Dorf & Stanton Communications, Inc. v. Molson Breweries

Opinion for the court filed by Circuit Judge RICH. Dissenting opinion filed by Circuit Judge NEWMAN. RICH, Circuit Judge. Dorf & Stanton Communications, Inc. (Dorf & Stanton), the public relations firm for Labatt’s USA, Inc., appeals from the 19 January 1995 Order of the United States District Court for the Southern District of New York in M-885, requiring Dorf & Stanton to produce certain documents that it asserts are protected by the attorney-client privilege. 1995 U.S. Dist. LEXIS 507, 199WL 23603 (S.D.N.Y. 19 January 1995). We affirm. I BACKGROUND This case originated when Molson Breweries, Molson Breweries USA, Inc., Miller Brewing Co., Martlet Importing Co., and Molson Breweries of Canada, Ltd. (collectively Miller) filed a motion in the Southern District of New York, where Dorf & Stanton is located, to compel the production of “certain documents” by Dorf & Stanton. In this appeal, we must decide whether the district court abused its discretion when it held that Dorf & Stanton failed to establish that the documents are protected by the attorney-client privilege and ordered Dorf & Stanton to produce them. — 921 — The documents consist of notes taken by three Dorf & Stanton employees during a 9 May 1994 meeting attended by the following people: James Emmerton, General Counsel of John Labatt Limited; Bernard Beasley, the Intellectual Property Officer of John Labatt Limited; Rick SkawinsM, Legal Compliance Officer of Labatt’s USA, Inc.; Steven Hauser, Brand Manager of La-batt’s USA, Inc.; Judy Cunningham, Brand Manager of La-batt’s USA, Inc.; Alex Stanton, the President of Dorf & Stanton; Jock Soper of Dorf & Stanton; Beth Jabiek, Account Supervisor of Dorf & Stanton; and Various employees of Hill Holliday Connors Cosmopoulos Advertising, Inc. The documents are ostensibly relevant to two ongoing lawsuits, which have been consolidated for discovery, between Labatt’s and Miller pending in the United States District Court for the Eastern District of Michigan. Dorf & Stanton is not a party in either Michigan lawsuit. At the hearing before the Federal Circuit, the panel requested the documents from Dorf & Stanton’s attorneys and deferred action on the appeal. After several months of discussions with the Second Circuit, the district court, and the attorneys, the Chief Deputy Clerk of the Southern District of New York sent 114 pages of material to us. After sifting through that material, we have determined that three documents, totaling 13 pages, are at issue. Miller, however, mentions “four documents” at various places in its brief, but its confusion undoubtedly stems from changes that Dorf & Stanton made to the description of a single document between two versions of its privilege log, as discussed further below. Miller, not having the benefit of seeing this document, is counting it twice. We are confident that Miller wants unredact-ed copies of the handwritten notes taken by the three Dorf & Stanton employees who attended the 9 May 1994 meeting. The appendices to this opinion includes two privilege logs. Log 1 is a copy of Dorf & Stanton’s original privilege log at issue in Miller’s motion to compel. Log 2 is a more recent, expanded version of original Log 1. We have added letters to the left edge of each log to be able to readily identify key documents in this opinion. Looking first at Log 1, documents (a), (b), (d), and (A) are the original four documents that Miller wanted produced! In response to Miller’s motion to compel production of these documents, Judge Patterson of the Southern District of New York held a hearing on 22 November 1994. At the hearing, Judge Patterson offered to review the four documents in camera. Dorf & Stanton, however, had failed to bring the four documents to the hearing. Nevertheless, from his review of Log 1, the judge concluded that he did not need to see the documents to order them produced, stating, “From what I saw [Log 1] they were not entitled to privilege, period.” In accordance with Judge Patterson’s 22 November Order, Dorf & Stanton produced documents (a), (b), and (d). It did not, however, produce document (A), which relates to the 9 May 1994 meeting. Instead, it filed a motion for modification of the 22 November 1994 Order to shield document (A) from production. In its motion papers, Dorf & Stanton not only tried to justify withholding document (A) as privileged, but also wanted the court to go further and hold that documents (B) and (C) (see Log 2), which were not involved in the 22 November hearing and which were not listed on Log 1, but which relate to the same 9 May meeting, are also privileged. Documents (A), (B), and (C) are the handwritten notes taken by Alex Stanton, Jock Soper, and Beth Jabiek, respectively, during that meeting. Apparently, while scrutinizing the four documents that Judge Patterson had ordered it to produce, Dorf & Stanton first realized the connection between documents (A), (B), and (C). Dorf & Stanton had previously produced documents (B) and (C) in redacted form several weeks before Miller filed its motion to compel production of the documents in Log 1. On 8 December 1994, Miller received Log 2 from Dorf & Stanton. Log 2 includes — 922 — documents (A), (B), and (C), as well as six other documents not on original Log 1. It thus includes eight new documents and does not include the three documents Dorf- & Stanton produced in response to Judge Patterson’s 22 November Order (i.e., (a), (b), and m With its motion for modification of the 22 November 1994 Order, Dorf & Stanton gave documents (A), (B), and (C) to the district court under seal;’ this was the first time the court had actually seen any of these documents. In its memorandum supporting its motion, Dorf & Stanton made the following claim: On grounds of privilege, [Dorf & Stanton] withheld from production all of the notes taken by all of its employees who attended the May 9 meeting: Alex Stanton, Beth Jabick, and Jock Soper.... However, Miller objected only to withholding Mr. Stanton’s notes [document (A)], not those of Ms. Jabick [document (C) ] or Mr. Soper [document (B)]...,. [Dorf & Stanton] has provided the Court, under seal, copies of the unredacted versions of Ms. Jabick’s and Mr. Soper’s notes to demonstrate that all three sets of notes are privileged, and none should be produced. On 4 January 1995, the district court conducted a hearing on Dorf & Stanton’s motion for modification. In its resulting 19 January 1995 decision, the district court stated that it adhered to its original order. 1995 U.S. Dist. LEXIS, *4, 1995 WL 23603, *2. Part of the court’s rationale for doing so included the following: [Dorf & Stanton] still [has] not established that the privilege ever existed as to any of the documents sought to be protected.... There has been no showing that [Dorf & Stanton was] seeking legal advice at the [9 May] meeting.[1] ... The documents themselves do not indicate either the seeking of legal advice or the confidentiality of their contents. Id. at *3-*4, 1995 WL 23603 at *1 (footnote added). Somewhat confusingly, however, the district court made reference to documents (B) and (C) when it ordered “the documents submitted under seal ... unsealed for production to [Miller] by January 23, 1994 [sic, 1995].” Id. at *4,1995 WL 23603 at *2. The “documents submitted under seal” were documents (A), (B), and (C). We conclude, therefore, that Judge Patterson not only adhered to his 22 November 1994 Order to produce document (A), but also expanded that order to include related documents (B) and (C). This view is consistent with the view of Dorf & Stanton’s attorneys in their letter of 14 May 1996 to this court. In that letter, an attorney representing Dorf & Stanton described “[t]he three documents most relevant to this appeal.” The descriptions correspond to documents (A), (B), and (C). II Standard of Review Dorf & Stanton asserts that, although the normal standard of review regarding discovery is an abuse of discretion standard, the application of the attorney-client privilege presents a mixed question of law and fact, which should be reviewed de novo. Dorf & Stanton also asserts that the Second Circuit must be looked to for the proper standard of review. Miller disagrees with the standard of review asserted by Dorf & Stanton and asserts that the abuse of discretion standard applies. Because an order compelling discovery is not unique to patent law, we agree that Second Circuit law must be considered for the proper standard of review. Cf American Standard Inc. v. Pfizer Inc., 828 F.2d 734, 739, 3 USPQ2d 1817, 1819 (Fed.Cir.1987) (regional circuit law applies to orders refusing to compel discovery) (citing Truswal Sys. Corp. v. Hydro-Air Eng’g, Inc., 813 F.2d 1207, 1209, 2 USPQ2d 1034, 1036 (Fed.Cir.1987); Heat & Control, Inc. v. Hester Indus., Inc., 785 F.2d 1017, 1022 n. 4, 228 USPQ 926, 929 n. 4 (Fed.Cir.1986)). According to the Second Circuit, “A trial court enjoys wide discretion in its handling of pretrial discovery, and its rulings with regard to discovery are reversed only upon a clear — 923 — showing of an abuse of discretion.” Cruden v. Bank of New York, 957 F.2d 961, 972 (2d Cir.1992) (citing Robertson v. National Basketball Ass’n, 622 F.2d 34, 35-36 (2d Cir.1980); Lehigh Valley Indus., Inc. v. Birenbaum, 527 F.2d 87, 93 (2d Cir.1975)). Ill Failure to Establish Privilege We have reviewed documents (A), (B), and (C) and are not convinced that Judge Patterson clearly abused his discretion when he ordered them produced. In response to Miller’s motion to compel production of document (A) and other documents, Dorf & Stanton faded to convince the district court with either its written or oral arguments that document (A) was privileged. Dorf & Stanton did not even take the documents in Log 1, including document (A), to the first hearing for the judge to review in camera. Only after being ordered to produce document (A) did Dorf & Stanton scrutinize that document and only after scrutinizing that document did Dorf & Stanton realize that it had treated the production of related documents (B) and (C) differently. Then, in its motion for modification of the 22 November Order to produce document (A), Dorf & Stanton finally put forth both its best arguments and evidence for withholding document (A) as privileged and its first clear attempt to shield documents (B) and (C) from production as privileged. The district court was not, however, convinced by Dorf & Stanton’s arguments. Dorf & Stanton thus had multiple opportunities to bolster its claimed privilege in these three documents, but failed to do so. This is not a case where a party inadvertently omitted documents from its privilege log and is getting “nailed” for its inadvertence. It also is not a ease where a party merely failed to comply with what it asserts are technicalities of a demanding local rule. Rather, this is a ease where a party failed to meet the requirements of a valid local rule, failed to treat related documents consistently, and then failed to use its best efforts to cure the problems created by its first two failures until it was too late, coming in with full throttle only after a crash was imminent. IV Waiver of Privilege Judge Patterson’s 22 November Order compelled production of document (A) on the ground that Dorf & Stanton had waived its claim to privilege by failing to satisfy Local Civil Rule 46(e) and Rules 45(d)(2) and 26(b)(5) of the Federal Rules of Civil Procedure. In particular, Dorf & Stanton “fail[ed] to provide a complete privilege log demonstrating sufficient grounds for taking the privilege.” 1995 U.S. Dist. LEXIS 507, *1, 1995 WL 23603, *1. At the 4 January 1995 hearing, Dorf & Stanton also sought to protect documents (B) and (C), which it had not listed on Log 1 that had been found legally insufficient to support the claim of privilege. The district court’s 19 January 1995 decision denied reconsideration of the earlier waiver ruling and concluded that the privilege had been similarly waived as to documents (B) and (C). The Second Circuit has held that “[a] district court’s finding that a defendant has waived the attorney-client privilege is reviewed under the abuse of discretion standard.” United States v. Bilzerian, 926 F.2d 1285, 1293 (2d Cir.) (citing In re von Bulow, 828 F.2d 94, 101 (2d Cir.1987)), cert. denied, 502 U.S. 813, 112 S.Ct. 63, 116 L.Ed.2d 39 (1991). Since we perceive no error in the determination that the privilege has been waived on the facts of this case, we cannot say that the district court abused its discretion in its alternative ground for compelling production of documents (A), (B), and (C) on the grounds of waiver of the privilege. V Conclusion We cannot say that the district court clearly abused its discretion in determining after in camera review that Dorf & Stanton’s documents are not privileged. Similarly, we cannot say that the district court abused its discretion when it determined that Dorf & Stanton had waived any attorney-client privilege that it may have been able to claim for documents (A), (B), and (C) on attached Log — 924 — 2. We must, therefore, affirm the district court’s order of 19 January 1995 for Dorf & Stanton to produce documents (A), (B), and (C). AFFIRMED. PAULINE NEWMAN, Circuit Judge, dissents. — 925 — [[Image here]] — 926 — [[Image here]] Footnotes [1] It is clear from the Dorf & Stanton affidavits submitted with the documents under seal that Labatt’s USA, Inc. organized the meeting, not Dorf & Stanton.