Ravenell v. Avis Budget Group, Inc. et al

Filing 365

ORDER granting in part and denying in part 342 Motion for Discovery. For the reasons stated on the record in the March 2, 2012 teleconference and in this Memorandum and Order, defendants' motion is granted in part and denied in part. In add ition, as described in the attached Memorandum and Order, defendants are ordered to produce, with appropriate redactions or exclusions of attorney thought processes, any documents previously withheld as privileged that were received from, sent to, or shared with OCI and to update their privilege log accordingly. Defendants shall complete these disclosures by APRIL 20, 2012. Ordered by Chief Magistrate Judge Steven M. Gold on 4/5/2012. (Keefe, Reed) (Main Document 365 replaced on 4/5/2012) (Keefe, Reed).

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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MATT RAVENELL, et al., individually
and on behalf of all other persons similarly
situated,
Plaintiffs,

Memorandum & Order
08-CV-2113 (SLT)

-againstAVIS BUDGET GROUP, INC. et al.,
Defendants.
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Gold, S., United States Magistrate Judge:
Plaintiffs bring this action under the Fair Labor Standards Act (“FLSA”). Defendants
contend that some or all of the plaintiffs are exempt from the Act‟s coverage. During the course
of discovery, defendants provided plaintiffs with an extensive privilege log asserting that various
documents were protected from disclosure by the attorney-client privilege, the protection
afforded to work product, and the self-critical analysis privilege. See “Ninth Revised Privilege
Log,” Docket Entry 342-1. After plaintiffs challenged defendants‟ privilege log by moving to
compel, Docket Entry 311, then-presiding Magistrate Judge Carter ordered submission of the
documents claimed to be privileged for in camera review and additional briefing, Docket Entry
340. Defendants subsequently filed papers responsive to Judge Carter‟s Order.1
After the case was reassigned to me, I examined the documents submitted for in camera
review and held a teleconference with the parties. At that time, I concluded that the attorneyclient privilege had been properly invoked with respect to most of the documents I had
reviewed.2 I questioned, however, whether the privilege had been waived with regard to

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Defendants‟ submission in this regard is referred to as “Defs. Mot.,” Docket Entry 342.
All questions of privilege with regard to the documents listed in defendants‟ Ninth Revised Privilege Log, with the
exception of those discussed in this Order, were resolved during that conference.
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communications had or shared with Organizational Concepts International (“OCI,” later known
as “PayCraft”), a company that conducted audits on defendants‟ behalf. I invited further briefing
to address whether the involvement of OCI was consistent with maintenance of the attorneyclient privilege pursuant to United States v. Kovel, 296 F.2d 918 (2d Cir. 1961), or whether
disclosure to OCI constituted a waiver of that privilege. See Mar. 6, 2012 Minute Entry, Docket
Entry 360.
Following that teleconference, defendants submitted additional briefing and an updated
privilege log regarding communications involving or shared with OCI. See “Defs. Mem.,”
Docket Entry 361, and “OCI Privilege Log,” Docket Entry 361-1. Plaintiffs have filed their
opposition. See Docket Entry 362. After reviewing this briefing and the underlying documents,
I am not persuaded that the attorney-client privilege, or the work product protection or selfcritical analysis privilege, applies to the documents related to OCI. I therefore order that the
defendants disclose documents and revise their privilege log to the extent indicated below.
It is well-established that the attorney-client privilege “protects confidential
communications between client and counsel for the purpose of obtaining or providing legal
assistance.” In re Country of Erie, 473 F.3d 413, 418 (2d Cir. 2007) (citing United States v.
Constr. Prod. Research, 73 F.3d 464, 473 (2d Cir. 1996)). “The privilege is intended to
encourage clients to be forthcoming and candid with their attorneys so that the attorney is
sufficiently well-informed to provide sound legal advice.” United States v. Adlman, 68 F.3d
1495, 1499 (2d Cir. 1995) (citing Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); United
States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991)). Nevertheless, the privilege is narrowly
construed, and the party seeking to invoke it bears the burden of establishing that it applies. See
In County of Erie, 473 F.3d at 418.

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Generally, disclosure of communications to persons outside of the attorney-client
relationship waives the privilege. See United States v. Mejia, 655 F.3d 126, 134 (2d Cir. 2011)
(noting that “it is vital to a claim of privilege that the communications between client and
attorney were made in confidence and have been maintained in confidence” (quoting In re
Horowitz, 482 F.2d 72, 81-82 (2d Cir. 1973))). Courts have carved out an exception to the
waiver rule, however, that applies where disclosures to a third party are necessary to facilitate
communication between attorney and client. As with the attorney-client privilege generally,
“[w]hat is vital to the privilege is that the communication must be made in confidence for the
purpose of obtaining legal advice from the lawyer.” United States v. Schwimmer, 892 F.2d 237,
243 (2d Cir. 1989) (quoting Kovel, 296 F.2d at 922) (emphasis in original). Kovel, in first
establishing this extension of the privilege, drew an analogy between the attorney‟s agent, in that
case an accountant, and an interpreter:
This analogy of the client speaking a foreign language is by no means irrelevant
to the appeal at hand. Accounting concepts are a foreign language to some
lawyers . . . . Hence the presence of an accountant . . . while the client is relating
a complicated tax story to the lawyer, ought not destroy the privilege . . . the
presence of the accountant is necessary, or at least highly useful, for the effective
consultation between the client and the lawyer which the privilege is designed to
permit. By the same token, if the lawyer has directed the client . . . to tell his
story in the first instance to an accountant engaged by the lawyer, who is then to
interpret it so that the lawyer may better give legal advice, communications by the
client reasonably related to that purpose ought to fall within the privilege.
296 F.2d at 922.
Cases following Kovel have continued to emphasize that this extension of the privilege
applies only where the third party “[enables] counsel to understand aspects of the client‟s own
communications that could not otherwise be appreciated.” Calvin Klein Trademark Trust v.
Wachner, 198 F.R.D. 53, 55 (S.D.N.Y. 2000). It is not sufficient that the third party‟s
involvement is simply useful to the lawyer; it must be necessary “to improve the comprehension
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of the communications between attorney and client.” United States v. Ackert, 169 F.3d 136, 139
(2d Cir. 1999). A Court in this Circuit recently found that the attorney-client privilege was
vitiated by disclosure to a third party hedge fund manager where there was no indication that the
lawyer could not evaluate the client communication without the assistance of the hedge fund
manager. In re Refco Sec. Litig., --- F.R.D. ----, 2011 WL 4527287, at *3 (S.D.N.Y. Sept. 30,
2011) (noting that, while “it appears that [the attorney] relied on [the agent‟s] experience and
specialized knowledge,” “[w]hat does not appear . . . is any evidence that there was information
[the attorney] could not understand without [the agent] translating or interpreting raw data for
him” (emphasis in original)). See also Ackert, 169 F.3d at 140 (holding that the privilege was
destroyed because the third party agent was not acting “as a translator or interpreter of client
communications”); Steinfeld v. IMS Health Inc., 2011 WL 6179505, at *4 n.3 (S.D.N.Y. Dec. 9,
2011) (finding that, to the extent defendant argued that Kovel applied, communications at issue
were not privileged because the consultant “did not explain unfamiliar concepts to counsel”).
The case that has arguably extended the privilege the furthest, In re Grand Jury
Subpoenas Dated Mar. 24, 2003, 265 F. Supp. 2d 321 (S.D.N.Y. 2003), nonetheless limited the
privilege to situations where an agent performs a role beyond the expertise of counsel but
nevertheless crucial to providing competent legal advice. See id. at 326, 330 (discussing the
lawyers‟ need in this case for “outside help” and the centrality of that assistance to the lawyers‟
“ability . . . to perform some of their most fundamental client functions”). The reach of that case
may be further limited by its context: the Court couched its finding in the narrow scenario of
public relations consultants assisting lawyers during a high profile grand jury investigation. See
id. at 331 (holding as follows: “(1) confidential communications (2) between lawyers and public
relations consultants (3) hired by the lawyers to assist them in dealing with the media in cases

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such as this (4) that are made for the purpose of giving or receiving advice (5) directed at
handling the client's legal problems are protected by the attorney-client privilege”).
Defendants in this case have failed to demonstrate that the involvement of OCI or its
corporate successor was necessary for effective communication between counsel and client.
Defendants have identified two major functions of OCI during the audits of employee roles.
First, OCI created a “an online platform for the dissemination and collection of questionnaires
for the 2005-06 audit.” Shoeman Aff. ¶ 6.3 Second, OCI summarized the collected data in a
chart, and, based on criteria provided by defendants‟ counsel, “made a preliminary assessment of
whether the individuals who completed the questionnaires met the requirements of an exempt
position” under the FLSA. Id. ¶ 7. Shoeman and her colleagues in the legal department then
made the final determinations with regard to exempt status. Id. ¶ 8.
The first use of OCI‟s expertise—the implementation of a system to send out
questionnaires and receive respondents‟ answers—arguably falls within the boundaries of Kovel.
Defendants aver that they lacked the technological capability to carry out this task given the
number of employees to be surveyed. See Defs. Mem. at 2. As such, OCI‟s role was akin to that
of an interpreter—a necessary facilitator in the communication between counsel and client.
However, defendants do not establish why OCI had any need to review the contents of the
responses to the questionnaires to perform this function.
OCI‟s second role, organizing responses to the questionnaires and making a preliminary
assessment of whether that data supported a classification of an employee as exempt or nonexempt, does not fit so easily into the Kovel model. While defendants state that they provided
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“Shoeman Aff.” refers to the affidavit of Rosalie J. Shoeman, who was, at all times relevant to this suit, Senior
Counsel at Cendant Corporation, now known as Avis Budget Group. The affidavit is labeled as Exhibit B to
defendants‟ memorandum and is located at Docket Entry 361-2. Although this affidavit mentions only the 2005-06
audit in this regard, the defendants‟ memorandum and the content of the OCI privilege log suggests that OCI played
similar roles during both the 2002-03 and 2005-06 audits.

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the standards by which OCI should classify the data, and that OCI was not hired to give the
defendants legal advice, see Shoeman Aff. ¶¶ 7, 8, defendants nonetheless required OCI to
examine the employee responses and make initial statutory classifications that in-house counsel
had the ability to make themselves. The preliminary assessments neither “improve[d] the
comprehension of the communications between attorney and client,” Ackert, 169 F.3d at 139, nor
provided advice outside the general expertise of attorneys yet essential to the ability of
defendants‟ lawyers to provide legal advice, In re Grand Jury Subpoenas, 265 F. Supp. 2d at
330. Given the strong policy mandating that the protection of privileges should be narrowly
construed, see, e.g., United States v. Goldberger & Dubin, P.C., 935 F.2d 501, 504 (2d Cir.
1991), there is no justification for applying the privilege here. I therefore conclude that in-house
counsel‟s communications with OCI waived the attorney-client privilege.
Defendants‟ most recent submission does not touch upon the other privileges claimed in
their earlier papers, work product and self-critical analysis, see Defs. Mot. at 5-8 (arguing, in this
earlier filing, for the application of work product protection and the self-critical analysis
privilege); they are, however, claimed in defendants‟ OCI Privilege Log. Accordingly, I will
address them here.
First, work product protection does not apply because defendants have not demonstrated
that the documents at issue were prepared in anticipation of litigation. Disclosure of attorney
work product is governed by Federal Rule of Civil Procedure 26(b)(3) and attendant case law.
The Rule states that “a party may not discover documents and tangible things that are prepared in
anticipation of litigation or for trial by or for another party or its representative” unless that party
makes a showing of “substantial need.” Courts have clarified that the “anticipation of litigation”
standard means that work product is protected only if it was created “because of anticipated

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litigation and would not have been prepared in substantially similar form but for the litigation.”
United States v. Adlman, 134 F.3d 1194, 1195 (2d Cir. 1998). This protection extends to
documents created for prior litigation. See Fine v. Facet Aerospace Prods. Co., 133 F.R.D. 439,
445 (S.D.N.Y. 1990) (citing F.T.C. v. Grolier, 462 U.S. 19, 25 (1983)).
Defendants do not claim that the 2002-03 audit was conducted in order to prepare for
litigation; they state only that the 2005-06 audit was “shaped” by a California Department of
Labor Standards Enforcement (“DLSE”) investigation and later litigation in that state. Defs.
Mot. at 5. This contention does not satisfy the requirement that the document would not have
been produced “but for” the litigation. See Adlman, 134 F.3d at 1195; see also Calabro v. Stone,
225 F.R.D. 96, 99 (E.D.N.Y. 2004) (noting that the “party asserting the work-product protection
bears the burden of establishing that a document was prepared principally or exclusively to assist
in anticipated litigation” (internal citations and quotation marks omitted)). As defendants claim
only that the DLSE investigation and the state litigation caused “the audit to take on a particular
sense of purpose,” Defs. Mot. at 5, they do not meet the “heavy burden . . . of demonstrating that
[the documents] would not have been prepared in „essentially similar form irrespective of the
litigation.‟” GenOn Mid-Atlantic, LLC v. Stone & Webster, Inc., 2011 WL 6074275, at *3
(S.D.N.Y. Dec. 6, 2011) (quoting Adlman, 134 F.3d at 1202) (other internal citation omitted).
Indeed, an employer complying with the FLSA must identify its exempt and non-exempt
employees in the ordinary course of its business and regardless of whether or not it faces
litigation.
Finally, defendants invoke the self-critical analysis privilege. This privilege “protect[s] a
party‟s confidential analysis of its own performance when that analysis tries to correct problems,
on the assumption that disclosure of the analysis during litigation may deter future candid

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reviews.” In re Ashanti Goldfields Sec. Litig., 213 F.R.D. 102, 104 (E.D.N.Y. 2003) (internal
citation omitted). It is unsettled whether this privilege is recognized in this Circuit. MacNamara
v. City of New York, 2007 WL 755401, at *3 (S.D.N.Y. Mar. 14, 2007) (citing cases). Moreover,
to the extent it is recognized, this privilege has been applied only when there is a strong public
interest “in preserving the free flow of the type of information sought.” Id. (quoting Mitchell v.
Fishbein, 227 F.R.D. 239, 252 (S.D.N.Y. 2005)).
Given the lack of full acceptance of this privilege, and because this case does not involve
the strong public interest at issue, for example, in the paradigmatic self-critical privilege case of
review of medical decisions, I decline to apply it here. Cf. Francis v. United States, 2011 WL
2224509, at *6 (S.D.N.Y. May 31, 2011) (noting the uniform state acceptance of the medical
peer review privilege). In the alternative, I also reject the defendants‟ contention that the
privilege applies because, having presented only a conclusory assertion that the impetus to
conduct such audits would be chilled in the future, see Defs. Mot. at 7, they have not made the
requisite “detailed and convincing showing” required to invoke it. E.B. v. N.Y.C. Bd. of Educ.,
233 F.R.D. 289, 296 (E.D.N.Y. 2005); cf. King v. Conde, 121 F.R.D. 180, 193 (E.D.N.Y. 1988)
(declining to apply the “official information privilege” based on defendants‟ contention that their
future candor would be chilled absent “empirical evidence” of this chilling effect). Defendants‟
blanket assertion that disclosure of employment audit documents in any case would discourage
evaluation of employee position classifications does not satisfy this standard.
In sum, defendants have not shown that they are entitled to the attorney-client or selfcritical analysis privileges, or to work product protection, as to the documents related to
OCI/PayCraft. Therefore, defendants are ordered to produce, with appropriate redactions or
exclusions of attorney thought processes, any documents previously withheld as privileged that

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were received from, sent to, or shared with OCI and to update their privilege log accordingly.
Defendants shall complete these disclosures by April 20, 2012.

SO ORDERED.
Dated:

Brooklyn, New York
April 5, 2012
/s/
STEVEN M. GOLD
United States Magistrate Judge

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