McKee v. PetSmart, Inc.

71 F. Supp. 3d 439, 2014 U.S. Dist. LEXIS 146583, 2014 WL 5293703
CourtDistrict Court, D. Delaware
DecidedOctober 15, 2014
DocketCivil Action No. 12-1117-SLR-SRF
StatusPublished
Cited by1 cases

This text of 71 F. Supp. 3d 439 (McKee v. PetSmart, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McKee v. PetSmart, Inc., 71 F. Supp. 3d 439, 2014 U.S. Dist. LEXIS 146583, 2014 WL 5293703 (D. Del. 2014).

Opinion

MEMORANDUM OPINION

SHERRY R. FALLON, United States Magistrate Judge

I. INTRODUCTION

Presently before the court in this action brought under the Fair Labor Standards Act (“FLSA”) is a motion to compel filed by plaintiff Nicholas McKee (“McKee”) and all other similarly situated current and former employees (“plaintiffs”) that hinges on whether defendant PetSmart, Inc. (“PetSmart” or “defendant”) waived the attorney-client privilege by asserting a “good faith” affirmative defense pursuant to 29 U.S.C. § 260. (D.I.183) For the following reasons, plaintiffs’ motion is granted-in-part and denied-in-part.

II. BACKGROUND

On September 10, 2012, McKee initiated this action on behalf of himself and other current and former operations managers of PetSmart. Plaintiffs allege that PetS-mart miselassified its operations managers as exempt under federal overtime laws in violation of the FLSA, and has failed to pay them overtime compensation. (D.I. 1 at ¶¶ 1-2)

On September 17, 2014, plaintiffs deposed Shane Burris, PetSmart’s director of compensation, regarding the affirmative good faith defense raised by PetSmart. (D.I. 183, Ex. D at 7:1-5) Burris testified that he is responsible for deciding whether a specific store level position, such as an operations manager, is classified as exempt. {Id. at 124:5-126:24) During the course of the deposition, PetSmart’s counsel repeatedly invoked the attorney-client privilege and instructed Burris not to answer questions as to whether he relied on legal advice in making classification decisions regarding the exempt status of operations managers. (Id. at 75:3-83:23) Burris testified that he made exemption decisions based on store visits and conversations with various people, including the legal department: {Id. at 140:4-141:4)

On September 23, 2014, plaintiffs filed the instant motion to compel, alleging that PetSmart invoked the attorney-client privilege “to stifle testimony that was both non-privileged and directly responsive to Defendant’s ‘good faith’ affirmative defense.” (D.I. 183 at 1) By way of the motion to compel, plaintiffs request that the court issue an order (1) directing Burris to an[441]*441swer specific questions and any follow-up questions; (2) granting plaintiffs an opportunity to re-depose Burris; and (3) requiring PetSmart to produce documents it has withheld based on its allegations of privilege. (Id.) On October 2, 2014, the court held an oral argument to address the motion.

III. LEGAL STANDARD

The attorney-client privilege protects disclosure of communications between a client and his or her attorney related to securing legal advice. See Rhone-Poulenc Rorer Inc. v. Home Indem. Co., 32 F.3d 851, 852 (3d Cir.1994). The privilege applies to communications from an attorney to a client as well as from, a client to the attorney. See Upjohn v. United States, 449 U.S. 383, 390, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981). The burden of demonstrating the applicability of the attorney-client privilege rests on the party asserting the privilege. See Matter of Bevill, Bresler & Schulman Asset Mgmt. Corp., 805 F.2d 120 (3d Cir.1986). Specifically, the party asserting the privilege must show the following: In re Grand Jury Investigation, 599 F.2d 1224, 1233 (3d Cir.1979) (internal quotation marks omitted).

(1) [T]he asserted holder of the privilege is or sought to become a client;
(2) The person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer;
(3) The communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some, legal proceeding, and not (d) for the purpose of committing a crime or tort; and
(4) The privilege has been (a) claimed and (b) not waived by the client.

The Third Circuit has held that “[a] party does not lose the privilege to protect attorney client communications from disclosure in discovery when his or her state of mind is put in issue in the action. While the attorney’s advice may be relevant to the matters in issue, the privilege applies as the interests it is intended to protect are still served by confidentiality.” Rhone-Poulenc, 32 F.3d at 864. “[F]inding that confidentiality may be waived depending on the relevance of the communication completely undermines the interest to be served.” Id. The Third Circuit expressly noted that decisions “extending] the finding of a waiver of the privilege to cases in which 'the client’s state of mind may be in issue in the litigation ... are of dubious validity.” Id.

IY. DISCUSSION

In support of the motion to compel, plaintiffs allege that defendant cannot simultaneously assert a good faith defense and claim that the attorney-client privilege protects all documents and testimony relating to defendant’s state of mind in determining the exempt classification status of the operations manager position. (D.I. 183 at 2-4) Plaintiffs contend that they are effectively barred from challenging defendant’s good faith in this matter because they cannot inquire into how defendant’s state of mind was formed without access to privileged testimony and documents. (Id. at 2-3) In response, defendant contends that it has not relied on advice sought from counsel in asserting its affirmative defense of good faith and, as a result, plaintiffs cannot force it to waive the attorney-client privilege. (D.I. 187 at 1)

The court concludes that defendant has not waived the attorndy-client privilege by [442]*442asserting a good faith affirmative defense because defendant has not relied on privileged communications or testimony in support of its defense. See Rhone-Poulenc, 32 F.3d at 863. Contrary to plaintiffs’ contentions, “[a] party does not lose the privilege to protect attorney client communications from disclosure in discovery when his or her state of mind is put in issue in the action. While the attorney’s advice may be relevant to the matters in issue, the privilege applies as the interests it is intended to protect are still served by confidentiality.” Id. at 864. The deposition transcript in the present case reveals that defendant preserved the privilege:

Ms. Rudich: You are instructing him not to answer if he relied on legal advice when determining whether the operations manager—
Mr. Voss: Correct.
Q By Ms. Rudich: You are here today to testify — is PetSmart asserting that any violation of the FLSA is not willful within the meaning of the FLSA?

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Bluebook (online)
71 F. Supp. 3d 439, 2014 U.S. Dist. LEXIS 146583, 2014 WL 5293703, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mckee-v-petsmart-inc-ded-2014.