Free Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 1 of 11

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 04-CV-1099-JLK-DLW WOLF CREEK SKI CORPORATION, INC., Plaintiff, v. LEAVELL-McCOMBS JOINT VENTURE, d/b/a THE VILLAGE AT WOLF CREEK, Defendant.

WOLF CREEK'S RESPONSE TO JOINT VENTURE'S MOTION TO COMPEL RETURN OF ATTORNEY-CLIENT PRIVILEGED DOCUMENTS PRODUCED BY PETE LEAVELL ______________________________________________________________________________

Plaintiff Wolf Creek Ski Corporation ("Wolf Creek" or "Plaintiff"), by and through its undersigned counsel, responds to Defendant Leavell-McCombs Joint Venture's ("Leavell-McCombs" or "Defendant") Motion to Compel Return of Attorney-Client Privileged Documents ("Motion"), and states as follows: INTRODUCTION Focusing on a red herring -- whether a former partner of the Joint Venture has the right to waive privilege -- the Joint Venture misses the boat. First, the Joint Venture's Motion is untimely, pursuant to (among other things) Order of this Court requiring the Joint Venture to file this Motion prior to November 30, 2005. Second, the Joint Venture was fully aware that managing venturer Pete Leavell maintained possession of privileged documents, and

\\\DE - 21735/0002 - 256325 v3

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 2 of 11

the Joint Venture's current members failed to take precautions to prevent production of such documents, thereby waiving any privilege. Finally the majority of documents over which the Joint Venture attempts to claim privilege (an issue on which it has the burden of proof) are not privileged as a matter of law, nor has the Joint Venture made any credible attempt to establish that the documents are privileged. PROCEDURAL BACKGROUND Wolf Creek served a third party subpoena to Mr. Leavell over 16-months ago on December 9, 2004, a copy of which was provided to the Joint Venture. Ex. 1. On or about December 27, 2004, through his counsel Chris Paul of Kemp Smith LLP, Mr. Leavell began producing responsive documents on a rolling production. The documents as received were then provided to the Joint Venture's counsel beginning on December 27, 2004. Ex. 2.1 Months later, on or about March 11, 2005 (over a year ago), the Joint Venture sent an e-mail to Wolf Creek's counsel requesting return of certain documents (including documents produced in December 2004) claiming such documents were privileged. Ex. 4. Wolf Creek refused on the grounds that the documents were either not privileged or the privilege was waived. Around this time, a variety of discovery issues were pending, and counsel agreed to seek guidance from the Court by providing the Court with a letter outlining outstanding discovery issues and the parties' position on each issue. As this Court is aware, it took some time to obtain the Joint Venture's position such that the letter could be submitted to the Court. On or about August 23, 2005, Wolf Creek and the Joint Venture provided the letter to the Court

1 Additional document were provided through Leavell's counsel on January 6, 2005, February 8, 2005, March 21, 2005 and July 6, 2005, all of which were provided or made available to the Joint Venture for inspection and copying. The December 27, 2004 production was sent to the Joint Venture on January 6, 2005. Ex. 3.

\\\DE - 21735/0002 - 256325 v3

2

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 3 of 11

setting forth their respective positions regarding the outstanding discovery issues. Ex. 5. On or about September 2, 2005, the Court held an informal meeting to give the parties guidance on these discovery disputes. Among the items addressed was the Joint Venture's claim for return of the allegedly privileged documents that were produced by Pete Leavell. During the conference, a representative of the Joint Venture informed the Court that during the summer before the Leavell Production, Mr. Honts had reviewed Mr. Leavell's files. Of course, Mr. Honts was well aware -- even prior to that -- that managing venturer Leavell had possession of numerous privileged documents. Accordingly, Wolf Creek argued to the Court that: 1) the documents the Joint Venture was asking to be returned were not privileged; or 2) that any privilege relating to Pete Leavell's production has been waived because, among other things, the Joint Venture took no precautions to protect privilege or to prevent the Mr. Leavell or his counsel from producing documents. Further, at the time, the Joint Venture was arguing out of the other side of its mouth that Kingsbury Pitcher was a member of the Joint Venture. During the Court's informal meeting on discovery issues, the Court indicated that it believed any privilege relating to Mr. Leavell's documents had been waived. The Joint Venture's attorney noted its disagreement with this conclusion, at which time the Court invited the Joint Venture to file a motion to compel return of the documents if it wanted the matter resolved by the Court. The Joint Venture took no action. After the change in counsel, Wolf Creek continued to press the Joint Venture for any motion on the Leavell documents. During the November 15, 2005 hearing on the Motion to Dismiss Defendant's breach of contract and breach of fiduciary duty claims, Wolf Creek's counsel raised the status of the Leavell documents. In the courtroom minutes of that hearing, the

\\\DE - 21735/0002 - 256325 v3

3

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 4 of 11

Court ordered that Defendant submit it a motion for return of the alleged privileged documents, if at all, prior to the end of November 2005. See Courtroom Minutes, Docket Number 123. Now, for the first time, over a year after Pete Leavell produced the allegedly privileged documents and almost three full months after the deadline set by this Court to file this motion has passed, Defendant moves for return of such documents.2 ARGUMENT A. The Court Ordered That Any Motion To Compel Return Of Privileged Documents Produced By Pete Leavell Must Be Filed Prior To November 30, 2005. On multiple occasions, the Court has invited the Joint Venture to file a motion relating to the allegedly privileged document produced by Pete Leavell, and no motion has been filed. In November, the Court set a date certain by which the motion must be filed, if at all ­ November 30, 2005. The Joint Venture's Motion, filed three months after the firm date set by this Court, is untimely and should be denied. B. The Joint Venture Has Failed To Take Reasonable Precautions To Protect Its Attorney-Client Privilege And Therefore Has Waived Any Claim Of Privilege. The Joint Venture sets forth the standard for finding an inadvertent waiver, but fails the test it propounds. In particular, the test cited by the Joint Venture requires the showing of two factors which the Joint Venture undeniably fails: 1) that the disclosing party took reasonable precautions to protect confidential information and; 2) that the disclosing party sought

These are merely the procedural highlights relating to the allegedly privileged document produced by Mr. Leavell. In addition to these conferences and communications, counsel for Wolf Creek and both current and former counsel for the Joint Venture exchanged numerous e-mails and engaged in multiple conversations regarding the Leavell Production and the claims of privilege.

2

\\\DE - 21735/0002 - 256325 v3

4

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 5 of 11

remedial measure in a timely fashion. Floyd v. Coors Brewing Co., 952 P.2d 797at 808 (Colo. App. 1997).3 Courts require that the party claiming privilege show that it had taken reasonable precautions to prevent disclosure of confidential information. Here, the Joint Venture was fully aware that Wolf Creek subpoenaed records from Pete Leavell, and it requested that Wolf Creek provide a copy of the production when received. Mr. Leavell was the former managing member of the Joint Venture, and the Joint Venture knew that he was in possession of attorney-client privileged information. This is particularly true in light of the Joint Venture's admissions to this Court that Mr. Honts in fact reviewed Mr. Leavell's files prior to Mr. Leavell's production. Nevertheless, the Joint Venture did not take any steps to prevent the disclosure of the allegedly privileged information. Indeed, it took over two months after receipt of the Leavell's first production (containing purportedly privileged documents) for the Joint Venture to notify Wolf Creek of any concerns. In similar circumstances, courts have held that a party's failure to take precautions to prevent disclosure of documents by people known to be in possession of privileged information constituted a waiver of privilege. For instance, in Denny v. Jenkins & Gilcrest the court held that the defendant had not taken adequate precautions to protect its privilege, and therefore waived the privilege. 362 F. Supp. 2d 407, 416-17 (S.D.N.Y. 2004). There, the defendant had produced an attorney-client privileged memorandum to a shareholder. Id. The defendant claimed sending the memorandum to the shareholder was inadvertent, but nevertheless
In fact, the Joint Venture does not meet any of the five required showings, but the two most glaring deficiencies are discussed here. Notably, this is not the first or only instance in which the Joint Venture had failed to protect allegedly privileged communications, including the Tom Glass production previously addressed by the Court, demonstrating a lack of diligence in protecting any alleged privileged communications. Thus, there can be no unfairness to the Joint Venture caused by its own waiver.
3

\\\DE - 21735/0002 - 256325 v3

5

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 6 of 11

failed to ask for immediate return of the document upon learning the document had been sent to the shareholder. Id. Three years later, the shareholder was asked to produce documents to the I.R.S. and to a plaintiff in a lawsuit. Id. Despite the fact that the defendant knew that the shareholder had the privileged document, and knew the shareholder was producing documents to the I.R.S. and the plaintiff, the defendant failed to request return of the document and failed to take any other precaution to make sure that the shareholder/third party did not produce the document to others. Id. In these circumstances, the court held that the defendant failed to show that it guarded its privilege with appropriate care, and therefore found any privilege has been waived. Here, the Joint Venture had full knowledge that Pete Leavell was in possession of its attorney-client communications. Rather than requesting the return of those documents from Mr. Leavell upon the buy-out of Leavell's interest, requesting that the documents be sent through the Joint Venture prior to production so that it could screen for privilege (as it did with other third parties in this case), or taking other action, the Joint Venture did nothing. Certainly, this lack of any effort to prevent the disclosure of privileged documents cannot be considered taking "reasonable precautions" to protect any purported privilege. Further, as discussed more fully above, the Joint Venture has not sought remedial measures in a timely fashion. To the contrary, while this privilege was initially raised by the Joint Venture in March 2005, it waited a year to file this Motion. This is despite the Court's guidance that it believed the privilege had been waived and the Court's invitation for the Joint Venture to file a motion at that time. After the retention of new counsel, Wolf Creek sought final resolution of issues concerning the Leavell documents in multiple correspondence with new

\\\DE - 21735/0002 - 256325 v3

6

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 7 of 11

counsel; still, no motion was filed. Finally, after bringing the issue to the Court's attention again during the hearing on the Motion to Dismiss, the Court issued a firm deadline for filing the present motion -- November 30, 2005. Far from seeking remedial measures in a timely fashion, the Joint Venture perpetually delayed resolution of this issue (thereby delaying Pete Leavell's deposition) and ignored the deadlines imposed on it by the Court. As such, the Joint Venture can not prove excusable inadvertence and has waived privilege with regard to the documents produced by Pete Leavell, and all other privileged documents relating those subject matters. C. The Vast Majority Of The Documents Are Not Privileged. Even if the Court were to overlook the delinquency in the filing of the Motion, the Joint Venture does not come remotely close to meeting its burden to compel return of the documents. "The party seeking to assert the attorney-client privilege or the work product doctrine as a bar to discovery has the burden of establishing that either or both is applicable." Barclays-American Corporation v. Kane, 746 F.2d 653, 656 (10th Cir. 1984) (citing United States v. Bump, 605 F.2d 548, 551 (10th Cir.1979) (burden is on party asserting that communication is protected by attorney-client privilege); Feldman v. Pioneer Petroleum, Inc., 87 F.R.D. 86, 88 (W.D. Okla. 1980) (party objecting to discovery has burden of establishing that information sought is protected by work product doctrine). The Joint Venture does not even attempt to meet this burden. Rather, without even a mention of why the documents at issue are privileged, the Joint Venture merely attaches a privilege log that it has never previously produced, and makes a blanket, unanalyzed claim that these documents are subject to the attorney-client or work product privileges. Indeed, the new list is different from the original list of claimed privileged document (Ex. 3), and demonstrates the Joint Venture's continually-evolving theories of privilege.

\\\DE - 21735/0002 - 256325 v3

7

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 8 of 11

The reason the Joint Venture's glazes over the requirement that it demonstrate privilege is clear upon review of the privilege log, and even more apparent when viewing the documents themselves -- the claimed privileges are not sustainable. Some of the documents, including L00301 and L04211-4216, were addressed to multiple people, many of them nonattorney consultants, and are unrelated to legal advice. Moreover, because they are copied to third parties, any privileged has been waived. Others, including L03035, L04181-4198, and L06970, were communications between the Joint Venture and Chris Paul, the attorney for Pete Leavell and his family. As such, Mr. Leavell had every right to produce such non-privileged documents and has done so. At least one of these documents L04108-4118, has been produced multiple times by the Joint Venture itself. See, e.g., JVF 8926-8933 and BHP 15478-15485. Some documents are merely communications between the Joint Venturers (in one instance copied to Pete Leavell's attorney), which is insufficient to make such business communications privileged. See L04108-4118, L04211-4216, and L7408-7441. Other documents are merely cover letters forwarding non-privileged information (such as information from consultants) to an attorney, again insufficient to create a privilege over these clearly non-privileged documents. See L01073 and L01084. Finally, this Court has already ruled that the Joint Venture has waived privilege regarding documents L07266-7231 in its order relating to privileged documents produced by Tom Glass. (Docket Number 106.) The remainder of the documents on the newly-created log, while apparently communications between Honts and various Joint Venture attorneys, do not necessarily meet the legal standard for privilege. For instance, there is no attorney-client privileged information contained in the invoices from Holland & Hart LLP or Crowell & Moring. Crowell & Moring

\\\DE - 21735/0002 - 256325 v3

8

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 9 of 11

was engaged to provide lobbying services, which are not protected attorney-client communications. See Black v. Southwestern Water Conservation District, 74 P.3d 462, 468 (Colo. Ct. App. 2003). The bills simply summarize communications with Representative DeLay and other policy making officials and their staff. These are merely "[s]ummaries of legislative meetings, progress reports, and general updates on lobbying activities [which] do not constitute legal advice and therefore are not protected by the attorney-client privilege or work product doctrine." Black, 74 P.3d at 468. Moreover, there has been a subject matter waiver on privilege regarding the negotiation and execution of the 1999 agreements, along with various other issues such as when the Joint Venture became aware of a potential claims against Wolf Creek, and attorneys' fees connected with attempts to obtain access to its land, which are the subjects of documents L 03101-03104, L 03105-03123, and L 01403-1408. It is the Joint Venture's duty to demonstrate privilege, and the mere assertion of privilege is insufficient to satisfy this burden. See In re Pfohl Brothers Landfill Litigation, 175 F.R.D. 13, 20 (W.D.N.Y. 1997). The proponent carries the burden of providing sufficient information as to the type of privilege being asserted, the documents or communications claimed privileged and the "precise reasons" for applying the privilege to those communications or documents. See General Elec. Capital Corp. v. Lear Corp., 215 F.R.D. 637, 643 (D. Kan. 2003). The Joint Venture has not meet this burden, and therefore, its motion should be denied.

\\\DE - 21735/0002 - 256325 v3

9

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 10 of 11

CONCLUSION Based on the foregoing, Plaintiff respectfully requests the Court order that the documents at issue are not privileged, that the privilege, if any, has been waived, and that the documents are not protected from discovery. Dated this 16th day of March, 2006. HOGAN & HARTSON L.L.P.

By: s/Andrew R. Shoemaker Andrew R. Shoemaker Denise D. Riley Jacqueline S. Cooper 1470 Walnut Street, Suite 200 Boulder, Colorado 80302 [email protected] [email protected] [email protected] (720) 406-5300 telephone (720) 406-5301 facsimile Attorneys for Plaintiff Wolf Creek Ski Corporation, Inc.

\\\DE - 21735/0002 - 256325 v3

10

Case 1:04-cv-01099-JLK-DW

Document 165

Filed 03/16/2006

Page 11 of 11

CERTIFICATE OF SERVICE I hereby certify that on this 16th day of March, 2006, I electronically filed the foregoing WOLF CREEK'S RESPONSE TO JOINT VENTURE'S MOTION TO COMPEL RETURN OF ATTORNEY-CLIENT PRIVILEGED DOCUMENTS PRODUCED BY PETE LEAVELL with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: George V. Berg: Sally P. Berg: [email protected] [email protected]

Kimberly A. Tomey: [email protected]

s/Tammy L. Fry

\\\DE - 21735/0002 - 256325 v3