Opinion
MDL 2862
06-10-2024
IN RE DIISOCYANATES ANTITRUST LITIGATION This Document Relates to All Actions Master Docket Misc. No. 18-1001
THOMAS J. RUETER SPECIAL MASTER
REPORT AND RECOMMENDATION
THOMAS J. RUETER SPECIAL MASTER
I. BACKGROUND
By Stipulation and Order dated March 11, 2024, with the consent of the parties, I was appointed by the Honorable W. Scott Hardy "as Special Master in this action for the purpose of deciding Plaintiffs' Discovery Motion No. 2 (ECF No. 986), seeking to compel Defendant Covestro LLC to produce documents withheld or redacted pursuant to the attorney-client privilege or work-product doctrine." (ECF No. 1043 at 2.) This Report & Recommendation is issued in accordance with Judge Hardy's March 11, 2024 Order.
Covestro LLC ("Covestro") submitted over 800 documents to the Special Master for in camera inspection, along with its privilege log. The Special Master has considered Plaintiffs' Discovery Motion (ECF No. 986, the "Discovery Motion") and Memorandum of Law in support thereof, Covestro's Opposition to the Discovery Motion and Memorandum of Law in support thereof (ECF No. 1017, the "Opp."), and Plaintiffs' Reply (ECF No. 1023), and all exhibits and attachments thereto.
II. DISCUSSION
A. The Law
(i) The Attorney-Client Privilege.
"The attorney-client privilege protects communications between attorneys and clients from compelled disclosure. It applies to any communication that satisfies the following elements: it must be (I) a communication (2) made between privileged persons (3) in confidence (4) for the purpose of obtaining or providing legal assistance for the client." In re Teleglobe Commc'ns Corn., 493 F.3d 345, 359 (3d Cir. 2007) (citation omitted). The party asserting the privilege bears the burden of proving its applicability. Matter of Bevill., Bresler & Schulman Asset Mgmt Corp. 805 F.2d 120, 126 (3d Cir. 1986); Fed Trade Comm'n v. Abbvie, Inc. 2015 WL 8623076, at * 1 (ED. Pa. Dec. 14, 2015). "A proper claim of privilege requires a specific designation and description of the documents within its scope as well as precise and certain reasons for preserving their confidentiality." Parisi v. State Farm Mut. Auto. Ins. Co.. 2017 WL 4403326, at *4 (W.D. Pa. Oct. 2, 2017) (citing cases). "Once the privilege-invoking party provides facts showing the privilege is applicable, the burden shifts to the party seeking disclosure to set forth facts showing that disclosure will not violate the privilege." In re Diisocyanates Antitrust Litie. 2024 WL 643037, at *1 (W.D. Pa. Feb. 15, 2024) (Hardy, J.) (citation omitted).
The attorney-client privilege applies to corporations. Porreca v. Alt. Energy Holdings. LLC. 2020 WL 6899612, at *2 (W.D. Pa. Nov. 24, 2020) (Hardy, J.). Counsel, especially in-house counsel, often play dual roles of legal counsel and business advisor, rendering legal advice often difficult to distinguish from business advice in a corporate setting. For the attorney-client privilege to apply, the "primary purpose of the communication at issue must be to gain or provide legal assistance." Paramount Fin. Commc'ns. Inc. v. Broadridge Investor Common Sols.. Inc. 2016 WL 5404462, at *2 (E.D. Pa. Sept. 28, 2016). Preliminary or red-lined drafts of documents reflecting attorney-client communications are protected from disclosure since they reveal not only client confidences, but also legal advice and opinions of attorneys, all of which are protected by the attorney-client privilege. Id. As noted by Plaintiffs, certain categories of documents are generally not privileged even though they include communications with an attorney and include the following: (1) communications seeking business advice; (2) copying any attorney on an email does not make the email privileged; and (3) attaching a communication to a privileged document does not make the attachment privileged. (Discovery Motion at 4 (citing In re Human Tissue Prod. Liab. Litig. 255 F.R.D. 151, 164 (D.N.J. 2008), appeal denied, judgment affd. 2009 WL 1097671 (D.N.J. April 23, 2009))).
(ii) Work Product Doctrine.
As with the attorney-client privilege, the party asserting the work product doctrine bears the burden of proving its applicability. Abbvie, 2015 WL 8623076, at *1. The work product doctrine provides 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." Fed.R.Civ.P. 26(b)(3). See Upjohn Co. v. United States, 449 U.S. 383. 399 (1981); Hickman v. Tavlor, 329 U.S. 495, 509-12 (1947). See also In re Cendant Corp. Sec. Litig. 343 F.3d 658, 661-62 (3d Cir. 2003) (The work product doctrine "shelters the mental processes of the attorney, providing a privileged area within which he can analyze and prepare his client's case.") (quotation omitted). See also King Drug Co. of Florence. Inc. v. Abbott Labs. 2023 WL 2646926, at *1 (E.D. Pa. Mar. 27,2023) (same). As explained by the Court in Hickman, the "'work' is reflected ... in interviews, statements, memoranda, correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible ways." Hickman, 329 U.S. at 511. "Forcing an attorney to disclose notes and memoranda of witnesses' oral statements is particularly disfavored because it tends to reveal the attorney's mental processes." Upjohn. 449 U.S. at 399. Furthermore, discovery of counsel's communications with third parties "creates the danger of converting the attorney from advocate to witness." In re Grand Jury Investigation. 599 F.2d 1224, 1231 (3d Cir. 1979).
B. The Documents
The following is a summary of the parties' arguments set forth in the pleadings. The Special Master has considered all arguments presented by the parties whether specifically addressed herein. Plaintiffs assert that Covestro improperly withheld or redacted four categories of documents described in Covestro's privilege log (as supplemented, the "Log"): (1) documents reflecting routine business dealings/advice; (2) documents for which Covestro has not provided sufficient identification of the attorney(s) providing legal advice; (3) documents that Plaintiffs argue do not constitute attorney work product; and (4) documents Plaintiffs assert were communications that included third parties thereby destroying any claim of privilege. (Discovery Motion at 5; Opposition at 2.) Plaintiffs also argue that the Log fails to include certain specific information required by the ESI Protocol. (ECF No. 313.)
Covestro contends that its Log contains the information required by the ESI Protocol. (Opp. at 2 (citing ECF No. 313 at ¶10).) See In re Diisocyanates Antitrust Litis. 2024 WL 643037, at *1 (W.D. Pa. Feb. 15, 2024) (discussing requirements of the ESI Protocol) (Hardy, J.). Covestro represents that it also provided Plaintiffs "with a detailed personnel log of each individual in the Log, their company, and their title." Id. at 3. Additionally, Covestro represents that almost 600 of the challenged documents, or more than two-thirds of the total, are produced in redacted form providing Plaintiffs with greater information than found in the Log. Id.
Considering all of the parties' arguments and applying the legal principles outlined herein, the Special Master has carefully reviewed each of the documents submitted for in camera inspection and makes the following recommendations:
I. Documents Reflecting Routine Business Dealings/Advice.
Plaintiffs assert over 300 of Covestro's Log entries "describe routine business matters," which are not protected by the attorney-client privilege. (Discovery Motion at 6 (citing Wachtel v. HealthNet, Inc.. 482 F.3d 225, 231 (3d Cir. 2007) ("Where a lawyer provides non-legal business advice, the communication is not privileged."))). In the Discovery Motion, Plaintiffs provide four examples of Log entries where they claim it cannot be discerned from the description in the Log whether the primary purpose of the communication was to gain or provide legal advice.
Covestro urges that a "review of the entries in Appendix A reveals that the documents included relate to a wide range of subject matters that are clearly legal in nature, including compliance, regulatory questions, litigation, contracts, negotiations, and draft external communications." (Opp. at 9.) See Se Pa. Transp. Auth. v. Caremarkpsc Health, L.P.. 254 F.R.D. 253,258 (E.D. Pa. 2008) (when a decision involves consideration of various business concerns, the attorney-client privilege applies if the decision "was infused with legal concerns and was reached only after securing legal advice") (quotation omitted). Covestro acknowledges that "the communications identified in Appendix A relate to legal topics that are intertwined with business issues," ii but urges that the attorney-client privilege applies because "the primary purpose of the withheld or redacted information ... was legal advice." Id. at 10. Covestro also notes that over one-half of the challenged entries "were documents produced with only minimal redactions so as to redact only legal advice or communications with Covestro's in-house counsel and not ancillary business communications." Id.
After careful review of the documents submitted for in camera review in this category, the Special Master recommends that Plaintiffs objections to Covestro's assertions of the attorney-client privilege with respect to these documents be overruled. The "primary purpose" of the redacted language and/or the communications in the documents Covestro declined to produce was "to gain or provide legal assistance" to the client. Paramount Fin. Commc'ns, Inc. 2016 WL 5404462, at *2.
2. Documents Providing Insufficient Identification of Attorney Providing Legal Advice.
With respect to this category of documents, Plaintiffs contend that in these documents, Covestro "failed to identify with the requisite specificity the attorneys from whom the legal advice was provided or sought." (Discovery Motion at 8.) Plaintiffs also question Log entries where a specific attorney is identified but is not "an author, recipient, or cc'd in the chain of communications." Id. at 10.
Covestro notes that it is well-settled that "[i]n the case of a corporate client, privileged communications may be shared with non-attorney employees in order to relay information requested by attorneys." (Opp. at 11 (quoting SmithKline Beecham Corp. v. Apotex Corp.. 232 F.R.D. 467,477 (E.D. Pa. 2005)). In response to Plaintiffs' complaint that some of the Log entries state that the advice came from "Covestro Legal" with no specific attorney identified, Covestro explains that non-attorney employees often refer to advice from counsel by the term "legal," rather than by a specific name of an individual, and that the term "Covestro Legal" refers to advice from Covestro's legal department. Id. at 12. Additionally, the referenced attorney need not be "an author, recipient, or cc'd in the chain of communications," ]g\ (quoting Discovery Motion at 10), for the communication to contain legal advice. Id. See SmithKline Beecham. 232 F.R.D. 467,477 ("A document need not be authored by or addressed to an attorney in order to be properly withheld on attorney-client privilege grounds.")
After careful review of the documents submitted for in camera review in this category, the Special Master recommends that Plaintiffs' objections to Covestro's assertions of the attorney-client privilege with respect to these documents be overruled. Covestro sufficiently identified "the attorneys from whom the legal advice was provided or sought," See Discovery Motion at 8, and the "primary purpose" of the redacted language and/or the communications in the documents Covestro declined to produce was "to gain or provide legal assistance" to the client. Paramount Fin Commc'ns. Inc.. 2016 WL 5404462, at *2.
3. Documents Not Work Product.
In many of the Log entries in this category, Plaintiffs assert that the work product doctrine does not apply because Covestro failed to identify the attorney involved or to identify the names and tides of the persons who prepared the documents. (Discovery Motion at 10.) Plaintiffs challenge the remaining documents in this category because the subject or file names are redacted in the Log. Id. at 11.
Covestro responds that in the body of the communications, it is stated that the information is being sought at the request of in-house counsel or contains redacted information provided by in-house counsel regarding the topics of litigation or settlement. Counsel urges that this is sufficient identification of counsel to warrant application of the work product doctrine. As to Plaintiffs' second claim in this category alleging insufficiency in the Log entries, Covestro asserts that it is appropriate to redact information in a Log entry where failing to do so would reveal privileged information. (Opp. at 14.) The ESI Protocol recognizes that "metadata, such as an email subject line, can be redacted when it would reveal privileged information." Id. (citing ECF No. 313 at ¶6(a)(1)).
After careful review of the documents submitted for in camera, review in this category, the Special Master recommends that Covestro be ordered to produce the document identified as Privilege Log No. 1808 in unredacted form, finding that this document was not "prepared in anticipation of litigation or for trial by or for another party or its representative." Fed. R. Civ. P. 26(b)(3). Plaintiffs' objection to this document should be sustained. With respect to all other documents in this category. Plaintiffs' objections to Covestro's assertions of the work product doctrine should be overruled. The redacted language and/or the documents Covestro declined to produce contain communications "prepared in anticipation of litigation or for trial by or for another party or its representative." Id.
The Special Master notes that the document submitted for in camera review identified as Privilege Log No. 931 is mostly blank. The Log describes this document as: "email sent to counsel (B. Koch) providing information involving request for legal advice re: litigation matters." The document submitted for review is an email cover page identifying the sender, the recipient (Mr. Koch, a Covestro attorney), the date of transmission and the attachment (an agreement identified by name). This document contains no additional information and no meaningful information for the Special Master to review. Covestro shall notify the Special Master if this submission contains an error and, if so, submit the complete document to the undersigned for in camera review. Otherwise, Covestro should be ordered to produce this document to Plaintiffs.
4. Communications Including Third Parties Which Waive Attorney-Client Privilege.
In this final category of documents, Plaintiffs contend that the inclusion of third parties in these communications precludes application of the attorney-client privilege. (Discovery Motion at 11 (citing In re Teleglobe Commc'ns Corp., 493 F.3d 345, 361 (3d Cir. 2007) (privilege does not attach where "persons other than the client, its attorney, or their agents are present". Similarly, if the client subsequently shares a privileged communication with a third party, the privilege ceases to protect it. In re Teleglobe, 493 F.3d at 361.
Covestro responds that this fourth category of Log entries "reflects either (i) documents that contain privileged information but reference to Bayer Corporation or other Bayer entities (Plaintiffs are fully aware that Bayer Material Science LLC became Covestro) or (ii) documents that contain privileged information that was provided by trade associations of which Covestro is a member." (Opp. at 14.)
Covestro argues that the second group of documents under this category contain documents from trade association meetings in which trade association counsel provided legal advice to association members. 14 at 15. Not all communications between a trade association counsel and the association members are automatically protected by the attorney-client privilege. "[Assessments of whether such communications are privileged are made on a case-by-case basis" employing the usual concepts of the attorney-client privilege. In re Plasma-Derivative Protein Therapies Antitrust Litis.. 2013 WL 791432, at *3 (N.D. III. Mar. 4, 2013) (citing cases). See also Bacchi v. Mass. Mut. Life Ins. Co.. 110 F.Supp.3d 278, 283 (D.Mass. 2015) (same. citing cases). As was explained by Judge Gene E.K. Pratter,
A trade association, like a corporation, does not have a blanket of privilege that it can toss over every communication between its lawyers and its members, dimming the light of discovery. Rather, the communications must be within the scope of the attorney-associational client relationship. This requires further analysis into the context of die communications between counsel for the association and its members.In re Processed Egg Products Antitrust Litip. 2014 WL 6388436, at * 11 (E.D. Pa. Nov. 17. 2014).
After careful review of the documents submitted for in camera review in this category, the Special Master recommends that Covestro be ordered to produce the following documents to Plaintiffs: Privilege Log Nos. 3, 1202, 1319,1659,1813-18, 1820, 1945-58, 1960, 1964-66, 1971, 1974, 1978-79, 1982, 1993-94, 2011, 2021-22, 2041-44, 2167, 2184, 2261, 2275-77, 2287, 2927-28, 2931-34, 3099, 3101. The Special Master finds that these documents do not contain communications made in confidence for the purpose of obtaining or providing legal assistance for the client. Plaintiffs' objections to Covestro's assertions of the attorney-client privilege to these documents should be sustained. Plaintiffs' objections regarding the remaining documents in this category should be overruled.
III. RECOMMENDATION
AND NOW, this 10th day of June. 2024, it is respectfully
RECOMMENDED
that (1) Plaintiffs' Discovery Motion No. 2 be GRANTED IN PART and DENIED IN PART for the reasons set forth herein; and (2) Plaintiffs' objections to Covestro's assertions of privilege with respect to the challenged documents be SUSTAINED IN PART and OVERRULED IN PART to the extent set forth herein. It is FURTHER RECOMMENDED that Covestro be ordered to produce documents to Plaintiffs consistent herewith within fourteen (14) days from the date of an Order addressing this Report and Recommendation.