Total E&P USA Inc v. Kerr-McGee Oil & Gas Corporation et al

Filing 321

ORDER that Total E&P USA, Inc.'s and Statoil Gulf of Mexico, L.L.C.'s 255 Motion to Compel the Production of Documents from Chevron U.S.A., Inc. in Response to Subpoena is GRANTED IN PART as set forth in document. Signed by Magistrate Judge Daniel E. Knowles, III on 8/19/14. (Reference: 09-6644; 10-106)(plh) Modified doc type on 8/19/2014 (plh).

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TOTAL E&P USA, INC.

CIVIL ACTION

VERSUS

NO. 09-6644 C/W
10-106

KERR-MCGEE OIL & GAS CORPORATION, ET AL.

SECTION "N" (3)

ORDER
On June 18, 2014, Total E&P USA, Inc.'s and Statoil Gulf of Mexico, L.L.C.'s Motion to
Compel the Production of Documents from Chevron U.S.A., Inc. in Response to Subpoena [Doc.
#255] came on for oral hearing before the undersigned. Present were Scott O' Connor on behalf of
Total E&P USA, Inc., John Worth on behalf of Statoil Gulf of Mexico, L.L.C., and Gerald Slattery
and Colleen Jarrot on behalf of Chevron U.S.A., Inc. After the oral hearing, the Court took the
motion under advisement. Having reviewed the motion, the opposition and the case law, the Court
rules as follows.
I.

Background
This is a dispute concerning oil and gas royalties. The lease at issue covers Green Canyon

Block 640 in the Gulf of Mexico ("GOM”). Total E&P USA, Inc. ("Total") operates the lease.
Kerr-McGee

Oil

&

Gas

Corporation

("Kerr-McGee")

and

numerous

individual

defendants/consolidated plaintiffs own overriding royalty interests on production from the lease.

Under the Outer Continental Shelf Royalty Relief Act (“RRA”), the lease is entitled to royalty-free
production until it has produced 87.5 million barrels of oil. The assignments that govern the
overriding royalty interests state that royalties will be paid in the same manner as they are paid to
the federal government.
Total argues that no overriding royalties are due to Kerr-McGee and the individual parties
until the lease has produced 87.5 million barrels of oil. Total thus filed this declaratory judgment
action in which it asks the Court to declare that its interpretation of the assignments is correct. Total
has already paid some royalties and seeks to offset future payments by these amounts. Total also
seeks to deposit into the registry of the Court any monies that it may owe if its interpretation of the
assignments is incorrect.
The consolidated suit is generally a mirror action – defendants in the lower-captioned suit
sue the oil and gas lessees, Total and Statoil Gulf of Mexico, L.L.C. ("Statoil"), arguing that they
are entitled to royalties as of the date of initial production of oil and gas.
II.

The Parties' Contentions
A.

The Motion to Compel

Chevron U.S.A., Inc. ("Chevron"), a party to one of the agreements here, provided affidavit
testimony in support of Kerr-McGee’s opposition to defendants’ motions for summary judgment.1
Defendants now contend that Chevron must respond to discovery related to the assertions in the
affidavit. The affidavit of Paul G. Walker supported Kerr-McGee’s interpretation of the lease, i.e.,
that overriding royalties are due and payable under the lease despite the suspension of royalties due

1

"Defendants" here refers to Total and Statoil, as they are the defendants in the
consolidated lawsuit.

2

the federal government under the RRA.
On October 16, 2013, Total served a subpoena on Chevron that sought documents related
to (1) the parties’ intent when executing the assignments; (2) Chevron’s interpretation of the
assignments; (3) the reason Chevron voluntarily entered this lawsuit; (4) Chevron’s communications
with the parties in this litigation; and (5) documents related to the affidavit itself.
Defendants first argue that Chevron has waived any objections to the subpoena because it
failed to respond to them within 14 days under the federal rules. Chevron produced its responses
and objections 20 days after service of the subpoena.
Defendants next argue that Chevron is withholding documents that are not protected by a
privilege. Defendants point to documents in the privilege log that were sent to or received from
third persons outside of Chevron. Defendants also note that numerous documents do not appear to
directly involve attorneys or privileged communications from attorneys. Defendants further note
that many documents relate to business issues rather than legal advice.
Chevron produced not one redacted document. Defendants argue that the privilege log does
not contain enough information to confirm that an entire document is privileged. With regard to the
work-product privilege, defendants maintain that they can not determine if the documents were
prepared in anticipation of litigation. Defendants argue that Chevron has not met its burden with
regard to the privilege of these documents.
Defendants maintain that RFP Nos. 11, 12-13, 14-15, 18-19, 20 and 24 seek documents that
are necessary to the reliability and credibility of the affidavit. Chevron objected on the grounds that
the RFPs are unduly burdensome and overbroad, not reasonably calculated to lead to the discovery
of admissible evidence and seek proprietary and confidential information. Defendants argue that

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Chevron fails to demonstrate how the requested information is inaccessible, difficult or costly to
produce. Given Chevron’s size and economic resources, defendants contend that it is hard to
imagine that the RFPs impose a burden on Chevron. Defendants also note that they narrowly
tailored the RFPs to leases under the RRA.
With regard to the objection on confidential and proprietary grounds, defendants note that
the protective order in place is adequate to protect the information and allows non-parties to adopt
it.
Pointing to specific elements of production, defendants note that Chevron produced some
documents that reference other documents that Chevron did not produce. For example, Chevron
produced an e-mail that referenced an offer for the overriding royalty interests but failed to produce
the offer itself.
B.

Chevron's Opposition

Chevron served its written responses and objections before the return date of the subpoena.
Counsel argues that he inadvertently overlooked the “earlier of” language in the rule and thus missed
the 14-day deadline. Chevron notes that counsel had informed defendants by telephone of its
objections six days after receipt of the subpoena, so defendants knew the objections. Chevron thus
asks the Court to rule on the merits of its objections.
Chevron maintains that it has acted in good faith. It notes that at least one RFP is unlimited
as to time, and many cover long periods of time (10, 15, or 19 years). Some of the RFPs required
a search for documents in Chevron’s offices around the world or even across the entire United
States. And numerous RFPs seek “all documents concerning” certain topics, irrelevant information
and Chevron’s confidential and proprietary information.

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Citing case law, Chevron notes that courts refuse to find waiver when the subpoena is
overbroad on its face, the subpoenaed witness is a non-party acting in good faith, and counsel for
the subpoenaed party was in contact with the subpoenaing party concerning its compliance before
the time the subpoenaed party challenged the legal basis for the subpoena. Chevron contends that
all three circumstances exist here. Chevron then distinguishes the case law on which defendants
rely, noting that there, the delays were much more egregious.
Chevron notes that defendants have not demonstrated prejudice. It notes that they did not
even file the motion to compel until six months after they received the objections and four months
after they received Chevron’s privilege log. It also notes that the discovery cut-off date is
approximately three months from now. Chevron argues that the Fifth Circuit has expressed a strong
preference that issues be decided on the merits.
Chevron maintains that it has properly asserted the attorney-client and work-product
privileges. It argues that from the beginning, its business managers had every reason to confer with
their lawyers about issues related to the overriding royalty interests. And when defendants
questioned the suspension of royalties, Chevron contends that it began to anticipate litigation.
Chevron asserts that all of the privileged documents are meticulously set out in its privilege log and
provides all information required under Rule 45. The affidavit of Salvadore V. Spalitta, Chevron’s
Senior Counsel, refutes defendants’ arguments that some documents were sent to third persons or
were not communications by an attorney.
Chevron next points to specific RFPs as raised in defendants’ motion and argues that many
of them seek irrelevant and confidential information, and producing the information would impose
an undue burden on Chevron. It maintains that because it is not a party to this action, its non-party

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status is a significant factor to be considered in determining whether the burden imposed by a
subpoena is undue. Citing case law, Chevron also contends that a discovery request is overbroad
or unduly burdensome if it uses an omnibus term and applies to a general category of documents or
a broad range of information.
With respect to RFP Nos. 12-14 and 24, Chevron argues that the availability of similar
documents and information from another source renders them unduly burdensome. Chevron points
to the affidavit of R.W. Robison, Jr., attached by Total to the subpoena. Robison reviewed all GOM
leases subject to the RRA. In the affidavit, Robison outlines the detailed procedure that he used to
determine whether any interest owners were paying the overrides while the lessor’s royalty was
suspended under the RRA. This, Chevron argues, is adequate to respond to RFP Nos. 12-14 and 24.
Chevron maintains that RFP Nos. 15, 18-20 and 24 seek confidential and proprietary
information. Chevron notes that both Total and Statoil are its direct competitors, both nationally and
internationally. Citing case law, Chevron notes that a non-party’s right to privacy in its financial
affairs is deserving of special protection.
C.

Defendants' Reply

Defendants again argue that Chevron has waived all objections to the discovery requests.
Citing case law from this circuit, defendants contend that no court here has adopted the argument
that objections are not waived because the subpoenaed entity is a non-party who orally
communicated one objection to the subpoenaing party.
Defendants also note that Chevron never moved to quash or to modify the subpoena. They
thus argue that Chevron can not contend that they neglected to avoid imposing an undue burden on
a non-party.

6

Defendants further argue that Chevron is well-equipped to comply with these discovery
requests. They assert that companies like Chevron are in litigation every day and must have
responded to much larger discovery requests in the past. They argue that the affidavit of Robison
reveals that there are only 105 override interests in the GOM, not all of which involve Chevron.
Listing several requests individually, defendants argue that they seek relevant documents that
go to bias and credibility.
Defendants maintain that Chevron’s assertion of privilege remains suspect. Defendants note
that since the filing of the motion, Chevron has produced numerous documents previously withheld
as privileged. Defendants ask the Court to review all entries with no attorney listed, documents sent
to or received from third parties, and all entries with questionable work-product designations.
III.

Law and Analysis
As an initial matter, the Court does not find that Chevron has waived its objections to the

discovery requests under the factual circumstances here. Chevron's status as a non-party, the breadth
of the subpoena and the fact that Chevron verbally raised an objection to the subpoena before it
responded to it weigh in favor of finding no waiver of objections. See, e.g., Yousuf v. Samantar,
451 F.3d 248, 252 (D.C. Cir. 2006) (affirming that district court had discretion to consider untimely
objection when the objector was non-party acting in good faith, the subpoena appeared to be
overbroad, and counsel contacted subpoenaing party to voice objection). The Court finds that
Chevron acted in good faith here, responding only six days after the deadline but already having
informed defendants of its intent to object.
This Court now addresses the privilege log. The federal common law of privilege applies
in this case brought under the court's federal question jurisdiction. Willy v. Admin. Review Bd., 423

7

F.3d 483, 495 (5th Cir. 2005). The attorney-client privilege protects communications by a client to
his lawyer and communications from the lawyer if they would tend to disclose the client’s
confidential communications. See Hodges, Grant & Kaufman v. United States, 768 F.2d 719,
720–21 (5th Cir. 1985) (“attorney-client privilege protects communications made in confidence by
a client to his lawyer for the purpose of obtaining legal advice. The privilege also protects
communications from the lawyer to his client, at least if they would tend to disclose the client's
confidential communications.”) (citations omitted). It is axiomatic that the attorney-client privilege
“only protects disclosure of confidential communications between the client and attorney; it does
not protect disclosure of underlying facts.” United States v. Edwards, 39 F. Supp. 2d 716, 723 (M.D.
La. 1999) (citing Upjohn Co. v. United States, 449 U.S. 383, 395-96 (1981); In re Six Grand Jury
Witnesses, 979 F.2d 939 (2d Cir. 1992); United States v. Freeman, 619 F.2d 1112 (5th Cir. 1980);
Computer Network Corp. v. Spohler, 95 F.R.D. 500 (D.D.C. 1982)).
The burden of sustaining a claim of attorney-client privilege falls on the party asserting the
privilege. Exxon Corp. v. St. Paul Fire & Marine Ins., 903 F. Supp. 1007, 1008 (E.D. La. 1995);
High Tech Commc'ns, Inc. v. Panasonic Co., No. 94-1477, 1995 WL 45847, at *1 (E.D. La. Feb.2,
1995) (citing Hodges, 768 F.2d at 721) (additional citations omitted). “Although the privilege
belongs to the client, and only the client may waive it, an attorney may assert the privilege on the
client's behalf.” Haines v. Liggett Grp., 975 F.2d 81, 90 (3d Cir. 1992) (citing McCormick on
Evidence § 92 (4th ed.1992)); accord United States v. Juarez, 573 F.2d 267, 276 (5th Cir. 1978)
(citing Fisher v. United States, 425 U.S. 391, 402 n.8 (1976)).
Work product protection from discovery extends to “documents and tangible things that are
prepared in anticipation of litigation or for trial by or for [a] party or its representative (including

8

the . . . party's attorney . . . or agent),” Fed. R. Civ. P. 26(b)(3)(A), but does not extend to the
“underlying relevant facts.” Blockbuster Entm't Corp. v. McComb Video, Inc., 145 F.R.D. 402, 403
(M.D. La. 1992) (citing United States v. El Paso Co., 682 F.2d 530, 542 (5th Cir. 1982); Hill Tower,
Inc. v. Dep't of Navy, 718 F. Supp. 562, 566 (N.D. Tex. 1988)); accord 8 C.A. Wright, A.R. Miller
& R.L. Marcus, Federal Practice & Procedure § 2024, at 494 (3d ed. 2010).
The work product “privilege can apply where litigation is not imminent, as long as the
primary motivating purpose behind the creation of the document was to aid in possible future
litigation.” Udoewa v. Plus4 Credit Union, 457 F. App'x 391, 393 (5th Cir. 2012) (quoting In re
Kaiser Alum. & Chem. Co., 214 F.3d 586, 593 (5th Cir. 2000)) (internal quotation omitted).
“The mere fact that a document is prepared when litigation is foreseeable does not mean the
document was prepared in anticipation of litigation. . . .” Arkwright Mut. Ins. Co. v. Nat'l Union Fire
Ins. Co., 19 F.3d 1432, 1994 WL 58999, at *3 (6th Cir. 1994) (citing Nat'l Union Fire Ins. Co. v.
Murray Sheet Metal Co., 967 F.2d 980, 984 (4th Cir. 1992)). Even “[e]stablishing that a document
was prepared after litigation was commenced is insufficient to prove that the document was prepared
in anticipation of litigation. . . . What is crucial is that ‘the primary motivating purpose behind the
creation of the document was to aid in possible future litigation.’” Robinson v. Tex. Auto. Dealers
Ass'n, 214 F.R.D. 432, 449 (E.D. Tex. 2003) (quoting In re Kaiser Alum., 214 F.3d at 593, rev'd on
other grounds, 2003 WL 21911333 (5th Cir. July 25, 2003); accord Global Oil Tools, Inc. v.
Barnhill, No. 12-1507, 2013 WL 1344622, at *6 (E.D. La. Apr. 3, 2013); Guzzino v. Felterman, 174
F.R.D. 59, 63 (W.D. La. 1997); Blockbuster, 145 F.R.D. at 404.
In addition, “[t]he law is settled that ‘excluded from the work product doctrine are materials
assembled in the ordinary course of business, or pursuant to public requirements unrelated to

9

litigation.’” Guzzino, 174 F.R.D. at 62 (quoting United States v. El Paso Co., 682 F.3d 530, 542 (5th
Cir. 1982) (citing Fed. R. Civ. P. 26(b)(3) advisory committee notes)); accord 8 C.A. Wright, A.R.
Miller & R.L. Marcus, Federal Practice & Procedure § 2024, at 503 (3d ed. 2010); see also Hill
Tower, Inc., 718 F. Supp. at 565 (“The mere fact this report deals with facts, opinions, and
recommendations that later may be the focus of litigation does not establish that there was the
expectation of litigation when this document was drafted.”) (citing Senate of P.R. v. U.S. Dep't of
Justice, 823 F.2d 574, 586 (D.C. Cir. 1987); Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d
854, 865 (D.C. Cir. 1980)).
Thus, “[i]f the document would have been created regardless of whether the litigation was
also expected to ensue, the document is deemed to be created in the ordinary course of business and
not in anticipation of litigation.” Global Oil Tools, 2013 WL 1344622, at *6 (citing S. Scrap Mat'l
Co. v. Fleming, No. Civ. A. 01-2554, 2003 WL 21474516, at *6 (E.D. La. June 18, 2003);
Piatkowski v. Abdon Callais Offshore, L.L.C., No. 99-3759, 2000 WL 1145825, at * 1 (E.D. La.
Aug, 11, 2000)).
Opinion or core work product merits special protection from discovery pursuant to Rule
26(b)(3)(B). “At its core, the work-product doctrine shelters the mental processes of the attorney [or
others named in the Rule], providing a privileged area within which he can analyze and prepare his
client's case.” United States v. Nobles, 422 U.S. 225, 238-39 (1975).
Nonetheless, when a party is ordered to produce its work product because the discovering
party has made the showing mandated by Rule 26(b)(3)(A)(i) and (ii), Rule 26(b)(3)(B) requires the
court to “protect against disclosure of the mental impressions, conclusions, opinions, or legal
theories of a party's attorney or other representative concerning the litigation.” Thus, tangible

10

materials that contain the mental impressions, conclusions, opinions or legal theories of a party's
attorney or representative, otherwise known as “opinion work product,” are afforded a high degree
of protection. In re Katrina Canal Breaches Consol. Litig., No. 05-4182, 2010 WL 2522968, at *1
(E.D. La. June 14, 2010) (additional quotation omitted) (citing Upjohn Co. v. United States, 449
U.S. 383, 395-96 (1981)); Dunn v. State Farm Fire & Cas. Co., 927 F.2d 869, 875 (5th Cir. 1991);
Int'l Sys. & Controls Corp. Sec. Litig., 693 F.2d at 1240; Bonneau v. F & S Marine, Inc., No. 093336, 2010 WL 1254552, at *2 (E.D. La. Mar. 25, 2010); Bross v. Chevron U.S.A. Inc., No.
06–1523, 2009 WL 854446, at *5 (W.D. La. Mar. 25, 2009); Blockbuster, 145 F.R.D. at 403-04)
(additional citations omitted).
This Court has reviewed line by line the privilege log submitted by counsel for Chevron, and
the application of the aforementioned law reveals that neither the attorney-client nor work-product
privilege protects the following documents from disclosure:
F02434-E0001-00000535 (a copy of a letter from Total)
F02434-E0001-00000539 (a copy of a letter to Total)
F02434-E0001-00000550 (an assignment)
F02434-E0001-00000552 (an assignment)
F02434-E0001-00000562 (a copy of agreement Chevron and others)
F02434-E0001-00000576 (a copy of a court pleading)
F02434-E0001-00000582 (a copy of a court pleading)
F02434-E0001-00000586 (a copy of a court pleading)
F02434-E0001-00000588 (a copy of a court pleading)
F02434-E0001-00000590 (a copy of a court pleading)
F02434-E0001-00000591 (a copy of a court pleading)
F02434-E0001-00000592 (a copy of a court pleading)
F02434-E0001-00000594 (a copy of a court pleading)
F02434-E0001-00000682 (a copy of a court pleading)
F02434-E0001-00002608 (a copy of a court pleading)
F02434-E0001-00002672 (a copy of a letter to Total)
F02434-E0001-00002673 (a copy of a letter from Total)
F02434-E0001-00002698 (an assignment)
F02434-E0001-00002699 (an assignment)
F02434-E0001-00002700 (an assignment)
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F02434-E0001-00004700 ( a copy of a division order)
F02434-E0001-00005604 (an assignment)
F02434-E0001-00005611 ( a copy of a division order)
Becauser this Court has now expended enough of its resources on this privilege log, the
following unprotected documents are listed by the first number in the privilege log: 597, 598, 600602, 604-607, 609, 611, 613, 615-617, 620-621, 623-625, 627-631, 633-636, 638-639, and 643. The
Court simply wishes to state for the record that it queries how one could assert a privilege with
regard to documents sent to opposing counsel (not drafts), public pleadings filed in this Court,
recorded documents with the Minerals Management Service ("MMS"), and correspondence on
which the MMS was a participant.
With regard to the allegedly deficient responses to specific requests for production ("RFP"),
the Court resolves the dispute as follows:
RFP No. 11: The Court finds this RFP to be extremely overbroad and not reasonably
calculated to lead to the discovery of admissible evidence. This Order
reserves the right to defendants to narrow and to re-word the RFP and repropound it.
RFP Nos. 12-13 and 24:
The Court finds these RFPs to be reasonably calculated to lead to the
discovery of admissible evidence. However, finding these RFPs to be
overbroad, the Court temporally limits these RFPs to 10 years from the
enactment of the RRA.
RFP Nos. 14-15:
The Court finds that these RFPs are extremely overbroad, a bit vague (at least

12

with regard to RFP No. 14) and not reasonably calculated to lead to the
discovery of admissible evidence.
RFP Nos. 18-19:
The Court can not fathom how these RFPS will lead to the discovery of
admissible evidence. The Court finds that why Chevron entered the lawsuit
via affidavit has no bearing on the interpretation of the overriding royalty
interest.
RFP No. 20:

Chevron shall respond to this RFP as it is reasonably calculated to lead to the
discovery of admissible evidence.

IV.

Conclusion
For the foregoing reasons,
IT IS ORDERED that Total E&P USA, Inc.'s and Statoil Gulf of Mexico, L.L.C.'s Motion

to Compel the Production of Documents from Chevron U.S.A., Inc. in Response to Subpoena [Doc.
#255] is GRANTED IN PART as outlined above. Chevron shall comply with this Order no later
than ten (10) days from the below date. Should Chevron believe that any of the documents that
this Courts orders produced are confidential and proprietary, it shall adopt the protective order in
place in this lawsuit or it shall meet and confer no later than five (5) days from the below date
with opposing counsel to confect an agreed-upon protective order.
New Orleans, Louisiana, this 19th day of August, 2014.

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DANIEL E. KNOWLES, III
UNITED STATES MAGISTRATE JUDGE

14