Federal Trade Commission v. Staples, Inc.

• Court: District Court, District of Columbia
• Decided: January 21, 2016
• Docket: Civil Action No. 2015-2115
• Status: Published

Opinion

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.

1 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]

2 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

3 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).

4 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

5 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

6 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

7 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.

8 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.

9 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.

10 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 11 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.

12 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.