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Beltran v. Interexchange, Inc.

United States District Court, D. Colorado

February 12, 2018

JOHANA PAOLA BELTRAN, LUSAPHO HLATSHANENI, BEAUDETTE DEETLEFS, ALEXANDRA IVETTE GONZALEZ, JULIANEHARNING, NICOLE MAPLEDORAM, LAURA MEJIA JIMENEZ, and SARAH CAROLINE AZUELA RASCON, Plaintiffs,
v.
INTEREXCHANGE, INC., USAUPAIR, INC., GREATAUPAIR, LLC, EXPERT GROUP INTERNATIONAL INC., d/b/a Expert AuPair, EURAUPAIR INTERCULTURAL CHILD CARE PROGRAMS, CULTURAL HOMESTAY INTERNATIONAL, CULTURAL CARE, INC., d/b/a Cultural Care Au Pair, AUPAIRCARE INC., AU PAIR INTERNATIONAL, INC., APF GLOBAL EXCHANGE, NFP, d/b/a Au Pair Foundation, AMERICAN INSTITUTE FOR FOREIGN STUDY, d/b/a Au Pair in America, AMERICAN CULTURAL EXCHANGE, LLC, d/b/a GoAuPair, AGENT AU PAIR, A.P.EX. AMERICAN PROFESSIONAL EXCHANGE, LLC, d/b/a ProAuPair, 20/20 CARE EXCHANGE, INC., d/b/a The International Au Pair Exchange, ASSOCIATES IN CULTURAL EXCHANGE, d/b/a GoAu Pair, and GOAUPAIR OPERATIONS, LLC, Defendants.

          ORDER REVERSING IN PART UNITED STATES MAGISTRATE JUDGE'S ORDER ON PLAINTIFFS' MOTION TO COMPEL AND FOR RELIEF

          CHRISTINE M. ARGUELLO United States District Judge.

         This matter is before the Court on Plaintiffs' Objections (Doc. # 771) to an Order issued by United States Magistrate Judge Kathleen M. Tafoya on December 4, 2017 (the "Magistrate Judge's Order") (Doc. # 763), wherein the Magistrate Judge denied Plaintiffs' Motion to Compel and for Relief. In Plaintiffs' Motion to Compel and for Relief, Plaintiffs moved the Court to compel the Alliance for International Exchange (the "Alliance") to produce seventy-seven pages of the Alliance's communications without redactions. (Doc. # 710 at 1-2.) Plaintiffs also asked the Court to impose monetary sanctions on Defendants and to order Defendants to pay Plaintiffs' reasonable expenses incurred in regards to their Motion to Compel. (Id. at 15.)

         For the following reasons, the Court affirms Plaintiffs' Objections (Doc. # 771) and reverses in part the Magistrate Judge's Order (Doc. # 763).

         I. BACKGROUND

         The factual and procedural background of this case has been extensively detailed in the Court's previous orders and the Magistrate Judge's recommendations. See, e.g., (Doc. ## 240, 569, 828.) The matter now before the Court concerns a discovery dispute. Additional factual and procedural background is detailed here to the extent necessary to address Plaintiffs' Objections.

         The Alliance is a trade association of ninety non-governmental organizations "comprising the international education and cultural exchange community in the United States." (Doc. # 717 at 7) (internal quotation omitted). It predates this action and continues to conduct its business as this action is litigated. (Doc. # 763 at 2-3.) Thirteen au pair sponsor organizations, including most Defendants, form an Au Pair Program sub-group within the Alliance.[1] (Id. at 3) (internal citation omitted). Officers of three Defendants serve on the Alliance's Board of Directors as Chairperson, Treasurer, and general board member.[2] (Id. at 3.) After service of the instant suit, the Alliance's Au Pair Program sub-group hosted discussions among its members to address this litigation and potential responses to it. (Doc. # 717 at 2.) Hand-written notes taken by and a draft letter composed by Alliance staff members at these discussions are the subject of Plaintiffs' Objections. (Doc. # 771.)

         Plaintiffs served an initial subpoena on the Alliance on or about January 30, 2017 (Doc. # 709-2), and an amended subpoena on May 25, 2017 (Doc. # 709-3), pursuant to Federal Rule of Civil Procedure 45.[3] (Doc. # 763 at 3.) Defendants objected to the subpoena on June 6, 2017. (Doc. # 709-4.) Plaintiffs and Defendants conferred on several occasions about the subpoena and specifically about potential privileges throughout June 2017. See (Doc. ## 709-5-709-7.)

         The Alliance produced a seventy-seven page, partially-redacted document of its communications to Plaintiffs on August 23, 2017. (Doc. ## 709-9-709-16.) In its cover letter to Plaintiffs, the Alliance stated that additional, potentially-responsive documents were still being reviewed. (Doc. # 709-8.) The Alliance proposed a claw-back agreement, "such that [the Alliance] could produce additional documents now while preserving [its] rights to clawback any documents which are determined to be privileged or otherwise confidential." (Id.) Plaintiffs promptly agreed to a claw-back arrangement (Doc. # 709-17) in an email to which the Alliance did not reply. The Alliance has not produced any documents since this correspondence.

         On September 13, 2017, one day before the Chairperson of the Alliance's Board of Directors was to be deposed, Defendants sent a letter to Plaintiffs "assert[ing] that certain portions of the documents produced by the Alliance [on August 23, 2017, ] are protected by the work product privilege, the common interest and joint defense doctrines, and possible the attorney client privilege." (Doc. # 709-22.) Defendants requested that Plaintiffs "immediately destroy or return to counsel for the Alliance the documents" in the August 23, 2017 production. (Id.) The parties conferred on September 15, 2017, but failed to reach agreement on the Alliance's production. (Doc. # 717 at 5.) Shortly thereafter, Defendants produced a redacted version of the Alliance's production and a privilege log. (Doc. # 709-1; Doc. # 717-5.) The privilege log contains ten entries and states that the bases for withholding information are "work product, [and] common interest" for all ten entries and also "attorney-client privilege reflecting legal advice of Jeffrey Allen, Esq. of Lawson & Weitzen, LLC" for five entries (entries 2-6).[4] (Doc. # 717-5.) Mr. Allen previously served as counsel for Defendant Cultural Care, Inc.

         On September 27, 2017, Plaintiffs filed their Motion to Compel and for Relief Under Federal Rules of Civil Procedure 26, 37, and 45, asserting that Defendants could not assert privileges over documents the Alliance produced on August 23, 2017. (Doc. # 710.) Plaintiffs asked the Court to compel production of unredacted versions of the documents and suggested that the Court sanction Defendants for their conduct. (Id.) Plaintiffs also requested that the Court impose monetary sanctions on Defendants and award Plaintiffs attorneys' fees and costs. (Id.) Defendants responded in opposition on October 6, 2017. (Doc. # 717.) Plaintiffs replied in support of their Motion to Compel and for Relief on October 11, 2017. (Doc. #721.) This Court referred Plaintiffs' Motion to Magistrate Judge Tafoya pursuant to 28 U.S.C. § 636(b)(1)(A). (Doc. #712.) The Magistrate Judge heard argument on November 15, 2017, see (Doc. # 757), and subsequently conducted an in camera review of the unredacted version of the Alliance's documents, see (Doc. # 763.)

         The Magistrate Judge denied Plaintiffs' Motion to Compel and for Relief in her Order on December 4, 2017, concluding that "the common interest doctrine . . . protect[s] . . . privileged portions of the communications from disclosure."[5] (Doc. # 763 at 13.) Plaintiffs objected to the Magistrate Judge's Order pursuant to Rule 72(a) on December 18, 2017. (Doc. # 771.) Defendants responded in opposition to Plaintiffs' Objections on January 10, 2017. (Doc. # 802.)

         II. STANDARD OF REVIEW

         Where a magistrate judge issues an order on a non-dispositive, pretrial order, "[a] party may serve and file objections to the order to the district court within 14 days after being served with a copy." Fed. R. Civ. Pro. 72(a). The district court must modify or set aside any part of the order that "is clearly erroneous or is contrary to law." Fed. R. Civ. Pro. 72(a); 28 U.S.C. § 636(b)(a)(A); First Union Mortg. Corp. v. Smith, 229 F.3d 992, 995 (10th Cir. 2000).

         With regard to legal matters, the district court conducts an independent, plenary review of the magistrate judge's order. In re Motor Fuel Temperature Sales Practice Litigation, 707 F.Supp.2d 1145, 1148 (D. Kan. 2010); see also 12 Charles Alan Wright, etal., Federal Practices Procedure § 3069 (2d ed. 2017). Under the 'contrary to law' standard, the reviewing court "set[s] aside the magistrate order only if it applied an incorrect standard, " Dias v. City & Cty. of Denver, No. 07-cv-00722-WDM-MJW, 2007 WL 4373229, *2 (D. Colo. Dec. 7, 2007) (internal quotations omitted), or applied the appropriate legal standard incorrectly, Kissing Camels Surgery Ctr, LLC v. Centura Health Corp., No. 12-cv-3012-WJM-BNB, 2014 WL 5599127, *1 (D. Colo. Nov. 4, 2014).

         As to factual findings by the magistrate judge, the 'clearly erroneous' standard "requires that the reviewing court affirm unless it 'on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1464 (10th Cir. 1988) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)). This is a deferential standard. In re Motor Fuel Temperature Sales Practice Litigation, 707 F.Supp.2d at 1147.

         III. ANALYSIS

         A. RELEVANT LAW

         Federal Rule of Civil Procedure 26(b)(1) requires production of "any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case." (Emphasis added.) The Alliance's documents satisfy the broad relevancy standard of Rule 26. The question for the Court is whether Plaintiffs' discovery request for the Alliance's unredacted documents covers privileged information. Privileges "further the administration of justice and should not be set aside lightly." Plaza Ins. Co. v. Lester, No. 14-cv-01162-LTB-CBS, 2015 WL 3528336, M (D. Colo. June 4, 2015) (internal quotation omitted). However, federal courts "narrowly construe all privileges."[6] Everitt v. Brezzel, 750 F.Supp. 1063, 1066 (D. Colo. 1990). "Whatever their origins, these exceptions to the demand for every man's evidence are not lightly created nor expansively construed, for they are in derogation of the search for the truth." United States v. Nixon, 418 U.S. 683, 710 (1074); see also Herbert v. Lando, 441 U.S. 153, 175 (1979) ("Evidentiary privileges in litigation are not favored."). The party resisting discovery and asserting privilege bears the burden of establishing that the privilege applies. Peat, Marwick, Mitchell &Co. v. West, 748 F.2d 540, 542 (10th Cir. 1984); Fed.R.Civ.P. 26(b)(5).

         Defendants assert two privileges: (1) work product privilege, and (2) attorney-client privilege. See (Doc. # 717-5.) Work product privilege is governed by the "uniform federal standard embodied in [Rule] 26(b)(3, )." Frontier Ref., Inc. v. Gorman-Rupp, Co., Inc., 136 F.3d 695, 703 n.10 (10th Cir. 1998) (quoting United Coal Co. v. Powell Constr. Co., 839 F.2d 958, 966 (3d Cir. 1988)). The privilege protects from discovery "documents and tangible things that are prepared in anticipation of litigation or for trial by or for [a] party or its representative." Fed.R.Civ.P. 26(b)(3)(A) (emphasis added). However, such materials may be discovered if the party requesting production shows that it has "substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means." Fed.R.Civ.P. 26(b)(3)(A)(ii); see also Martin v. Monfort, Inc., 150 F.R.D. 172, 172-73 (D. Colo. 1993) (describing the sequential approach to resolving work product privilege claims). Work product privilege exists because "[p]roper preparation of a client's case demands that [counsel for a party] assemble information, sift what he considers to be the relevant from the irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference." Hickman v. Taylor, 329 U.S. 495 (1947). Accordingly, "work product protection only applies to attorneys' or legal representatives' mental impressions, conclusions, opinions, or legal theories authored in anticipation of litigation." Grace United Methodist Church v. City of Cheyenne, 451 F.3d 643, 668 (10th Cir. 2006).

         The attorney-client privilege protects "confidential communications by a client to an attorney made in order to obtain legal assistance."[7] Matter of Grand Jury Subpoena Duces Tecum Issued on June 9, 1982, to Custodian of Records, 697 F.2d 277, 278 (10 Cir. 1983) (emphasis added) (quoting Fisher v. United States, 425 U.S. 391, 403 (1976)). The "mere fact that an attorney was involved in a communication does not automatically render the communication subject to the attorney-client privilege, " Motley v. Marathon Oil Co., 71 F.3d 1547, 1550-51 (10th Cir. 1995); rather, the "communication between a lawyer and client must relate to legal advice or strategy sought by the client, " United States v. Johnston, 146 F.3d 785, 794 (10th Cir. 1998). Another critical component of the privilege is "whether the communication between the client and the attorney is made in confidence of the relationship and under circumstances from which it may reasonably be assumed that the communication will remain in confidence." In re Qwest Commc'n Intern. Inc., 450 F.3d 1179, 1185 (10th Cir. 2006) (quoting United States v. Lopez, 777 F.2d 543, 552 (10th Cir. 1985)). 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." Upjohn Co. v. United States, 449 U.S. 383, 389(1981).

         It is well-settled that when privileged communications are voluntarily disclosed to a third-party, the privilege is waived. The Tenth Circuit explained, "the confidentiality of communications covered by [a] privilege must be jealously guarded by the holder of the privilege lest is be waived. The courts will grant no greater protection to those who assert the privilege than their own precautions warrant." United States v. Ryans, 902 F.2d73l, 741 n.13 (10th Cir. 1990) (internal quotation omitted). The proponent of the privilege bears the burden of establishing non-waiver. L-3 Commc'ns Corp. v. Jaxon Eng'g & Maint, Inc., No. 10-cv-02868-MSK-KMT, 2014 WL 3732943, *5 (D. Colo. July 29, 2014). Because work product privilege and attorney-client privilege are "two distinct concepts, " different standards for waiver apply and "waiver of one does not necessarily waive the other." Id., see also United States v. Nobles, 422 U.S. 225, 238 n.11 (1975) ("the work-product doctrine is distinct from and broader than the attorney-client privilege."). Work product privilege is waived "when protected materials are disclosed in a manner which 'substantially increases the opportunity for potential adversaries to obtain the information.'" Martin, 150 F.R.D. at 174 (quoting Niagara Mohawk Power Corp. v. Stone & Webster Eng'g Corp., 125 F.R.D. 578, 590 (N.D.N.Y. 1989)). In contrast, attorney-client privilege is waived by any voluntary disclosure. United States v. Bernard, 877 F.2d 1463, 1465 (10th Cir. 1989); Ryans, 903 F.2d at 741 n.13 ("The attorney-client privilege is lost if the client discloses the substance of any otherwise privileged communication to a third party.").

         The common interest doctrine, also known as the joint defense doctrine, is an exception to the general rule that a privilege is waived when the communication at issue is disclosed to a third party.[8]Roe v. Catholic Health Initiatives Colo.,281 F.R.D. 632, 638 (D. Colo. 2012) (citing In re Qwest Commc'n Intern. Inc., 450 F.3d at 1195). The doctrine operates "as a shield to preclude waiver of [a privilege] when a disclosure of confidential information is made to a third party who shares a community of interest with the represented party." Frontier Ref., Inc., 136 F.3d at 705 (emphasis added). A "community of interest" exists "where different persons or entities have an identical legal interest with respect to the subject matter of a communication between an attorney and a client concerning legal advice . . . The key consideration is that the nature of the interest be identical, not similar." Id. (emphases added) (quoting NL Indus., inc. v. Commercial Union Ins. Co.,144 F.R.D. 225, 230-31 (D.N.J. 1992)); see Gebremedhin v. Am. Family Mut. Ins. Co., No. 13-cv-02814-CMA-NYW, 2015 WL 4272716, *6 (D. Colo. July 15, 2015), objections overruled, 2015 WL 12967849 (D. Colo. Aug. 18, 2015). In short, the common interest doctrine is designed "to protect communications between co-defendants or co-litigants." Roe, 281 F.R.D. at 638 (citing Westinghouse Elec. Corp. v. Republic of Philippines,951 F.2d 1414, 1424 (3rd Cir. 1991) ("[c]ourts have also held that the client may disclose communications to co-defendants or co-litigants without waiving the privilege"); In re Grand Jury Proceedings,156 F.3d 1038, 1042-43 (10th Cir. 1998) ("to establish a joint-defense privilege, [the party is] required to demonstrate (1) the documents were made in the course of a joint- ...


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