Lubrizol Corp. v. IBM Corp.
Lubrizol Corp. v. IBM Corp.
2024 WL 941686 (N.D. Ohio 2024)
February 8, 2024
Dowdell Armstrong, Jennifer, United States Magistrate Judge
Summary
Lubrizol filed a complaint against IBM for breach of contract and other claims, and later added a claim of spoliation under Ohio law. Lubrizol alleged that IBM deleted ESI and failed to implement a litigation hold. The court denied IBM's motion for a Rule 502(d) order allowing intentional disclosures of privileged information, and granted Lubrizol's motion to compel the production of documents related to its spoliation claim. The court also granted Lubrizol's motion to compel non-privileged information regarding IBM's preservation efforts and anticipation of litigation.
Additional Decisions
THE LUBRIZOL CORPORATION, Plaintiff,
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant
CASE NO. 1:21-CV-00870-CAB
United States District Court, N.D. Ohio, Eastern Division
Filed: February 08, 2024
Counsel
Adam E. Primm, W. Eric Baisden, Benesch, Friedlander, Coplan & Aronoff, Cleveland, OH, Christine M. Rodriguez, Pro Hac Vice, Joshua E. Hollander, Pro Hac Vice, Mark P. Ressler, Kasowitz Benson Torres, New York, NY, Jason S. Takenouchi, Veronica Nauts, Kasowitz Benson Torres, San Francisco, CA, Jeffrey J. Lauderdale, Kelly A. Kosek, Nada G. Faddoul, Lubrizol, Wickliffe, OH, for Plaintiff.Robert Fuqua, Lauren B. Lindsay, Stephen A. Broome, Quinn Emanuel Urquhart & Sullivan, Los Angeles, CA, Alison Y. Lo, Brendan T. Carroll, Ellison W. Merkel, Richard I. Werder, Jr., Quinn Emanuel Urquhart & Sullivan, New York, NY, Derek L. Shaffer, Quinn Emanuel Urquhart & Sullivan, Washington, DC, John Q. Lewis, Jonathan F. Feczko, Nelson Mullins Riley & Scarborough, Cleveland, OH, for Defendant.
Dowdell Armstrong, Jennifer, United States Magistrate Judge
ORDER
I. INTRODUCTION
*1 This matter is before me pursuant to Local Rule 37.1 on (1) Plaintiff The Lubrizol Corporation's (“Lubrizol”) motion to compel the production of documents regarding its spoliation claim (ECF No. 115); and (2) Defendant International Business Machines Corporation's (“IBM”) motion for entry of an order pursuant to Federal Rule of Evidence 502(d) permitting IBM to produce certain documents to Lubrizol without waiving the attorney-client privilege (ECF No. 116). For the reasons set forth below, Lubrizol's motion to compel is GRANTED while IBM's motion for entry of a Rule 502(d) order is DENIED.
II. PROCEDURAL HISTORY
On April 27, 2021, Lubrizol filed its Complaint alleging that IBM breached a contract between the parties and committed fraud and various torts in connection with a project to implement a new enterprise resource planning software, known as S/4HANA.
On December 20, 2021, Lubrizol amended its complaint to add a claim that IBM committed the tort of spoliation under Ohio law when it deleted the electronically stored information of several IBM personnel who worked on the S/4HANA project. (ECF No. 27). Lubrizol later filed a Second Amended Complaint against IBM. (ECF No. 61).
In its spoliation claim, Lubrizol alleges that, between July 2019 and October 2021, IBM deleted the email boxes of a number of IBM personnel who played key roles on the S/4HANA project. Id. at ¶ 128. Lubrizol also alleges that IBM failed to implement a litigation hold until May 2021, after Lubrizol filed its complaint. Id. Lubrizol further alleges that IBM failed to institute a litigation hold before May 2021 even though: (1) Lubrizol sent IBM a notice terminating the parties’ contract for cause in April 2020; (2) following the termination, the parties exchanged letters addressed to senior legal personnel at both companies and labeled “Subject to Rule 408 and the Ohio and Federal rules of Evidence”; (3) in Lubrizol's correspondence to IBM, it described its legal claims and damages and was “explicit about its plan to sue IBM”; (4) in September 2020, IBM informed Lubrizol that it had hired outside counsel; and (5) the parties conducted a mediation in November 2020, during which they acknowledged that there was a “massive gulf” between their respective positions on claims, defenses, and damages. Id. at ¶¶ 123-27.
Lubrizol alleges that, even after IBM implemented a litigation hold, IBM applied it to only a handful of consultants who worked on the project, while failing to send it to “hundreds” of other individuals, “dozens” of whom allegedly played important roles. Id. at ¶ 128. Lubrizol alleges that IBM did not issue a broader litigation hold until October and November 2021, and that additional evidence was destroyed in the interim. Id. at ¶ 137. Lubrizol alleges that, as a result of IBM's failure to timely implement a litigation hold, the electronically stored information of some of the most important IBM witnesses were destroyed, including the individual who led IBM's efforts to secure the contract. Id. at ¶¶ 134-35. IBM does not dispute that the deletions occurred. However, it argues that Lubrizol has told a sensationalized version of events, asserting that the deletions were the result of IBM's routine document retention protocols and took place because some personnel left IBM before litigation was reasonably anticipated. (ECF No. 116, PageID # 5678-79).
*2 On October 14, 2023, Lubrizol filed a letter requesting a conference before me regarding alleged deficiencies in IBM's responses to Lubrizol's spoliation-related discovery requests. (ECF No. 115). In its letter, Lubrizol argued that IBM had failed to produce information responsive to certain interrogatories and requests for production, and that IBM had also refused to produce a Rule 30(b)(6) witness on a spoliation-related topic. Lubrizol further argued that the majority of the materials it was seeking were not privileged and that, to the extent any relevant materials were privileged, IBM had waived the privilege.
On October 15, 2023, IBM filed its own letter requesting a conference before me regarding entry of an order pursuant to Federal Rule of Evidence 502(d) that would permit IBM to produce some privileged spoliation-related materials without waiving the attorney-client privilege over other, unproduced materials on the same subject matter. (ECF No. 116).
I held a telephonic conference with the parties’ regarding their respective letters on November 6, 2023. At the conclusion of the hearing, I ordered the parties to meet and confer regarding the issues raised in their letters and to submit a joint status report by November 20, 2023, which I later extended to November 27, 2023. (See ECF non-document entry dated November 6, 2023; ECF non-document entry dated November 21, 2023).
On November 27, 2023, the parties filed competing status reports. (ECF No. 127, 128). In its status report, IBM included legal argument regarding its request for a Rule 502(d) order and the issues raised in Lubrizol's letter, including the question of whether IBM had waived the attorney-client privilege. (ECF No. 127). I granted Lubrizol leave to file a sur-reply, which Lubrizol filed on December 12, 2023. (See ECF non-document entry dated November 29, 2023; ECF No. 132). The parties’ respective motions are now ripe for resolution.
III. LAW & ANALYSIS
A. IBM's Motion for Entry of a Rule 502(d) Order
Federal Rule of Evidence 502(d) provides that a court “may order that the [attorney-client] privilege or [attorney work product] protection is not waived by disclosure connected with the litigation pending before the court ....” Fed. R. Evid. 502(d). Rule 502 was enacted to achieve two main goals: (1) resolving disagreement among courts regarding the effect of certain disclosures of privileged information; and (2) preventing litigation costs from spiraling due to fears that any disclosure of a privileged document would result in subject-matter waiver of all other communications on the same topic. See Irth Solutions, LLC v. Windstream Commc'ns LLC, No. 2:16-CV-219, 2017 WL 3276021, at *6 (S.D. Ohio Aug. 2, 2017), objections overruled, 2018 WL 575911 (S.D. Ohio Jan. 26, 2018); Abington Emerson Capital, LLC v. Landash Corp., No. 2:17-cv-143, 2019 WL 3521649, at *2 (S.D. Ohio Aug. 2, 2019). Notably, “nothing in the language of the rule requires court action—the ‘may’ is explicitly permissive.” Petty v. Bluegrass Cellular, Inc., No. 3:19-CV-00193-RGJ-LLK, 2021 WL 1235266 at *4 (W.D. Ky. Apr. 2, 2021), objections overruled, Petty v. Bluegrass Cellular, Inc., 2022 WL 759538 (W.D. Ky. Mar. 10, 2022) (declining to enter rule 502(d) order).
IBM asks me to enter an order permitting it to produce certain documents and information regarding its document preservation and litigation holds without waiving the privilege over any related materials and without exposing itself to the risk of subject matter waiver. In particular, IBM's proposed order would authorize IBM to produce, without waiving the attorney-client privilege or attorney work product protection: (1) all documents and communications concerning “the preparation, implementation, institution, application, and dissemination by IBM of document preservation and litigation holds” through May 15, 2021; (2) responses to Lubrizol's interrogatories on the same subject; and (3) a Rule 30(b)(6) witness on the same subject.
*3 The parties have met and conferred regarding the entry of a Rule 502(d) order, but have been unable to reach agreement on the scope of such an order. Lubrizol also argues that I lack authority to enter a Rule 502(d) order that would permit IBM to intentionally, rather than inadvertently, disclose privileged information without constituting a subject matter waiver of all other documents and communications on the same topic.
The fact that the parties disagree regarding the propriety and scope of the proposed Rule 502(d) order does not prevent me from entering the order. To the contrary, it is well-settled that a court may enter a Rule 502(d) order on its own initiative and without the consent of both parties. See Rule 502, advisory committee's explanatory note (“Under the rule, a confidentiality order is enforceable whether or not it memorializes an agreement among the parties to the litigation. Party agreement should not be a condition of enforceability of a federal court's order”); Lyall v. City of Denver, No. 16-cv-02155-WJM-CBS, 2016 WL 7176716, at *1 (D. Colo. Sept. 28, 2016) (“A court certainly has the authority to enter a Rule 502(d) order on its own initiative and without prior agreement by the parties.”). While the parties’ disagreement does not prevent me from entering a Rule 502(d) order, however, I conclude that entry of IBM's proposed order is unwarranted under the circumstances.
As an initial matter, I agree with Lubrizol that it unclear whether a court has the authority to enter a Rule 502(d) order that covers intentional, rather than inadvertent, disclosures of privileged documents and information. The Sedona Conference has taken the position that a court may do so, opining that “[a] Rule 502(d) order may address not only inadvertent waiver, but also instances in which intentional disclosure will not result in waiver.” The Sedona Conference Commentary on Protection of Privileged ESI, 17 Sedona Conf. J. 95, 130 (2015). A number of courts, however, have reached the opposite conclusion, holding that Rule 502(d) does not extend to intentional disclosures. See Petty, 2021 WL 1235266, at *4 (“Other courts in the district have rejected application of [Rule] 502 where the disclosure was not unintentional”); Potomac Elec. Power Co. & Subsidiaries v. United States, 107 Fed. Cl. 725, 731-32 (2012) (“although FRE 502(d) is not expressly limited to unintentional disclosures, the context of the Rule as a whole makes clear that this provision exists to ‘close the loop’ on the protections that the Rule extends to such disclosures”); Smith v. Best Buy Stores, L.P., No. 4:16-cv-00296-BLW, 2017 WL 3484158, at *3 (D. Idaho Aug. 14, 2017) (“The Court also has serious reservations about the enforceability of a clawback order extending to intentional disclosures”); but see Whitaker Chalk Swindle & Sawyer, LLP v. Dart Oil & Gas Corp., No. 4:08-CV-684-Y, 2009 WL 464989, at *4 (N.D. Tex. Feb. 23, 2009) (“Although the rule address[es] the consequences of an inadvertent disclosure of privileged information, this is not the extent of the rule.”)
In support of its argument that a court may preemptively enter a Rule 502(d) order authorizing a party to intentionally produce documents in connection with a spoliation dispute, IBM cites Warner Bros. Records Inc. v. Charter Communications, Inc., No. 19-cv-0087-RBJ-MEH (D. Colo. Dec. 18, 2020), an unpublished decision that is not available on electronic research databases. There, the defendant sought entry of a Rule 502(d) order that would permit it to produce approximately 600 documents on its privilege log regarding its alleged spoliation without waiving privilege. (ECF No. 116-2 at PageID # 5687). The court acknowledged that “the current situation was apparently not contemplated by the drafters of Rule 502(d) nor has it been the subject of any case [plaintiffs] or I could find.” Id. at PageID # 5687-88. The court further acknowledged that Rule 502(d) “was designed to address inadvertent disclosures” and that “[t]his would be a fairly novel use of the Rule, where a party seeks an advance judicial ruling of nonwaiver.” Id. at PageID # 5688.
*4 The Warner Bros. court nonetheless held that, in the circumstances before it, entry of a Rule 502(d) order was appropriate, concluding that the order would not preclude the plaintiff from pursuing other potentially privileged documents through other means. Id. at PageID # 5688-90. In reaching its holding, the court dismissed the plaintiff's concerns that the defendant was cherry-picking which documents to produce and was seeking to obtain a tactical advantage through selective disclosure, stating that, even if the defendant was acting tactically, entry of the order would “narrow and refine” the arguments before the court. Id. at PageID # 5689.
After careful consideration, I conclude that Warner Bros. is not persuasive in the circumstances presented here. Notwithstanding Warner Bros., I remain unconvinced that I have the authority to enter a Rule 502(d) that preemptively authorizes IBM to make intentional disclosures without waiving the privilege. But even assuming I do have that authority, I conclude that the Rule 502(d) order that IBM is proposing here is not appropriate in scope and is not likely to “narrow and refine” the parties’ arguments for two reasons.
First, as I stated when the parties appeared before me at the November 6, 2023 hearing, I am concerned that the time frame IBM has selected—through May 15, 2021—may exclude relevant communications regarding IBM's preservation efforts or implementation of a litigation hold. In particular, there is a risk that IBM's proposal will not capture discussions between IBM and its in-house or outside counsel in the weeks and months following the filing of the complaint regarding why a litigation hold was not implemented sooner and why IBM's auto-deletion policies were not suspended. While IBM has acknowledged my concern and has attempted to address it by extending the temporal cutoff to May 15, 2021, three weeks after the Complaint was filed, I nonetheless remain concerned that additional relevant discussions may have occurred after that date.
Second, I am troubled by the possibility that IBM's proposed Rule 502(d) order would enable it to disclose documents that support its spoliation position while continuing to withhold other, less favorable, documents. Several courts have noted that extending Rule 502(d) to intentional disclosures may enable a party to use the rule as a means to produce documents favorable to its position while holding back harmful materials. See RTC Indus., Inc. v. Fasteners for Retail, Inc., No. 17 C 3595, 2020 WL 1148813, at *8 (N.D. Ill. Mar. 9, 2020) (stating that the court's prior comments regarding a Rule 502(d) order were not “inten[ded] to give [plaintiff] license to selectively disclose and withhold privileged documents at its will”); Thomas v. Marshall Public Schools, No. 21-cv-2581 (PJS/DJF), --- F. Supp. 3d ---, 2023 WL 5743611, at *12 (D. Minn. Sept. 6, 2023) (“While Rule 502(d) allows a party who discloses privileged material to claw them back without having to prove the disclosure was ‘inadvertent’, it does not sanction the tactical, selective disclosure of some privileged materials for use in litigation while withholding others on the same subject.”); XY, LLC v. Trans Ova Genetics, Lc, No. 17-cv-00944-WJM-NYW, 2018 WL 11000694, at *4 (D. Colo. May 14, 2018) (“this court concludes that Rule 502 does not permit the selective, intentional waiver of communications protected by the attorney-client privilege”).
IBM responds that it is not engaging in cherry-picking because it is agreeing to produce all relevant documents and information within the scope of the Rule 502(d) order. However, IBM is only agreeing to produce all documents and communications regarding specific topics, namely “the preparation, implementation, institution, application, and dissemination by IBM of document preservation and litigation holds.” IBM notably has not agreed to produce documents regarding the broader question of whether it reasonably anticipated litigation at the time that the alleged spoliation occurred. To the contrary, IBM states that it “is not willing to broadly waive privilege over all documents relating to the topic of anticipation of litigation.” (ECF No. 127, PageID # 6033). Given that IBM is willing to waive privilege only with respect to a subset of the disputed documents, it is likely that the parties will continue to litigate privilege issues regarding whether IBM reasonably anticipated litigation, while also disputing whether a particular document relates to the implementation of a litigation hold or instead relates to broader anticipation of litigation issues.
*5 I therefore conclude that the scope of IBM's proposed Rule 502(d) does not eliminate the risk of selective disclosure and that it is not likely to meaningfully narrow the disputes between the parties. And, as IBM correctly notes, nothing in the text of Rule 502(d) appears to give me the authority to unilaterally impose on IBM a broader waiver of the privilege than IBM has itself agreed to. Cf. Abington Emerson Capital, 2019 WL 3521649 at *2 (“where the parties cannot agree on additional protections beyond those provided in the Rule, the Court is reluctant to impose them absent exceptional circumstances”). IBM's motion for entry of a Rule 502(d) order is therefore DENIED.
B. Lubrizol's Motion to Compel
In its own motion, Lubrizol moves to compel responses to certain interrogatories and document requests regarding spoliation-related issues. In particular, Lubrizol asks me to compel IBM to respond to: (1) Interrogatory Number 16; and (2) Requests for Production Numbers 39-43, 45-47, and 54-63.[1] For the reasons set forth below, Lubrizol's motion to compel is granted.
Federal Rule of Civil Procedure 26(b)(1) provides that a party may “obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). Rule 26 embodies a liberal approach to discovery, and “relevance” is construed broadly for discovery purposes. See Noakes v. Case Western Reserve Univ., No. 1:21-CV-01776-PAB, 2022 WL 17811630, at *2 (N.D. Ohio Dec. 19, 2022). After the 2015 revisions to the Federal Rules, however, discovery must also be “proportional” to the needs of the case. Fed. R. Civ. P. 26(b)(1); see also Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, 988 F.3d 260, 273 (6th Cir. 2021).
Rule 37(a)(1)(B) provides that a party may move to compel responses to discovery. Fed. R. Civ. P. 37(a)(1)(B). The party moving to compel “bears the burden of demonstrating [the] relevance” of the requested discovery. White v. City of Cleveland, 417 F. Supp.3d 896, 902 (N.D. Ohio Oct. 25, 2019) (quoting CSX Transp., Inc. v. Columbus Downtown Dev. Corp., No. 2:16-cv-557, 2019 WL 1760069, at *4 (S.D. Ohio Apr. 22, 2019)). If the moving party demonstrates that the requested material is relevant, “the burden shifts to the non-movant to show that to produce the information would be unduly burdensome.” Id.; see also Fed. R. Civ. P. 26, 2015 Advisory Committee Note (noting that “[a] party claiming undue burden or expense ordinarily has far better information — perhaps the only information — with respect to that part of the determination”). Courts have broad discretion in overseeing the scope of discovery and ruling on motions to compel. See James v. Cuyahoga County, 648 F. Supp. 3d 897, 903-04 (N.D. Ohio Dec. 28, 2022).
Lubrizol argues that much of the information it seeks is not privileged and that, to the extent any information is privileged, IBM has waived the privilege, either by placing the contents of privileged materials at issue in the litigation (“at-issue” waiver), or through application of the crime-fraud exception. IBM responds that it has produced an extensive amount of non-privileged information regarding these topics and that it would be unduly burdensome to require IBM to produce more. IBM also argues that a significant proportion of the information Lubrizol seeks is presumptively privileged and that IBM has not waived the privilege. I will first address Lubrizol's motion to compel additional non-privileged documents responsive to its discovery requests before turning to Lubrizol's argument that IBM has waived privilege with respect to materials covered by the attorney-client privilege or attorney work product protection.
1. Lubrizol's Motion to Compel Non-Privileged Information
Interrogatory Number 16
*6 Lubrizol first seeks an order compelling IBM to respond to Interrogatory Number 16, which asked IBM to “[i]dentify all communications before 2022 concerning IBM preparing, implementing, instituting, applying, and disseminating document preservation and litigation holds in connection with” the S4/Hana project. (ECF No. 115-3, PageID # 5470). The instructions to the interrogatories state that “identify” means to provide the date of the communication, whether the communication was oral or written, and the individuals who participated in the communication. Id. at PageID # 5466.
IBM responds that Lubrizol is “not entitled to the documents themselves” because they are privileged and that “logging all such documents would be unduly burdensome and disproportionate.” (ECF No. 118, PageID # 5696). To the extent IBM argues that it is not entitled to the underlying documents, IBM misconstrues Lubrizol's interrogatory. Lubrizol is not asking IBM to produce documents in Interrogatory Number 16, nor is Lubrizol asking IBM to disclose the contents of those documents. Instead, Lubrizol is asking IBM only to identify responsive communications regarding its document preservation efforts.
Under both federal and Ohio law, the mere fact that a party communicated with counsel is not privileged. See Pales v. Fedor, 113 N.E.3d 1019, 1030 (Ohio Ct. App. 2018) (“the fact of consultation and the general nature of the work performed by the attorney are not usually protected by the privilege”); State v. Walls, 104 N.E.3d 280, 295 (Ohio Ct. App. 2018) (“the attorney-client privilege protects the substance of communications—not the fact that there has been communication.”) (quotation omitted); Libertarian Party of Ohio v. Husted, No. 2:13-cv-953, 2014 WL 3792727, at *5 (S.D. Ohio July 31, 2014) (“the privilege extends essentially only to the substance of matters communicated to an attorney in professional confidence”) (quoting Cotton v. United States, 306 F.2d 633, 638 (2d Cir. 1962)). Interrogatory Number 16 thus does not seek privileged information and IBM cannot refuse to respond on that basis.
IBM also has not demonstrated that it would impose an undue burden to require IBM to respond to Interrogatory Number 16. IBM argues that Lubrizol has not identified “any relevant purpose” of logging communications regarding preservation efforts given the burden involved. (ECF No. 118, Page ID # 5696). However, relevance is construed broadly under Rule 26, see Noakes, 2022 WL 17811630, at *2, and the existence, timing, and frequency of such communications is relevant to Lubrizol's argument that IBM anticipated litigation at the time of the alleged spoliation. IBM also takes issue with the date range on Interrogatory Number 16, which asks IBM to identify relevant communications through the end of 2021, eight months after the complaint was filed and more than a week before the First Amended Complaint was filed. As discussed above, however, I find it plausible that IBM and its counsel would continue to have relevant conversations regarding the timing of IBM's litigation hold in the months following the filing of the complaint, and I cannot say on the record before me that the time period Lubrizol has chosen is unreasonable under the circumstances.
Finally, IBM argues that Interrogatory Number 16 is unduly burdensome because it would have to “collect, review, and log emails from both in-house and outside counsel” regarding document preservation, which IBM asserts includes “numerous communications.” (ECF No. 118, PageID # 5696). As noted above, it is IBM's burden to show that a discovery request is disproportionate to the needs of the case. See White, 417 F. Supp.3d at 902. Beyond the bare assertion that responding to Interrogatory Number 6 would require it to list “numerous” communications, IBM has not provided any specific evidence regarding the volume of communications at issue or the burden that responding to the interrogatory would impose. IBM thus has not met its burden of showing that Interrogatory Number 16 is unduly burdensome. See Biondi v. Jaguar Land Rover North America, LLC, No. 1:23-cv-297, 2023 WL 5822415, at *4 (N.D. Ohio Aug. 21, 2023), reconsideration denied, 2023 WL 7018511 N.D. Ohio Sept. 19, 2023) (holding that defendant “has not satisfied its burden of showing that Interrogatory No. 12 is unduly burdensome, particularly given that it provided no specific evidence to demonstrate how this request was actually burdensome”). Lubrizol's motion to compel IBM's response to Interrogatory Number 16 is therefore granted.
Requests for Production 39-43, 45-47, and 54-63
*7 Lubrizol also moves to compel IBM's responses to Requests for Production Numbers 39-43, 45-47, and 54-63. Those requests seek all documents and communications concerning: (1) any written litigation hold notices; (2) any steps IBM took to preserve relevant evidence; (3) the potential for litigation; (4) the parties’ failed November 18, 2020 mediation, to the extent those documents relate to the potential for litigation; (5) IBM's policies, practices, and procedures for preserving or deleting the data of the former IBM employees at issue; (6) steps IBM took to determine whether it was possible to restore or retrieve the information deleted from the email boxes of the former IBM employees; (7) communications between IBM and the former IBM employees regarding data preservation and deletion; (8) communications a former employee regarding data-related passwords; and (9) documents and communications regarding the separation of the former IBM employees from IBM and the preservation of their files. (ECF Nos. 115-7, 115-8).
The information that Lubrizol seeks in these requests is plainly relevant to its spoliation claim, and IBM does not appear to argue otherwise. Instead, IBM states that it has produced “extensive” non-privileged information on these topics. (ECF No. 118, PageID # 5695). IBM also states that it is “unclear what more Lubrizol expects IBM to do.” Id. It is not clear to me based on IBM's responses whether it has produced all non-privileged documents responsive to Requests for Production 39-43, 45-47, and 54-63. To the extent IBM has not produced any non-privileged document that is responsive to those requests (subject to any custodian restriction, date restriction, or other restrictions that the parties have agreed to), Lubrizol's motion to compel is granted, and IBM must produce all such documents within 30 days of the date of this order.
2. IBM has waived privilege with respect to its preservation efforts and whether it reasonably anticipated litigation
While Lubrizol argues that much of the information it seeks is not privileged, it is undisputed that the disputed discovery requests cover privileged material as well. Lubrizol argues that IBM has waived the attorney-client privilege and attorney work product doctrines or such materials under both the “at-issue” waiver and crime-fraud doctrines, while IBM argues that no waiver has occurred.
The parties first dispute whether the waiver issue is governed by state or federal law. IBM argues that waiver questions in diversity actions are governed by federal law. That is true as a general matter. Federal Rule of Evidence 502 sets forth certain exceptions to waiver of the attorney-client privilege and attorney work product protections, and Rule 502(f) provides that Rule 502 applies “even if state law provides the rule of decision.” Fed. R. Evid. 502(f); see also LifeBio, Inc. v. Eva Garland Consulting, LLC, No. 2:21-cv-722, --- F. Supp. 3d --- 2023 WL 3258586, at *3 (S.D. Ohio May 4, 2023) (holding that federal law governs the question of waiver); Murray Energy Corp. v. Cassidy, Cogan, Chappell and Voegelin, L.C., No. 2:18-cv-440, 2019 WL 2240245, at *3 (S.D. Ohio May 24, 2019), report and recommendation adopted, 2019 WL 3406543 (S.D. Ohio July 29, 2019) (“As to the question of waiver ... federal law controls”).
The Advisory Committee explanatory note to Rule 502 states, however, “while establishing some exceptions to waiver, the rule does not purport to supplant applicable waiver doctrine generally.” Fed. R. Evid. 502, advisory committee explanatory note. Thus, “[o]ther common-law waiver doctrines may result in a finding of waiver even where there is no disclosure of privileged information or work product.” Id. Accordingly, at least one court in this circuit has held that state law governs common-law waiver issues in a diversity case. See Laethem Equip. Co. v. Deere & Co., 261 F.R.D. 127, 136 (E.D. Mich. 2009) (“Because Michigan law provides the rule of decision in this case, it controls the inquiry whether there is a waiver for misconduct.”); see also Blankenship v. Superior Controls, Inc., No. 13-12386, 2014 WL 12659921, at *4 (E.D. Mich. Nov. 25, 2014) (noting that Rule 502 “was not intended to cover all privilege waiver situations” and analyzing common-law waiver under Michigan law “[f]or the sake of completeness”). I agree with the Laethem court that state law governs common-law waiver doctrines falling outside the scope of Rule 502. Accordingly, I will apply Ohio law to determine whether either the at-issue waiver doctrine or the crime-fraud exception applies in these circumstances.
*8 IBM argues that Ohio no longer recognizes common-law waiver doctrines at all. Specifically, IBM argues that an Ohio statutory provision, R.C. 2317.02(A), has eliminated common-law waiver doctrines and provides the exclusive means by which the attorney-client privilege can be waived under Ohio law. R.C. 2317.02(A) provides that:
The following persons shall not testify in certain respects:
(A)(1) An attorney, concerning a communication made to the attorney by a client in that relation or concerning the attorney's advice to a client, except that the attorney may testify by express consent of the client or, if the client is deceased, by the express consent of the surviving spouse or the executor or administrator of the estate of the deceased client. However, if the client voluntarily reveals the substance of attorney-client communications in a nonprivileged context or is deemed by section 2151.421 of the Revised Code to have waived any testimonial privilege under this division, the attorney may be compelled to testify on the same subject.
R.C. § 2317.02(A)(1).
In Jackson v. Gregor, 110 Ohio St. 3d 488 (2006), the Ohio Supreme Court held that “[i]n Ohio, the attorney-client privilege is governed by statute, R.C. 2317.02(A), and in cases that are not addressed in R.C. 2317.02(A), by common law.” Id. at 489-90 (quoting State ex rel. Lesie v. Ohio Hous. Fin. Agency, 105 Ohio St. 3d 261 (2005)). The court held that the statutory privilege under R.C. 2317.02(A) “governs communications directly between an attorney and a client.” Id. at 490. The court further held that “R.C. 2317.02(A) clearly enumerates the means by which a client may waive the statutory attorney-client privilege: by express consent or by voluntarily testifying on the same subject.” Id. at 490-91.
In light of Jackson, IBM argues that R.C. 2317.02(A) provides the exclusive means by which a party may waive the attorney-client privilege under Ohio law. However, “since its publication, courts have clarified that Jackson was not intended to wipe clean the pre-existing body of common law exceptions to privilege in Ohio.” Fifth Third Bancorp v. Certain Underwriters at Lloyd's, No. 1:14-cv-869, 2017 WL 1881339, at *5 (S.D. Ohio May 7, 2017). Indeed, Ohio courts have generally held that R.C. 2317.02(A) “does not abrogate the common-law implied-waiver doctrine because the statutory attorney-client privilege is a testimonial privilege.” Grace v. Mastruserio, 182 Ohio App. 3d 243, 249, 251 (Ohio Ct. App. 2007) (holding that “plain reading” of R.C. 2317.02(A) “clearly limits the statute's application to cases in which a party is seeking to compel testimony of an attorney for trial or at a deposition—as opposed to cases where a party is seeking to compel production of nontestimonial documents”); see also Edwards v. Edwards, 151 N.E. 3d 6, 9 (Ohio Ct. App. 2019) (“The statutory version does not apply here because, by its very terms, it applies only to competency of the attorney to testify”).
Federal courts, including the Sixth Circuit, have also repeatedly held that R.C. 2317.02 applies only to testimony, not documents. See In re Professionals Direct Ins. Co., 578 F.3d 432, 440 (6th Cir. 2009) (“by its terms, § 2317.02(A) applies to attorney testimony, not documents held by defendants”); Arrowood Indem. Co. v. The Lubrizol Corp.., No. 1:10 CV 2871, 2013 WL 12130641, at *2 (N.D. Ohio Aug. 6, 2013) (holding that “both the case law and the plain text of the statute foreclose” the argument that R.C. 2317.02(A) applies to the production of documents);[2] Little Italy Development, LLC v. Chicago Title Ins. Co., No. 1:11 CV 112, 2011 WL 4944259, at *2 (N.D. Ohio Oct. 17, 2011) (“It is well-settled that subsection (A)(1) does not apply to the production of documents.”).
*9 IBM argues that these cases are not an accurate statement of current Ohio law. In particular, IBM argues that State v. Brunson, 171 Ohio St. 3d 384 (2022), clarified that Jackson applies to all privilege situations and is not limited to testimony. IBM's argument is unavailing. It is true, as IBM argues, that the Brunson court stated that “under this court's decision in Jackson, R.C. 2317.02(A) applies to all direct communications between a client and his or her attorney ....” Id. at 392. However, the court also stated that “[t]he attorney-client privilege is governed by statute, R.C. 2317.02(A), and for situations that are not addressed in the statute, the privilege is governed by the common law.” Id. at 391. The court further stated that “R.C. 2317.02(A) covers testimonial privilege, and the common-law attorney client privilege protects against any dissemination of information obtained in the confidential relationship.” Id. Accordingly, rather than supporting IBM's position that R.C. 2317.02(A) applies to all privilege issues, Brunson instead confirms that the statute codifies only a testimonial privilege. Because R.C. 2317.02(A) applies only to testimony, it does not govern waiver issues for the documents at issue here. “And where the statute is not implicated, the common law applies.” Grace, 182 Ohio App. 3d at 251.
In analyzing common-law implied waiver, “Ohio appellate courts have discussed and applied the tripartite test set forth in Hearn v. Rhay [68 F.R.D. 574, 581 (E.D. Wash. 1975)],” Grace, 182 Ohio App. 3d at 250. Under that test, a party commits an implied waiver if: “(1) the assertion of the privilege is the result of some affirmative act, such as filing suit, by the asserting party; (2) through the affirmative act, the asserting party has placed the protected information at issue by making it relevant to the case; and (3) application of the privilege would deny the opposing party access to information vital to its defense.” Id. (citing Hearn); see also Covington v. The MetroHealth Sys., 150 Ohio App. 3d 558, 565 (Ohio Ct. App. 2002) (applying three-factor Hearn test).
IBM argues that the Hearn test is no longer applicable because the Ohio Supreme Court rejected it in Jackson. The Jackson court criticized Hearn, however, in the context of holding that R.C. 2317.02(A) provides the exclusive means by which a party may waive the testimonial privilege. See Jackson, 110 Ohio St. 3d at 491 (stating that the court was “guided by the significant body of law from this court that has consistently rejected the adoption of judicially created waivers, exceptions, and limitations for testimonial privilege statutes”) (emphasis added). As discussed above, that holding did not impact the applicability of common-law waiver doctrines to non-testimonial settings. See Grace, 182 Ohio App. 3d at 251; In re Professionals Direct, 578 F.3d at 440. I therefore conclude that the Hearn test continues to govern under Ohio law. See Grace, 182 Ohio App. 3d at 250 (applying Hearn in a post-Jackson decision).
With respect to the first Hearn factor, Lubrizol argues that IBM asserted the privilege through an “affirmative act” when it sent a letter on October 29, 2021, in which it defended against Lubrizol's spoilation allegations by asserting that it did not reasonably anticipate litigation at the time the relevant documents were allegedly deleted “given the amounts at stake (under $10 million), the parties’ longstanding relationship, and the contractual provisions for resolving disputes of the nature now at issue, litigation was neither imminent nor reasonably anticipated at that time.” (ECF No. 115-11, PageID # 5611). IBM further stated that it did not identify certain departed employees as potential custodians “until Lubrizol included them in its [ESI] disclosures.” Id. I agree that IBM took an “affirmative act” under the first prong of the Hearn test when it sent a letter disputing Lubrizol's spoliation claim by asserting that IBM did not reasonably anticipate litigation before the filing of the complaint in April 2021 and had not identified certain custodians as potentially relevant until Lubrizol served its disclosures.
*10 IBM argues that it did not take an affirmative act under Hearn because it did not file a claim or assert an affirmative defense that relied on the advice of counsel. However, while Grace described “filing suit” as one example of an affirmative act that would satisfy the first Hearn factor, it did not limit waiver to those circumstances. See Grace, 182 Ohio App. 3d at 250 (holding that the first Hearn factor is satisfied the assertion of the privilege is the result of some affirmative act, such as filing suit, by the asserting party”) (emphasis added). IBM has not cited any Ohio case limiting Hearn to a situation where a party affirmatively asserts a claim, and my research has not identified any such case either. I conclude that IBM's letter—which squarely raised the questions of IBM's document preservation efforts, whether IBM anticipated litigation at the time of the alleged spoliation, and when it identified the disputed custodians as potentially relevant—constitutes an affirmative act sufficient to satisfy Hearn.
I also conclude that the second Hearn factor is met. By arguing that it did not reasonably anticipate litigation before April 2021, IBM has made relevant the advice that it received from counsel regarding its document preservation efforts and whether litigation was reasonably likely prior to that date. IBM argues that the advice of its counsel is irrelevant because the reasonable anticipation of litigation standard is an objective one. However, reasonable anticipation of litigation for purposes of a spoliation claim under Ohio law can be demonstrated through a party's direct knowledge. See Smith v. Howard Johnson Co., Inc., 67 Ohio St. 3d 28, 29 (1993) (holding that tort of spoliation under Ohio law requires “knowledge on the part of defendant that litigation exists or is probable”); Burgess v. Fischer, 735 F.3d 462, 482 (6th Cir. 2013) (“a reasonably jury could conclude that Defendants knew or should have known that litigation was probable when the tape was destroyed”) (emphasis added). If counsel was telling IBM before April 2021 that litigation was reasonably likely, that is certainly relevant to Lubrizol's claim. Similarly, if IBM's counsel identified the disputed employees as potentially relevant custodians before their email boxes were deleted, that would impact IBM's state of mind and the strength of Lubrizol's spoliation claim.
Finally, the third factor of the Hearn test is satisfied because applying the privilege would deny Lubrizol access to information that is vital to its spoliation claim. “ ‘Vital information’ necessarily implies that the information is unavailable from any other source.” Covington, 150 Ohio App. 3d at 566. Here, IBM itself states that counsel led IBM's preservation and data restoration efforts. (ECF No. 118, PageID # 5695) (stating that “IBM's in-house and outside counsel promptly initiated preservation efforts” and led document restoration efforts). Thus, what IBM's counsel was telling it regarding when litigation was reasonably anticipated and which custodians’ documents needed to be preserved is vital to the resolution of Lubrizol's claim and is not available from another, non-privileged source. All three Hearn factors are therefore satisfied.
Finally, IBM argues that applying the at-issue waiver doctrine in the circumstances here would create an “incredibly slippery slope” because many of the documents at issue would reflect IBM's attorneys’ assessment of the merits of the dispute in addition to discussing whether IBM reasonably anticipated litigation. (ECF No. 127, PageID # 6041). I disagree. To the extent that a particular document contains discussion of other legal issues in addition to IBM's document preservation efforts, whether IBM reasonably anticipated litigation, or when IBM identified certain custodians as potentially possessing relevant information, IBM shall be entitled to redact that information before producing the document.[3]
*11 In sum, I hold that IBM has waived privilege with respect to: (1) IBM's document preservation efforts; (2) whether IBM reasonably anticipated litigation at the time of the alleged spoliation; and (3) when IBM identified the disputed custodians as individuals who might possess information relevant to the case. I also hold that IBM has not waived privilege with respect to any other topic and may redact privileged information from otherwise responsive documents to the extent that information deals with other topics. IBM is hereby ordered to produce all responsive documents within 30 days of the date of this order.[4]
IV. CONCLUSION
For the foregoing reasons, IBM's motion for entry of an order under Federal Rule of Evidence 502(d) is DENIED, while Lubrizol's motion to compel is GRANTED. Within 30 days of the date of this order, IBM shall produce (1) all non-privileged documents responsive to Interrogatory Number 16 and Requests for Production 39-43, 45-47, and 54-63; and (2) all documents responsive to Interrogatory Number 16 and Requests for Production Numbers 39-43, 45-47, and 54-63 for which IBM is currently claiming privilege that address IBM's document preservation efforts, whether IBM reasonably anticipated litigation prior to the alleged spoliation, or when IBM identified the disputed custodians as individuals possessing potentially relevant information.
IT IS SO ORDERED.
Footnotes
Lubrizol initially also moved to compel Lubrizol to produce a witness regarding one of IBM's 30(b)(6) deposition topics, Topic Number Three. In the parties’ November 20, 2023 status report, Lubrizol states that IBM has agreed to produce a witness on that topic. I therefore deny Lubrizol's motion to compel with respect to Topic Number Three as moot.
Arrowood Indemnity involved R.C. 2317.02(A)(2), which deals with the circumstances in which an attorney of an insurance company may be required to testify, including with respect to a bad faith claim. However, the holding of Arrowood Indemnity is applicable to the statute as a whole, not just to subsection (A)(2). As the Arrowood Indemnity court stated, “nothing in [subsection (A)(2) suggests that it should be construed differently than the rest of the section.” 2013 WL 12130641 at *2.
IBM requests that, to the extent I am inclined to find waiver, I grant another hearing on the issue and permit further briefing to the extent it would be useful. The parties have already submitted numerous letter briefs on the waiver issue and argued their positions at length at the November 6, 2023 hearing. I conclude that no additional briefing or argument is necessary.
Because I agree that IBM has committed at-issue waiver, I need not address whether IBM has waived privilege under the crime-fraud exception to the attorney-client privilege or attorney work product protection.