Federal Trade Commission v. Staples, Inc. ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
)
FEDERAL TRADE COMMISSION, )
ET AL., )
)
Plaintiffs, )
) Civil Action No.15-2115 (EGS)
v. ) (UNDER SEAL)
)
STAPLES, INC. and )
OFFICE DEPOT, INC. )
)
)
)
Defendants. )
______________________________)
MEMORANDUM OPINION
Defendants Staples, Inc. and Office Depot, Inc.
(“Defendants”) seek to compel production of factual information
collected by Plaintiffs from third parties during the course of
the 2013 investigation of the Office Depot-Office Max merger and
the 2015 investigation of the Staples-Office Depot merger.
Defs.’ Mem. Supp. Mot. Compel (“Defs.’ Mem. Supp.”), Docket No.
64. Plaintiffs argue the material sought is protected by the
attorney work-product doctrine and the deliberative process
privilege. Pls.’ Opp. Mem., Docket No. 66 at 4. Upon
consideration of the motion, the response and reply thereto, the
applicable law, and the entire record, Defendants’ motion is
DENIED.
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I. Background.
In February 2015, shortly after Defendants announced
their intent to merge, Plaintiffs began an investigation into
the likely effects of the merger. Defs.’ Mem. Supp. at 2. On
December 7, 2015, Plaintiffs filed suit seeking to enjoin the
proposed merger, pursuant to Section 13(b) of the Federal Trade
Commission Act, 15 U.S.C. § 53 (b), until the FTC’s
administrative proceedings are complete. Pls.’ Mot. Prelim.
Inj., Docket No. 5 at 1. The parties have agreed to a compressed
discovery schedule, with fact discovery closing February 12,
2016 and expert discovery closing March 15, 2016. Sched. Order,
Docket No. 54 at 2. A hearing on Plaintiffs’ Motion for a
Preliminary Injunction is scheduled to commence March 21, 2016.
Id.A. Defendants’ Document Request and Interrogatory seeking
factual information about third parties.
On December 17, 2015, Defendants served Plaintiffs with the
following Document Request and Interrogatory:
All Documents Concerning [the Plaintiffs’] contact, or
considered or contemplated contact, with any non-parties
Related to the Merger and/or [the Plaintiffs’]
investigation of the Merger, including Documents Related
to telephone conferences, in-person conferences,
meetings, interviews, or correspondence with customers
or competitors of the Defendants, or any other Persons
in connection with the Merger or office supply industry.
[and]
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Identify each Person interviewed by each of the
Plaintiffs (either together or independently) in
connection with the Merger and provide all factual
information obtained from these individuals and entities
through such interviews that is relevant to Plaintiffs’
claims in this case.
Defs.’ First Set of Document Requests, Request No. 4, Docket
No. 64, Ex. 2; Defs.’ First Set of Interrogatories, Int. No.
2, Docket 64 at Ex. 3. Plaintiffs produced the following
responsive documents: (1) all documents obtained from, or
sent to third parties during Plaintiffs’ 2013 and 2015
investigations; (2) all communications with third parties
from both investigations; and (3) names and contact
information for all third parties with whom Plaintiffs
communicated during both investigations. Pls.’ Opp. Mem. at
2; Xenakis Decl., Docket No. 66 (“Xenakis Decl.”), Ex. 2 at
¶ 15.
Plaintiffs withheld approximately 850 documents from the
2013 and 2015 investigations. Pls.’ Opp. Mem. at 4; Xenakis
Decl. at ¶ 6. The documents are comprised of attorney
interview notes and internal memoranda resulting from
interviews with third parties. Xenakis Decl. at ¶ 17; Jin
Decl., Docket No. 66, Ex. 4 (“Jin Decl.”) at ¶ 5; Feinstein
Decl., Docket No. 66, Ex. 5. (“Feinstein Decl.”) at ¶¶ 5-7.
By this motion, Defendants seek to compel production of all
segregable factual information contained in the withheld
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documents. Defs.’ Mem. Supp. at 5 (“Plaintiffs should be
compelled to produce factual information discovered in the
course of their communications with third party customers,
competitors, and industry participants.”).
On January 19, 2016, the Court received a representative
sample of the documents at issue for in camera review. See
January 15, 2016 Minute Order.
II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 26(b)(1) provides that
“parties may 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). “Relevance” is broadly construed and discovery need
not be admissible to be discoverable. Id.; see also Food Lion v.
United Food & Commercial Workers Int’l Union, 103 F.3d 1007,
1012 (D.C. Cir. 1997). District Courts have considerable
discretion in resolving discovery matters, but must limit
discovery where it is shown to be unreasonably cumulative, more
easily obtained from an alternative source, or where the burden
and expense of producing the discovery outweighs the likely
benefit of the information sought. Fed. R. Civ. P. 26(b)(2)(C);
see also Donohoe v. Bonneville Int’l Corp., 602 F. Supp.2d 1, 3
(D.D.C. 2009).
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III. ANALYSIS
Defendants argue that there must be some segregable non-
privileged facts within the 850 documents withheld by
Plaintiffs. Defs.’ Reply Mem., Docket No. 71-2 at 1. Plaintiffs
maintain that the attorney work-product doctrine and the
deliberative process privilege protect all facts contained in
the documents at issue. Pls.’ Opp. Mem. at 7.
A. The work-product doctrine.
In 1947 the Supreme Court established the work-product
doctrine in Hickman v. Taylor, 329 U.S. 495 (1947). The Court
denied discovery of counsel’s witness interview notes, reasoning
that some measure of protection must be afforded to attorneys’
work product. “It is essential that a lawyer work with a certain
degree of privacy, free from intrusion by opposing parties and
their counsel.” Id. at 510. Work product may include facts and
legal theories reflected in “interviews, statements, memoranda,
correspondence, briefs, mental impressions, personal beliefs,
and countless other tangible and intangible ways.” Id. at 507-
10. The work-product doctrine is a qualified immunity designed
to “balance the needs of the adversary system to promote an
attorney’s preparation against society’s general interest in
revealing all facts relevant to the resolution of a dispute.” In
re Sealed Case, 856 F.2d 268 at 273 (D.C. Cir. 1988)(“In re
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Sealed Case II”) (citing In re Subpoenas Duces Tecum, 738 F.2d
1367, 1371 (D.C. Cir. 1984)).
Federal Rule of Civil Procedure 26(b)(3) partially codifies
the work-product doctrine, stating:
Ordinarily, a party may not discover documents and
tangible things that are prepared in anticipation of
litigation or for trial by or for another party or its
representative (including the other party’s attorney,
consultant, surety, indemnitor, insurer, or agent).
Fed. R. Civ. P. 26(b)(3)(A). Nevertheless, a court may order the
disclosure of such material when the requesting party can show a
“substantial need” for the material and an inability to procure
equivalent information “without undue hardship.” Fed. R. Civ. P.
26(b)(3)(A)(ii); In re Sealed Case, 856 F.2d at 273 (citing
Upjohn v. United States, 449 U.S. 383, 399-401 (1981)). When
ordering such a disclosure, a court must still “protect against
disclosure of the mental impressions, conclusions, opinions, or
legal theories of a party’s attorney or other representative
concerning the litigation.” Fed. R. Civ. P. 26(b)(3)(B).
The party asserting the work-product protection carries the
burden first of showing that the communications at issue were
prepared in anticipation of litigation. See, e.g., Coastal
States Gas Corp. v. Dept. of Energy, 617 F.2d 854, 865 (D.C.
Cir. 1980) (holding that “some articulable claim, likely to lead
to litigation, must have arisen.”)). The burden then shifts to
the party seeking discovery to demonstrate its “substantial
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need” for the information and the “undue hardship” of securing
the information from other sources. See, e.g., Kent Corp v.
NLRB, 530 F.2d 612, 623-24 (5th Cir.), cert. denied, 429 U.S.
920 (1976). “The showing of need required to discover another
party’s work product depends on whether the materials at issue
constitute “fact” work product or “opinion” work product.” U.S.
v. Clemens, 793 F. Supp.2d 236, 244 (D.D.C. 2011) (citing In re
Sealed Case, 676 F.2d 793, 811 (D.C. Cir. 1982) (“In re Sealed
Case I”) (noting there is a “qualified protection for ‘fact’
work product and more absolute protection for ‘opinion’ work
product”).
B. Defendants cannot establish substantial need and
undue hardship.
There is no dispute that the documents sought by Defendants
were produced in anticipation of litigation. Pls.’ Opp. Mem. at
5. The parties both treat the documents at issue as fact work
product and focus their analysis on whether Defendants have
established a substantial need for the information sought and
whether collecting the same information through Defendants’ own
discovery constitutes an undue hardship. Defs.’ Reply Mem.,
Docket No. 71 at 4.
Defendants clearly need to gather factual information about
third parties in order to competently defend this case. However,
such a generalized need is not equivalent to the substantial
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need and undue hardship that must be shown in order to compel
production of opposing counsel’s work product. See Edna Selan
Epstein, Section of Litigation, American Bar Association, THE
ATTORNEY-CLIENT PRIVILEGE AND THE WORK-PRODUCT DOCTRINE at 923 (5 ed.
2007) [hereinafter Epstein] (noting substantial need will be
found wanting where alternative means of obtaining the work
product information exist, including by interviews or
depositions); see also Castle v. Sangamo Weston, Inc., 744 F.2d
1464, 1466-67 (11th Cir. 1984) (reversing District Court’s order
granting production of otherwise privileged documents where
party failed to show that it was unable to obtain the same
information by deposing the same witnesses)). Indeed, “undue
hardship” is generally found only in extreme circumstances such
as unavailability due to death, brain injury or where a
witness’s geographic location is beyond the court’s subpoena
power. See Epstein at 927-932.
Here, Defendants argue that “[b]ecause a significant
portion of Plaintiffs’ investigation was conducted through
telephone and in-person interviews, Plaintiffs’ interview notes
and memoranda provide the only source of highly relevant
information that cannot be obtained by other means.” Defs.’
Reply at 4 (emphasis added). The Court rejects this argument.
Defendants may interview or depose as many of the third parties
that were interviewed or deposed by the Plaintiffs as desired.
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Defendants have already served at least 200 third-party
subpoenas. Pls.’ Opp. Mem. at 5. In short, the factual
information contained within Plaintiffs’ interview notes and
memoranda are equally available to Defendants through their own
discovery. See e.g., United States v. US Airways Group, Inc.,
Civ. No. 13-1236, Slip. Op., Docket No. 107 (D.D.C. Oct. 10,
2013) (noting that an interrogatory seeking facts rather than
mental impressions is a “distinction without a difference” when
the request of opposing counsel is to divulge information
learned from interviewing potential witnesses in anticipation of
trial). “Forcing an attorney to disclose notes and memoranda of
witnesses’ oral statements is particularly disfavored because it
tends to reveal the attorney’s mental processes.” Upjohn Co. v.
U.S., 449 U.S. 383, 400 (1981). Finally, Defendants cite no
authority to support the suggestion that a “compressed discovery
schedule” constitutes an undue hardship. Defs.’ Reply at 4. 1
Moreover, the authorities cited by Defendants in support of
their motion are not persuasive. First, Defendants rely on this
Court’s decision in United States v. AB Electrolux, for the
1 Courts have ruled that the cost of discovery does not
constitute an undue hardship. See, e.g., Garnier v. Illinios
Tool Works, Inc., 2006 U.S. Dist. LEXIS 28370 (E.D.N.Y May 4,
2006). The Court’s independent research reveals no case law
supporting Defendants’ suggestion that a compressed discovery
period constitutes an undue hardship.
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proposition that not all factual information contained in the
documents at issue can be protected by the work-product
doctrine. Civ. No. 1:15-CV-1039, 2015 U.S. Dist. LEXIS 162023,
*16 (D.D.C. Sept. 25, 2015) (noting the suggestion that “all
communications at issue fall within the scope of the work-
product doctrine’s protective arms is highly suspicious.”). As
Plaintiffs correctly point out, Electrolux addressed third-party
communications withheld by Defendants under a blanket assertion
of the work-product doctrine. Pls.’ Opp. Mem. at 9. Electrolux
is distinguishable because in this case attorney notes and
internal memoranda are at issue, not third-party communications.
Third-party communications in Plaintiffs’ possession have
already been produced. Id. The precise holding in Electrolux
simply has no bearing on this case because the Court did not
consider the burden-shifting analysis necessary to determine
whether fact work product should be disclosed. 2
Defendants also cite FTC v. Boehringer Ingelheim Pharms.,
Inc. for the proposition that not all facts included in attorney
2 Likewise, Defendants assertion that the Court’s offhanded
remark of “absolutely” in response to Defense counsel’s
statement “your Electrolux ruling made clear that fact
information in the interview notes was discoverable but attorney
work product was not” is misplaced. The Court’s response to
counsel’s statement was meant to acknowledge that under certain
circumstances fact information may be discoverable. The Court’s
rapid colloquy with counsel by no means sought to confirm that
fact information is always or necessarily discoverable.
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work product are necessarily protected from disclosure. 778 F.3d
142, 152 (D.C. Cir. 2015), reh’g denied (June 4, 2015), cert.
denied (Jan. 19, 2016). Of course this is true. However,
Defendants conveniently neglect Boehringer’s thoughtful
discussion of the “special circumstances” that “excuse the
movant’s failure to obtain the requested material itself.” Id.
at 155. As the Court discussed supra, Boehringer notes that only
under unique circumstances, including where a witness refuses to
speak with the movant and where the information at issue was
otherwise unavailable, could a moving party demonstrate
“substantial need” and “undue hardship.” Id. (internal citations
omitted). As discussed in Boehringer, “each side must undertake
its own investigation of the relevant facts and not simply
freeload on opposing counsel.” Id. (citing Guilford Nat’l Bank
v. Southern Ry., 297 F.2d 921, 926 (4th Cir. 1962)). Unlike
Boehringer, this case does not present a situation where one
party never had the opportunity to obtain the information sought
during discovery Id. at 158 (noting that “Boehringer’s
contemporaneous financial evaluations provide unique information
about Boehringer’s reasons for settling in the manner that it
did.”). Boehringer does not reach as far as Defendants wish to
extend it. 3 In sum, it appears that Defendants “claim of
3 Similarly, Defendants’ attempt to characterize Hickman as
inapplicable because it “involved no showing of unequal access
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necessity for the intrusion into the investigative file appears
to be little more substantial than a desire to learn what kind
of case the Government has.” United States v. Chatham City
Corp., 72 F.R.D. 640, 644 (S.D. Ga. 1976). 4
As is routine in merger cases, the Defendants here agreed
to an aggressive discovery schedule. See generally, Sched. Ord.
The Court recognizes that an enormous amount of work must be
done by both parties in a very short time period. This
understandably places tremendous pressure on Defendants, as they
do not have the benefit of completing a year-long investigation
into the matter like Plaintiffs. While this disparity is not
sufficient to infringe on Plaintiffs’ work product, the Court
will consider any modifications to the discovery schedule sought
to information or an undue hardship in obtaining information
from other means” fails. Defs.’ Reply. As discussed above,
Defendants have not established that this case involves unequal
access or undue hardship, making the distinction moot. Finally,
Defendants reliance on U.S. v. Dean Foods Co. is misplaced for
the same reasons discussed in US Airways, Civ. No. 13-1236 at 4
(noting that in contrast to Dean Foods where the Court held only
a “written record and verbatim record” of witness statements
would qualify as protected work product, “the DC Circuit has
expressly held that both recorded and non-recorded recollections
of interviews qualifies for such protection.”) (quoting United
States v. Deloitte LLP, 610 F.3d 129, 136 (D.C. Cir. 2010)).
4 Because Defendants have not meet their burden to demonstrate
their substantial need or undue hardship, the Court need not
discuss the applicability of the deliberative process privilege
or whether the Court’s in camera review supports a finding that
the documents at issue may be considered opinion work product.
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by Defendants. The Court also stands ready to order expedited
responses to subpoenas and discovery requests issued by
Defendants to third parties. To the extent the compressed
discovery schedule may impede Defendants’ preparation,
Defendants should not hesitate to request appropriate relief
from the Court.
IV. CONCLUSION
Because Defendants cannot establish their substantial need
for Plaintiffs’ notes and memoranda, nor an undue hardship in
conducting their own third-party discovery, their motion to
compel fact work product from Plaintiffs’ interview notes and
internal memoranda is DENIED. An appropriate order accompanies
this Memorandum Opinion.
Signed: Emmet G. Sullivan
United States District Judge
January 21, 2016.
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