United States of America et al v. Bozeman Health Deaconess Hospital et al

Filing 438

ORDERED: BDH' s Renewed Motion to Quash Subpoena and for Protective Order 317 is DENIED. BDH shall forthwith produce to Relators all documents identified in the privilege log and submitted to the Court in camera. The parties may reopen the VMG deposition under the conditions set forth in paragraph 2(b) and 2(c) of the Court's Order of April 30, 2018. FURTHER ORDERED: Relators' Motion for Sanctions 317 is DENIED. Signed by Judge Sam E Haddon on 7/19/2018. (HEG)

FILED
JUL 19 2018
Clerk, U.S. District Court
District Of Montana
Helena

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BUTTE DIVISION

UNITED STATES OF AMERICA EX
REL. FRANK M. REMBERT AND
MICHAEL R. PARADISE,

No. CV 15-80-BU-SEH

Plaintiffs,

ORDER
vs.
BOZEMAN HEAL TH DEACONESS
HOSPITAL D/B/A BOZEMAN
HEALTH, and
DEACONESS-INTERCITY
IMAGING, LLC D/B/A ADVANCED
MEDICAL IMAGING,
Defendant.

Pending are: (1) Bozeman Health Deaconess Hospital's ("BDH") Renewed

Motion to Quash Subpoena and for Protective Order;1 and (2) Relators' Motion for
Sanctions. 2 Both are ripe for resolution.
Background
BDH filed its original motion to Quash Subpoena and for Protective Order
on January 1, 2018, asserting that documents and testimony regarding BDH' s
2014 engagement (the "2014 Engagement") of Value Management Group
("VMG") were protected by attorney client privilege and the work product
doctrine. 3
The Court ordered the deposition of VMG to proceed, upon condition that
counsel not ask questions about work performed by VMG in 2014 4 and that "[i]f
the Court determines that work performed by VMG in 2014 is not privileged, the
VMG deposition may be reopened to allow the parties to question VMG on that
topic only." 5

1

Doc. 317.

2

Doc. 319.

3

See Doc. 1, CV 18-18-BU-SEH. Cause number CV 18-18-BU-SEH was consolidated
with this action by the Court's Order of May 22, 2018. See Doc. 294 at 8-9. Relators had
previously issued subpoenas seeking, inter alia, production of such documents and a deposition
with VMG on the topic of the 2014 Engagement. See Doc. 294 at 3-4.
4

See Doc. 273 .

5

Doc. 273 at 2.
2

On May 22, 2018, the Court ruled that BDH had failed to meet its burden of
establishing that the documents and testimony regarding BDH's 2014 engagement
of VMG were protected by attorney client privilege or work product protection. 6
BDH's motion was denied "without prejudice to renewal," ifBDH filed, "in
camera, the specific communications it [sought] to protect as privileged." 7 The

specific communications were filed as ordered. 8
Discussion
I.

BDH's renewed motion to quash and for protective order.

"The attorney-client privilege protects confidential communications
between attorneys and clients, which are made for the purpose of giving legal
advice." 9 The standard for establishing the privilege, as stated by the Ninth Circuit
1s:

"(1) [] 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

6

See Doc. 294 at 6-7.

7

Doc. 294 at 7.

8

Doc. 312.

9

United States v. Richey, 632 F.3d 559, 566 (9th Cir. 2011) (citing Upjohn Co. v. United
States, 449 U.S. 383,389 (1981)).

3

by the legal adviser, (8) unless the protection be
waived." 10
"The ... privilege may extend to communications with third parties who have
been engaged to assist the attorney in providing legal advice. If the advice sought
is not legal advice, but, for example, accounting advice from an accountant, then
the privilege does not exist." 11 Business matter communications are not
privileged. 12 Attorney work product protection applies to "documents and tangible
things that are prepared in anticipation of litigation or for trial by or for another
party or its representative." 13 The protection is available only if "the 'document
was created because of anticipated litigation, and would not have been created in
substantially similar form but for the prospect of litigation. "' 14
BDH has renewed its blanket assertion that "the 2014 Engagement was
privileged and work product protected." 15 The specific documents for which

10

Richey, 632 F.3d at 566 (quoting United States v. Graf, 610 F. 3d 1148, 1156 (9th Cir.

2010)).
11

Richey, 632 F.3d at 566 (citing Weil v. Inv./Indicators, Research & Mgmt., Inc., 647
F.2d 18, 24 (9th Cir. 1981)).
12

See United States v. Rowe, 96 F.3d 1294, 1297 (9th Cir. 1996).

13

Fed. R. Civ. P. 26(b)(3)(A).

14

Richey, 632 F .3d at 568 (quoting In re Grand Jury Subpoena (Mark TorpTorf Envtl.
Mgmt.), 357 F.3d 900, 908 (9th Cir. 2004)).
15

Doc. 318 at 3-4.
4

protection was sought were submitted to the Court in camera.16 A privilege log
identifying protected documents, documents produced for which protection was
not sought, and certain documents already ruled to be unprotected, was provided. 17
Specific grounds for each item BDH sought to protect, beyond a basic
assertion of "attorney client," "work product," or "common interest" were not
stated. 18 Rather, BDH relies upon: (1) the contents ofVMG's January 31, 2014
letter ("Engagement Letter") to T.J. Sullivan ("Sullivan"), BDH's counsel from the
law firm Drinker Biddle and Reath ("DBR"), 19 and (2) affidavits of Sullivan and
Elizabeth Lewis ("Lewis"), BDH's chief operating officer, attesting to BDH's
expectation of the 2014 Engagement's protected status (the "Affidavits"). 20 A
separately stated reason for protection against production was that Relators' state
court suit against BDH was ongoing at the time of the 2014 Engagement. 21
BDH has failed to establish that blanket protection, as requested, is
warranted. The Engagement Letter and the two Affidavits relied upon were

16

See Doc. 312.

17

See Doc. 312-1.

18

See Docs. 312 and 312-1.

19

See Doc. 318 at 2.

20

See Doc. 318 at 2-3.

21

See Doc. 318 at 3.

5

already before the Court when it determined earlier that BDH failed to meet its
burden. The existence of ongoing state court litigation does not change that
assessment.
Neither the Engagement Letter nor the Affidavits specifically connect the
2014 Engagement to legal.representation by Sullivan in the state court
proceedings. However, both the Affidavits and Engagement Letter make clear the
advice BDH sought from Sullivan pertaining to the 2014 Engagement was advice
on a "potential transaction," not the state court litigation. 22
Employees ofVMG, during the 2014 Engagement, have not been shown to
be agents "engaged to assist" Sullivan or DBR in the provision of legal advice to
BDH. 23 The 2014 Engagement materials are not entitled to blanket attorney-client
protection.
BDH has likewise failed to establish that work product protection applies to
any part of the 2014 Engagement materials. Although it did not previously assert a
specific reason for work product protection, it now raises the state court litigation
in 2014 as a possible basis.
22

Doc. 1-1 at 12-13, CV 18-18-BU-SEH; See also Doc. 1-1 at 3-11 , CV 18-18-BU-SEH.

23

See Richey, 632 F.3d at 566 (citing Weil, 647 F.2d at 24); See e.g. , Scott v. Chipotle
Mexican Grill, Inc., 94 F. Supp 3d. 585, 592 (S.D.N.Y. 2015) (communications from accountant
were not privileged because they consisted of factual research to assist client in making business
decisions, rather than to assist attorney in rendering legal advice.)

6

No connection between the state court litigation and the 2014 Engagement
has been demonstrated. It has not been shown that the documents related to the
2014 Engagement "would not have been created in substantially similar form but
for the prospect of litigation." 24
As ordered, BDH filed the specific communications it sought to protect as
privileged. 25 The documents, identified on the privilege log as "Work Product" or
"Work Product/Common Interest," 26 and identified by the bates number listed in
footnote 27 below, are not entitled to protection. 27
In addition, certain other documents identified as "Attorney Client" are not
entitled to protection. The employees of VMG were not employed by Sullivan or
DBR to assist in rendering legal advice. Documents that did not involve Sullivan
or DBR are not protected by attorney-client privilege. Moreover, the attorney-

24

Richey, 632 F.3d at 568 (quoting In re Grand Jury Subpoena (Mark Torf/Torf Envtl.
Mgmt.), 357 F.3d at 908).
25

See Doc. 294 at 7.

26

See Doc. 312-1.

27

VMG-PRIV000000l , VMG-PRIV0000008-32, VMG-PRIV0000034-l 10, VMGPRIV0000153-63, VMG-PRIV0000165-90, VMG-PRIV0000259-64, VMG-PRIV0000270,
VMG-PRIV0000279-95 , VMG-PRIV0000304-8, VMG-PRIV0000311-14, VMG-PRIV0000319,
VMG-PRIV0000324-39, VMG-PRIV0000429-84, VMG-PRIV0000488-963 , VMGPRIV0000965-84, VMG-PRIV0000990, VMG-PRIV0000999-1003 , VMG-PRIV0001006-15 ,
VMG-PRIV0001056-61 , VMG-PRIV0001350-1412, VMG-PRIV0001414-16, VMGPRIV0001677, VMG-PRIV0001695.
7

client privilege protects only communications related to the provision of legal
advice. Documents that are not communications are not protected. 28 Any document
attached to an email that did not involve BDH' s counsel cannot be considered a
communication protected by attorney-client privilege. Documents not attached to
an email are not entitled to attorney-client privilege. Accordingly, the documents,
identified in the privilege log29 and submitted in camera and identified by the
bates number listed in footnote 30 below, are not entitled to attorney client
privilege. 30
Defendants also submitted:
(1) an email from VMG's Nick Taglioli ("Taglioli") to Sullivan and VMG' s
Aaron Murski ("Murski"). 31
(2) an email from Murski to Sullivan. 32
28

See Richey, 632 F.3d at 567 (citing Graf, 610 F.3d at 1156).

29

See Doc. 312-1.

30

VMG-PRIV0000002-7, VMG-PRIV0000033, VMG-PRIV0000152, VMGPRIV0000164, VMG-PRIV0000258, VMG-PRIV0000265 , VMG-PRIV0000296-97, VMGPRIV0000303 , VMG-PRIV0000485 , VMG-PRIV0000486-87, VMG-PRIV0000985 , VMGPRIV0001063-64, VMG-PRIV0001067, VMG-PRIV0001069, VMG-PRIV0001261-64, VMGPRIV0001265-68, VMG-PRIV0001269-71 , VMG-PRIV0001272-75 , VMG-PRIV0001276-92,
VMG-PRIV0001349, VMG-PRIV0001413 , VMG-PRIV0001417, VMG-PRIV0001656-57,
VMG-PRIV0001662-63 , VMG-PRIV0001666-67, VMG-PRIV0001671-74, and VMGPRIV0001675-76.
31

VMG-PRIV0000964.

32

VMG-PRIV0001016.
8

(3) an unsigned copy of the Engagement Letter. 33
(4) emails involving Murski and Sullivan, together with an attached
executed version of the Engagement Letter. 34
(5) emails among Taglioli, Sullivan, and Murski. 35
(6) emails between Murski and Sullivan, two of which are contained in
VMG-PRIV000l 055. 36
(7) emails between BDH's Lewis, Sullivan, Murski, and AMI's Courtney
Funk ("Funk"). 37
(8) emails between BDH's Lewis, Sullivan, Murski, and AMI's Funk, 38
which are identical to those found in VMG-PRIV0001068.
The claimed privilege of each is addressed separately below.
( 1) is not a communication between a "client" and lawyer, nor is it, under

Richey, a communication between a lawyer and a third party engaged to assist in
the provision of legal advice. It is not privileged.

33

VMG-PRIV0001017-22.

34

VMG-PRIV0001055 and VMG-PRIV0001056-61.

35

VMG-PRIV0001062.

36

VMG-PRIV0001065-66.

37

VMG-PRIV0001068 and VMG-PRIV0001069.

38

VMG-PRIV0001070.
9

(2) is not a communication between a "client" and lawyer, nor is it a
communication between a lawyer and a third party engaged to assist in the
provision of legal advice. It is not privileged.
(3) was publically disclosed by BDH, waiving any privilege that may have
attached. 39 It is not privileged.
(4) the emails are not a "communication[ s] ... by the client. " 40 Murski is a
third party not shown to be engaged to assist in the provision of legal advice. The
documents are not privileged.
(5) the emails are not communications between a "client" and lawyer, nor
are they, under Richey, communications between a lawyer and a third party
engaged to assist in the provision of legal advice. They are not privileged.
(6) the emails are not privileged.
(7) although the emails include both BDH, the "client," and Sullivan, they
do not pertain to the provision of Sullivan's legal advice. Like in Richey, the
communication relates to VMG's ability to "determin[e] the value" of AMI. 41

39

See Doc. 1-1 at 6-11, CV 18-18-BU-SEH; See Richey, 632 F.3d at 566 (citing Weil, 647
F.2d at 24).
40

Richey, 632 F.3d at 566 (quoting Graf, 610 F. 3d at 1156).

41

Richey, 632 F.3d at 567.
10

Sullivan's receipt of them does not render them privileged. 42 The emails are not
privileged.
(8) is not privileged.

II.

Relators' Motion for Sanctions. 43

Relators move for sanctions against Defendant, based upon, inter alia: (1)
BDH's failure to review documents before asserting privilege; (2) BDH's
withholding of legitimate discovery over a long period of time; and (3) BDH' s
shifting positions with regard to the 2014 Engagement documents. 44
Sanctions are not warranted. BDH complied with the Court's orders and
was substantially justified in objecting to disclosure of the 2014 Engagement
materials.
BDH timely filed the documents it sought to protect on June 8, 2018,
together with a privilege log, a renewed motion, and a brief. 45 It complied with the

42

See Richey, 632 F.3d at 567; See also, JAMES WM. MOORE ET AL., 6 MOORE'S
FEDERAL PRACTICE§ 26.49[1], at 361-62 (3d ed. 2017) ("merely copying emails to counsel does
not provide a basis for attaching attorney client privilege to emails that do not seek legal advice
and are otherwise unprivileged") (citing Zelaya v. Unicco Service Co., 682 F. Supp. 2d 28, 39
(D.D.C. 2010)).
43

Doc. 319.

44

Doc. 320 at 29-30

45

See Docs. 312,317, and 318.
11

core directive of the Court's Order of May 22, 2018. 46
BDH was substantially justified in opposing disclosure of the 2014
Engagement materials, pending a ruling from the Court on whether the materials
were entitled to protection from disclosure. 47 Sanctions against BDH are not
warranted.
ORDERED:
1.

BDH' s Renewed Motion to Quash Subpoena and for Protective Order

is DENIED. 48
2.

BDH shall forthwith produce to Relators all documents identified in

the privilege log49 and submitted to the Court in camera. 50
3.

The parties may reopen the VMG deposition under the conditions set

forth in paragraph 2(b) and 2(c) of the Court's Order of April 30, 2018. 51

46

See Docs. 294 at 7 and 312.

47

See Richey, 632 F.3d at 566 ("The attorney-client privilege may extend to
communications with third parties who have been engaged to assist the attorney in providing
legal advice.") (citing Smith v. McCormick, 914 F.2d 1153, 1159-60 (9th Cir. 1990)).
48

Doc. 317.

49

Doc. 312-1.

50

Doc. 312.

51

Doc. 273 at 2.
12

FURTHER ORDERED:
Relators' Motion for Sanctions52 is DENIED.
DATED this

fi_

t

of July, 2018.

~~ct~\

~~no1'1

United States District Judge

52

Doc. 319.
13