Builders Warehouse, Inc. v. PFC Services, Inc.

• Court: District Court, D. Nebraska
• Decided: September 24, 2025
• Docket: 7:24-cv-05001
• Status: Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA

BUILDERS WAREHOUSE, INC., a Nebraska corporation; 7:24CV5001 Plaintiff,

vs. ORDER

PFC SERVICES, INC., a Georgia corporation; and PAUL BUMBLAUSKAS, an individual;

Defendants.

This matter comes before the Court following a discovery dispute conference held with counsel for the parties on September 4, 2025. During the conference, the Court granted Defendants’ request to conduct an in camera review of certain redacted documents and other documents withheld by Plaintiff as attorney-client privileged. (Filing No. 97; Filing No. 98-1 at pp. 9-13). The Court ordered Plaintiff to provide the Court and counsel with a supplemental privilege log, and to file the withheld documents under seal for the Court’s in camera review. Plaintiff provided a supplemental privilege log and filed the documents under seal as directed on September 11, 2025. (Filing No. 102). Following the Court’s in camera review, the Court finds Plaintiff has properly asserted attorney-client privilege and properly redacted documents.

ANALYSIS In a diversity case, the court applies “federal law to resolve work product claims and state law to resolve attorney-client privilege claims.” Baker v. Gen. Motors Corp., 209 F.3d 1051, 1053 (8th Cir. 2000). See also Fed. R. Evid. 501 (“[I]n a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.”). In this diversity case, there does not appear to be a dispute that Nebraska law applies to the present issues regarding attorney- client privilege and waiver thereof. (Filing No. 98-1 at pp. 10-11); see also Pamida, Inc. v. E.S. Originals, Inc., 281 F.3d 726 (8th Cir. 2002) (referencing Fed. R. Evid. 501). “The attorney-client privilege is the oldest of the privileges for confidential communications known to the common law.” United States v. Yielding, 657 F.3d 688, 706-07 (8th Cir. 2011) (quoting Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)). Under Nebraska law, “A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client (a) between himself or his representative and his lawyer…” Neb. Rev. Stat. § 27-503(2). For the attorney-client privilege to apply, there must be an attorney client relationship. See State ex rel. Stivrins v. Flowers, 729 N.W.2d 311, 316 (Neb. 2007). “An attorney-client relationship is created when (1) a person seeks advice or assistance from an attorney, (2) the advice or assistance sought pertains to matters within the attorney’s professional competence, and (3) the attorney expressly or impliedly agrees to give or actually gives the desired advice or assistance.” Flowers, 729 N.W.2d at 317 (citing McVaney v. Baird, Holm, McEachen, Pedersen, Hamann & Strasheim, 466 N.W.2d 499, 506 (Neb. 1991)). “[T]o be protected from disclosure, a communication must be one which is essentially confidential in character and which relates to the subject matter upon which advice was given or sought. State v. Hawes, 556 N.W.2d 634, 637 (Neb. 1996). A communication is confidential if it is not intended to be disclosed to third persons other than those to whom disclosure is in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication. See Neb. Rev. Stat. § 27-503(1)(d). The attorney-client privilege is narrowly construed and “protects only those disclosures— necessary to obtain informed legal advice—which might not have been made absent the privilege.” United States v. Ivers, 967 F.3d 709, 716 (8th Cir. 2020) (quoting Fisher v. United States, 425 U.S. 391, 403 (1976)). The party asserting the attorney-client privilege has the burden of proving the information sought is protected. Greenwalt v. Wal-Mart Stores, Inc., 567 N.W.2d 560, 566 (Neb. 1997). The party claiming privilege must: (i) expressly make the claim; and (ii) describe the nature of the documents, communications, or tangible things not produced or disclosed--and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.

Fed. R. Civ. P. 26(b)(5)(A).

A party or any person from whom discovery is sought may move for a protective order in the court where the action is pending--or as an alternative on matters relating to a deposition, in the court for the district where the deposition will be taken. The motion must include a certification that the movant has in good faith conferred or attempted to confer with other affected parties in an effort to resolve the dispute without court action…

Fed. R. Civ. P. 26(c)(1).

The Court has reviewed the withheld and/or redacted documents in camera as identified on Plaintiff’s privilege log, which is reproduced below. The Court has added additional columns identifying each document’s place either under Filing No. 102, the Bates number utilized by plaintiff, or both, and the Court’s ruling on each item:

Number Date Description Basis for Doc. Bates Court’s Withholding 102 Number Ruling Page Number

1 August 5- Emails between attorney Attorney- 1-2 0183- Privileged 6, 2019 Justin Herrmann, Bryan client 0192 Rosenbaugh, Myron privilege Andersen regarding the Independent Contractor Agreement with Bumblauskas.

2 August 9, Emails between Bryan Attorney- 4, 5 0193- Privileged 2019 Rosebaugh, Myron client 0194 Andersen, and Attorney privilege Justin Herrmann regarding the Independent Contractor Agreement with Bumblauskas.

3 September Emails between Casey Attorney- 6-19 Privileged 1-August Carey and Justin client 31, 2021 Herrmann regarding the privilege Independent Contractor Agreement with Bumblauskas and the separation agreement with Bryan Rosenbaugh. 4 September Emails between Casey Attorney- 20-22 0001- Privileged 2-3, 2021 Carey and Attorney client 0003 Justin Herrmann relating privilege to Rosenbaugh’s termination and the Independent Contractor Agreement with Bumblauskas.

5 November Emails between Attorney- 23-28 Privileged 4-5, 2021 Bumblauskas, Justin client Herrmann, Casey Carey, privilege Stacy Bivona, and Chad Andersen relating to Debra Pelkowski’s employment agreement.

6 August 20 - Emails between Attorney- 29-30 Privileged 22, 2022 Bumblauskas, Justin client Herrmann, and Casey privilege Carey relating to Pelkowski’s employment.

7 October Emails between Attorney- 31-32 Privileged 14, 2022 Bumblauskas, Casey client Carey, and Justin privilege Herrmann relating to Pelkowski’s employment.

8 October Email from Attorney- 33 0038 Privileged 19, 2022 Bumblauskas to Justin client Herrmann, Casey Carey, privilege Chad Andersen and Stacy Bivona relating to Pelkowski’s employment.

9 October Emails between Attorney- 34 Privileged 20, 2022 Bumblauskas and Justin client Herrmann and Casey privilege Carey relating to Pelkowski’s termination. 10 October Emails between Attorney- 35-37 Privileged 21, 2022 Bumblauskas, Justin client Herrmann, Casey Carey, privilege and Bette Spath regarding termination of Pelkowski and her benefits.

11 October Email from Bumblauskas Attorney- 38 0046 Privileged 31, 2022 to Casey Carey and client Justin Herrmann relating privilege to Pelkowski’s termination.

12 November Email from Attorney- 39-41 0047- Privileged 1, 2022 Bumblauskas to Justin client 0049 Herrmann, Bette Spath privilege and Casey Carey relating to Pelkowski’s termination.

13 October 31 Emails between Attorney- 42-46 Privileged – Bumblauskas, Justin client November Herrmann, Casey Carey, privilege 1, 2022 and Bette Spath relating to Pelkowski’s termination.

14 November Email from Bette Spath Attorney- 47-53 Privileged 2, 2022 to Casey Carey, Justin client Herrmann, and privilege Bumblauskas regarding Pelkowski’s termination.

15 November Text message from Attorney- 54 Privileged 29, 2023 Casey Carey to Michael client Cassidy regarding privilege communications with Justin Herrmann.

16 November Email from Justin Attorney- 55 0079 Privileged 29, 2023 Herrmann to Casey client Carey relating to the privilege Independent Contractor Agreement with Bumblauskas.

17 December Email from Myron Attorney- 56 0080 Privileged 6, 2023 Andersen to Justin client Herrmann and Chad privilege Andersen relating to Bumblauskas’ employment.

18 December Email from Myron Attorney- 56 0080 Privileged 6, 2023 Andersen to Chad client Andersen and Casey privilege Carey which contained the email from Myron to Justin Herrmann identified in #17 above.

19 December Email from Casey Carey Attorney- 57-58 0266- Privileged 7, 2023 to Justin Herrmann client 0267 relating to Bumblauskas. privilege

20 January 4, Board meeting minutes Attorney- 59 Privileged 2024 in which information client was provided by Justin privilege Herrmann to the Board of Directors relating to the dispute with Bumblauskas and PFC Services.

21 April 2024 This is a draft report Attorney- 60-84 Privileged prepared by Matt Client Lausten, an accountant, Privilege from the Betzer Call and Rule Lausten accounting firm 26(f) report in Denver. The only (Doc. 26). people to receive copies of this document are attorneys for Builders, Michael Cassidy, Stacy Bivona, and Laura Stence.

22 March Portion of Builders Attorney- 85 Privileged 2022 meeting minutes from client March 2022 in which privilege Justin Herrmann provided legal input regarding ESOP.

LEGEND For ease of reference, below is a roster of Builders’ personnel and their role within the company.

1. Casey Carey – Builders’ former Chief Executive Officer 2. Michael Cassidy – Builders’ Chief Operating Officer and Board Member 3. Justin Herrmann – Builders’ Corporate Counsel 4. Paul Bumblauskas – Owner of PFC Services, Inc. and independent contractor for Builders – served as interim Chief Financial Officer and Board Member of Builders. 5. Bryan Rosenbaugh – Builders’ former Chief Executive Officer 6. Myron Andersen – Builders’ owner, Board Member, and former President 7. Stacy Bivona – Builders’ co-owner, current CEO, and Board Member 8. Chad Andersen – Builders’ co-owner, President, and Board Member 9. Debra Pelkowski – Builders’ former Chief Financial Officer 10. Bette Spath – Builders’ Human Resource Manager 11. Laura Stence — Builders’ current Chief Financial Officer

I. E-mails with Justin Herrmann and Paul Bumblauskas The Court finds that all e-mails from or including Justin Herrmann (“Herrmann”), Builders’ Corporate Counsel, are protected by attorney-client privilege. Defendants argue that Herrmann’s inclusion alone on e-mail communications does not necessarily establish that the attorney-client privilege applies to the e-mail, as he could be acting in another capacity such as providing factual information or business advice. See, e.g., United States v. Spencer, 700 F.3d 317, 320 (8th Cir. 2012) (“[W]hen an attorney acts in other capacities, such as a conduit for a client’s funds, as a scrivener, or as a business advisor, the privilege does not apply.”). However, the Court concludes that all the withheld e-mails from or including Herrmann are protected by the attorney-client privilege because he was acting in his role as legal counsel, despite also serving on Builders’ Board of Directors. After review, the Court is unable to separate any responsibilities and discussions as business advice from legal advice. Defendants also assert that e-mail conversations in which Defendant Bumblauskas participated with counsel for Builders are not privileged as to Bumblauskas and should be produced. (Filing No. 98-1 at p. 11). At the time of these email conversations, Bumblauskas was the interim CFO of Builders and served on the Board of Directors. The privilege concerning these communications belonged to Bumblauskas’ employer, Builders, not to Bumblauskas. See, e.g., Milroy v. Hanson, 875 F. Supp. 646, 649 (D. Neb. 1995) (stating that, “for purposes of the attorney- client privilege [] [t]here is but one client, and that client is the corporation.”). In his role as CFO, Bumblauskas was involved in seeking legal advice on behalf of Builders. He has “no right to frustrate the attorney-client privilege” as to Builders as an individual. See id. Therefore, the Court finds the e-mails between Bumblauskas and Herrmann are properly withheld as protected by attorney-client privilege.

II. Board Minutes - Numbers 20, 22 (Bates Nos. 59, 85) Defendants next assert that redactions of Board meeting minutes are not protected by attorney-client privilege. (Filing No. 98-1 at pp. 11-12). Defendants claim a substantial need to see “full, unredacted copies of all board meeting minutes” so that all parties have the same record of what happened at the meetings, and specifically, Bumblauskas’ alleged illegal conduct. Further, Defendants claim that they would be unfairly prejudiced if Paul Weitzel had access to information that is not also available to Defendants’ experts. After the Court’s review of the redacted documents, it does not appear that Bumblauskas was present, either throughout the meeting or while in executive session, and there is no risk of an uneven playing field concerning Paul Weitzel’s expert report given the substance of the information redacted. (Doc. No. 98-3, p. 71; Doc. No. 98-3, p. 27). Therefore, the Court finds Plaintiff’s redactions were proper.

III. Draft Report - 21 (Bates Nos. 60-84) The draft report prepared by Matt Lausten, an accountant, from the Betzer Call Lausten accounting firm in Denver, was not raised by either party. Upon in camera review, this report is privileged and protected by the work product doctrine. See Fed. R. Civ. P. 26(b)(3)(A)(ii) (“[A] party may not discover documents and tangible things that are prepared in anticipation of litigation[.]”). The only people to receive copies of this document were attorneys for Builders, Michael Cassidy, Stacy Bivona, and Laura Stence. Further, the report is addressed to lawyers with the case number referenced. (Filing No. 102, p. 60-66). Thus, the Court finds the draft report is privileged and protected by the work product doctrine. Accordingly,

IT IS ORDERED: Plaintiff has properly asserted attorney-client privilege as to all withheld and/or redacted documents identified in Plaintiff’s supplemental privilege log, and shall not be produced.

Dated this 24th day of September, 2025.

BY THE COURT:

s/Michael D. Nelson United States Magistrate Judge