Promotional Marketing Insights, Inc. v. Affiliated Computer Services, Inc.

Filing 45

ORDER - Based on the foregoing, and on all of the files, records, and proceedings herein, IT IS HEREBY ORDERED THAT defendant's objection 38 is OVERRULED and the June 4, 2012 order 34 is AFFIRMED. (Written Opinion). Signed by Judge Patrick J. Schiltz on 08/13/12. (bjs)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
PROMOTIONAL MARKETING INSIGHTS,
INC.,

Case No. 11-CV-2795 (PJS/AJB)

Plaintiff,
ORDER
v.
AFFILIATED COMPUTER SERVICES,
INC.,
Defendant.
Kelly G. Laudon, J.H. Strothman, Jonathan M. Bye, and Carol R. Washington,
LINDQUIST & VENNUM PLLP, for plaintiff.
Christopher A. Young and Alan H. Maclin, BRIGGS AND MORGAN, P.A., for
defendant.
Plaintiff Promotional Marketing Insights, Inc. (“PMI”) alleges that defendant Affiliated
Computer Services, Inc. (“ACS”) breached the parties’ contract by failing to pay compensation to
which PMI is entitled. This matter is before the Court on ACS’s objection to the June 4, 2012
discovery order of Chief Magistrate Judge Arthur J. Boylan. A magistrate judge’s ruling on
nondispositive pretrial matters may be reversed only if it is “clearly erroneous or contrary to
law.” 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). Having reviewed Judge Boylan’s order
and the parties’ submissions, the Court finds that the order is neither clearly erroneous nor
contrary to law. The order is therefore affirmed.
ACS objects to two aspects of the June 4 order. First, ACS objects to the requirement
that it produce its audit work papers. ACS argues that these documents are protected from
disclosure by various state confidentiality statutes. But, as Judge Boylan recognized, the relevant
question is not whether the documents are confidential; the relevant question is whether the

documents are privileged. Cf. In re Grand Jury Subpoena Dated Dec. 17, 1996, 148 F.3d 487,
492 (5th Cir. 1998) (“‘Confidential’ does not necessarily mean ‘privileged.’”); Nguyen Da Yen v.
Kissinger, 528 F.2d 1194, 1205 (9th Cir. 1975) (“The records are confidential but not
privileged.”). This Court commonly requires parties to produce confidential documents; the
confidentiality of those documents is protected not by denying access to them, but by entering a
protective order to cover them.
Because this is a diversity case, state law is the source of any applicable privilege. Fed.
R. Evid. 501. ACS has identified numerous state statutes providing that audit work papers are
confidential, but ACS has not contended that any of these statutes creates an evidentiary
privilege. Indeed, a number of the statutes expressly recognize that the documents may be
produced in response to a court order. See Ariz. Rev. Stat. § 44-322(D)(3); Idaho Code § 633076(1); Me. Rev. Stat. tit. 33, § 1971(4)(C); W. Va. Code § 36-8-20(d)(3); N.D. Cent. Code
§ 47-30.1.-30.1(1)(c); Tenn. Code Ann. § 66-29-154(a)(3). Likewise, although ACS offers
letters from state officials opining that the documents are confidential, these letters do not assert
that the documents are privileged. ACS’s argument that these materials are “immune” from
disclosure thus has no basis in law.
ACS also argues that Judge Boylan erred by not weighing PMI’s need for the materials
against the harm that could come from disclosure. The Court rejects this contention. Judge
Boylan crafted a careful and comprehensive protective order to ensure that there will be no harm
from disclosure of the audit work papers. At the same time, the audit work papers are clearly
relevant to whether PMI “in fact” assisted ACS — which, under ACS’s theory of the case, PMI
must prove before it can recover the compensation that it seeks. Even if the “balancing” sought
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by ACS is necessary, then, Judge Boylan’s order properly reflects the fact that the (considerable)
probative value of the audit work papers far outweighs the (negligible) harm of disclosure under
Judge Boylan’s protective order. The Court therefore affirms this aspect of Judge Boylan’s
order.
ACS next objects to Judge Boylan’s denial of its motion to compel the production of
PMI’s contracts with third parties. ACS seeks these contracts in order to prove that it was
fraudulently induced to enter into the contract with PMI and that PMI breached the parties’
contract.1 Judge Boylan found that ACS’s document requests are not reasonably calculated to
lead to the discovery of admissible evidence. The Court agrees, and adds the following:
ACS’s theory is premised on its position that PMI contractually represented that, in the
course of performing services for ACS, PMI would not violate any other agreement to which
PMI is a party. That is not, however, what the parties’ contract says. The contract contains a
covenant from PMI to ACS as follows: “[PMI] acknowledges this Agreement does not violate
any other agreement in which it is a party.” Compl. Ex. 2 § 6(b). This is not, as ACS would
have it, a promise that PMI will not in the future violate any of its contracts with third parties; it
is a promise that “this Agreement” — that is, the ACS-PMI contract — did not, on the day it was
signed, violate any of PMI’s contracts with third parties. ACS does not contend that, merely by
entering into the ACS-PMI contract, PMI violated a contract with a third party. Even if, as ACS
believes, PMI later breached a third-party contract in the course of performing services for ACS,

1

There are actually several contracts between ACS and PMI; the Court is referring to what
the parties generally call the “2007 Agreement.”
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those breaches would not violate PMI’s covenant in the ACS-PMI contract. Those third-party
contracts are therefore not relevant to ACS’s claims and defenses.
In its objection, ACS points out that the parties’ contract also says that, “[w]hen
reasonably possible, PMI will identify situations where information being sought by ACS would
be a breach of a pre-existing agreement between PMI and another party.”2 ECF No. 1-2 at 12.
Like the covenant discussed above, however, this is not a representation that PMI will not breach
its contracts with third parties. It is merely a representation that, when ACS seeks information
that PMI cannot provide without breaching a third-party contract, PMI will let ACS know —
“[w]hen reasonably possible.”
Moreover, describing this statement as a “representation” is generous. It does not appear
in the section entitled “Special Covenants and Representations of [PMI].” See Compl. Ex. 2 § 6.
Indeed, it does not appear in the contract at all; rather, it is in an exhibit, attached to the contract,
which appears to be a written presentation from PMI to ACS. The contract does not incorporate
the exhibit; instead, the contract refers to the exhibit for a definition of the services that PMI was
to provide and states that, in case of any conflict between the contract and the exhibit, the
contract controls. Compl. Ex. 2 §§ 1, 8.
Even if this language was a part of the parties’ contract, there is no indication that ACS
relied on it in entering the contract, as would be necessary to prove a defense of fraudulent
inducement. The declaration of the former ACS representative to which ACS points does not
cite this language; it says only that the representative relied on the covenant (discussed above)

2

Although ACS mentioned this language at the May 24 hearing, it did not cite or rely on it
in its brief to Judge Boylan.
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that “this Agreement does not violate any other agreement in which [PMI] is a party.” See ECF
No. 19.
Finally, as Judge Boylan noted, ACS does not identify any damages that it may have
suffered as a result of a breach of PMI’s promise (if it was a promise) that PMI would, “[w]hen
reasonably possible . . . identify situations where information being sought by ACS would be a
breach of a pre-existing agreement between PMI and another party.” In short, it appears to the
Court, as it did to Judge Boylan, that ACS is simply on a fishing expedition.
For these reasons, the Court affirms Judge Boylan’s order in all respects.
ORDER
Based on the foregoing, and on all of the files, records, and proceedings herein, IT IS
HEREBY ORDERED THAT defendant’s objection [ECF No. 38] is OVERRULED and the
June 4, 2012 order [ECF No. 34] is AFFIRMED.
Dated: August 13, 2012

s/Patrick J. Schiltz
Patrick J. Schiltz
United States District Judge

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