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Le v. Zuffa, LLC

United States District Court, D. Nevada

June 9, 2017

CUNG LE, et al., Plaintiffs,
v.
ZUFFA, LLC, et al., Defendants.

          ORDER (MOT CHALLENGE DESIGNATION ECF NO. 281/282)

          PEGGY A. LEEN UNITED STATES MAGISTRATE JUDGE

         Before the court is Plaintiffs' Motion to Challenge Work Product Designation (ECF No. 281 filed under seal, and the redacted version (ECF No. 282) filed on the public record. The court has considered the motion, Zuffa's Opposition (ECF Nos. 294/295), numerous related filings[1], and the arguments of counsel at the hearing on this matter.

         BACKGROUND

         I. The Amended Complaint and Procedural History

         Plaintiffs filed their Consolidated Amended Antitrust Class Action Complaint (Dkt. #208) on December 18, 2015. It is a civil antitrust action under Section 2 of the Sherman Act, 15 U.S.C. § 2, for treble damages and other relief arising out of allegations of Zuffa's anti-competitive scheme to maintain and enhance a monopoly power in the market for promotion of live elite professional Mixed Martial Arts (“MMA”) fighter bouts and monopsony power of the market for live elite professional MMA fighter services. The named Plaintiffs bring suit on behalf of themselves and a putative class of others similarly situated under Rule 23 of the Federal Rules of Civil Procedure against Zuffa, operating under the trademark Ultimate Fighting Championship or “UFC”. Plaintiffs claim that the UFC has engaged in an illegal scheme to eliminate competition from would-be MMA promoters by systematically preventing them from gaining access to resources critical to successful MMA promotions, including by imposing extreme restrictions on UFC fighters' ability to fight for would-be rivals during and after their tenure with the UFC. The amended complaint claims that as part of its scheme, UFC controls not only fighter careers, but also takes and expropriates the rights to their names and likeliness in perpetuity. As a result of this conduct, UFC fighters are paid a fraction of what they would earn in a competitive marketplace.

         II. The Parties' Dispute

         A. Plaintiff's Motion to Challenge Work Product Designation

         In the current motion, the plaintiffs challenge defendant Zuffa's designation of three documents produced in discovery in this case as covered by the work product privilege. Zuffa Bates-stamped and produced the three documents at issue in response to plaintiffs' Request for Production of Document No. 23 seeking documents analyzing the effect of contractual terms on fighter compensation or on Zuffa's strategies, revenues and profitability. However, it subsequently sought to claw back the documents asserting they are entitled to work product protection.

         The three documents at issue involve a proposal by a third-party human resources consultant, Mercer (U.S.) Inc. (“Mercer”) to produce a “fighter pay assessment”, the stated objective of which was to “guide future compensation and benefits program design, including fighter pay (base and incentives) and benefit levels.”

         In response to plaintiff's Request for Production No. 23, Zuffa produced six documents or communications relating to the Mercer fighter pay assessment, including the three documents now in dispute. Two of the three challenged documents were created by Mercer, and the third is an email chain between Zuffa's Chief Legal Officer, Kirk Hendrick, and William Hunter Campbell, an attorney at Campbell & Williams, outside counsel for Zuffa. The email chain attaches one of the Mercer documents, and discusses setting up a telephone call with outside consultants.

         After the documents were produced in discovery, plaintiffs served Zuffa with a Rule 30(b)(6) notice on July 5, 2016 requesting deposition testimony about the work done by Mercer as a category and citing the statement of work by Bates number that Zuffa produced. On July 28, 2016, plaintiffs provided notice to Zuffa pursuant to Fed.R.Civ.P. 45(a)(4) that plaintiffs intended to serve a subpoena duces tecum on Mercer. The subpoena was served on Mercer July 29, 2016. To date, Mercer has not produced responsive documents and Zuffa has not objected to the subpoena. On August 8, 2016, plaintiffs served a Second Request for Production of Documents on Zuffa asking for all documents and communications concerning Zuffa's engagement of Mercer in connection with the “Fighter Pay Program Review and Design, ” as well as communications with Mercer, documents and information provided to Mercer, Mercer's findings and Zuffa's response to Mercer's findings.

         On August 19, 2016, Zuffa sent plaintiffs a letter stating that they were clawing back the three documents at issue in this motion as attorney work product. Plaintiffs notified Zuffa of their intent to challenge the designation and this motion was filed. Although Zuffa has claimed work product protection for the 3 documents in dispute it has not attempted to claw back the Mercer statement of work for the fighter pay assessment project.

         Plaintiffs claim that the challenged documents consist of documents directly related to the August 8, 2013 statement of work Bates-stamped ZFL-1007379 which Zuffa has not clawed back, which references an engagement letter of March 8, 2013. Plaintiffs argue that the challenged documents pertain to a project which was originally contemplated and commenced in March 2013, more than 21 months prior to the filing of the first complaint in this case. The first document is a memorandum by Cathy Shepard, a non-attorney employee of Mercer, dated September 27, 2013. It seeks documents and information that Mercer intended to use to develop a “fighter pay assessment” for Zuffa and specifies the documents requested. Nothing on the face of the document indicates that it was prepared in anticipation of litigation or involved an attorney. No attorneys or litigation are referenced, nor are any legal concepts or strategies discussed.

         The second document challenged is an email Bates-stamped ZFL-1824835. The Mercer (Shepard) memo was attached to this document which consists of an email chain between Mr. Hendrick and Mr. Campbell between September 30th and October 1st, 2013, to schedule a call “with some outside consultants.”

         The third document is a Mercer presentation Bates-stamped ZFL-0557588. It is a draft presentation entitled “Fighter Pay/Project Update and Methodology Discussion” dated March 18, 2014. The presentation is a status report on the progress of the fighter pay assessment project, along with a summary of the methodology to be used and a list of the next steps for the project. The presentation discusses a comparator group of other sports organizations including NASCAR, MLB, the NBA, and the NHL whose compensation practices Mercer proposed to study to “provide an external basis for understanding how UFC's fighter pay structure and practices compares to similar companies.”

         Plaintiffs argue that Mercer is a human resources consulting company that describes itself as a “global consulting leader in health, retirement, investments, and talent, ” and offers HR solutions for companies including “compensation data to benchmark your organization against others….” The statement of work for the fighter pay assessment indicates that Mercer analyzed Zuffa's information and compared it to compensation practices in the comparator groups to assess Zuffa's current compensation model and make recommendations for the future. The goal of the project was to “not only help test the alignment of current fighter compensation and benefits practices against UFC strategies and market practices, but also identify potential opportunities for change.”

         Plaintiffs contend that none of the documents at issue in this motion qualify as work product. Fighter compensation is at the heart of the plaintiffs' claims against Zuffa. The amended complaint alleges that Zuffa suppressed compensation for elite professional MMA fighters by using its monopoly and monopsony power. The challenged documents concern compensation to be paid to UFC fighters. The materials consist of a survey of compensation for UFC fighters, and includes a number of comparisons between pay for UFC fighters and other professional athletes.

         Citing In re Grand Jury Subpoena, 357 F.3d 900, 908 (9th Cir. 2003), plaintiffs argue the documents do not meet the Ninth Circuit standard to qualify as work product. The Ninth Circuit has adopted a “because of” standard that requires consideration of the totality of the circumstances and affords work product protection only when it can fairly be said that the documents were created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of litigation. Plaintiffs cite district court decisions holding that documents prepared in the ordinary course of business, or that would have been created in essentially the similar form irrespective of litigation, are not work product documents. Plaintiffs cite Ooida Risk Retention Grp., Inc. v. Bordeaux, 2016 U.S. Dist. LEXIS 12851, at *3 (D. Nev. February 3, 2016) for the proposition that “documents generated in the ordinary course of business are generally not protected under the work product doctrine, even if produced at a time when litigation was anticipated.” Documents are not work product simply because litigation “is in the air or there is a remote possibility of some future litigation.”

         Zuffa bears the burden of demonstrating the work product doctrine applies. Consulting work performed by a third party cannot be work product if it is the type of work routinely done on behalf of a company. In this case, all three of the documents are routine business communications related to fighter pay assessment. The Mercer memo itself concerns materials Mercer asked for to assess fighter pay and was not written by a lawyer. The memo provides a quote for the proposed services, describes Mercer employees who would be doing the work, and a describes the work to be done. The email chain between Zuffa's general counsel, Kirk Hendrick, and outside counsel, William Hunter Campbell, was created 15 months before the complaint in this case was filed, and does nothing more than transmit a memo and make arrangements for a telephone call for a purely business purpose. The Mercer presentation was created by Mercer employees, not lawyers, in approximately March 2014, nine months before the complaint in this case was filed. The presentation itself shows that Mercer was creating a human resources document pertaining to employee compensation, an ordinary business activity, that was to be used for business purposes. Nothing in the documents contain legal analysis or reflects that they were prepared in anticipation of litigation. In attempting to claw back the documents, Zuffa has not identified any potential or actual litigation that was related to the challenged documents. Assuming arguendo that the challenged documents were created as part of Zuffa's internal investigation of its compensation policies, the documents are so devoid of any reference to the threat of litigation that Zuffa's post hoc rationale should be rejected as insufficient.

         Plaintiffs argue, in the alternative, that if the court determines the documents are covered by the work product doctrine, plaintiffs have shown substantial need for the documents and that they would suffer undue hardship if the documents are not produced because the documents are not available from another source.

         The case law distinguishes between two types of work product which are subject to two different standards for discovery. Ordinary work product includes raw factual information, while opinion work product includes the mental impressions, conclusions, opinions, or legal theories of an attorney or representative concerning litigation. The plaintiffs should be permitted to discover ordinary work product consisting of factual materials on a showing of substantial need if plaintiffs “cannot, without undue hardship, obtain their substantial equivalent by other means.” Fed.R.Civ.P. 26(b)(3). This is determined on a case-by-case basis. In this case, plaintiffs have alleged that Zuffa suppressed compensation for the plaintiffs and the putative class. Fighter compensation is a central issue in this case and plaintiffs seek to prove that UFC fighter compensation is inordinately low when compared to compensation to athletes in other sports. The fighter pay assessment Mercer performed addresses this allegation directly. Plaintiffs are aware of no other documents that make the comparison and analysis contained in the fighter pay assessment. The court should therefore order that the documents be produced as plaintiffs have established substantial need for them and that they cannot obtain the substantial equivalent by other means.

         In the alternative, plaintiffs argue Zuffa has waived work product protection for the documents because it produced other documents relating to the Mercer fight pay assessment. Thus, even if the documents were protected by work product privilege, Zuffa has waived the protection by selectively disclosing certain privileged materials, while selectively withholding others, presumably to mislead the plaintiffs and gain an advantage. Plaintiffs contend that at a minimum, the scope of the waiver includes each of the challenged documents as well as any other documents containing the facts and materials on which Mercer relied in conducting its fighter pay assessment and any documents containing or disclosing Mercer's findings and recommendations in connection with the fighter pay assessment.

         To support its waiver arguments, the plaintiffs assert that Zuffa produced several documents related to the fighter pay assessment including the three challenged documents and the statement of work which it is not attempting to claw back. The Mercer presentation was produced March 24, 2016. The statement of work was produced May 18, 2016, and the memo and email chain were produced on July 11, 2016. Plaintiffs put Zuffa on notice that they possessed and intended to use the statement of work on July 5, 2016, when plaintiffs referred to it by Bates number and title in the Rule 30(b)(6) notice of deposition plaintiffs served. The parties had a meet-and-confer telephone conference on July 26, 2016, to discuss the topics in the July 5th notice. Zuffa raised certain privilege issues implicated by other topics, but did not raise any potential issues related to the Mercer fighter pay assessment or statement of work.

         On August 3, 2016, plaintiff served a revised Rule 30(b)(6) notice which again specifically referenced the Mercer statement of work by Bates number and title. Another meet-and-confer call was conducted August 12, 2016, to discuss the notice. Zuffa failed to raise any work product issues related to the statement of work. On August 8, 2016, plaintiffs served their Second Set of Requests for Production of Documents which specifically requested documents related to the fighter pay assessment performed by Mercer. A meet and confer was conducted August 25, 2016 to discuss the Second Set of Requests for Production of Documents, but Zuffa did not raise any work product issues with respect to the statement of work. However, Zuffa's August 19, 2016 letter clawed back the Mercer memo, the email chain, and presentation, but not the statement of work. Having provided the statement of work to plaintiffs, Zuffa has waived the right to assert work product protection for the memo and presentation which addresses the same subject matter, any other documents containing the facts and materials on which Mercer relied in conducting the fighter pay assessment, and any documents containing or disclosing Mercer's findings and recommendations in connection with its fighter pay assessment.

         Zuffa therefore seeks an order granting its challenge to work product designation of the three challenged documents and compelling production of related materials.

         B. ...


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