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Tracy v. Telemetrix, Inc.

United States District Court, D. Nebraska

July 17, 2015

MICHAEL J. TRACY, an individual and Derivatively as a shareholder of Telemetrix and Convey; and TRACY BROADCASTING CORPORATION, a Nebraska corporation; Plaintiffs,
v.
TELEMETRIX, Inc.; et. al; Defendants.

MEMORANDUM AND ORDER

CHERYL R. ZWART, Magistrate Judge.

The plaintiffs filed discovery motions to determine the sufficiency of the defendants' answers for requests for admission, (Filing No. 204), to compel production of documents from Defendants William Becker, Gary Brown and Telemetrix, Inc., (Filing No. 215), and compel production of documents from Defendants Larry Becker, Becker Capital Management, L.L.C., Green Eagle Communications, Inc. and Green Eagle Networks, Inc., (Filing No. 216). The court ordered the parties to further confer, provide a succinct statement of the discovery issues that remain pending, and participate in a recorded hearing on any unresolved issues. (Filing No. 226). That hearing was held on July 14, 2015.

The motion to compel (Filing No. 216), was fully resolved (as discussed on the record and set forth in the court's order below) as to Larry Becker, Becker Capital Management, LLC, Green Eagle Communications, Inc., Green Eagle Networks, Inc. (the GE defendants).

As to the Telemetrix defendants (William Becker, Gary Brown and Telemetrix, Inc.), the current and threshold dispute is whether the Telemetrix defendants have prepared and served a sufficiently informative privilege log. The plaintiffs claim the privilege logs fails to adequately identify the name and corporate position of the person who sent or received the documents identified in the privilege log, and fails to identify the proper custodian of the documents. The Telemetrix defendants argue they need not name the specific person who sent and received the documents; that identifying the author or recipient by the entity's name (e.g., Telemetrix, Inc., the law firm name, etc.) is sufficient. The Telemetrix defendants have further identified their attorney as the document custodian. But Plaintiffs claim that for the purpose of a privilege log, the custodian is the person from whom the attorney received the documents-the person who could lay foundation for admissibility at trial.

"The attorney-client privilege attaches to corporations as well as to individuals, " and "serves the function of promoting full and frank communications between attorneys and their clients." Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 348 (1985). The attorney-client privilege protects communications made in confidence by a client and a client's employees to an attorney, acting as an attorney, for the purpose of obtaining legal advice.

A corporation communicates through its employees, but the privilege is held by the corporation, not the employee. The privilege is not waived when a management employee is terminated or resigns and then moves to another job. "[W]hen control of a corporation passes to new management, the authority to assert and waive the corporation's attorney-client privilege passes as well." Commodity Futures Trading, 471 U.S. at 349. New managers installed to replace departing management may waive the corporation's attorney-client privilege with respect to communications made by former officers and directors. Displaced managers may neither assert the privilege over the wishes of current managers, ( Commodity Futures Trading, 471 U.S. at 349), nor waive it. In re Richard Roe, Inc., 168 F.3d 69, 72 (2d Cir. 1999) ("The fact that the author of Document 195 no longer works for John Doe, Inc. is irrelevant. "It follows a fortiori that since a corporate employee cannot waive the corporation's privilege, that same individual as an ex-employee cannot do so."); United States v. Chen, 99 F.3d 1495, 1502 (9th Cir. 1996) (holding the privilege remained intact, despite the former employee's disclosure of privileged information, where there was no evidence former employee had authority to waive privilege).

The attorney-client privilege does not attach to every communication between an attorney and a client. For example, the privilege does not attach to communications that do not contain confidential information and reveal only the relationship between the parties, the reason a law firm was hired, and the steps which the law firm intends to take in discharging its obligation to the client. Diversified Industries, Inc., 572 F.2d at 603 (en banc). And documents that do not disclose the substance of the attorney-client communications, but merely indicate that discussions occurred, legal services were rendered, and documents were provided to the client are not protected by attorney-client privilege. Burke v. Messerli & Kramer, P.A., 2010 WL 2520615, at *3 (D. Minn. June 15, 2010).

The attorney-client privilege protects a corporate employee's communication if:

(1) the communication was made for the purpose of securing legal advice;
(2) the employee making the communication did so at the direction of a corporate superior;
(3) the superior made the request so that the corporation could secure legal advice;
(4) the subject matter of the communication was within the scope of the employee's corporate duties; and
(5) the communication was not disseminated beyond those persons who, because of the corporate structure, need to know its contents.

In re Bieter Co., 16 F.3d 929, 935 (8th Cir. 1994) (quoting Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 609 (8th Cir. 1977)). As to work product, the test 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." Simon v. G.D. Searle & Co., 816 F.2d 397, 401 (8th Cir. 1987). But "there is no work product immunity ...


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