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March 3, 2000


The opinion of the court was delivered by: Scullin, District Judge.



Richard F. Tompkins died in 1996 at the age of 68. For purposes of the motions pending before this Court, the parties agree that he died from lung cancer caused by smoking. He is said to have started smoking around the age of 10. He predominantly smoked unfiltered Camel cigarettes — an average of one pack per day. Since the mid-1950s, his wife encouraged him to quit. In the 1960s, the Surgeon General issued a report on smoking and health, and Congress mandated that warnings be placed on cigarette packaging. In 1984, Mr. Tompkins was diagnosed with high blood pressure and kidney problems, which his doctors said were related to smoking. In 1988, the Surgeon General issued another report concluding that smoking was an addiction. In 1990, Mr. Tompkins' doctor again encouraged him to quit. Mr. Tompkins was diagnosed with lung cancer in 1995, and he died the next year. Although Mr. Tompkins on several occasions tried to quit smoking, each attempt was unsuccessful. He said he would quit when he believed cigarettes were a real hazard to a person's health.

Mr. Tompkins' wife and son are the Plaintiffs in this action. They have brought suit against Defendant R.J. Reynolds Tobacco Company ("RJR") as the manufacturer of Camel cigarettes. Their complaint alleges fraud and misrepresentation, products liability, negligence, personal injury, breach of warranty, wrongful death and loss of consortium. Federal jurisdiction is based upon diversity of citizenship.

Presently before the Court is (1) RJR's appeal from a decision by Magistrate Judge Gustave J. DiBianco denying RJR's request for a protective order pertaining to particular evidence, (2) Plaintiffs' motion to amend their complaint, (3) Plaintiffs' motion to strike certain of Defendant's affirmative defenses, and (3) RJR's motion for summary judgment.


I. RJR's Appeal from Magistrate Judge DiBianco's Decision

In the course of discovery, Plaintiffs' expert witness, K. Michael Cummings, Ph. D., prepared a report in which he refers to and quotes from a document entitled "RJR Research and Development Activities Fact Team Memorandum — Volume III" ("R & D Memo"). Defendant objected to the use of this report and sought the imposition of a protective order on the grounds that the R & D Memo is subject to attorney-client and work product privileges. Magistrate Judge DiBianco denied Defendant's motion in an order dated October 21, 1998.

A. Standard of Review

The parties disagree as to what standard of review applies on appeal. RJR argues the Court should conduct a de novo review, because the question of whether the privileges apply is a mixed question of law and fact. See Def.'s Mem. of Law in Supp. of Appeal, at 8.

Yet under Fed.R.Civ.P. 72(a), whenever a magistrate judge determines "nondispositive matters," the district court on appeal may set aside such a determination only if "clearly erroneous or contrary to law." The Rule reflects the standard of review set forth in 28 U.S.C. § 636(b)(1)(A). Section 636(b)(1)(A) also identifies what is to be considered a "dispositive matter," such that anything not included is classified by default as a "nondispositive matter." Discovery disputes fall into the latter category, and the Eastern District of New York has clearly explained that pre-trial discovery matters "include[] issues of privilege." Commodity Futures Trading Comm'n v. Standard Forex, Inc., 882 F. Supp. 40, 42 (E.D.N.Y. 1995) (citations omitted). Moreover, district courts within the Second Circuit consistently have applied the "clearly erroneous or contrary to law" standard of review when privilege determinations are appealed. See, e.g., Springwell Corp. v. Falcon Drilling Co., Inc., No. 96 CIV 7463, 1998 WL 352533, at *1 (S.D.N.Y. July 1, 1998) (Sotomayor, J.); Bertolotti v. Teamsters Local 814 Pension Fund, No. 95-CV-5261, 1998 WL 12169, at *2 (E.D.N.Y. Jan. 8, 1998); New York State Teamsters Council Prepaid Legal Servs. Plan v. Primo & Centra, 159 F.R.D. 386, 387-88 (N.D.N.Y. 1995). This Court therefore will apply that same standard to the appeal of Magistrate Judge DiBianco's order.

An order is clearly erroneous when "the reviewing court is left with the definite and firm conviction that a mistake has been committed." Primo & Centra, 159 F.R.D. at 387 (internal quotation marks omitted). An order is contrary to law "when it fails to apply or misapplies relevant statutes, case law or rules of procedure." Thompson v. Keane, No. 95 Civ. 2442, 1996 WL 229887, at *1 (S.D.N.Y. May 6, 1996) (internal quotation marks omitted). Considering that magistrate judges are given broad discretion with respect to pre-trial discovery matters, reversal is warranted only when that discretion is abused. Abrams v. General Elec. Co., No. 95-CV-1734, 1997 WL 458446, at *1 (N.D.N.Y. Aug. 4, 1997).

B. Applicable Law

Because this Court is sitting in diversity, a question arises as to whether the privilege issues raised in this case are governed by federal or state law. With respect to the attorney-client privilege, it is governed by state law. See Fed.R.Evid. 501; Shamis v. Ambassador Factors Corp., 34 F. Supp.2d 879, 892 (S.D.N.Y. 1999). In their letter briefs to Magistrate Judge DiBianco, both parties acknowledged that in this context, New York law applies.*fn1 While this distinction is not drawn in the order on appeal, and although the magistrate judge's opinion relies primarily on federal common law, the order is not contrary to the law of New York. For "`New York law governing the attorney-client privilege [N.Y.C.P.L.R. § 4503] is generally similar to accepted federal doctrine, albeit with certain variants.'" Shamis, 34 F. Supp.2d at 892 (quoting Bowne of New York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 470 (S.D.N Y 1993)).

With respect to the work product privilege, federal law controls. See Bowne, 150 F.R.D. at 471. Guidance is found primarily in Fed.R.Civ.P. 26(b)(3). See id. Since Magistrate Judge DiBianco cited federal law cases addressing a claimed work product privilege, this Court need only ensure that the relevant law was appropriately applied.

C. Whether the Decision on Appeal is Clearly Erroneous or Contrary to Law

The party seeking the protection of a privilege — in this case RJR — must prove the privilege exists and that such privilege has not been waived. See Shamis, 34 F. Supp.2d at 892; Bowne, 150 F.R.D. at 470-71; see also Iron Workers Local Union No. 17 Ins. Fund v. Philip Morris, Inc., 35 F. Supp.2d 582, 590 (N.D.Ohio 1999). In his October 21, 1998 order, Magistrate Judge DiBianco assumed arguendo that the attorney-client and work product privileges apply. Magistrate Judge DiBianco nevertheless denied RJR's request for a protective order, having found that RJR on three separate occasions waived its right to assert privileges over the R & D Memo. This Court will also presume, without deciding, that the asserted privileges apply because in reviewing Magistrate Judge DiBianco's order, his determination that RJR waived its privileges is neither clearly erroneous nor contrary to law.

1. History of the R & D Memo

The facts pertaining to the R & D Memo are largely undisputed. Whether the R & D Memo is a privileged document was an issue in a prior lawsuit brought in Minnesota District Court, State v. Philip Morris. On March 7, 1998, the Minnesota District Court ordered the production of the R & D Memo, along with thousands of other documents, after adopting a special master's report. RJR and the other defendants attempted to obtain interlocutory review from the higher state courts and the United States Supreme Court, but failed. The documents were eventually produced subject to a protective order barring public release.

Meanwhile, the congressional House Commerce Committee issued subpoenas on February 19, 1998 to the CEOs of the parent corporations of RJR and other cigarette manufacturers who were defendants in the Minnesota Philip Morris litigation. The Committee sought to receive copies of the 39,000 documents released in the Philip Morris case, including the R & D Memo. The defendants asserted the same privileges being decided upon in state court, and a letter was written to the House Committee Chair, dated March 12, 1998, asking for a delay in deciding the privilege issue until appellate review from the state court decision could be exhausted. The Committee chair did so, and when the appellate stays expired on April 6, 1998, he ruled that the claims of privilege would not be recognized. He also informed the parties that unless the documents were turned over immediately, he would begin contempt proceedings. That same day, the tobacco companies complied with his order.

Although the tobacco companies requested the materials be kept confidential, the Committee released them onto the Internet on April 22, 1998. RJR issued a press release when this occurred, claiming that "[t]aken as a whole — and not selectively out of context — these documents more than demonstrate that our company responsibly researched, manufactures and markets its products to adult smokers." Ex. to Def.'s Mem. of Law, Tab F.

In May 1998, State v. Philip Morris settled. Incorporated in the consent judgment was a provision permitting the plaintiffs to seek court approval for public disclosure of those documents that were subject to a protective order, over which the defendants had asserted a privilege but for which no privilege was found to exist. The plaintiffs sought said approval, and the court initially granted it. The defendants opposed the order, and subsequently secured a stay of the release pending resolution of a motion to vacate the order. The stay however, did not apply to documents posted by Congress on the Internet, which included the R & D Memo.

2. Whether RJR Waived Its Privileges When It Entered into the Settlement Agreement/Consent Judgment in the Minnesota Philip Morris Case

Magistrate Judge DiBianco found that RJR waived any privileges when it entered into the consent judgment in Philip Morris permitting the plaintiffs to seek public disclosure of those documents for which a privilege was claimed but found not to exist. Magistrate Judge DiBianco cannot be said to have misapplied the law upon which he relied for his conclusion. See United States v. International Bhd. of Teamsters, 961 F. Supp. 665, 673 (S.D.N.Y. 1997), aff'd 119 F.3d 210 (2d Cir. 1997) (holding that a party waives the attorney-client privilege when it voluntarily consents to the disclosure of any significant part of the communication in issue); Grumman Aerospace Corp. v. Titanium Metals Corp. of Am., 91 F.R.D. 84, 90 (E.D.N.Y. 1981) (holding that when a party discloses an item to an adversary, even in the context of settlement, a waiver of the work product privilege is effected).

Furthermore, nothing in New York case law holds to the contrary insofar as the waiver of the attorney-client privilege is concerned. In New York, only a client may waive the privilege. See N.Y.C.P.L.R. § 4503(a). Such waiver may be achieved by publicly disclosing the matter in issue. See Jakobleff v. Cerrato, Sweeney & Cohn, 97 A.D.2d 834, 835, 468 N.Y.S.2d 895 (2d Dep't 1983). Having been a party to the Minnesota Philip Morris settlement, RJR thereby can be considered to have waived its privilege over the R & D Memo by consenting to its public disclosure, on the condition that the plaintiffs in that case apply for a court order. Nor has RJR raised the argument that its attorneys consented to the settlement agreement without RJR's permission.

What RJR does contend in its appeal papers is that the consent judgment allowed the plaintiffs to do no more than apply to the Minnesota court for the public release of certain documents, and that nowhere in the consent judgment did RJR waive its right to oppose this application. RJR emphasizes that it did oppose the application and obtained a partial stay. Yet RJR cites no authority either to support its interpretation of the consent judgment or to undermine the conclusion that the failure to include language preserving RJR's right to object is tantamount to effecting a waiver of any applicable privileges. RJR bears the burden of proof, and its failure to show how Magistrate Judge DiBianco's interpretation of the consent judgment is contrary to law gives this Court no basis upon which to mandate a reversal on appeal.

Moreover, three courts outside this Circuit*fn2 have reached the same conclusion. They held that RJR waived its privileges over the R & D Memo because the Philip Morris consent judgment/settlement agreement contained no provision preserving RJR's right to oppose the plaintiffs' application for the release of documents. See Iron Workers Local Union No. 17 Ins. Fund, 35 F. Supp.2d at 591-94; State v. Philip Morris Inc., No. 97-CV-328, slip op. at 8-9 (Wis.Cir.Ct., Branch 11, Dane County Oct. 21, 1998); State v. Philip Morris, No. 96122017/CL211487, slip op. at 17-20 (Baltimore City Cir.Ct. Aug. 5, 1998).

3. Whether RJR Waived Its Privileges When It Released the R & D Memo to the House Commerce Committee

Magistrate Judge DiBianco further found that RJR waived its privileges when it turned over the R & D Memo to the House Commerce Committee in response to the Committee's subpoena. RJR contends that once the Committee Chair rejected the privilege claims, it had no choice but to comply with the congressional subpoena or else risk being held in contempt. Although Magistrate Judge DiBianco acknowledged the limited choices available to RJR once its privilege claims were ruled upon, he nevertheless faulted RJR for failing to exhaust all avenues available for pressing its privilege claims before the Committee Chair. See Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414, 1427 n. 14 (3d Cir. 1991) (noting that a subpoenaed party will waive applicable privileges if it does not continue to challenge the subpoena and withhold requested documents until ordered to do so).

Magistrate Judge DiBianco relied heavily upon the recent decision in Commonwealth v. Philip Morris, No. 95-7378-J, 1998 WL 1248003 (Mass.Sup.Ct. July 30, 1998). He agreed with that court's observation that RJR is experienced in dealing with congressional subpoenas. Consequently, the fact that only one letter was written to the Committee Chair did not, in Magistrate Judge DiBianco's mind, satisfy RJR's burden to show that it made a concerted effort to convince the Chair to sustain its privilege assertions — especially when the thrust of this one letter was not to explain the basis for finding that a privilege applied, but rather to ask for a delay in ruling on the issue of privilege until after appellate review was exhausted in Minnesota. Without any evidence to show that RJR pursued all available avenues before the Chair rejected its claims of privilege, Magistrate Judge DiBianco concluded that RJR waived those privileges.

On appeal, RJR offers no evidence that its efforts to persuade the Committee Chair were greater than those recognized by the magistrate judge, such that the factual basis for Magistrate Judge DiBianco's decision cannot be characterized as clearly erroneous. Although RJR considers it "telling" that the magistrate judge failed to identify what other steps RJR could have pursued short of standing in contempt, see Def.'s Br., at 14, RJR is mistaken in believing it is the Court's responsibility to do so.*fn3 RJR carries the burden of proof to establish that a privilege exists. As a result, RJR must show not only what steps it took to challenge the congressional subpoena, but also that those steps represent the fullest extent of options available. With RJR having failed to do so, Magistrate Judge DiBianco's order is not clearly erroneous.

Nor can the magistrate judge's decision be said to be contrary to law. It both relies upon the legally-recognized principle that a party must take steps to preserve claims of privilege against a subpoena, and parallels so closely the decision by the Massachusetts Superior Court. Furthermore, case law suggests that mere objections to Congress' refusal to extend a privilege are insufficient to contest a congressional subpoena. See Sanders v. McClellan, 463 F.2d 894, 899 (D.C.Cir. 1972). Instead, a party may need to risk standing in contempt by refusing to comply with the subpoena, thereby causing the legislators to seek a contempt citation and refer the citation to the Attorney General. See id. If prosecution were to result, the party could present in court its argument in favor of finding a privilege. See id. Applying these principles to this case, RJR's efforts clearly fell short. The tobacco company failed even to register an objection with the Commerce Committee after the Chair denied its privilege requests. Instead, RJR turned over the requested documents on the same day the Chair's decision was issued.

As a final consideration, other courts have determined that RJR failed to take reasonable steps to resist compliance with or mount a challenge to the congressional subpoena, thereby waiving any applicable privileges. See Iron Workers Local Union No. 17 Ins. Fund, 35 F. Supp.2d at 594-96; State v. R.J. Reynolds Tobacco Co., No. CJ-96-1499, Tr. of Proceedings at 67-69 (Okla.Dist.Ct. Oct. 20, 1998).

4. Whether RJR Waived Its Privileges When It Issued Its April 22, 1998 Press Release

Last of all, Magistrate Judge DiBianco found that RJR waived its privileges by issuing its April 22, 1998 press release at the time Congress released the R & D memo, along with numerous other documents, onto the Internet. In light of Plaintiffs' claims against RJR for fraud and misrepresentation, products liability, negligence and breach of warranty, and the fact that statements in the press release indicate that the documents released onto the Internet — including the R & D Memo — illustrate how RJR has responsibly researched, manufactured and marketed its product, Magistrate Judge DiBianco reasoned that RJR has put the R & D Memo "at issue." As such, he held that the company could not now claim a privilege after having used the occasion of the R & D Memo's release to tout its own virtues.

Although courts within this Circuit have applied a fairness test to determine whether a party has implicitly waived a privilege, thereby causing the communication at issue to be disclosed, that test was applied to claims asserted within the context of litigation. See, e.g., United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991); Worthington v. Endee, 177 F.R.D. 113, 116-17 (N.D.N.Y. 1998); Tribune Co. v. Purcigliotti, No. 93 Civ. 7222, 1997 WL 10924, at *5, 7 (S.D.N.Y. Jan. 10, 1997), modified in part by 1998 WL 175933 (S.D.N.Y. Apr.14, 1998). Among the common characteristics of an implied waiver is that a litigant places the protected communication "at issue" through an affirmative act, such as claiming an affirmative defense. See Worthington, 177 F.R.D. at 116. RJR's press release however, is an extrajudicial statement that may be subject to "no waiver or only a narrow one." Tribune Co., 1997 WL 10924, at *5. The Second Circuit has held that extrajudicial disclosure of attorney-client communication does not constitute waiver where the client does not subsequently use that communication in a judicial proceeding. See In re von Bulow, 828 F.2d 94, 102 (2d Cir. 1987).

5. Existence of Contrary Conclusions in Case Law

This Court acknowledges that a split exists among courts that have addressed the precise question of whether RJR waived any privileges applicable to the R & D Memo. See Iron Workers Local Union No. 17 Ins. Fund, 35 F. Supp.2d 582 (waiver by entering into consent judgment and complying with congressional subpoena); State v. Philip Morris Inc., slip op. (no waiver by complying with congressional subpoena or issuing press release, but waiver by entering into consent judgment); State v. R.J. Reynolds Tobacco Co., Tr. of Proceedings (waiver by complying with congressional subpoena); State v. Philip Morris, slip op. (no waiver by complying with congressional subpoena, but waiver by entering into consent judgment and issuing press release); Commonwealth v. Philip Morris Inc., slip op. (waiver by complying with congressional subpoena); Reed v. Philip Morris Inc., Civ. No. 5070-96, Tr. of Proceedings (D.C.Super.Ct. June 25, 1998) (no waiver by entering into consent judgment); State v. American Tobacco Co., No. 96-2-15056-8, slip op. (Wash.Super.Ct. May 1, 1998) (no waiver by complying with congressional subpoena).

Yet while authority may exist to support RJR's position, the more critical inquiry on appeal is whether authority exists to support Magistrate Judge DiBianco's decision. As the foregoing analysis illustrates, this Court cannot conclude that the magistrate judge "fail[ed] to apply or misapplie[d] relevant statutes, case law or rules of procedure." Thompson, 1996 WL 229887, at *1. Consequently, his order is not contrary to law. Moreover, remembering that magistrate judges are afforded much discretion in making pre-trial discovery determinations, this Court can find no basis for believing that Magistrate Judge DiBianco abused his discretion such as to warrant a reversal. Accordingly, Magistrate Judge DiBianco's October 21, 1998 Order is affirmed, and RJR's motion for a protective order is denied.

II. Plaintiffs' Motion to Amend the Complaint

On October 27, 1998 — after this lawsuit was initiated — the New York Supreme Court, Appellate Division, issued a decision explaining that allegations of fraud must include examples of misrepresentation upon which a cigarette user relied. See Small v. Lorillard Tobacco Co., Inc., 252 A.D.2d 1, 15, 679 N.Y.S.2d 593 (1st Dep't 1998), aff'd 94 N.Y.2d 43, 698 N.Y.S.2d 615, 720 N.E.2d 892 (1999). Plaintiffs wish to amend their complaint to reference particular advertisements and pronouncements issued by RJR, upon which they claim Mr. Tompkins reasonably relied.

Fed.R.Civ.P. 15(a) provides that leave to amend a complaint "shall be freely given when justice so requires." Yet leave may be denied where permitting the amendment would be futile. See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 18 (2d Cir. 1997).

If the proposed amended pleadings cannot survive RJR's motion for summary judgment on the merits, it serves little purpose to allow the amendments to be made. The Court's analysis (infra) of the sufficiency of the evidence pertaining to Plaintiffs fraud claim concludes that even with evidence of specific advertisements, Plaintiffs cannot survive summary judgment. As such, Plaintiffs' motion to amend is denied.*fn4

III. Plaintiffs' Motion to Strike Certain Affirmative Defenses

Plaintiffs move pursuant to Fed. R.Civ.P. 12(f) to strike a myriad of affirmative defenses asserted by RJR in its answer. This Court has stated that "[c]ourts generally disfavor Rule 12(f) motions and do not routinely grant them." State of New York v. Almy Bros., Inc., 971 F. Supp. 69, 72 (N.D.N.Y. 1997) (McCurn, J.). Where a plaintiff moves to strike affirmative defenses, the defendant's pleadings are to be construed liberally so as to give the defendant a full opportunity to support its claims after discovery has been made. See id. A motion to strike should be granted only where (1) it appears to a certainty that the plaintiff will succeed regardless of what facts could be proved in support of the defense; (2) the affirmative defense sought to be struck does not present disputed and substantial questions of law that could be resolved in such a way as to support the defense; and (3) the plaintiff shows it will be prejudiced by inclusion of the affirmative defense. See id.

RJR contends that Plaintiffs' motion should be dismissed as untimely, since Fed.R.Civ.P. 12(f) provides that a motion to strike should be brought "within 20 days after the service of the pleading upon the party." A motion to strike was dismissed for this reason in Harley-Davidson, Inc. v. Estate of O'Connell, 13 F. Supp.2d 271, 278 (N.D.N.Y. 1998).

On the other hand, courts within the Second Circuit have ruled on the merits of a motion to strike brought after the expiration of the 20-day window, based upon the language in Rule 12(f) giving judges discretion to strike material from a pleading on their own initiative. See, e.g., Wine Markets Int'l, Inc. v. Bass, 177 F.R.D. 128, 132-33 (E.D.N.Y. 1998) ("In effect, the Court's ...

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