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Cheryl & Co. v. Krueger

United States District Court, S.D. Ohio, Eastern Division

December 4, 2019

CHERYL & CO., Plaintiff,
CHERYL L. KRUEGER, et al., Defendants.

          Edmund A. Sargus, Jr., Judge



         This matter is before the Court on Plaintiff Cheryl & Co.'s (“Cheryl's”) Motion to Compel Discovery and to Strike Errata Street. (Doc. 85). For the reasons below, Plaintiff's Motion to Compel is DENIED, and Plaintiff's Motion to Strike Errata Sheet is DENIED without prejudice. (Id.).

         I. BACKGROUND

         Elsewhere, the Court has summarized the allegations in this case. (See, e.g., Doc. 63 at 1- 3). Broadly speaking, Cheryl's alleges that Defendant Cheryl Krueger, the former owner of Cheryl's, founded a new cookie company, CKE Management, LLC (“CKE”), to compete with Cheryl's. To perpetrate the scheme, CKE recruited Cheryl's talent in breach of Cheryl's employees' noncompete agreements so that CKE could sell lookalike (and taste-alike) cookies. (See generally Doc. 1).

         Cheryl's used the deposition of Benjamin Alesi, CKE's Chief Financial Officer and 30(b)(6) witness, to learn about the noncompete agreements. During his deposition, Mr. Alesi answered questions about CKE's hiring of Cheryl's then-employee, Defendant Amy Coley-Tonti. (See generally Doc. 85-1). Specifically, he testified that CKE's then-counsel, Taft Stettinius & Hollister LLP (“Taft”) advised CKE about Ms. Coley-Tonti's noncompete agreement with Cheryl's, (See id. at 44-46), but that he did not know the substance of these communications, (id., at 48-51). At one point in the deposition, counsel for Cheryl's asked Mr. Alesi whether CKE disclosed Taft's legal advice with Ms. Coley-Tonti, to which he answered, “yes.” (Id., 46:14-18). Yet, later in the deposition, Mr. Alesi testified that he did not know whether this disclosure had occurred. (See id., 48:5-8, 49:12-17).

         Based on Mr. Alesi's testimony, Cheryl's requested documents relating to Taft's legal advice concerning the noncompete agreements, asserting that CKE waived any applicable privilege when it shared privileged communications with Ms. Coley-Tonti. (Doc. 85-2, ¶ 2). CKE objected on the basis of the attorney-client privilege or work product doctrine. (Doc. 85-2 at 4- 5). CKE also supplemented its privilege log, adding a January 2018 “legal memorandum re noncompete” drafted by a Taft attorney (“the Taft Memo”). (Doc. 85-2 at 6). The next day, CKE issued an errata sheet for Mr. Alesi's testimony, explaining that Mr. Alesi had misunderstood the questions and did not know whether CKE disclosed Taft's legal advice to Ms. Coley-Tonti. (Doc. 85-2 at 7; see also Doc. 85-2 at 13-14). Cheryl's requested that CKE withdraw the errata sheet. CKE refused, explaining that, “[w]hen read in full context, it is apparent that Mr. Alesi misunderstood your initial questions about whether CKE provided any information to Ms. Tonti that it received from the Taft firm.” (Id. at 13).

         Consequently, Cheryl's moved to compel the production of documents and communications exchanged between CKE and Taft concerning Cheryl's non-compete agreements and moved to strike Mr. Alesi's errata sheet. (Doc. 85). The matter is briefed and ripe for resolution. (See Docs. 85, 91, 100).

         II. STANDARD

         Determining the proper scope of discovery falls within the broad discretion of the trial court. See Lewis v. ACD Bus. Servs., Inc., 135 F.3d 389, 402 (6th Cir. 1998). Pursuant to Rule 26(b)(1) of the Federal Rules of Civil Procedure, “[p]arties 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.” Moreover, Rule 37 of the Federal Rules of Civil Procedure allows for a motion to compel discovery when a party fails to answer interrogatories submitted under Rule 33 or to provide proper responses to requests for production of documents under Rule 34. See Fed. R. Civ. P. 37(a)(1), (3).

         Because this case is before the Court on federal question jurisdiction, federal law governs questions regarding the attorney-client privilege or work product protection. Talismanic Properties, LLC v. Tipp City, Ohio, 309 F.Supp.3d 488, 493 (S.D. Ohio 2017) (citing Hancock v. Dodson, 958 F.2d 1367, 1373 (6th Cir. 1992)). The party withholding discovery bears the burden to establish privilege or work product. New Phoenix Sunrise Corp. v. C.I.R., 408 Fed.Appx. 908, 918 (6th Cir. 2010). Information is protected by the attorney-client privilege:

(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), unless the protection is waived.

Reed v. Baxter, 134 F.3d 351, 355-56 (6th Cir. 1998). “The work-product doctrine protects an attorney's trial preparation materials from discovery to preserve the integrity of the adversarial process. Talismanic Properties, LLC, 309 F.Supp.3d at 493.

         Further, Rule 502 of the Federal Rules of Evidence governs waiver of privilege. Generally, federal courts in this Circuit require the proponent of the privilege to carry the burden of showing nonwaiver as an element of attorney-client privilege. See In re VisionAmerica, Inc. Sec. Litig., No. 02-MC-033 D/V, 2002 WL 31870559, at *1-2 (W.D. Tenn. Dec. 18, 2002) (collecting cases and noting that the Sixth Circuit has favorably cited cases holding that the party claiming privilege must also show nonwaiver). Some district courts, however, have adopted a burden-shifting approach to waiver. See, e.g., Burkhead & Scott, Inc. v. City of Hopkinsville, No. 5:12-CV-198-GNS, 2014 WL 7335173, at *1 (W.D. Ky. Dec. 19, 2014) (applying burden-shifting approach and noting that, “[p]roving privilege has not been waived would require proving a negative”); Shumaker, Loop & Kendrick, LLP v. Zaremba, 403 B.R. 480, 484 (N.D. Ohio 2009) (holding that once the proponent of the privilege establishes privilege, the burden shifts to the objecting party to “present sufficient evidence upon which a reasonable person may find that the privilege has been waived, ” and then back to the privilege-holder to “disprove each demonstrated claim of waiver by a preponderance of the evidence”).

         When deciding whether to apply waiver, “[c]ourts examine whether there has been disclosure of a significant part of a privileged communication to determine if the privilege, in fact, has been waived.” Yarberry v. Gregg Appliances, Inc., No. 1:12-CV-611, 2013 WL 4476681, at *3 (S.D. Ohio Aug. 19, 2013) (quotation marks and citations omitted). If the court concludes that privilege has been waived, it then must determine the scope of that waiver. Id.


         To begin, the Court notes that Cheryl's does not challenge CKE's claim of attorney-client privilege. Rather, it asserts that CKE waived the privilege. (Doc. 85 at 12-13). It is unclear, however, whether Cheryl's is arguing that CKE waived privilege when it purportedly disclosed privileged communications to Ms. Coley-Tonti, or, alternatively, that Mr. Alesi waived privilege on behalf of CKE when he testified about privileged communications. (See, e.g., Doc. 85 at 12 (asserting third-party waiver); Doc. 85-2 (asserting, in document request, “that CKE waived any privilege that may have applied . . . when CKE's duly authorized representative, Benjamin Alesi, testified that [Taft] and CKE communicated about Ms. Tonti's noncompete agreement, and that CKE relayed what [Taft] told [ ] CKE to Ms. Tonti”)). The Court addresses both assertions.

         A. Third-Party Waiver

         First, to the extent that Cheryl's argues that CKE waived privilege when it disclosed Taft's communications to Ms. Coley-Tonti, the Court notes one critical problem: there is nothing decisive on the record establishing that such disclosure occurred.

         Cheryl's relies on the following testimony to assert waiver:

Q. Without revealing any details, did Taft and CKE communicate about Ms. Tonti's noncompete?
Mr. Mead: You can say yes or ...

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