Fidelity and Deposit Company of Maryland v. Big Town Mechanical, LLC et al

Filing 295

ORDER. IT IS HEREBY ORDERED THAT: 230 Travelers' objection seeking reconsideration of the privilege-log order is OVERRULED and reconsideration is denied. The 249 motion to strike is GRANTED in part; 264 Fidelity's motion to supple ment is DENIED as moot; 294 Fidelity's motion for reconsideration of the 10/18/17 minute order is GRANTED. The Clerk of Court is directed to VACATE 293 the minute order and reinstate the filings struck by it ECF Nos. 287 - 291 . See Order for details/deadlines. Signed by Judge Jennifer A. Dorsey on 10/26/17. (Copies have been distributed pursuant to the NEF - MR)

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1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 4 Fidelity & Deposit Company of Maryland, a Maryland corporation, 5 Plaintiff 6 v. 7 Big Town Mechanical, LLC, a Nevada limited liability company; et al., 8 9 2:13-cv-00380-JAD-GWF Order re: Privilege Logs [ECF Nos. 230, 249, 264, 294] Defendants 10 11 This case arises out of campus-modernization construction at five elementary 12 schools in Clark County School District (CCSD) that defendant Big Town 13 Mechanical contracted to perform and for which plaintiff Fidelity and Deposit 14 Company of Maryland and defendant Travelers Casualty and Surety Company 15 agreed to act as sureties. The long history of this case has seen multiple discovery 16 extensions, changes of counsel, and rising tensions. Some of Travelers’ responses to 17 Fidelity’s 2013–2016 discovery requests were met with the objection that the 18 materials sought were protected by the attorney-client or work-product privileges, 19 but Travelers failed to provide a privilege log until April 2017. 20 Fidelity moved to compel the production of the documents that Travelers has 21 withheld for privilege, arguing that Travelers waived the privilege by failing to 22 provide the privilege log that FRCP 26(b)(5) requires.1 Magistrate Judge Foley 23 granted the motion.2 Travelers objects, newly arguing that there was a gentlemen’s 24 agreement between counsel that documents and logs would be produced on an 25 informal schedule, and it would be unfair to strip Travelers of its most important 26 27 1 ECF No. 168. 28 2 ECF No. 227. 1 privilege.3 Fidelity denies there was any such agreement and argues that, even if 2 there were, Travelers’ johnny-come-lately argument does not render the magistrate 3 judge’s ruling clearly erroneous.4 I agree, so I overrule the objection5 and give 4 Travelers 15 days to produce the withheld documents. 5 6 Discussion A. 7 Preliminary issues Before I reach the merits of Travelers’ objection, I must resolve two briefing- 8 related motions. Although Local Rule IB 3-1(a), which governs the briefing 9 schedule for challenges to magistrate judges’ discovery orders, states that “[r]eplies 10 will be allowed only with leave of the court,” Travelers filed one without leave.6 11 Fidelity moves to strike this rogue brief.7 Travelers responds that it felt that 12 Magistrate Judge Foley’s statement in his order’s conclusion that “Travelers shall 13 produce documents . . . within thirty (30) days of the filing of this order unless an 14 objection to the order is filed”8 was an “invitation” to object that implied that the 15 briefing process would be governed by Local Rule 7-2, which applies generally to all 16 motions and permits a reply brief. 17 Travelers’ argument is ridiculous. Magistrate Judge Foley’s closing sentence 18 3 ECF No. 230. 20 4 ECF No. 242. 21 5 19 22 23 24 25 Likely because it relies (erroneously) on LR IB 3-2 instead of applicable LR IB 3-1, see infra at p. 5, Travelers captions its challenge to Magistrate Judge Foley’s order as an “objection” instead of a motion for reconsideration. Although I refer to this challenge as Travelers’ “objection” to avoid confusion, I review and treat it as the motion for reconsideration under LR IB 3-1(a) and 28 U.S.C. § 636(b)(1)(A) that it is. 6 ECF No. 247. 7 ECF No. 249. 8 ECF No. 227 at 8. 26 27 28 2 1 was just a recognition that the challenged documents would not have to be disclosed 2 while proper objections were pending. It was not a secret signal to Travelers that a 3 totally different set of rules would apply.9 This discovery order is plainly governed 4 by LR IB 3-1(a) and its reply prohibition. Because Travelers has not demonstrated 5 any basis to permit its reply, I find that it was filed in violation of LR IB 3-1(a). I 6 thus grant Fidelity’s motion in part—I disregard Travelers’ reply brief. 7 Fidelity followed up its motion to strike with a separate motion to permit it to 8 “introduce supplemental evidence in response to” Travelers’ rogue reply brief.10 The 9 request is conditioned on me accepting Travelers’ reply brief. Because I am 10 disregarding that brief, I deny Fidelity’s motion to supplement as moot. With these 11 preliminary matters out of the way, I now turn to Travelers’ objection to Magistrate 12 Judge Foley’s order compelling Travelers to produce its privilege-withheld 13 documents. 14 B. 15 Travelers’ objection to the magistrate judge’s discovery order A magistrate judge’s discovery order may be modified or set aside if it is 16 “clearly erroneous or contrary to law.” Factual determinations are reviewed for 17 clear error, and legal conclusions are reviewed to determine whether they are 18 contrary to law. The clear-error standard allows the court to overturn a magistrate 19 judge’s factual determinations only if the court reaches a “definite and firm 20 conviction that a mistake has been committed.”11 All parties agree that this privilege-log issue is governed by Burlington 21 22 23 24 25 26 27 28 9 Indeed, in its objection, Travelers argues the “clearly erroneous or contrary to law” standard, which is the standard of review under LR IB 3-1(a) and FRCP 72(a) (nondispositive matters). See ECF No. 230 at 5. 10 ECF No. 264. 11 Burdick v. C.I.R., 979 F.2d 1369, 1370 (9th Cir. 1992). 3 1 Northern & Santa Fe Railway Co. v. United States District Court,12 which Judge 2 Foley faithfully applied.13 Travelers just disagrees with the conclusions that the 3 magistrate judge reached when he applied the Burlington factors to the facts of this 4 case, particularly in light of its fresh theory that the reason why the logs weren’t 5 produced was that counsel had verbally agreed to “open-ended timing to produce 6 the required privilege logs of documents not produced when [the] review of them 7 was entirely completed.”14 I am not persuaded that I should consider this belatedly disclosed discovery 8 9 pact. To explain away its failure to alert the Magistrate Judge of this key verbal 10 agreement, Travelers argues that it didn’t “have an opportunity to reach out to” 11 prior counsel “or learn about the verbal agreement regarding discovery prior to 12 filing its Opposition Brief” because it was only alerted to the fact that Fidelity was 13 relying on 2015 communications by Fidelity’s reply brief.15 “Further, Local Rule IB 14 3-2(b) allows for consideration of additional evidence in these objections.”16 15 But the hearing on this motion happened nearly three weeks after the reply 16 brief was filed, and Magistrate Judge Foley took the motion under submission for 17 another nine days before issuing his ruling.17 If the reply brief, in fact, triggered 18 the light-bulb moment that sent Travelers’ current counsel seeking out the details 19 20 21 22 12 Burlington No. & Santa Fe Railway Co. v. U.S. Dist. Ct., 408 F.3d 1142 (9th Cir. 2005). 13 See ECF No. 227. 14 ECF No. 230-2 at 3, ¶ 6. 25 15 ECF No. 230 at 3, n.1. 26 16 Id. 23 24 27 28 See reply filed on 5/5/17 [ECF No. 208], minutes of 5/22/17 hearing [ECF No. 224], and 5/31/17 order [ECF No. 227]. 17 4 1 of this secret agreement from previous counsel Sean T. Osborn, Esq.,18 it had ample 2 time to ferret out those details before the magistrate judge ruled. 3 And Travelers’ reliance on LR IB 3-2 is misplaced. That rule governs district- 4 court review of a magistrate judge’s findings and recommendations on a matter 5 “that may not be finally determined by a United States Magistrate Judge.”19 6 Discovery orders do not fall into this category. They are pretrial matters, and 7 magistrate judges have the authority to enter them under 28 U.S.C. § 636(b)(1)(A).20 8 The rules for review of magistrate-judge orders issued under 28 U.S.C. § 9 636(b)(1)(A) are found in LR IB 3-1, not LR IB 3-2. And LR IB 3-1 does not 10 authorize the district judge to “receive further evidence” in reviewing discovery 11 orders like this one. Travelers’ newly revealed, undocumented, verbal agreement 12 between counsel to relax the discovery rules is thus not a proper subject of this 13 challenge. 14 Even if I were to accept Travelers’ belated and controverted assertion that 15 there was such an agreement, I still cannot conclude that the magistrate judge’s 16 ruling was clearly erroneous or contrary to law. Magistrate Judge Foley considered 17 18 19 20 21 22 23 24 25 26 27 28 18 This presumes the veracity of Travelers’ claim that “It was not until [Fidelity’s] Reply Brief . . . that” it realized that Mr. Osborn’s history with the case may be relevant because Fidelity’s motion “was focused on discovery-related communications in 2017 after Mr. Osborn had already left the firm.” ECF No. 230 at 3, n.1. But Travelers’ explanation is suspect. In its opposition to the motion to compel, Travelers stressed that Osborn’s departure from the case “contributed to its tardiness in serving privilege logs.” ECF No. 203 at 3–4. So Travelers was plainly aware from the motion itself that Osborn’s conduct was central to this dispute. Confirming Osborne’s understanding of the discovery history should have been the first step in Travelers’ response plan. 19 LR IB 3-2. See also 28 U.S.C. § 636(b)(1)(B). See, e.g., Grimes v. City & Cty. of San Francisco, 951 F.2d 236, 240 (9th Cir. 1991); Rockwell Int’l Inc. v. Pos-A-Traction Indus., Inc., 712 F.2d 1324, 1325 (9th 20 Cir. 1983). 5 1 each of the Burlington factors and methodically applied them to the facts 2 established by the record in this case. His discussion paints a clear picture: Over 3 the course of several years, Travelers responded to Fidelity’s document requests 4 with boilerplate objections that offered nothing to help Fidelity assess the validity of 5 Travelers’ privilege claims; it ignored a January 2015 letter complaining about the 6 lack of a privilege log, and it waited until April 2017—more than four years into the 7 case and more than three years after making its first privilege objection to Fidelity’s 8 document requests—to produce any form of privilege log, even though FRCP 9 26(b)(5) required one. Based on this clear picture, Magistrate Judge Foley 10 concluded that the Burlington factors weigh in favor of deeming Travelers’ privilege 11 waived, and he ordered Travelers to produce the withheld documents.21 12 I find that this ruling is not clearly erroneous or contrary to law because it is 13 consistent with Burlington and supported by the facts of this case. The Burlington 14 court stressed that the waiver analysis is “intended to forestall needless waste of 15 time and resources, as well as tactical manipulation of the rules and the discovery 16 process.”22 To adopt Travelers’ position that “the relevant principles of law support 17 a lesser sanction than the wholesale waiver” of the attorney-client privilege23 would 18 give short shrift to this stated intention behind Burlington’s test. Travelers’ actions 19 have needlessly delayed the discovery process in this already-too-lengthy litigation. 20 Allowing Travelers—“a sophisticated corporate litigant and repeat player”24 in 21 coverage lawsuits—to shield its documents from production on nothing but 22 boilerplate objections followed years later by a privilege log that will likely require 23 24 25 21 ECF No. 227. 22 Burlington, 408 F.3d at 1149. 23 ECF No. 230 at 6. 24 Burlington, 408 F.3d at 1149. 26 27 28 6 1 further litigation would not be “holsitic[ally] reasonable[].”25 So I overrule 2 Travelers’ objection, deny its request for reconsideration, and adopt and affirm 3 Magistrate Judge Foley’s order. Travelers has 15 days to produce its previously 4 withheld documents. 5 6 C. 7 Motion for Reconsideration of Order Striking Motion For Summary Judgment There is one final matter that I now address: Fidelity’s motion to reconsider 8 my October 18, 2017, minute order striking its fifth motion for partial summary 9 judgment.26 In striking that motion, I relied on the dispositive-motion deadline in 10 the scheduling order,27 overlooking the magistrate judge’s October 3, 2017, stay of 11 that deadline.28 I thank Fidelity for pointing out this oversight, and I grant its 12 motion to vacate my October 18, 2017, minute order because it was entered in error. 13 In doing so, however, I caution Fidelity and its counsel that the first and only 14 way to alert the court to an error in its analysis is by motion, not by emailing court 15 16 17 18 19 20 21 22 23 24 25 Id. I might be more sympathetic to Travelers’ argument if it did not employ the same day-late-dollar-short approach to the briefing of this issue as it did to the protection of its attorney-client privilege. Travelers waited until the magistrate judge issued his ruling to trot out its undocumented-agreement argument, see discussion supra at pp. 4–5, just like it waited until the motion to compel to produce its privilege log. Travelers’ cries of prejudice are also muffled by the reality that it could have prevented this result. If, indeed, counsel for these sophisticated corporate litigants had an agreement not to hold each other to the rules of discovery, Travelers’ counsel could have easily reduced that deal to a stipulation or applied for a protective order or even just sent a confirming letter. See id. at 1149, n.3 (suggesting methods to foster the goals of the privilege-log rule in “discoveryintensive litigation”). 25 26 ECF No. 293. 27 ECF No. 192. 28 ECF No. 285. 26 27 28 7 1 staff and asking “whether [I] will vacate” an order.29 Local Rule IA 7-1(b) expressly 2 prohibits emailed or letter requests for relief: “All communications with the court 3 must be styled as a motion, stipulation, or notice, and must be filed in the court’s 4 docket and served on all other attorneys and pro se parties.” In the future, should a 5 party or its counsel believe that relief is necessary, that request must be made by 6 motion, not by email or some other informal communication. 7 Conclusion 8 Accordingly, IT IS HEREBY ORDERED THAT: 9 • Travelers’ objection seeking reconsideration of the privilege-log order 10 [ECF No. 230] is OVERRULED and reconsideration is denied. The 11 Magistrate Judge’s ORDER regarding the privilege logs [ECF No. 227] 12 is AFFIRMED and ADOPTED, and Travelers has 15 days to produce 13 the documents that were previously withheld on grounds of privilege; 14 • The motion to strike [ECF No. 249] is GRANTED in part; I disregard 15 Travelers’ reply [ECF No. 247] because it was filed without leave of 16 court; 17 • Fidelity’s motion to supplement [ECF No. 264] is DENIED as moot; 18 • Fidelity’s motion for reconsideration of my 10/18/17 minute order [ECF 19 No. 294] is GRANTED. The Clerk of Court is directed to VACATE my 20 minute order at ECF No. 293 and reinstate the filings struck by it 21 [ECF Nos. 287–291]. The parties have 14 days to file proposed 22 scheduling orders regarding the dispositive-motion deadline and joint- 23 pretrial-order deadline.30 In light of the extensive dispositive-motion 24 practice that has already occurred in this case, and to streamline the 25 court’s ability to address the remaining dispositive 26 27 28 29 ECF No. 294-1 at 2. 30 See ECF No. 285 at 2. 8 1 issues in this four-year-old case and get this case to trial, each party 2 will be limited to just one more motion for summary judgment, and 3 the page limits of LR 7-3 apply. 4 DATED: October 26, 2017. 5 ___________________________________ U.S. District Judge Jennifer A. Dorsey 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9

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