Strand et al v. USANA Health Sciences

Filing 453

PRELIMINARY RULINGS ORDER Regarding Usana's In Camera Review re 391 MOTION to Compel Production of Documents and Deposition Testimony Improperly Withheld as Privileged (Short Form) filed by Elizabeth Strand, Amar a Enterprises. The parties shall file simultaneous briefing regarding the courts tentative rulings no later than August 2, 2021. The parties' briefs shall not exceed 10 pages (including caption, facts, and legal arguments). The briefing should a lso address whether the court should impose the reasonable expenses of preparing and litigating the motion to compel under Fed. R. Civ. P. 37(a)(5). Oral argument is scheduled for August 9, 2021, at 3:00 p.m. via Zoom before Magistrate Judge Jared C. Bennett. Signed by Magistrate Judge Jared C. Bennett on 7/20/21. (jwt)

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6066 Page 1 of 13

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH
ELIZABETH STRAND and AMARA
ENTERPRISES, INC.,
Plaintiffs,
v.
USANA HEALTH SCIENCES, INC.,
Defendant.

PRELIMINARY RULINGS REGARDING
USANA’S IN CAMERA REVIEW
Case No. 2:17-cv-00925-HCN-JCB
District Judge Howard C. Nielson, Jr.
Magistrate Judge Jared C. Bennett

This case was referred to Magistrate Judge Jared C. Bennett under 28 U.S.C.
§ 636(b)(1)(A). 1 Before the court is Plaintiffs Elizabeth Strand and Amara Enterprises, Inc.’s
(collectively, “Ms. Strand”) Short Form Motion to Compel the Production of Documents and
Deposition Testimony Improperly Withheld as Privileged. 2 The court held oral argument on the
matter on May 25, 2021. 3 At the conclusion of the hearing, the court ordered Defendant USANA
Health Sciences, Inc. (“USANA”) to submit the documents for an in camera review. 4 On June 1,
2021, USANA submitted to the undersigned’s chambers its challenged documents in camera
with the privilege log in Excel spreadsheet form as the court ordered.

1

ECF No. 23, 312.

2

ECF No. 391.

3

ECF No. 406.

4

ECF No. 409.

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6067 Page 2 of 13

The court has reviewed every document and provides a tentative ruling on each, which is
provided on the spreadsheet that the parties submitted. The court will provide a link in a separate
email from chambers that will allow the parties to access the court’s spreadsheet. To provide
context for the court’s tentative rulings on each document, the court: sets forth the legal
requirements for (I) attorney-client privilege and (II) work-product protection; (III) shares its
preliminary legal analysis for the three categories of documents in the reviewed materials; and
(IV) renders individual preliminary rulings for each document withheld and discusses the
deposition testimony. Finally, the court (V) orders simultaneous briefing on the court’s tentative
rulings that will be due on or before August 2, 2021, and will precede oral argument on this
matter, which is scheduled for August 9, 2021, at 3:00 p.m. via Zoom.
The court begins by setting forth the standards that it has used in evaluating USANA’s
privilege claims. The court discusses attorney-client privilege followed by the work-product
doctrine.
I.

ATTORNEY-CLIENT PRIVILEGE
Rule 501 of the Federal Rules of Evidence dictates how privilege is determined. 5

Pursuant to Rule 501, state law governs the applicability and scope of attorney-client privilege in
diversity actions. In this case, Ms. Strand’s action against USANA is based on Utah law. “[T]he
mere existence of an attorney-client relationship ‘does not ipso facto make all communications
between them confidential.’” 6 Rather, the “communication between a lawyer and client must

5

ERA Franchise Sys., Inc. v. N. Ins. Co. of New York, 183 F.R.D. 276, 278 (D. Kan. 1998).

Gold Standard, Inc. v. Am. Barrick Res. Corp., 801 P.2d 909, 911 (Utah 1990) (quoting Anderson v. Thomas, 159
P.2d 142, 147 (Utah 1945)).
6

2

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6068 Page 3 of 13

relate to legal advice or strategy sought by the client.” 7 Thus, under Utah law, a party claiming
attorney-client privilege must establish three elements: “(1) an attorney-client relationship, (2)
the transfer of confidential information, and (3) the purpose of the transfer was to obtain legal
advice.” 8 The purpose of 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.” 9 The privilege “protects confidential
communications by a client to an attorney made in order to obtain legal assistance from the
attorney in his capacity as a legal advisor.” 10
Attorney-client privilege protects information only when an attorney is acting in a legal
capacity. 11 In a corporate setting, “[a] party may successfully demonstrate applicability of the
privilege to written communication between corporate and management employees by
establishing that the communication was made in confidence for the primary purpose of
obtaining legal advice.” 12 “For a communication between non-attorney employees to be held

7

In re Grand Jury Proceedings, 616 F.3d 1172, 1182 (10th Cir. 2010) (quotations and citation omitted).

S. Utah Wilderness All. v. Automated Geographic Reference Ctr., Div. of Info. Tech., 2008 UT 88, ¶ 33, 200 P.3d
643; see also Utah R. Evid. 504 (providing that a client has a privilege to refuse to disclose and to prevent any other
person from disclosing confidential communications made for the purpose of facilitating the rendition of
professional legal services).
8

9

Upjohn Co. v. United States, 449 U.S. 383, 389 (1981).

10

In re Grand Jury Proceedings, 616 F.3d at 1182 (quotations and citations omitted).

See, e.g., id. (“Where questions only request information regarding communications where the attorney was acting
as a ‘conduit’ for non-confidential information, the client may not invoke the attorney-client privilege.”); Brigham
Young Univ. v. Pfizer, No. 2:06cv890 TS, 2011 WL 2795892, at *3 (D. Utah July 14, 2011) (finding that
communications are not privileged if they relate to general business or technical matters); Lifewise Master Funding
v. Telebank, 206 F.R.D. 298, 304 (D. Utah 2002) (excluding documents not subject to attorney-client privilege
because the documents were “not shown to be confidential or for legal advice as distinct from business advice”).
11

Brigham Young Univ., 2011 WL 2795892, at *3 (quotations and citation omitted); see, e.g., Mission Nat. Ins. Co.
v. Lilly, 112 F.R.D. 160, 163 (D. Minn. 1986) (“[T]he attorney must be acting in the role of legal counsel with
12

3

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6069 Page 4 of 13

privileged, it must be apparent that the communication from one employee to another was for the
purpose of the second employee transmitting the information to counsel for advice or the
document itself must reflect the requests and directions of counsel.” 13
II.

WORK-PRODUCT DOCTRINE
The work-product doctrine protects from discovery those documents, things, and mental

impressions of a party or its representative, particularly its attorney, developed in anticipation of
litigation.14 The doctrine is not intended to protect work prepared in the ordinary course of
business or investigative work unless it was done so under the supervision of an attorney in
preparation “for the real and imminent threat of litigation or trial.” 15 For the doctrine to apply,
there must be a real and substantial probability that litigation will occur at the time the
documents were created. In diversity cases, work-product protection is governed by Fed. R. Civ.
P. 26(b)(3). 16 To establish work-product protection, USANA must show “(1) the materials
sought to be protected are documents or tangible things; (2) they were prepared in anticipation of
litigation or for trial; and (3) they were prepared by or for a party or a representative of that
party.” 17

respect to the information in issue before the privilege may attach. If the attorney is acting in some other role, as an
ordinary businessman for example, the privilege may not be properly claimed.”).
Adams v. Gateway, Inc., No. 2:02-cv-106 TS, 2003 WL 23787856, at *11 (D. Utah Dec. 30, 2003) (quotations
and footnote omitted).
13

14

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

15

U.S. Fire Ins. Co. v. Bunge N. Am., Inc., 247 F.R.D. 656, 657 (D. Kan. 2007).

Frontier Refining, Inc. v. Gorman–Rupp Co., 136 F.3d 695, 702 n.10 (10th Cir. 1998) (stating that “[u]nlike the
attorney client privilege, the work product privilege is governed, even in diversity cases, by a uniform federal
standard embodied in Fed. R. Civ. P. 26(b)(3)” (quotations and citation omitted)).
16

17

Johnson v. Gmeinder, 191 F.R.D. 638, 643 (D. Kan. 2000).

4

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6070 Page 5 of 13

There are two components in determining whether documents are prepared in
anticipation of litigation. The first is the causation requirement—the primary motivating purpose
for preparation of the document must be anticipation of litigation rather than preparation in the
ordinary course of business or preparation required by some external or internal mandate. 18 The
second component imposes a reasonableness limit on a party’s anticipation of litigation—the
threat of litigation must be real and imminent. 19 Therefore, a party claiming work-product
protection must demonstrate the document was prepared principally or exclusively to assist in
anticipated or ongoing litigation and establish the underlying nexus between the preparation of
the document and the specific litigation. 20

If materials are produced in the ordinary and regular course of a discovery opponent’s business, and not to prepare
for litigation, they are outside the scope of the work-product doctrine. Fed. R. Civ. P. 26(b)(3) advisory committee’s
note to 1970 amendment. Accordingly, even if litigation is imminent, there is no work-product immunity for
documents prepared in the ordinary course of business rather than for litigation purposes. Binks Mfg. Co. v. Nat’l
Presto Indus., 709 F.2d 1109, 1119 (7th Cir. 1983); Wright & Miller, Federal Practice and Procedure,
Civil, § 2024. That is to say, the mere fact that a discovery opponent anticipates litigation does not qualify an “inhouse” document as work product. Janicker v. George Washington Univ., 94 F.R.D. 648, 650 (D.D.C. 1982); see,
e.g., Fine v. ESPN, Inc., No. 5:12-CV-0836, 2015 WL 3447690, at *7 (N.D.N.Y. May 28, 2015) (“[W]hile the Jones
Affidavit states that the University anticipated litigation at the time of the 2005 investigation . . . , it offers no
evidence, nor does the University claim now, that the documents produced during the investigation would not have
been prepared in the same form absent the prospect of litigation . . . .”).
18

Because litigation can be anticipated, in a general sense, at the time almost any incident occurs—thus closing off
much pertinent discovery—courts have interpreted the Rule to require a higher standard of anticipation to give a
reasonable scope to the protection. There are many formulations of this level of threat, but the cases generally
concur that a party must show more than a remote prospect, an inchoate possibility, or a likely chance of litigation.
See, e.g., Kannaday v. Ball, 292 F.R.D. 640, 649 (D. Kan. 2013) (stating that the “reasonableness limit on a party’s
anticipation of litigation” requires the threat of litigation to be “real” and “imminent”); Leonen v. Johns–Manville,
135 F.R.D. 94, 97 (D.N.J. 1990) (providing that there must be “an identifiable specific claim or impending litigation
when the materials were prepared” for the protection to apply); Carver v. Allstate Ins. Co., 94 F.R.D. 131, 134 (S.D.
Ga. 1982) (explaining that the concern is no longer “with the contingency of litigation” but whether the probability
of litigation is “substantial and imminent”); Coastal States Gas Corp. v. Dep’t of Energy, 617 F.2d 854, 865 (D.C.
Cir. 1980) (stating that a party must demonstrate that “at the very least some articulable claim, likely to lead to
litigation” had arisen).
19

20

Kannaday, 292 F.R.D. at 648-49.

5

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6071 Page 6 of 13

The court next addresses the documents listed in USANA’s privilege log and provided to
the court for in camera review pursuant to the categories described below. The court presents its
preliminary legal analysis for each document group, as well as a tentative ruling on each
document in the privilege log spreadsheet that USANA submitted and a discussion of the
deposition testimony.
III.

PRELIMINARY LEGAL ANALYSIS
The documents submitted for review are divided into three categories and grouped by

color. 21 These categories generally are comprised of (A) Yellow–Compliance Department
Memoranda, (B) Pink–Compliance Department Checklists and Forms; and (C) Green–Email
Communications with Counsel. The preliminary legal analysis for each color group is discussed
in turn below.
A.

Yellow–Compliance Department Memoranda

USANA asserts the memoranda in the Yellow category are protected from disclosure
under attorney-client privilege. As shown, the court disagrees, and concludes that none of
documents in this category are attorney-client privileged. The Yellow group of documents is
comprised of routine memoranda authored by members of the Compliance Department (e.g.,
Compliance Officers, Compliance Assistants, and Compliance Specialists) and sent to “File” at
the conclusion of all case investigations. 22 The materials appear to be prepared pursuant to Step 9
of USANA’s Step-By-Step Procedures for Processing “Serious” Policy Violations (hereafter,
Because the parties refer to the document groups by color, the court will also refer to the groups by color for ease
of discussion herein.
21

In a corporate setting, “communications from lower echelon employees [are] within the privilege as long as the
communications were made to the attorney to assist him in giving legal advice to the client corporation.” United
States v. El Paso Co., 682 F.2d 530, 538 n.8 (5th Cir. 1982) (citing Upjohn Co., 449 U.S. at 391).
22

6

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6072 Page 7 of 13

“Compliance Protocol Sheet”), 23 which is the document setting forth the steps that the
Compliance Department must perform when it receives complaint information from a DSR or
DSR Supervisor.
As discussed, the attorney-client privilege protects only communication primarily
motivated by the client’s request for legal advice. Here, company policy required preparation of
the memoranda at the conclusion of compliance investigations as part of a corporate
recordkeeping exercise. The documents were created during routine investigations into
unauthorized recruiting and performed within the Compliance Department without involvement
of counsel. The primary purpose appears to be motivated by business concerns regarding
unauthorized recruiting and fulfilling obligations under corporate policies and distributor
contracts which, among other things, permit cancellation of distributorships for “cause” only.
Accordingly, at this stage, USANA has not shown that the materials were prepared for
the primary purpose of receiving legal advice, but rather were prepared in the ordinary course of
business of investigating serious complaints of unauthorized recruiting. The memoranda contain
no references to law, legal advice, or litigation, and affixing a “Privileged and Confidential
Prepared at the request of Counsel” label to a memorandum does not magically render it
privileged when it contains no communication made or work done for the purpose of providing
legal advice. Moreover, Jim Bramble’s (“Mr. Bramble”) attempt to label all case files
“memoranda, checklists, and other documents” as necessary investigative steps in connection
with legal advice is not persuasive. Steps 3-9 in the Compliance Protocol Sheet directly

23

ECF No. 405-1 at 2-3.

7

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6073 Page 8 of 13

contradict Mr. Bramble’s claim that the documents were intended “exclusively” for him to
formulate legal advice. 24 Were memoranda such as these attorney-client privileged, then nearly
every investigative report from the Federal Bureau of Investigation and every other law
enforcement agency would be attorney-client privileged because someday it may be reviewed by
an attorney to determine whether to seek charges and how to prove them later. This cannot be.
Unless USANA can establish otherwise, the court concludes the documents are not attorneyclient privileged.
B.

Pink–Compliance Department Checklists and Forms

USANA asserts both attorney-client privilege and work-product protection for the
materials in the Pink category. These documents are compliance checklist forms for the purpose
of aiding Administrative Assistants and Compliance Officers in their investigation of a
Distributor’s alleged breach. First, the court finds that none of the documents in the Pink
category are subject to attorney-client privilege for the same reasons as the documents in Yellow
category. The checklists were created pursuant to internal policy for the purpose of uniformly
conducting investigations and to mitigate harm to the business from unauthorized recruiting and
fulfilling contractual obligations, among other things. The content of these checklists does not
encompass or reveal legal advice, and the underlying facts and events contained therein are not
subject to privilege.
Next, the court finds the documents are not entitled to work-product protection. The
work-product doctrine protects documents primarily motivated by a corporation’s involvement in

24

ECF No. 400-3 at ¶ 5.

8

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6074 Page 9 of 13

or reasonable anticipation of litigation. Here, the documents were created in the ordinary course
of business and prepared pursuant to internal policy and procedure, and although USANA may
have anticipated litigation, this was not the motivating factor for creating the documents.
Therefore, because they were created in accordance with company policy in the ordinary course
of business, such documents are not protected by the work-product doctrine unless USANA can
show that they were specifically created to aid litigation strategy or defenses.
C.

Green–Email Communications with Counsel

USANA alleges that the email communications in the Green category are protected from
disclosure under attorney-client privilege and the work-product doctrine. 25 The court concludes
that most of the documents in the Green category are not attorney-client privileged
communications or protected under the work-product doctrine. Most of the documents relate to
Dr. Strand’s participation in the Ariix webinar and cancellation of Ms. Strand’s Distributorship.
The email communications are made by or sent to in-house counsel, Mr. Bramble.
Attorney-client privilege protects only confidential communications made for the purpose
of facilitating the rendition of professional legal services to the client. Where an attorney is
functioning in some other capacity (e.g., as a business advisor), there is no privilege. Here, Mr.
Bramble’s communications with USANA executives, Division Directors, and Compliance
Committee members are business-related, not legal. In general, they summarize discussions and
provide updates to USANA employees on the progress of the Strand investigation and do not
appear to be created for the purpose of seeking or transmitting legal advice. Mr. Bramble’s status

25

USANA asserts only attorney-client privilege for Documents 552-53, 555-84, 558-90.

9

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6075 Page 10 of 13

as an attorney does not transform what would otherwise be business communications into legal
communications. For example, Mr. Bramble’s July 12, 2011 email to Executive Management
(Document D) provides an update on the situation with Dr. Strand and Ms. Strand, describes
communications with them, gives his impression of the situation, and relays next steps. Indeed,
USANA’s own internal description of the communication is “Jim Bramble’s email information
management of Strand situation.” The fact that Mr. Bramble, an attorney, drafted this status
update communication does not turn the email into a privileged communication. 26 Likewise, the
content of Mr. Bramble’s communication to the Compliance Committee does not support a
finding that rendering legal advice was the predominant purpose. For example, the content of the
September 7, 2011 communication (Document 573) itself establishes the purpose was business,
not legal, advice as Mr. Bramble directly states in the email that, “Dan has authorized me to send
summary for your vote on this case.” However, the communication between Mr. Bramble and
Keng Hean Ng that follows this email does pertain to legal advice and, therefore, that
communication is privileged and should be redacted.
The court is also not convinced that the draft letter sent to Mr. Bramble for approval
(Document A) entitled, “what do you think thumbs up send it thumbs down means don’t,”
contains legal advice. The mere fact that legal counsel was involved in drafting a letter does not
automatically render it subject to attorney-client privilege. Based on the content and the context

Walker v. N.H. Admin. Office of the Courts, No. 11-CV-421-PB, 2013 WL 672584, at *8 (D.N.H. Feb. 22, 2013)
(noting that investigation summaries and updates are not legal advice).

26

10

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6076 Page 11 of 13

of the draft letter, there is no evidence of legal advice within the document or that legal advice
was sought or given. 27
As for USANA’s assertions of work-product protection, the court does not find it applies.
The fact that USANA may have anticipated litigation does not make all documents thereafter
generated by or for in-house counsel automatically protected under the work-product doctrine.
Here, although litigation may have been anticipated, the primary concern of the communications
does not involve the facilitation of legal advice but rather is business-focused as USANA
strategizes the appropriate course of action in light of Ariix’s competitive posture and the
Strand’s engagement with a direct competitor.
Moreover, Mr. Bramble’s involvement in the investigation appears, in part, tailored to
impress upon Dr. Strand and Ms. Strand the seriousness in which USANA viewed their actions.
This suggests a business rather than a legal purpose. Although the information developed during
the course of the investigation may be helpful in future legal proceedings against Ms. Strand,
USANA has shown neither that the emails contain confidential communication made for the
purpose of facilitating the rendition of legal advice nor that the emails were motivated by the
anticipated litigation rather than by something else.
IV.

INDIVIDUAL RULINGS AND DEPOSITION TESTIMONY
The court renders individual preliminary rulings for each document withheld as

privileged. As noted above, the court reviewed each document to determine whether
attorney-client privilege or the work-product doctrine applies. The court’s rulings with respect to
In re Syngenta AG MIR Corn Litig., No. 14-MD-2591-JWL, 2017 WL 1106257, at *7 (D. Kan. Mar. 24, 2017)
(“[T]he attorney-client privilege does not attach to simple editing or ‘word-smithing’ by counsel.”); see also
Entrata, Inc. v. Yardi Sys., Inc., No. 2:15-CV-00102-CW-PMW, 2018 WL 3055755, at *3 (D. Utah June 20, 2018).
27

11

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6077 Page 12 of 13

each document in the privilege log and submitted in camera are provided on the spreadsheet that
USANA submitted. The court will provide a link in a separate email from chambers that will
allow the parties to access the court’s spreadsheet.
As to USANA’s assertions of attorney-client privilege during the depositions of Dan
Whitney, 28 James Bramble, 29 Lori Truman, 30 and Kevin Guest, 31 it appears that USANA’s
counsel improperly directed the deponents not to answer certain questions about the Strand
investigation on the basis of attorney-client privilege. Counsel’s deposition questions present as
being questions of fact, which are not subject to attorney-client privilege. Given the
well-established rule that the privilege protects communications rather than historical facts or
events, 32 and considering the court’s preliminary rulings on privilege set forth herein, the court
finds USANA’s invocation of privilege during the depositions improper. Ms. Strand requests that
the court reopen the depositions for the deponents to answer the questions. At this stage, the
court is not inclined to wholly reopen the depositions but rather is inclined to allow Ms. Strand to
re-depose the deponents by written questions pursuant to Fed. R. Civ. P. 31(2)(A)(ii). The parties
should address the propriety of the assertions of privilege as to the deposition testimony and the
appropriate remedy in the event the court concludes the solicited testimony is not subject to
attorney-client privilege in their briefing memoranda.

28

ECF No. 391-2.

29

ECF No. 391-3.

30

ECF No. 391-4.

31

ECF No. 391-5.

32

Upjohn Co., 449 U.S. at 395.

12

Case 2:17-cv-00925-HCN-JCB Document 453 Filed 07/20/21 PageID.6078 Page 13 of 13

V.

ORDER FOR BRIEFING
The parties shall file simultaneous briefing regarding the court’s tentative rulings no later

than August 2, 2021. The parties’ briefs shall not exceed 10 pages (including caption, facts, and
legal arguments). The briefing should also address whether the court should impose the
reasonable expenses of preparing and litigating the motion to compel under Fed. R. Civ. P.
37(a)(5). Oral argument is scheduled for August 9, 2021, at 3:00 p.m. via Zoom.
IT IS SO ORDERED.
DATED July 20, 2021.
BY THE COURT:

JARED C. BENNETT
United States Magistrate Judge

13