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Matrix Essentials, Inc. v. Quality King Distributors

January 12, 2006

MATRIX ESSENTIALS, INC., PLAINTIFF,
v.
QUALITY KING DISTRIBUTORS, INC., BERNARD NUSSDORF, GLENN NUSSDORF, AND STEPHEN NUSSDORF, DEFENDANTS, RUTH NUSSDORF, PRO'S CHOICE BEAUTY CARE, INC. AND GSN TRUCKING CORP., NON-PARTY RESPONDENTS



The opinion of the court was delivered by: Wall, Magistrate Judge

ORDER

Before the court is a motion by Non-Party Respondent Pro's Choice Beauty Care to compel production of a document ("the Report") that plaintiff (L'Oreal) contends is protected by the work product privilege, to further compel production of all documents and other information related to the Report, and to extend the deposition of Charles Domroe. For the reasons set forth herein, the motion is granted in part and denied in part.

The court finds that L'Oreal waived work product protection for the Report, and it must produce the Report and any other documents relating to the investigation that is the subject matter of the Report that were in L'Oreal's possession in April 2003, subject to the limitations discussed infra. Materials relating to the investigation generated after that date, even if related to the investigation, need not be produced, unless they were, like the Report, disclosed to the government. The court declines to continue Mr. Domroe's deposition at this time, and no sanctions are awarded.

BACKGROUND

Familiarity with the facts underlying this action is assumed. Pro's Choice seeks an order compelling the plaintiff to produce "the Report," a document numbered P00243-248 that the plaintiff previously disclosed to various governmental entities, allegedly in an effort to determine if any "criminal processes could be applied that would help . . . the pending civil lawsuit." See 12/23/06 Cizmarik Letter at 1 (quoting Domroe Dep. at 55:2-16, 195:23-196:5; 217:16-25). The plaintiff explains the background of the Report as follows:

About a year before the bringing of the present contempt proceedings and the companion state court ARTec case, L'Oreal referred its evidence of defendants' violations of the Matrix Consent Judgment and ARTec Settlement Agreement to the FBI and U.S. Attorneys Office. Although it has produced all of the underlying evidence to defendants, L'Oreal has asserted attorney work product immunity in withholding certain documents that L'Oreal created to summarize and analyze its pre-filing investigations and evidence in preparation for litigation, including one such document, P00243-248, that L'Oreal also provided to federal law enforcement authorities for their related criminal investigations of defendants (the "Report") . . . 1/3/06 Canova Letter*fn1 at 1 (underscore in original).

Pro's Choice argues that L'Oreal's production of the document waived any work product protection to which it otherwise would have been entitled, a claim with which L'Oreal disagrees.

DISCUSSION

The work product doctrine protects materials produced by an attorney for, or in anticipation of, litigation. See Fed. R. Civ. P. 26(b)(3); United States v. Adlman, 134 F.3d 1194, 1197-98 (2d Cir. 1998). The court accepts, for the purposes of this motion, that the document at issue is work product. "The logic behind the work product doctrine is that opposing counsel should not enjoy free access to an attorney's thought processes." In re Steinhardt Partners, L.P., 9 F.3d 230, 234 (2d Cir. 1993). The issue of work product waiver in situations where disclosure was made to a governmental authority has frequently arisen. See In re Natural Gas Commodity Litigation, 2005 WL 1457666, *4-7 (S.D.N.Y. June 21, 2005) (citing cases).

"Unlike waiver of the attorney-client privilege, work product is not automatically waived once produced to a third party. Rather it is waived when its production to another is inconsistent with the protection." Spanierman Gallery Profit Sharing Plan v. Merritt, 2003 WL 22909160 *2 (S.D.N.Y. Dec. 9, 2003) (citing GAF Corp. v. Eastman Kodak Co., 85 F.R.D. 46, 51 (S.D.N.Y. 1979)). Consistent with these principles, it has been held that "'[t]he work product doctrine is waived when documents are voluntarily shared with an adversary . . .'" Fullerton v. Prudential Ins. Co., 194 F.R.D. 100, 103 (S.D.N.Y. 2000) (quoting Niagara Mohawk Power Corp. v. Stone & Webster Eng. Corp., 125 F.R.D. 578, 587 (N.D.N.Y. 1989)). It is not, however, necessary that the disclosure be made to an actual adversary. Bank of America, N.A. v. Terra Nova Ins. Co., 212 F.R.D.166, 170 (S.D.N.Y. 2002). Waivers have been found where the governmental agency was a potential adversary to the disclosing party. See Bank of America, 212 F.R.D. at 170 (citing cases).

Courts also look to whether the disclosure was made in a manner that is "'inconsistent with maintaining secrecy against opponents.'" Id. (quoting United States v. AT&T, 642 F.2d 1285, 1299 (D.C. Cir. 1980)). Thus, a disclosure to a non-adversarial governmental agency that substantially or materially increases the likelihood that an adversary will obtain the information has been found to waive the protection. See, e.g., GAF, 85 F.R.D. at 51-52; see also Bank of America, 212 F.R.D. at 170 and cases cited therein.

In making a determination of the increased risk of an adversary's obtaining the work product, courts in this Circuit have looked to whether the material was disclosed under an express agreement or requirement that it be kept confidential. See, e.g., Steinhardt, 9 F.3d at 236 (declining to adopt a per se waiver rule, which would fail to anticipate situations in which government agency and "disclosing party have entered into an explicit agreement that the [agency] will maintain the confidentiality of the disclosed materials." (citing in re Sealed Case, 676 F.2d 793, 817 (D.C. Cir. 1982); see also GAF, 85 F.R.D. at 52 (no waiver found where, even if adversarial relationship between government and disclosing party had existed, there was an explicit statutory prohibition on the government's revelation of GAF's documents without GAF's permission); In re natural Gas, 2005 WL 1457666 at *8-9 (finding no waiver where confidentiality and non-waiver agreements existed, despite majority view in other Circuits that such agreements would not necessarily insulate disclosing party from finding of waiver). Courts in other Circuits, however, have found waiver even where a confidentiality agreement did exist. See in re Natural Gas, 2005 WL 1457666 at *7-8 (citing cases).

Courts have also looked to whether the disclosure of information to the government was to assist in litigation against a common opponent, or whether a common interest existed. See Bank of America, 212 F.R.D. at 171; see also Spanierman, 2003 WL 22909160 at *5; Information Resources, Inc. v. Dun & Bradstreet, 999 F. Supp. 591, 591-92 (S.D.N.Y. 1998). A distinct category of cases in which courts have considered waiver are those in which the disclosure of information to governmental authorities was made in the hope that the government will "attack" the disclosing party's adversary. Information Resources, 999 F. Supp. at 592. Such disclosure, it has been held, "cannot be said to be done 'in the pursuit of trial preparation,' and "disclosure in such a situation results in a waiver of the work product protection." Bank of America, 212 F.R.D. at 172-73 (quoting AT&T, 642 F.2d at 1299); see also Information Resources, Inc., 999 F. Supp. at 593 (S.D.N.Y. 1998) (protection waived where materials were submitted voluntarily to stimulate official action beneficial to discloser); Three Crown Ltd. P'ship v. Salomon Bros., Inc., 1993 U.S. Dist. LEXIS 9995 at *2 (S.D.N.Y. July 21, 1993) (protection waived where work product materials used to "persuade the government to take action against a party and thereby gain, if possible, the advantage of collateral estoppel in later civil litigation.")

Here, the disclosure was voluntary, but there was no adversarial or potentially adversarial relationship between L'Oreal and the government agencies. Thus, the relevant questions are whether the disclosure was made to gain an advantage against an adversary, whether the disclosure heightened the risk of disclosure to that ...


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