MAINTENANCE ENTERPRISES, LLC, Plaintiff, v. ORASCOM E&C USA, INC. and Iowa Fertilizer Company, LLC, Defendants. Orascom E&C USA, Inc., Counterclaimant, v. Maintenance Enterprises, LLC, Counterclaim Defendant Case No. 3:16-CV-00014-SMR-CFB United States District Court, S.D. Iowa, Davenport Division Signed January 24, 2018 Counsel Mark E. Weinhardt, Elisabeth A. Tursi, Todd M. Lantz, The Weinhardt Law Firm, Des Moines, IA, Terry M. Giebelstein, Alexander Clement Barnett, Benjamin James Patterson, Lane & Waterman LLP, Davenport, IA, Brandon K. Black, Pro Hac Vice, Charles Parker Kilgore, Pro Hac Vice, Jones Walker LLP, Baton Rouge, LA, Christopher D. Cazenave, Pro Hac Vice, Michael C. Drew, Pro Hac Vice, Richard John Tyler, Pro Hac Vice, Jones Walker Waechter Poitevent Carrere & Den'egre LLP, New Orleans, LA, Joseph P. Henner, Pro Hac Vice, Jones Walker LLP, Atlanta, GA, for Plaintiff/Counterclaim Defendant. Rebecca Woods, Pro Hac Vice, Seyfarth Shaw, Atlanta, GA, Roger W. Stone, Chad D. Brakhahn, Jacob W. Nelson, Jeffrey A. Stone, P. Gail Brashers-Krug, Simmons Perrine Moyer Bergman PLC, Cedar Rapids, IA, Anthony J. LaPlaca, Pro Hac Vice, Sara Beiro Farabow, Pro Hac Vice, Seyfarth Shaw LLP, Washington, DC, for Defendants/Counterclaimant. Bremer, Celeste F., United States Magistrate Judge ORDER ON PRIVILEGED DOCUMENTS I. Motions Relating to Privileges *1 The parties have exchanged Privilege Logs. MEI filed objections to OEC's claims of Attorney Client (A/C) and Work Product (W/P) privileges (ECF 142); the parties filed Motions to Compel in order to provide a basis to review the documents (ECF 197, 198, 199). The issues relating to the claims of privilege, and the format of the privilege logs and operation of the clawback provisions in the Protective Orders have been the subject of meet-and-confer discussions, hearings, and status reports before and after the resisted Motions to Compel were filed. This ruling is based upon all of these discussions, briefs, and in camera review of documents. In the most recent Joint Status Report on this issue (ECF 222), the parties state that disputes relating to the A/C and W/P privileges have been narrowed to: 1) Documents which OEC claims are “Privileged By Attachment” (PxA); and 2) communications with certain entities. At the hearing on January 10, 2018, the parties agreed that OEC would produce “direct communications” with AECOM, URS, and Orrick. The parties resolved their disagreements with respect to communications concerning IFCO. See (ECF 227 at 2). The parties disagreed over how the claimed privileges applied to communications with OCI (IFCO's parent and OEC's former parent), and OEC's sibling corporation, Weitz (which also was a part of certain joint ventures and impacted by mechanics liens on this project). Following the hearing, counsel met and conferred to further clarify the claims asserted, and to identify the documents that were subject to an in camera inspection. An Order setting out the requirements for submission of these documents for the Court's review was entered January 17, 2018; that Order incorrectly identified certain documents that required in camera review. As noted by OEC in its Status Report (ECF 229), it provided the documents correctly identified at the hearing; it was not required to provide copies of the attachments for the group designated PxA. Based upon the agreement of the parties contained in the Joint Status Report (ECF 222) and as discussed at the January 10, 2018 hearing, it is Ordered: 1. By February 1, 2018, OEC will supplement its Clawback Log to add missing “From” metadata. 2. The issues relating to MEI's Privilege Log raised in OEC's Motion to Compel (ECF 197) have been resolved. By February 1, 2018, MEI will produce redacted emails relating to its acquisition in 2016. OEC withdraws its objections relating to documents created in the fall of 2015. The Court assumes the parties understand what documents this agreement covers. OEC's Motion to Compel is moot. 3. The Court accepts the parties' stipulation, and orders that amendments to the Privilege and Clawback logs, additional productions, and withdrawal of objections, as outlined in the Joint Status Report (ECF 222) should be completed by February 1, 2018. 4. MEI's Motions to Compel relating to OEC's Privilege and Clawback Logs (ECF 198, 199) have been fully briefed and discussed over the past four months, and at hearings on December 8, 2017, and January 10, 2018 (ECF 179, 197, 198, 199, 210, 220, 222, 228, 229, 230). This case arises from a large construction project that encompassed work from a variety of entities, including corporations that at times were related to OCI (IFCO's parent and OEC's former parent); joint ventures of OCI-related and OCL-related companies and others, some of which sued OEC; and companies (some of which were related to OCI, OEC, or others in that corporate family) that were hired before and after MEI's work in 2105, and whose work impacted MEI or the claims in this lawsuit. OEC and IFCO have a joint defense agreement. Weitz shared IT and other support with OEC and others in the corporate family. Weitz's former parent company was OCI and after March 2015, its parent company was OCL. Weitz had an interest in certain claims and liens on this project. Weitz's involvement required it to coordinate certain defenses, and to communicate with OEC or OCI about legal issues on this project. II. Application of Attorney Client and Work Product Privileges A. Background. *2 The basic tenets surrounding privilege law, privilege logs, and protective orders are well established. The Court applies Iowa law to define A/C privilege, and federal law to determine W/P protection. The parties have capably briefed these issues, and there is no need to repeat the controlling authorities here. There is no new law to apply, just the need to gain a common understanding of the scope of these privileges in the context of this case; to set guidelines so that the parties have confidence in the claims of privileges and move forward with discovery. Because the contours of the privileges claimed are not sharply defined, the Court needed to conduct an in camera inspection of certain documents. This ruling should help the parties determine the scope of privileges for ongoing discovery. The A/C privilege covers confidential communications between lawyers and clients. The client can waive the privilege by transmitting the protected communication to others. Thus, a communication may have protection at some point, but later lose that protection. The communication may have protected status in response to some ESI but not others. For example, if an email containing advice from counsel is attached or forwarded to nonclients, or otherwise distributed too widely within a corporation, the A/C privilege may be lost. Additionally, not every communication from, to, or through an attorney gains privileged status, particularly where in-house counsel are involved. Especially within corporations, attorneys (outside or in-house counsel) at times have more of a “business” purpose in communications than a “legal issue” purpose. As noted by MEI, using an attorney as a conduit for information does not automatically protect the communication. The Court carefully reviewed the documents to determine whether the “business” purpose of the communication, if it could be discerned, was separate from the “legal issue” raised in the subject line of an email or its content. As discovery progressed, issues become more clearly defined, allowing the parties to make this determination about the purpose of a communication when asserting privileges. Their privilege logs and later discussions containing these descriptions continued to evolve. The basis for privilege claims are now included in the revised Privilege Logs (ECF 228). The W/P privilege or protection arises from the same basis as the A/C privilege, namely that the attorney needs information that is protected from disclosure to an adversary, in order to provide adequate representation and to encourage clients to communicate freely with counsel. The W/P privilege looks to what information the attorney is receiving or acquiring in anticipation of litigation. These communications may come from the client or other sources, generally at the direction of counsel. The scope of the W/P protection depends upon the type of material being sought, and the adversary's need for it. W/P protection is similar to the A/C privilege, and can be waived. Generally, material collected by, or at the direction of, counsel in preparation for litigation is protected from disclosure. It is the protection of counsel's thought processes and strategies that allow claims for protection from disclosure of materials that are attached to communications with the attorney. Identification of the attachments may disclose the attorney's analysis or mental impressions. In limited instances, an adversary may obtain discovery of W/P material upon showing a sufficient need. OEC states that it was cautious in its descriptions (or omitted them) in the Privilege Logs, in an effort to maintain the privileges asserted. The Court reviewed the Logs and documents. As discussed below, the Court is satisfied with OEC's descriptions of the documents it withheld, and the description of the basis for its privilege claims. Because of the limited descriptions, there was a pool of documents that MEI could not assess, and for which OEC could not provide expanded descriptions, without waiving the privileges. Thus, we reached the stage of the case where an in camera inspection of privileged documents was required. OEC submitted 402 documents from its Privilege Log and 93 documents from its Clawback Log, for a total of about 1500 pages for in camera inspection (ECF 229). The Court reviewed these documents, and will have the Clerk of Court retain them under seal, until the parties determine that no further review or appeal of this Order is necessary. They will then be returned to OEC. *3 When determining whether a privilege was properly asserted or waived, in addition to considering the scope of dissemination of a communication, and the “business” versus “legal” purpose for a communication, the Court also looks at the relationship of the parties involved (as a sender, direct recipient, or copied). MEI asserts that all communications to Weitz (or a related entity), and most to/from OCI, should not be privileged, because their interests in the disputes about this project were not sufficiently aligned with OEC's, or the timing indicates that the communications were not in relation to litigation, or not the subject of advice from shared legal counsel. The Court considered MEI's positions about the scope and application of the privileges. B. Issues raised in MEI's Motions to Compel. 1. Business purpose for communications with in-house counsel. In the Joint Stipulation Regarding Privilege Logs (ECF 222) OEC agreed to re-review all of the documents between OEC in-house counsel and OEC employees to redact legal advice, and to the extent practicable, and produce any portion that relates predominantly to a “business” purpose. This production shall be completed by February 1, 2018. 2. OCI and Weitz documents (Appendices A[1] and B, ECF 228-1, 228-2). OEC produced revised Privilege/Clawback Logs for these communications, expanding some of the descriptions (Appendices to ECF 228). This resolves a portion of MEI's original objections to these logs. Additionally, as described in OEC's brief (ECF 228), MEI has agreed to allow OEC to withdraw some documents from the logs. Based upon a review of the revised logs and the documents, the Court finds that the privileges are appropriately claimed and protected by OEC, with the limited exceptions described below. MEI's Motions to Compel (ECF 198, 199) are denied. The Court finds that OEC has taken appropriate steps to avoid waiver of the privileges, including labeling them as privileged, and avoiding over-distribution to unrelated parties inside or outside of the corporation. Some documents were created under the joint defense agreement, or arose within the need to defend and address claims that are related to those that are the subject of this action. The Court paid close attention to MEI's assertion that communications involving Weitz should not be protected by claims of privilege because Weitz was in a joint venture with Rust that created RWC, and Weitz was involved in a joint venture with a subcontractor that replaced MEI. RWC was terminated (and then MEI was hired); RWC then filed mechanics liens against OEC. Weitz and OEC, along with IFCO, have relationships to OCI. The Court is satisfied that the documents OEC withheld are protected by the A/C and W/P privileges. The Court further finds that OEC did not waive any claimed privilege through limited sharing certain communications with senior management of OCI, even in light of the relationship of OCI to the other entities involved in the project. The documents were reviewed with attention to the dates of the communications, and the identities of the sender, recipient, and those copied on the emails. Considering the nature of the claims in this action, and the evolving relationships of the various entities involved, the Court finds that the majority of OEC's privilege claims are appropriate. As noted above, OEC is planning on re-reviewing some of the communications by and to in-house counsel. The Court has identified other documents that need further review. *4 By February 1, 2018, OEC shall re-review the following documents (ECF 228-2, Exhibit B) and indicate whether it continues to claim the privileges as described in the logs, and if so, expand the description of the item to more clearly explain the basis for the privilege; or indicate that the document (or a redacted version) will be promptly produced. The additional documents that OEC shall review are: Document No. #of pages Issue to be addressed 149 17 Waiver by scope of distribution 1799 1 Relevancy/Subject/ Scope of distribution 2349 2 Basis for claim of privilege not clear 2748 2 Basis for claim of privilege not clear 2754 3 Basis for claim of privilege not clear 2792 1 Basis for claim of privilege not clear 3164 1 Business purpose may exceed legal issue 3170 7 Business purpose may exceed legal issue 3498 1 Basis for claim of privilege not clear 3717 18 Waiver by scope of distribution MEI's objections were appropriate, and not imposed for any improper purpose. Without an in camera review of the documents, the Court has not been in a position to understand the designations used in the logs. It has taken the meet-and-confer process to refine the categories and descriptions of documents that allowed the parties to reach agreement on some of these issues, and narrow the scope on others. Some of MEI's objections were caused by the use of the designation that the communication “seeks,” “contains,” or “reflects” advice of counsel. Without seeing the documents, to gain an understanding of their context, the scope of distribution, and the dates that documents were created or distributed, it was difficult to assess the basis for the privileges claimed. It required seeing all of the documents in order to understand how these terms were used. The Court has no suggestions for different labels or other descriptions that might prevent future disputes, but encourages the parties to continue their discussions when they do not understand the basis for privilege claims. The Court is satisfied that for the documents reviewed, the claims of A/C or W/P privileges were appropriately made. The documents that were labeled as “containing” or “reflecting” advice of counsel were not just summarizing or paraphrasing what a lawyer said, but included the email or other work product from the attorney. Documents that were labeled as “seeking” the advice of counsel, or created “in anticipation of litigation” (with the exception of those which OEC will re-review) were readily identified as such. The Court appreciates the efforts of counsel as they continue to resolve or narrow these disputes, in order to make a clear record on this issue. We can now fix the parameters for discovery and move to a conclusion of document production. 3. Privileged by Attachment (Exhibits C and D, ECF 228-3 and 228-4). The Court has reviewed the documents that OEC designated as “Privileged by Attachment” (PxA). MEI objects to this label, noting that its vagueness does not provide a basis to assess the validity of the claim of privilege. OEC resists identifying these documents in greater detail, arguing that to do so would disclose the attorney work product or a protected communication. Both parties are right. OEC maintains that if the “parent” document is privileged, so is any attachment that the attorney, client, or other person elected to provide during the discussion of the privilege communication. The Court has reviewed the “parent” documents, and found that OEC has correctly asserted privilege for most of them. Like MEI, the Court was skeptical of what seemed to be overbroad claims of privilege for a wide range of documents. With the additional refinement of the Privilege Logs, the continuing discussions about this dispute, and the in camera inspection, the Court has a better understanding of this issue, and greater confidence that OEC's claims of privilege are not overbroad. *5 In its revised logs, OEC clarified the PxA designation: A) Produced Duplicate. These 646 documents were already produced in response to other requests. The Court finds that no further production or identification is required. B) Not Responsive. These documents (EDF 288-3 pgs 5 – 37; ECF 228-4, p.1) were identified as PxA, but OEC states that standing alone, they are not responsive to ESI. OEC objects to identifying them in further detail, or to their production. Because they are components of documents which the Court found privileged, and the privilege has not been waived, the Court finds that they do not have to be further identified or produced, as this discovery is not proportional to the needs of the case. C) Independently Privileged. There are 97 PxA documents that are responsive to ESI search terms, but that OEC claims are privileged, independent of their status as an attachment to a privileged document. The modified privilege logs do not indicate the dates of the documents or identify senders/recipients. These documents have not been produced for in camera inspection. The Court has reviewed the descriptions of these documents as provided in the revised logs (ECF 228, Exhibit C, pp. 1 – 5; Exhibit D, p. 1) and finds that these claims of privilege are not overbroad. MEI's Motion to Compel their production is denied. D) Not Otherwise Appearing. This category of documents were documents that hit on a search term, are not independently privileged, and have not been previously been produced. Despite hitting on a search term, these documents have not been produced before because they did not appear anywhere else in custodial ESI. OEC has labeled 111 documents as “Not Otherwise Appearing” on the log excerpt. OEC describes this category as those that were forwarded to counsel while seeking advice, or which respond to counsel's questions on legal matters; it claims W/P or A/C privileges. The revised logs contain dates and participants' names for some of the documents. (ECF 228, Exhibit C, pp. 37-45). In addition to their status as PxA, OEC claims it does not have to produce these documents, as they are outside the scope of the agreed-upon ESI terms. OEC also argues that it should not be required to produce these documents because they would reveal the substance of the parent communication. However, they may be relevant or their production may be proportional to the issues in this case, as they are presently identified. Depending upon the nature of the document, MEI may be able to assert that some of these documents would be subject to the very limited exception to the W/P protection, if it cannot otherwise obtain this information. Considering the amount of other discovery that has been produced in this, and other litigation between the parties, that is not highly likely, but OEC should re-review this material. The current descriptions are not sufficient to allow the Court to rule on whether the documents should be afforded A/C or W/P protection. By January 31, 2018, counsel shall meet and confer to discuss this category of documents, and determine whether there is a way to resolve or further narrow this dispute. OEC is not required to disclose to MEI the contents of these documents. If MEI believes that an in camera inspection for this set of documents is warranted, it shall tell OEC. By February 1, 2018, OEC shall produce the documents in this category to the Court for in camera inspection, along with any additional description (ex parte, under seal) that it believes will assist in understanding the basis for continued protection of these materials, or provide a status report indicating that this issue is resolved. *6 The next Status Conference is scheduled for 1:00 p.m. on February 5, 2018 at the U. S. Courthouse in Des Moines, IA. Lead counsel and local counsel shall attend in person. A plan for completion of discovery will be adopted. A Joint Agenda shall be filed by February 2, 2018. Footnotes [1] Contained in Volume 1 are three pages that are not included in the Clawback Log (Appendix A, ECF 228-1): DS_OEC_0680635-0637, an email sent June 12, 2015. The Court assumes that no privilege is claimed for these documents, and that they have been produced.