In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig.
In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig.
2019 WL 6736132 (S.D.N.Y. 2019)
July 22, 2019
Barbara S. Jones, United States District Judge
Summary
The court found that documents shared with third parties, such as Van Houtte and JAB, were privileged, as long as the documents were shared for the purpose of obtaining legal advice or services. The court also found that documents sent to members of Keurig's Board of Directors at non-Keurig email addresses were not considered third party documents. Additionally, the court found that documents shared with related companies, such as StoneTurn, PricewaterhouseCoopers, LECG, Carbonview, and Motiv, were protected by either the attorney-client privilege or work-product immunity. Finally, the court found that Keurig failed to provide information or provided mistaken information that slowed the review process of ESI.
Additional Decisions
IN RE: KEURIG GREEN MOUNTAIN SINGLE-SERVE COFFEE ANTITRUST LITIGATION
14-md-2542 (VSB)(HBP)
United States District Court, S.D. New York
Signed
July 18, 2019
Filed July 22, 2019
Barbara S. Jones, United States District Judge
REPORT AND RECOMMENDATION OF SPECIAL MASTER
*1 On April 12, 2019, Magistrate Judge Henry Pitman appointed me to serve as Special Master to review documents in camera that Plaintiffs allege Keurig improperly withheld from production on the ground that they were privileged. On April 19, 2019, I issued an order to the parties setting forth procedure for my review. Keurig submitted all of the disputed documents to me, and my review is complete. I make the below Report and Recommendation to the Court with respect to these documents.
I. Background to the Privilege Dispute
In this lawsuit, Plaintiffs allege that Keurig engaged in “a wide range of anticompetitive conduct that was and is intended to, and has had the effect of, unlawfully maintaining [Keurig’s] monopolies in multiple markets.” TreeHouse Am. Compl. ¶ 2. During the course of discovery, Keurig has produced nearly 3.5 million documents. Tr. at 14:16-20, Mar. 22, 2019.
In the fall of 2018, Plaintiffs challenged Keurig’s privilege logs on the ground that they were insufficient, and that certain documents, including documents with no attorney in the metadata, did not appear to be privileged. At a November 9, 2018 conference before Judge Pitman, counsel for Plaintiffs stated that they had “gotten three versions of logs with a promise of more revisions to come.” Tr. at 76:11-12, Nov. 9, 2018. Though Plaintiffs sought a ruling that Keurig waived the privilege due to the inadequacy of the logs, Judge Pitman declined to make that ruling, stating, “I distinguish between total defaults and good faith efforts to submit a privilege log and there have been several cases ... where I have not found a waiver because I think there has been a good faith effort to comply, and I think this is one of those cases. So I’m not going to find a waiver now, but I take plaintiff’s point that at some point there has to be a final iteration of a log.” Id. at 101:2-11. On December 6, 2018, Judge Pitman issued an Order that required Keurig to produce “a revised, compliant index of documents withheld on the ground of privilege no later than December 18, 2018.” Order at 3, Dec. 6, 2018, ECF No. 473.
The dispute over withheld documents continued. At a January 11, 2019 hearing, Plaintiffs objected to the form of the privilege logs and the lack of substantiation for privilege assertions. Plaintiffs highlighted two problematic categories of documents: documents with no attorney in the metadata fields (e.g., “to,” “from,” “cc,” or “author”), Tr. at 33:4-6, 33:12-24, Jan. 11, 2019, and documents that were shared with third parties. Id. at 32:11-17. At the time, there were about 4,200 documents in dispute. Letter, Jan. 9, 2019, ECF No. 494. With respect to the sufficiency of the logs and the substantiation for the privilege, counsel for Keurig responded: “[T]he burden is on me to substantiate the privilege, but right now the burden is on me to have a log that is sufficient, which I believe I do. And then if we have a meaningful meet and confer on their challenges ... to the extent that there are challenge[d] categories or challenge[d] documents, I have a right to come forward and substantiate with affidavits or other evidence the privilege.” Tr. at 44:10-19; Jan. 11, 2019. Judge Pitman indicated that he would review selected documents in camera in order to address the categories of privilege challenges and help guide the parties in their meet and confers. Id. at 52:19-24. On January 23, 2019, Judge Pitman directed the Parties to submit 50 documents for his review. Order at 2, Jan. 23, 2019, ECF No. 501. On March 7, 2019, Judge Pitman issued an Order that contained his rulings on the documents. Order, Mar. 7, 2019, ECF No. 544.
*2 After Judge Pitman’s Order, the parties continued to meet and confer on privilege issues. Plaintiffs continued to dispute Keurig’s privilege assertions in the two main categories: “no attorney” and third-party documents. In a March 22 discovery conference, Plaintiffs indicated that most of their challenges were substantive rather than procedural. Tr. at 13:11-23, Mar. 22, 2019.
On April 12, 2019, I was appointed as Special Master to review the documents that remained in dispute. Shortly after my appointment, Judge Pitman entered a Stipulated Order Pursuant to Federal Rule of Evidence 502(d) which governs the production of documents that are the subject of a challenge based on the assertion of attorney-client privilege. Order, Apr. 15, 2019, ECF No. 571. The Order stated that any party’s production of such documents in this matter “are not in and of themselves a waiver of the attorney-client privilege, work product doctrine, and/or any other applicable privilege when such production or permission to view is made in response to a challenge of any asserted privilege.” Id. at 1.
At my first call with the parties, they indicated that the number of documents in dispute had dropped from around 4,300 to approximately 1,200 documents. The reduction in number of disputed documents was in part due to Keurig’s production of disputed documents pursuant to the Rule 502(d) Order. During this call with the parties, there was also a discussion of whether Keurig had waited too long to provide the “context” or declarations to substantiate its privilege assertions with respect to third parties. I permitted Keurig to provide these documents and declarations to substantiate the privilege with each submission to me.
On April 19, 2019, I issued a Report to the Court setting forth the procedures for my in camera review. Special Master Report, Apr. 18, 2019, ECF No. 576. Keurig was to provide me with the disputed documents on a rolling basis. With each submission, Keurig was to provide a legend of relevant persons and their roles and affiliations. Id. at ¶ 4. Keurig also was permitted to provide context documents and declarations regarding relevant third parties. Id. at ¶¶ 5-6. Keurig was to raise any applicable legal arguments with each submission. Id. at ¶ 7. Keurig began its rolling submissions on April 24 with its first batch of “no-attorney” documents. It then submitted two more batches of “no-attorney” documents on April 29 and May 3.[1]
On May 6, 2019, counsel for the TreeHouse Plaintiffs objected to what they perceived to be a delay in the production of substantiation for the third-party documents. TreeHouse argued that “any declarations supporting Keurig’s assertion of privilege over entries involving third parties were due, at the latest, at the time the motion to compel was briefed.” Letter at 2, May 6, 2019. TreeHouse requested that I set a deadline for the declarations regarding third-party documents. On May 8, I provided the following instructions by email: (1) Keurig was to submit the remaining documents by May 10; and (2) Keurig was to follow the procedures forth in the April 18 Special Master Report, and submit the legend, context documents, declarations, and legal briefing relevant to the claim of privilege over the underlying documents on that date. On May 10, Keurig provided a letter brief, declaration, the disputed third party documents, and context documents. In its letter brief, Keurig stated that “now is the appropriate time for Keurig to substantiate the privilege.” Keurig Letter Br. at 3. On May 23, TreeHouse submitted a responsive letter brief on the disputed privilege issues. On May 24, Keurig submitted a brief reply.
*3 Ultimately, Keurig provided me with 1229 documents for my review.[2] Two hundred one of those documents were context documents, and Keurig ultimately withdrew the privilege designation over 34 documents, leaving 995 disputed documents. In June and July, I requested and received a list of documents that correspond to each third party challenge and additional context documents for three disputed attachments to emails. I reviewed all of the disputed documents, the context documents, the declaration, and the legal briefing. During the course of my review, I also sent Keurig’s counsel two rounds of questions ex parte and received answers that I also considered. See Order at 1, Apr. 12, 2019, ECF No. 569 (“The Special Master may communication with the parties or the undersigned on an ex parte basis as she deems appropriate.”).
II. Threshold Decisions Applicable to All Documents
Plaintiffs raise several procedural points that must be decided before I address individual documents. At the outset of my review, Plaintiffs argued that Keurig should have presented its evidentiary substantiation of the privileged documents when they filed their motion to compel, and since they had not done so, they should not be permitted to present such evidence to me. As I read the record, Judge Pitman clearly contemplated that I would consider all relevant substantiation in connection with my review. I agree with Keurig that “now is the time to substantiate the privilege.” As discussed below, however, Keurig’s submissions to me were its last opportunity to do so with respect to these documents.
Next, Plaintiffs argued: (1) Keurig cannot assert work product protection over documents where the protection was not asserted on its multiple prior iterations of its logs or the version of the log submitted to me; (2) in other instances, Keurig has not substantiated work-product in its letter brief; and (3) the “common interest” privilege theory in Keurig’s letter brief has been waived because Keurig never asserted common interest privilege in any of its prior logs. Pl. Letter Br. at 2.
With respect to Plaintiffs’ first procedural argument, I find that Keurig may assert work product protection over three documents it identified for the first time in its letter brief as being work product (Documents 374, 375, and 376).[3] But Keurig’s letter brief was its last opportunity to assert additional protections, and I have not ruled that certain documents are work product where it has not been claimed, either in the logs or in its letter brief. With respect to Plaintiffs’ second argument, I evaluated each document individually, along with the context documents, and did not make categorical decisions based on the letter brief. For example, I found that the attorney-client privilege could not be maintained over documents shared with some third parties, but that individual documents shared with those same third parties may qualify for work product protection. I do note, however, that a few documents were shared with third parties that are not mentioned in the letter brief, and Keurig makes no attempt to explain its relationship with those third parties. See Doc. 107 (Compass Marketing); 438 (Buckland Consulting); Doc. 478 (Smart Girl LLC). Where that has occurred, Keurig has not met its burden to substantiate the privilege. Finally, with respect to Plaintiff’s final argument, I find that the common interest privilege is an “extension of the attorney-client privilege,” U.S. v. Krug, 868 F.3d 82, 86 (2d Cir. 2017), and thus even though “common interest” was not asserted on prior logs, as long as it is adequately established in the materials submitted to me, Keurig may assert that documents disclosed to third parties remain privileged due to the common interest rule.
III. The Law Governing These Disputes
A. Attorney-Client Privilege
*4 The attorney-client privilege protects “communications (1) between a client and his or her attorney (2) that are intended to be, and in fact were, kept confidential (3) for the purpose of obtaining or providing legal advice.” ACLU v. Nat’l Sec. Agen., No. 17-cv-3399, 2019 WL 2295077, at *6 (2d Cir. May 30, 2019); see also AU New Haven, LLC v. YKK Corp., No. 15-cv-03411(GHW)(SN), 2016 WL 6820383, at *1 (S.D.N.Y. Nov. 18, 2016) (quoting In re County of Erie, 473 F.3d 413, 419 (2d Cir. 2007)). The purpose of the privilege is to “encourage clients to make full disclosure to their attorneys.” Universal Std. Inc. v. Target Corp., ---F.R.D.---, 2019 WL 1983944, at *4 (S.D.N.Y. May 6, 2019) (internal quotation marks omitted). Despite this important purpose, the attorney-client privilege “exacts significant costs because it runs counter to the ordinary judicial interest in the disclosure of all relevant evidence.” Id. (internal quotation marks omitted). As a result, “courts apply the attorney-client privilege only where necessary to achieve its purpose and construe the privilege narrowly because it renders relevant information undiscoverable.” Id. (internal quotation marks omitted).
As discussed below, a portion of my review deals with whether disclosure to a third party destroys attorney-client privilege. Normally “disclosure to a third party by the party of a communication with his attorney eliminates whatever privilege the communication may have originally possessed.” Id. at *5. Yet as Magistrate Judge Gorenstein recently explained in Universal Std., there are exceptions to that rule. “One exception commonly applied involves communications with the attorney and a third party who has a common legal interest, sometimes referred to as the ‘common interest’ doctrine or the ‘joint defense privilege.’ ” Id. at *5. Another exception to the general waiver rule involves “cases in which the third party is deemed essential to allow communication between the attorney and the client, such as an interpreter or accountant.” Id. (citations and internal quotation marks omitted).[4] These two exceptions—common-interest and essential third party consultant—are the most common exceptions at issue in this review.
1. Common Interest
The common-interest rule is an “extension of the attorney-client privilege.” Krug, 868 F.3d at 86. It protects “the confidentiality of communications passing from one party to the attorney for another party where a joint defense effort or strategy has been decided upon and undertaken by the parties and their respective counsel.” Id. (internal quotation marks omitted). Only communications “made in the course of an ongoing common enterprise and intended to further the enterprise” are protected by the common-interest rule. Id. (internal quotation marks omitted). The rule “does not encompass a joint business strategy which happens to include as one of its elements a concern about litigation;” rather the parties must have “demonstrated cooperation in developing a common legal strategy.” AU New Haven, 2016 WL 6820383, at *3 (internal quotation marks omitted).
2. Third Party Essential for Communication Between Client and Counsel
For the next exception, instances where third party communications are essential to allow communication between client and counsel, “waiver is not found where the presence of a third party is needed to allow the client to communicate information to an attorney, such as where a translator is used or where an accountant supplies specialized knowledge to allow an attorney to understand the client’s situation.” Universal Std., 2019 WL 1983944, at *5. A communication between an attorney and a third party is not protected by the attorney-client privilege solely because it is important to the attorney’s ability to represent the client; instead the third party’s involvement must be to “improve the comprehension of the communications between attorney and client.” Id. (internal quotation marks omitted).
B. Work Product Protection
*5 The work product doctrine is “intended to preserve a zone of privacy in which a lawyer can prepare and develop legal theories and strategy with an eye toward litigation free from unnecessary intrusion by his [or her] adversaries.” U.S. v. Adlman, 134 F.3d 1194, 1196 (2d Cir. 1998) (internal quotation marks omitted). Under Rule 26(b)(3) of the Federal Rules of Civil Procedure, there are three requirements for work product protection to apply; the material must “(1) be a document or tangible thing, (2) that was prepared in anticipation of litigation, and (3) was prepared by or for a party, or by or for his representative.” AU New Haven, 2016 WL 6820383, at *1. This doctrine “protects only documents prepared because of the prospect of litigation and does not protect documents that would have been prepared irrespective of the expected litigation.” Id.; see also Adlman, 134 F.3d at 1202-03 (explaining the prepared “because of” formulation for work product protection).
“Unlike the rule for the attorney-client privilege, the protection afforded work product is not waived merely because the material is disclosed to a third party.” Bank of Am., N.A. v. Terra Nova Ins. Co., 212 F.R.D. 166, 169 (S.D.N.Y. 2002). A waiver of work product protection occurs when the covered materials are used in a manner that is inconsistent with the protection, such as when they are given to an adversary or used in such a way that may end up in the hands of an adversary. Id. at 170.
C. Burden of Establishing Privilege
The party asserting the privilege bears the burden of establishing its essential elements. U.S. v. Mejia, 655 F.3d 126, 132 (2d Cir. 2011). This burden is not discharged “by mere conclusory or ipse dixit assertions.” Universal Standard, 2019 WL 1983944, at *4 (quoting In re Grand Jury Subpoena Dated Jan. 4, 1984, 750 F.2d 223, 224-25 (2d Cir. 1984)). The party invoking the privilege also has the burden to show that the privilege has not been waived. Id. (citing Wultz v. Bank of China Ltd., 304 F.R.D. 384, 391 (S.D.N.Y. 2015)); see also Bank of Am., 212 F.R.D. at 169 (“The party asserting the protection afforded by the work product doctrine has the burden of showing both that the protection exists and that it has not been waived.”).
Even when a party has demonstrated that material is protected by the work product protection, that is not the end of the inquiry. A court must examine whether
the party seeking discovery has made an adequate showing of substantial need for the document and an inability to obtain its contents elsewhere without undue hardship. The district court can order production of the portions of the document for which a litigant has made an adequate showing. The court can focus its attention on whether the document or any portion is the type of material that should be disclosed, while retaining the authority to protect against disclosure of the mental impressions, strategies, and analyses of the party or its representative concerning the litigation.
Adlman, 134 F.3d at 1203.
IV. “No-Attorney” Documents
Roughly three quarters of the disputed documents were challenged on the ground that no attorney appears in the metadata of the document, and thus no attorney appears in the “to,” “from,” “cc,” or “author” fields on Keurig’s logs. At some point before my review, Keurig identified the attorneys whose communications are captured in the documents in its “privilege description” column on its logs. Plaintiffs still challenged the applicability of the privilege to the “no-attorney” documents.
The vast majority of these documents are privileged. Generally speaking, they are internal Keurig email chains where a lawyer has provided legal advice or legal advice has been sought, and then non-lawyers share the email chain with other non-lawyers at Keurig. “[A]lthough dissemination of privileged information to third parties generally waives attorney-client privilege, the distribution within a corporation of legal advice received from its counsel does not, by itself, vitiate the privilege.” AU New Haven, 2016 WL 6820383, at *2 (internal quotation marks omitted). Other times, they are documents edited by attorneys and attached to privileged parent emails, or they are work product where an attorney asked for materials for a litigation and others in the company sought to provide those materials to the attorney.
*6 There were some documents that were not privileged, and those appear on the list of individual document rulings at the end of this decision. Broadly speaking, I concluded that a document was not privileged when:
• An email chain included attorneys but did not contain legal advice; or a document contained attorney edits but they were not legal in nature;
• An email chain began with a privileged communication that was shared by a Keurig non-lawyer with non-lawyers at Keurig and then the recipients began discussions that were not protected by attorney-client or work product protection (this would be a partially privileged document); or
• An email or document was shared with a third party that vitiated the applicable privilege at an earlier point in the email chain.
V. Third-Party Documents
About one quarter of the documents I reviewed involved documents that were shared with third parties.[5] Over the course of several years, Keurig engaged financial, accounting, auditing, research, consulting, and communications firms to assist with various issues, and at times it shared privileged documents with these firms. It also shared privileged documents with individuals and attorneys at parent and subsidiary corporations. The question before me is whether sharing these otherwise privileged documents vitiated the privilege. As set forth below, in some instances Keurig met its burden of showing the privilege had not been waived, and in other instances it did not.
A. Sufficiency of Keurig’s Substantiation
Along with its letter brief, Keurig proffered the disputed documents, certain “context” documents, and one declaration that addressed the retention of a forensic accounting firm, StoneTurn, and Keurig’s independent auditor, PricewaterhouseCoopers (“PwC”). Plaintiffs argue that Keurig’s substantiation for the third parties other than StoneTurn and PwC “amounts to nothing more than the musings of Keurig’s counsel, without identification of the source or reliability of the information or the suggestion that such counsel has personal knowledge of the recited ‘facts.’ ” Pl. Letter Br. at 3. Plaintiffs argue that due to this failure, Keurig has not substantiated its burden to support the extension of privilege to documents shared with these third parties.[6]
*7 I find that Keurig’s failure to proffer declarations regarding the third parties other than StoneTurn and PwC does not mean that it has categorically failed to substantiate its burden with respect to documents shared with those third parties. Plaintiffs are correct that a party seeking to establish privilege must do so “based on competent evidence, usually through the admission of affidavits, deposition testimony or other admissible evidence.” Gulf Islands Leasing, Inc. v. Bombardier Capital, Inc., 215 F.R.D. 466, 472 (S.D.N.Y. 2003) (citing von Bulow by Auersperg v. von Bulow, 811 F.2d 136, 147 (2d Cir. 1987)). But I am aware of no case that holds that declarations are required, particularly where the party asserting privilege has proffered the disputed documents and other context documents for in camera review. See generally Egiazaryan v. Zalmayev, 290 F.R.D. 421, 436 (S.D.N.Y. 2013) (finding work product protection based on the content of emails reviewed in camera). I evaluated each third party on a case-by-case basis. In some instances, Keurig has failed to carry its burden to substantiate the privilege in the absence of more evidence, and in other instances, the documents are sufficient to substantiate the privilege.
B. Documents Shared with Keurig Parties
1. Keurig’s Board of Directors
This first group of “third party” documents does not involve third parties at all. It involves documents sent to members of Keurig’s Board of Directors at non-Keurig email addresses (e.g., to first.last@tumi.com rather than first.last@keurig.com). Plaintiffs flagged these documents as third party documents because it appeared they had been shared outside the organization. In connection with my review, Keurig provided SEC filings listing its Boards of Directors during the relevant timeframe. These filings show that the individuals who received these documents were Keurig Directors at the time of the emails, and I find that the privilege is not destroyed by their receipt of the documents.
Plaintiffs claim that because Keurig’s privilege logs failed to identify the members of the Board of Directors and on that basis alone, I should find a waiver over these documents. I do not find such a measure to be appropriate here, where Keurig has now adequately substantiated the privilege with reliable evidence. Moreover, Board of Director membership is publicly available, and Keurig previously alerted the Court and Plaintiffs months ago that one Board Member, who appears in many of the disputed Board of Directors documents, was a Board Member rather than a third party. See Jan. 11 Tr. at 48:7-12 (“So you, Your Honor, mentioned Tumi. That is one of our board members. So when we send board materials to him, it goes to his email address. The problem is, that they are rushing into court from right after New Year’s without giving us a chance to explain all of this.”).[7]
2. Van Houtte and JAB, Related Companies
The next categories of disputed documents are those shared with individuals and lawyers at Van Houtte or Keurig Canada, which were Keurig-related companies, and JAB, Keurig’s corporate parent. With respect to attorney-client privilege, Keurig argues that inter-related corporate communications are treated in the same manner as intra-corporate communications, relying on Music Sales Corp. v. Morris, No. 98 Civ. 9002(SAS)(FM), 1999 WL 974025 (S.D.N.Y. Oct. 26, 1999), and Cary Oil Co. v. MG Ref. & Mktg., Inc., 99 Civ. 1725(VM)(DFE), 2000 WL 1800750 (S.D.N.Y. Dec. 7, 2000). Plaintiffs argue that under the more recent Gulf Islands Leasing, “the proponent of the privilege must still prove a common legal interest and may not rely solely on the fact that the entities at issue are affiliated with each other.” 215 F.R.D. at 473-74.
*8 I find that Keurig may not rely on inter-relatedness alone to demonstrate attorney-client privilege. The more recent decisions in Gulf Islands and AU New Haven, 2016 WL 6820383, represent a trend toward requiring more from corporate entities than simple affiliation to meet their burden of establishing that documents shared with related corporate entities remain privileged. In declining to adopt the same per se standard that Keurig proposes here, the court in AU New Haven found that “in certain circumstances, commonly owned subsidiaries simply do not have the common purpose in litigation necessary for the invocation of the doctrine. ‘Privileges should be narrowly construed and expansions cautiously extended.’ ” 2016 WL 6820383, at *6 (quoting United States v. Weissman, 195 F.3d 96, 100 (2d Cir. 1999)). Thus, in order to maintain the attorney-client privilege over these documents, Keurig must demonstrate that “a common attorney was representing both corporate entities or that they otherwise shared a common legal interest.” Id. at *3.
Requiring corporate parties to establish a common representation or interest is not an arduous task; indeed in AU New Haven, immediately after the court found that the proponent of the privilege must do this, the court found that “Defendants have amply proven [that the two corporate entities] may invoke the common interest doctrine to maintain their communications privileged.” Id. at *7. The court cited a proffered declaration from one of the entities’ Chief Legal Counsel, the disputed documents, and other documents that all confirmed the court’s finding that the staff of one company regularly requested and relied on the legal advice of the other’s attorneys and treated them “in all respects as if they were in-house counsel directly employed by [the former].” Id.
The problem for Keurig is that it has not come forward with reliable evidence of a similar arrangement with respect to counsel or a common legal interest between Keurig and Van Houtte or Keurig Canada. Keurig only points to its documents, and these documents raise more questions than they answer. Keurig claims that Van Houtte was purchased by Keurig in December 2010 and “Van Houtte employees became Keurig (or Keurig Canada) employees.” Keurig Letter Br. at 6. Yet the documents show that some of these employees continued to use Van Houtte email addresses (something Keurig says, without any evidentiary support, was the mis-use of an email address), Van Houtte continued to operate apart from Keurig with separate counsel and separate interests for a period of time, and Keurig identified certain employees as “Van Houtte” in their legends to Judge Pitman and “Keurig” in their legends to me. See In Camera Review Vol. 1, Tab 3 Legend (identifying Jean-Olivier Boucher, Sylvain Toutant, and Maria Garliaris as “Van Houtte” individuals).[8] Moreover, it appears that all of the former Van Houtte employees actually became employees of Keurig Canada, not Keurig, and Keurig has provided no information about Keurig Canada at all. Even if one could discern the actual Van Houtte/Keurig Canada corporate structure (including who worked where at the relevant times) from the documents, there is an even larger problem—there is no simply substantiation of a common legal interest between Keurig and Van Houtte (or Keurig Canada, if applicable) or any evidence that counsel effectively represented both corporate entities in the manner set forth in AU New Haven. The documents alone here are not enough, and Keurig chose not to submit any kind of declaration explaining the basis for the privilege. As such, Keurig has not substantiated its assertion of attorney-client privilege over documents shared with former Van Houtte employees who became Keurig Canada employees.
*9 With respect to JAB, Keurig has done a bit more to explain the nature of its relationship to Keurig, see Doc. 1095, but the documents do not demonstrate that Keurig and JAB shared a common legal interest to maintain the attorney-client privilege with respect to the documents at issue. Having staked the success of its claim of attorney-client privilege on its interpretation of the law, Keurig made no attempt to demonstrate a joint representation or common legal interest with reliable evidence.[9] Keurig’s general statements in its letter brief that Keurig’s and JAB’s interests on litigation and potential transactions were aligned are insufficient to carry its burden. As a threshold matter, Keurig cannot rely on “a joint business strategy which happens to include as one of its elements a concern about litigation,” AU New Haven, 2016 WL 6820383, at *3, and more fundamentally, Keurig produced no declarations or other reliable evidence to adequately substantiate a claim of common legal interest here. As such, Keurig has failed to demonstrate that documents shared with JAB remain privileged. See Bowne of N.Y.C. Inc. v. AmBase Corp., 150 F.R.D. 465, 491 (S.D.N.Y. 1993) (noting that courts that have upheld the privilege for communications by the parent with its wholly-owned subsidiary “have done so only upon a showing that a common attorney was representing both corporate entities or that the two corporations shared a common legal interest”).[10]
With respect to work product protection over certain documents prepared in anticipation of litigation and shared between Keurig and Van Houtte/Keurig Canada or JAB, these documents remain protected since sharing work product among related companies generally is not a disclosure inconsistent with the work product protection, nor do I see anything in the documents to suggest there was a disclosure inconsistent with the protection here.
C. Third Party Consultants
1. StoneTurn
Plaintiffs challenge Keurig’s privilege assertions over documents shared with or authored by StoneTurn, a forensic accounting firm hired by Keurig in the fall of 2010. Keurig produced the declaration of Frances Rathke, Keurig’s Chief Financial Officer from October 2003 to August 2015 and Senior Advisor to the CEO of Keurig from August to December 2015, in support of its claim of privilege. In her declaration, Ms. Rathke states:
In September 2010, the [SEC] opened an inquiry into Keurig’s annual financial statements in SEC filings. Keurig retained Ropes & Gray as its law firm representing Keurig in connection with that SEC inquiry and resulting internal investigation. Ropes & Gray then retained StoneTurn Group LLP ... to provide forensic accounting assistance in connection with the SEC’s inquiry and internal investigation, which enabled their legal advice to Keurig. The SEC investigation closed without action in 2014.
[ ]StoneTurn further assisted Ropes & Gray with Keurig’s regulatory controls, including internal investigations in 2011 and 2012, acquisition accounting issues and various SEC inquiries with respect to Keurig’s SEC filings, and with respect to the preparation of quarterly and yearly SEC filings.
Rathke Decl. ¶¶ 3-4. Plaintiffs argue that Ms. Rathke’s declaration is insufficient to substantiate the privilege because in her deposition, she could not recall or had no personal knowledge of certain facts, such as the applicable billing arrangement, the supervision of StoneTurn, or the work-product generated by StoneTurn. These attacks on Ms. Rathke’s ability to recall certain facts about StoneTurn’s retention do nothing to undermine her declaration, her deposition testimony (in which she demonstrates her personal knowledge of StoneTurn’s role), or the documents themselves, all of which demonstrate that StoneTurn was an “arm of the attorneys in order to facilitate the lawyers’ rendition of work for the client.” Fitzpatrick v. Am. Int’l Grp., Inc., No. 10 Civ. 142(MHD), 2011 WL 350287, at *3 (S.D.N.Y. Feb. 1, 2011). StoneTurn’s role was to supply “specialized knowledge to allow an attorney to understand the client’s situation.” Universal Std., 2019 WL 1983944, at *5. As such, attorney-client privileged communications that include StoneTurn remain privileged.
*10 In addition, documents prepared in response to the SEC’s inquiry are entitled to work-product protection where Keurig has asserted that protection on its privilege logs. The SEC’s inquiry triggered Keurig to retain a law firm to conduct an internal investigation, hire StoneTurn, and engage in protracted discussions with the SEC over the course of several years. Documents that StoneTurn prepared are work product, and Keurig or Keurig attorney documents that were shared with StoneTurn remain protected by work product because they were not shared with a third party in a manner that was inconsistent with that protection.[11]
2. PricewaterhouseCoopers
Keurig and its lawyers also shared attorney-client privileged and work product protected materials with PwC, Keurig’s external auditor. Ms. Rathke describes PwC’s involvement as follows:
In connection with the SEC inquiry noted above, as well as other SEC inquiries, Ropes & Gray, with StoneTurn, provided certain privileged information to Keurig’s registered public accounting firm, [PwC], and requested information held by them, on a confidential basis, to facilitate their approval of Keurig’s financial statements.
Rathke Decl. ¶ 5. Keurig’s letter brief styles the relationship differently; it claims that PwC “provided information and assistance to StoneTurn and Ropes & Gray as they defended Keurig against a potential enforcement action from the SEC.” Keurig Letter Br. at 12. Keurig then argues that where a party’s lawyer or agent requests documents from the external auditor, communications “may be protected under either the attorney-client privilege or work-product immunity.” Id. (citing Fitzpatrick, 2011 WL 350287, at *3). Ms. Rathke’s and Keurig’s descriptions of events put the information flowing in opposite directions. Ms. Rathke states that Keurig, Ropes & Gray, and StoneTurn provided information to PwC so that it could approve Keurig’s financial statements; Keurig states that PwC provided information to Keurig, Ropes & Gray, and StoneTurn to assist with Keurig’s defense against the potential SEC action.
Ms. Rathke is correct. Her sworn statement is amply corroborated by the documents. It is clear that PwC was acting as a conscientious, independent auditor, and at times Keurig’s lawyers and StoneTurn provided information or drafts of SEC filings so that PwC could approve Keurig’s financial statements and otherwise do its job. PwC is not a third party whose role was to supply its client’s attorney with specialized knowledge. PwC is a third party that vitiates the attorney-client privilege.
But where Keurig shared documents protected by the work-product doctrine and claimed work-product protection over such documents in its logs, these documents are not discoverable. In reaching this conclusion, I follow the reasoning in Merrill Lynch & Co., Inc. v. Allegheny Energy, Inc., 229 F.R.D. 441 (S.D.N.Y. 2004), in which Judge Baer found that work product shared with an independent auditor remains protected because disclosure to an auditor is not disclosure inconsistent with maintaining secrecy from possible adversaries. Judge Baer found that “any tension between an auditor and a corporation that arises from an auditor’s need to scrutinize and investigate a corporation’s records and book-keeping practices simply is not the equivalent of an adversarial relationship contemplated by the work product doctrine.” Id. at 448. As long as the underlying document is work product, and Keurig claimed such protection on its logs, sharing it with PwC does not destroy that protection.[12]
3. LECG
*11 The documents demonstrate that LECG was retained by Keurig’s counsel, Ropes & Gray, to provide economic analyses for Keurig’s defense of the acquisition of Diedrich Coffee to the Federal Trade Commission. Much like StoneTurn, LECG supplied “specialized knowledge to allow an attorney to understand the client’s situation.” Universal Std., 2019 WL 1983944, at *5. Documents created by and shared with LECG are protected by the attorney-client privilege.
4. Carbonview
The documents demonstrate that Carbonview was retained by Keurig’s counsel, Wolf Greenfield, to prepare and conduct surveys during Keurig’s litigation with Sturm Foods. The documents were prepared for the litigation by Keurig’s attorney and/or Carbonview, its agent. As such, these documents are protected by the work-product doctrine, and Plaintiffs have not demonstrated a substantial need for these documents.
As discussed above, I will allow Keurig to assert work product protection over the three Carbonview documents where this designation was claimed belatedly in its letter to me.
5. Motiv
Similarly, the documents demonstrate that Keurig’s counsel requested that its consultant Motiv provide materials for its legal defense in the preliminary injunction hearing in this case. These documents are work product, and Plaintiffs have not demonstrated a substantial need for these documents.
6. Sloane & Company/Joele Frank
There are two disputed documents concerning the public relations firms Sloane & Company and Joele Frank. The first is a memorandum drafted by Joele Frank to Keurig’s General Counsel regarding “SEC Media Strategy.” Doc. 635.[13] Keurig claims that this document is attorney-client privileged under the third line of cases set forth in Universal Standard, consultants used by lawyers to aid in legal tasks. 2019 WL 1983944, at *9. Under this line of cases, documents are privileged where “attorneys us[e] a public relations consultant to implement a specific legal strategy that required the use of a public relations consultant.” Id. Here, Keurig simply recited this standard and proffered no evidence of the legal strategy that required the use of a public relations consultant. The memo itself shows general public relations consulting work and does not shed light on a “specific legal strategy” that required the use of Joele Frank. This document is not protected by the attorney-client privilege.
*12 The second document, Document 1228, is an email chain that begins with Keurig’s in-house counsel discussing a news article that related to the then upcoming expiry of its patents. Doc. 1228. Keurig’s in-house counsel decided to have its outside patent counsel comment on the article, and one of the in-house attorneys responded to other in-house attorneys with outside counsel’s comments. Several weeks later, one of the in-house lawyers forwarded the chain to several individuals, including individuals at the public relations firms Joele Frank and Slone & Co. In its letter brief, Keurig argues this document is work product. On its log, it asserts both attorney-client privilege and work product protection.
Because Document 1228 was shared with the public relations firms, it is not attorney-client privileged, and Keurig appears to abandon this protection in its letter brief.[14] See Keurig Letter Br. at 14-15 (arguing for work product protection only). As set forth above, there is no evidence of a “specific legal strategy” that required the use of these public relations firms, and there is no indication that the document was in furtherance of a legal strategy on the part of the public relations firms.
Nor is the document work product. Keurig has not submitted any evidence as to why it was created. The document itself indicates that it was created because Keurig was concerned it would “get many questions on the theories posited” in the article. While it is true that the outside lawyer’s comments reference the Sturm litigation in passing, nothing in the document demonstrates that it was created because of the Sturm litigation. See Adlman, 134 F.3d at 1202 (no protection for “documents that are prepared in the ordinary course of business or that would have been created in essentially similar form irrespective of the litigation.”). The document shows that it was created to provide information for future outside inquiries regarding Keurig’s future when its patents expire, and therefore, work product protection does not apply.
7. MSL Worldwide
The final document in my review is one that was shared with MSL Worldwide. This document was Number 15 on the “Third Party” documents submitted to Judge Pitman, and Judge Pitman found that the “privilege [was] questionable because it was sent to individuals at MSL Worldwide. Order at 4, Mar. 7, 2019, ECF No. 544. Judge Pitman could not “determine from the email what MSL Worldwide is and the nature of its relationship to the subject of the email.” Id. In its letter brief, Keurig claims that MSL Worldwide was a global public relations firm that was advising Keurig counsel with respect to a brewer issue. It has submitted no declaration or context documents that would demonstrate that fact, and I, like Judge Pitman cannot determine the nature of MSL Worldwide’s relationship to the subject of the email. Moreover, Keurig acknowledges that the communication here does not “fit neatly within the three lines of cases identified in Universal Std.,” but rather is somewhere between the first (third party essential to improving communication between the client and attorney) and second (third party is “functional equivalent” of a corporate employee). Keurig Letter Br. at 15. Keurig categorizes the relationship here as beyond “normal use” of a PR firm. But “a communication between an attorney and a third party does not become shielded by the attorney-client privilege solely because the communication proves important to the attorney’s ability to represent the client.” Universal Std., 2019 WL 1983944, at *5 (quoting U.S. v. Ackert, 169 F.3d 136, 139 (2d Cir. 1999)). Keurig has not demonstrated that MSL Worldwide “served to improve counsel’s understanding” of the client’s request or receipt of legal advice, nor has it demonstrated that MSL worldwide was the functional equivalent of a Keurig employee. The MSL Worldwide document is not privileged.
VI. CONCLUSION
*13 I respectfully submit this Report and Recommendation for the Court’s consideration. I set forth my decisions on individual documents in the list appended to this Report and Recommendations. I have reached my decision on these documents based on the decisions above. To the extent my decision on an individual document rested on a legal principle not discussed in this Report and Recommendation, I have noted the applicable legal principle in my list.
Throughout this Report, I have described instances where Keurig failed to provide information or provided mistaken information that slowed the review process. Although 83% of the documents have been found to be privileged, the manner in which Keurig provided information made it difficult for Plaintiffs and me to discern the privilege in many areas. I respectfully recommend that these factors be taken into account when the Court assesses costs.
Decisions on Documents
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Footnotes
The parties also provided me with relevant correspondence, filings, and court decisions; counsel for Keurig provided me with the documents that Judge Pitman reviewed in camera.
Keurig provided me with 1228 documents and asked me to rule on one of the documents that Judge Pitman could not rule upon because he did not have enough information. Order at 4, Mar. 7, 2019, ECF No. 544.
These documents were shared with Carbonview, a third party consultant discussed in more detail below.
Other exceptions include “cases involving communications between a third party and a corporation’s attorney where the third party is deemed the ‘functional equivalent’ of a corporate employee; and [ ] cases involving consultants used by lawyers to assist in performing [certain] tasks that go beyond advising a client as to the law—in particular, tasks that promote broader public interests in the observance of law and administration of justice.” Universal Std., 2019 WL 1983944, at *5 (citations and internal quotation marks omitted).
For some of these “third party” documents, the metadata fields in the privilege logs indicated that a third party had created the document, but the documents themselves show that a Keurig attorney edited them and circulated them internally. See, e.g., Docs. 991, 997, 999. Keurig’s logs did not always indicate that the lawyer himself or herself was editing the document. Compare Consolidated Log, Doc. 997 (describing the document as “[a]ttachment to privileged communication sent to William Karim* for the purpose of obtaining legal advice regarding distribution agreement”) with Consolidated Log, Doc. 999 (describing the document as “[a]ttachment to privileged communication reflecting legal advice of William Karim* for the purpose of obtaining legal advice with respect to draft agreement”). Such documents are not really “third party” documents, although they may have appeared as such on the privilege logs.
Plaintiffs also argue that the declaration regarding StoneTurn and PwC is substantively deficient, which I address below.
I note, however, that Plaintiffs may have been justifiably confused by Keurig’s “Privilege Description” in its logs. For example, Keurig described Document 1024, an email among Keurig attorneys, Keurig employees, and Keurig Board of Directors members as “Confidential communication with counsel and third-party consultants necessary for obtaining legal advice with respect to draft SEC submission.” Consolidated Log, Doc. 1024 (emphasis added). There were no third-party consultants on this document. Though I do not believe this error warrants a waiver of the privilege with respect to this document, I note it to the Court for consideration when determining the allocation of costs for this review.
Adding to the confusion, several of the former Van Houtte employees do not appear on the Legend accompanying the Third Party Documents (Volume 4), at all. For example, Jean-Olivier Boucher and Gerard Geoffrion had appeared as individuals affiliated with Keurig in the Volume 1 Legend (Boucher as “Keurig In-House Legal Counsel” and Geoffrion as “Keurig Personnel”) but are noticeably absent on the Third Party (Volume 4) Legend. Keurig’s letter brief identifies Boucher as the VP and General Counsel of Keurig Canada; the letter does not identify Geoffrion’s position at all.
For nearly every entry related to documents shared with JAB, Keurig described the document as a “confidential communication with counsel and third-party consultants.” See Consolidated Log Docs. 1086-1094. There were no third parties other than JAB and at times, JAB’s counsel, on these documents. Moreover, the confusion continued when several of the JAB individuals were either identified as “Keurig Personnel” or not at all on the Third Party (Vol. 4) Legend. For example, the JAB recipients in Document 1090, are either listed as “Keurig Personnel” (Robert Gamgort, Ozan Dokmecioglu), or do not appear at all on the Third Party (Vol. 4) Legend (Joachim Creus, Olivier Goudet, David Bell).
Though Bowne applied New York, not federal law, on attorney-client privilege, “New York law governing the attorney-client privilege is generally similar to accepted federal doctrine.” 150 F.R.D. at 470; see also NXIVM v. O’Hara, 241 F.R.D. 109, 124 (N.D.N.Y. 2007) (“[T]he distinction between New York and federal law on attorney-client privilege is quite indistinguishable.”).
I also find that Plaintiffs have not demonstrated a “substantial need” for StoneTurn documents that are protected by the work-product doctrine.
I also find that Plaintiffs have not demonstrated a “substantial need” for PwC documents that are protected by the work-product doctrine.
In its letter brief on third party issues, Keurig wrote that there was only one email in the challenged documents that involved Joele Frank, Doc. 1228. In my ex parte questions, I asked Keurig’s counsel whether they still were asserting privilege over the Joele Frank memo found at Document 635. Keurig’s counsel indicated that it was indeed asserting privilege over the document. Keurig claimed that it did not include this document in its letter brief on third party issues because it was challenged as a “no attorney” document rather than a “third party document.” Yet Keurig’s letter brief addressed several documents challenged as “no attorney” that were really third party documents. See Keurig Letter Br. at 14 n.16 (explaining it failed to assert work product over the Carbonview documents because they were originally challenged as “no attorney” documents). In addition, when I asked Keurig for the list of documents that correspond to each third party challenge (after I alerted Keurig to the presence of this memo in the documents), Keurig still listed Document 1228 as the only Joele Frank document. If I were I inclined to find this document privileged, I would have invited Plaintiffs to brief waiver of privilege with respect to this document. As discussed below, I find that it is not privileged on the merits.
I note that if the document had not been shared, it most certainly would have been protected by the attorney-client privilege.