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In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation

United States District Court, E.D. New York

February 26, 2018

IN RE PAYMENT CARD INTERCHANGE FEE AND MERCHANT DISCOUNT ANTITRUST LITIGATION This document refers to ALL ACTIONS

          MEMORANDUM & ORDER

          MARGO K. BRODIE, UNITED STATES DISTRICT JUDGE

         A putative class of over twelve million merchants brought antitrust actions under the Sherman Act, 15 U.S.C. §§ 1 and 2, and state antitrust laws, against Defendants Visa and MasterCard networks, as well as various issuing and acquiring banks, including Bank of America. In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 986 F.Supp.2d 207 (E.D.N.Y. 2013), rev'd and vacated, 827 F.3d 223 (2d Cir. 2016). Plaintiffs allege that Defendants harmed competition and charged merchants supracompetitive prices by creating unlawful contracts and rules and by engaging in conspiracies. Id. at 213. One of the challenged rules is the “Honor All Cards” rule, which requires merchants that accept any Visa-branded or MasterCard-branded payment cards to accept all Visa or MasterCard payment cards. Id. Plaintiffs argue that their inability to steer customers away from particular cards has resulted in supracompetitive interchange rates established by the networks. Id.

         In addition to the class actions, groups of some of the largest merchants brought actions against Defendants, which actions were consolidated together with the class actions into a multi- district litigation (“MDL”) in 2005. Id. at 223. One such group is the 7-Eleven Plaintiffs (“7-Eleven”).[1] 7-Eleven, Inc., v. Visa Inc., No. 13-CV-5746 (E.D.N.Y. Feb. 17, 2015).

         Currently before the Court is 7-Eleven's appeal of Magistrate Judge James Orenstein's Order denying 7-Eleven's request to overrule Bank of America's assertions of work product and attorney-client privilege over documents produced from the files of Bank of America's former, non-attorney employee Herbert Fellman (the “Fellman Documents”). (Minute Order dated Aug. 24, 2017 (“August 2017 Order”), Docket Entry No. 7051.) For the reasons set forth below, the Court affirms Judge Orenstein's August 2017 Order.

         I. Background

         At issue is a collection of documents retrieved from the files of Mr. Fellman including emails, PowerPoint presentations, handwritten notes, and graphs. These documents are identified as Exhibits A through T and cover a range of __. According to Bank of America, it inadvertently disclosed these documents in the course of discovery. (Bank of America's Mem. of Law in Opp'n to 7-Eleven Pls. Obj. to Magistrate Judge Orenstein's Order Regarding Bank of America's Assertions of Privilege 5 (“Def. Opp'n on Appeal”), Docket Entry No. 7081.)

         a. Procedural background

         On March 15, 2017, and April 18, 2017, Bank of America notified 7-Eleven that it would seek to claw back the Fellman Documents because they were produced inadvertently and are subject to work product protection and the attorney-client privilege.[2] (See 7-Eleven Pls. Obj. to Magistrate Judge Orenstein's Order Regarding Bank of America's Assertions of Privilege (“Pls. Appeal”), Docket Entry No. 7063.)

         On August 4, 2017, after the parties met and conferred, 7-Eleven filed a motion seeking an order invalidating Bank of America's assertions of work product protection and attorney client privilege over the Fellman Documents. (Pls. Mot. to Invalidate Def. Assertion of Privilege (“Pls. Mot.”), Docket Entry No. 7043.) On August 16, 2017, Bank of America opposed 7- Eleven's motion. (Def. Mem. of Law in Opp'n to Pls. Mot. (“Def. Resp.”), Docket Entry No. 7043-3.) Judge Orenstein denied 7-Eleven's motion on August 24, 2017. (August 2017 Order.)

         On September 8, 2017, 7-Eleven appealed Judge Orenstein's August 2017 Order, in accordance with Rule 72(a) of the Federal Rules of Civil Procedure, requesting that the Court set aside the order based on clear error and as contrary to law. (Pls. Appeal.) On October 3, 2017, Bank of America opposed 7-Eleven's appeal. (Def. Opp'n on Appeal.) 7-Eleven submitted its reply brief on October 12, 2017. (Pls. Reply Br. in Supp. of the Appeal (“Pls. Reply”), Docket Entry No 7095.)

         b. Factual background

         The Fellman Documents include PowerPoint slides, emails and handwritten notes. (Id.) As to some documents, Bank of America claims privilege for selected pages rather than the entire document.[3] (See e.g., PowerPoint slides annexed to Pls. Appeal as Ex. Q.)

         i. The parties' arguments before Judge Orenstein

         7-Eleven made several arguments before Judge Orenstein. First, it argued that the Fellman documents do not contain any attorney-client communication and instead were “fact-based business analyses evaluating . (Pls. Mot. 2.) Second, it argued that the documents do not constitute work product as they contain Bank of America's “strategic business response” and not the “mental processes of . . . counsel or its litigation strategy.” (Id. at 4.) Third, it argued that even if the documents can be labeled work product, they are merely factual and do not involve any legal analysis or opinion, and are therefore only entitled to minimal protection. (Id.)

         Finally, 7-Eleven argued that any minimal protection is outweighed by its “substantial need for the documents” and the inability to “obtain the information without undue hardship.” (Id.)

         In response, Bank of America argued that the documents are both attorney-client communication and work product, as they include information gathered at the direction of outside counsel in anticipation of litigation and reflect “mental impressions” and “analysis” of counsel. (Def. Resp. 2.) Specifically, Bank of America argued that the Fellman Documents were created as part of a project entitled “Workstreams, ” __. (Id. at 1.)__. (Id. at 2.)

         ii. August 24, 2017 hearing and Judge Orenstein's decision

         On August 24, 2017, Judge Orenstein heard oral arguments on the motion, and allowed the parties to argue the merits without specific references to the content of the documents because of the nature of the motion. Judge Orenstein told the parties that if they needed to reference the contents of the documents, he would allow them to argue those issues in a hearing closed to the public. (Aug. 24, 2017 Hr'g Tr. (“Hr'g Tr.”) 11-12, Docket Entry No. 7052). The parties never referenced the content of the documents and did not request a closed hearing to do so. (See id.)

         Consistent with their written submissions, 7-Eleven argued that the documents are not privileged under the work product doctrine, and do not constitute attorney-client communication. Bank of America argued that the documents are protected under both doctrines.

         Judge Orenstein ruled that the documents are subject to work product protection, and therefore declined to determine whether the documents are also protected by attorney-client privilege. (Id. at 36-37.) Judge Orenstein found that the documents at issue are “clearly created for this litigation” and are “opinion” work product and therefore entitled to heightened protection. Id. He further ruled that 7-Eleven already had access to the underlying facts, and failed to make a showing sufficient to breach the higher protection afforded to opinion work product. (Id.)

         iii. 7-Eleven's Appeal

         7-Eleven argues that Judge Orenstein's decision should be set aside as clearly erroneous and contrary to law because: (1) Judge Orenstein failed to examine each of the Fellman Documents individually to determine their eligibility for work product protection; (2) to the extent that some documents are entitled to work product protection, they are not opinion work product and are therefore only entitled to a lower level of protection, which can be overcome by 7-Eleven's “substantial need, ” (Pls. Appeal 2); and (3) Judge Orenstein erred by not deciding that the documents are not protected by attorney client privilege. (Id. at 3.)

         7-Eleven argues[4] that Exhibits C, D, E, Q, S and T are “business documents, devoid of any legal analysis concerning litigation or settlement and would have been generated . . . in the ordinary course of business.” (Id. at 12.) As to Exhibits A, B, F, G, H, I, J, K, L, N and P, [5] 7-Eleven concedes that they constitute work product, but argues that they are not “opinion” work product, subject to heightened protection because, to the extent they reflect opinions, the opinions are not those of an attorney and the documents are therefore entitled to a lower level of protection - a protection that can be overcome by 7-Eleven's demonstrated substantial need and inability to access the information elsewhere without “undue hardship.” (Id.)

         7-Eleven also challenges Mr. Fellman's response to a question about these documents at his deposition.___(Fellman Dep. Tr. 204:8-25, annexed to Pls. Appeal as Ex. Y.) 7-Eleven contends that “even assuming that it was counsel who first asked Mr. Fellman to provide__, that topic cannot be immunized from discovery entirely.” (Pls. Appeal 18.)

         iv. Bank of America's objections on appeal

         On appeal, Bank of America states that all of the documents were prepared for litigation at the direction of its inside and outside counsel for the “Workstreams” project and therefore constitute opinion work product subject to heightened protection. (Def. Opp'n on Appeal 10- 11.) Bank of America contends that the Fellman Documents are “the product of __and are therefore attorney opinions. (Id. at 12.) Bank of America argues that none of those documents was “used for business purposes independent of the litigation, and they have not been located in any other Bank of America business-person's files.” (Id.)

         In response to 7-Eleven's argument that the documents are only entitled to a lower level of protection because they contain a business-person's opinions and not those of an attorney, Bank of America argues that Rule 26 (b)(3)(B) of the Federal Rules of Civil Procedure affords heightened protection to opinions of an “attorney or other representative concerning litigation, ” and Mr. Fellman is one such representative because he was “working on a litigation project directly and in conjunction with the attorneys themselves, and the documents were not shared with other business people.”[6] (Id. at 16.) Bank of America further argues that because the documents are opinion work product and are entitled to a heightened level of protection, 7-Eleven's substantial need for the documents is irrelevant, and even if it is relevant, 7-Eleven has failed to demonstrate such need. (Id. at 17-18.)

         Lastly, Bank of America argues that the documents constitute attorney-client communication and are therefore protected under attorney-client privilege. (Id. at 18-20.)

         II. Discussion

         a. Standard of review

         Under the Federal Magistrates Act, 28 U.S.C. § 636, and Rule 72 of the Federal Rules of Civil Procedure, “[a] magistrate judge is authorized ‘to make findings as to non-dispositive pretrial matters, such as discovery matters, which may not be disturbed by a district judge absent a determination that such findings were clearly erroneous or contrary to law.'” Ebo v. N.Y. Methodist Hosp., No. 12-CV-4432, 2015 WL 4078550, at *4 (E.D.N.Y. July 6, 2015) (quoting McNamee v. Clemens, No. 09-CV-1647, 2014 WL 1338720, at *2 (E.D.N.Y. Apr. 2, 2014))); see also Fielding v. Tollaksen, 510 F.3d 175, 178 (2d Cir. 2007)). An order is clearly erroneous if, based on all the evidence, a reviewing court “is left with the definite and firm conviction that a mistake has been committed.” In re Gordon, 780 F.3d 156, 158 (2d Cir. 2015) (internal quotations omitted) (quoting United States v. Murphy, 703 F.3d 182, 188 (2d Cir. 2012)); Ebo, 2015 WL 4078550, at *4. An order is only contrary to law if it misapplies existing law and the district judge is convinced that a mistake has been made. In re Gordon, 780 ...


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