1 UNITED STATES DISTRICT COURT
2 DISTRICT OF NEVADA
3 * * *
4 IGNITE SPIRITS, INC., a Wyoming Case No. 2:21-cv-01590-JCM-EJY corporation, 5 Plaintiff, 6 ORDER v. 7 CONSULTING BY AR, LLC, a Florida 8 limited liability company; Does I through X, inclusive; and Roe Business Entities I through 9 X, inclusive,
10 Defendants.
12 Consulting by AR, LLC,
13 Counterclaim Plaintiff,
14 v.
15 IGNITE SPIRITS, INC. (f/k/a Ignite Beverages, Inc.); IGNITE 16 INTERNATIONAL LTD.; and IGNITE INTERNATIONAL BRANDS, LTD., 17 Counterclaim Defendant. 18 19 Pending before the Court is Consulting by AR, LLC’s Motion for an Order to Show Cause 20 Why Ignite International Brands, Ltd. Should Not be Held in Contempt of the Court’s August 12, 21 2022 Order.1 ECF No. 128. The Court considered the Motion, Ignite International’s Response (ECF 22 No. 130), and Consulting by AR’s Reply (ECF No. 143). The Court also reviewed ECF No. 120, 23 the Order that ultimately underlies the present Motion; ECF No. 132, the Court’s Order regarding a 24 prior request for an Order to Show Cause and requiring the parties to meet and confer; ECF No. 147, 25 the Motion to Stay the Order issued at ECF No. 120; the Response to the Motion to Stay at ECF No. 26 160; and the Reply in support of the Motion to Stay at ECF No. 162. 27 1 I. Background 2 The instant Motion seeks an Order to Show Cause (“OSC”) requiring Ignite International to 3 demonstrate why it should not be held in contempt for failing to comply with the Court’s August 12, 4 2022 Order found at ECF No. 120.2 The Order required Ignite to file 65 documents identified as 5 containing attorney client privilege communications, under seal, for in camera review by August 18, 6 2022. Id. The 65 documents were not to be served on Consulting. Id. The Order further required 7 Ignite International to include a legend with the documents, which was to be served on Consulting 8 by AR, but filed under seal. Id. Although Ignite filed an Objection on the Court’s Order, no stay of 9 that Order has been entered. See Docket generally. Attached to Consulting by AR’s Motion is an 10 email from counsel for Ignite stating Ignite International “will not produce anything until a final 11 determination is made on the objection.” ECF No. 128-2 at 2. 12 Ignite International responds to the instant Motion arguing Consulting did not seek 13 production of the 65 documents until after Consulting filed its Motion for Summary Judgment. 14 Ignite says 154 days passed between Consulting’s filing of its Motion for Summary Judgment and 15 its Motion to Compel the 65 documents, Consulting did not claim the 65 documents are relevant to 16 this matter, and the Court’s Order failed to comply with the Rules of Civil Procedure because the 17 timing requirements in the Order failed to give Ignite an opportunity to challenge the Order before 18 compliance. ECF No. 130 at 2. Ignite International complains the OSC asks the Court to ignore 19 Ignite’s Objection. Id. at 3. Ignite seems to contend that because the Order offered a hearing if there 20 were questions or clarification of its Order needed, the Court invited an Objection and also created 21 a basis for “no ruling on the OSC Motion until … Ignite’s … Objection is heard and resolved.” Id. 22 at 4, 5 (also contending the Court seeks to circumvent Ignite’s rights to appeal ECF No. 120). Ignite 23 International argues that if it submits its documents in camera for the Court’s review it will moot 24 Ignite’s Objection to the Court’s Order. Id. at 6. Finally, Ignite argues the legal bases for an OSC 25 and attorneys’ fees are not met because it acted in good faith throughout this discovery dispute. Id. 26 at 7-8. 27 1 In its Reply, Consulting by AR argues Ignite’s failure to comply with the Court’s Order to 2 submit the 65 documents at issue for in camera review was willful because (1) an Objection does 3 not stay the Court’s Order, (2) Ignite could not unilaterally decide not to comply with the Court’s 4 Order, (3) Ignite did not move for a stay until after the date for compliance with ECF No. 120 had 5 passed, and (4) the District Judge previously ruled against Ignite’s Motion for an Emergency Stay 6 based on a finding of no irreparable harm. ECF No. 143 at 1-2. Consulting also offers case law 7 demonstrating that complying with an in camera review to determine whether documents withheld 8 based on privilege are, in fact, privileged, does not waive or affect the assertion of privilege. Id. at 9 3. Consulting argues Ignite acted in bad faith and remedial sanctions are appropriate. Id. at 3-5 10 II. Discussion 11 Well established law demonstrates that neither an objection to nor a unruled upon motion to 12 stay a Magistrate Judge’s Order stays the order at issue. Krause v. Nevada Mut. Ins. Co., Case No. 13 2:12-cv-00342-JCM-CWH, 2014 WL 176624, at *2 (D. Nev. 2014); Wells Fargo Bank, N.A. v. Iny, 14 Case No. 2:13-cv-01561-MMD-NJK, 2014 WL 1796216, at *3 (D. Nev. May 6, 2014). Hence, the 15 presumption is that discovery ordered by a Magistrate Judge will proceed regardless of the filed 16 objection. In re Application of O’Keeffe, Case No. 2:14-cv-01518-RFB-CWH, 2016 WL 2771697, 17 at *6 (D. Nev. Apr. 4, 2016). Indeed, if an objection to a Magistrate Judge’s order automatically 18 stayed the order, parties would be encouraged to file objections simply to delay discovery regardless 19 of the merits of the objections. Alvarez v. LaRose, Case No. 3:20-cv-00782-DMS-AHG, 2020 WL 20 5632659, at *1 (S.D. Cal. Sept. 21, 2020 (internal citation omitted). 21 The Order at ECF No. 120, issued on August 12, 2022, required Ignite International to submit 22 documents for in camera review by August 18, 2022. ECF No. 120 at 4. Ignite filed its Objection 23 on August 15, 2022, erroneously believing the Objection stayed the Order. ECF No. 124. On August 24 19, 2022, Consulting by AR filed a Motion for Order to Show Cause why Ignite International should 25 not be held in contempt for failing to comply with the Court’s August 12th Order. ECF No. 128. 26 Ignite responded, inter alia, that the Court’s August 12, 2022 Order did not give Ignite an 27 opportunity to object before compliance was required, compliance should not be required until the 1 No. 130 at 2-6. Given the well settled law, the appearance, at first blush, is that Ignite had no legal 2 basis to ignore the Court’s Order to submit documents for in camera review. 3 In addition to the well settled law that an objection does not stay a Magistrate Judge’s Order, 4 well settled law also establishes submission of documents for in camera review does not destroy or 5 otherwise impair the attorney client privilege claimed to apply to the documents submitted. Reading 6 International, Inc. v. Malulani Group, Limited, 694 Fed.Appx. 571, 572 (9th Cir. 2017) citing United 7 States v. Zolin, 491 U.S. 554, 568 (1989). Consulting’s underlying motion (ECF No. 68) leading to 8 the Court’s Order to submit documents in camera demonstrates that few emails were produced by 9 Ignite International or any of the Ignite companies that are part of this litigation, while all 65 10 documents withheld are emails. ECF No. 69-5. The emails relate to the essence of this case⸺the 11 Letter Agreement being litigated that arises from contracts with Resorts World that Consulting says 12 it facilitated. Id. Sufficient grounds to review the documents was demonstrated based on Ignite’s 13 refusal to supplement its privilege log. This refusal precluded a reasonable determination of whether 14 the attorney client privilege was properly applied to the withheld documents. As the Court found, 15 Ignite’s privilege log failed to provide essential information that would allow Consulting by AR to 16 assess whether the privilege is properly asserted. ECF No. 120 at 2.
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1 UNITED STATES DISTRICT COURT
2 DISTRICT OF NEVADA
3 * * *
4 IGNITE SPIRITS, INC., a Wyoming Case No. 2:21-cv-01590-JCM-EJY corporation, 5 Plaintiff, 6 ORDER v. 7 CONSULTING BY AR, LLC, a Florida 8 limited liability company; Does I through X, inclusive; and Roe Business Entities I through 9 X, inclusive,
10 Defendants.
12 Consulting by AR, LLC,
13 Counterclaim Plaintiff,
14 v.
15 IGNITE SPIRITS, INC. (f/k/a Ignite Beverages, Inc.); IGNITE 16 INTERNATIONAL LTD.; and IGNITE INTERNATIONAL BRANDS, LTD., 17 Counterclaim Defendant. 18 19 Pending before the Court is Consulting by AR, LLC’s Motion for an Order to Show Cause 20 Why Ignite International Brands, Ltd. Should Not be Held in Contempt of the Court’s August 12, 21 2022 Order.1 ECF No. 128. The Court considered the Motion, Ignite International’s Response (ECF 22 No. 130), and Consulting by AR’s Reply (ECF No. 143). The Court also reviewed ECF No. 120, 23 the Order that ultimately underlies the present Motion; ECF No. 132, the Court’s Order regarding a 24 prior request for an Order to Show Cause and requiring the parties to meet and confer; ECF No. 147, 25 the Motion to Stay the Order issued at ECF No. 120; the Response to the Motion to Stay at ECF No. 26 160; and the Reply in support of the Motion to Stay at ECF No. 162. 27 1 I. Background 2 The instant Motion seeks an Order to Show Cause (“OSC”) requiring Ignite International to 3 demonstrate why it should not be held in contempt for failing to comply with the Court’s August 12, 4 2022 Order found at ECF No. 120.2 The Order required Ignite to file 65 documents identified as 5 containing attorney client privilege communications, under seal, for in camera review by August 18, 6 2022. Id. The 65 documents were not to be served on Consulting. Id. The Order further required 7 Ignite International to include a legend with the documents, which was to be served on Consulting 8 by AR, but filed under seal. Id. Although Ignite filed an Objection on the Court’s Order, no stay of 9 that Order has been entered. See Docket generally. Attached to Consulting by AR’s Motion is an 10 email from counsel for Ignite stating Ignite International “will not produce anything until a final 11 determination is made on the objection.” ECF No. 128-2 at 2. 12 Ignite International responds to the instant Motion arguing Consulting did not seek 13 production of the 65 documents until after Consulting filed its Motion for Summary Judgment. 14 Ignite says 154 days passed between Consulting’s filing of its Motion for Summary Judgment and 15 its Motion to Compel the 65 documents, Consulting did not claim the 65 documents are relevant to 16 this matter, and the Court’s Order failed to comply with the Rules of Civil Procedure because the 17 timing requirements in the Order failed to give Ignite an opportunity to challenge the Order before 18 compliance. ECF No. 130 at 2. Ignite International complains the OSC asks the Court to ignore 19 Ignite’s Objection. Id. at 3. Ignite seems to contend that because the Order offered a hearing if there 20 were questions or clarification of its Order needed, the Court invited an Objection and also created 21 a basis for “no ruling on the OSC Motion until … Ignite’s … Objection is heard and resolved.” Id. 22 at 4, 5 (also contending the Court seeks to circumvent Ignite’s rights to appeal ECF No. 120). Ignite 23 International argues that if it submits its documents in camera for the Court’s review it will moot 24 Ignite’s Objection to the Court’s Order. Id. at 6. Finally, Ignite argues the legal bases for an OSC 25 and attorneys’ fees are not met because it acted in good faith throughout this discovery dispute. Id. 26 at 7-8. 27 1 In its Reply, Consulting by AR argues Ignite’s failure to comply with the Court’s Order to 2 submit the 65 documents at issue for in camera review was willful because (1) an Objection does 3 not stay the Court’s Order, (2) Ignite could not unilaterally decide not to comply with the Court’s 4 Order, (3) Ignite did not move for a stay until after the date for compliance with ECF No. 120 had 5 passed, and (4) the District Judge previously ruled against Ignite’s Motion for an Emergency Stay 6 based on a finding of no irreparable harm. ECF No. 143 at 1-2. Consulting also offers case law 7 demonstrating that complying with an in camera review to determine whether documents withheld 8 based on privilege are, in fact, privileged, does not waive or affect the assertion of privilege. Id. at 9 3. Consulting argues Ignite acted in bad faith and remedial sanctions are appropriate. Id. at 3-5 10 II. Discussion 11 Well established law demonstrates that neither an objection to nor a unruled upon motion to 12 stay a Magistrate Judge’s Order stays the order at issue. Krause v. Nevada Mut. Ins. Co., Case No. 13 2:12-cv-00342-JCM-CWH, 2014 WL 176624, at *2 (D. Nev. 2014); Wells Fargo Bank, N.A. v. Iny, 14 Case No. 2:13-cv-01561-MMD-NJK, 2014 WL 1796216, at *3 (D. Nev. May 6, 2014). Hence, the 15 presumption is that discovery ordered by a Magistrate Judge will proceed regardless of the filed 16 objection. In re Application of O’Keeffe, Case No. 2:14-cv-01518-RFB-CWH, 2016 WL 2771697, 17 at *6 (D. Nev. Apr. 4, 2016). Indeed, if an objection to a Magistrate Judge’s order automatically 18 stayed the order, parties would be encouraged to file objections simply to delay discovery regardless 19 of the merits of the objections. Alvarez v. LaRose, Case No. 3:20-cv-00782-DMS-AHG, 2020 WL 20 5632659, at *1 (S.D. Cal. Sept. 21, 2020 (internal citation omitted). 21 The Order at ECF No. 120, issued on August 12, 2022, required Ignite International to submit 22 documents for in camera review by August 18, 2022. ECF No. 120 at 4. Ignite filed its Objection 23 on August 15, 2022, erroneously believing the Objection stayed the Order. ECF No. 124. On August 24 19, 2022, Consulting by AR filed a Motion for Order to Show Cause why Ignite International should 25 not be held in contempt for failing to comply with the Court’s August 12th Order. ECF No. 128. 26 Ignite responded, inter alia, that the Court’s August 12, 2022 Order did not give Ignite an 27 opportunity to object before compliance was required, compliance should not be required until the 1 No. 130 at 2-6. Given the well settled law, the appearance, at first blush, is that Ignite had no legal 2 basis to ignore the Court’s Order to submit documents for in camera review. 3 In addition to the well settled law that an objection does not stay a Magistrate Judge’s Order, 4 well settled law also establishes submission of documents for in camera review does not destroy or 5 otherwise impair the attorney client privilege claimed to apply to the documents submitted. Reading 6 International, Inc. v. Malulani Group, Limited, 694 Fed.Appx. 571, 572 (9th Cir. 2017) citing United 7 States v. Zolin, 491 U.S. 554, 568 (1989). Consulting’s underlying motion (ECF No. 68) leading to 8 the Court’s Order to submit documents in camera demonstrates that few emails were produced by 9 Ignite International or any of the Ignite companies that are part of this litigation, while all 65 10 documents withheld are emails. ECF No. 69-5. The emails relate to the essence of this case⸺the 11 Letter Agreement being litigated that arises from contracts with Resorts World that Consulting says 12 it facilitated. Id. Sufficient grounds to review the documents was demonstrated based on Ignite’s 13 refusal to supplement its privilege log. This refusal precluded a reasonable determination of whether 14 the attorney client privilege was properly applied to the withheld documents. As the Court found, 15 Ignite’s privilege log failed to provide essential information that would allow Consulting by AR to 16 assess whether the privilege is properly asserted. ECF No. 120 at 2. In camera review was ordered 17 to resolve the conflict between the parties. 18 The Court finds, as it did when it entered the Order on August 12, 2022, that Ignite 19 International has not met its obligation to provide adequate information in the privilege log to allow 20 Consulting by AR to determine if the documents are, in fact, protected by privilege. American 21 Alternative Insurance Corp. v. Ducas, Case No. 2:18-cv-02346-APG-NJK, 2019 WL 13194014, at 22 *2 (D. Nev. Oct. 28, 2019) (“The subject matter of each document must be provided in a privilege 23 log ‘with a reasonable degree of specificity.’ [Citing] Nevada Power [v. Monsanto, 151 F.R.D. 118,] 24 122 at n.6 [(D. Nev. 1993)]. … [N]early all of the documents are identified as having the subject 25 matter of ‘[l]itigation strategy.’ … Such a description is woefully deficient to enable assessment of 26 the claim for privilege or protection. [Citing] Cf. McKenzie v. Walgreen Co., [Case No. 2:12-cv- 27 044-KJD-NJK,] 2013 WL 211104, at *4 (D. Nev. Jan. 18, 2013) (rejecting as insufficient 1 No. CV-15-00087-PHX-SPL, 2016 WL 11513612, at *1 (D. Ariz. Aug. 4, 2016) (citation omitted) 2 (finding the privilege log produced inadequate even though Maricopa County identified the date, 3 sender, recipient, the employer of the sender and recipient, and privilege asserted because the 4 “privilege log lack[ed] … any information regarding the subject matter of the documents”); Kellgren 5 v. Petco Animal Supplies, Inc., Case No. 13-cv-644 L (KSC), 2016 WL 4097521, at *4 (S.D. Cal. 6 May 26, 2016) (requiring the privilege log to contain the title or subject matter of the document, the 7 “RE:” line); RG Abrams Insurance v. Law Officers of C.R. Abrams, 342 F.R.D. 461, 498 (C.D. Cal. 8 2022) (stating “the Ninth Circuit long has recognized that information relating to ‘the identity of a 9 client, the amount of the fee, and the general purpose of the work performed are usually not protected 10 from disclosure by the attorney-client privilege,’” therefore finding the privilege log deficient 11 because the subject matter failed to provide the opposing party enough information to determine 12 whether the attorney client privilege was triggered). Ignite’s privilege log identifies every document 13 as attorney client privilege without providing any meaningful description regarding what in the 14 content of the document renders it privileged. ECF No. 69-5 at 2-9. The entirety of description of 15 material includes “Email Re: Alan Richardson Deal,” “Email Re: Ltr Agreement,” or “Email Re: 16 Resorts World.” Nothing about these descriptions allow Consulting by AR, the opposing party, to 17 determine whether the attorney client privilege was properly asserted. 18 Accordingly, based the foregoing as well as the passage of time since the Court issued its 19 Order at ECF No. 120, the Court finds Ignite International may avoid sanctions arising from its 20 failure to comply by doing one of three things. Ignite may, within ten (10) days of the date of this 21 Order, produce to Consulting a revised privilege log containing sufficient information regarding the 22 communication or work performed, along with the legend the Court ordered on pages 3 and 4 of 23 ECF No. 120, such that Consulting may reasonably assess whether the attorney client privilege was 24 triggered. The information provided should not reveal any actual privileged communication, but 25 must instead reflect the general nature of the communications at issue. Alternatively, within ten (10) 26 days of the date of this Order, Ignite may file the 65 documents under seal for in camera review, 27 without serving Consulting, while simultaneously filing the legend under seal. The Court will 1 Ignite an opportunity to respond to any determination by the Court that a document or 2 communication is not privileged before a final determination regarding production of documents to 3 Consulting is made. Finally, within ten (10) days of the date of this Order, Ignite may choose to 4 show cause in writing why it should not be held in contempt for failing to comply with the Court’s 5 August 12, 2022 Order. 6 The Court is not a particular fan of civil contempt when litigants disagree, in good faith, with 7 what the law or Court requires. While civil contempt is within the Court’s power here as Ignite 8 violated a specific and definite Order of the Court, the Court chooses to treat Ignite’s 9 misunderstanding of the effect of its Objection to this Magistrate Judge’s Order as having initially 10 been in good faith; albeit a review of case law would have easily demonstrated otherwise. Further, 11 the Court accepts that, despite law to the contrary, Ignite believed submission of its claimed privilege 12 documents to the Court would have effected a waiver of the privilege claimed. The Court rejects 13 the argument that submission of the documents to the Court would moot Ignite’s Objections; 14 however, the choices provided by the Court alleviate this concern if Ignite chooses to supplement its 15 privilege log. The Court warns Ignite International that continued conduct based on positions 16 contrary to well established law may not be deemed in good faith. Further, failure to comply with 17 this Order will be deemed willful and therefore potentially worthy of contempt. 18 III. Order 19 IT IS HEREBY ORDERED that the Motion for an Order to Show Cause Why Ignite 20 International Brands, Ltd. Should not be held in Contempt of the Court’s August 12, 2022 Order 21 (ECF No. 128) is DENIED in part. 22 IT IS FURTHER ORDERED that Ignite International Brands Ltd. must, within ten (10) days 23 of the date of this Order, do one of the following: 24 1. Produce to Consulting a revised privilege log that contains sufficient information 25 regarding the communication or work performed, along with the legend the Court required as stated 26 on pages 3 and 4 of ECF No. 120, such that Consulting may reasonably assess whether the attorney 27 client privilege was triggered. The information provided should not reveal any privileged 1 2. File the 65 withheld documents under seal for in camera review, without servi 2 || Consulting, simultaneously filing the legend described in ECF No. 120 under seal. The Court w 3 || review the documents and determine if any fail to demonstrate privilege. The Court will provic 4 || Ignite an opportunity to respond to any determination by the Court that a document | 5 || communication is not privileged before a final determination regarding production of documents 6 || Consulting is made; or, 7 3. File a written response to the Order to Show Cause why it should not be held 8 || contempt for failing to comply with the Court’s August 12, 2022 Order. 9 Dated this 28th day of February, 2023. 10 11 FLAVNA eke UNITED.STATES MAGISTRATE JUDGE
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