Kalch v. Raytheon Technical Services Company, LLC et al

Filing 94

ORDER denying 68 Defendant's Motion for Dismissal or Other Sanctions; denying as moot 73 Defendant's Motion for Leave to File Reply. Signed by Judge Paul G. Byron on 7/20/2017. (SEN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION

STEVEN KALCH,
Plaintiff,
v.

Case No: 6:16-cv-1529-Orl-40KRS

RAYTHEON TECHNICAL SERVICES
COMPANY, LLC and RAYTHEON
COMPANY,
Defendants.
ORDER
This cause comes before the Court without oral argument on Defendant’s Motion
for Dismissal or Other Sanctions Resulting from Plaintiff’s Perjury and Misconduct
(Doc. 68), filed April 10, 2017. On April 24, 2017, Plaintiff responded in opposition.
(Doc. 70). Upon consideration, Defendant’s motion will be denied.
I.

BACKGROUND
Plaintiff, Steven Kalch (“Kalch”), worked for Defendants, Raytheon Technical

Services Company, LLC and Raytheon Company (collectively, “Raytheon”), under a
contract with the United States Army in Afghanistan. During his employment, Kalch
claims that he witnessed numerous instances of fraud and abuse, and he reported the
same to his supervisors.

Kalch’s employment with Raytheon was terminated on

January 17, 2014, and Kalch believes that his employment was terminated due to his
reports of fraud and abuse. Kalch therefore initiated this lawsuit against Raytheon for
retaliation under the False Claims Act and for wrongful termination under Missouri state
law.

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During the course of discovery, Raytheon sought the disclosure of a “timeline”
Kalch identified in response to a request for production, but claimed was privileged. Kalch
specifically withheld production of the timeline based on his assertion of the attorneyclient privilege. After Raytheon filed a motion to compel production of the timeline, the
presiding Magistrate Judge ordered Kalch to produce a privilege log justifying his
assertion of the attorney-client privilege. On March 24, 2017, Kalch provided the privilege
log along with his sworn affidavit explaining how, when, and why he prepared the timeline.
In his affidavit, Kalch affirmed, “I did not provide the timeline to any other person.” Kalch
re-affirmed this statement during his deposition on March 29, 2017. However, at the very
end of the deposition, Kalch waived his claim of privilege.
Raytheon now asks the Court to dismiss this action with prejudice pursuant to its
inherent powers as a sanction for what it contends is Kalch’s misconduct and perjury.
Raytheon takes the position that “[Kalch] has known all along that the ‘timeline’ was not
privileged,” and therefore intentionally asserted a false claim of attorney-client privilege in
order to withhold the timeline from Raytheon and hinder its defense. Raytheon maintains
that Kalch in fact provided the timeline to his supervisors in Afghanistan when he first
made his reports of fraud and abuse, thus waiving any claim to the attorney-client privilege
long ago. Since Kalch knew that he had previously produced the timeline to others,
Raytheon concludes that Kalch engaged in litigation misconduct by asserting the
attorney-client privilege and perjured himself in both his sworn affidavit and at his
deposition when he insisted that he had never given the timeline to anyone else.

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II.

DISCUSSION
Federal courts have the inherent power to sanction parties and attorneys who

abuse the judicial process. See Chambers v. NASCO, Inc., 501 U.S. 32, 43–46 (1991).
“The key to unlocking a court’s inherent power is a finding of bad faith,” which requires
direct evidence that the party or attorney accused of the misconduct acted with the
subjective intent to abuse the judicial process. Purchasing Power, LLC v. Bluestem
Brands, Inc., 851 F.3d 1218, 1223–24 (11th Cir. 2017). “[I]n the absence of direct
evidence of subjective bad faith, this standard can be met if [the] conduct is so egregious
that it could only be committed in bad faith.” Id. at 1224–25. “Because of their very
potency, inherent powers must be exercised with restraint and discretion.” Chambers,
501 U.S. at 44.
The Court has reviewed the evidence submitted by Raytheon and Kalch and finds
that neither Kalch nor his counsel engaged in misconduct, let alone bad faith misconduct,
when they asserted the attorney-client privilege with respect to the timeline at issue. To
the contrary, the Court finds that Kalch’s assertion of the privilege was entirely
permissible, as the situation is more nuanced than Raytheon posits. Indeed, Kalch
created two timelines: one timeline while he was in Afghanistan which he ultimately gave
to Raytheon’s Deputy Program Manager, Vince Hosch, and another timeline afterward
which he provided to his attorneys. As Kalch explained at a June 10, 2015 interview with
the Department of Defense:
Q.

And also he mentions here that “He had a journal.” Do
you know who is the person that has a journal?

A.

Me. I gave them the journal.

Q.

What journal? Is this the same timeline that I have?

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A.

Correct.

Q.

Okay. Is there another journal other than this?

A.

No. Well, you know, I gave him, I had to. I kept most of
it, you know, because I gave it to him. And then when
they removed my computer access, so when I came
back I had to refill my timeline. The timeline is pretty well
exact to what I gave him. I can’t say it’s exactly because
I gave him a timeline and they took my computer away
from me without me being able to do anything. They
showed up one day.
So the timelines are pretty well close. I can’t say that
they’re 100 percent perfect. But I gave him a journal.
That’s why he’s mentioning that. I gave him a journal.

Q.

You gave Mr. Hosch the journal?

A.

That’s correct.

(Doc. 68-9, 76:21–77:17).
In short, Kalch attempted to recreate the timeline he gave to Hosch so that he
could provide it to his attorneys for purposes of legal representation. In response to
Raytheon’s request that Kalch produce this second timeline, Kalch objected and stated,
“Plaintiff created a timeline for communication with his attorney and this document is
protected by the attorney-client privilege.” (Doc. 68-4, p. 3). At the direction of the
Magistrate Judge, Kalch subsequently produced a privilege log and a sworn affidavit
detailing his assertion of the privilege. In these documents, Kalch confirms that he
created the second timeline after his termination in order to provide information to his
attorneys about this case. (Docs. 68-2, 68-3). Based on the evidence provided, this is a
proper invocation of the attorney-client privilege under Florida law.

See Fla. Stat.

§ 90.502. The fact that the two timelines might be similar, even significantly so, does not
change that Kalch created the second timeline for his attorneys for the purpose of legal

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representation. Additionally, there is no evidence in the record indicating that Kalch
waived his attorney-client privilege until the end of his March 29, 2017 deposition. The
Court therefore finds that neither Kalch nor his counsel engaged in misconduct when they
repeatedly invoked the attorney-client privilege with respect to the second timeline.
To the extent Raytheon would have the Court sanction Kalch for not producing the
first timeline he gave to Hosch while in Afghanistan, there is no basis for such a sanction.
As Kalch testified in his interview with the Department of Defense, he could no longer
access the first timeline after he gave it to Hosch, and that timeline remained in the
Department of Defense’s possession until Raytheon requested the timeline from the
Department of Defense earlier this year.

Moreover, Kalch did not object to the

Department of Defense producing the first timeline to Raytheon, and Raytheon has been
in possession of the timeline ever since. These circumstances again do not amount to
misconduct warranting the imposition of sanctions.
III.

CONCLUSION
For the aforementioned reasons, it is ORDERED AND ADJUDGED that

Defendant’s Motion for Dismissal or Other Sanctions Resulting from Plaintiff’s Perjury and
Misconduct (Doc. 68) is DENIED. Defendant’s Motion for Leave to File Reply (Doc. 73)
is DENIED AS MOOT.
DONE AND ORDERED in Orlando, Florida on July 20, 2017.

Copies furnished to:
Counsel of Record

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