout the country. Plaintiff DuPont is a Delaware corporation with its principal place of business in Delaware. Defendant Cardinal 200 is a Delaware corporation with is principal place of business in Illinois. This case is before a Tennessee federal district court which is situated within the Sixth Circuit. Therefore, a brief review of the prevailing legal principles governing the application of the client-attorney privilege in those jurisdictions is in order.
It is generally agreed that the “classic statement” of the client-attorney privilege rule is contained in United States v. United Shoe Machinery Corp., 89 F.Supp. 357, 358-59 (Mass. 1950), overruled on other grounds in American Standard, Inc. v. Pfizer, Inc., 828 F.2d 734 (Fed Cir 1987):
*2 [T]he privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purposes of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client (Emphasis added.) Accord, Deutsch v. Cogan, 580 A.2d 100, 103-104 (Del Ch. 1990).
The rationale for the rule is aptly summarized as follows:
Generally, if a client chooses to make or receive a communication to or from his attorney in the presence and hearing of a third person, the communication is not confidential and is not entitled to the protection afforded by the rule of privilege, on the theory that the very nature of the transaction and the circumstances surrounding it are inconsistent with the notion that communication was ever intended to be confidential. Thus, under this general rule, when communications between attorney and client are made in the presence of a third person, that third person is competent to testify as to the communication In addition, it is generally held that under such circumstances, the attorney may also testify to the communications made in the presence of the third person.” § 2, 14 A.L.R.4th 594 (2005).
The current statement of the lawyer-client privilege rule in Delaware is similar and is contained in Rule 502(b) of the Delaware Uniform Rules of Evidence:
(b) General rule of privilege. A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client (1) between the client or the client's representative and the client's lawyer or the lawyer's representative, (2) between the lawyer and the lawyer's representative, (3) by the client or the client's representative or the client's lawyer or a representative of the lawyer to a lawyer or a representative of a lawyer representing another in a matter of common interest, (4) between representatives of the client or between the client and a representative of the client, or (5) among lawyers and their representatives representing the same client. (Emphasis added.)
Likewise, in Illinois, the essential elements of the attorney-client privilege are described in People v. Adam, 51 Ill. 2nd 46, 48, 280 N.E.2d 205 (1972):
(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection [may] be waived. (Quoting from 8 Wigmore, Evidence § 2292 (McNaughton rev. 1961 )
Accord, People v. Williams, 97 Ill. 2d 252, 454 N.E.2d 220 (1983); People v. Brown, 275 Ill App 3d 1105, 657 N.E.2d 642 (1995).
The rule is much the same in Tennessee. For example, in Edwards v. Whitaker, 868 F Supp. 226 (M.D. Tenn. 1994), Judge Echols wrote:
Communications between an attorney and his or her client are privileged when made without the presence of strangers and for the purpose of obtaining an opinion of law, legal services, or assistance in a legal proceeding. Hydraflow, Inc. v. Enidine, Inc. 145 F.R.D. 626, 630 (W.D.N.Y. 1993) However, “the privilege only applies if the lawyer is providing legal advice or services, and will not protect disclosure of non-legal communications where the attorney acts as a business or economic advisor.” (internal citations omitted) (868 F.Supp. at 228.)
*3 See also, Royal Surplus Lines Ins. v. Sofamor Danek Group, 190 F.R.D. 463, 468-69 (W.D. Tenn. 1999). In an appeal from the Middle District of Tennessee, the Court of Appeals for the Sixth Circuit restated the elements of the federal common law of attorney-client privilege:
(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client (6) are at his instance permanently protected (7) from disclosure by himself of by the legal adviser, (8) except the protection [may] be waived. (internal citations omitted) Humphreys, Hutchison and Moseley v. Donovan, 755 F.2d 1211, 1219 (6th Cir. 1985)
In that connection, the Court also noted that the privilege is one of communication and “does not envelope everything arising from the existence of an attorney-client relationship.” (Id.) As the Court pointed out, the privilege “does not protect against disclosure of the facts underlying the communication,” citing Upjohn Co. v. United States, 449 U.S. 383, 395 (1981).
In a nutshell, then, the attorney-client privilege protects “confidential disclosures by a client to an attorney made in order to obtain legal assistance ” Fisher v. United States, 425 U.S 391, 403 (1976). See also, In re Grand Jury subpoena Duces Tecum, 731 F.2d 1032, 1036 (2nd Cir. 1984).
In addition to the client-attorney privilege rule, the attorney work-product rule is also relevant to the DuPont documents addressed in this Report. The work-product rule (or doctrine) is codified in Federal Rule of Civil Procedure 26(b)(3) under the sub-heading, “Trial Preparation: Materials.” It is well-known that this rule was the product of Hickman v. Taylor, 329 U.S. 495 (1947). In ruling on some of the issues in this Report, the Special Master has applied that portion of Rule 26(b)(3) that protects against an attorney's disclosure of his or her “mental impressions, conclusions, opinions, or legal theories” about the litigation
The material element of the attorney-client privilege applicable to the issues on which the Special Master has been asked to rule concerns the breadth of the privilege. The general consensus of the authorities reviewed above is that the protected communication must relate to the requesting or giving of confidential legal advice or legal assistance However, “the mere fact that a communication is made directly to an attorney, or an attorney is copied on a memorandum, does not mean that the communication is necessarily privileged.” U.S. Postal Service v. Phelps Dodge Refining Corp., 852 F Supp.156, 160 (E.D.N.Y. 1994), citing Simon v. G D. Searle & Co., 816 F.2d 397, 403-04 (8th Cir.), cert. denied, 484 U.S. 917 (1987).
In arriving at the recommended rulings, the Special Master has applied the essentially uniform legal principals of client-attorney privilege discussed above. The Special Master also intends to apply the same legal principles to the privilege issues which will be addressed in future Report Nos. 2 and 3.
The Agreed Protective Order
The terms of the Court's Agreed Protective Order Governing the Disclosure of Confidential Information governs the parties' privilege dispute. Paragraph 11 of the Agreed Protective Order states:
*4 11. Notice of an inadvertent production of any document, thing or information that is subject to the work-product doctrine, the attorney-client privilege or any other privilege shall be given within 30 days upon the discovery of the inadvertent production by the producing party Inadvertent production shall not constitute a waiver of any such doctrine or privilege. The inadvertent production, without designation as Confidential Material, of a document, thing, information or deposition testimony intended to be designated or that should have been designated Confidential Material shall not waive the right to so designate such document, thing, information or deposition testimony. Upon written request of the Producing Party or Non-Party, all copies of any inadvertently produced document, thing or information that is subject to the attorney-client privilege or other privilege or work product doctrine shall be returned forthwith. In addition, any Confidential Material that is inadvertently not designated Confidential Material when produced shall, upon written request of the Producing Party or Non-Party, thereafter be treated as Confidential Material under this Order. (Emphasis added.)
The circumstances surrounding DuPont's production of its claimed inadvertently produced privileged documents, the descriptions of the documents, the purposes of the documents and the identities of the people involved are contained in the Affidavits of attorney Rebecca Weinstein Bacon and Carl J. Lukach (Exhibits B and F, respectively, to Dupont's Memorandum in Support of Motion for Return of Inadvertently Produced Documents.) The statements contained in those Affidavits are not refuted by Cardinal. (Although not dispositive, it is noted that co-defendant BBA Nonwovens apparently returned all copies of the same documents at issue upon DuPont's request.)
I. The “Bacon Affidavit” Documents
Of more than 357,000 pages of documents produced by DuPont during pre-trial discovery, DuPont seeks the return of 30 pages of claimed privileged documents attached to the Bacon Affidavit More than 10 of these pages are duplicate communications contained in separate e-mail messages to different persons at the company. As reflected in the Bacon Affidavit, there are three categories of documents at issue:
(1) Communications between patent counsel and DuPont employees relating to legal advice;
(2) Post-It Notes reflecting attorney mental impressions and directions of attorney Scott McBride; and
(3) An e-mail message between Ms. Bacon and a DuPont inventor in anticipation of litigation.
The documents are Bates-stamped “DNW” followed by an assigned number After carefully inspecting these documents, the Special Master finds that all of them meet the privilege tests discussed in the legal authorities examined above. Thus all of the documents (or, in some instances, the bracketed portions of them) attached to the Bacon Affidavit either are privileged attorney-client communications because they constitute or relate to confidential legal advice or assistance or fall within the work-product doctrine of Federal Rule 26(b)(3). As a result, the Special Master respectfully recommends that the Court order defendant Cardinal Health 200 to return all of the “Bacon Affidavit” documents to Dupont pursuant to paragraph 11 of the Agreed Protective Order.
II. The “Lukach Affidavit” Documents
Mr. Lukach is DuPont's Vice Present for Investor Relations According to his Affidavit, he reviewed several pages from his personal notebooks for possible production in the litigation. Mr. Lukach addresses specific handwritten pages from his notebook which were produced to defendants. Those pages are attached to his Affidavit and he describes the circumstances surrounding his writings.
Of more than 357,000 pages of documents produced by Dupont during pre-trial discovery, there are 17 pages of notes attached to the Lukach Affidavit which DuPont claims were inadvertently produced privileged documents. The documents are Bates-stamped “DNW” followed by an assigned number. After carefully inspecting these documents, the Special Master finds that all but one of them (DNW 0075407) meet within the privilege tests discussed in the legal authorities examined above. Thus all of the documents, with the sole exception of page DNW 0075407, concern privileged attorney-client communications because they constitute or relate to confidential legal advice or assistance
*5 Document DNW 0075407, as described in paragraph 17 of Mr. Lukach's Affidavit, contain notes which he wrote in preparation for a meeting with Mr. Chad Holliday, Chairman of DuPont. Mr. Lukach, a non-lawyer states that these notes “reflect legal input and advice” from a DuPont attorney regarding this litigation. The Special Master accepts the statement of Mr. Lukach as true However, there does not appear to be any indication on that page which discloses anything concerning legal advice or assistance. To the contrary, the notes show that there is a hand-drawn box number “4” with the words “Legal-legal opinion” written within it Although those words appear within the “box,” the box is blank; no legal opinion is expressed.
Within “box” number “3”, entitled “Anticipated View,” item number 5 states “Veiled legal threats” and item number 10 states “What are DD's legal intentions.” However, the “legal threats” are not explained in the document and, if “DD” is shorthand for “DuPont,” no such “legal intentions” are stated Therefore, DNW 0075407 does not, on its face, reveal or refer to any privileged communications Therefore, the Special Master respectfully recommends that the Court order Cardinal Health 200 to return all of the “Lukach Affidavit” documents, with the exception of DNW 0075407, to DuPont pursuant to paragraph 11 of the Agreed Protective Order.
III. Carl Lukach's Notes of His Telephone Conversation With Michael Hudson on September 19, 2003
The last issue to be determined involves 10 pages of Mr. Lukach's handwritten notes (DNW 3010648 – 3010657) relating to a telephone conversation he had with Michael Hudson on September 19, 2003. These notes are attached as Exhibit G to DuPont's Memorandum in Support of Motion for Return of Inadvertently Produced Documents. The parties have agreed that the Special Master should decide whether the intended production of those notes by DuPont constituted a waiver of the client-attorney privilege. (This action was filed by DuPont on September 11, 2003.)
The top of the first page of the “Lukach-Hudson Notes,” DNW 3010648, contain Mr. Lukach's handwritten legend, “Attorney-Client Privileged-Prepared at Request of Counsel.” Those notes, according to Mr. Lukach in his deposition testimony (at pages 22-27) summarize his telephone conversation with Mr. Hudson, a former Allegiance Healthcare executive, on September 19, 2003 (3/10/05 Lukach Dep.) DuPont does not claim that any of these 10 pages of notes are privileged and does not claim that they were inadvertently produced Rather, DuPont claims that, despite the “Privilege” legend, the notes of the conversation between two businessmen who were employed by different companies are not subject to a claim of privilege DuPont is correct; contemporaneous notes of an otherwise relevant conversation between two non-lawyers are clearly discoverable as is the conversation. However, the twist lies in the “Privileged” legend.
Cardinal argues that, based upon the deposition testimony of Mr. Lukach and the fact that Mr. Lukach sent his notes to Justin Miller, a DuPont attorney, the production of these notes constitutes a subject matter waiver by DuPont of the client-attorney privilege. Stated differently, because Mr. Miller asked Mr. Lukach to “rewrite” his notes of his call with Mr. Hudson “in legible form” (3/10/05 Lukach Dep., p. 23) and because Mr. Lukach had consulted Mr. Miller before he returned Mr. Hudson's call (Id. at p. 25), Cardinal argues that: (1) the notes are privileged; (2) a waiver therefore occurred concerning Mr. Miller's conversations with Mr. Lukach about the notes; and (3) that a blanket waiver also occurred pertaining to all subjects reflected in the notes. As Cardinal colorfully argued before the Court, Mr. Miller was acting as Mr. Lukach's “ventriloquist” during his telephone conversation with Mr. Hudson (5/9/05 Hrg. Tr., p. 227)
*6 This is an unusual situation where, as here, the producing party claims that a document is not privileged while the receiving party claims that it is privileged. The typical situation faced by the courts is vice versa. Nevertheless, the Special Master concurs with the Court's preliminary observations that it is difficult to “turn notes on a [non-lawyer's] conversation with a [non-lawyer] third party into a privileged document.” (See 5/9/05 Hrg. Tr., p. 231) Say, for example, the lawyer, Mr. Miller, had instead telephoned Mr. Hudson and prepared notes of that conversation While the lawyer 's notes may be subject to a claim of Federal Rule 26(b)(3) work-product privilege, the conversation which occurred between the two surely is discoverable and cannot be subject to a claim of client-attorney privilege.
If, arguendo, DuPont claimed privilege on the notes, it could not succeed The attorney-client privilege cannot allow a corporation to “funnel” its documents to its lawyers and thereby avoid production. Radiant Burners, Inc v. American Gas Ass'n, 320 F.2d 314, 324 (7th Cir. 1963). Likewise, “one cannot merely hand over documents to an attorney and have them protected by the attorney-client privilege.” Medical Waste Technologies, L.L.C v. Alexian Brothers Medical Center, 1998 WL 387706, *2 (N.D. Ill), citing Sneider v. Kimberly Clark Corp, 91 F.R.D. 1, 4 (N.D. Ill. 1980) and Radiant Burners, supra.
Cardinal has not cited any persuasive applicable legal authority for the proposition that notes of a non-privileged communication are automatically converted into a privileged document under these circumstances. Therefore, the Special Master respectfully recommends that the Court enter a finding that the “Lukach-Hudson Notes” (DNW 3010648-0657) are not privileged. Therefore, no confidential communications between DuPont counsel and Mr. Lukach about the notes or the Hudson telephone conversation were waived.
Summary of Recommendations
Based upon the foregoing, the Special Master respectfully RECOMMENDS that:
(1) DuPont's motion for return by Cardinal of the documents listed in and attached to the Bacon and Lukach Affidavits, with the exception of DNW 0075407, be GRANTED;
(2) DuPont's motion for return by Cardinal of document DNW 0075407 be DENIED; and
(3) Cardinal's motion to compel the production or disclosure of information confidentially communicated between DuPont counsel and Carl J Lukach relating to his September 19, 2003, telephone call with Michael Hudson or Mr. Lukach's notes be DENIED.
MICHAEL T. HANNAFAN SPECIAL MASTER
I, Diana M. Mucker, a non-attorney, under oath state that I caused a copy of the attached Second Status Report of Special Master and Report No. 1 and Recommendations of Special Master – Issue of Inadvertently Produced Privileged Documents to be deposited in the U.S. mail chute located at One East Wacker Dr., Chicago, IL. 60601 on August 4, 2005, and addressed to the following:
The Honorable Juliet Griffin
United States Magistrate Judge
United States District court
Middle District of Tennessee
(By Federal Express only)
Rebecca Weinstein Bacon, Esq.
Bartlit Beck Herman Palenchar & Scott LLP
54 West Hubbard Street, Suite 300
Michael J. Philippi, Esq.
Three First National Plaza
Michael T. Hannafan & Assoc., Ltd
End of Document.