Jacob v. Duane Reade, Inc. et al, No. 1:2011cv00160 - Document 71 (S.D.N.Y. 2012)
Court Description: MEMORANDUM OPINION AND ORDER: For the foregoing reasons, the Court concludes that any privilege with respect to the email in question was waived. (Signed by Magistrate Judge Theodore H. Katz on 2/28/2012) (cd)
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- ,.,-.--....... (JSt)\ ",! ~I' '; l}(.'~·~ V' ,-,'\., , AUNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK EL.i~\ ; ."Jt\il( J. f' u' " _~._~. __~~ --x nAT... ~'nJu) MANI JACOB, et al., PIa iffs, 11 Civ. 0160 (JMO) (THK) -againstMEMORANDUM OPINION AND ORDER DUANE READE, INC., et al., Defendants. ------- -X THEODORE H. KATZ, UNITED STATES MAGISTRATE JUDGE. Plaintiffs in this action are Assistant Store Managers who are pursuing a collective action for overt Labor Standards Act ("FLSA"), aga and Duane Reade Holdings, Inc. wages, under the Fair st Defendants Duane Reade, Inc. ("Duane Reade"). Presently before Court is a letter motion filed by Duane Reade, for a protective order declaring an email that was inadvertently produced in discovery to be protected by the attorney-client privilege and ordering its return. (See Stephen A. Court, dated Jan. 2012 oppose the motion, 24, arguing Fuchs, Esq., Letter to ("Fuchs Jan. that the 24 Ltr.").) document in Plaintiffs issue is not protected by the attorney-cl ient privilege and, al ternati vely, that any lege has been waived. Lewis M. Steel, Esq., Letter to the Court, dated Jan. 31, 2012 ("Steel Jan. 31 Ltr.").) For the reasons set forth below, the Court concludes that the document in issue is a privileged attorney-client communication, but that the d. s been wa privilege FACTUAL BACKGROUND On November Plaintiffs as 8, part formation stored 2011, of an ("ES a ongoing Ltr., Ex. 1.) Acco email was oduction relating If) of Human Resources, Pres two-page to of produced electronically Defendant's Jim Scarfone. to former Vice Fuchs Jan. 24 to Defendants' counsel, the ESI production involved the review of over two million documents in less than a month; that review was accomplis wi th the assistance The Reade's email in Human question Resources is from Manager, to Suzanne Robin Lazarchick, Costa, Director of Human Resources, which Costa therea Jim Scarfone. Ac task force held, with Laza Julie Ko, in-house the email, the charged with sing the To t j end, a task script I counsel, in attendance. at the meeting the two Regiona rform those tasks them from the for rce meeting was ick, two Regional Directors of Operat sed those present that to exempt Senior r communicated to and As reflected in Directors what duties the Assistant Store Managers were not perfo rs to Duane ng to Lazarchick, she was a member of a Duane Assistant Store Managers. Ko an vendor and document review team. outsi Rea of rted on , and was necessary for Assistant Store n order for their responsibilities coverage 2 of FLSA. In email. however, Julie Ko's last name was not mentioned and she was simply identifi as Julie. The remainder al for training management their management of email reflects a rsonnel so that they understand lities respons the that they are "exempt" employees under the FLSA. On November 9, 2011, the mo to Plaintiffs, Pla iffs after the email was produced sed Mr. Scarfone about its contents. The deposition was defended by one of Defendants' att ion, lit who also conducted respect to the email. the depos refe to i to in the email. ify Jul time was examinat Nor did ask Mr. Scarfone whether he There were apparently several breaks at the not used roduced, including a lunch break, to ascertain ie's Nevertheless, the same attorney defended another weeks earlier I with ify who the "Julie" was who was sition after the email was and redirect He did not raise a privilege objection at or att could some s in this at which Julie Ko was i ity. sition three ified as Defendants' former in-house counsel. On January 13, deposition. deadl notice, had 2012, Plaintiffs noticed Ms. Lazarchick's (The deposition notice was issued after the discovery s .) In response to receiving the deposition ned documents associated with Duane Reade's counsel Ms. Lazarchick, and its lead counsel in this litigation 3 ermined, on January 17, 2012, that the Lazarchick email in issue contained privileged meeting, information at whi because Julie was given in rmation. related to t 1 and requesti Plaintiffs contend that is not privi involved same date, t On was rmation and provi counsel sent an email to Plaintiffs' email was pri Ko in the d advice ,s Duane counsel asserti that the that all copies be returned. email is a business cument that and, in any event, the privilege has en waived. DISCUSSION I. Attorney-Client Privilege A thre privil d d question attorney-client is whether . +- . communlca,-lon. privilege has the burden of est be and was in fact email The lishing privil between client a communicat the issue party is a asserting by showing, "1) counsel that (2) was intended to kept confidential, purpose of obtaining or p and (3) legal advice." was made for the In re County of , 473 F.3d 413, 419 (2d Cir. 2007). To be privileged, a communication must be for the purpose of obtaining or providing 1 here, invol se counsel, 1 advice and assistance. Where, who are often business executives, as are in the communication, "the question usually is whether t communication was generated for the purpose of obtaining providing legal advice as opposed to business advice." 4 or at 419; , 473 F. AID Ins. Co. v. TIG Ins. Co., No. 07 Civ. 7052(SHS) (HBP), 2008 WL 4067437, at *6 (S.D.N.Y. Aug. 28, 2008) (" [W] within the legal, as re in-house counsel also serves as a business advisor corporation, contrasted only with se com.rnunications business, advice are (quoting 144 'related to protected.'") 214 F.R.D. 143, (S.D.N.Y. 2003)). test to be emplo d is "whether the predominant purpose of the communication is to render or solicit legal ce." Erie, 473 " [f]undamentally . . of legal conduct," demarcat the to guide of role by a at corporate bright 420. gh ves the inte i inciples F.3d 1 future " lawyers at ce ation and application conduct Id. legal is or to assess broader 419-20. As and the st "not Second Circuit has observed: The complete 1 r may well promote and reinforce the legal advice given, weigh it, and layout its fications by laining: how the advice is feasi e and can be implemented; the legal downsides, risks and costs of taking ce or doing otherwise; what other rsons are doing and thinking about the matter; or the collateral benefits, risks or costs in terms of expense, politics, insurance, commerce, morals, and appearances. So long as the nant purpose of the commu cation is legal advice, these considerations and caveats are not other than legal advice or seve e from it. at 420. "The predominant ascertained by purpose of a communication cannot be ification or classification of one passage or 5 another ; advice it should be assessed dynamically and being between advice authorit 420-21. sought or that rendered, can light of the and advice that can well as t red be as on ly by consulting relationship given by a non-lawyer." Moreover, even where the predominant pu or communication is business, that is, non-Ie legal rd. at se of a document 1, such a document can also contain legal advice, which can be redacted on the basis of the attorney-client pr ilege. fides of De Plaintiffs question the the email is a See id. at 421 n.S. pri vil nts' claim t communication. argue that appears to be a business document incorporating business a and, at st, its privile bus ss purpose - De ensuri that Assistant their job description. legal irements. Def nts acknowledge t job description t they were ion and strategies Store Managers per rmed the duties in But business matters are often informed by nts assert that t that a Human Resources executive and the ce meeting reflected in the email had ss of redrafting a job descr in it status is ambi The Court accepts that t a t Assistant meeting was Id so counsel could review Store Managers, and who classified as exempt oyees under the FLSA, the duties actually per rmed by Assistant Store Managers. are re it to ~he s e c t of the email and meeting was "FLSA-ASM," which suggests 6 that Assistant Store rs' responsibilities were being assessed the context of t requirements of a federal statute. email, Ms. Ko re in rmation from bus ss managers and, in her role as legal counsel, gave legal advice on The email the FLSA. :::n the requirements of cifically states that "Julie emphasized that [the job duties identified] above are needed in order for the position to comply wj th the Duties portion of the FLSA test. type of advice requirements how to comply with regulatory is precisely the type of or 1/ This statutory 1 advice one would expect in-house counsel to provide to business people. The proposals that came out of the meeting, however, conta in the second half of the email, reflect a business strategy for getting the Store Managers and Assistant Store Managers to view and treat the ASM's as managers. Proposals ll There is nothing in the "Suggest ceo that reflects legal The Court, therefore, concludes that only the first half of the Lazarchick email is a privil attorney-client communication. II. Waiver The question that remains is whether Defendants wa attorney-c ient privilege when they inadvertently produced the the email to Plaintiffs' counsel. The attorney-client privilege is waived if the holder of the privilege voluntarily discloses or consents to disclosure of any 7 significant part of the communication to a third party or stranger to the attorney-client relationship. See Urban Box Office Network, Inc. v. Interfase Managers, L.P., No. 01 Civ. 8854 (LTS) (THK), 2006 WL 1004472, at *3 (S.D.N.Y. Proceedings, No. M-11-189 Oct. 468 3, 2001); (S.D.N.Y. Apr. 17, 2006); In Grand (LAP), 2001 WL 1167497, at *7 In re Kidder Peabody Sec. Litig., 1996). re Jury (S.D.N.Y. 168 F.R.D. 459, A party who seeks to uphold the privilege must take affirmative measures to maintain the confidentiality of attorney-client communications. See Salomon Bros. Treasury Litig. v. Steinhardt Partners, L.P., 9 F.3d 230, 235 (2d Cir. 1993); In re von Bulow, F.2d 72, 82 828 F.2d 94, 100 (2d Cir. 1987); In re Horowitz, 482 (2d Cir. 1973). Here, Defendants claim that the privileged email was produced inadvertently and, therefore, its production does not give rise to a waiver of privilege. The law governing waiver through inadvertent disclosure was recently summarized by Judge Scheindlin, of this Court: Although the federal courts have differed as to the legal consequences of a party's inadvertent disclosure of privileged information, the general consensus in this district is that the disclosing party may demonstrate, in appropriate circumstances, that such production does not constitute a waiver of the privilege or work-product immunity and that it is entitled to the return of the mistakenly produced documents. In determining whether an inadvertent disclosure waives privilege, courts in the Second Circuit have adopted a middle of the road approach. Under this flexible test, courts are called on 8 to balance the following factors: (1) reasonableness of the precautions to prevent inadvertent sclosure; (2) the time taken to recti fy the error; (3) "the scope of the discovery;" (4) the extent of t sclosure; and (5) an over [arching] issue of fairness. 6471 (SAS), 2012 WL 208998, at *11 (S.D.N.Y. Jan. 23, (quoting 7037, No. 03 Civ. 2005 WL 66892, at *2 (S.D.N.Y. Jan. 11, 2005) and United States v. Rigas, 281 F. Supp. 2d 733,737 (S.D.N.Y. 2003) ed) ) ; quotation marks and citations New York Mellon 1466122, at *2 502(b) Corp., No. 09 (S.D.N.Y. 9448 14, 2011). the (1) Va lentin v. Bank of (GBD) (JCF), 2011 WL See also Fed. R. Evid. sclosure is inadvertent; holder of the privilege disclosure; and (3) .") so. The Laz production of vo production of the email in issue t Moreover, Defendants' assertion t the disclosure of pr the took reasonable steps to prevent There is no question inadvertent. (2) the holder promptly took reasonable steps to rectify the error. do Civ. =:::.'-=''''-=-'''' (internal ("disclosure does not operate as a waiver in a Federal or State proceeding if: was 2012) ick nous Plaintiffs question took reasonable steps to prevent t 1 although material, the Court finds no basis to email was amounts disclosed of ESI. as part the Defendants hired an outside vendor to host the electronic data retrieved. 9 of They then retained a team of between ten and fifteen contract attorne working r the supervision of a Project Ma counsel, to names of witnesses, and to prevent or irrelevant documents. of ion ew the ESI and produce relevant documents prior to depositions privil rand liti attorneys whose employed search filters, Def the disclosure or nts prepared lists of communications could be pr and quality control reviews. reason that the email in question was not identified as privileged is that it was neither from nor to an attorney, no attorney was 1, and only the first name of the attorney at the meeting was contained in the body of the email. the Court reas mate No. measures 9 6 Ci v. 2 0 64 ("Courts prevent the Defendants did not employ disclosure of privileged (RW S), have 1 9 9 6 WL 6 6 8 8 most often , at *5 Id (S.D.N.Y. Nov. 19, [privilege] protection te inadvertent disclosure when a small number of privileged documents were ion pr to Under the circumstances, al. 1996 ) de is unable to conclude that e on of i rtently discovery sclosed materials, and as the part of a disclosure large of the leged documents was careless, not egregious."). The remaini rectify the issue is whether Defendants acted promptly to disclosure concludes that of the did not. 10 ivileged email. The Court Defendants argue that it was not deposition was noticed on January 13, relevant documents and, on Janua 17, until 2012, Ms. Laza that 2012, y reviewed realized that the privileged email had been produced to Plaintiffs production. t s was approximately two months a used as a basis questioning Mr. that t they cont in an earlier promptly requested its return. They t ick's Although er the email was produced and Scarpone at his deposition, relevant time frame is triggered by when t realized that the email was privi sclosure has been held to be "Inadvertent ed when the privilege is asserted immediately upon discovery of the disclosure and a prompt documents." st Id. is made at *5; 2324292, at *5 (S.D.N.Y. Court f s return of the privileged LaSalle National Bank Assn. Merrill Lynch Mortgage Lending, The for the No. 04 Civ. 5452 (PKL), v. 2007 WL . 13, 2007) that Defendants not act ligently in rectifying the inadvertent disclosure. promptly or It is ironic that Defendants fault Plaintiffs' counsel for a purported e cal lapse and in failing to refrain from ewing t documen t alerting Defendants' counsel that they had received the document, because, according to Defendants, on its face the email contains "at the very least secret and confidential information not intended for Plaintiffs' counsel, that Plaintiffs' counsel should 11 been aware would raise a privile Ltr. at 3.) email argument." ( s Jan. 24 Yet, even when Defendants' counsel became aware of the which, allowed a on its suggested tness to be depos about a i lege , fail argument, he to make efforts to ascertain the identity of Julie Ko, and failed to raise a lege or demand the email's return for more than two months. object The only justification offered for this delay is that other things were going on in the 1 igation and it was not until Laza ick's deposit was noticed that counsel focused on the document. inference, Defendants suggest that had PIa iffs' counsel not noti Ms. Lazarchick's deposition, they would never have focused on email, the deposition even and it though had been it had in been used Plaintiffs' at the Scarpone possession for two months. Defendants rely on the Valentin tha t "the measu length of lay in cision for the proposition claiming the from when the producing at *3. distinguishable. The In Valentin that case, ilege should be rty learns of the disclosure, not from the time of the disclosure itself." 1466122, pr case, the Valentin, however, defendant 2011 WL is factually bank produced documents that included two hand-written pages of notes, but it did not know who had authored the notes. After the p intiff's attorney demanded the production of any additional documents on the 12 same subject as the notes, the defendant's counsel asked the human rtment resources notes. so, tely t handwrit attempt to identi resources depa The but to the author of the was initially unable to do determined that the of the former in-house counsel. notes were in the Once the bank was e to confirm that the notes were authored by former in-house counsel, ivilege. it asserted The court declined to find delay under those circumstances. Here, there were numerous red to s' De counsel that formation. privil t email rst, referred to the FLSA, a lags that should the was subject ral statute. suggested likely line to of contain the Second, the email ce Julie gave at the meeting entailed satisfying the requirements of the another obviously le FLSA argue that Plaintiffs' 1 matter. counsel Indeed, even Defendants should have been aware that the email contained "secret and confidential information raise a pri vil " and that alerted defense counsel that they received it. at 3) Clarke v. i (CM) (DF), 2009 WL 970940, nimum, if have come J.P. should t (S.D.N.Y. Apr. have (Fuchs Jan. 24 Ltr. Morgan Chase & Co., No. at *5 [that] 08 Civ. 10, 02400 2009) ("At a the email contained an analysis that could only from an attorney, Defendant should have begun an tigation at that time as to the potentially privileged status 13 document.") . of Moreover, examination at the Scarpone was raised. the email was the sition and no issue of pr ird, it would have qui te easy to on the same day as the deposition, as anyone in t Department, subj ect se counsel. lege ify Jul Human Resources or anyone who had attended the meeting, known that she was Defendants' in of would have Finally, Julie Ko had been identified as in-house counsel at another deposition taken only three weeks earl Jul 's identity or r. Yet, no attempt was made to investi ascertain the privileged nature of the email until two months later, and even then, it took PI interest the te subject of the email to ntiffs' further prompt Defendants' investigation. Under the circumstances, the Court concludes that Defendants did not act ligently in recti WL 2009 approximately pr four 970940, months ng the inadvertent disclosure. at between (finding learning that that a WL 2324292, at *2, *5 of lege was a nding of waiver); (finding that where a delay potentially leged email was produced and the assertion of sufficiently long period to warrant a 2007 *6 LaSalle, deponent was questioned about a document that was first viewed as "possibly" an attorney-client communication and then determined to be a communication with an attorney, waiting one month to demand return of the document constituted a waiver of pr 14 lege) ; 1996 WL 668862, at *5 (waiting one month to request the return of vileged notes supported a finding of wa to the extent of the disclosure, here there has With re been complete disclosure, since the email fully read and conside subj ect of r) . iffs' counsel, and questions. was the Liz by Pla deposition self is brief, it was 1996 Claiborne, WL 668862, at *5 (finding that where the defendants had access to the vileged document overnight, the document was brief and easily in a short time, r and was subject of deposition of or to the assertion of privilege, "the completeness of questions . supports a finding of waiver."). the disclosure . lly, because the email has already been the subject of deposi tion questions, and Defendants so delayed in seeking the return of the email, the concerns of fairness and prejudice tip in Plaintiffs' favor. See 2007 asserting (finding that delay WL 2324292, aintiff had taken discovery related to the privileged document, the as a waiver). Moreover, *6 ivilege undercut the producing party's claim of privilege and that because the suffer greater prejudice if the at aintiff would sclosure was found not to serve any pre] udice to Defendants will be limited as the waiver here extends only to the email that was produced, and not to all attorney-client subject of the email. 15 communications on the CONCLUSION For the foregoing reasons, the Court concludes t any privilege with respect to the email in question was waived. So Ordered. UNITED STATES MAGISTRATE JUDGE Dated: February 28, 2012 New York, New York 16
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