Travelpass Grp., LLC v. Caesars Entm't Corp.
Travelpass Grp., LLC v. Caesars Entm't Corp.
2021 WL 4027374 (E.D. Tex. 2021)
February 9, 2021
Craven, Caroline M., United States Magistrate Judge
Summary
The court denied the defendant's motion to compel the plaintiff to produce withheld and redacted communications and documents exchanged between Austin Lowe, TravelPass's General Counsel, and Paul Gallagher, an attorney at the United States Department of Justice (“DOJ”). The court found that the withheld and redacted materials were protected work product and that the disclosure of the materials to the DOJ did not constitute a waiver of the work-product immunity. No ESI was discussed in this case.
Additional Decisions
TRAVELPASS GROUP, LLC, PARTNER FUSION, INC. and RESERVATION COUNTER, LLC
v.
CAESARS ENTERTAINMENT CORPORATION, ET AL
v.
CAESARS ENTERTAINMENT CORPORATION, ET AL
Case No. 5:18-cv-153-RWS-CMC
United States District Court, E.D. Texas, Texarkana Division
Signed February 09, 2021
Counsel
Barira Munshi, Christopher W. Patton, Jared Daniel Eisenberg, Samuel Butler Hardy, IV, Ruben Alan Garcia, Christopher John Schwegmann, Lynn Pinker Cox & Hurst LLP, Cory Courtney Johnson, Rebecca Lynn Adams, Lynn Pinker Hurst & Schwegmann, LLP, Dallas, TX, Jason H. Kim, Todd Schneider, Schneider Wallace Cottrell Konecky Wotkyns LLP, Emeryville, CA, Paul Joseph Stancil, Paul Stancil, Attorney, Orem, UT, for Travelpass Group LLC.Christopher W. Patton, Jared Daniel Eisenberg, Samuel Butler Hardy, IV, Ruben Alan Garcia, Christopher John Schwegmann, Lynn Pinker Cox & Hurst, LLP, Rebecca Lynn Adams, Lynn Pinker Hurst & Schwegmann, LLP, Dallas, TX, Jason H. Kim, Todd Schneider, Schneider Wallace Cottrell Konecky Wotkyns LLP, Emeryville, CA, Paul Joseph Stancil, Paul Stancil, Attorney, Orem, UT, for Partner Fusion Inc, Reservation Counter LLC.
Diane Siegel Danoff, Thomas J. Miller, Dechert LLP, Philadelphia, PA, Britton Dale Davis, Jeffrey L. Poston, Luke Van Houwelingen, Crowell & Moring LLP, Shari Ross Lahlou, Pro Hac Vice, Dechert LLP, Washington, DC, Jennifer Insley-Pruitt, Dechert LLP, New York, NY, Jordan Lee Ludwig, Crowell & Moring LLP, Los Angeles, CA, Lance Lee, Attorney at Law, Cole Alan Riddell, Jennifer Haltom Doan, Joshua Reed Thane, Haltom & Doan, Texarkana, TX, Melissa Richards Smith, Gillam & Smith, LLP, Marshall, TX, for Marriott International Inc.
Alexander G. Gray, Danielle Chattin, Emily Shoemaker Newton, Jeffrey S. Cashdan, Logan Robert Hobson, Lohr A. Beck-Kemp, Melanie C. Papadopoulos, Russell Edward Blythe, King & Spalding LLP, Atlanta, GA, Deron R. Dacus, Shannon Marie Dacus, The Dacus Firm, PC, Tyler, TX, Jennifer Haltom Doan, Haltom & Doan, Lance Lee, Attorney at Law, Texarkana, TX, Melissa Richards Smith, Gillam & Smith, LLP, Marshall, TX, Steven Mark Zager, King & Spalding LLP, Austin, TX, for Six Continents Hotels Inc.
Craven, Caroline M., United States Magistrate Judge
ORDER ON DEFENDANTS’ JOINT MOTION TO COMPEL
*1 The above-referenced cause of action was referred to the undersigned United States Magistrate Judge for pretrial purposes in accordance with 28 U.S.C. § 636. The following motion is pending before the Court:
Defendants’ Joint Motion to Compel (Docket Entry # 375).
The Court, having carefully considered the relevant briefing, is of the opinion the motion should be DENIED.
I. BACKGROUND
Plaintiff TravelPass Group, LLC and its predecessor or related entities, Reservation Counter, LLC, and Partner Fusion, Inc. (collectively, “TravelPass” or “Plaintiffs”) are downstream online travel agencies (“OTAs”) that sell hotel rooms from different chains to consumers in the United States. Docket Entry # 1, ¶ 45. According to TravelPass, there are two types of OTAs: (1) Gatekeeper OTAs, including Expedia and Priceline, that maintain direct relationships with major hotel chains to market hotel inventory online and (2) Downstream OTAs, like TravelPass, that have affiliate agreements with Gatekeeper OTAs for access to hotel inventory. Id., ¶ 46. TravelPass's business model includes bidding on branded keyword search results to attract hotel consumers to the hotel inventory on its websites. Id., ¶ 48.
TravelPass filed this antitrust case against several hotel chains: (1) Caesars Entertainment Corporation; (2) Choice Hotels International, Inc.; (3) Hilton Domestic Operating Company, Inc.; (4) Hyatt Corporation; (5) Marriott International, Inc.; (6) Red Roof Inns, Inc.; (7) Six Continents Hotels, Inc. and (8) Wyndham Hotel Group, LLC.[1] TravelPass alleges these hotel chains and others conspired to eliminate interbrand competition on keyword searches. Id., ¶ 1. TravelPass asserts the following claims against Defendants: (1) a violation of the Sherman Act, 15 U.S.C. § 1 (per se bid rigging/group boycott/market division); (2) a violation of the Sherman Act, 15 U.S.C. § 1 (unreasonable restraint of trade); (3) a violation of related Utah Antitrust Act § 1 and (4) tortious interference with prospective business relations. Id., ¶ 164–94.
*2 The expert discovery deadline is May 4, 2021. Docket Entry # 382. The pre-trial conference is set for October 5, 2021, with jury selection and trial scheduled October 25, 2021. Id.
II. JOINT MOTION TO COMPEL
Defendants move for an order compelling TravelPass to produce withheld and redacted communications and documents exchanged between Austin Lowe, TravelPass's General Counsel, and Paul Gallagher, an attorney at the United States Department of Justice (“DOJ”). As described in TravelPass's First Supplemental Privilege Log, TravelPass redacted portions of Mr. Lowe's correspondence with the DOJ on the grounds that it contained confidential “work-product communication ... concerning government investigation of illegal conduct” and “work-product regarding analysis of potential claims.” Docket Entry # 375, Ex. 2. TravelPass also withheld in full two documents (a July 29, 2017 “[c]onfidential legal memorandum regarding keyword bidding created by TravelPass counsel” and an antitrust memo Mr. Lowe sent to the DOJ on April 10, 2018), arguing they are also protected from disclosure by the work-product doctrine.
Defendants argue the communications between Mr. Lowe and Mr. Gallagher are clearly relevant to the claims and defenses in this case. Defendants further assert these materials were not prepared in anticipation of litigation or for trial and thus are not protected by the work-product doctrine. Additionally, Defendants contend the withheld and redacted materials are discoverable for a second, independent reason – any work-product protection was waived when TravelPass voluntarily provided these materials to the DOJ for purposes of instigating an investigation into Defendants.
TravelPass argues the redacted and withheld materials constitute opinion work product. Docket Entry # 393 at p. 4 (citing Butler v. Am. Heritage Life Ins. Co., Civil Action No. 4:13-CV-199, 2016 WL 367314, at *7 (E.D. Tex. Jan. 29, 2016) (memo created by in-house counsel is opinion work product); also citing Houten v. City of Fort Worth, Civil Action No. 4:12-CV-826-Y, 2014 WL 12531273, at *2 (N.D. Tex. June 11, 2014) (counsel's substantive comments were opinion work product because they concerned legal theories and mental impressions)). TravelPass further asserts the redacted and withheld materials are further protected by the common-interest doctrine because TravelPass “and the DOJ shared information concerning a common adversary (Defendants), concerning identical issues (Defendants’ anticompetitive conduct).” Id. at p. 5.
III. APPLICABLE LAW
Under Federal Rule of Civil Procedure 26(b)(1), parties “may obtain discovery regarding any non[-]privileged matter that is relevant to any party's claim or defense....” United States ex rel. Fisher v. JPMorgan Chase Bank N.A., Civil Action No. 4:16-CV-00395, 2020 WL 3265060, at *2 (E.D. Tex. June 17, 2020) (quoting FED. R. CIV. P. 26(b)(1)). Relevance, for the purposes of Rule 26(b)(1), is when the request is reasonably calculated to lead to the discovery of admissible evidence. Id. (citing FED. R. CIV. P. 26(b)(1); also citing Crosby v. La. Health & Indem. Co., 647 F.3d 258, 262 (5th Cir. 2011)).
“A party asserting a privilege exemption from discovery bears the burden of demonstrating its applicability.” Moser as Tr. of Tr. Under Amended Joint Plan of Liquidation of Tango Transp., L.L.C. v. Navistar Int'l Corp., Civil Action No. 4:17-CV-00598, 2019 WL 236722, at *2 (E.D. Tex. Jan. 16, 2019) (quoting In re Santa Fe Int'l Corp., 272 F.3d 705, 710 (5th Cir. 2001)). “A general allegation of privilege is insufficient to meet this burden.” Id. (quoting Navigant Consulting, Inc. v. Wilkinson, 220 F.R.D. 467, 473 (N.D. Tex. 2004)). Instead, “[t]he proponent must provide sufficient facts by way of detailed affidavits or other evidence to enable the court to determine whether the privilege exists.” Id.
*3 Under federal law, the elements of the attorney-client privilege are “(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 a 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 purpose 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.” Id. (quoting Stoffels v. SBC Commc'ns, Inc., 263 F.R.D. 406, 411 (W.D. Tex. 2009) (quoting In re Grand Jury Proceedings, 517 F.2d 666, 670 (5th Cir. 1975))). “Although disclosure to a third-party normally waives the [attorney-client] privilege, the privileged communication is not waived, however, if it is shared with a third person who has a common legal interest with respect to the subject matter of the communication.” Id. (quoting Mondis Tech., Ltd. v. LG Elecs., Inc., Civil Action No. 2:07-CV-565-TJW-CE, 2011 WL 1714304, at *4 (E.D. Tex. May 4, 2011) (citing United States v. Robinson, 121 F.3d 971, 974 (5th Cir. 1997))). The “common interest privilege” protects two types of communications: “(1) communications between co-defendants in actual litigation and their counsel; and (2) communications between potential co-defendants and their counsel.” Id. (quoting United States v. Homeward Residential, Inc., Civil Action No. 4:12-CV-461, 2016 WL 1031154, at *6 (E.D. Tex. Mar. 15, 2016) (quoting Ferko v. Nat'l Ass'n For Stock Car Auto Racing, Inc., 219 F.R.D. 396, 401 (E.D. Tex. 2003))).
Rule 26 of the Federal Rules of Civil Procedure codifies the work-product doctrine and provides in part that:
[A] party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent). But ... those materials may be discovered if: (i) they are otherwise discoverable under Rule 26(b)(1); and (ii) the party shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means.
Id. at * 4-5 (quoting FED. R. CIV. P. 26(b)(3)(A)).
Rule 26 further distinguishes between two types of work product—ordinary and opinion. Id. at * 5 (citing FED. R. CIV. P. 26(b)(3)(A); also citing S.E.C. v. Brady, 238 F.R.D. 429, 442 (N.D. Tex. 2006)). While ordinary work product is comprised of “factual material prepared in anticipation of litigation or trial,” opinion work product contains the “mental impressions, conclusions, or legal theories of any attorney or other representative of a party....” Id. (quoting United States ex rel. Fisher v. Ocwen Loan Servicing, L.L.C., Civil Action No. 4:12-CV-543, 2015 WL 4609742, at *2 (E.D. Tex. July 31, 2015)).
In order to claim work-product privilege, a party must show that: “(1) the materials sought are tangible things; (2) the materials sought were prepared in anticipation of litigation or trial; [and] (3) the materials were prepared by or for a party's representative.” Id. (quoting Mondis, 2011 WL 1714304, at *2). Once a party meets this showing, the burden shifts to the party seeking discovery to prove why the materials should still be produced. Id. (citing Ocwen, 2015 WL 4609742, at *3 (quoting Ferko, 219 F.R.D. at 400)). Specifically, the party seeking discovery “must establish (1) a substantial need of the privileged materials and (2) an inability to obtain the substantial equivalent of the material through other means without undue hardship.” Id. (quoting Ocwen, 2015 WL 4609742, at *3 (quoting Ferko, 219 F.R.D. at 400)). However, opinion work product “enjoys nearly absolute protection” and is only discoverable in rare circumstances or when the work-product privilege has been waived. Id.
IV. DISCUSSION
In its response, TravelPass represents Mr. Lowe, TravelPass's General Counsel, created the subject materials in anticipation of litigation against Defendants after initial contact from the DOJ. Docket Entry # 393 at p. 3; see also id. at Ex. A, Affidavit of Austin Lowe (“Lowe Aff.”), ¶¶ 7-9. According to Mr. Lowe, Mr. Gallagher reached out to Mr. Lowe, unsolicited, on April 3, 2018, “just weeks after a consumer class action lawsuit had been filed against several of the Defendants in this case (see Tichy v. Hilton, et al., No. 1:18-cv-1959, N.D. Ill. (Mar. 19, 2018)) for an alleged antitrust conspiracy related to online paid search advertising.” Lowe Aff., ¶¶ 5-6. “Upon information and belief, the DOJ initiated these communications because it was interested in or had already begun conducting its own investigation of Defendants’ anticompetitive conduct.” Id., ¶ 7. As part of the subsequent confidential communications with Mr. Gallagher and the DOJ, Mr. Lowe shared two memorandums he prepared in 2017 in anticipation of litigation relating to Defendants’ alleged anticompetitive behavior to restrict competition in online paid keyword search advertising. Id., ¶¶ 8-9. Mr. Lowe states the redacted emails referenced in TravelPass's privilege log consist of confidential communications between Mr. Lowe and the DOJ discussing and reflecting Mr. Lowe's mental impressions regarding potential claims against Defendants in response to their anticompetitive conduct. Id., ¶ 10.
*4 The Court finds the withheld and redacted materials are protected work product because they were prepared in aid of potential litigation. The Court must now determine whether Mr. Lowe's disclosure of the materials to the DOJ constitutes a waiver of the work-product privilege. Regardless of whether or not the common interest doctrine applies, the Court finds the disclosure does not constitute a waiver of the work-product immunity. See Wi-Lan, Inc. v. Acer, Inc., Civil Action No. 2:07-CV-473-TJW, 2010 WL 4118625, at *4 (E.D. Tex. Oct. 18, 2010).
The work product privilege is very different from the attorney-client privilege. Id. at *5. “Although the attorney-client privilege exists to protect the confidential communications between an attorney and client and, thus, is waived by disclosure of confidential communications to third parties, the work product protection exists to ‘promote the adversary system by safeguarding the fruits of an attorney's trial preparations from the discovery attempts of an opponent.’ ” Id. (quoting Shields v. Sturm, Ruger & Co., 864 F.2d 379, 382 (5th Cir. 1989) (citing United States v. American Telephone & Telegraph Co., 642 F.2d 1285, 1299 (D.C. Cir. 1980))). “Therefore, the mere voluntary disclosure to a third person is insufficient in itself to waive the work product privilege.” Id. (other citations omitted). Such disclosure only waives the work product privilege if it is given to adversaries or is “treated in a manner that substantially increases the likelihood that an adversary will come into possession of the material.” Wi-Lan, 2010 WL 4118625, at *5 (quoting Advance Technology Incubator, Inc. v. Sharp Corp., Civil Action No. 2:07-CV-468, 2009 WL 4432569, * 2 (E.D. Tex. 2009) (citing Ferko v. NASCAR, 219 F.R.D. 396, 400–01 (E.D. Tex. 2003); also citing S.E.C. v. Brady, 238 F.R.D. 429, 444 (N.D. Tex. 2006))).
The burden of proving waiver of the work product privileged falls on the party asserting waiver. Id. (citations omitted). For example, in United States v. American Telephone and Telegraph Co., the court held that information shared with a government agency having a common interest against a third party did not constitute waiver of the work product privilege because the governmental agency was not an adversary and the disclosure of the information to the governmental agency did not substantially increase the likelihood that an adversary would come into possession of the information. Id. (citing 642 F.2d at 1290).
Mr. Lowe disclosed the redacted and withheld materials in response to an inquiry from the DOJ, sharing information he had prepared in anticipation of potential litigation against Defendants. Under these circumstances, the disclosure did not substantially increase the likelihood that an adversary would come into possession of the information. Accordingly, the Court finds that Mr. Lowe's disclosure of the materials to the DOJ did not constitute a waiver of the work product privilege. See Wi-Lan, 2010 WL 4118625, at *5-*6 (further stating the court “need not reach the question of whether Wi–LAN's disclosure of the Driessen Report to Broadcom during the purchase due diligence is subject to the common interest privilege”). Based on the foregoing, it is
ORDERED that Defendants’ Joint Motion to Compel (Docket Entry # 375) is DENIED.
Footnotes
On October 14, 2020, the Court granted Plaintiffs and Red Roof Inns, Inc., and RRI Financial Inc.’s Joint Motion to Dismiss With Prejudice Under Fed. R. Civ. P. 41(a)(2) & (c), dismissing Plaintiffs’ claims against Red Roof Inns, Inc., and Red Roof Inns, Inc., and RRI Financial, Inc.’s counterclaims against Plaintiff with prejudice. Docket Entry # 360. On November 9, 2020, the Court granted Plaintiffs and Defendant and Counterclaimant Hyatt Corporation's Joint Motion to Dismiss with Prejudice under Fed. R. Civ. P. 41(a)(2) & (c), dismissing with prejudice Plaintiffs’ claims against Hyatt and Hyatt's counterclaims against Plaintiffs. Docket Entry # 383.
On December 2, 2020, the Court granted the Joint Motion to Dismiss With Prejudice of Plaintiffs and Wyndham Hotel Group, LLC Under Fed. R. Civ. P. 41(a), dismissing Plaintiffs’ claims against Wyndham with prejudice. Docket Entry # 400. On December 30, 2020, the Court granted Plaintiffs and Defendant Caesars Entertainment Corp.’s Joint Motion to Dismiss With Prejudice, dismissing with prejudice Plaintiffs’ claims against Caesars and Caesars’ counterclaims against Plaintiffs. Docket Entry # 409. The same day, the Court granted Plaintiffs and Defendants Hilton Domestic Operating Company Inc. and Hilton International Holding LLC's Joint Motion to Dismiss With Prejudice, dismissing with prejudice Plaintiffs’ claims in this action against Hilton and Hilton's counterclaims against Plaintiffs. Docket Entry # 410.