Cessna Finance Corporation v. JS CJ3, LLC et al
Filing
135
MEMORANDUM AND ORDER granting in part 81 Motion to Compel and granting in part 95 Motion to Compel. Signed by Magistrate Judge Kenneth G. Gale on 2/28/20. (This is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.) (df)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
CESSNA FINANCE CORP.,
)
)
Plaintiff,
)
)
v.
)
)
JETSUITE, INC. and JS CJ3 LLC, )
)
Defendants. )
)
)
JETSUITE, INC. and JS CJ3 LLC, )
)
Counterclaim Plaintiffs, )
)
v.
)
)
CESSNA FINANCE CORP., et al., )
)
Counterclaim Defendants, )
______________________________ )
Case No.: 18-1095-EFM-KGG
MEMORANDUM & ORDER
ON REMAINING ISSUES FROM MOTIONS TO COMPEL
The above-captioned case relates to failure to pay for certain aircraft and the
subsequent abandoning thereof. (Doc. 1, at 6.) A companion case (hereinafter
“the Textron case”) relating to the failure to pay on maintenance agreements on
these aircraft is also pending before the District Court. (See No. 18-1187, Doc. 1,
at 2-3.)
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On February 13, 2020, the Court held an in-person hearing relating to three
overlapping discovery motions pending in these two cases. (See Docs. 81, 95, 117,
132; No. 18-1187, Docs. 92, 122, 148.) At the hearing, the Court resolved issues
from the first motion to compel (Doc. 81) relating to general objections; documents
concerning corrosion in the fuselage, wing, or lavatory area of any CJ3 aircraft;
communications with Don Beverlin; and documents created after July 22, 2013
(Doc. 132). Corresponding issues were resolved as to the second Motion to
Compel in this case (Docs. 95, 132) as well as the initial motion to compel in the
Textron case (No. 18-1187, Docs. 92, 148). In addition, the Court resolved a
second Motion to Compel in the Textron case (No. 18-1187, Docs. 125, 147) and
the motions to extend the expert disclosure deadlines in both cases (Docs. 128,
130; No. 18-1187, Docs. 140, 147). Defendants’ Motion to Amend Answer and
Counterclaim in the present case (Doc. 131) was withdrawn at the request of the
Defendants (Doc. 131).
This Order resolves the issue that remains from the two motions to compel
in the present case (Docs. 81, 95) after the Court’s oral rulings from the bench at
the hearing.1 Cessna Finance and Textron argue that certain of their
communications with each other are protected by a “joint defense” and that they
1
A separate Order will be filed in the Textron case as to the corresponding issue
remaining from the motion to compel pending therein (No. 18-1187, No. 92).
2
need not even provide a privilege log for such documents. (Doc. 82, at 9; Doc. 96,
at 12.)
ANALYSIS
I.
Legal Standards.
Fed.R.Civ.P. 26(b) states that
[p]arties may obtain discovery regarding any
nonprivileged matter that is relevant to any party's claim
or defense and proportional to the needs of the case,
considering the importance of the issues at state in the
action, the amount in controversy, the parties' relative
access to relevant information, the parties' resources, the
importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery
outweighs its likely benefit. Information within this
scope of discovery need not be admissible in evidence to
be discoverable.
As such, the requested information must be nonprivileged, relevant, and
proportional to the needs of the case to be discoverable. Holick v. Burkhart, No.
16-1188-JTM-KGG, 2018 WL 372440, at *2 (D. Kan. Jan. 11, 2018). As to the
present motion, the parties responding to the discovery requests at issue are
claiming privilege based on the join defense doctrine.
Typically, the protections afforded by the attorney-client privilege and workproduct doctrine are waived when the party claiming the protection voluntarily
discloses the information at issue to a third-party. See U.S. v. Ary, 518 F.3d 775,
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783 (10th Cir. 2008) (citation omitted). However, third-party disclosure of
information does not waive the protections if a “joint defense” relationship exists.
In re Grand Jury, 156 F.3d 1039, 1042 (10th Cir. 1998).
The duty to establish the existence of a joint-defense privilege is on the party
asserting the privilege. Heartland Surgical Specialty Hosp., LLC v. Midwest Div.,
Inc., No 05-2164-MLB, 2007 WL 950282, at *9 (D. Kan. Mar. 26, 2007). To do
so, “the proponent of the privilege must first establish either the attorney-client or
work-product privileges, and then must also demonstrate: (1) the documents were
made in the course of a joint-defense effort; and (2) the documents were designed
to further that effort.” Id.; see also In re Grand Jury, 156 F.3d at 1043; Beltran v.
InterExchange, Inc., No. 14-CV-03074-CMA-CBS, 2018 WL 839927 at *4 (D.
Colo. Feb. 12, 2018) (unpublished opinion) (discussing “common interest doctrine
also known as the joint defense doctrine” and stating that the doctrine “is designed
‘to protect communications between co-defendants or co-litigants’”) (citations
omitted)).
“A common commercial interest and a common desire for the same outcome
in a legal matter are not sufficient to establish a common interest.” Beltran v.
Interexchange, Inc., 2018 WL 839927, *4 (D. Colo. Feb. 12, 2018) (citing In re
Urethane Antitrust Litigation, MDL No. 1616, 2013 WL 4781035, *2 (D. Kan.
Sept. 5, 2013) and United States v. Hudson, No. 13-20063-01-JWL, 2013 WL
4
4768084, *2 (D. Kan. Sept. 5, 2013)); see also Servicemaster of Salina, Inc. v.
United States, No. 11-1168-KHV-GLR, 2012 WL 1327812 at *3 (D. Kan. April
17, 2012) (holding that the common interest doctrine “does not apply when the
parties merely have similar [as opposed to identical] legal interests or when the
interests are solely commercial or business in nature.”) (citation omitted).
The common interest doctrine can only exist where there
is an applicable underlying privilege. The common
interest doctrine is not a separate privilege, but an
exception to waiver of the attorney-client privilege. The
common interest doctrine thus acts as an exception to the
general waiver rule by facilitating cooperative efforts
among parties who share common interests. For the
common interest doctrine to attach, ‘most courts . . .
insist that the two parties have in common an interest in
securing legal advice related to the same matter – and
that the communications be made to advance their shared
interest in securing legal advice on that common matter.’
‘The key consideration is that the nature of the interest be
identical, not similar, and be legal, not solely
commercial.’
United States Fire Ins. Co. v. Bunge N. Am., Inc., No. 05-2192-JWL-DJW, 2006
WL 3715927, at *1 (D. Kan. Dec. 12, 2006) (citations omitted).
JetSuite argues that Cessna Finance has failed to establish the joint defense
privilege, citing Bunge N. Am., Inc., supra. (Doc. 82, at 9-10.) JetSuite contends
that Cessna Finance’s communications with the Textron entities “are at issue for a
number of reasons, not least of all because JetSuite alleges a conspiracy among
those entities to conceal CJ3 corrosion from JetSuite.” (Id., at 9.) JetSuite states
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that Textron, Inc. and TAI “were necessary signatories” to the Cessna Finance
financing, “and that TAI agreed to pay 10% of the loan balance upon default.”
(Id.) JetSuite further contends that Cessna Finance objects to production of the
communications with Textron contending they are privileged, without identifying
the communications in a privilege log. (Id.)
JetSuite correctly points out that the burden is on Cessna Finance and/or
Textron to establish the application of the privilege. See Servicemaster of Salina,
2012 WL 1327812 at *3 (holding that “[b]ecause the party asserting privilege has
‘the burden to establish that waiver has not occurred,’ that party also has the
burden to show the applicability of the common interest doctrine”) (citing Johnson
v. Gmeinder, 191 F.R.D. 638, 643 (D.Kan. 2000)). JetSuite contends that Cessna
has “abjectly [f]ailed” in this regard “[b]ecause it refuses to identify the basis for
its joint defense claim or to even identify on a privilege log the documents being
withheld.” (Id., at 11.)
Cessna Finance counters that “litigation counsel for the CounterclaimDefendants are entitled to share confidential, privileged communications between
and among themselves concerning the ongoing litigation, and JetSuite, the adverse
party, has no legitimate claim to discover those privileged materials.” (Doc. 103,
at 13.) It contends that it agreed to provide a privilege log of
all privileged communications before February 21, 2018
(a day after JetSuite filed essentially an identical suit in
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California against the same parties), and counsel
understood JetSuite to agree that communications on or
after February 21, 2018, between the lawyers for both
parties or between the lawyers and their clients, did not
need to be logged.
(Id., at 15.) Cessna Finance continues that it
requests a categorical approach previously approved by
this Court. In Raymond v. Spirit AeroSystems Holdings,
319 F.R.D. 334 (D. Kan. 2017), the Court discussed the
issue of a burdensome privilege log and found ‘[t]his
‘categorized’ method of production is referenced
specifically in the comment to the 1993 amendment to
Rule 26(b)(5) and the Thermal opinion, and would ease
Defendants’ burden of production while providing the
Plaintiffs (and ultimately, if necessary, the Court) enough
information to assess the validity of the privilege
objection.’ Id. at 340–41. Even though [Cessna Finance]
does not believe even this method is necessary or
appropriate, as noted below, it has provided a privilege
log to JetSuite that includes a categorized disclosure of
what is being withheld.
(Id., at 16.)2
Cessna Finance contends that the “identical legal interest” requirement “is
easily met [in this instance] because based on the allegations asserted by JetSuite,
2
In the second Motion to Compel, JetSuite contends that Textron “refuses to produce
many communications with [Cessna Finance] on the grounds they are privileged, then
refuses to identify those communications on a privilege log.” (Doc. 96, at 12.) JetSuite
argues that because Textron “refuses to identify the basis for its joint defense claim or
even to identify on a privilege log the documents being withheld, [it] has abjectly failed
to meet its burden.” (Id., at 14.) JetSuite continues that because Textron “refused to
produce a log at the appropriate time, the Court should rule [it] has waived any jointdefense privilege claim as to its communications with [Cessna Finance] and order all of
its communications with [Cessna Finance] be produced. (Id.)
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it is hard to imagine a scenario where two parties could have more identical legal
interests.” (Doc. 103, at 13-14.) At the hearing, the Court voiced its skepticism
that Cessna Finance and Textron can establish a joint defense effort when the
primary position of Cessna Finances is that it is not liable for the actions of
Textron – e.g., if Textron lied to the buyers about the airplanes in question, Cessna
Finance would not be at fault for this. The Court indicated that Cessna Finance
and Textron appeared to take the position that they are clearly separate. Nothing at
the hearing, in the Court’s subsequent research, or in supplementation supplied by
the parties has changed the Court’s understanding of the dynamic between Cessna
Finance and Textron – they are clearly separate entities that do not share an
identical legal interest in this litigation.
As such, Cessna Finance and Textron have failed to carry their burden to
show a common legal interest between them in the present litigation. Even if they
share a common legal interest in defending against the claims of JetSuite, Cessna
Finance and Textron have “not shown that they shared an identical interest in
securing legal advice for those matters.” Servicemaster of Salina, 2012 WL
1327812, at *4. “Differences between the parties in the legal interest make the
interests non-identical, and thus make the common interest exception
inapplicable.” Id.
8
Cessna Finance and Textron have arguably established a “common desire
for the same outcome” of this litigation. See Beltran, 2018 WL 839927 at * 4;
Servicemaster of Salina, 2012 WL 1327812 at *3. This is not, however, sufficient
to establish a common interest as necessary for application of the joint defense
doctrine. Id. Simply stated, to the extent Cessna Finance and/or Textron have
waived the protections of the attorney-client privilege and/or the work product
doctrine by sharing information with persons outside of the protection, they cannot
use the joint defense privilege as an exception to the underlying waiver(s).
IT IS THEREFORE ORDERED that the joint defense objections raised
by Cessna Finance and Textron are overruled and Defendant’s Motions to Compel
(Docs. 81 and 92) are GRANTED in part as more fully set forth herein.
IT IS SO ORDERED.
Dated this 28th day of February, 2020, at Wichita, Kansas.
S/ KENNETH G. GALE
HON. KENNETH G. GALE
U.S. MAGISTRATE JUDGE
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