Oro BRC4, LLC v. Silvertree Apartments, Inc.
Oro BRC4, LLC v. Silvertree Apartments, Inc.
2023 WL 2785743 (S.D. Ohio 2023)
February 10, 2023
Preston Deavers, Elizabeth A., United States Magistrate Judge
Summary
The court ordered Borror to produce unredacted versions of documents redacted as “Non-Responsive,” allowed Oro to query Sage as to the expense in question, and found that the attorney-client privilege should extend to communications between Borror's counsel and RDI's counsel. The court also found that emails between Borror's counsel and RDI's counsel contained mental impressions and qualified as work product, and that emails between Borror's counsel and a Borror representative were protected both by the attorney-client privilege and as work product.
Additional Decisions
ORO BRC4, LLC, Plaintiff,
v.
SILVERTREE APARTMENTS, INC., et al. Defendants.
ORO ORO CAPITAL ADVISORS, LLC, et al., Plaintiffs,
v.
BORROR CONSTRUCTION CO., LLC, et al., Defendants
v.
SILVERTREE APARTMENTS, INC., et al. Defendants.
ORO ORO CAPITAL ADVISORS, LLC, et al., Plaintiffs,
v.
BORROR CONSTRUCTION CO., LLC, et al., Defendants
Case No. 2:19-cv-04907, Case No. 2:19-cv-05087
United States District Court, S.D. Ohio, Eastern Division
Filed: February 10, 2023
Counsel
David Matthew Scott, Aaron Jones, Hayley Elizabeth Kick, Krista D. Warren, Lucas K. Palmer, Brennan, Manna & Diamond, LLC, Columbus, OH, for Plaintiff in No. 2:19-cv-04907.James Edward Arnold, Damion M. Clifford, Daniel J. Matusicky, Tiffany L. Carwile, Arnold & Clifford LLP, Columbus, OH, for Defendants Silvertree Apartments, Inc., Springburn Apartments, Inc., Karric South Apartments, Inc., Karric North Apartments, Inc., Borror Properties Real Estate, LLC in No. 2:19-cv-04907, Borror Construction Co., LLC, LoriBeth Steiner, Tom Garske, Danielle Borror-Sugarman, BPI Associates, LLC, Matthew Devereaux, Jeffrey Rankey, Tina Shivers in No. 2:19-cv-05087.
John Doe Net Worth Affiliate, Pro Se.
John Does 1-15, Pro Se.
Jane Does 1-15, Pro Se.
John Doe Corporations 1-15, Pro Se.
John Doe Entities 1-15, Pro Se.
David Matthew Scott, Lucas K. Palmer, Aaron Jones, Hayley Elizabeth Kick, Krista D. Warren, Brennan, Manna & Diamond, LLC, Columbus, OH, Marlon Alfred Primes, Brennan Manna & Diamond Brennan Manna & Diamond, Cleveland, OH, for Plaintiffs Oro Capital Advisors, LLC, Oro Karric South, LLC, Oro Karric North, LLC, Oro Silvertree, LLC, Oro Springburne, LLC, Oro Island Club, SPE Owner, LLC in No. 2:19-cv-05087.
James Edward Arnold, Damion M. Clifford, Daniel J. Matusicky, Arnold & Clifford LLP, Columbus, OH, for Defendants John and Jane Does 1-15, John Doe Corporations 1-15, and John Doe Entities 1-15 in No. 2:19-cv-05087.
Timothy Edward Miller, Dale Daniel Cook, Isaac Wiles Burkholder & Teetor, LLC, Columbus, OH, Daniel J. Matusicky, Arnold & Clifford LLP, Columbus, OH, for Defendant Reliable Staffing Resources, LLC in No. 2:19-cv-05087.
Neil C. Sander, Sander Law, LLC, Columbus, OH, Daniel J. Matusicky, Arnold & Clifford LLP, Columbus, OH, for Defendant Skyworks Equipment Rental, L.L.C. (Skyworks L.L.C.) in No. 2:19-cv-05087.
Preston Deavers, Elizabeth A., United States Magistrate Judge
SPECIAL MASTER'S SECOND REPORT, ORDERS, AND RECOMMENDATIONS ON DISCOVERY MATTERS
Chief Judge Algenon L. Marbley
Report on Status of Proceedings
Report on Status of Proceedings
*1 The first Report, Orders, and Recommendations issued in November 2022, addressed a litany of discovery issues. Several were deferred pending investigation and discussion between the parties, and I ordered an in camera review of a sample of documents to determine whether redactions for “irrelevance” were proper. I conducted the in camera review in early December. The parties were notified by email on December 18 of my preliminary conclusions and were offered discovery conference.
A telephone scheduling conference was held on January 16, 2023 to discuss the in camera review and several other issues. The parties submitted their positions via email. A Zoom conference was held on January 25, and the parties submitted additional legal authority thereafter. Additional Orders and Recommendations are contained below, using the item number corresponding to the first Report.
Orders and Recommendations
1(B) Borror's Redaction of “Irrelevant Information” from Document Production
Oro challenged redaction of those portions of documents Borror deemed irrelevant. I ordered Oro to identify 50 of the documents containing improper or questionable redactions. Borror then provided unredacted versions. The redactions were labeled “Non-Responsive,” but Borror argued consistently that the redactions were based on relevance. (A relevant document could be non-responsive to a particular discovery request, but the parties did not argue that specific requests were at issue.) I reviewed the sample in camera to assess whether the sample indicated that Borror was improperly redacting relevant information.
Most of the documents were lengthy data reports (e.g., payroll records) and spreadsheets detailing work on Borror's various projects. It appears that Borror redacted information about its other businesses and employees and produced information relevant to the projects at issue for the relevant time. I advised the parties of my preliminary conclusions that Borror's redactions appeared proper based upon my knowledge of the case, but that I could not independently verify that all redactions were of irrelevant data. We then scheduled a discovery conference on this and other issues.
Before the conference the parties submitted case authority supporting their positions. Borror added two justifications for the redactions. First, Borror argued that producing property management information could damage its business interest because Oro also manages rental properties and is therefore a competitor. Second, it argued that many of the redactions related to the property management side of its business rather than the construction side. The property management issues are pending in a state court action, hence Borror argues that it is not required to produce records relevant to a case over which this Court has no jurisdiction.
Both parties were allowed several days after the January 25 conference to submit legal authority, and both submitted case law and additional argument via email. The case law demonstrates a wide variety of outcomes. Although I have considered decisions from other jurisdictions as persuasive authority, I look to the law of this District and the Sixth Circuit for controlling precedent.
*2 Cases from this District have allowed redactions of irrelevant information, but the redactions tend to be of limited and easily identified material, often coupled with a claim of prejudice. E.g., Thompson v. Village of Mt. Pleasant, Ohio, No. 2:10-cv-93, 2011 WL 31106, at *1 (S.D. Ohio, Jan. 4, 2011) (King, M.J.) (redaction allowed of irrelevant portion of transcript of interview to protect ongoing criminal investigation); North American Rescue, Inc. v. Bound Tree Medical, LLC, No. 2:09-cv-255, 2010 WL 1258113, at *2 (S.D. Ohio, March 25, 2010) (Kemp, M.J.) (defendant allowed to redact irrelevant information from bill of sale).
One month after Mag. Judge Kemp's decision in North American Rescue he decided a case more analogous to the ones at hand. Beverage Distributors, Inc. v. Miller Brewing Co., No. 2:08-cv-827, 2010 WL 1727640 (S.D. Ohio, Apr. 28, 2010) (Kemp, M.J.). Defendant produced thousands of pages of documents, many with redactions based on relevance. Mag. Judge Kemp conducted a review of the case law and found that “[i]n those cases cited by defendants where redactions were approved, the number of redacted documents appeared to be small, and the content of the redactions readily apparent.” Id. at *5. He concluded that an in camera review would be unnecessarily burdensome and time-consuming, and granted a motion to compel. See also Tween Brands Investment, LLC v. Bluestar Alliance, LLC, No. 2:15-cv-2663, 2015 WL 6955177 (S.D. Ohio, Nov. 10, 2015) (Frost, J.) (approving Beverage Distr. analysis).
Although Borror argues that the Federal Rules require only the production of relevant information, Mag. Judge Jolson noted “the Federal Rules of Civil Procedure provide no support for the redaction of irrelevant information” from otherwise responsive documents. Ewalt v. Gatehouse Media Holding II, Inc., No. 2:19-cv-4262, 2020 WL 4782860, at *2 (S.D. Ohio, Aug. 18, 2020) (Jolson, M.J.). The court quoted with approval the sentiment of other courts disapproving of redactions of irrelevant information from otherwise responsive documents and noted that “irrelevant information may be highly useful in providing context for the relevant information.” Id. quoting Bartholomew v. Avalon Capital Grp., Inc., 278 F.R.D. 441, 451 (D. Minn. 2011).
Finally, Mag. Judge Deavers conducted an extensive analysis in American Municipal Power, Inc. v. Voith Hydro, Inc., No. 2:17-cv-708, 2020 WL 5014914 (S.D. Ohio, Aug. 25, 2020) (Deavers, M.J.), perhaps the closest factually to the Oro/Borror dispute. Mag. Judge Deavers analyzed many of the cases already discussed and concluded that redactions based solely on relevancy were improper. The producing party was, of course, entitled to designate documents as privileged under the Protective Order. The same is true of Borror here.
Although Borror stated during oral argument that it's business interests could be damaged because Oro is a competitor in property management, that claim is impossible to evaluate with the information available and was not the stated reason for the redaction. With a Protective Order in place and the ability to seek other relief for truly sensitive information, allowing wholescale redactions based on a weak assertion of damage to Borror's business interests is unwarranted.
As for Borror's claim that this Court lacks jurisdiction over the property management claims pending in state court, the simple answer is that the Court is not ordering the production of documents irrelevant to the case; rather, the Court is declining to engage in an expansive review of redactions from documents that do contain relevant information — a task as needlessly burdensome and unworkable in this case as in several of the decisions discussed above.
*3 Having now reviewed the case law and precedent from this District and recognizing the practical difficulties that led previous courts to reject extensive “relevance” redactions, I conclude that Borror should be ordered to produce unredacted versions of the documents redacted as “Non-Responsive.”[1] Borror may designate those documents as privileged under the Protective Order.
1(D) Sage
Borror used a computer software system called Sage to conduct its accounting for the Borror Construction project. Oro argues that it should have full access to Sage based on language in the Construction Agreement requiring Borror to keep records and make them available to Oro. Borror has refused to give Oro unrestricted access because the system contains information on other projects and categories of information, arguing that Oro has already been given access to the relevant information. During the first discovery conference the parties agreed that this request should be deferred until the relevant witnesses have been deposed.
Oro has since deposed a Borror representative who testified that restricted access to Sage is technologically possible. Borror contends that the witness was mistaken and that an expert on the Sage program has advised that access cannot be restricted. Borror is in a weak position to disavow the testimony of a witness it produced to testify on a technical issue, but that does not mean that Borror is obligated to give cumulative access if Oro received the cost information in other ways. Fed. R. Civ. P. 26(b)(2)(C).
Oro's stated reason for needing access to Sage is that some of the expenses for which it was charged are unclear and not supported by backup documents. While Oro was able to give several examples of undocumented expenses, it did not dispute that Borror has produced extensive records of the expenses allocated to the project. Sage itself does not contain the underlying invoices and purchase orders. Borror argues that Oro already has all information about the charges and the underlying documentation, so that accessing Sage will not provide Oro with additional information but will create the possibility of mischief if Sage is open to unmonitored access.
Oro is entitled to an itemization and documentation of expenses allocated to its projects. Assuming Oro is missing some of the documentation and is unclear on the nature of a charge, Sage might provide helpful information even if it does not contain copies of the supporting documents. Requiring unmonitored access, however, is unnecessary given the limited number of queries cited. If the other sources of information already produced do not provide Oro with the background it needs to understand a given expense, Oro should be allowed to query Sage as to the expense in question. A Borror and Oro representative should be present at the database search, which alleviates any concern by Borror that Oro is going beyond the search needed.
1(H) Borror Vendors
2. Prices Charged by Borror Vendors
Oro argued that the pricing data might show that Borror did not properly manage the cost of the project. Oro asked for documents showing what vendors on its project charged Borror on non-Oro projects for a ten year period, later reduced to five years. The first Order and Recommendations found that the burden and expense upon Borror of producing pricing documents for other projects not close in time to Oro's project is not proportional to the potential benefit. Borror was ordered to produce pricing information on any other projects for a which an Oro vendor provided labor or materials during the period June 2018 and August 2019, the period of construction on the Oro project.
*4 Borror has asked that the original Order and Recommendation be amended to eliminate or further reduce the production because it will take an estimated 25 hours to collect the requested information from storage. Borror argues that the cost of production is disproportional to the potential benefit because pricing information from other projects in other locations is not a reliable indicator of whether it properly managed the expenses on Oro's projects. That objection goes to the weight and admissibility of the evidence, not Oro's right to conduct discovery. Although the cost of retrieving the information is regrettably high, the production has been limited to the construction period as opposed to the five or ten years requested by Oro. I see no reason to amend the original Order and Recommendation.
1(S) Borror's Counsel's Communications with Borror Vendors or Counsel for Borror Vendors
Borror objected to producing communications between its counsel and counsel for RDI, Borror's ESI vendor. Borror claimed the document were protected under either the attorney-client privilege or the attorney-work product doctrine. Borror provided a privilege log and Oro requested an in camera review to determine whether claims of privilege and work product justify Borror's position. Borror requested an opportunity for a “full briefing” if the Special Master was inclined to order production of the disputed documents.
The standards applicable to assertions of attorney-client privilege and work product protection are discussed at length in American Municipal Power, Inc. v. Voith Hydro, Inc., No. 2:17-cv-708, 2020 WL 5014914 (S.D. Ohio, Aug. 25, 2020) (Deavers, M.J.) (American I) and American Municipal Power, Inc. v. Voith Hydro, Inc., No. 2:17-cv-708, 2021 WL 5917096 (S.D. Ohio, Dec. 14, 2021) (Deavers, M.J.) (American II). The issue at hand is whether either protection was waived as to communications between Borror's counsel and RDI's counsel. “Both the attorney-client privilege and work-product protection are waived by voluntary disclosure of private communications to third parties. New Phoenix Sunrise Corp. v. Comm'r of Internal Revenue., 408 Fed. Appx. 908, at *13 (6th Cir. 2010).
As discussed by Mag. Judge Deavers in American I, “communications between an attorney and a client's agent are protected under the attorney-client privilege.” Id. at *8. Thus the question is whether RDI is an “agent” for purposes of the privilege. RDI provided managed services to Borror through “a hosting environment where Borror and its employees can access their programs and data via the internet. The hosting environment consists of both applications provided by RDI and applications owned by Borror.” Decl. of Chris Anderson at ¶ 2, ECF 81-9. Thus Borror (and Borror's counsel) must rely upon RDI for access to Borror's records.
Oro argues that RDI is merely a vendor, such that the privilege would not attach. Oro cites the following language from the RDI (also known as VOS) contract:
VOS may disclose any information in its possession, including, without limitation, information about Customers, internet transmissions and website activity in order to comply with a court order, subpoena, summons, discovery request, warrant, statute, regulation or governmental request, to protect VOS or others from harm, and/or to ensure the proper operation of the Services. VOS has no obligation to notify any person, including the Customer about whom information is sought, that VOS has provided the information.
While this language confirms RDI's right (or obligation) to comply with legal process, it does not prevent Borror from asserting a privilege is one exists.
Neither party cited case law specifically on point as to the status of a non-litigation ESI contractor, but the nature of the service provided by RDI leads to the conclusion that RDI should be treated as an “agent” for the purpose of the privilege. RDI was not a typical arms-length vendor, but hosted the information side of Borror's operations, including Borror's most sensitive records. Borror could not respond to many of Oro's discovery requests without the direct assistance of RDI, so Borror's counsel and RDI's counsel would need to communicate directly about issues sensitive to Borror's legal interests.
*5 RDI, as keeper of Borror's records, is just the type of agent to which the privilege should extend.
The privilege “must include all the persons who act as the attorney's agents.” United States v. Kovel, 296 F.2d 918, 921 (2d Cir. 1961) (quoting 8 Wigmore, EVIDENCE, § 2301; Annot., 53 A.L.R. 369 (1928)). The Kovel Court found that “the complexities of modern existence prevent attorneys from effectively handling clients’ affairs without the help of others; few lawyers could now practice without the assistance of secretaries, file clerks, telephone operators, messengers, clerks not yet admitted to the bar, and aides of other sorts,” id., and thus confidential communications in the presence of or disclosed to these agents should remain protected.
Cooey v. Strickland, 269 F.R.D. 643, 652 (S.D. Ohio 2010) (Frost, J.).[2] Although Kovel primarily addresses agents of the attorney, the privilege can also extend to agents of the client, as confirmed in American I. The “complexities of modern existence” when Kovel was decided in 1961 are almost trivial when compared to the complexities of the information age. The expense and technical know-how required for a company to host its own data prompts many to rely upon outside providers such as RDI.
The communications between Borror's counsel and RDI's counsel all involve responses to Oro's discovery requests or upcoming depositions — some targeting RDI, others targeting Borror. It would be difficult if not impossible for Borror's counsel to manage discovery without the freedom to speak confidentially to RDI's counsel, given that RDI was the keeper of the records on Borror's behalf.
The question thus reduces to whether the individual communications at issue qualify as attorney-client communications or work product.
The party invoking the protection of the attorney client privilege bears the burden of establishing the following:
(1) Where legal advice of any kind is sought (2) from a professional legal advisor 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 his legal advisor, (8) except the protection be waived.
Inhalation Plastics, Inc. v. Medex Cardio-Pulmonary, Inc., No. 2:07-cv-116, 2012 U.S. Dist. LEXIS 121830 (S.D. Ohio, Aug. 28, 2012) (King, Mag. J.), quoting Fausek v. White, 965 F.2d 126, 129 (6th Cir. 1992).
“The work product doctrine ‘protects an attorney's trial preparation materials from discovery to preserve the integrity of the adversarial process.’ ” American II at *2, quoting In re Powerhouse Licensing, 441 F.3d 467, 472 (6th Cir. 2006). Rule 26(b)(3) protects (1) “documents and tangible things”; (2) “prepared in anticipation of litigation or for trial”; (3) “by or for another party or its representative.” Work product is not limited to attorneys, but has been extended to documents prepared by or for the party and the party's representative in anticipation of litigation. American II at *2. Work product materials may still be discovered if otherwise discoverable under Rule 26(b)(1) or the requesting party shows a “substantial need.” Fed. R. C. P. 26(b)(3)(A).
*6 The records in question meet the three threshold qualifications of Rule 26(B)(3), but the analysis does not end there. Documents that “contain ‘no mental impressions, conclusions, opinions, or legal theories’ concerning the litigation and do not even contain any relevant facts learned during the investigation” are not protected, nor are documents relating merely to “administrative, logistical, or scheduling matter.” American II at *3 Id.
With those standards in mind, a review of the contested documents reveals that almost every one is a close call. Taking the documents in numerical order (rather than their order in the Privilege Log), the findings are as follows:
-78.1 The email thread contains communications between counsel for Borror and RDI reflecting counsel's mental impressions and strategy and is protected work product.
-81.1 Borror has indicated that it will produce the email thread with a highlighted portion redacted. The highlighted portion relates to scheduling or logistics but reveals a specific topic of the planned discussion. As such, Borror has a thin but sustainable claim to work product.
-89.1 The email thread is a transmittal communication between counsel for Borror and RDI containing mental impressions and qualifies as work product.
-90.1 The email thread is a communication between counsel for Borror and RDI containing mental impressions and qualifies as work product.
-95.1 The email thread is a transmittal communication between counsel for Borror and RDI containing mental impressions and qualifies as work product.
-98.1 The email thread includes communications between counsel for RDI and Borror, including other emails forwarded as part of the discussion. Borror claims attorney-client privilege only. Given the status of RDI as an agent and the topic of discussion, the document is privileged. (Portions of the thread are emails that standing alone would not be privileged, but redaction would not fully protect the subject matter of communications between counsel.)
-99.1 The document is a signed declaration filed in this action. No privilege or work product protection applies and the document should be produced.
-100.1 The email thread is a subset of document -98.1, lacking only the final response from Borror's counsel. It is protected by the attorney-client privilege.
-102.1 The email thread is a communication between Borror's counsel and a Borror representative, forwarded to by the client to RDI in connection with the the lawsuit. It is protected both by the attorney-client privilege and as work product.
-157.1 The email from Borror's counsel to RDI's counsel primarily discusses logistics and scheduling, but also contains information protected by the attorney-client privilege and work product.
-170.1 The email is from Borror's counsel to RDI's counsel and is the first in the series of threads within document -89.1. Although primarily a transmittal message, it contains sufficient attorney mental impressions to qualify as work product.
-182.1 The document is an unsigned declaration. Given that it is an unsigned draft, it is attorney work product.
-183.1 The emails from Borror's counsel are another subset of -89.1 and subject to the same protections.
-186.1 The email thread between Borror's counsel and RDI's counsel is a variant of -89.1, -170.1, -183.1, and subject to the same protection.
-188.1 The email thread between Borror's counsel and RDI's counsel is a subset of -98.1, lacking only the final response from RDI's counsel. It is protected to the same extent as 98.1.
*7 -191.1 Borror has indicated that it will produce the email thread with a highlighted portion redacted. As with -81.1, the highlighted portion relates to scheduling or logistics but reveals a specific topic of the planned discussion. As such, Borror has a thin but sustainable claim to work product.
-192.1 Unsigned declaration appearing identical to -182.1, and therefore subject to the same protection.
Finally, none of the documents protected as work product contain information for which Oro could have a “substantial need.” Indeed, it is hard to imagine how Oro could be meaningfully helped or Borror meaningfully hurt by disclosure of any of the protected documents. Borror is nonetheless entitled to assert a right to withhold protected documents even if the protection is thin and the consequences slight.
SO ORDERED.
Footnotes
This includes the “Garske email,” which contains redactions of information seemingly unrelated to the Oro project, but potentially providing context to the writer's senior role at Borror during the relevant time.
Cooey also discusses the common interest doctrine, under which parties with allied interests in litigation may communicate in confidence without waiving the attorney-client privilege. RDI is not a party to the litigation, but one could argue that it shares a common legal interest with its client. Because RDI is an agent it is unnecessary to analyze whether the common interest doctrine applies.