Civil Procedure Notes Page 8
LAW 5301 (4 credits)
Professor Pedro A. Malavet
Civil Procedure Notes File 8
Privilege: Corporate Employees
- (1) The information is sought to supply the basis for legal advice
- (2) The information concerns matters within the scope of the employees' duties
- (3) The employees know that they are being questioned so that the corporation can obtain legal advice
- (4) The employees understand that the communications are confidential [as to the corporation!].
Attorney-Client Privilege, CB-366, N. 1.
- (1) Where legal advice of any kind is sought
- (2) from a professional legal adviser in his capacity as such,
- (3) the communications relating to that purpose,
- (4) made in confidence
- (5) by the client,
- (6) are at his instance permanently protected
- (7) from disclosure by himself or by the legal adviser,
- (8) except the protection be waived.
 "The records should include but not be limited to written questionnaires sent to managers of the Upjohn Company's foreign affiliates, and memorandums or notes of the interviews conducted in the United States and abroad with officers and employees of the Upjohn Company and its subsidiaries."
 The company declined to produce the documents specified in the second paragraph on the grounds that they were protected from disclosure by the attorney-client privilege and constituted the work product of attorneys prepared in anticipation of litigation.
 "[t]o the extent that the communications were made by officers and agents not responsible for directing Upjohn's actions in response to legal advice ... for the simple reason that the communications were not the 'client's.' " The court reasoned that accepting petitioners' claim for a broader application of the privilege would encourage upper-echelon management to ignore unpleasant facts and create too broad a "zone of silence."
[See Federal Rule of Evidence 501].
 Its purpose is 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. The privilege recognizes that sound legal advice or advocacy serves public ends and that such advice or advocacy depends upon the lawyer's being fully informed by the client.
 Such a view, we think, overlooks the fact that the privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.
Middle-level--and indeed lower-level--employees can, by actions within the scope of their employment, embroil the corporation in serious legal difficulties, and it is only natural that these employees would have the relevant information needed by corporate counsel if he is adequately to advise the client with respect to such actual or potential difficulties. This fact was noted in Diversified Industries, Inc. v. Meredith, 572 F.2d 596 (CA8 1978) (en banc):
 "Hobson's choice". If he interviews employees not having "the very highest authority," their communications to him will not be privileged. If, on the other hand, he interviews only those employees with the "very highest authority", he may find it extremely difficult, if not impossible, to determine what happened.' "
The attorney's advice will also frequently be more significant to noncontrol group members than to those who officially sanction the advice, and the control group test makes it more difficult to convey full and frank legal advice to the employees who will put into effect the client corporation's policy.
An uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all.
FN2. The Government argues that the risk of civil or criminal liability suffices to ensure that corporations will seek legal advice in the absence of the protection of the privilege. This response ignores the fact that the depth and quality of any investigations to ensure compliance with the law would suffer, even were they undertaken. The response also proves too much, since it applies to all communications covered by the privilege: an individual trying to comply with the law or faced with a legal problem also has strong incentive to disclose information to his lawyer, yet the common law has recognized the value of the privilege in further facilitating communications.
 The communications at issue were made by Upjohn employees to counsel for Upjohn acting as such, at the direction of corporate superiors in order to secure legal advice from counsel. *** The communications concerned matters within the scope of the employees' corporate duties, and the employees themselves were sufficiently aware that they were being questioned in order that the corporation could obtain legal advice.
 "zone of silence" over corporate affairs. Application of the attorney-client privilege to communications such as those involved here, however, puts the adversary in no worse position than if the communications had never taken place. The privilege only protects disclosure of communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney:
"[T]he protection of the privilege extends only to communications and not to facts. A fact is one thing and a communication concerning that fact is an entirely different thing. The client cannot be compelled to answer the question, "What did you say or write to the attorney?' but may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication to his attorney."
[Please note that someone's Zone of Silence, which is bad, is another's Zone of Privacy, which is good.]
 Fn. 8. Thomas described his notes of the interviews as containing "what I considered to be the important questions, the substance of the responses to them, my beliefs as to the importance of these, my beliefs as to how they related to the inquiry, my thoughts as to how they related to other questions. In some instances they might even suggest other questions that I would have to ask or things that I needed to find elsewhere."
Rule 26 goes on, however, to state that "[i]n ordering discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions or legal theories of an attorney or other representative of a party concerning the litigation." Although this language does not specifically refer to memoranda based on oral statements of witnesses, the Hickman court stressed the danger that compelled disclosure of such memoranda would reveal the attorney's mental processes. It is clear that this is the sort of material the draftsmen of the Rule had in mind as deserving special protection.
 While we are not prepared at this juncture to say that such material is always protected by the work-product rule, we think a far stronger showing of necessity and unavailability by other means than was made by the Government or applied by the Magistrate in this case would be necessary to compel disclosure.
[Note that the next step would be to seek to depose counsel to get oral statements that he had not memorialized, but the government had not yet done that. Note that such recollections receive the highest level of protection under Hickman.]
Consider whether or not the obligation to disclose facts really encourages counsel to be as through as possible. Consider whether or not this obligation swallows the privilege.
Please pay close attention to the issues raised by note 4 regarding the effect of disclosures and possible waivers by the corporation on the employees.
Rule 26(b)(4)(A) was amended in **1993** to allow depositions are absolutely correct, as is indicated in note 3 at page 374.
FRCP 26(b)(4) Trial Preparation: Experts.
(B) A party may, through interrogatories or by deposition, discover facts known or opinions held by  an expert who has been retained or specially employed by another party  in anticipation of litigation or preparation for trial and  who is not expected to be called as a witness at trial, only as [a] provided in Rule 35(b) or [b] upon a showing of exceptional circumstances under which it is impracticable for the party seeking discovery to obtain facts or opinions on the same subject by other means.
BREAK-DOWN of RULE 26(b)(4)(B
- I. Are they protected by Rule 26(b)(4)(B)?
-  an expert
-  who has been retained or specially employed by another party  in anticipation of litigation or preparation for trial and  who is not expected to be called as a witness at trial,
- II. Discovery may be had only
- [a] as provided in Rule 35(b) or
- [b] upon a showing of exceptional circumstances under which it is impracticable for the party seeking discovery to obtain facts or opinions on the same subject by other means.
[GET into the habit of breaking rules down in ways that are comfortable to you. While there is a level of formalism that is an absolutely necessary element of any rule interpretation, that does not mean that you should not attempt to reorganize it in ways with which you feel comfortable].
On May 5, 1988, the catalytic cracking unit (CCU) at the Shell Oil Refinery, Norco, Louisiana, exploded. The first of several suits ultimately certified as a class action was filed that day. The day after the explosion, the parties entered an agreement giving the Plaintiff's Legal Committee (PLC) and its experts access to the CCU to inspect, measure, and photograph. Following their agreement, Shell Oil Company (Shell) preserved all materials tagged by the PLC, as well as additional materials Shell wanted preserved.
CB-369: Shell submitted five reports: two from its in-house employees,  R.E. Nordstrom and  Paul A. Nelson; one from  Failure Analysis Associates;  one from Arthur D. Little, Inc.; and  one from Hercules, Inc. The PLC submitted three expert reports:  one from C H & A Engineering Group;  one from Metallurgical & Materials Technologies, Inc.; and  one from Perez Architects.
CB-370: The procedure established in subsection (b)(4)(A)
holds the risk [that one side will benefit unduly from the other side's better preparation] to a minimum. Discovery is limited to trial witnesses, and may be obtained only at a time when the parties know who their expert will be. A party must as a practical matter prepare his own case in advance of that time, for he can hardly hope to build his case out of his opponent's expertise.
Those who will testify at trial often cannot be identified until the later stages of litigation. Therefore, the court finds that the PLC's attempt to obtain discovery from experts expected to be called at trial is premature.
CB-370: Under Fed.R.Civ.P. 26(b)(4)(B), the facts known and opinions held by non-testifying experts who are retained or specially employed in anticipation of litigation or preparation for trial are subject to discovery only in exceptional circumstances. This Rule recognizes that with non-testifying experts, there is no need to obtain discovery for effective cross- examination.
CB-370-371: Nordstrom is the Manager of Heat Transfer and Pressure Equipment for Shell. His duties consist of technical input on operations and on design and construction of new facilities. Nelson is a Research Manager whose duties consist of managing 11 research engineers and nine technicians for Shell. Their affidavits show that during the week following the explosion, Shell's legal department and outside counsel requested them to help the investigation team defend the lawsuits filed against Shell. Also, in September, 1988, James Blasek, outside counsel for Shell, requested Nordstrom and Nelson to prepare preliminary reports of their investigation and study of the explosion. Nordstrom and Nelson sent their preliminary reports to only Blasek. Although Nordstrom and Nelson have not been assigned to work exclusively on this litigation, they remain available to assist outside counsel on an as needed basis.
371: The court finds that the persuasive authority favors application of Rule 26(b)(4)(B) to non- testifying in-house experts. To rule otherwise would encourage economic waste by requiring an employer to hire independent experts to obtain the protection of Rule 26(b)(4). Protection of an in-house expert's opinion supports improved public safety and other social benefits of self- analysis. That the work of an in-house expert is used not only to defend a lawsuit but also to improve a company's operations or product design does not remove him from the parameters of Rule 26(b)(4)(B).
371: Those in-house experts who are not retained or specially employed should be treated as ordinary witnesses under Rule 26(b)(1), and if their work was in anticipation of litigation or preparation of trial, then discovery must be analyzed under the work product doctrine, Rule 26(b)(3).
CB-371-372: Whether an in-house expert is retained or specially employed must be decided case-by- case. In this case, the court finds that Nordstrom and Nelson were retained or specially employed by Shell in preparation for trial. Shell's attorneys engaged Nordstrom and Nelson to perform specific tasks to help them defend the lawsuit. At the direction of Shell's legal department and outside counsel, Nordstrom and Nelson investigated and studied the cause of the explosion, and prepared preliminary reports. Copies of the reports were sent only to Shell's outside counsel. Although Nordstrom and Nelson might have studied the cause of the explosion regardless of litigation, their usual duties do not include litigation assistance. That Nordstrom and Nelson were not paid additional compensation or assigned exclusively to the litigation is not conclusive. An in-house expert may be specially employed without additional compensation or an exclusive assignment.
372: A party seeking to show exceptional circumstances under Rule 26(b)(4)(B) carries a heavy burden. The exceptional circumstances requirement has been interpreted by the courts to mean an inability to obtain equivalent information from other sources.
372: Mr. Shelton was present at certain of the tests conducted by Shell and estimates that the total cost to duplicate the investigation and testing performed by Shell would be in the range of $230,000 to $315,000.
Pearl Brewing Co. v. Jos. Schlitz Brewing Co., 415 F.Supp. 1122 (S.D.Tex.1976),*** The court found that the defendant's expert would be unable to understand the model without explanations of the undefined short-hand codes used in the computer program.
Federal Rule of Evidence 702. Testimony by Experts
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.
- 26(a)(1) Mandatory Disclosure
- 26(d) prohibits disclosure and discovery until 26(f) meeting takes place
- 26(e)(1) Duty to supplement 26(a) disclosures
- 26(f) Partiesmust meet to discuss Settlement, Automatic disclosure and discovery Plan
- 26(g)(1) Signature constitutes a certification that the information is complete and accurate, based upon reasonable inquiry.
- 37(c)(1) Sanctions for failing to disclose, include striking evidence, precluding its presentation, and money.
 The Rule requires litigants to disclose specified core information about the case; namely, potential witnesses, documentary evidence, damage claims, and insurance. The objectives [are] the elimination of the time and expense of preparing formal discovery requests with respect to that information and to enable the parties to plan more effectively for the discovery that would be needed.
[382-383] However, contrary to the suggestion of
Bridgestone/Firestone, the initial disclosure required by Rule 200-5 is not limited to identifying those potential witnesses and documents supporting the disclosing party's contentions. Rather, the obligation imposed by the rule requires the disclosure of the identity of all potential witnesses, documents and tangible evidence that are relevant to the disputed facts as framed by the pleadings.
 Rule 200-5(a) imposes upon the defendant in this case, Bridgestone/Firestone, inter alia, the following obligations: First, to identify all persons known or believed to have discoverable information that would bear upon the claim asserted by the plaintiff in this action, i.e., that the RH5 degrees assembly, at the time it left the hands of Firestone, was in a defective condition, unreasonably dangerous to the ultimate user or consumer of the RH5 degrees assembly, or any defense to that claim. Together with identifying those persons, Bridgestone/Firestone must provide a summary of the information each person possesses. Second, to provide a description of all tangible evidence and documents that are reasonably likely to bear on the claim advanced by the plaintiff and the defenses asserted to that claim. With regard to each item of tangible evidence and document Bridgestone/Firestone shall set forth the location of the tangible item or document and the individual who has custody of that item or document.
 Bridgestone/Firestone shall not be allowed to effectively defeat the goal of the Plan, and necessarily the CJRA, through the mere expediency of declaring that counsel for the adverse party is aware of the information falling within the purview of Rule...
 Rule 200-5 certainly contemplates that the disclosing party will identify all percipient witnesses to the transaction in which the plaintiff's claims have their genesis. In a case such as the present, where liability in tort is founded upon a theory of strict liability, Rule 220 also contemplates the defendant will disclose all individuals in affiliation with the defendant who possess knowledge relevant to a resolution of the factual disputes inherent in the allegation that a product was defectively designed and/or manufactured, and the defenses asserted to those allegations.
The district court viewed Corley's investigative technique as tantamount to a deposition under the Federal Rules. * * * But we see nothing in the Federal Rules that would support such a restriction on counsel's private inquiry into the facts underlying his client's claim. * * * [A]lthough court reporters were present and witnesses presumably were questioned under oath, the interviews in fact were not depositions precisely because Corley had not complied with the requirements of Rule 30(b). The statements thus could not be used as depositions under Rule 32.
But the fact that the statements could not be used as depositions does not mean, as the district judge apparently assumed, that Corley was not entitled to take them. The Supreme Court has long recognized that  as part of his investigation and trial preparation, counsel may choose to take sworn statements from individual having knowledge of the claims or defenses at issue. See Hickman v. Taylor. [The court also noted that Rule 26(b)(3)(B) explicitly contemplates that witness statements may include "a stenographic, mechanical, electrical, or other recording."] This portion of Rule 26 therefore assumes that the taking of a witness statement is entirely proper, even where the statement is recorded and transcribed by a court reporter, and the rule proceeds to address the circumstances under which the statement may be discoverable. In light of that, there would seem to be no basis for restricting Corley's chosen investigative method of taking sworn statements from potential nonparty witnesses. The Federal Rules of Civil Procedure do not prohibit that technique; the rules instead are concerned only with whether the
statements are discoverable and with the uses to which they may be put at trial.
Notes and Questions 
1. Although we have concentrated thus far in this chapter on the use of the power of the court to extract information, it is important to realize that a great deal of extremely useful information is available for the asking. Responsible lawyers will use investigation instead of formal discovery wherever possible both because it is extremely flexible and because it can be conducted without notice to other parties. Indeed, it may be that the opposing party cannot use the power of the court to find out what the investigating attorney was seeking from a witness.
See FRCP 37(d), 37(b), 26(c), 26(b).
Discovery Sanctions Generally,
For violation of the Rules:
- Non-Compliance with Rule 26(a). See Rule 37(a)(2)(A); Rule 37(c): Preclusion of evidence. "In addition to or in lieu of this sanction _ other appropriate sanctions."
- Party, Deposition, interrogatories.
- See Rule 37(a)(2)(B); Rule 37(d).
Note the certification pre-requisite for motion to compel.
Sanctions for Failure to Obey Orders: Rule 37(b)
- Aug. 1, 1975 Case Is Filed
- Nov. 6, 1975 Eleven Defendants Served; Plaintiff Served With A Set Of Consolidated Interrogatories THEREAFTER Damages Discovery Deferred
- FOUR MONTHS After Deadline: Initial Answer To Non-Deferred Interrogatories
- OCT. 1977 $500 In Costs
- SOON AFTER Warning: Further Non-Compliance Will Result In Dismissal
- SUMMER 1977? Damages Interrogatories Warning
- SEPT. 7, 1978 Hearing, Order To Cure Of Suffer Dismissal
- SEPT. 20, 1978 Motion To Dismiss
- OCT. 19, 1978 Formal Hearing But Your Honor ... Damage Claim Evidence Will not be Admitted
- DISTRICT Willful OR Grossly Negligent $1,000 Costs.
 The question before us is whether a grossly negligent failure to obey an order compelling discovery may justify the severest disciplinary measures available under Fed.R.Civ.P. 37. This rule provides a spectrum of sanctions. (FN13) The mildest is an order to reimburse the opposing party for expenses caused by the failure to cooperate. More stringent are orders striking out portions of the pleadings, prohibiting the introduction of evidence on particular points and deeming disputed issues determined adversely to the position of the disobedient party. Harshest of all are orders of dismissal and default judgment.
FN7. This footnote, and footnote 8, were edited out in the Updated Fourth Edition:
Responding to a contention raised for the first time on reargument, the court noted that in light of the extensive proceedings already conducted before the magistrate, an evidentiary hearing in the district court could serve no useful function. The judge did note that a hearing could explore other actions litigated by plaintiff’s counsel in federal court; he was in fact already aware of other cases in which these same lawyers had ignored discovery orders. But he concluded that such an inquiry would raise problems of privilege that would outweigh any probative value such a hearing could have.
FN8. Rule 37 was amended in 1970 to permit the imposition of a broader range of sanctions. By deleting the word “willfully” from subsection (d) of the Rule, the drafters intended “that willfulness [be] relevant only to the selection of sanctions, if any, to be imposed.” Advisory Committee Note.
 These sanctions serve a threefold purpose. Preclusionary orders ensure that a party will not be able to profit from its own failure to comply. Rule 37 strictures are also specific deterrents and, like civil contempt, they seek to secure compliance with the particular order at hand. Finally, although the most drastic sanctions may not be imposed as "mere penalties," Hammond Packing Co. v. Arkansas, ***; see Hovey v. Elliott, ***, courts are free to consider the general deterrent effect their orders may have on the instant case and on other litigation, provided that the party on whom they are imposed is, in some sense, at fault. CINE FORTY Fn. 13, 392: Rule 37 was amended in 1970 to permit the imposition of a broader range of sanctions. By deleting the word "willfully" from subsection (d) of the Rule, the drafters intended "that willfulness [be] relevant only to the selection of sanctions, if any, to be imposed." Advisory Committee Note.
 *** "Rule 37 should not be construed to authorize dismissal of [a] complaint because of petitioner's noncompliance with a pretrial production order when it has been established that failure to comply has been due to inability, and not to  willfulness,  bad faith, or  any fault of petitioner" Societe Internationale, supra, 357 U.S. at 212, 78 S.Ct. at 1096.
 Willfulness v. Negligence:
Appropriateness of Sanctions
Unless we are to assume that the Court chose its words carelessly, we must accord the term “fault” a meaning of its own within the Societe Internationale triad. And plainly, if “fault” has any meaning not subsumed by “willfulness” and “bad faith,” it must at least cover gross negligence of the type present in this case. ***
 In the final analysis, however, this question cannot turn solely upon a definition of terms. We believe that our view advances the basic purposes of Rule 37, while respecting the demands of due process. The principal objective of the general deterrent policy of National Hockey is strict adherence to the “responsibilities counsel owe to the Court and to their opponents,” 427 U.S. at 640, 96 S.Ct. at 2780. Negligent, no less than intentional, wrongs are fit subjects for general deterrence. And gross professional incompetence no less than deliberate tactical intransigence may be responsible for the interminable delays and costs that plague modern complex lawsuits.
[Severity of Sanctions, 419] Considerations of fair play may dictate that courts eschew the harshest sanctions provided by Rule 37 where failure to comply is due to a mere oversight of counsel amounting to no more than simple negligence. But where gross professional negligence has been found_that is, where counsel clearly should have understood his duty to the court_the full range of sanctions may be marshalled. Indeed, in this day of burgeoning, costly and protracted litigation courts should not shrink from imposing harsh sanctions where, as in this case, they are clearly warranted.
 FN10. The acts and omissions of counsel are normally wholly attributable to the client. This case does not present the extraordinary circumstance of complete disappearance or mental illness of counsel that justified relief in Vindigni v. Meyer, 441 F.2d 376 (2d Cir.1971) and United States v. Cirami, 563 F.2d 26 (2d Cir.1977). Indeed, by Magistrate Gershon's finding and counsel's own admission, Clark, Cine's principal officer, was aware of every aspect of discovery and intimately involved with the progress of the case. [YES this is the SECOND footnote no. 10, I do not have a clue why the numbers are wrong].