Winthrop Resources v. CommScope, Inc.

Filing 70

ORDER denying 44 Objection to Magistrate Judge's Decision (Rule 72(a)) re 42 Order on Motion to Compel, except as to the question in Kim Dep. 262:25-263:1-4; granting 46 Unopposed Motion to Stay; granting 56 M otion for Leave to File a Reply in that the Court considered the attached reply. The parties are directed to take the deposition in the Western District of NC or such other location in the United States as the parties may agree. Within 30 days from entry of this Order, defendant shall make Kap Kim available for deposition where he shall answer all questions he was instructed by counsel not to answer in accordance with this Order as well as reasonable follow up questions. Signed by District Judge Richard Voorhees on 11/7/2014. (cbb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
CIVIL ACTION NO. 5:11-CV-172
WINTHROP RESOURCES
CORPORATION,
Plaintiffs,
v.
COMMSCOPE, INC. OF NORTH
CAROLINA,
Defendants.

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ORDER

Before the Court is Commscope, Inc. of North Carolina’s (“Commscope”) Objection to
Magistrate Judge’s Order Granting Plaintiff’s Motion to Compel.

(Doc. 44).

Winthrop

Resources Corporation (“Winthrop”) filed a Response in Opposition. (Doc. 49). Commscope
filed a motion for leave to file a reply and attached the proposed reply. (Doc. 56). Given that the
Court considered the reply, the Court grants the motion for leave to file reply. (Doc. 56).
On July 1, 2014, Magistrate Judge Cayer granted Winthrop’s Motion to Compel
Testimony from Commscope’s Former VP and CIO Kap Kim. (Doc. 42). Judge Cayer’s Order
compelled Kim to answer twenty-one deposition questions that defense counsel for Winthrop
instructed him not to answer. Judge Cayer found that “[t]he questions involve communications
occurring years after Kim’s employment terminated and he moved to South Korea.

The

questions relate to deposition preparation and matters that may have influenced his testimony.”
(Doc. 42, at 1). The Order relied on Peralta v. Cendant Corp., 190 F.R.D. 38 (D. Conn. 1999)
and Wade Williams Distribution, Inc. v. American Broadcast Companies, 2004 WL 1487702

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(S.D.N.Y. June 30, 2004 along with “other reasons stated in [Winthrop’s] briefs.” (Doc. 42, at
1).

I.

STANDARD OF REVIEW
At the outset, the parties dispute what standard this Court should apply. Winthrop urges

this Court to adopt a de novo review. (Doc. 44, at 2 & n. 1).1 Commscope asks that the Court
continue to apply the clearly erroneous or contrary to law standard. (Doc. 49, at 2).
Federal Rule of Civil Procedure 72(a) provides that, with respect to nondispositive
matters such as the instant motion, “[t]he district judge in the case must consider timely
objections and modify or set aside any part of the order that is clearly erroneous or is contrary to
law.” “A finding is ‘clearly erroneous’ when, although there is evidence to support it, the
reviewing court . . . is left with the definite and firm conviction that a mistake has been
committed.” High Voltage Beverages, L.L.C. v. Coca-Cola Co., No. 3:08-CV-367, 2010 WL
234258, at *1 (W.D.N.C. June 8, 2010) (quoting Walton v. Johnson, 440 F.3d 160, 173-74 (4th
Cir. 2006)). “If a magistrate judge's order is contrary to law then the judge must have failed to
apply or misapplied statutes, case law, or procedural rules.” Miceli v. KBRG of Statesville, LLC,
5:05CV265-V, 2008 WL 2945451 (W.D.N.C. July 24, 2008). The text of Rule 72(a) does not
allow the Court to alter the level of deference it gives to magistrates. Accordingly, the Court
declines to adopt a new standard of review.

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Commscope argues that Winthrop raised new issues in its reply. Commscope believes that this justifies a de novo
review. Local Rule 7.1(E) states that “a reply brief should be limited to a discussion of matters newly raised in the
response.” This analysis is determined on how the issues are framed. Flores v. Lowe’s Home Centers, Inc., No.
5:08-CV45, 2009 WL 762198 at *8 n. 26 (W.D.N.C. Mar. 19, 2009) (noting that it “invites a relatively subjective
analysis.”). The Court finds that the entirety of the submissions to the Magistrate concerned whether a privilege
existed to protect Kim’s communications. Further, the Court finds that the cases cited by Winthrop are responsive
to the In re Allen former employee theory advanced by Commscope.

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II.

APPLICATION
A.

Choice of Law

The parties have cited many federal and state decisions in their appeal of the Magistrate’s
Order. The Court holds that the North Carolina law regarding privilege governs the issue.
Federal Rule of Evidence 501 provides that “in a civil case, state law governs privilege regarding
a claim or defense for which state law supplies the rule of decision.” The Fourth Circuit states
that “the availability of an evidentiary privilege is governed by the law of the forum state.”
Ashcraft v. Conoco, Inc., 218 F.3d 282, 282 n. 5 (4th Cir. 2000).2 Therefore, the Court will
apply North Carolina privilege law to this matter. Amatulli & Sons, LLC v. Great Northern Ins.
Co., 3:06-CV-286, 2008 WL 113914 at * 5 (W.D.N.C. 2008). Of course, with respect to the
work-product doctrine, federal law will apply.
B.

Attorney-Client Privilege
1. Rules Applied

The purpose of the attorney-client privilege “is to encourage full and frank
communication between attorneys and their clients and thereby promote broader public interests
in the observance of law and administration of justice.” Brown v. American Partners Fed. Credit
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Courts look to the conflict of law provisions of the forum state to determine which privilege to apply. Hatfill v.
New York Times Co., 459 F. Supp. 2d 462, 465 (E.D. Va. 2006); Metric Constructors, Inc. v. Bank of TokyoMitsubishi, Ltd., 5:97-CV-369BR1, 1998 WL 1742589 at *1-2 (E.D.N.C. Sept. 28, 1998) (applying Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941)). North Carolina utilizes the traditional conflict of law rules.
“[M]atters affecting the substantial rights of the parties are determined by lex loci, the law of the situs of the claim,
and remedial or procedural rights are determined by lex fori, the law of the forum.” Harco Nat. Ins. Co. v. Grant
Thornton LLP, 698 S.E.2d 719, 722 (N.C. Ct. App. 2010). In North Carolina, “[t]he law of the forum governs the
admissibility of evidence.” Frugard v. Pritchard, 450 S.E.2d 744, 744 (N.C. 1994); Tenn. Carolina Transp., Inc. v.
Strick Corp., 196 S.E.2d 711, 720 (N.C. 1973) (“[Q]uestions of the admission and exclusion of evidence are
generally considered procedural and governed by Lex fori.”). Therefore, the North Carolina attorney-client
privilege applies. Hatfill, 459 F. Supp. 2d at 466 (applying Virginia choice of law, which has the lex fori and lex
loci distinction, to determine that matters of privilege are deemed procedural). This means Fourth Circuit law
interpreting the federal law of privilege is not binding.

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Union, 645 S.E.2d 117, 121 (N.C. Ct. App. 2007) (quoting Upjohn Co. v. United States, 449
U.S. 383, 389 (1981)). North Carolina uses a five factor test to determine if the privilege
applies.3
Commscope claims that the Magistrate’s order is “contrary to well-established law in the
Fourth Circuit” by citing to the case of In re Allen, 106 F.3d 582, 605-06 (4th Cir. 1997). (Doc.
44, at 1). In re Allen does not determine the North Carolina law of privilege, Wuchenich v.
Shenandoah Mem'l Hosp., No. CIV. A. 598CV00041, 2000 WL 1769577, at *2 (W.D. Va. Nov.
2, 2000), and no North Carolina case has adopted it.4
The Court has not found a North Carolina case analyzing whether the attorney-client
privilege applies to former employees. The Wuchenich case is instructive on this point. In that
case, there appeared to be no Virginia case law addressing the matter so the court turned to
federal law. Id., 2000 WL 1769577 at *2. This Court, therefore, turns to the federal law of
privilege for guidance. In the case of In re Allen, the Fourth Circuit agreed with Chief Justice
Berger’s concurrence in Upjohn Co. v. United States, 449 U.S. 383 (1981) in finding that the
Upjohn analysis applies to former employees. 106 F.3d at 605-06. North Carolina courts have
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The Murvin test is as follows:
(1) the relation of attorney and client existed at the time the communication was
made, (2) the communication was made in confidence, (3) the communication
relates to a matter about which the attorney is being professionally consulted, (4)
the communication was made in the course of giving or seeking legal advice for
a proper purpose although litigation need not be contemplated and (5) the client
has not waived the privilege.
Raymond v. N. Carolina Police Benevolent Ass'n., Inc., 365 N.C. 94, 100, 721 S.E.2d 923, 927-28 (2011) (quoting
State v. Murvin, 284 S.E.2d 289, 293 (1981)).
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The Court of Appeals analyzed In re Allen when ruling on a work-product issue. Boyce & Isley, PLLC v. Cooper,
673 S.E.2d 694, 705 (N.C. Ct. App. 2009). The Business Court used In re Allen on remand from a case from the
Eastern District of North Carolina. However, the parties had agreed that the federal rules would govern the dispute
as the motion to compel was filed in the Eastern District but not ruled upon prior to remand after dismissing all
federal claims. Morris v. Scenera Research, LLC, No. 09 CVS 19678, 2011 WL 3808544, at *6 (N.C. Super. Aug.
26, 2011) supplemented, (N.C. Super. Oct. 10, 2011). The Supplemental Order, available on the Business Court’s
website, stated that the Plaintiff conceded that the attorney-client relationship could not shelter communications
extending beyond the period of her responsibilities and cited Peralta v. Cendant Corp., 190 F.R.D. 38 (D. Conn.
1999) as authority.

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cited favorably to the Upjohn decision. See, e.g., Evans v. United Servs. Auto. Ass’n, 541 S.E.2d
782 (N.C. Ct. App. 2001).5
The Supreme Court in Upjohn “decline[d] to lay down a broad rule or series of rules” to
govern this issue apart from holding that the privilege was present in the communications sought
in the case before it. 449 U.S. at 386. In Upjohn, the communications were made by employees
to corporate counsel at the behest of their superiors, provided a basis for legal advice for the
corporate counsel, and “concerned matters within the scope of the employee’s corporate duties.”
449 U.S. at 394. The scope of employment issue with regard to former employees and the
attorney-client privilege was specifically referenced by In re Allen. 106 F.3d at 606. The Court
believes that North Carolina would adopt a construction limiting the attorney-client privilege to
matters within their personal knowledge and scope of employment because “[t]he privilege must
be strictly construed.” Scott v. Scott, 417 S.E.2d 818, 822-23 (N.C. Ct. App. 1992).
The case of Peralta v. Cendant Corp., 190 F.R.D. 38, 40-42 (D. Conn. 1999) elucidates
the distinction between current and former employees with regards to the attorney-client
privilege. The Peralta court allowed the privilege to apply where the discussions between the
corporate attorney and the former employee concerned matters that involved the scope of her
employment, but refused to apply it where conversations went beyond the former employee’s
independent knowledge. Id. For example, informing the former employee of testimony of other
witnesses would not be privileged. Id. at 41. The concern is that an attorney may seek to
“influence a witness to conform or adjust her testimony . . . consciously or unconsciously.” Id.
The Peralta distinction has been accepted by other courts. See, e.g., Wade Williams
Distribution, Inc. v. American Broadcasting Cos., Inc., No. 5002(LMM), 2004 WL 1487702

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The Court notes that “[t]he North Carolina appellate courts have not yet decided what test should apply as to the
corporate attorney-client privilege.” Brown v. Am. Partners Fed. Credit Union, 645 S.E.2d 117, 123 (2007).

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(S.D.N.Y. June 30, 2004); Infosystems, Inc. v. Ceridian Corp., 197 F.R.D. 303 (E.D. Mich.
2000).
Accordingly, the Court holds that the Peralta case governs the current discovery dispute.
2.

Application

Judge Cayer found as a matter of fact that the twenty one questions in dispute involve
“communications occurring years after Kim’s employment terminated . . . [and] [r]elate to
deposition preparation and matters that may have influenced his testimony.” (Doc. 42, at 1).
Given the copious objections, the Court will address several groups of questions
specifically.
First, there are questions that directly relate to deposition preparation. (Kim Dep., 77:67; 77:20; 77:24-25; 85:10-12; 85:21-22; 86:2-5; 86:19; 87:3-5; 87:9-10). In others, counsel for
Winthrop ask about the substance of conversations that occurred during a deposition break.
(Kim Dep. 129:4-5; 129:9-10; 129:14-16). These are squarely covered by the holding in
Peralta. Therefore, the Magistrate’s finding is not clearly erroneous. The privilege inquiry, and
the deposition that follows this Order, must center on the following questions:
[D]id the communication relate to the former employee's conduct
and knowledge, or communication with defendant's counsel,
during his or her employment? If so, such communication is
protected from disclosure by defendant's attorney-client privilege
under Upjohn. As to any communication between defendant's
counsel and a former employee . . . no attorney-client privilege
applies.
Peralta, 190 F.R.D. at 41-42.
One question seeks the substance of conversation with counsel that occurred during
employment. (Kim Dep. 262:25-263:-4). This is clearly subject to the privilege under Peralta

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and In re Allen. See also King v. Allred, 333 S.E.2d 758, 760 (N.C. Ct. App. 1985). Therefore,
the Court reverses Magistrate Judge Cayer’s Order compelling the answer of that question.
Another question asks whether Kim has had any discussion with any lawyers about the
language of the lease agreement and “who’s right, Winthrop or CommScope.” (Kim Dep.
278:11-20). Kim does not have to reveal the substance of conversations while he was employed
with Commscope. However, gaining insight into other opinions regarding the lease agreement
could influence Kim’s opinion regarding the agreement. Therefore, the Magistrate was not
clearly erroneous.
One asked Kim whether he “expect[ed] Commscope lawyer’s [sic] to go back and reread
the actual language in the lease agreement.” (Kim Dep. 281:10-12). The Court finds that the
Magistrate was not clearly erroneous in finding that this was not subject to the attorney-client
privilege.
The final two questions ask whether attorney Jeff Mayer had told, or if Kim had asked,
Mayer’s “personal view on whether Winthrop or Commscope is correct in their interpretation of
the lease language in the case.” (Kim Dep. 281:16-19; 281:23-25). Mayer’s personal view on
the litigation is outside the scope of Kim’s personal knowledge or his scope of employment with
Commscope. Gaining insight into Mayer’s view would have a tendency to influence Kim’s
testimony. Therefore, the Court holds that this matter is not protected by the privilege.
A series of questions ask whether Kim had asked any lawyer to determine whether
CommScope’s or Winthrop’s interpretation of the lease was correct. (Kim Dep. 280:13-17; 28021-24; 281:3-6). Of course, if this occurred during Kim’s employment with Commscope it
would be subject to the privilege. However, if it did not it would not be subject to the privilege

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and would tend to influence Kim’s testimony. Therefore, the Court holds that the Magistrate’s
finding was not clearly erroneous.
C.

Waiver and the Work-Product Doctrine

In Commscope’s Objections to the Magistrate Judge’s Order, Commscope argues that the
Magistrate Judge ordered Kim to answer questions that were subject to the work-product
doctrine.6 (Doc. 44, at 11-12). Winthrop argues that Commscope waived the work-product
objection by failing to present it to the Magistrate Judge. (Doc. 49).
Magistrate Judges fulfill a vital role in the federal judiciary. It would defeat the purpose
of the Magistrate’s Act to allow a party to object to a Magistrate’s Order on a ground the party
never raised before the Magistrate. Aikens v. Shalala, 956 F. Supp. 14, 22-24 (D.D.C. 1997);
Price v. Dixon, 961 F. Supp. 894, 899 (E.D.N.C. 1997) (dismissing objection to M&R where
claim was not raised earlier); Ervin v. Hammond, No. 3:05-CV-059, 2008 WL 901185 at *9 n. 5
(W.D.N.C. Mar. 31, 2008) (failing to raise issue to Magistrate Judge would allow for rejection of
objection outright); see Muth v. United States, 1 F.3d 246, 250 (4th Cir. 1993) (“[I]ssues raised
for the first time on appeal generally will not be considered.”). Moreover, the Court cannot see
how a Magistrate’s Order can be “clearly erroneous” or “contrary to law” on an issue never
presented to it. Fed. R. Civ. P. 72(a); cf Tafas v. Dudas, 530 F. Supp. 2d 786, 798 n. 3 (E.D. Va.
2008) (“A District Court must assess whether a Magistrate Judge's decision was ‘clearly
erroneous or contrary to law’ only based on the facts actually before the Magistrate Judge.”).
Commscope’s Reply Brief argues that the work-product argument “could not be waived
as Winthrop introduced Peralta for the first time in its Reply in Support of Its Motion to
Compel.” (Doc. 56-1, at 4). However, the introduction of Peralta did not necessitate
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While the attorney-client privilege in this case is a creature of state law, the work-product doctrine is federally
created. The work-product doctrine was developed in Hickman v. Taylor, 329 U.S. 495 (1947) and codified in
Federal Rule of Civil Procedure 26(b)(3).

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Commscope’s work-product argument. If Commscope believed the questions at issue were
subject to the work-product doctrine, Commscope should have raised the issue in its Response.
Republican Party of North Carolina v. Martin, 136 F.R.D. 421, 427 (E.D.N.C. 1991) (items not
protected by the attorney-client privilege “can, of course, be protected by the work-product
doctrine.”). Therefore, the Court declines to allow Commscope to pursue a theory not advanced
before the Magistrate.
D.
Commscope’s Objection to the Magistrate’s Order Requiring the
Deposition to be in the Western District of North Carolina
Magistrate Judge Cayer’s Order stated that “[t]he deposition shall take place within the
Western District of North Carolina or such other location in the United States as the parties may
agree.” (Doc. 42, at ¶ 2).
Commscope claims that it is unnecessarily burdensome for Kim to travel to the Western
District of North Carolina. (Doc. 44, at 12). Winthrop argues that Magistrate Judge Cayer was
“well within his discretion to order that Commscope produce Kim the same way (in person in the
United States) that Kim was produced the first time.” (Doc. 49, at 18).
Winthrop originally moved for the deposition to take place according to the terms
provided by Magistrate Judge Cayer. (Doc. 34, at 12). Commscope never objected expressly to
the terms of the Order sought. (Doc. 38, at 11-14). However, Commscope did take issue with
the timing of the motion, the relevancy of requested questions, and the purpose of the motion
itself. (Id.).

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The Court finds that Magistrate Judge Cayer did not abuse his discretion7 and was not
contrary to law in his Order. Therefore, the Court declines to limit Magistrate Judge Cayer’s
Order.
IT IS, THEREFORE, ORDERED THAT
(1) Commscope’s Objection to Magistrate Judge Cayer’s Order is Denied (Doc. 44), except
as to the question in Kim Dep. 262:25-263:1-4;
(2) Commscope’s Motion for Leave to File a Reply (Doc. 56) is Granted in that the Court
considered the attached reply;
(3) The Unopposed Motion to Stay (Doc. 46) is Granted; and
(4) The parties are directed to take the deposition in the Western District of North Carolina
or such other location in the United States as the parties may agree. Within thirty (30)
days from entry of this Order, Defendant shall make Kap Kim available for deposition
where he shall answer all questions he was instructed by counsel not to answer in
accordance with this Order as well as reasonable follow up questions.

Signed: November 7, 2014

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If a court finds “good cause” it has the discretion to issue an order “specifying terms, including time and place, for
the disclosure or discovery.” Fed. R. Civ. P. 26(c)(1)(B).

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