Opinion
1:98-CV-726
February 23, 2001
OPINION
This matter is before the Court on appeals from the Magistrate Judge's rulings on Plaintiff Amway Corporation's motion to compel discovery or to strike defenses, counterclaims and evidence Magistrate Judge Joseph G. Scoville made extensive rulings on the record on January 23-24, 2001, which are summarized in a discovery order dated January 24, 2001. Defendant PG, Defendant Dinsmore and Plaintiff Amway have all appealed the discovery order.
This Court will modify or set aside on appeal a magistrate judge's resolution of a nondispositive pretrial matter only if it is clearly erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); FED. R. CIV. P. 72(a). The "clearly erroneous" standard applies only to the magistrate judge's findings of fact. His legal conclusions are reviewed under the "contrary to law" standard. Gandee v. Glaser, 785 F. Supp. 684, 686 (S.D.Ohio 1992). "A finding is clearly erroneous where it is against the clear weight of the evidence or where the court is of the definite and firm conviction that a mistake has been made." Galbraith v. Northern Telecom, Inc., 944 F.2d 275, 281 (6th Cir 1991).
In its motion to compel, Plaintiff sought to compel answers to questions posed to Procter Gamble Company witnesses Joseph Suarez and James Johnson and Dinsmore Shohl, LLP, witnesses Frederick Hamilton, Thomas Calder, and Robert Heuck, II. This discovery is related to Plaintiff's allegation that PG, through Dinsmore, aided and abetted Schwartz's website postings by supplying allegedly defamatory information to him and encouraging him to post that information on the website. Because Dinsmore was PG's counsel in two previous cases between PG and Amway, and Schwartz was hired by Dinsmore in connection with the previous litigation, these relationships raise issues of attorney client privilege and work product immunity which complicate the discovery in this case. In his rulings the Magistrate Judge attempted to strike a balance between Plaintiff's need for discovery and Defendants' qualified work product immunity, while preserving intact Defendants' attorney-client privilege and core work product immunity.
I.
Plaintiff appeals the Magistrate Judge's denial of its request for a ruling that Defendants have generally waived the attorney-client privilege and the work-product immunity. Plaintiff contends that it should not be barred from discovering the thought processes and opinions of PG and Dinsmore attorneys, because they placed their states of mind directly at issue through the filing of affirmative defenses, counterclaims, and affidavits. Plaintiff contends that by placing their state of mind at issue, Defendants waived any right to assert attorney-client privilege, or to protect otherwise undiscoverable core work product.
The Magistrate Judge correctly rejected such a broad application of the at-issue waiver doctrine. The issue of attorney-client privilege is governed by § 2317.02 of the Ohio Revised Code and by Ohio common law. The Ohio statute does not provide for an at-issue waiver of the scope requested by Plaintiff. The Ohio Supreme Court has held that § 2317.02(A) provides "the exclusive means by which privileged communications directly between an attorney and a client can be waived." State v. McDermott, 651 N.E.2d 985, 988 (Ohio 1995). Section 2317 does not contain an at-issue waiver. Although some Ohio cases have recognized an at-issue waiver, they have only done so where an attorney's advice has been placed into issue. See, e.g., Kremer v. Cox, 682 N.E.2d 1006, 1017 (Oh. App. 1996) (attorney-client privilege may be waived when they raise advice of counsel as a defense). That is not this case Plaintiff is not suggesting in this case that Defendants have put attorney-client communications at issue.
The Ohio Revised Code provides in pertinent part:
The following persons shall not testify in certain respects:
(A) An attorney, concerning a communication made to the attorney by a client in that relation or 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 and except that, if the client voluntarily testifies 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;
OHIO REV. CODE ANN. § 2317.02(a)
Plaintiff primarily relies on Dawson v. New York Life Ins. Co., 901 F. Supp. 1362 (N.D.Ill. 1995), in support of the broader proposition that when parties place their states of mind at issue they simultaneously waive the attorney-client and work-product privileges. This Court agrees with the Magistrate Judge that Plaintiff's broad reading of the at-issue doctrine in Dawson should not be adopted. Dawson is not representative of Ohio law, its at-issue analysis is not generally followed, and Dawson itself contains facts that place in question the broad reading of the at-issue doctrine suggested by Plaintiff. The "at issue" doctrine applies where a party injects the substance of counsel's advice, not the attorney's state of mind, into the case. This Court affirms the Magistrate Judge's denial of Plaintiff's motion for a ruling that Defendants have generally waived the attorney-client privilege and the work-product immunity.
Dawson contains the following broad statements regarding the at-issue doctrine:
To waive the attorney-client privilege by "voluntarily injecting" an issue into a case, a defendant must do more than merely deny a plaintiff's allegations. The holder must inject a new factual or legal issue into the case. Most often, this occurs through the use of an affirmative defense901 F. Supp. at 1369.
In Dawson, even though the defendant did not explicitly raise advice of counsel to establish its affirmative defense, the affirmative defense did put privileged communications at issue as all of the employees stated in their depositions that they relied on factual information contained in the attorney communications that the plaintiff was seeking to compel. 901 F. Supp. at 1370 Most of the cases and commentaries that have considered Dawson have not given it the expansive reading urged by Plaintiff. For example, in Certain Underwriters at Lloyds v. Fidelity and Cas Co. of New York, 1997 WL 769467, *3 (N.D.Ill. 1997), the court held that the "at issue" doctrine was not applicable because the plaintiff had not put its communications with its counsel at issue in the litigation. "A party must affirmatively try to use the privileged communication to defend itself or attack its opponent in the lawsuit before `at issue' waiver may apply." Id. (citing Dawson v. New York Life Insurance Co., 901 F. Supp. 1362 (N.D.Ill. 1995)).
Plaintiff has requested in the alternative that the Court strike Defendants' defenses, counterclaims and evidence that put PG's and Dinsmore's states of mind at issue in order to level the playing field. An appeal of a discovery order is not the proper context in which to test the impact of Defendants' assertion of privileges and immunities on Plaintiff's ability to meet their affirmative defenses, counterclaims and evidence. Accordingly, the Court declines at this time to address Plaintiff's request to strike.
II.
Although Defendants approve of the Magistrate Judge's determination that they have not waived the attorney-client privilege or work product immunity, they object to the breadth of discovery permitted.
Although Defendant PG and Defendant Dinsmore filed separate appeals, their appeals will be addressed together because they raise similar issues and they have joined in each others' arguments.
The Magistrate Judge recognized that an attorney's thoughts, mental processes, strategy and opinions are protected from disclosure under the work product doctrine Hickman v. Taylor, 329 U.S. 495, 511 (1947); 6 MOORE'S FEDERAL PRACTICE § 26.70[2][c] at 26-209. He also correctly recognized, however, that the work product doctrine provides only a qualified protection against discovery of trial preparation matters and work product other than those mental impressions. SeeFED. R. CIV. P 26(b)(3); United States v. Leggett Platt, Inc., 542 F.2d 655, 660 (6th Cir. 1976). Seealso 8 Wright Miller, FEDERAL PRACTICE and PROCEDURE, § 2022 (2d ed. 1994).
Defendants contend the Magistrate Judge has erroneously permitted discovery of documents and other communications between Defendants and Sidney Schwartz. The Magistrate Judge determined that while some of these communications may come within qualified work-product immunity, Plaintiff has substantial need for the information in preparation of its case and is unable to obtain the substantial equivalent of such information by any other means. The Magistrate Judge emphasized that this ruling does not affect the core work product of Dinsmore which shall remain unabridged.
1/24/01 Discovery Order at 1.
Defendants contend this ruling is erroneous because Plaintiff has not made a sufficient showing of need, and because disclosure of the information will actually invade core work-product. This Court is satisfied that Plaintiff has made an adequate showing of its need for this information. Plaintiff has no other access to communications between the Defendants in this case. Moreover, the previous disclosure of documents does not end Plaintiff's reasonable inquiry into communications with Schwartz.
To the extent his discovery order constitutes a reversal of the Magistrate Judge's prior rulings regarding the discovery of documents reflecting communications between Dinsmore and Schwartz, Defendants appeal that ruling as well. The Magistrate Judge has clarified his ruling in paragraph A of his order filed Feb. 13, 2001 (Docket # 380). The Court is satisfied that this ruling is appropriate and consistent with the 26(b)(3) analysis.
This Court also finds that Defendants have overstated the specter of how this line of inquiry will necessarily disclose core work product. The Magistrate Judge made a determination that the Plaintiff's request for information concerning communications with Schwartz is not intended as a back door effort to gain an advantage in the Utah and Texas litigation. Moreover, the communications between Defendants and Schwartz involve Amway, not confidential client information regarding PG. These factual determinations are not clearly erroneous and are accepted by this Court as the background against which the discovery order was entered.
Tr. 1/23/01 at 80-81; Tr. 2/12/01 at 20.
Defendants also appeal the ruling that Plaintiff may inquire into the factual bases and legal research performed by Dinsmore in preparing the complaints filed by PG against Amway in Utah and Texas and into certain communications from PG's attorney's to PG's in-house counsel.
The Magistrate Judge ruled that the attorney-client privilege may be asserted with regard to communications to PG from its attorneys only to the extent that the attorney-to-client communication constitutes legal advice or tends to directly or indirectly reveal the substance of the confidences of PG. The Magistrate Judge determined that in a case such as this where the lawyers' conduct is at issue, questions regarding the lawyers' activities, as distinguished from their thoughts and mental impressions, do not invade core work product. In this case, in particular, where the allegation is the republishing of allegedly defamatory pleadings, Plaintiff must be able to investigate what factual support counsel had for its allegations.
1/24/01 Discovery Order at 2 ( citing Guy v. United Healthcare Corp., 154 F.R.D. 172, 179 (S.D Ohio 1993)).
Tr. 1/23/01 at 73-74.
Tr. 1/24/01 at 16-21.
Defendants are concerned that some of the questions deemed permissible may indirectly, and by inference, disclose some of their mental impressions. In Miller Oil Co. v. Smith Industries, 1990 U.S. Dist. LEXIS 17176 (Dec. 13, 1990), Magistrate Judge Rowland observed that "subject matter that relates to the preparation, strategy, and appraisal, of the strengths and weaknesses of an action, or to the activities of the attorneys involved, rather than to the underlying evidence, is protected regardless of the discovery method employed." U.S. Dist. LEXIS 17176 at *14. Defendants focus on the phrase "activities of the attorneys" in an attempt to show that questions about who did what work is off limits under the work product doctrine.
Miller did not involve the kinds of questions at issue in this case. In Miller the plaintiffs sought to depose defendants' investigators to discover the types of questions the investigators asked, as well as the underlying facts of the investigation. U.S Dist. LEXIS 17176 at *13. Magistrate Judge Rowland denied the plaintiffs' motion to compel based upon his determination that the information sought was intertwined with the mental impressions, conclusions, opinions, or legal theories of Defendants' attorneys Id.at *16. He also found that because the subjects interviewed by the investigators were equally, if not more available to the plaintiffs for questioning, the plaintiffs had failed to make the necessary showing of a substantial need for the information or any inability to obtain the information without undue hardship. Id.at *17.
This Court agrees with Magistrate Judge Scoville that Miller does not stand for the proposition that all inquiries into attorney activity are barred by work product immunity, where they do not seek information regarding the attorneys' thought processes.
In re Grand Jury Subpoena Dated November 8, 1979, 622 F.2d 933 (6th Cir. 1980), the Sixth Circuit reversed an order compelling discovery of information regarding activity conducted by an attorney on the grounds that the grand jury's questions "viewed as a whole" delved into areas protected by the work product privilege. 622 F.2d at 935. Defendants correctly point out that some of the questions the Sixth Circuit prohibited were threshold questions such as those at issue here: e.g., were memoranda created, to whom were they circulated. These threshold questions were prohibited because the questions sought "information on drafts of submissions to the FDA and memoranda of interviews, which the courts have uniformly classified as work product." Id.
This Court does not find that In re Grand Jury stands for the proposition that such threshold or foundational questions should always be prohibited. In re Grand Jury involved a criminal investigation where the Fifth Amendment privilege against self-incrimination comes into play. Such considerations are not involved in this case. Moreover, the court was objecting to the government's attempt "to embark on a general fishing expedition" into the attorney's files. Id.at 936. The court remanded the case for a determination as to whether the government could show a need for the material. Id.
The limited discovery allowed by the Magistrate Judge's discovery order will not cause Defendants the "extreme prejudice" they fear This includes discovery of record-keeping procedures. Foundational questions are often necessary to determine whether the information is work product at all, e.g., whether it was prepared for litigation, or whether any asserted privilege has been waived through publication to third parties. There is ample protection in the Magistrate Judge's rulings to protect Defendants from disclosure of their core work product. The Magistrate Judge indicated both on the record and in his order that by allowing witnesses to answer questions as compelled by the court, or in good-faith reliance on the court's ruling and directions, Defendants will not be deemed to have waived any privilege or immunity. This Court stands by this assurance Defendants have also suggested that because Plaintiff did not seek Rule 11 sanctions in either the Texas or the Utah case, Plaintiff is somehow estopped from requiring Defendants to now provide the factual basis for those pleadings. Defendants have cited no legal authority for this estoppel argument. Discovery regarding the factual basis for the pleadings is reasonably related to Plaintiff's attempt to show that Defendants acted with knowledge of falsity or reckless disregard for the truth when they encouraged or facilitated the publication of the pleadings on the websites. It appears that Defendants' estoppel argument is not an attack on the discovery order, so much as it is an attack on Plaintiff's right to assert a claim for defamation at all. This Court has previously ruled that defamation may be shown through the republication of otherwise privileged court documents. There is no requirement that Plaintiff first challenge the pleadings in the previous cases under Rule 11 in order to bring such a claim.
Discovery Order 1/24/01 at 2; Tr. 1/24/091 at 36.
Defendants appeal the Magistrate Judge's ruling that the identity of potential witnesses contacted by counsel is not protected by the work product immunity. Here again, it is important to review this ruling in light of the Magistrate Judge's factual findings Judge Scoville determined that Plaintiff's inquiries were designed to elicit information regarding Plaintiff's allegation that Dinsmore entered into and facilitated a conspiracy against Plaintiff and was feeding allegedly negative information about Plaintiff to those it knew would publish the information, and were not designed to find out core work product matters such as whether an individual was an important witness. Defendants have not even attempted to show that this factual finding is erroneous, much less clearly erroneous. In light of the Magistrate Judge's finding as to the purpose of the inquiry, the Court does not find any impropriety in allowing the limited discovery of the identity of potential witnesses. Furthermore, it is doubtful that the mere identity of potential witnesses can any longer be considered a protected area in light of recent disclosure obligations requiring early release of such information. SeeFED. R. CIV. P. 26(a)(1).
Tr. of 1/23/01 at 78.
The discovery in this case is complicated. Magistrate Judge Scoville has done an admirable job of striking a balance between the Plaintiff's need for discovery and the Defendants' qualified work-product immunity. This Court agrees with the legal principles articulated by the Magistrate Judge and by the particular applications of those principles expressed in his rulings on the record. The parties are directed to reflect on the Magistrate Judge's rulings and to use those rulings as a guide as they proceed with discovery in this case.
For the reasons stated herein, the Magistrate Judge's January 24, 2001, discovery order, and the rulings he made on the record on January 23-24, 2001, will be affirmed. The protective order staying discovery contained in paragraph C of the Magistrate Judge's February 13, 2001, order is lifted.
An order consistent with this opinion will be entered.
ORDER
In accordance with the opinion entered this date.
IT IS HEREBY ORDERED that upon consideration and review of the appeals filed by Defendant Procter Gamble, Defendant Dinsmore and Plaintiff Amway (Docket #'s 354, 365, 369) from the Magistrate Judge's January 24, 2001, discovery order, the Magistrate Judge's January 24, 2001, order (Docket # 319) and the rulings he made on the record on January 23-24, 2001, are AFFIRMED.
IT IS FURTHER ORDERED that the protective order staying discovery contained in paragraph C of the Magistrate Judge's February 13, 2001, order (Docket # 380) is LIFTED.