Bailey v. Oakwood Healthcare, Inc. d/b/a Oakwood Hospital & Medical Center
OPINION AND ORDER granting 48 Motion to Strike Attorney-Client Privileged Communication. Signed by District Judge Paul D. Borman. (DTof)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
MICHELLE H. BAILEY,
Case No. 15-11799
Paul D. Borman
United States District Judge
OAKWOOD HEALTHCARE, INC.,
d/b/a OAKWOOD HOSPITAL
& MEDICAL CENTER,
Elizabeth A. Stafford
United States Magistrate Judge
OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO STRIKE
ATTORNEY-CLIENT PRIVILEGED COMMUNICATION
This action arises from Plaintiff Michelle H. Bailey’s claims that her employment with
Defendant Oakwood Healthcare, Inc. was terminated for both discriminatory and retaliatory
reasons in violation of various federal and state civil rights laws.
On September 2, 2016, Defendant filed its Amended Motion for Summary Judgment.
(ECF No. 38.) Plaintiff filed her Response on October 14, 2016. (ECF No. 41.) Attached to the
Response as Exhibit A were two pages of handwritten notes that David Squire (a Director of
Human Resources employed by Defendant) had taken during a conversation that he had with
Patrice Baker (Defendant’s in-house counsel) 10 days before the March 20, 2014 meeting at which
Plaintiff’s employment was terminated. Defendant filed its Reply on November 11, 2016. (ECF
No. 49.) On the same date, Defendant filed a Motion to Strike Attorney/Client Privileged
Communication. (ECF No. 48.)
That Motion to Strike, which seeks to exclude Exhibit A as inadmissible based on the
attorney-client privilege, is now before the Court. For the reasons stated below, the Court will
GRANT Defendant’s Motion.
The governing Sixth Circuit precedent provides as follows:
Questions of privilege are to be determined by federal common law in federal
question cases. Fed. R. Evid. 501. The elements of the attorney-client privilege are
as follows: (1) Where legal advice of any kind is sought (2) from a professional
legal adviser in his capacity as such, (3) the communications relating to that
purpose, (4) made in confidence (5) by the client, (6) are at his instance
permanently protected (7) from disclosure by himself or by the legal adviser, (8)
unless the protection is waived.
Reed v. Baxter, 134 F.3d 351, 355–56 (6th Cir. 1998).
Notes on a privileged conversation that reflect the substance of that conversation can
amount to “communications” for these purposes, since the term “can be defined as ‘any expression
through which a privileged person . . . undertakes to convey information to another privileged
person and any document or other record revealing such an expression.’” Laethem Equip. Co. v.
Deere & Co., 261 F.R.D. 127, 140 (E.D. Mich. 2009) (quoting Restatement (Third) of Law
Governing Lawyers § 69). Additionally, the requirement that the communication be “by the client”
is not necessarily a literal one: “[a]n attorney's communications to a client may also be protected
by the privilege, to the extent that they are based on or contain confidential information provided
by the client, or legal advice or opinions of the attorney.” Schenet v. Anderson, 678 F. Supp. 1280,
1281 (E.D. Mich. 1988). Overall, “[t]he burden of establishing the existence of the
[attorney-client] privilege rests with the person asserting it.” United States v. Dakota, 197 F.3d
821, 825 (6th Cir. 1999).
Squire, in an Affidavit attached to Defendant’s Reply in support of its Motion, avers that
the notes were taken during a conversation with Baker that was held in order to “address the
underlying facts as to Michelle Bailey, actions taken with similarly situated persons, the possible
claims, associated legal risks, and possible available alternatives.” (ECF No. 53, Def.’s Reply, Ex.
B, Affidavit of David Squire at ¶ 4.) Defendant argues that because the notes were produced
inadvertently in discovery, and as they contain “the substance of a conversation that . . . Squire had
with legal counsel prior to the termination of Plaintiff,” they are privileged and therefore
inadmissible for the purpose. (ECF No. 48 at 4.)
Plaintiff makes three distinct arguments in her Response: that Defendant has failed to show
that the notes are privileged, that any privilege which did exist was waived by Defendant’s
disclosure of the notes, and that the crime/fraud exception should negate any finding that the notes
are privileged. These arguments are considered in turn below.
Has Defendant met its burden of showing that the notes were privileged?
Plaintiff argues that Defendant has failed to establish that the notes were the product of
seeking legal advice, characterizing them instead as business advice, and suggesting that “Baker
was operating more as a human resources consultant than as an attorney.” (ECF No. 51 at 10.) In
other words, Plaintiff essentially challenges Defendant’s ability to meet the first two elements of
the attorney-client privilege test articulated above: that the communication was made in the
context of legal advice, and that it was made by an attorney in his or her capacity as such.
Plaintiff’s argument is not persuasive in view of Squire’s Affidavit and deposition
testimony regarding the notes. (See generally Squire Aff.; ECF No. 53, Def.’s Reply, Ex. D,
Deposition of David Squire.) Squire states that he contacted Baker on March 10, 2014 in order to
discuss “the associated legal risks” that might arise from the discipline or termination of Plaintiff.
(Squire Aff. ¶¶ 2-4.) This is consistent with Squire’s deposition testimony confirming some of the
notes that he had made based on his conversation with Baker about Plaintiff’s potential
termination, including references to the question of whether Defendant would be “inviting a
challenge” and the question of whether something (presumably the challenge) would “survive
scrutiny.” (Squire Dep. 127:1-128:25.) Squire also testified that the notes contain the substance of
the phrase “[don’t] treat her differently,” and a reference to “testimony.” (Id.)
Even putting the explanation in Squire’s Affidavit aside, these words, written down during
a conversation with Defendant’s in-house counsel 10 days before the meeting at which Plaintiff
was terminated, are enough on their face to require a clear inference that the conversation involved
the seeking of legal advice, and that Baker was therefore acting in her capacity as an attorney. The
Court finds that Defendant has made the showing required to invoke the attorney-client privilege
in these circumstances.
Did Defendant waive privilege as to the notes?
Plaintiff correctly points out that this Court has adopted what is referred to as the
“intermediate approach” taken by federal courts in determining whether a disclosure of privileged
information was inadvertent enough to preclude a finding that the privilege was waived. Under
that approach, the court considers five factors: “1) the reasonableness of precaution taken in view
of the extent of document production; 2) the number of inadvertent disclosures; 3) the magnitude
of the disclosure; 4) any measures taken to mitigate the damage of the disclosures; and 5) the
overriding interests of justice.” Grace Community Church v. Lenox Township, 2007 WL 2534179,
at *4 (E.D. Mich. 2007) (Borman, J.) (citing Fox v. Massey–Ferguson, 172 F.R.D. 653, 671 (E.D.
Mich. 1995). But contrary to Plaintiff’s argument, an application of this test weighs in favor of
finding that Defendant did not waive privilege as to the notes.
Neither party has offered any evidence of precautions taken to avoid disclosure of
privileged documents, so the first factor discussed in Grace Community Church is neutral.
Factors two and three—the number of inadvertent disclosures and their magnitude—weigh
in Defendant’s favor. Plaintiff highlights the fact that the notes were produced as part of a
production of 873 pages, and states that it was not as if “the alleged privileged material was part of
some huge document production.” (ECF No. 51 at 13.) That may be the case, but Defendant has
produced over 5,000 pages of documents in the course of discovery overall (See ECF No. 53 at 5);
even in the context of 873 pages, two pages of notes does not amount to much. See Nilavar v.
Mercy Health Systems-Western Ohio, 2004 WL 5345311, at *5 (S.D. Ohio 2004) (“Even given the
relatively small size of the overall production at stake here (‘several inches’), a disclosure that
amounts to, at most, little more than a page of hand-written material, cannot be viewed as anything
other than minuscule.”).
As to the remedial measures contemplated in the fourth factor, Plaintiff highlights the
length of time between the disclosure (October 2015) and Defendant’s first claim of privilege (this
Motion, filed in November 2016). This is a substantial length of time, and it is indeed
distinguishable from the situation in Grace Community Church, in which the document at issue
“was not in Plaintiff's possession for very long, and upon realizing the inadvertent disclosure,
Defendant promptly retrieved the documents.” Grace Community Church, 2007 WL 2534179, at
*5. On the other hand, Defendant argues that its privilege claim in this Motion was not untimely, as
it was filed “[u]pon learning that Plaintiff’s counsel was trying to use this privileged document as
substantive evidence” at the summary judgment stage. (ECF No. 53 at 8.) There is support in Sixth
Circuit case law for the proposition that a delay for this reason does not amount to a privilege
waiver. See Quinn v. Griffith, 515 F. App'x 543, 550 (6th Cir. 2013) (upholding the district court’s
decision to strike privileged documents where the documents were disclosed during discovery but
the plaintiff moved to strike them after “Defendants made known their intent to present the emails
at trial”). Moreover, the Court’s Stipulated Protective Order issued on October 15, 2015 (ECF No.
17) provides that a party’s inadvertent disclosure of privileged materials “shall not be construed to
be a waiver, in whole or in part, of that party’s claim to privilege.” (Id. at ¶ 7.) It would not have
been unreasonable for Defendant to rely on this in deciding not to seek the return of inadvertently
disclosed privileged information that had been analyzed at deposition, but later to seek to exclude
that same information from substantive evidence. See Rainer v. Union Carbide Corp., 402 F.3d
608, 625 (6th Cir. 2005) (rejecting an argument that an inadvertent disclosure constituted an
implicit waiver where the parties had agreed in a protective order that accidental production would
not effect a waiver of privilege), opinion amended on reh'g (Mar. 25, 2005).
Plaintiff bootstraps her crime/fraud exception argument onto the fifth factor, arguing that
finding a waiver of privilege would serve the interests of justice because the notes were made in
furtherance of a fraudulent scheme to cover up the reason for Plaintiff’s termination. (See ECF No.
51 at 16.) This is unpersuasive for the reasons that Plaintiff’s crime/fraud argument is unpersuasive
generally. It could just as convincingly be argued that the interests of justice are best served by
protecting the notes as privileged, since this would further the general principle of “encourag[ing]
full and frank communication between attorneys and their clients and thereby promot[ing] broader
public interests in the observance of law and administration of justice.” Upjohn Co. v. United
States, 449 U.S. 383, 389 (1981).
Courts tend to take a narrow view of implied waiver of attorney-client privilege generally,
since “[a] broad waiver rule would no doubt inhibit the kind of frank attorney-client
communications and vigorous investigation of all possible defenses that the attorney-client and
work product privileges are designed to promote.” In re Lott, 424 F.3d 446, 453 (6th Cir. 2005).
With this in mind, the Court finds that the “intermediate test” employed in Grace Community
Church weighs in favor of Defendant.
Does the crime/fraud exception apply?
The crime/fraud exception to the attorney-client privilege has two requirements: “a prima
facie showing that a sufficiently serious crime or fraud occurred to defeat the privilege . . . [and the
establishment of] some relationship between the communication at issue and the prima facie
violation.” United States v. Collis, 128 F.3d 313, 321 (6th Cir. 1997) (quoting In re Antitrust
Grand Jury, 805 F.2d 155, 164 (6th Cir.1986)).
Plaintiff argues that the crime/fraud exception applies here because Squire’s notes on their
face demonstrate a concerted effort by Squire and Baker to develop factual scenarios surrounding
Plaintiff’s termination that were untrue, and that they would later contradict both in Defendant’s
response to Plaintiff’s EEOC charge and in deposition testimony. (See ECF No. 51 at 17-20.)
This argument borders on the frivolous. First, the Sixth Circuit noted in 2005 that “[w]e
have found no case law relating to private citizens seeking to claim the crime-fraud exception as a
basis to keep privileged information.” Rainer, 402 F.3d at 625. Notably, Collis, the only case cited
by Plaintiff in support of her crime/fraud exception argument (and also quoted above), itself arose
from a federal criminal prosecution; the movant seeking application of the crime/fraud exception
was the United States. See Collis, 402 F.3d at 321 (“In this case, the government was able to make
a prima facie showing that a serious crime or fraud occurred.”).
Even assuming that the crime/fraud exception can be invoked by a private party, Plaintiff’s
reliance on nothing outside of her interpretation of the notes makes her argument circular,
particularly given Squire’s characterization of the notes in his Affidavit as reflecting a
conversation in which he sought Baker’s analysis of potential legal risks that could arise from
terminating Plaintiff. Without some plausible indication of fraud outside of the notes themselves,
Plaintiff’s argument is conjecture. See Rainer, 402 F.3d at 625 (finding it significant that the party
seeking to invoke the crime/fraud exception had “fail[ed] to cite any facts” supporting its argument
that the document at issue exposed an act of fraud). It is likely in order to forestall such conjecture
that a court in this District has held that the two showings required to invoke the crime/fraud
exception “must be made without reference to the allegedly privileged material.” State Farm Mut.
Auto. Ins. Co. v. Hawkins, 2010 WL 2287454, at *5 (E.D. Mich. 2010). The Court finds that the
crime/fraud exception does not apply here.
For all the reasons above, the Court GRANTS Defendant’s Motion, holding that Defendant
is entitled to the return of the notes, and that the notes are inadmissible as privileged materials.
IT IS SO ORDERED.
s/Paul D. Borman
Paul D. Borman
United States District Judge
Dated: February 1, 2017
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing order was served upon each attorney
or party of record herein by electronic means or first class U.S. mail on February 1, 2017.
Deborah Tofil, Case Manager
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