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Durling v. Papa John's International, Inc.

United States District Court, S.D. New York

January 24, 2018

WILLIAM DURLING, JAMES MORTON, JR., TOM WOLFF, MICHAEL MORRIS and RICHARD SOBOL, for themselves and all others similarly situated, Plaintiffs,
v.
PAPA JOHN'S INTERNATIONAL, INC., Defendant.

          OPINION AND ORDER

          JUDITH C. MCCARTHY, UNITED STATES MAGISTRATE JUDGE

         Plaintiffs William Durling, James Morton, Jr., Tom Wolff, Michael Morris and Richard Sobol ("Plaintiffs") commenced this putative class action against Defendant Papa John's International, Inc. ("PJI"), alleging that PJI pays its pizza delivery drivers wages below the minimum wage mandated by federal and state law. Presently before the Court is Plaintiffs' motion to compel production of documents. (Docket No. 242). Plaintiffs' motion challenges PJI's decision to withhold, on privilege grounds, certain documents involving communications between PJI and third-party Motus, LLC ("Motus"). The motion also raises other general document discovery issues. For the reasons set forth below, Plaintiffs' motion is granted in part and denied in part.

         I. BACKGROUND

         The Court assumes familiarity with the history of this case, and recites only the facts necessary to this Opinion and Order. Plaintiffs allege that PJI "systematically under-reimbursed its delivery drivers for vehicular wear and tear, gas and other driving-related expenses, thereby ensuring that all of [P]I's] delivery drivers are effectively paid well below the minimum wage." (Docket No. 35 ¶ 2). Plaintiffs assert claims under the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. §§ 201 et seq.; the New York Labor Law, N.Y. Lab. Law, Art. 19 §§ 650 et seq.; the Pennsylvania Minimum Wage Act of 1968, 43 P.S. §§ 333.101, et seq.; the New Jersey Wage and Hour Law, N.J.S.A. 34:1 l-56a, et seq.; and the Delaware Minimum Wage Act, 19 Del. C. §§ 901 et seq (Id ¶ 1).

         On July 6, 2016, Plaintiffs issued their first set of document requests, seeking, among other things, all "studies or analyses relating to [P]Fs] determination as to how much to reimburse Delivery Drivers." (Docket No. 244-4 ¶ 7). On or about August 8, 2017, PJI provided Plaintiffs with a privilege log listing documents it had withheld from production. (Docket No. 244 ¶ 6). PJI subsequently updated its privilege log as the parties conferred on discovery issues, providing a revised privilege log (the "Privilege Log"), (Docket No. 244-12), on August 21, 2017, (Docket No. 244 ¶ 6). PJI later provided Plaintiffs with a supplemental log containing thirteen entries, reflecting documents that PJI inadvertently produced and sought to claw back on privilege grounds (the "Claw-Back Privilege Log"). (Docket No. 244-11).

         PJI has withheld multiple documents related to Motus, a third-party consultant that provided services to PJI. At a status conference on October 4, 2017, the Court ordered the parties to submit briefing on the present discovery issues and ordered PJI to submit, for in camera review, all Motus-related documents that PJI was withholding on privilege grounds. PJI has represented that its Privilege Log contains eighty entries that involve communications with Motus or attachments concerning Motus data. (See Docket No. 254). PJI submitted the documents reflected in those eighty entries to the Court for in camera review.[1] In addition, PJI submitted documents reflected in the thirteen entries on PJFs Claw-Back Privilege Log.[2] In total, PJI submitted documents reflected in ninety-three log entries to the Court for in camera review.

         PJI also submitted declarations signed by Billy Higdon (Docket No. 253-1), Caroline Oyler (Docket No. 253-2) and Rodney Harrison (Docket No. 253-3) addressing, among other things, the role performed by Motus. On August 19, 2009, PJI was sued in a nationwide class action captioned Perrin v. Papa John's Int'l, Inc., No. 09 Civ. 01335 (E.D. Mo. 2015) (the "Perrin Litigation"). PJI's outside counsel in the Perrin Litigation, Ogletree Deakins, retained Motus to act as an expert. In January 2016, the court granted final settlement approval in the Perrin Litigation. Separate from Motus's role as an expert in the Perrin Litigation, PJI retained Motus to assist it in connection with an analysis of alternative approaches to reimbursement of delivery driver vehicle expenses. Motus continued to provide services to PJI after conclusion of the Perrin Litigation.

         On October 30, 2017, the Court heard oral argument regarding Plaintiffs' motion.

         II. LEGAL STANDARDS

         The following is a summary of the applicable legal standards regarding relevance, the attorney-client privilege and the work-product doctrine.

         A. Relevance

         In general, the Federal Rules of Civil Procedure permit parties to "obtain discovery \ regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case." Fed.R.Civ.P. 26(b)(1). Information within this scope of discovery need not be admissible in evidence to be discoverable. Id. "Although not unlimited, relevance, for the purpose of discovery, is an extremely broad concept." Greater New York Taxi Ass'n v. City of New York, No. 13 Civ. 3089 (VSB) (JCF), 2017 WL 4012051, at *2 (S.D.N.Y. Sept. 11, 2017) (quoting Am. Fed'n of Musicians of the United States & Canada v. Sony Music Entm X Inc., No. 15-CV-05249 (GBD) (BCM), 2016 WL 2609307, at *3 (S.D.N.Y. Apr. 29, 2016)). "'Relevance' under Rule 26 'has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on any issue that is or may be in the case.'" Scott v. Chipotle Mexican Grill, Inc., 67 F.Supp.3d 607, 618 (S.D.N.Y. 2014) (quoting Crosby v. City of New York, 269 F.R.D. 267, 282 (S.D.N.Y. 2010)).

         B. Attorney-Client Privilege

         "Where, as here, a case includes federal and state law claims and the evidence sought is relevant to both, 'the asserted privileges are governed by the principles of federal law.'" Fresh Del Monte Produce, Inc. v. Del Monte Foods, Inc., No. 13 Civ. 8997(JPO)(GWG), 2015 WL 3450045, at *2 (S.D.N.Y. May 28, 2015) (quoting von Bulow v. von Bulow, 811 F.2d 136, 141 (2d Cir. 1987)). Accordingly, the Court applies federal law to decide the issues raised by this motion.

         "The attorney-client privilege protects confidential communications between client and counsel made for the purpose of obtaining or providing legal assistance." In re Cty. of Erie, 473 F.3d 413, 418 (2d Cir. 2007). "A party invoking the attorney-client privilege must show (1) a communication between client and counsel that (2) was intended to be and was in fact kept confidential, and (3) was made for the purpose of obtaining or providing legal advice." Id. at 419. "The party asserting the privilege ... bears the burden of establishing its essential elements." United States v. Mejia, 655 F.3d 126, 132 (2d Cir. 2011).

         "The privilege's underlying purpose has long been 'to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.'" Id. (quoting Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)). In order to balance the protection of confidentiality with the competing value of public disclosure, however, courts apply the privilege "only where necessary to achieve its purpose" and "construe the privilege narrowly because it renders relevant information undiscoverable." Mejia, 655 F.3d at 132 (quoting In re Cty. of Erie, 473 F.3d at 418).

         "The attorney-client privilege protects only legal advice, not economic, business, or policy advice." Fox News Network, LLC v. U.S. Dep't of Treasury, 911 F.Supp.2d 261, 271 (S.D.N.Y. 2012); see also Schaeffler v. United States, 806 F.3d 34, 40 (2d Cir. 2015) ("Communications that are made for purposes of evaluating the commercial wisdom of various options as well as in getting or giving legal advice are not protected."). The test for deciding whether a communication that contains both legal and non-legal advice is privileged is "whether the predominant purpose of the communication is to render or solicit legal advice." In re Cty. of Erie, 473 F.3d at 420. "Fundamentally, legal advice involves the interpretation and application of legal principles to guide future conduct or to assess past conduct. It requires a lawyer to rely on legal education and experience to inform judgment." Id. at 419 (citation omitted); see also Colton v. United States, 306 F.2d 633, 638 (2d Cir. 1962) ("Attorneys frequently give to their clients business or other advice which, at least insofar as it can be separated from their essentially professional legal services, gives rise to no privilege whatever.").

         "Application of the attorney-client privilege to the corporate context poses 'special problems.'" Complex Sys., Inc. v. ABN AMRO Bank NV., 279 F.R.D. 140, 150 (S.D.N.Y. 2011) (quoting Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 348 (1985)). "In-house counsel often fulfill the dual role of legal advisor and business consultant." MSF Holding, Ltd. v. Fiduciary Tr. Co. Int'l, No. 03 Civ. 1818PKLJCF, 2005 WL 3338510, at *1 (S.D.N.Y. Dec. 7, 2005) (holding that e-mails from in-house counsel constituted business advice because counsel "never alluded to a legal principle in the documents nor engaged in legal analysis"). "The court therefore must proceed cautiously, recognizing that the application of the privilege 'risks creating an intolerably large zone of sanctuary since many corporations continuously consult attorneys.'" Ovesen v. Mitsubishi Heavy Indus, of Am. Inc., No. 04 Civ. 2849(JGK)(FM), 2009 WL 195853, at *3 (S.D.N.Y. Jan. 23, 2009) (quoting First Chicago Int'l v. United Exch. Co., 125 F.R.D. 55, 57 (S.D.N.Y. 1989)). "In cases involving corporations and in-house counsel, courts have maintained a stricter standard for determining whether to protect confidential information through the attorney-client privilege." Bank Brussells Lambert v. Credit Lyonnais (Suisse), S.A., 220 F.Supp.2d 283, 286 (S.D.N.Y. 2002); see also Assured Guar. Mun. Corp. v. UBS Real Estate Sec. Inc., No. 12 Civ. 1579(HB)(JCF), 2013 WL 1195545, at *9 (S.D.N.Y. Mar. 25, 2013) ("[Communications between businesspeople and in-house counsel are not automatically shielded from discovery."). "Communications that principally involve the performance of non-legal functions by an attorney are not protected." Complex Sys., 279 F.R.D. at 150. "Moreover, even if a business decision can be viewed as both business and legal evaluations, the business aspects of the decision are not protected simply because legal considerations are also involved." Id. (internal quotation marks omitted).

         While as a general matter the attorney-client privilege applies only to communications between lawyers and their clients, the Second Circuit has held that under certain circumstances "the privilege for communication with attorneys can extend to shield communications to others when the purpose of the communication is to assist the attorney in rendering advice to the client." Mejia, 655 F.3d at 132 (quoting United States v. Adlman ("Adlmani"), 68 F.3d 1495, 1499 (2d Cir. 1995)). For example, the Second Circuit has extended the application of the privilege to communications by an attorney's client to an accountant hired by the attorney to assist the attorney in understanding the client's financial information. United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961). "Nevertheless, the extension has always been a cabined one, and '[t]o that end, the privilege protects communications between a client and an attorney, not communications that prove important to an attorney's legal advice to a client.'" Mejia, 655 F.3d at 132 (quoting United States v. Ackert, 169 F.3d 136, 139 (2d Cir. 1999)).

         The Second Circuit has clarified that the Kovel decision "recognized that the inclusion of a third party in attorney-client communications does not destroy the privilege if the purpose of the third party's participation is to improve the comprehension of the communications between attorney and client." Ackert, 169 F.3d at 139-40. "On the other hand, where an attorney seeks out a third party in order to obtain information that his client does not have, the third party's role is 'not as a translator or interpreter of client communications, [and] the principle of Kovel does not shield his discussions with [the attorney].'" Montesa v. Schwartz, No. 12 Civ. 6057 (CS)(JCM), 2016 WL 3476431, at *5 (S.D.N.Y. June 20, 2016) (alterations in original) (quoting Ackert, 169 F.3d at 139-40); see also Merck Eprova AG v. Gnosis S.p.A., No. 07 Civ. 5898(RJS)(JCF), 2010 WL 3835149, at *2 (S.D.N.Y. Sept. 24, 2010) ...


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