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Davine v. The Golub Corp.

United States District Court, D. Massachusetts

February 8, 2017

SHELLY DEVINE, et al. Plaintiffs
v.
THE GOLUB CORPORATION, et al. Defendants.

          MEMORANDUM AND ORDER REGARDING PLAINTIFFS' MOTION FOR IN CAMERA REVIEW OF DOCUMENTS WITHHELD BY DEFENDANTS BASED ON PRIVILEGE (DOCKET NO. 145)

          KATHERINE A. ROBERTSON, U.S. MAGISTRATE JUDGE

         In this discovery dispute, Plaintiffs have asked the court to review in camera eleven documents or categories of documents that defendants Golub Corporation, Price Chopper, Inc., Price Chopper Operating Co. of Massachusetts, and Neil M. Golub and Jerel Golub (“Price Chopper” or “Defendants”) have withheld under claims of attorney-client privilege or the attorney-client privilege and the work product doctrine. Plaintiffs ask that if the court concludes that any of these documents are not privileged or otherwise protected from disclosure, the court order Defendants to produce any such documents with redactions if appropriate.[1] A copy of Defendants' privilege log is attached to this order (Dkt. No. 145-1).

         I. Background

         Plaintiffs allege that it is Price Chopper's practice or policy to reduce its labor costs by unlawfully classifying its so-called Team Leaders, also referred to as Department Managers, as exempt employees not entitled to overtime pay for hours worked over forty (40) hours in a work week (Dkt. No. 52 at 1, ¶ 2). On the basis of this allegation, Plaintiffs bring claims under the federal Fair Labor Standards Act (“FLSA”), the Massachusetts Wage Act, the New York Labor Law, the Connecticut Minimum Wage Act, and the Pennsylvania Minimum Wage Act (id. at 1-2, ¶ 2). The parties are presently engaged in non-expert discovery related to these claims. The dispute now before the court is about documents concerning an outside consultant's analysis of Price Chopper's classification of its Department Managers for purposes of the FLSA and cognate state statutes. According to William Kenneally, Esq., recently retired Price Chopper General Counsel, in or around February 2011, after receiving a memorandum from employees in Price Chopper's human resources department, he decided that it was necessary for Price Chopper to retain a consultant to assist him in analyzing the facts and circumstances relevant to the compensation classification of Department Managers for purposes of FLSA compliance (Dkt. No. 156-1 at 4, ¶¶ 7-9). Defendants' privilege log shows that Mr. Kenneally received an engagement letter from Saratoga Human Resources Solutions, Inc. (“SHRS”) on or around May 26, 2011 and that SHRS thereafter prepared a report regarding its study of store level Price Chopper Department Managers (Dkt. No. 145-1 at 3-4) (“FLSA Audit” or “Audit Report”). Plaintiffs seek the production of various documents related to the audit, which was conducted with the assistance of employees in Price Chopper's human resources department and completed in 2011. After a hearing, the court concluded that the plaintiffs had raised more than a merely speculative claim that the disputed documents were not privileged or otherwise protected and that it could not resolve this discovery dispute without an in camera review. See Assoc. for Reduction of Violence v. Hall, 734 F.2d 63, 66 (1st Cir. 1984) (party seeking production of documents for which privilege or other form of protection is claimed must make threshold showing of entitlement to discovery that is more than merely speculative). Defendants provided copies of the privilege log and the disputed documents to the court, which has conducted an in camera review.

         II. Analysis

         “'The party invoking a recognized privilege has the burden of establishing, not only the existence of that privilege, but also that the established privilege was not waived.'” Columbia Data Prods., Inc. v. Autonomy Corp., Ltd., Civil Action No. 11-12077-NMG, 2012 WL 6212898, at *11 (D. Mass. Dec. 12, 2012) (quoting Cavallaro v. United States, 153 F.Supp.2d 52, 56 (D. Mass. 2001), aff'd, 284 F.3d 236 (1st Cir. 2002)). Accordingly, Defendants have the burden of showing that they are entitled to withhold production of the documents listed on the privilege log on the basis of the attorney-client privilege or the work product doctrine.

         The parties have not addressed what law determines the scope of the attorney client privilege and any exceptions to it, although they have relied on federal case law in support of their respective positions. Where, as here, jurisdiction is premised on a federal question and the disputed documents constitute evidence related to the federal FLSA claims (as well as to the pendent state law claims), federal common law, “as interpreted by United States courts in the light of reason and experience” governs a claim of privilege. Fed.R.Evid. 501; see also United States v. Mass. Inst. of Tech., 129 F.3d 681, 684 (1st Cir. 1997); Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437, 441 (S.D.N.Y. 1995).

         a. The attorney-client privilege and the third party exception

         The First Circuit has instructed that the attorney-client privilege applies in the following circumstances:

(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 the legal adviser, (8) except the protection be waived.

Cavallaro, 284 F.3d at 245 (quoting 8 J.H. Wigmore, Evidence § 2292, at 554 (McNaughton Rev. 1961)). The privilege is well-established and serves important interests, but is nonetheless narrowly construed because its invocation may hinder the search for truth. See Mass. Inst. of Tech., 129 F.3d at 684-85. It “applies only to the extent necessary to achieve the goal of ensuring effective representation though open communication between lawyer and client.” In re Grand Jury Subpoena, 274 F.3d 563, 571 (1st Cir. 2001). In this case, Defendants assert the privilege as to communications between Price Chopper's General Counsel and Price Chopper employees and among Price Chopper employees. Communications by corporate employees with their employer's in-house counsel concerning matters within the scope of an employee's corporate duties and made for the purpose of securing legal advice from in-house counsel are protected by the attorney-client privilege. See Upjohn v. United States, 449 U.S. 338, 394 (1981). Communications among Price Chopper employees “that discuss or relay counsel's legal advice . . . are privileged to the extent that the employees are in a ‘need to know' position or bear some responsibility for the subject matter underlying the consultation.” In re Prograf Antitrust Litig., No. 1:11-md-02242-RWZ, 2013 WL 1868227, at *2 (D. Mass. May 3, 2013) (citing Se. Pa. Transp. Auth. v. Caremarkpcs Health L.P., 254 F.R.D. 253, 262 (E.D. Pa. 2008); Bank Brussels Lambert, 160 F.R.D. at 442 (“[T]he privilege protects from disclosure communications among corporate employees that reflect advice rendered by counsel to the corporation.”)). A communication from one corporate employee to another may be privileged even though it does not reflect counsel's legal advice if the communication was about matters within the scope of the employee's duties and responsibilities, and “the employee was aware that the communication was made in order to enable [Price Chopper's] attorneys to provide legal advice to the corporation and understood that the [matter] to which the communication related was to be treated as confidential.” Lewis v. Wells Fargo & Co., 266 F.R.D. 433, 444 (N.D. Ca. 2010) (evaluating claims of attorney-client privilege and work product protection for documents related to FLSA audit).

         Defendants also have asserted that the attorney-client privilege protects the contents of the Audit Report prepared by SHRS, documents related to preparation of the Audit Report, such as an engagement letter between SHRS and Price Chopper's General Counsel, and notes taken by SHRS of its interviews with Price Chopper Store and Department Managers. The attorney-client privilege applies to communications made in confidence between an attorney and a client. Thus, an attorney's communications with, or in the presence of, a third party, such as SHRS, about the subject matter of the attorney's legal representation generally are not protected by the attorney-client privilege, nor are the third party's communications with the client protected. See Cavallaro, 284 F.3d at 246-47 (presence of a third party during attorney-client communication often is sufficient to undermine confidentiality requirement). “An exception to this general rule exists for third parties employed to assist a lawyer in rendering legal advice.” Id. at 247. However, “[t]he circumstances under which the exception applies are limited.” Dahl v. Bain Capital Partners, LLC, 714 F.Supp.2d 225, 227 (D. Mass. 2010).

         “The first element that must be satisfied in order for the exception to apply is that ‘the third party communications must be “necessary, or at least highly useful, for the effective consultation between the client and the lawyer which the privilege is designed to permit.”'” Columbia Data Prods., Inc., 2012 WL 6212898, at *15 (quoting Dahl, 714 F.Supp.2d at 227-28 (quoting Cavallaro, 284 F.3d at 247-48) (additional citations omitted)). It is not enough that the attorney's ability to advise the client is improved by the assistance of the third party. Rather, the involvement of the third party must serve some specialized purpose in facilitating the attorney's provision of legal advice to the client. See Cavallaro, 284 F.3d at 247-48; United States v. Ackert, 169 F.3d 136, 139 (2d Cir. 1999) (attorney-client privilege did not protect communications between attorney and investment banker despite assumption that the communications significantly assisted the attorney in giving his client legal advice). Further, communications with the outside party must be made for the purpose of providing or obtaining legal rather than business advice. See Dahl, 714 F.Supp.2d at 228; see also Cavallaro, 284 F.3d at 248-49.

         2. The work product doctrine

         The work product doctrine, first recognized by the Supreme Court in Hickman v. Taylor, 329 U.S. 495 (1947), and partially codified in Federal Rule of Civil Procedure 23(b)(3), “'protects against disclosure of materials that a party, her attorney, or her representative prepares in anticipation of litigation[.]'” Columbia Data Prods., Inc., 2012 WL 6212898, at *11 (quoting In re Grand Jury Subpoena, 220 F.R.D. 130, 141 (D. Mass. 2004)). The work product doctrine serves the purpose of preserving “a ‘zone of privacy' in which a party, his attorney, and in many cases his non-attorney ‘representative' can prepare for litigation ‘free from unnecessary intrusion by his adversaries.'” In re Grand Jury Subpoena, 220 F.R.D. at 141 (quoting United States v. Adlman, 134 F.3d 1194, 1196 (2d Cir. 1998)). The First Circuit requires a close connection between the information for which work product protection is sought and litigation for which the information is procured. While a document that serves both a business and a litigation purpose may be protected as work product, see Columbia Data Prods., Inc., 2012 WL 6212898, at *11 (quoting Maine v. United States Dep't of the Interior, 298 F.3d 60, 68 (1st Cir. 2002)),

[i]t is not enough to trigger work product protection that the subject matter of a document relates to a subject that might conceivably be litigated. Rather, as the Supreme Court explained, the literal language of [Rule 26(b)(3)] protects materials prepared for any litigation or trial as long as they were prepared by or for a party to the subsequent litigation.

United States v. Textron, Inc. & Subsidiaries, 577 F.3d 21, 27 (1st Cir. 2009) (en banc) (quoting Fed. Trade Comm'n v. Grolier Inc., 462 U.S. 19, 25 (1983) (emphasis in original)). In other words, documents that are prepared to aid a corporation with its compliance obligations, rather than because of pending or imminent litigation, are not protected by the work product doctrine. See Lewis, 266 F.R.D. at 440.

         As a preliminary matter, the court rejects Defendants' reliance on the work product doctrine as a basis for withholding production of the documents listed in their privilege log. In support of their claim that Price Chopper prepared these documents in anticipation of litigation, Price Chopper points to an FLSA lawsuit filed against Price Chopper in Vermont in 1999 and decided on summary judgment in September 2000, and increased media attention regarding alleged misclassifications of managers at other grocery store chains (Dkt. No. 156 at 6). The FLSA Audit at issue here was commissioned in 2011, more than 10 years after judgment entered for Price Chopper in the Vermont FLSA suit (Dkt. No. 146-1), and some three to four years before the instant suit was filed (Dkt. No. 1). In view of the ten-year lapse in time between the favorable resolution of the Vermont case and the commission of the FLSA Audit, the court rejects Price Chopper's contention that the Vermont case caused Price Chopper to commission the FLSA Audit in anticipation of additional imminent FLSA litigation. The four-year lapse in time between Price Chopper's commission of the FLSA Audit and the filing of the instant case also defeats any claim that documents listed on Defendant's privilege log were created in anticipation of the instant litigation See Lewis, 266 F.R.D. at 440 (where FLSA audit was conducted a year before litigation commenced, documents were not created in anticipation of litigation and were not protected work product); Marceau v. IBEW Local 1269, 246 F.R.D. 610, 614 (D. Ariz. 2007) (fact that litigation was not imminent supports argument that FLSA audit documents were not prepared in ...


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