Craig v. Rite Aid Corporation
Filing
508
MEMORANDUM OPINION - IT IS HEREBY ORDERED THAT: 1. The Court finds that Dfts have failed adequately to support their assertions of attorney-client privilege or work-product protection for the following documents, and therefore directs that these docu ments be produced within 20 days from the of this Order: PRV 000062 through PRV 000063, PRV 000064 through PRV 000066, PRV 000069 through PRV 000071, PRV 000192 through PRV 000193, PRV 000208 through PRV 000209, PRV 000223 through PRV 000286, PRV 000 290 through PRV 000291, PRV 000311 through PRV 000348, PRV 007120 through PRV 007123, PRV 007184, PRV 007185 through PRV 007186, PRV 007291 through PRV 007296, PRV 007308. 2. The Court finds that Dfts have adequately justified withholding the follow ing documents from disclosure on the basis of either the attorney-client privilege, the work-product doctrine, or for the reasons otherwise explained in the within memorandum: PRV 000094 through PRV 000108, PRV 000127 through PRV 000129, PRV 000188 t hrough PRV 000189, PRV 000190 through PRV 000191, PRV 000197 through PRV 000198, PRV 000204 through PRV 000206, PRV 000220, PRV 000304, PRV 000349 through PRV 000358, PRV 000465 through PRV 000549, PRV 007918. 3. With respect to PRV74-76, PRV 00021 6, PRV 007291 through PRV007296, and PRV 007308 although we do not find that Dfts have adequately supported their assertion that this document is protected from disclosure either on the basis of attorney-client privilege or work-product protection, b ecause it appears that the document might potentially be subject to protection from disclosure, we will permit Defendants a final opportunity to explain the basis for withholding this document from production. Accordingly, on or before February 27, 2012, Dfts may submit with the Court any additional information and evidentiary support that they may have in support of their contention that these records are privileged or otherwise protected from disclosure. SEE MEMO FOR COMPLETE DETAILS. Signed by Magistrate Judge Martin C. Carlson on February 9, 2012. (kjn )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
SHIRLEY CRAIG, et al.,
:
:
Plaintiffs
:
:
v.
:
:
RITE AID CORPORATION and :
ECKERD CORPORATION d/b/a :
RITE AID,
:
:
Defendants
:
Civil Action No. 4:08-CV-2317
(Judge Jones)
(Magistrate Judge Carlson)
MEMORANDUM OPINION
I.
INTRODUCTION
A.
Overview of the Case
Shirley Craig and others (collectively, “Plaintiffs”) initiated this action for
overtime compensation under the Fair Labor Standards Act (“FLSA”) with the filing
of a collective action complaint on December 29, 2009. (Doc. 1.) At bottom, the case
concerns Plaintiffs’ claims that Rite Aid misclassified Assistant Store Managers as
exempt employees under the FLSA. The District Court in this case subsequently
entered an order conditionally certifying the following collective class for purposes
of providing notice of the action and an opportunity to opt-in: “All individuals
classified as exempt from the FLSA’s overtime pay provisions and employed as
salaried Assistant Store Managers during any workweek within the previous three
years in any of the 4,901 stores identified in Rite Aid Corporation’s April 17, 2009
Annual Report as being operated by Rite Aid Corporation.” (Doc. 72.) Thus far,
more than 1,000 individuals have identified themselves as putative opt-in plaintiffs
in the course of this litigation.
B.
Defendants’ Assertion of the Attorney-Client Privilege or the WorkProduct Doctrine as a Basis to Resist Production of Certain Written
Discovery that Plaintiffs Have Requested.
Now pending before the Court is a dispute between the Plaintiff and Defendants
regarding Defendants’ assertion that the attorney-client privilege and work-product
doctrine shield from disclosure various corporate documents that Plaintiffs have
requested be produced as part of discovery in this collective action. Informed
assessment of these privilege claims, in turn, requires some consideration of the
factual context in which these documents were created at Rite Aid. In broad terms, the
allegedly privileged documents appear to relate to a multi-faceted internal corporate
restructuring analysis that was undertaken at Rite Aid, examining the organization and
operation of its stores, many of which had been acquired over time from other
companies, and had different corporate and organizational cultures. This multi-faceted
analysis entailed many non-attorney participants and included, on occasion, corporate
in-house counsel. This process examined multiple business facets of store operations,
including on occasion legal compliance issues, and was inspired by a host of business
2
concerns, including occasionally potential legal liability concerns. In sum, the records
at dispute in this matter are not simply the fruit, or product, of some preparation for
litigation, or legal analysis of a discrete corporate issue. Rather, these documents are
inspired by a multiplicity of business operation and reorganization concerns, and
reflect a thorough assessment and analysis of this broad array of matters relating to
issues of corporate structure, governance and organization, only some of which are
legal in nature.
Cast against this background, Defendants initially asserted that these documents
were virtually all protected by both the attorney-client privilege and the work-product
doctrine, and provided Plaintiffs with a privilege log setting forth the basis for
withholding production. Plaintiffs disputed the adequacy of Defendants’ privilege log
and, by extension, the legitimacy of Defendants’ assertions of privilege or workproduct protection. Plaintiffs ultimately moved the Court to examine the entire
collection of documents that had been withheld and listed on Defendants’ privilege
log.
Defendants demurred, arguing that their privilege log was legally sufficient, and
maintaining that no in camera review of the documents was warranted. Upon
consideration, the Court directed Defendants to submit for in camera review the 30
documents that Plaintiffs’ had identified on Defendants’ privilege log as having the
3
most relevance to Plaintiffs’ case, and as to which Plaintiffs had the most substantial
questions concerning the application of the attorney-client privileges and other
asserted bases for withholding production.1 (Doc. 380.) Thereafter, Defendants
submitted these documents to the Court for the Court’s review, which has now
concluded.
The documents that have been provided to the Court, and Defendants’ various
assertions of the reasons for withholding production of these documents, exemplify
of the difficulty that courts often face when tasked with assessing the application of
privileges to corporate-level documents that, on their face, often do not provide any
clear indication that they were generated primarily for the purpose of obtaining legal
advice, or that they were prepared in connection with or anticipation of litigation. In
some instances, certain of the documents that have been provided to the Court indicate
that the author of the document was providing legal advice to a representative of the
company, or that one or more of the company’s officers were seeking legal advice
from in-house counsel with respect to a particular legal issue. It appears further that
these particular instances of legal counsel were provided in the context of the larger
store restructuring process that the company had undertaken in 2008 and 2009.
1
These documents have been identified at Document 289, Exhibit C, on the
docket in this action.
4
However, many of the documents Defendants have submitted bear no indication
at all that they were prepared at the direction of counsel; that they were prepared
primarily for the purpose of obtaining or furnishing legal advice, or that they were
created at the direction of a lawyer for legal reasons; or that they had any obvious
relation to a lawyer’s work in connection with litigation involving the company,
whether actual or anticipated. Indeed, very few of the documents submitted to the
Court were prepared by a lawyer, and many documents were circulated among
entirely non-legal corporate personnel who appear to have been evaluating a number
of business considerations with respect to a store-wide restructuring effort with
respect to certain employment positions within the company.
We acknowledge the fact that a senior counsel to Defendants has submitted a
sworn declaration from in-house counsel, Mr. Chima, stating that many of the
documents that are the subject of the current discovery dispute were prepared in
connection with a review and assessment of the impact of store structure changes on
the exempt status of certain store-level employment positions, and was undertaken at
the direction of in-house counsel “in large part” because of existing or anticipated
litigation. (Doc. 269, Ex. 6, Decl. of Ron S. Chima, ¶ 6.) However, Mr. Chima’s
declaration is extraordinarily broad, and essentially asserts that every piece of
documentation provided to the Court for in camera review was part of a large
5
corporate restructuring initiative that was undertaken at the direction of in-house
counsel. However, as we discuss below, the declaration lacks specificity regarding
any of the particular documents in question, and instead relies upon sweeping
generalities made by in-house counsel who serves many corporate functions, only
some of which would cloak documents in privilege. Taken together, we find that these
factors undermine the evidentiary value of this declaration when we conduct a
document-by-document review of privilege claims, as we are required to do.
In addition, we are mindful that Kristin Crandall, Rite Aid’s Vice President of
Field Human Relations, previously submitted a separate sworn declaration in
connection with a separate, and now-resolved, discovery dispute concerning
Defendants’ assertion that the self-critical analysis privilege should protect a number
of related documents from discovery in this case. (Doc. 232, Ex. A, Decl. of Kristin
Crandall.) In that declaration, Ms. Crandall represented that her review of the
company’s then existing store structure was undertaken at the direction of in-house
counsel for Rite Aid, and that her team of human resources, compensation, legal, and
operations personnel worked under the understanding that the information gathered
as part of this collective effort would be provided to in-house counsel to assist in
providing legal advice to the company. (Id., ¶¶ 5-6.) For this reason, Ms. Crandall
represented that these personnel were informed that the communications exchanged
6
during this project would be treated as confidential. (Id., ¶ 7.)
Fairly construed, we believe that Ms. Crandall’s declaration confirms our more
nuanced view regarding the complex corporate decision-making process reflected in
these records, a process which was inspired by, driven by, and informed by a host of
inter-related business considerations, many of which do not fall within the paradigm
of the attorney-client or work-product privileges. As explained below, we have
carefully assessed each of the documents that Defendants submitted for in camera
review, and we have done so through the perspective of the multi-faceted business
planning reflected in these documents, guided by the relevant law governing the
application of the privileges asserted in this particular setting, and balancing the
general assertions of Rite Aid’s in-house counsel and Ms. Crandall against a review
of what each document actually reveals. As explained further below, while in some
instances this review sustains claims of privilege, we find that in a number of
instances Defendants have not carried their burden of demonstrating that certain
documents are, in fact, subject to the attorney-client privilege or work-product
protection. Where we have not found a sufficient basis to conclude that either of these
evidentiary privileges applies to the documents in question, we will order the
documents to be produced. With respect to the remaining documents, we have
concluded that they are properly shielded from disclosure either by the attorney-client
7
privilege or the work-product doctrine, and we will uphold Defendants’ decision to
withhold production.
II.
SUMMARY OF THE APPLICABLE LAW
In endeavoring to resist the disclosure of a number of corporate-level
documents that Plaintiffs have requested for production, Defendants have invoked the
protections of either the attorney-client privilege or the work-product doctrine.
The United States Court of Appeals for the Third Circuit recently summarized
the purposes of, and distinctions between, the attorney-client privilege and the workproduct doctrine, and the importance of limiting recognition of evidentiary privileges
when necessary to achieve their purposes, as follows:
Though they operate to protect information from discovery, the workproduct doctrine and the attorney-client privilege serve different
purposes. The purpose behind the attorney-client privilege is “‘to
encourage clients to make full disclosure of facts to counsel so that he
may properly, competently, and ethically carry out his representation.
The ultimate aim is to promote the proper administration of justice.’” In
re Impounded, 241 F.3d 308, 316 (3d Cir. 2001) (quoting In re Grand
Jury Proceedings, 604 F.2d 798, 802 (3d Cir. 1979)). The work-product
doctrine, by contrast, “promotes the adversary system directly by
protecting the confidentiality of papers prepared by or on behalf of
attorneys in anticipation of litigation. Protecting attorneys’ work product
promotes the adversary system by enabling attorneys to prepare cases
without fear that their work product will be used against their clients.”
Westinghouse Elec. Corp. v. Republic of the Phil., 951 F.2d 1414, 1428
(3d Cir. 1991) (citations omitted).
Though evidentiary privileges have important purposes, their recognition
may result in the withholding of relevant information and so may
8
obstruct the search for truth. Indeed, the protections are effective only
if they shield relevant evidence and thus they necessarily obstruct the
search for the truth at a trial at which they are recognized either
implicitly or explicitly. Consequently, privileges should be recognized
only when necessary to achieve their respective purposes. See Fisher v.
United States, 425 U.S. 391, 403 (1976).
In re Chevron Corp., 633 F.3d 153, 164 (3d Cir. 2011).
Because the assertion of a claim of privilege “may result in the withholding of
relevant information and so may obstruct the search for truth,” In re Chevron Corp.,
633 F.3d 153, 164 (3d Cir. 2011), it is also well-established that, “ ‘The burden of
proving that the . . . privilege applies is placed upon the party asserting the privilege.’
United States v. Landof, 591 F.2d 36, 38 (9th Cir. 1978).” Matter of Grand Jury
Empanelled February 14, 1978, 603 F.2d 469, 474 (3d Cir. 1979). Therefore, the
burden of proof is this case rests squarely with Rite Aid, which has asserted the
privilege. With this preliminary guidance in mind, we turn to consideration the
attorney-client privilege and work-product doctrines.
1.
The Attorney-Client Privilege
The attorney-client privilege is meant to facilitate “full and frank
communication between attorneys and their clients.” Wachtel v. Health Net, Inc., 482
F.3d 225, 231 (3d Cir. 2007). The privilege “recognizes that sound legal advice or
advocacy serves public ends and that such advice or advocacy depends upon the
lawyer’s being fully informed by the client.” Upjohn v. United States 449 U.S. 383,
9
389 (1981). The privilege “applies to any communication that satisfies the following
elements: it must be ‘(1) a communication (2) made between [the client and the
attorney or his agents] (3) in confidence (4) for the purpose of obtaining or providing
legal assistance for the client.’” In re Teleglobe Communications Corp., 493 F.3d 345,
359 (3d Cir. 2007) (quoting the Restatement (Third) of the Law Governing Lawyers
§ 68 (2000)). Thus, the privilege reaches “[c]onfidential disclosures by a client to an
attorney made in order to obtain legal assistance.” Fisher v. United States, 425 U.S.
391, 403 (1976); see also In re Ford Motor Co., 110 F.3d 954, 965 n.9 (3d Cir. 1997)
(communications made by client and an attorney are privileged if made “for the
purpose of securing legal advice.”); United States v. Amerada Hess Corp., 619 F.2d
980, 986 (3d Cir. 1980).
The privilege applies both to information that the client provides to the lawyer
for purposes of obtaining legal advice, as well as to the advice the attorney furnishes
to the client. To this end, the Supreme Court has explained that “the privilege exists
to protect not only the giving of professional advice those who can act on it but also
the giving of information to the lawyer to enable him to give sound and informed
advice.” Upjohn, 449 U.S. at 390. However, the privilege extends only to the
disclosure of the communications, and does not extend to disclosure of the underlying
facts conveyed in those communications. Id. at 385.
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While recognizing the value served by the privilege, courts must also be
mindful that the privilege obstructs the truth-finding process and should be “applied
only where necessary to achieve its purpose.” Wachtel, 482 F.3d at 231; see also
Westinghouse Elec. Corp., 951 F.2d at 1423. Therefore, because the purpose of the
privilege is to protect and promote the “dissemination of sound legal advice,” it
applies only to communication conveying advice that is legal in nature, as opposed to
where the lawyer is providing non-legal, business advice. Wachtel, 482 F.2d at 231;
see also Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 152 F.R.D. 132, 137 (N.D. Ill.
1993) (stating that the privilege is inapplicable where the legal advice is incidental to
business advice); Hardy v. New York News, Inc., 114 F.R.D. 633, 643 (S.D.N.Y.
1987) (“The attorney-client privilege is triggered only by a client’s request for legal,
as contrasted with business advice . . . .”).
Federal courts are further required to assess the application of the privilege on
an individualized case-by-case basis. Thus, “Rule 501 [of the Federal Rules of
Evidence] requires the federal courts, in determining the nature and scope of an
evidentiary privilege, to engage in the sort of case-by-case analysis that is central to
common-law adjudication.” Id. at 230; see also Upjohn, 449 U.S. at 386, 396-97; In
re Processed Egg Prods. Antitrust Litig., MDL No. 2002, 08-Md.-2002, 2011 U.S.
Dist. LEXIS 120708, at *10-11 (E.D. Pa. Oct. 19, 2011). In addition, the party
11
asserting the privilege bears the burden of providing that it applies to the
communication at issue. In re Grand Jury, 603 F.2d 469, 474 (3d Cir. 1979).
Accordingly, we may not rely upon broad and sweeping assertions of privilege to
wholly excuse an individualized examination of particular communications.
2.
The Work-Product Doctrine
The work-product doctrine is embodied within Rule 26(b)(3) of the Federal
Rules of Civil Procedure, which provides that “a party may not discover documents
and tangible things that are prepared in anticipation of litigation or for trial” unless
otherwise discoverable or a party shows substantial need for the material. Fed. R. Civ.
P. 26(b)(3). The doctrine is, in essence, a recognition that a lawyer requires a “certain
degree of privacy, free from unnecessary intrusion by opposing parties and their
counsel.” Hickman v. Taylor, 329 U.S. 495, 511 (1947).
The doctrine thus is intended “to protect material prepared by an attorney acting
for his client in anticipation of litigation.” United States v. Rockwell Int’l, 897 F.2d
1255, 1265 (3d Cir. 1990); see also United States v. Nobles, 422 U.S. 225, 238 (1975)
(“At its core, the work-product doctrine shelters the mental processes of the attorney,
providing a privileged area within which he can analyze and prepare his client’s
case.”). Notably, the doctrine does not extend to protect documents that were
prepared “in the ordinary course of business, or pursuant to public requirements
12
unrelated to litigation, or for other nonlitigation purposes.’” Martin v. Bally’s Park
Place Hotel & Casino, 983 F.2d 1252, 1260 (3d Cir.1993) (quoting Fed. R. Civ. P.
26(b)(3) advisory committee note).
In order for the doctrine to apply, Rule 26(b)(3) requires “that the material be
prepared in anticipation of some litigation, not necessarily in anticipation of the
particular litigation in which it is being sought.” In re Ford Motor Co., 110 F.3d at
967 (emphasis omitted). It is not necessary that litigation has been commenced or
even threatened before a document can be found to have been prepared in anticipation
of litigation. See In re Processed Egg Prods. Antitrust Litig., MDL No. 2002, 08-Md.2002, 2011 U.S. Dist. LEXIS 120708, at *16 (E.D. Pa. Oct. 19, 2011) (citing
Hydramar, Inc. v. Gen. Dynamics Corp., 115 F.R.D. 147, 150 n.3 (E.D. Pa. 1986)).
However, documents will come within the scope of the work-product doctrine only
where the documents were prepared primarily in anticipation of future litigation. See
In re Diet Drugs Prods. Liability Litig., MDL No. 1203, 2001 U.S. Dist. LEXIS 5494,
2001 WL 34133955, at *5 (E.D. Pa. Apr. 19, 2001).
3.
Application of these Privileges to Complex, MultiFaceted Corporate Decision-Making Involving InHouse Counsel
13
The application of these legal privileges to documents generated in complex
multi-faceted corporate restructuring decision-making has, in turn, led to the
development of a series of additional guiding principles. The work of applying the law
of privileges to records generated in corporate restructuring involving in-house
counsel has typically fallen to the lower courts, which have identified several key
tenets to guide their analysis of these claims.
First, in a corporate business restructuring setting, it is evident that: “The
involvement of in-house counsel alone is not enough for the attorney-client privilege
to be applicable. ‘Because in-house counsel is often extensively involved in the
business matters of the company (not infrequently holding executive positions), ...
[c]ourts have not been willing to presume that the services provided were of a legal,
as opposed to a business, nature.’ 1 Rice, Attorney–Client Privilege § 3:14, at 55–56
& n. 32 (citing cases).” Visa U.S.A., Inc. v. First Data Corp., 02-1786, 2004 WL
1878209, 10 (N.D.Cal. Aug. 23, 2004).
This refusal to automatically extend the privilege to matters which touch upon
in-house counsel reflects a simple corporate reality:
[U]nlike outside counsel, in-house attorneys can serve multiple functions
within the corporation. In-house counsel may be involved intimately in
the corporation's day to day business activities and frequently serve as
integral players in business decisions or activities. Accordingly,
communications involving in-house counsel might well pertain to
business rather than legal matters. The privilege does not protect an
14
attorney's business advice. Corporations may not conduct their business
affairs in private simply by staffing a transaction with attorneys. Fischel,
557 F.2d at 211. Because in-house counsel may operate in a purely or
primarily business capacity in connection with many corporate
endeavors, the presumption that attaches to communications with outside
counsel does not extend to communications with in-house counsel.
Accord, U.S. v. Chevron Corp., 1996 WL 264769, *4 (N.D. Cal.1996).
United States v. ChevronTexaco Corp., 241 F.Supp.2d 1065, 1076 (N.D.Cal. 2002).
These corporate realities, in turn, prescribe the showing which must be made to assert
a claim of privilege in this setting: “With respect to internal communications
involving in-house counsel, [a party] must make a ‘clear showing’ that the ‘speaker’
made the communications for the purpose of obtaining or providing legal advice. In
re Sealed Case, 737 F.2d 94 (D.C.Cir.1984).” United States v. ChevronTexaco Corp.,
241 F.Supp.2d at1076.
Corporate culture, and the role of in-house counsel in that culture, define the
legitimate scope of these privileges in another fundamental respect. In this setting,
“[t]here are substantial policy reasons for holding that business documents submitted
for attorney review are not by that virtue automatically exempt as privileged or work
product protected communications.” In re Seroquel Products Liability Litigation, 061769, 2008 WL 1995058, 4 (M.D.Fla. May 7, 2008)(citations omitted). As one court
has observed:
The structure of certain business enterprises, when their legal
15
departments have broad powers, and the manner in which they circulate
documents is broad, has consequences that those companies must live
with relative to their burden of persuasion when privilege is asserted.
See, e.g., In re Vioxx Products Liability Litigation, 501 F.Supp.2d 789,
805 (E.D.La.2007). When the business “simultaneously sends
communications to both lawyers and non-lawyers, it usually cannot
claim that the primary purpose of the communication was for legal
advice or assistance because the communication served both business
and legal purposes.” Id. (citing United States v. Chevron Corp., 1996
WL 444597 (N.D.Cal.1996)); United States v. International Business
Machines Corp., 66 F.R.D. 206, 213 (S.D.N.Y.1974) (“If the document
was prepared for purposes of simultaneous review by legal and non-legal
personnel, it cannot be said that the primary purpose of the document is
to secure legal advice.”). Consequently, the privilege does not protect
such communications. In re Vioxx, 501 F.Supp.2d at 805; AttorneyClient Privilege § 7.2.1 (“Because of the ease with which e-mail
technology allows in-house counsel to be brought into discussions,
counsel are contacted far more frequently, and through those contacts,
are likely encouraged to participate in regular business matters far more
frequently and broadly than was the case in the past.”).
Preferred Care Partners Holding Corp. v. Humana, Inc., 258 F.R.D. 684, 689-90
(S.D.Fla. 2009).
Applying these benchmarks, courts have eschewed broad claims of privilege
premised upon the involvement of in-house counsel in multi-participant corporate
restructuring processes, in favor of a far more narrowly tailored and fact specific
analysis of privilege claims.
III. DISCUSSION
With this legal framework in mind, we turn to the parties’ competing positions
16
with respect to the documents that Defendants have sought to withhold from
production. In doing so, the parties take divergent, sweeping positions: Defendants
contend that all of the documents enjoy broad protection, whereas Plaintiffs insist that
Defendants’ assertions of privilege were improper and all of the documents should,
accordingly, be disclosed. Upon consideration, and in summary, we find that with
respect to a number of the challenged documents, Defendants simply have not carried
their burden of showing that either the attorney-client privilege or the work-product
doctrine applies. With respect to these documents, because it is not evident that the
privilege applies, and because Defendants have not persuaded us that the privilege
should be found applicable, we will require Defendants to produce the documents.
In other cases, we conclude that the documents are, in fact, protected from disclosure
under either theory and we will not compel their disclosure.
In endeavoring to carry its obligation to establish that each document at issue
is privileged, United States v. LeCroy, 348 F. Supp. 2d 375, 382 (E.D. Pa. 2005),
Defendants have primarily chosen to rely on the content of the documents themselves,
the explanatory notes contained in the privilege log provided to Plaintiffs – many of
which are substantively identical – and on two paragraphs from the declaration of Ron
S. Chima, a senior in-house counsel to Rite Aid who was assigned to the corporate
team that was charged with evaluating and assessing the existing store structure.
17
(Doc. 269 and Exhibit 6 thereto, ¶¶ 5-6.) In addition, Mr. Chima has referred
generally to Kristin Crandall’s sworn declaration, which was previously submitted in
support of Defendants’ assertion that a number of related documents should be
deemed protected from discovery by the self-critical-analysis privilege. (Doc. 223,
Ex. A.) Defendants did not submit declarations or evidence from any other corporate
counsel or members of the team that was engaged in the assessment of Rite Aid’s
store structure at the time. Nor did the defendants provide declarations addressing in
a particularized way the application of the privilege to specific document, despite the
fact that “ ‘[t]he burden of proving that the . . . privilege applies is placed upon the
party asserting the privilege.’ United States v. Landof, 591 F.2d 36, 38 (9th Cir.
1978),” Matter of Grand Jury Empanelled February 14, 1978, 603 F.2d 469, 474 (3d
Cir. 1979), and “[w]ith respect to internal communications involving in-house
counsel, [a party] must make a ‘clear showing’ that the ‘speaker’ made the
communications for the purpose of obtaining or providing legal advice. In re Sealed
Case, 737 F.2d 94 (D.C.Cir.1984).” United States v. ChevronTexaco Corp., 241
F.Supp.2d at 1076.
Given the exacting, and specific standards applied by the courts to corporate
restructuring communications between in-house counsel and non-lawyers, we find this
18
categorical approach unpersuasive, and decline to adopt this approach. However, upon
an individualized review of these records, we conclude that the following documents
are privileged and exempt from disclosure. The bases for our decisions with respect
to these records are set forth below:
A.
Analysis of Privileged Documents
PRV 000094 through PRV 000108
These documents, all of which have been labeled as “confidential” and covered
by “work product / attorney client privilege” appear to be internal corporate Power
Point communications identifying a number of activities being undertaken in
connection with the corporate assessment and restructuring of Rite Aid’s front end
store leadership structure, and assigning responsibility for the various initiatives to
one or more team members. Defendants claim that the documents are covered by both
the attorney-client privilege and the work-product doctrine.
Defendants’ privilege log states that the Power Point slides reflect the advice
of counsel that was given in anticipation of FLSA litigation, and that the documents
represent “extensive planning, and related legal review, as well as legal advice, for
purposes of a large scale reduction in force and changes to manager positions and
store structure.” The privilege log indicates that Kristin Crandall, rather than an inhouse attorney, prepared the slides. The slides do not specifically explain or otherwise
19
indicate what information within the slides is the product of legal counsel and advice,
although some of the information contained within them suggests that it was, at least
in part, the product of legal counsel. In his declaration in support of Defendants’
assertion of privilege, Ron Chima does not specifically address these Power Point
slides, or explain why they are privileged, or what information contained in the slides
was privileged. While Defendants’ assertion of the privilege is both vague and broad,
we ultimately find that although the document was prepared by Kristin Crandall, there
is sufficient indicia of legal advice throughout the document itself, and the
involvement of counsel appears evident throughout. Accordingly, although we find
Defendants’ support for withholding this document to be somewhat weak, we are
persuaded that by the substance of the documents that they represent the product of
legal counsel that had been rendered in connection with the store restructuring, and
thus we will affirm Rite Aid’s assertion of the privilege to shield these materials from
discovery.
PRV 000127 through PRV 000129
These documents, together, form an internal memorandum regarding front end
store leadership structure for fiscal year 2010 that Defendants’ contend reflects
counsel’s mental impressions and advice in anticipation of and in light of FLSA
litigation. The documents were not prepared by a lawyer, but were instead prepared
20
by Kristin Crandall in May 2009, and appear to have grown out of the store
restructuring project that Rite Aid had undertaken in the fall of 2008. Rite Aid took
steps to protect the information, stamping a “do not distribute” label on the
documents, and identifying them as attorney work-product and subject to attorneyclient privilege. Defendants represent that the factual information has already been
produced to Plaintiffs in its entirety, and the dispute over these documents appears
therefore to be no longer a live issue. Accordingly, based upon Defendants’
representation that the factual information contained in the documents has already
been produced, and given the other indicia of privilege reflected in the records, we
will sustain Defendants’ decision to withhold production of the internal memorandum
itself.
PRV 000188 through PRV 000189
These documents are part of an internal communication that Kristin Crandall
prepared in February 2009, which addresses specific FLSA concerns, actions that the
company was planning to address these concerns, and a status update on these
initiatives. The documents are labeled as confidential attorney directed work product,
and seem to reflect, in a number of specific instances, the legal advice that had been
communicated as part of the store restructuring project with respect to specific,
discrete issues. Accordingly, we agree with Defendants that these documents may be
21
withheld from production on the basis of attorney-client privilege.
PRV 000190 through PRV 000191
These documents, similar in style and substance to those identified above as
PRV 000094 through PRV 000108, are Power Point slides that were part of an
internal corporate presentation regarding FLSA compliance and implementation, and
reflects in numerous instances, what appears to be the result of in-house legal advice
regarding numerous store restructuring initiatives. Although the document was
prepared by Kristin Crandall, we find sufficient indicia of legal advice throughout the
document itself, and the involvement of counsel appears evident throughout.
Accordingly, we are persuaded that the documents represent the product of legal
counsel that had been rendered in connection with the store restructuring, and thus we
will affirm Rite Aid’s assertion of the privilege to shield these materials from
discovery.
PRV 000197 through PRV 000198; PRV 000204 through PRV
000206
These documents consist of internal emails exchanged between Traci Burch,
Rite Aid Vice President of Labor Relations and Employment Counsel, and members
of the restructuring team. Specifically, two of the emails come from Ms. Burch in
which she provides express legal advice, and three of them come from Ms. Crandall
and David Markley, in which they provide requested information or otherwise ask
22
legal questions of Ms. Burch. The e-mails were contemporaneously identified as
“privileged and confidential” when they were written.
The email chain thus specifically addresses discrete legal issues that arose in
connection with the store restructuring project, and expressly reflect legal advice that
Ms. Burch, an in-house attorney, was providing to Ms. Crandall and other members
of the restructuring team, regarding some of the proposed changes, particularly with
respect to collective bargaining and labor-related issues. It is thus clear that these
documents are covered by the attorney-client privilege, and we will not require
Defendants to produce them.
PRV 000220
This document consists of emails exchanged between Kristin Crandall and
Traci Burch, Rite Aid’s Vice President for Labor Relations and Employment Counsel,
and which were also shared with other senior finance, labor relations, and human
relations personnel. The emails include requests made to Ms. Burch for legal counsel,
and Ms. Burch’s responses, which are legal in nature and relate to hours reductions
and litigation, anticipated union grievances, or other concerns that may result. The
legal nature of the communication is obvious, and we find that the attorney-client
privilege and work-product protections apply to shield this document from discovery.
PRV 000304
23
This document consists of emails between in-house counsel, Traci Burch, and
David Markley, Rite Aid’s Vice President of Financial Labor Analysis. The email
exchange was labeled “privileged and confidential” and was motivated by legal
considerations relating to Rite Aid’s store structure changes, and expressly requests
information for the purpose of providing legal advice. Ms. Burch’s response is filled
with confidential communications from counsel regarding legal advice being provided
to Mr. Markley and other senior managers. As such, we agree with Defendants that
these materials are protected from disclosure by the attorney-client privilege as well
as the work-product doctrine.
PRV 000349 through PRV 000358
These documents consist of an email from Kristin Crandall dated April 30,
2009, sent to Ron Chima and members of Rite Aid’s senior management circulating
draft information regarding the reduction-in-force initiative and store restructuring.
Defendants have asserted that these materials were also prepared in anticipation of
litigation regarding the staffing reductions, and severance concerns involved in the
store structure changes. Thus, Defendants contend that the materials are covered by
the attorney-client privilege and the work-product doctrine. Upon review, it appears
that these documents are substantively similar to those that we previously found to be
covered by the attorney-client privilege, and which have been identified as PRV
24
000094 through PRV 000108. For the same reasons we provided following our
analysis of those documents, we agree with Defendants that these materials may be
withheld from production on the basis of both the attorney-client privilege and workproduct doctrine.
PRV 000465 through PRV 000486; PRV 000487 through PRV
000527; and PRV 000528 through 000549
These documents consist of internal spreadsheets or charts that, according to
Defendants’ privilege log, were prepared by David E. Markley, Rite Aid’s Vice
President of Financial Labor Analysis, and provided to Robert B. Sari, Rite Aid’s
former Executive Vice President, General Counsel and Corporate Secretary. The first
set of spreadsheets, PRV 000465 through 000486, was prepared on September 25,
2007. The second series of documents, PRV 000487 through PRV 000527, was
prepared on February 25, 2008, and the third collection of documents, PRV 000528
through PRV 000549, was prepared on September 26, 2007. According to the
declaration of Ron Chima, these materials would have been prepared and provided to
the former General Counsel during a time when Rite Aid was defending itself in a
variety of FLSA litigation, and when the company could reasonably expect further
litigation to arise in the future. (Doc. 269, Ex. 6, Decl. of Ron S. Chima, at ¶ 5.)
The documents include a variety of factual information that Defendants claim
was requested for the purposes of providing legal advice regarding pending and
25
anticipated litigation regarding the exempt status of assistant store managers.
Defendants contend that requiring them to divulge these materials would force them
to reveal counsel’s mental impressions and legal advice.
These particular materials present something of a challenge for the Court on in
camera review. The difficulty in ascertaining whether the attorney-client privilege or
work-product doctrine shields these documents stems, in part, from the fact that the
documents themselves appear to convey only raw factual information to the General
Counsel. Additionally, it appears that Robert Sari is no longer employed by Rite Aid
and, perhaps for that reason, has not offered any attestation to support Defendants’
assertions regarding the nature and provenance of these documents.
Instead,
Defendants rely on bare assertions and the two paragraphs of Ron Chima’s declaration
on which they base substantially all of their privilege claims. Notwithstanding some
of the challenges that these circumstances present, upon careful review of the
documents, we believe it is sufficiently clear that the content of the information being
conveyed, the manner in which it was arranged, the representation that the information
was provided exclusively to the company’s General Counsel regarding actual and
anticipated litigation, and Ron Chima’s sworn declaration that the documents were
prepared for the purpose of helping counsel render legal services to the company with
respect to this litigation, collectively support Defendants’ claim that the materials are
26
protected attorney work-product, and we will uphold Defendants’ invocation of the
protections afforded by Federal Rule 26(b)(3) to withhold these materials from
production.2
PRV 007918 through PRV 007937
The final privileged document that Defendants have submitted is a sworn
declaration that Thomas Marano, a Co-Manager of a Rite Aid in Highland, New
Jersey, gave on October 22, 2009, and provided to outside counsel in connection with
FLSA litigation involving assistant store managers. It is not clear exactly what the
declaration was used for, although it appears to have clearly been obtained in
connection with FLSA litigation. Defendants argue that the declaration is protected
by the attorney-client privilege and the work-product doctrine, although they represent
2
In addition to what we noted earlier in this order about the work-product
doctrine, we observe that work product consists of “written materials obtained or
prepared by [] counsel with an eye toward litigation,” and includes: “interviews,
statements, memoranda, correspondence, briefs, mental impressions, [and]
personal beliefs . . . .” Bogosian v. Gulf Oil Corp., 738 F.2d 587, 592 (3d Cir.
1984). In order to determine whether a particular document was “prepared in
anticipation of litigation,” Fed. R. Civ. P. 26(b)(3), the relevant inquiry is “whether
in light of the nature of the document and the factual situation in the particular
case, the document can fairly be said to have been prepared or obtained because of
the prospect of litigation.” Martin v. Bally’s Park Place Hotel & Casino, 983 F.2d
1252, 1258 (3d Cir. 1993) (citing United States v. Rockwell Int’l, 897 F.2d 1255,
1266 (3d Cir. 1990)). Guided by these factors, and following review of the
documents in question, the timing of their creation, the fact that they were provided
exclusively to the company’s General Counsel, and in further consideration of Ron
Chima’s declaration, we conclude that the materials are protected work product.
27
that if Mr. Marano becomes a witness in the instant litigation, they will produce his
declaration to Plaintiffs. Defendants contend that until such time as they elect to rely
upon Mr. Marano as a witness, his declaration provided to counsel should be
considered confidential and be protected from disclosure.
Upon consideration, we tentatively agree with Defendants that disclosure of this
material should not be compelled at this time. The declaration itself appears to have
been obtained by Rite Aid counsel in connection with FLSA litigation brought by
former New Jersey Rite Aid Assistant Managers. We have difficult understanding
how this declaration could qualify as attorney-client privileged material, and we have
some question as to whether the signed declaration itself rightly qualifies as attorney
work product. In this regard, we note that in similar cases courts have similarly found
that a witness’s declaration, standing alone, is not work product, whereas an attorney’s
notes from a witness interview will generally be protected. See, e.g., Murphy v.
Kmart Corp., 259 F.R.D. 421, 431 (D.S.D. 2009); Doe v. Luzerne County, No. 3:041637, 2008 U.S. Dist. LEXIS 47796, at *13 (M.D. Pa. June 19, 2008). In this case,
the document sought to be protected is the witness’s declaration itself, not the
attorney’s notes or memoranda.
Nevertheless, we are persuaded that the declaration need not be produced at this
time because Defendants have not identified Mr. Marano as a witness likely to have
28
discoverable information that the disclosing party may use to support its case. See
Fed. R. Civ. P. 26(a)(1)(A)(I). To the extent that Mr. Marano is identified as such a
witness whose identity must be disclosed, Defendants will be required to disclose his
name and information to Plaintiffs, and at such time may be required to produce his
sworn declaration. We note that there is no work-product protection that would
excuse Defendants from making such an initial disclosure to the extent they identify
Mr. Marano as a witness. See id. But, at this time, Defendants have not identified Mr.
Marano as a witness in this litigation, or identified him as an individual likely to have
discoverable information, and we thus do not find that disclosure of his declaration
is properly compelled at this time. Accordingly, Defendants will not be required to
produce Mr. Marano’s declaration at this point in the litigation.
B.
Analysis of Non-Privileged Documents
Having concluded that the foregoing records are cloaked in privilege, we have
determined that the following documents are not privileged. Accordingly, for the
reasons set forth below, we will order these documents disclosed.
PRV 000062 through PRV 000063
The first document at issue consists of a series of internal emails sent on
October 13 and 14, 2008, by Kristin Crandall to members of the team of Rite Aid
personnel who were working together to assess and make changes to the company’s
29
existing store structure, particularly with respect to front-end leadership. In the first
email, Ms. Crandall writes to Jason Linsey, a former senior director of payroll and
compensation, asking whether he could assist with providing a “wage sensitivity
analysis” related to certain changes that the company was contemplating concerning
assistant managers. (Defendants’ PRV 00062.) Ms. Crandall indicates that her
question was inspired by a “great suggestion” that she had gotten from former General
Counsel Robert Sari, although the email is silent as to what the suggestion itself was,
or to what it related, or whether it was legal in nature. Nothing in the email indicates
that Mr. Sari had rendered legal advice – or, if he did, what the advice might have
been – and it is not clear that the information Ms. Crandall was soliciting from Mr.
Linsey was intended to be provided to counsel for the purposes of securing legal
advice.
The second email was sent to fifteen members of the Rite Aid team working on
the store-structure assessment, including two in-house counsel, seeking review and
feedback with respect to proposed store structure changes. (Defendants’ PRV
000063.) The email summarizes a number of the expected benefits from the revised
front-end store leadership structure, including corporate consistency, appropriate
leadership coverage levels, defined payroll plan expectations, and FLSA compliance.
Other than a general request for feedback on the attached proposal, the
30
correspondence does not expressly seek legal counsel and does not indicate that it is
covered by any privilege. Indeed, although in the email Ms. Crandall does seek input
on a number of issues, none of them are clearly legal in nature.
In their privilege log, Defendants assert that the information was being
“gathered at the request of in-house counsel Robert Sari, Ron Chima, and Traci Burch
for the purpose of providing legal advice regarding plans for store structure changes
and in light of FLSA litigation over managers’ exempt status.” However, the
document itself does not support the assertion that it was being generated at the
direction of counsel, and in many respects it appears to be part of a much larger
corporate initiative, regardless of whether it may have touched upon matters of legal
concern. Nothing in Ms. Crandall’s emails to members of the corporate team
reviewing Rite Aid’s corporate structure supports Defendants’ blanket assertion that
the documents are covered by either the attorney-client privilege or the work-product
doctrine, and we are unable to conclude that the documents are privileged or properly
withheld from production.
PRV 000064 through PRV 000066
These documents consist of internal corporate email messages regarding the
ongoing store structure assessment project in October 2008, and are in part duplicative
of the documents identified as PRV 000062-000063. The additional documents are
31
follow-up messages from Jason Linsey, the former senior director of payroll and
compensation, and from Matt Gerber, a senior manager of payroll compensation. In
their emails, Messrs. Linsey and Gerber provide Ms. Crandall with very general
information, and some questions, regarding the requested wage sensitivity analysis,
comparing pay rates for assistant managers and shift supervisors by region, and about
what the financial impact would be if Rite Aid had these employees’ base hours
reduced.
In their privilege log, Defendants indicate that these documents would be
produced with certain redactions, which Defendants have not identified. Defendants
also assert, again, that the emails in question were gathered at the request of in-house
counsel for purpose of providing legal advice, but the documents suggest rather that
they were generated as part of Rite Aid’s corporate reassessment of its existing store
structure, and in particular with respect to its plans to reduce base hours for assistant
managers.
Although this undertaking undoubtedly had legal implications, the
documents themselves do not appear to be privileged, as they do not appear to have
been created and shared for the primary purpose of obtain legal counsel. We simply
do not find that Defendants have carried their burden to show that these documents,
or many of the front end structuring reassessment documents, fall under a broad
application of either the attorney-client privilege or work-product doctrine.
32
Accordingly, we will order that the documents be produced.
PRV 000069 through PRV 000071
These documents consist of further correspondence from Kristin Crandall to
members of the corporate team evaluating and revising the front-end store leadership
structure, and seeking additional input from team members on issues concerning hours
equivalency and payroll budgeting, operations issues, and questions relating to
compensation and benefits. Other documents in this series consist of the emails
discussed above, and identified as PRV 000062-000063.
As before, we find insufficient indicia that these documents were, in fact, being
gathered and distributed at the direction of in-house counsel, or that the documents
were created primarily for the purpose of obtaining legal advice, or at counsel’s
direction for use in real or anticipated litigation. Instead, these documents appear to
be a continuation of the documents that reflect a large corporate restructuring effort
that appears to have been driven principally by business concerns, even if it touched
on legal matters as well. Again, none of the documents contain information from
counsel, and none of the documents specifically refer to legal counsel, or request input
from legal counsel on the matters set forth in the email. These documents will,
accordingly, be ordered produced.
PRV 000192 through PRV 000193
33
These documents are an internal spreadsheet that Defendants claim was
prepared at the direction of in-house counsel for the purpose of pending FLSA
litigation and for providing legal advice. The document was prepared by David E.
Markley, Rite Aid’s Vice President of Financial Labor Analysis, and was provided to
Kristin Crandall, the Vice President of Field Human Resources.
Other than
Defendants’ general assertion that the documents were prepared at the direction of
counsel, nothing in the documents themselves indicates that they contain confidential
communication that was provided to or from counsel, and the documents do not
appear to “reflect counsel’s mental impressions and legal advice,” regardless of
Defendants’ general contentions to the contrary.
Instead, the spreadsheet appears to consist of factual information regarding the
number of store managers in various store-level positions throughout the company.
Defendants further note that they already produced factual information about the
number of managers in relevant positions, and for this reason suggest that these
documents are redundant of those that have been made available to Plaintiffs. To the
extent that Defendants have already produced this information to Plaintiffs, and
production of these documents would be redundant, we will not require that the
documents be produced. However, to the extent that these documents contain
different information regarding the numbers of managers in various capacities, we do
34
not find that it is privileged or subject to work-produce protection, and it must be
produced.
PRV 000208 through PRV 000209
These documents are part of an internal email communication chain from May
8, 2009, between Kristin Crandall and other human resources and labor relations
personnel on the restructuring team, with respect to proposed front end store structure
changes, and particularly with respect to union and labor considerations.
Defendants claim that the documents “reflect legal advice and counsel’s mental
impressions,” but it is difficult to credit this broad assertion given that none of the
correspondence involves communication from a lawyer, and although in-house
counsel, Traci Burch, was copied on some of the emails, she was not asked to render
legal advice or to otherwise weigh in on the issues being discussed.
Defendants also claim that the these documents constitute protected attorneywork product, but again we find insufficient basis to credit this assertion, because
there is an inadequate basis to find that the information was being shared in
anticipation of litigation. To the contrary, it appears that the overriding reason for the
communication was for members of the restructuring team to exchange ideas and
concerns regarding the proposed store leadership changes – a project we have already
found cannot properly be concealed in its entirety behind the attorney-client privilege
35
or work-product doctrine.
We can appreciate the sensitive nature of the
communications, but we are unable to conclude that either the attorney-client privilege
or the work-product doctrine apply to shield this information from discovery.
PRV 000223 through PRV 000286
These documents consist of an initial transmittal email from Kristin Crandall
to Steve Parsons, Senior Vice President of Human Resources, and Scott Bernard,
Senior Vice President of Store Operations, and copied on a number of corporate
employees regarding possible exceptions to the store restructuring proposal.
Specifically, the email addresses a proposal to except certain assistant store managers
from the proposed changes to hours reductions, demotions, and terminations that were
part of the store restructuring proposal regarding front end store leadership.
Ms. Crandall’s email indicates that her email and comments were the product
of discussions that she had with Kenneth Black, Rite Aid’s Group Vice President of
Compensation and Benefits, and reflected certain reservations that Mr. Black’s “team”
had with some of the proposed changes. Attached to the email is the exception list
itself, which appears to be a spreadsheet listing a number of assistant store managers,
their store, and the district and region in which the stores are located.
Nothing in Ms. Crandall’s email, or in the attached spreadsheet, supports
Defendants’ broad assertion that the information was prepared or communicated in
36
anticipation of union grievances or FLSA litigation, and the email does not expressly
indicate that it was the product of any legal considerations or advice from in-house or
outside counsel. Thus, it is difficult to credit Defendants’ assertion – which appears
to be based upon the same general attestations that Ron Chima provided in his
declaration in support of all privilege claims before the Court – that the documents
reflect counsel’s advice and mental impressions. Instead, the communication is
exchanged solely between non-lawyers, and reflects business and compensation
considerations, rather than legal advice or planning.
Defendants have represented that the list of managers is over-inclusive, and the
information about “relevant managers” has already been produced to Plaintiffs in
“multiple other formats.” Nevertheless, because we do not find that Defendants have
shown that either the attorney-client privilege or work-product protections apply to
these documents, and because it appears that the information included in the
documents differs in certain respects from that already produced to Plaintiffs, we will
order that the documents be produced unless Plaintiffs no longer seek this information
in light of Defendants’ previous production.
PRV 000290 through PRV 000291
These documents consist of an email from Kristin Crandall to Ron Chima and
a number of senior management personnel soliciting feedback on a draft proposal
37
relating to Rite Aid’s restructuring initiatives and reduction-in-force efforts. The
document was clearly intended to be kept confidential by the recipients, but with the
exception of being sent to one of Defendant’s in-house attorneys in addition to other
management personnel, it is not clear from the document that it is really seeking
counsel’s legal advice. Instead, the document generally requests each recipient’s
“thoughts,” (PRV 000290), and Ms. Crandall specifically solicits only businessrelated feedback from Kenneth Black, Jason Linsey, and David Markley – senior
managers assigned to compensation, payroll, and finance issues. No specific legal
questions were directed at in-house counsel. To the extent Ron Chima responded with
specific legal information or advice, that communication is not included with these
documents. Upon consideration, we find that the document does not, facially, seek
legal advice or counsel, but instead concerns the company’s broad restructuring effort,
an effort that may have been motivated, in part, by legal considerations, but which was
also – like other documents from the restructuring initiative – driven by business
concerns. We do not find that paragraphs 5 and 6 of Ron Chima’s declaration are
sufficient to support Defendants’ contention that these documents should be withheld
from production on the basis of either the attorney-client privilege or the work-product
doctrine, and these documents will therefore be ordered produced.
PRV 000311 through PRV 000348
38
These documents consist of two pages of email communications, followed by
a spreadsheet listing of assistant store managers who would be excepted for purposes
of hours reductions, demotions, and terminations, and was contemplated as part of
Rite Aid’s front end store restructuring project. The email correspondence that serves
as a transmittal cover for the spreadsheets was shared among Kristin Crandall and as
many as six senior managers on the restructuring team. Notably, no member of Rite
Aid’s in-house counsel was copied on the email or the spreadsheets that were
transmitted. The email communication does not make express reference to any
specific legal issue on which Rite Aid was seeking advice from its attorneys; instead,
the documents address potential problems with the exceptions list, principally payrelated issues.
Defendants claim that these materials were prepared in anticipation of union
grievances and in light of pending FLSA litigation, and Defendants assert that
revealing the list of assistant store manager names will somehow “reveal both legal
advice and in-house counsel’s mental impressions.” Once again, Defendants support
this assertion by referring the Court to two paragraphs of Ron Chima’s declaration in
which he contends, essentially, that every aspect of Rite Aid’s store restructuring
project was undertaken at the direction of counsel, and that during the course of the
project he and other members of Rite Aid’s in-house counsel department provided
39
legal advice to corporate personnel regarding the proposed changes. (Doc. 269, Ex.
6, Chima Decl. at ¶¶ 5-6.) Mr. Chima’s declaration does not speak to these specific
documents in any way.
Notwithstanding Mr. Chima’s general representations, however, we note that
none of the correspondence seeks legal advice, and there is no indication that this
correspondence was shared with counsel, or that counsel provided any legal advice
regarding the information contained in either the email or the spreadsheet being
transmitted. Upon consideration, we find Defendants’ claims of privilege and workproduct protections for these materials is insufficiently supported and is not
corroborated by anything in the documents themselves.
Defendants have represented that the list of managers has already been
produced to Plaintiffs in “multiple other formats.” Nevertheless, because we do not
find that Defendants have shown that either the attorney-client privilege or workproduct protections apply to these documents, and because it appears that the
information included in the documents differs from that already produced to Plaintiffs,
we will order that the documents be produced unless Plaintiffs no longer seek this
information in light of Defendants’ previous production.
PRV 007120 through PRV 007123
These documents consist of internal email communications and an attached
40
draft memorandum regarding the front end store restructuring assessment that appears
to be substantively similar to the documents we considered previously, and which
were identified at PRV 000062 through 000063. The additional email correspondence
included with PRV 007120 through 007123 appear to have been shared between
senior managers, and touch upon issues relating to payroll budgeting and scheduling
considerations.
Consistent with our prior analysis, we do not find that Defendants have
adequately demonstrated that these materials are protected from discovery by either
the attorney-client privilege or the work-product doctrine, and we will therefore direct
that they be produced.
PRV 007284
This document is apparently a discussion outline and related handwritten notes
that Kristin Crandall prepared in 2008 and placed in a file. The document, which does
not appear to have been shared with any other Rite Aid personnel or counsel,
addresses possible store restructuring ideas that the company was considering at this
time. Defendants claim that the memorandum reflects counsel’s mental impressions
and legal advice in anticipation of litigation.
Upon consideration, we find that Defendants have not demonstrated sufficiently
41
that this particular document, which appears not to have been communicated or shared
with anyone internally at the company, and which does not state in any way that it was
the product of legal advice or counsel, or that it was prepared at counsel’s direction
in anticipation of litigation, is subject either to the attorney-client privilege or the
work-product doctrine.3 Because Defendants have not sufficiently demonstrated that
this document is subject to privilege or other protection, it must be produced.
PRV 007285 through PRV 007286
These documents are internal memoranda relating to Rite Aid’s store
restructuring project, and were prepared by Kristin Crandall at some point in or
around 2008. The documents were not shared with anyone, but were instead placed
3
Because we conclude that Defendants have not adequately demonstrated
that the memorandum is privileged, we find it unnecessary to consider whether a
memo to the file prepared by a non-lawyer is properly subject to the attorney-client
privilege. We do note that some courts have concluded that such memoranda are
not properly privileged, because they fail to satisfy the first element of the
privilege, namely that the information to be protected constitute a
“communication” for purposes of obtaining legal advice. See Stafford Trading,
Inc. v. Lovely, No. 05-C-4868, 2007 U.S. Dist. LEXIS 13062, at * 22 (N.D. Ill,
Feb. 22, 2007) (“Memos to files prepared by non-legal personnel containing
business information are clearly not privileged. These memos are not
communications directed to anyone for the purpose of obtaining legal advice and
cannot therefore fall within the ambit of the privilege.”) (quoting Sneider v.
Kimberly-Clark Corp., 91 F.R.D. 1, 6 (N.D. Ill. 1980)). In this case, there is
simply insufficient evidence for the Court to conclude that Ms. Crandall’s memo to
her file contains legal advice of counsel, or counsel’s mental impressions, as
Defendants’ assert.
42
in a file. Defendants claim that these documents are protected by the attorney-client
privilege and the work-product doctrine, and they rely on Ron Chima’s general
declaration in support of this claim. We note that PRV 007285 and PRV 007286 are
substantively identical, except that PRV 007286 contains handwritten notes that
Defendants claim “reflect both legal advice and counsel’s mental impressions”.
Defendants also contend that they already provided Plaintiffs with PRV 007285, with
the exception of a subsection briefly addressing the FLSA.
Upon consideration, as with PRV 007284, we do not find that Defendants have
met their burden of showing that these documents should be withheld from production
on the basis of privilege or work-product protection. None of the documents is
marked as privileged or as attorney-directed work product. Other than assertions in
Defendants’ privilege log, which are quite general, Ron Chima’s declaration does not
speak in any way to these memoranda, or what are apparently Ms. Crandall’s
handwritten notes on PRV 007286. We observe further that nothing in the notes
themselves causes it to be evident that the notes were the product of counsel’s mental
impressions or legal advice. In short, there is an insufficient basis for the Court to find
that these memoranda are privileged or otherwise protected, and they will be ordered
43
produced.4
C.
Conditional Privilege Ruling
Finally, we have identified the following documents which we conditionally
find not to be privileged based upon the Defendants’ current factual showing.
However, mindful of the fact that the privilege is evanescent, and is lost entirely when
first disclosed, we will provide the Defendants an opportunity to further buttress this
particular privilege claim, if it chooses to do so. Our analysis of the privileges and
their application to these particular documents, is set forth below:
PRV 000074 through PRV 000076
These documents consist of further internal communications between and
among members of the restructuring team. The additional correspondence contained
in this set of documents is found on PRV 000074 and PRV 000075, which are emails
exchanged between Kristin Crandall and Bradley Sapp, the Director of Labor
Relations for the West Coast. In these emails, Ms. Crandall solicits Mr. Sapp’s input
4
We acknowledge that Defendants have already produced much of this
information in a redacted format. Nevertheless, we do not find that Defendants’
assertion of privilege have been supported, and we thus have no basis on the
current record to permit Defendants’ to resist production of these documents in
their entirety. We note further that although the redacted portion of PRV 007285
concerns FLSA matters, the redacted material is especially general, does not
indicate that it is the product of counsel’s legal advice or mental impressions, and
therefore does not on its own appear to represent privileged information,
notwithstanding that it is information touching upon FLSA compliance.
44
on certain proposed changes to the store leadership structure, and Mr. Sapp provides
detailed guidance regarding particular concerns and problems presented by collective
bargaining agreements applicable to California stores.
Mr. Sapp clearly recognizes that the company was seeking store-wide changes
in an effort to create consistency in the front-end store structure company-wide, but
he raised a number of questions and concerns with respect to certain provisions in the
collective bargaining agreements applicable to California stores and their relevance
to the changes being proposed. Although legal concerns animate Mr. Sapp’s
correspondence, it does not appear to have been shared with a lawyer, and it is not
clear that the correspondence was provided for purposes of securing legal advice from
counsel.
Defendants state that these materials contain work product that was created in
anticipation of litigation, but the documents do not support this assertion. Instead, the
documents appear to describe business decisions taken in response to past litigation,
and have been created with corporate-wide business interests in mind, regardless of
the fact that relevant legal considerations were also recognized and discussed. Without
a further, and more detailed factual showing, we cannot conclude that the documents
consist of protected work-product, or that the attorney-client privilege attaches to
shield these documents from production. Neither Mr. Sapp nor Ms. Crandall is
45
identified as a lawyer for the company, and the lack of a sufficient indication that this
correspondence was generated at the behest of a lawyer, or for the purpose of
obtaining legal advice, cuts against Defendants’ generic assertion that the
correspondence is privileged. Although Rite Aid’s in-house attorney, Ron Chima, has
submitted a declaration stating states generally that these documents, and apparently
all of the 30 sets of documents that have been marked as privileged, were prepared at
the direction of counsel, in anticipation of litigation, and were related to legal advice
provided to the company, we find Mr. Chima’s declaration to be overly general and
insufficient to cause us to find that the correspondence exchanged between these two
non-lawyers is privileged or protected work-product. We will, however, permit
Defendants an additional opportunity to more fully and specifically explain and
support their basis for asserting either the attorney-client privilege or work-product
protection with respect to this email before ordering it be produced.
PRV 000216
This single document is an email that Kristin Crandall sent to members of Rite
Aid’s senior leadership team regarding the proposed store structure changes, and
particularly regarding assistant store managers. Although the email is sent to a
number of leadership personnel, we observe that the email was not sent to or copied
on any member of Rite Aid’s in-house or outside counsel, and does not appear to seek
46
legal advice of any kind. Instead, Rite Aid contends that the document reflects the
legal advice that counsel had provided during the restructuring process itself, and
further reflected counsel’s mental impressions in light of existing and anticipated
FLSA litigation. In essence, Defendant relies on the same generic assertions
regarding the attorney-client privilege and work-product protections that they resort
to with respect to all of the documents submitted.
At first blush, we have difficulty agreeing with Defendants that the attorneyclient privilege or work-product protection attaches to this document. Although there
is a reference in the email that it is “the recommendation with all taken into account,”
it is not clear that the recommendation is the result of legal advice given by counsel,
and Defendants have not explained with any degree of specificity why the document
should be privileged.
At the same time, having reviewed the contents of the email, we can perceive
how some parts of the correspondence may reflect the advice given by counsel, which
was in turn being shared with senior management involved in the store-restructuring
project. Nevertheless, the document does not bear any indicia of confidentiality, is not
marked as privileged, and does not otherwise indicate that it is communicating legal
counsel, or that it is being conveyed at counsel’s direction.
Although this document presents a close call, we find at this time that
47
Defendants have not adequately supported their contention that this email
communication is privileged material that should not be produced. Defendants’
reliance upon the same blanket and general assertions regarding the privilege, and
their claim that every aspect of the store-restructuring project and seemingly all
communications shared by members of Rite Aid’s restructuring team are privileged,
is simply not persuasive or sufficient. However, because it does appear that the
document may touch upon legal matters and real and potential litigation against the
company, we will permit Defendants an additional opportunity to more fully and
specifically explain and support their basis for asserting either the attorney-client
privilege or work-product protection with respect to this email before ordering it be
produced.
48
PRV 007291 through PRV 007296
These documents are also draft internal corporate memoranda that Kristin
Crandall prepared, and placed in a file, at some point during fiscal year 2010. These
memoranda relate to Rite Aid’s front end store structure and FLSA compliance, and
contain different proposals for managerial staffing and FLSA designation depending
on the front-end volume of a respective store.
The memoranda also contain
handwritten notes, although the notes are brief and quite general. In contrast to the
memoranda discussed above, these documents were labeled as “Attorney Directed
Work Product.” Defendants maintain that these draft memoranda were prepared at the
direction of counsel Ron Chima, for the purpose of providing legal advice and in light
of pending FLSA litigation. Defendants also note that final versions of the draft
documents used for business purposes have already been produced to Plaintiffs.
Upon consideration, although it is a somewhat closer issue, we do not find that
Defendants have met their burden of showing that these documents should be
withheld from production on the basis of privilege or work-product protection.
Although the documents are marked as attorney-directed work product, it is difficult
to perceive how these front-end store leadership changes were part of legal counsel’s
litigation strategy, and neither Ron Chima nor any other legal representative of the
company has explained adequately how these documents can reasonably be
49
considered work product created for litigation purposes. Instead, the documents
appear to consider forward-looking restructuring initiatives that may have been
inspired by the myriad lawsuits Rite Aid was defending against, but the documents do
not suggest that they were prepared to assist counsel with respect to the litigation
itself.
Although Defendants also contend that the memoranda are protected by the
attorney-client privilege, we again find an insufficient basis to reach this conclusion.
The documents were, apparently, written by Ms. Crandall and then placed in a file.
Nothing in Defendants’ submission to the Court supports their contention that the
documents were prepared primarily for the purposes of obtaining legal advice; instead
they appear to have been merely draft memos to the file. Other than assertions in
Defendants’ privilege log, which are quite general, Ron Chima’s declaration does not
speak specifically to these memoranda, or what are apparently Ms. Crandall’s
handwritten notes. We observe further that nothing in the notes themselves causes it
to be evident that the notes were the product of counsel’s mental impressions or legal
advice. In short, Defendants have provided an insufficient basis for the Court to find
that these memoranda are privileged or otherwise protected, and they will be ordered
50
produced.5 We will, however, permit Defendants an additional opportunity to more
fully and specifically explain and support their basis for asserting either the attorneyclient privilege or work-product protection with respect to this memoranda before
ordering it be produced.
PRV 007308
This document is another internal memorandum regarding Rite Aid’s store
restructuring proposals, prepared by Kristin Crandall and placed in a file sometime in
or around 2008. The document appears to set forth a number of corporate objectives
with respect to the restructuring, including FLSA compliance, defined supervisory
structure, clarity of leadership expectations, and profitability. The document does
indicate that some of the goals of the restructuring were to limit the corporation’s
liability in extant and future litigation, but nothing in the document indicates that it
was the product of legal counsel, or that it contains legal advice or opinions, or that
it was created at counsel’s direction to assist in actual or anticipated litigation. In
short, this brief document highlights restructuring objectives, touches on legal and
business issues, but does not clearly “reflect the advice of in-house counsel in
5
Although Defendants claim to have produced to Plaintiffs final versions of
the documents that were used for business purposes, we do not find that this
provides a sufficient basis for us to conclude that the draft memoranda is either
irrelevant or necessarily redundant of the material already produced.
51
anticipation of / in light of existing FLSA litigation,” as Defendants state in their
privilege log. Moreover, nothing in the two paragraphs in Ron Chima’s declaration
on which Defendants’ rely speaks directly to this particular memorandum, which was
created by a non-lawyer and thereafter placed in a file. In consideration of these
factors, we conclude that Defendants have not shown that this memorandum is
privileged or protected by the work-product doctrine, and it will be produced. We will,
however, permit Defendants an additional opportunity to more fully and specifically
explain and support their basis for asserting either the attorney-client privilege or
work-product protection with respect to this email before ordering it be produced.
An appropriate order follows:
IV.
ORDER
Accordingly, for the reasons set forth above, IT IS HEREBY ORDERED
THAT:
1.
The Court finds that Defendants’ have failed adequately to support their
assertions of attorney-client privilege or work-product protection for the
following documents, and therefore directs that these documents be
produced within 20 days from the of this Order:
•
•
•
•
•
•
•
PRV 000062 through PRV 000063
PRV 000064 through PRV 000066
PRV 000069 through PRV 000071
PRV 000192 through PRV 000193
PRV 000208 through PRV 000209
PRV 000223 through PRV 000286
PRV 000290 through PRV 000291
52
•
•
•
•
•
•
2.
3.
PRV 000311 through PRV 000348
PRV 007120 through PRV 007123
PRV 007184
PRV 007185 through PRV 007186
PRV 007291 through PRV 007296
PRV 007308
The Court finds that Defendants have adequately justified withholding
the following documents from disclosure on the basis of either the
attorney-client privilege, the work-product doctrine, or for the reasons
otherwise explained in the within memorandum:
•
PRV 000094 through PRV 000108
•
PRV 000127 through PRV 000129
•
PRV 000188 through PRV 000189
•
PRV 000190 through PRV 000191
•
PRV 000197 through PRV 000198
•
PRV 000204 through PRV 000206
•
PRV 000220
•
PRV 000304
•
PRV 000349 through PRV 000358
•
PRV 000465 through PRV 000549
•
PRV 007918
•
With respect toPRV74-76, PRV 000216, PRV 007291 through PRV
007296, and PRV 007308 although we do not find that Defendants have
adequately supported their assertion that this document is protected from
disclosure either on the basis of attorney-client privilege or work-product
protection, because it appears that the document might potentially be
subject to protection from disclosure, we will permit Defendants a final
opportunity to explain the basis for withholding this document from
production. Accordingly, on or before February 27, 2012, Defendants
may submit with the Court any additional information and evidentiary
support that they may have in support of their contention that these
records are privileged or otherwise protected from disclosure.
/s/ Martin C. Carlson
Martin C. Carlson
53
United States Magistrate Judge
Dated: February 9, 2012
54
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