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explaining that the district court will not reverse the magistrate judge's determination, even in circumstances where the court might have decided the matter differently
Summary of this case from Amersham Biosciences Corp. v. Perkinelmer, Inc.Opinion
Civil Action No. 00-5765 (JBS)
July 30, 2002
Thomas McKay, III, Esq. Cozen O'Connor, Cherry Hill, NJ, for Plaintiff Joseph Bowen.
William L. Bowe, Esq., Willig, Williams Davidson, Haddonfield, NJ, for Plaintiff Thomas Del Rosario.
Thomas Joseph Hagner, Esq. Kenney Kearney, LLP, Woodland Falls Corporate Cherry Hill, NJ, for Defendants Parking Authority of the City of Camden, Carlos M. Morcate, Estate of Anthony Scarduzio, Carmen G. Otero, Linda R. Jones, Thomas Buckingham, Judy E. Felton.
Vincent P. Sarubbi, Esq. Sarubbi Sarubbi, Audubon, NJ, for Defendant Estate of Anthony Scarduzio.
John J. Lack, Esq., West Collingswood, NJ, for Defendants William R. Jenkins and Peter McHugh.
Joseph P. Grimes, Esq., Grimes Grimes, LLC, Cherry Hill, NJ, for Defendant John Melfi.
OPINION
This action is before the Court on the appeal of defendant Parking Authority of the City of Camden ("Parking Authority") from the April 26, 2002 Order of the Honorable Joel B. Rosen, United States Magistrate Judge, which directed that defendant Parking Authority must produce eight letters authored by defendant and former Executive Director of the Camden County Parking Authority, Anthony Scarduzio, now deceased, to his attorneys, Thomas Joseph Hagner, Esquire and William Tambussi, Esquire ("the Scarduzio letters"). Mr. Hagner and his firm, Kenney Kearney, LLP, were attorneys for Mr. Scarduzio and for the Parking Authority, while Mr. Tambussi was Mr. Scarduzio's personal attorney. Each of these letters was written by Scarduzio after he was served with the Complaint in this litigation, in which Mr. Hagner represented him. Scarduzio's letter to Mr. Tambussi likewise was written in this time frame (January 3, 2001) and pertained to allegations made against Scarduzio in this lawsuit. The Parking Authority asserts that the seven letters from Scarduzio to Hagner and the one letter from Scarduzio to Tambussi were protectable under the attorney-client privilege and that Judge Rosen erred when he determined that Scarduzio had waived that privilege. Plaintiffs contend that Judge Rosen's Order was neither clearly erroneous nor contrary to law and therefore must be affirmed. For the reasons stated herein, defendant Parking Authority's appeal will be denied and Judge Rosen's April 26, 2002 Order denying the application for a protective order and directing the production of the Scarduzio letters will be affirmed.
The Court has reviewed the eight letters in camera (Exs. AC Privileged 1 though 8). These documents bear dates ranging from December 21, 2000 to January 3, 2001 and each appears to refer to matters stated in the Complaint in this litigation, which was filed in the New Jersey Superior Court, Camden County on October 27, 2000, and removed to this Court on November 22, 2000. The letters are unsigned copies and attachments referred to in them have not been attached. These letters are indeed privileged communications between attorney and client.
I. BACKGROUND
The facts underlying this motion may be summarized as follows. Anthony Scarduzio, now deceased, was the Executive Director of the Parking Authority for the City of Camden until May 31, 2001. Mr. Scarduzio died in July, 2001. From January 4, 1999 until May 31, 2001, Lana Irrgang ("Irrgang") was employed as the full-time Administrative Assistant to former director Scarduzio. At the time of her hiring as Scarduzio's Administrative Assistant, it is undisputed that Ms. Irrgang withdrew from her union and became responsible for typing Scarduzio's documents, organizing Parking Authority files as well as "her" personal files, and making herself familiar with all documents in all files so that she could assist Scarduzio in finding them when necessary. From December, 2000 until April, 2001, Ms. Irrgang was out on maternity leave. During Ms. Irrgang's maternity leave, two temporary administrative assistants, Roquel ("Rocky") Toledo and Dawn Rago, worked for Scarduzio.
The eight documents for which defendants sought a protective order (the "Scarduzio letters") were typed by one of the temporary assistants, specifically Rocky, during the time period of Ms. Irrgang's maternity leave. Ms. Irrgang testified that upon her return from leave, Scarduzio handed her three privileged Scarduzio letters (marked AC-1, AC-2, and AC-3) and instructed her to read them and make copies for herself so she would know what was going on in case she was called as a witness by Bowen in the case. (See Irrgang Dep., 2/15/02, Tr. 19:15-22:4, 22:16-24:16, 25:1-26:11.) Ms. Irrgang later testified that Scarduzio instructed her to read and print all the documents in Rocky's computer file, created while she was on maternity leave, for her file, so that she would know what was going on and use them in the future if she needed to. (See Irrgang Dep., Tr. 103:8-104:19.) In both variations, Ms. Irrgang testified that Mr. Scarduzio specifically instructed her to keep copies of the letters he authored to his attorneys so she would know what was going on, in case she needed them, and in case she got jammed up, presumably in the current litigation.
The privilege issue central to this appeal arose at the deposition of Irrgang, which took place on February 15, 2002. Ms. Irrgang brought a number of documents, eight of which (the Scarduzio letters) defense counsel asserted were privileged, to the deposition. Defense counsel took possession of the eight documents and on March 14, 2002, moved for a protective order barring the disclosure of these documents before Judge Rosen. On April 23, 2002, oral argument was heard and a hearing was held before Judge Rosen at which Irrgang testified. (Haworth Cert., Ex. 3, the "Protective Order Hearing".) Judge Rosen found that the letters were privileged, but that Scarduzio had waived the privilege and he denied the defendants' motions at the conclusion of the hearing. (See Protective Order Hearing, Tr. 23:4-12.) Elaborating, Judge Rosen said:
One of the touchstones of the attorney/client privilege is an intent to keep a document confidential. Confidential communication between a client and his or her attorney. . . . I'm satisfied, however, after reading the deposition transcript and talking to [Irrgang] here that [Scarduzio] gave her these documents and gave her his permission to use them if she ever thought it was appropriate. That is not consistent with an intent to keep a document confidential. And I find that not that there was an implicit waiver, but there was an explicit waiver.
(Protective Order Hearing, Tr. 23:6-24.) Judge Rosen then ordered that the documents be produced by April 26, 2002 unless a stay was sought. Defendants moved for a stay on April 26, 2002, which was granted in an Order entered on May 3, 2002. This appeal from Judge Rosen's Order, filed May 9, 2002, followed.
II. DISCUSSION
Defendant Parking Authority argues, as it did in the initial motion for a protective order before Judge Rosen, that there was no waiver of the attorney/client privilege because Irrgang took the Scarduzio letters without permission for her own use and, alternatively, that she is not a third party to the privilege since the nature of her job was so closely related to Scarduzio's function as Executive Director. Additionally, the Parking Authority asserts for the first time on appeal that the privilege was not Scarduzio's to waive. Plaintiffs assert that Judge Rosen's Order was not clearly erroneous nor contrary to law and therefore must be affirmed.
Appeal from an Order of a Magistrate Judge
"A United States Magistrate Judge may `hear and determine any [non-dispositive] pretrial matter pending before the court.'" Cardona v. General Motors Corp., 942 F. Supp. 968, 970 (D.N.J. 1996) (quoting 28 U.S.C. § 636(b)(1)(A)); see also Fed.R.Civ.P. 72(a); L. Civ.R. 72.1a(1). "In all non-dispositive pre-trial matters, a magistrate judge may issue an opinion and order." Id. A party objecting to a magistrate judge's order may, within ten days of service of the order, serve and file objections with the district judge. See Fed.R.Civ.P. 72(a); L. Civ.R. 72.1c(1)(A).
The Federal Magistrates Act of 1968 provides that a district court may reverse a magistrate judge's determination of a non-dispositive issue only if it is "clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A); accord Fed.R.Civ.P. 72(a); L. Civ.R. 72.1(c)(1); see also Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1113 (3d Cir. 1986), cert. denied, 484 U.S. 976 (1987); Lithuanian Commerce Corp. v. Sara Lee Hosiery, 177 F.R.D. 205 (D.N.J. 1997). "A finding is clearly erroneous only `when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" Cooper Hospital/Univ. Medical Center v. Sullivan, 183 F.R.D. 119, 127 (D.N.J. 1998) (quoting Lo Bosco v. Kure Engineering Ltd., 891 F. Supp. 1035, 1037 (D.N.J. 1995) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395(1948)); see also South Seas Catamaran, Inc. v. Motor Vessel Leeway, 120 F.R.D. 17 (D.N.J. 1988). In reviewing a magistrate judge's factual determinations, a district court may not consider any evidence which was not presented to the magistrate judge. See Haines v. Liggett Group, Inc., 975 F.2d 81, 92 (3d Cir. 1992); Lithuanian Commerce Corp., 177 F.R.D. at 213.
Under the clearly erroneous standard of review, the reviewing court will not reverse the magistrate judge's determination even if the court might have decided the matter differently. See Cardona, 942 F. Supp. at 971 (quoting Toth v. Alice Pearl, Inc., 158 F.R.D. 47, 50 (D.N.J. 1994) (citing Anderson v. City of Bessemer City, 470 U.S. 564, 574 (1985)). "On the other hand, this Court will conduct a de novo review of a magistrate judge's legal conclusions." Cooper Hospital, 183 F.R.D. at 127 (citingLithuanian Commerce Corp., 177 F.R.D. at 214; Haines, 975 F.2d at 91; Lo Bosco, 891 F. Supp. at 1037; Campbell v. International Business Machines, 912 F. Supp. 116, 119 (D.N.J. 1996)).
Analysis
On April 23, 2002, Judge Rosen heard oral argument and considered the testimony of Ms. Irrgang at a hearing on this issue. Prior to the hearing, Judge Rosen had received briefs and written submissions on this issue. Judge Rosen carefully evaluated the facts and the law and, accepting Ms. Irrgang's testimony about what the former Executive Director told her to do with the documents (i.e., put them in "her" files in case she needed them personally or was called as a witness by Bowen), and he determined that Mr. Scarduzio had waived any attorney/client privilege that might have applied. The Parking Authority does not challenge the law applied by Judge Rosen, rather, it challenges Judge Rosen's factual determination that Scarduzio's instruction to Irrgang to print, read, and use the letters for her protection constituted a waiver, and that Irrgang did not merely take these documents without Scarduzio's authorization. Alternatively, the Parking Authority argues, for the first time on appeal that Scarduzio was not the holder of the privilege, which belonged to the Parking Authority, and thus he could not waive the Authority's attorney-client privilege in any event.
The Parking Authority argues that the evidence supports a finding that Irrgang "simply took the documents without the knowledge of Parking Authority management and then concealed her possession of those documents." (Def. Br. at 5.) The Parking Authority points to the circumstances surrounding Irrgang's disclosure of her receipt of these files, in which she waited until November, 2001, four months after Scarduzio's death, to inform former Parking Authority employee Elvis Gooden (who also has filed suit against the Authority) that she possessed the folder of 130 documents from Scarduzio, citing Gooden Dep. Tr. 20-22. Irrgang also allegedly told Gooden that she did not reveal the existence of the documents to the Parking Authority because she did not trust the Parking Authority, its attorneys, the Executive Director or the Commissioner. (Id., citing Gooden Dep. Tr. 96-104.) The Parking Authority argues that Irrgang, upon return from maternity leave, would simply have been told to familiarize herself with documents created during her absence on the computer, and not that these were "her" documents. Although the Parking Authority paints a competing version of the facts, it is by no means apparent that such evidence clearly outweighs Ms. Irrgang's version, as she testified in her deposition and at the hearing in court. The facts found by Judge Rosen, representing his weighing of the credibility and probative value of testimony, are not clearly erroneous even though facts or inferences to the contrary may exist.
The determination of what Scarduzio told Irrgang is an issue of fact. Under the clearly erroneous standard, a district court may not reverse the factual decision of a magistrate judge unless it is clearly erroneous. See Cardona, 942 F. Supp at 971 (citing cases). Judge Rosen weighed the witness's testimony, demeanor and surrounding circumstances and determined that Scarduzio's instructions to Irrgang included copying these letters and using them on her own behalf if necessary. Judge Rosen's factual findings regarding Scarduzio's instructions to Irrgang and the manner in which Irrgang came to possess Scarduzio's correspondence to his attorneys are not clearly erroneous; Judge Rosen had the benefit of observing the live testimony of Ms. Irrgang, as well as reviewing all the materials and arguments submitted by both sides. This Court is not left with the impression that Judge Rosen's factual findings are mistaken. Whether these circumstances give rise to waiver of the attorney-client privilege, on the other hand, is a question of law, reviewed de novo.
The law of attorney-client privilege and its waiver is fairly straightforward. In this case, plaintiffs Bowen and Del Rosario have asserted that the defendants violated their rights under federal law, including 42 U.S.C. § 1983 and 1985 in breach of the First, Fifth and Fourteenth Amendments, as well as under the law of New Jersey, namely, the New Jersey Law Against Discrimination and the Conscientious Employee Protection Act. Under Rule 501, Fed.R.Evid., assertions of privilege in actions alleging federal claims, such as the present case, are to be "governed by the principles of the common law as they may be interpreted by the courts of the United States in light of reason and experience," in other words, in accordance with "federal common law." See, e.g., Wei v. Bodner, 127 F.R.D. 91, 95 (D.N.J. 1989) (citations omitted). The attorney-client privilege is well-recognized at federal common law. See Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). The privilege survives the death of the client, Swidler Berlin v. United States, 524 U.S. 399, 408-11 (1998), which is pertinent here because Mr. Scarduzio has died and his estate is also a defendant. (See Am. Compl., filed Oct. 30, 2001, ¶¶ 67.) The privilege will be waived by the client's voluntary disclosure to a person outside the attorney-client relationship. Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414, 1424 (3d Cir. 1991) (voluntary disclosure of privileged information to governmental investigating agencies waives privilege as to adverse party in the litigation). Indeed, a voluntary disclosure to a third party waives the privilege even if the third party agreed not to disclose the communications to anyone else. Id. at 1427 (noting this tenet of "traditional waiver doctrine" and citing United States v. Rockwell Int'l, 897 F.2d 1255, 1265 (3d Cir. 1990)).
There are several exceptions to the traditional rule regarding third-party disclosure. For example, when disclosure to a third party is "necessary to obtain informed legal advice, courts have recognized exceptions to the rule that disclosure waives the attorney-client privilege," such as disclosure to an agent assisting an attorney in giving legal advice, or disclosure to certain co-defendants. Id. (citations omitted). Likewise, a production of documents ordered by a court does not constitute a waiver of attorney-client privilege because such production was not "voluntary." Leonen v. Johns-Manville Corp., 135 F.R.D. 94 (D.N.J. 1990). Also, disclosure of privileged materials that is truly inadvertent, as in the production of documents in massive litigation during expedited discovery, may be seen as a type of court-compelled disclosure and therefore not as a voluntary waiver. See Transamerican Computer Co. v. IBM Corp., 573 F.2d 646, 650-51 (9th Cir. 1978)[IBM's inadvertent disclosure of privileged documents in Control Data Corp. v. IBM Corp., 16 Fed.R. Serv.2d 1233, 1234 (D.Minn. 1972), in which 17 million documents were produced for inspection in a three-month period, was held not to be a waiver in subsequent suit]; IBM Corp. v. United States, 471 F.2d 507, 510 (2d Cir. 1972), rev'd en banc for lack of jurisdiction, 480 F.2d 293 (2d Cir. 1973), cert. denied, 416 U.S. 980 (1974)[same]. Finally, the disclosure of privileged materials to parties with a "community of interest" does not operate as a waiver if the parties have identical legal interests with respect to the subject matter, such as with respect to insurance coverage. See NL Industries, Inc. v. Commercial Union Ins. Co., 144 F.R.D. 225, 231 (D.N.J. 1992);Pittston Co. v. Allianz Ins. Co., 143 F.R.D. 66, 69 (D.N.J. 1992). None of these exceptions to the third-party waiver rule applies to the circumstances of this case.
If Irrgang were only a confidential assistant to Scarduzio who maintained his files, his revealing of these privileged communications to her would not rise to the level of an intentional disclosure, and the privilege would not be waived, because Irrgang's maintenance of Scarduzio's files, including his letters to counsel, might be necessary to his obtaining of legal advice. An attorney-client communication remains confidential when the circumstances demonstrate that it was not intended to be disclosed to persons other than (1) those to whom disclosure is in furtherance of the rendition of legal services or (2) those reasonably necessary for the transmission of the communication. 2Weinstein's Federal Evidence, § 503.15[23] at 503 (2 ed. 2002). One who merely files or transmits the confidential communication for the client is not the type of third-party who lies beyond the privileged zone, since this sort of record keeping merely facilitates the purpose of obtaining informed legal advice. See Westinghouse Electric Corp., 951 F.2d at 1425. Similarly, a confidential assistant such as Ms. Irrgang is not authorized to waive her employer's attorney/client privilege, since it is not hers to waive.
In the present case, however, Scarduzio manifested his intention that he was permitting Irrgang to read and keep copies of his attorney/client communications for her own use, since she should "know what's going on" and because she "might be called as a witness for Bowen." (Irrgang Dep., Tr. 40:20-41:20.) Scarduzio also told Irrgang she could take her copies home if she wanted to. (Protective Order Hearing, Tr. 21:13-18.) Thus, Irrgang did not merely come into possession of these and other documents during the course of her official duties, as defendant Parking Authority argues, but she was permitted to read, copy and retain at home her own set of these documents for her own personal purposes. Thus, Scarduzio did not inadvertently disclose the privileged documents to Irrgang, since, as Irrgang testified, he had deliberately discussed and disclosed at least three of them to her. Further, Irrgang did not lie within a "community of interest" with Scarduzio, since, among other things, she was not accused of wrongdoing and Scarduzio predicted that his adversary, Bowen, might call her as a witness.
The Parking Authority argues that Irrgang merely took these documents without the knowledge or permission of Scarduzio (who resigned as Executive Director on May 31, 2001), and that she refrained from revealing this for six months until November, 2001. The Parking Authority further argues that she printed out the 130 documents, including the 8 privileged letters, as part of her official duties to maintain hard copies in the files, since her temporary replacements (while she had been on maternity leave) may have failed to do so. The facts demonstrate, however, as Judge Rosen found, that Scarduzio granted Irrgang permission to keep her own copies for her own use if she got "jammed up" in litigation. Since Scarduzio knew that his own communications with counsel were included in these documents, having been prepared and kept in these office files, he knew he was granting Irrgang permission to use his attorney/client communications for her own information and purposes. Further, nothing suggests that Scarduzio and Irrgang shared identical legal interests with respect to the subject matter of these letters.
Finally, the Parking Authority seeks to argue that the attorney/client privilege was not Scarduzio's to waive since it belonged to the Parking Authority itself. This new argument is contrary to the Parking Authority's position before Judge Rosen, when Parking Authority's counsel acknowledged Scarduzio was the client and thus held the privilege, stating: "Your Honor, the documents that we're seeking a protective order for are clearly privileged letters. They're letters from Mr. Scarduzio, who was the Executive Director of the Parking Authority, to his lawyer, Mr. Hagner." (Protective Order Hearing, Tr. 4:25-5:3.) Judge Rosen accordingly noted, in his oral opinion, that Mr. Scarduzio was "the holder of the privilege." (Id., Tr. 23:24-24:2.)
The Parking Authority's argument is non-meritorious for three reasons.First, absent good cause, the District Judge will not consider new arguments raised on appeal that could have been presented to the Magistrate Judge in the discovery motion. The motion papers, argument and hearing before the Magistrate Judge constitute the entire record upon which any appeal must be based, absent good cause to enlarge the record, lest the litigation before the Magistrate Judge becomes an empty exercise. By failing to assert that Scarduzio himself lacked authority to waive the privilege, the Parking Authority normally cannot do so now.Second, as noted above, counsel for the Parking Authority already stipulated to Judge Rosen that this was Scarduzio's privilege, as he was the client; a party is normally estopped from arguing an inconsistent position to a second judicial officer. Third, even now, the Parking Authority has not supplied evidence of any limitation upon Scarduzio's authority, as Executive Director, that precluded him from waiving the privilege of his communications as Executive Director with attorney Hagner. Although the law recognizes that a corporate manager or officer's communications with counsel may be protected within the corporate attorney-client privilege, see In re Bevill, Bressler Schulman Asset Management Corp., 805 F.2d 120, 125 (3d Cir. 1986), the Parking Authority, even at this late date, has provided no information about its governance structure to indicate whether its Commissioners possess sole authority to waive that privilege, or whether the Executive Director's authority and duties are broad enough to embrace waiver of the confidentiality of his communications with counsel in these circumstances.
Whether management executives other than officers or directors are empowered to waive a corporation's attorney-client privilege may depend upon the context and governance structure. The Supreme Court in Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 349 and n. 5 (1985), noted that "the power to waive the corporate attorney-client privilege rests with the corporation's management and is normally exercised by its officers and directors." The Court held that a trustee in bankruptcy succeeds to management's authority in asserting or waiving the privilege, and was thus empowered to waive it even over the objection of management. The Weintraub case did not address the question of precisely which members of management, other than officers or directors, may waive the privilege, not will this Court since the issue has not been presented for decision. It suffices to note, as counsel for defendants themselves did, that Executive Director Scarduzio was a holder of the privilege and thus could waive it.
This Court finds that Judge Rosen's Order directing the production of the eight documents at issue was neither clearly erroneous, nor contrary to law. Even considering the deposition testimony of Elvis Gooden, who indicated Irrgang had told him she printed and saved some of the letters in the file on her own, Judge Rosen's Order finding waiver in light of Scarduzio's other instruction to Irrgang to retain and use the letters was not clearly erroneous or contrary to law. Scarduzio's waiver of privilege was knowing and not inadvertent. The appeal will be denied and Judge Rosen's April 26, 2002 Order will be affirmed.
III. CONCLUSION
For the reasons stated above, defendant Parking Authority's appeal of Judge Rosen's Order directing the production of seven letters from Mr. Scarduzio to his attorney, Mr. Hagner, and the one letter from Mr. Scarduzio to attorney William Tambussi will be denied and Judge Rosen's April 26, 2002 Order will be affirmed.
The accompanying Order is entered, compelling disclosure not later than August 9, 2002.
ORDER
This matter having come before the Court upon the appeal of defendant Parking Authority of the City of Camden [Docket Item 115-1] to the Order entered by Judge Rosen on April 26, 2002 ordering the production of eight documents; and this Court having considered all the parties' submissions; and for the reasons expressed in an opinion of today's date;
IT IS this ___ day of July 2002 hereby
ORDERED that defendant's appeal [Docket Item 115-1] of Judge Rosen's April 26, 2002 Order be, and hereby is DENIED , and Judge Rosen's Order compelling the production of the eight letters at issue authored by Mr. Scarduzio is AFFIRMED ; and
IT IS FURTHER ORDERED that the eight Scarduzio letters (marked as AC Privileged 1-8) be produced by defendant's counsel pursuant to Judge Rosen's Order by close of business on August 9, 2002.