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Fidelity & Deposit Co. of Maryland v. Big Town Mechanical, LLC

United States District Court, D. Nevada

October 26, 2017

Fidelity & Deposit Company of Maryland, a Maryland corporation, Plaintiff
Big Town Mechanical, LLC, a Nevada limited liability company; et al., Defendants

          ORDER RE: PRIVILEGE LOGS [ECF NOS. 230, 249, 264, 294]


         This case arises out of campus-modernization construction at five elementary schools in Clark County School District (CCSD) that defendant Big Town Mechanical contracted to perform and for which plaintiff Fidelity and Deposit Company of Maryland and defendant Travelers Casualty and Surety Company agreed to act as sureties. The long history of this case has seen multiple discovery extensions, changes of counsel, and rising tensions. Some of Travelers' responses to Fidelity's 2013-2016 discovery requests were met with the objection that the materials sought were protected by the attorney-client or work-product privileges, but Travelers failed to provide a privilege log until April 2017.

         Fidelity moved to compel the production of the documents that Travelers has withheld for privilege, arguing that Travelers waived the privilege by failing to provide the privilege log that FRCP 26(b)(5) requires.[1] Magistrate Judge Foley granted the motion.[2] Travelers objects, newly arguing that there was a gentlemen's agreement between counsel that documents and logs would be produced on an informal schedule, and it would be unfair to strip Travelers of its most important privilege.[3] Fidelity denies there was any such agreement and argues that, even if there were, Travelers' johnny-come-lately argument does not render the magistrate judge's ruling clearly erroneous.[4] I agree, so I overrule the objection[5] and give Travelers 15 days to produce the withheld documents.


         A. Preliminary issues

         Before I reach the merits of Travelers' objection, I must resolve two briefing-related motions. Although Local Rule IB 3-1(a), which governs the briefing schedule for challenges to magistrate judges' discovery orders, states that “[r]eplies will be allowed only with leave of the court, ” Travelers filed one without leave.[6]Fidelity moves to strike this rogue brief.[7] Travelers responds that it felt that Magistrate Judge Foley's statement in his order's conclusion that “Travelers shall produce documents . . . within thirty (30) days of the filing of this order unless an objection to the order is filed”[8] was an “invitation” to object that implied that the briefing process would be governed by Local Rule 7-2, which applies generally to all motions and permits a reply brief.

         Travelers' argument is ridiculous. Magistrate Judge Foley's closing sentence was just a recognition that the challenged documents would not have to be disclosed while proper objections were pending. It was not a secret signal to Travelers that a totally different set of rules would apply.[9] This discovery order is plainly governed by LR IB 3-1(a) and its reply prohibition. Because Travelers has not demonstrated any basis to permit its reply, I find that it was filed in violation of LR IB 3-1(a). I thus grant Fidelity's motion in part-I disregard Travelers' reply brief.

         Fidelity followed up its motion to strike with a separate motion to permit it to “introduce supplemental evidence in response to” Travelers' rogue reply brief.[10] The request is conditioned on me accepting Travelers' reply brief. Because I am disregarding that brief, I deny Fidelity's motion to supplement as moot. With these preliminary matters out of the way, I now turn to Travelers' objection to Magistrate Judge Foley's order compelling Travelers to produce its privilege-withheld documents.

         B. Travelers' objection to the magistrate judge's discovery order

         A magistrate judge's discovery order may be modified or set aside if it is “clearly erroneous or contrary to law.” Factual determinations are reviewed for clear error, and legal conclusions are reviewed to determine whether they are contrary to law. The clear-error standard allows the court to overturn a magistrate judge's factual determinations only if the court reaches a “definite and firm conviction that a mistake has been committed.”[11]

         All parties agree that this privilege-log issue is governed by Burlington Northern & Santa Fe Railway Co. v. United States District Court, [12] which Judge Foley faithfully applied.[13] Travelers just disagrees with the conclusions that the magistrate judge reached when he applied the Burlington factors to the facts of this case, particularly in light of its fresh theory that the reason why the logs weren't produced was that counsel had verbally agreed to “open-ended timing to produce the required privilege logs of documents not produced when [the] review of them was entirely completed.”[14]

         I am not persuaded that I should consider this belatedly disclosed discovery pact. To explain away its failure to alert the Magistrate Judge of this key verbal agreement, Travelers argues that it didn't “have an opportunity to reach out to” prior counsel “or learn about the verbal agreement regarding discovery prior to filing its Opposition Brief” because it was only alerted to the fact that Fidelity was relying on 2015 communications by Fidelity's reply brief.[15] “Further, Local Rule IB 3-2(b) allows for consideration of additional evidence in these objections.”[16]

         But the hearing on this motion happened nearly three weeks after the reply brief was filed, and Magistrate Judge Foley took the motion under submission for another nine days before issuing his ruling.[17] If the reply brief, in fact, triggered the light-bulb moment that sent Travelers' current counsel seeking out the details of this secret agreement from previous counsel Sean T. Osborn, Esq., [18] it had ample time to ferret out those details before the magistrate judge ruled.

         And Travelers' reliance on LR IB 3-2 is misplaced. That rule governs district-court review of a magistrate judge's findings and recommendations on a matter “that may not be finally determined by a United States Magistrate Judge.”[19]Discovery orders do not fall into this category. They are pretrial matters, and magistrate judges have the authority to enter them under 28 U.S.C. § 636(b)(1)(A).[20]The rules for review of magistrate-judge orders issued under 28 U.S.C. § 636(b)(1)(A) are found in LR IB 3-1, not LR IB 3-2. And LR IB 3-1 does not authorize the district judge to “receive further evidence” in reviewing discovery orders like this one. Travelers' newly revealed, undocumented, verbal agreement between counsel to relax the discovery rules is thus not a proper subject of this challenge.

         Even if I were to accept Travelers' belated and controverted assertion that there was such an agreement, I still cannot conclude that the magistrate judge's ruling was clearly erroneous or contrary to law. Magistrate Judge Foley considered each of the Burlington factors and methodically applied them to the facts established by the record in this case. His discussion paints a clear picture: Over the course of several years, Travelers responded to Fidelity's document requests with boilerplate objections that offered nothing to help Fidelity assess the validity of Travelers' privilege claims; it ignored a January 2015 letter complaining about the lack of a privilege log, and it waited until April 2017-more than four years into the case and more than three years after making its first privilege objection to Fidelity's document requests-to produce any form of privilege log, even though FRCP 26(b)(5) required one. Based on this clear picture, Magistrate Judge Foley concluded that the Burlington factors weigh in favor of deeming Travelers' privilege waived, and he ordered Travelers to produce the withheld documents.[21]

         I find that this ruling is not clearly erroneous or contrary to law because it is consistent with Burlington and supported by the facts of this case. The Burlington court stressed that the waiver analysis is “intended to forestall needless waste of time and resources, as well as tactical manipulation of the rules and the discovery process.”[22] To adopt Travelers' position that “the relevant principles of law support a lesser sanction than the wholesale waiver” of the attorney-client privilege[23] would give short shrift to this stated intention behind Burlington's test. Travelers' actions have needlessly delayed the discovery process in this already-too-lengthy litigation. Allowing Travelers-“a sophisticated corporate litigant and repeat player”[24] in coverage lawsuits-to shield its documents from production on nothing but boilerplate objections followed years later by a privilege log that will likely require further litigation would not be “holsitic[ally] reasonable[].”[25] So I overrule Travelers' objection, deny its request for reconsideration, and adopt and affirm Magistrate Judge Foley's order. Travelers has 15 days to produce its previously withheld documents.

         C. Motion for Reconsideration of Order Striking Motion ...

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