Carhartt, Inc. v. Innovative Textiles, Inc.

Filing 179

OPINION and ORDER DENYING DEFENDANT/THIRD PARTY PLAINTIFF'S 109 Amended MOTION to Compel Discovery Regarding Communications Exchanged Between and Information Considered by Carhartt's Four-Person "Product Notification" Te am AND DENYING DEFENDANT/THIRD PARTY PLAINTIFF'S 98 MOTION to Compel Discovery Regarding Communications Exchanged Between and Information Considered by Carhartt's Four-Person "Product Notification" Team filed by Innovative Textiles LLC, Innovative Textiles, Inc. - Signed by Magistrate Judge R. Steven Whalen. (CCie)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

CARHARTT, INC.,
Plaintiff,

No. 17-13604

v.

District Judge Judith E. Levy
Magistrate Judge R. Steven Whalen

INNOVATIVE TEXTILES, INC.,
Defendant / Third Party Plaintiff,
v.
GENTRY MILLS, INC.,
Third Party Defendant.
/
OPINION AND ORDER
Before the Court are Defendant / Third Party Plaintiff Innovative Textiles, Inc.’s
(“ITI’s”) Motion to Compel Discovery Regarding Communications Exchanged Between
and Information Considered by Carhartt’s Four-Person “Product Notification” Team
[ECF No. 98] and its Amended Motion to Compel [ECF No. 109].1 Following an in
camera review of the documents in question, and for the reasons discussed below, the

1

The Amended Motion contains a certified copy of Joe Don Long’s deposition
transcript, which was not available when the initial motion was filed. Otherwise, the two
motions are identical.
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motions will be DENIED.
I.

BACKGROUND

Carhartt is a Dearborn, Michigan based clothing company that markets a line of
flame-resistant garments. Beginning in 2009, ITI supplied Carhartt with flame-resistant
fabric. Carhartt alleges that around June of 2016, its internal testing revealed that ITI’s
fabrics “did not satisfy the standards they were required to satisfy...and did not live up to
the representations that [it] had made about the fabrics.” Complaint, ECF No. 1,
PageID.11. As a result, Carhartt recalled products containing the allegedly nonconforming (i.e., defective) fabric, and seeks damages associated with the recall.
At issue in these motions is Carhartt’s decision to recall products containing the
allegedly defective fabric, and internal communications among Carhartt personnel
preceding that decision. Ultimately, four people participated in the decision to recall
products: William Hardy, Jeffrey Hicks, Joe Don Long, and Anna Inch. Ms. Inch was
Carhartt’s in-house counsel. Mr. Hardy, a senior vice-president, testified as follows at his
deposition:
Q:

Okay. Who at Carhartt made the final decision to issue the
product notification?

A:

The final decision was made by a collective group of us, there
was three or four primary people involved in that....Yeah, so it
was a collective decision. Jeff, amongst myself and our Linda
Hubbard and Joe Don Long and our inside counsel, we had
extensive meetings together, and spent a lot of time evaluating
the information that we had.

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Q:

Was everyone in that group in agreement on the decision to
issue the product notification?

A:

Yes, sir.

Q:

Okay. So there wasn’t one final person that made the
decision?

A:

No, we collectively all came to the agreement, what we
needed to do.

Deposition of William Hardy, ITI’ Exhibit 3, ECF No. 109-4, PageID.5023-5024;
Carhartt Exhibit 2, ECF 126-3, PageID.5508.
Joe Don Long, formerly Carhartt’s Director of Quality for Raw Materials testified
similarly that four individuals participated in the ultimate decision to issue the product
notification:
Q:

Sure, William Hardy indicated to me that there were four
people who made the decision to issue the product
notification. There were four decision-makers, essentially.
Do you agree with that statement?

A:

Yes.

Q:

Okay. And he also told me that those four decision-makers
were himself, as one, you, as number two, and these are in no
particular order, Linda Hubbard as the third person and I
referred to counsel as the fourth person, who I assume that he
meant Anna Inch. Does that sound accurate based on your
recollection?

A:

Yes. Deposition of Joe Don Long, ITI’s Exhibit 4, ECF No.
109-5, PageID.5033-5034.

Following Carhartt’s decision, it issued a Product Notification Letter to its

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customers (ITI’s Exhibit 1, ECF No. 109-2, PageID.109) and a press release (ITI’s
Exhibit 2, ECF No. 109-3, PageID.5020), informing both its customers and the public of
the problems with nine specific flame-resistant sweatshirt styles. The Product Notification
Letter stated, “We ask that you stop sale of the products listed above and return all
inventory, at our cost, to Carhartt for a refund or alternative product.”
During discovery, ITI requested the production of communications related to the
recall/product notification. At issue in this motion are 65 specific communications to
which Carhartt claimed attorney-client privilege. Carhartt has produced those
communications (email chains) to the Court for an in camera review.2
II.

DISCUSSION

In Reed v. Baxter, 134 F.3d 351, 355-56 (6th Cir.1999), cert. denied, 525 U.S. 820
(1998), the Sixth Circuit described the contours of the attorney-client privilege 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

2

Carhartt’s privilege log was previously filed as part of ITI’s motion to compel a
more detailed privilege log [ECF No. 64], which the Court denied on October 24, 2019
[ECF No. 155]. The 65 documents at issue in the present motion are: Carhartt Priv. Log
Nos. 00001,00002, 00003, 00007, 00055, 00056, 00057, 00061, 00062, 00063, 00087,
00143, 00145, 00147, 00148, 00149, 00150, 00152, 00198, 00207, 00208, 00212, 00215,
00219, 00220, 00229, 00235, 00236, 00237, 00239, 00240, 00246, 00252, 00260, 00303,
00343, 00392, 00407, 00414, 00425, 00429, 00439, 00440, 00476, 00616, 00622 00626,
00631, 00632, 00697, 00807, 00808, 00809, 00810, 00811, 00812, 00814, 01105, 01115
01116, 01118, 01119, 01152, and 01162. Carhartt’s Revised Privilege Log,
ECF No. 75-5, PageID.3426-3559.
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(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.” (Emphasis added).
The attorney-client privilege is narrowly construed, because it “reduces the amount of
information discoverable during the course of a lawsuit.” United States v. Collis, 128 F.3d
313, 320 (6th Cir.1997); In re Grand Jury Proceedings, 78 F.3d 251, 254 (6th Cir.1996).
Furthermore, “[t]he burden of establishing the existence of the privilege rests with the
person asserting it.” 3
The emails to which Carhartt claims privilege were to and from its in-house
counsel, Anna Inch, and discussed Ms. Inch’s input. ITI argues that because Ms. Inch
was a member of a four-person team that made a collective decision to issue a recall, she
was not acting in her role as an attorney, but rather in the capacity of a corporate official
participating in a business decision.
“Where a person who happens to be an attorney is not acting in that capacity, the
privilege does not attach,” and “[c]ommunications between an attorney and client which
relate to business, rather than legal matters, do not fall within the protection of the
attorney-client privilege.” Michigan First Credit Union v. Cumis Ins. Soc., Inc., 2006 WL
1851018, at *2 (E.D. Mich. July 5, 2006). However, separating an attorney’s role in a
business decision from his or her role as a legal advisor is not always a simple matter.

3

ITI’ argument that the description of the privilege in Carhartt’s privilege log is
conclusory and unsubstantiated was rejected in the previous order denying ITI’s motion to
compel a more detailed privilege log [ECF No. 155].
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“‘[L]egal and business considerations may frequently be inextricably intertwined. This is
inevitable when legal advice is rendered in the context of commercial transactions or in
the operations of a business in a corporate setting. The mere fact that business
considerations are weighed in the rendering of legal advice does not vitiate the
attorney-client privilege.’” Picard Chem. Inc. Profit Sharing Plan v. Perrigo Co., 951 F.
Supp. 679, 685–86 (W.D. Mich. 1996)(quoting Coleman v. American Broadcasting Co.,
106 F.R.D. 201, 206 (D.C.1985)). See also In re Bairnco Corp. Sec. Litig., 148 F.R.D.
91, 97 (S.D.N.Y.1993) (the distinction between legal and business concerns is necessarily
blurred in a corporate litigation context).
Thus, the mere fact that Ms. Inch, Carhartt’s in-house counsel, was part of a
decision-making collective that included three non-lawyer corporate officers is not
dispositive. The more important question is whether the legal nature of the advice or
communication has primacy over its business character. “When an attorney acts in both a
legal and a business capacity, the resulting communications are only privileged if the
legal aspect predominates.” Ganley v. Mazda N. Am. Operations, 2007 WL 9706988, at
*5 (N.D. Ohio 2007)(citing Boca Invest. Partnership v. United States, 31 F. Supp. 2d 9,
11–12 (D.D.C.1998)). Moreover, “[a]s legal and business issues are often ‘inextricably
intertwined,’ in determining whether advice is predominately legal or business in nature,
courts should resolve doubts in favor of the privilege.” Id. (citing U.S. Postal Serv. v.
Phelps Dodge Refining Co., 852 F. Supp. 156, 160 n.2 (E.D.N.Y. 1994)).

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If an attorney serves a non-legal function that could as well be performed by a nonlawyer, and acts in the ordinary course of business, his or her communications in that
capacity would likely not be protected by the attorney-client privilege. For example, in
Burke v. Cumulus Media, Inc., 2017 WL 2628192, at *2 (E.D. Mich. Mar. 16, 2017), an
attorney also had a position as Senior Vice President of Human Resources Operations,
and the advice sought from her related to ordinary human resources issues, not legal
issues. Rejecting a claim of privilege, the Court found that “[t]his type of advice is not
exclusive to legal authorities but rather can be given by non-lawyers as well.” Id. See
also Flagstar Bank v. Fed. Ins. Co., 2006 WL 6651780, at *4 (E.D. Mich. Aug. 21, 2006)
(“Communications by attorneys acting as insurance claims investigators, rather than as
attorneys, are not protected by the attorney client privilege”); Michigan First Credit
Union v. Cumis Ins. Soc., Inc., 2006 WL 1851018, at *2 (“Where a person who happens
to be an attorney is not acting in that capacity, the privilege does not attach.”).
In this case, attorney Inch’s communications are of a different ilk. Unlike the
attorney in Burke, Inch did not have a dual business/legal function at Carhartt; she was
the in-house counsel, not a corporate manager. Moreover, the recall/product notification
was a singular event occasioned by Carhartt’s determination that the flame-resistant
fabrics supplied by ITI were defective, not a routine activity that was done in the regular
course of business. The decision to recall and the scope of the recall necessarily involved
legal questions, including potential liability to customers and claims against ITI, the

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supplier of the fabric. These, not marketing or other business considerations, were Ms.
Inch’s area of expertise. Because her advice and communications were predominately
legal, they are protected by the attorney-client privilege, notwithstanding that the other
members of the decision-making quartet may have factored in business-related
considerations.4 Ganley v. Mazda N. Am. Operations.
Contrary to ITI’s argument, the deposition testimony of Messrs. Hardy and Long,
two other members of the four-person collective, did not serve to waive the attorneyclient privilege as to Ms. Inch. They merely testified, in general terms, that in considering
the recall, they looked at and analyzed all the information they had. As they did not
disclose the content of any specific communications to or from Ms. Inch, there can be no
waiver, express or implied.5
Turning to the 65 emails that Carhartt asserts are privileged, I have conducted an
in camera review, and find that they in fact meet the eight-part test of Reed v. Baxter, and
4

In Flagstar Bank, 2006 WL 6651780, at *5,the Court, addressing the issue of
work product privilege, stated, “In determining whether a document was prepared “in
anticipation of litigation” Courts must ask first whether litigation was a real and
substantial possibility and whether the particular document was generated because of the
threat of litigation, and not for ordinary business purposes.” The same reasoning applies
to attorney-client privilege. The salient inquiry is whether the material is produced “in the
ordinary course of business,” or whether it constitutes legal advice on an issue that is not
“ordinary,” for example, decisions that carry legal consequences, such as the one-off
recall of a defective product.
5

“[I]mplied waivers of the attorney-client privilege are narrowly construed and
generally found where a plaintiff asserts claims or defenses that put his attorney's advice
directly at issue in the litigation.” Tocco v. Richman Greer Prof'l Ass'n, 2012 WL
1166620, at *2 (E.D. Mich. 2012)(citing In re Lott, 424 F.3d 446, 453-55 (6th Cir.2005)).
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are therefore shielded from disclosure. Carhartt has met its burden of establishing
attorney-client privilege.
III.

CONCLUSION

ITI’s Motion to Compel Discovery Regarding Communications Exchanged
Between and Information Considered by Carhartt’s Four-Person “Product Notification”
Team [ECF No. 98] and its Amended Motion to Compel [ECF No. 109] are DENIED.
IT IS SO ORDERED.

Dated: October 28, 2019

s/R. Steven Whalen
R. STEVEN WHALEN
UNITED STATES MAGISTRATE JUDGE

CERTIFICATE OF SERVICE
I hereby certify on October 28, 2019 that I electronically filed the foregoing paper
with the Clerk of the Court sending notification of such filing to all counsel registered
electronically. I hereby certify that a copy of this paper was mailed to the following nonregistered ECF participants October 28, 2019.

s/Carolyn M. Ciesla
Case Manager for the
Honorable R. Steven Whalen

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