The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
RONALD J. HOF * CIVIL ACTION NO. 19-10696
*
VERSUS * SECTION: “D”(1)
*
LAPORTE, A PROFESSIONAL * JUDGE WENDY B. VITTER
ACCOUNTING CORPORATION, ET *
AL. * MAGISTRATE JUDGE
* JANIS VAN MEERVELD
*********************************** *
ORDER AND REASONS
Before the Court is the Motion for Protective Order filed by LaPorte, a Professional
Accounting Corporation (“LaPorte”). (Rec. Doc. 39). Having reviewed the documents in camera
and having considered the parties’ briefs, the court finds that LaPorte has not established that the
primary motivating purpose behind the creation of the emails in question was anticipation of
litigation. Accordingly, and for the following reasons, the Motion for Protective Order is DENIED.
LaPorte shall produce the emails to Hof within seven days.
Background
In this lawsuit, plaintiff Ronald J. Hof, in his capacity as trustee of the Chapter 7
Bankruptcy Estate of FoodServiceWarehouse.Com, LLC (“FSW”) alleges that Laporte is liable
for professional negligence arising out of LaPorte’s performance of audit services for FSW for the
2013 and 2014 fiscal years. Of potential relevance to the present discovery issue, LaPorte decided
to disengage from the FSW audit for the 2015 fiscal year and sent formal correspondence to this
effect to FSW’s interim CEO, Thomas Kim, on May 9, 2016. That letter has been produced in
discovery. On May 20, 2016, FSW filed a bankruptcy petition. However, plaintiff did not file this
adversary proceeding against LaPorte in bankruptcy court until May 13, 2019. On May 28, 2019,
plaintiff filed a motion in this court to withdraw the bankruptcy reference.
Presently before the court is the question of whether five emails appearing on LaPorte’s
privilege log are entitled to protection under the work product doctrine. Each of these emails is
dated April 1, 2016. All of them are described on the privilege log as “Email correspondence in
anticipation of litigation and at the direction of insurer with non-testifying expert regarding
disengagement from 2015 Pride and FSW audits.” The senders and recipients include certain
LaPorte employees as well as Joe Richardson, a CPA with Harper Peterson in Houston. According
to LaPorte, when it made the decision to disengage from the 2015 FSW audit, it was “aware that
litigation could result from the disengagement of an audit that was already underway,” and so, it
sought assistance from its insurer, Continental Casualty Company (“CNA”). CNA directed
LaPorte to Mr. Richardson, who held a telephone conference with LaPorte and who exchanged
two emails with LaPorte concerning procedures for disengagement. The other emails on the
privilege log involve LaPorte employee Terri Troyer relaying the substance of Mr. Richardson’s
advice to a larger group of LaPorte employees and explaining LaPorte’s plans based on Mr.
Richardson’s advice.
After the parties submitted the documents to the court for in camera review, the court
ordered that briefing would be required for the court to address the issue. LaPorte filed the present
Motion for Protective Order. It argues that the documents are protected by the work product
doctrine because the emails were exchanged to aid in future litigation by ensuring that LaPorte
acted in accordance with applicable professional standards. It submits that disengagement from an
audit is an unusual occurrence. It explains that the email correspondence under review reflects the
advice and assistance it received from CNA and Mr. Richardson and insists that contact with CNA
was only made in anticipation of potential litigation from an improper disengagement. LaPorte
adds that the substance of Mr. Richardson’s advice is contained in the May 9, 2016, letter and it
argues that there are no exceptional circumstances that would warrant disclosure of this protected
emails.
Plaintiff opposes, arguing that it is clear from LaPorte’s description that the advice was
being obtained so as to avoid possible future litigation, and not in anticipation of any litigation
concerning the contemporaneous business actions being taken at the time. . Plaintiff argues that
here, LaPorte sought advice to ensure it properly disengaged from the audit. Plaintiff insists that
however rare it may be to disengage from an audit, this advice is not work product in anticipation
of litigation. Instead, plaintiff argues that LaPorte merely sought to avoid future litigation. Plaintiff
insists that the emails were prepared in the ordinary course of business and are not protected by
the work product doctrine.
Law and Analysis
1. Standard of Review
The work-product doctrine protects from discovery documents and tangible things
“prepared by an attorney ‘acting for his client in anticipation of litigation.’” United States v.
Nobles, 422 U.S. 225, 238 (1975) (quoting Hickman v. Taylor, 329 U.S. 495, 508 (1947)). In
contrast, “materials assembled in the ordinary course of business,” are excluded from work-
product materials. United States v. El Paso Co., 682 F.2d 530, 542 (5th Cir. 1982). Codified at
Federal Rule of Civil Procedure 26(b)(3), the work-product protection extends to materials
prepared by the party itself and representatives other than attorneys. If the party resisting discovery
establishes that the materials are work product, the party seeking discovery can only obtain the
documents if they are relevant and proportional to the needs of the case and the party
“has substantial need for the materials to prepare its case and that it cannot, without undue
hardship, obtain the substantial equivalent of the materials by other means.” Fed. R. Civ. P.
26(b)(3)(A); see Lassere v. Carroll, No. CIV.A. 13-5430, 2014 WL 7139138, at *4 (E.D. La. Dec.
15, 2014).
“[T]he burden of showing that documents were prepared in anticipation of litigation, and
therefore, constitute work product, falls on the party seeking to protect the documents from
discovery.” Piatkowski v. Abdon Callais Offshore, L.L.C., No. CIV.A.99-3759, 2000 WL
1145825, at *2 (E.D. La. Aug. 11, 2000) (footnotes omitted). The work product “privilege can
apply where litigation is not imminent, ‘as long as the primary motivating purpose behind the
creation of the document was to aid in possible future litigation.’” In re Kaiser Aluminum &
Chem. Co., 214 F.3d 586, 593 (5th Cir. 2000) (quoting United States v. El Paso Co., 682 F.2d 530,
542 (5th Cir. 1982)). Courts have stated that “[g]enerally, a reasonable anticipation of litigation
requires existence of an identifiable specific claim or impending litigation at the time the materials
were prepared.” Chemtech Royalty Assocs., L.P. v. United States, No. 06-258-RET-DLD, 2009
WL 854358, at *2 (M.D. La. Mar. 30, 2009) (quoting Schmidt, Long & Assoc., Inc. v. Aetna U.S.
Healthcare, Inc., No. CIV. A. 00-CV-3683, 2001 WL 605199, at *4 (E.D. Pa. May 31, 2001)).
Thus, the fact that documents were prepared to assist a company in complying with the law
is not enough to find that they were prepared in anticipation of litigation. For example, in
Chemtech, the court noted that “work papers generated by an attorney who prepares a tax return
are not protected by the work product doctrine ‘simply because there is always a possibility that
the IRS might challenge a given return’” and added that “[t]here must be evidence to expect ‘future
trouble with the IRS,’ or the documents will be outside the scope of the work product doctrine.”
Id. (quoting United States v. Davis, 636 F.2d 1028, 1040 (5th Cir. 1981)). Similarly, in El Paso,
the Fifth Circuit held that a tax pool analysis by in house counsel was not protected by the work
product doctrine where the memorandum contained legal analysis but not an actual litigation
strategy, where no item in the analysis was under IRS scrutiny at the time the memorandum was
drafted, and where the company’s litigation was handled by outside counsel. 682 F. 2d at 543.
Hof cites to numerous out of circuit but useful cases similarly holding that business
planning to avoid future litigation does not qualify for work product protection. For example, in
BoDeans Cone Co. v. Norse Dairy Systems., L.L.C., the Northern District of Iowa determined that
an email by a company’s executive was “a sort of post mortem on the DOJ's then-concluded
investigation of [the acquisition of the defendant], with an eye toward business planning to avoid a
general possibility of future litigation.” 678 F. Supp. 2d 883, 891 (N.D. Iowa 2009) (emphasis in
original). The court held that the email was not protected by the work product doctrine because
“business planning that considers the possible litigation risks involved does not cloak pertinent
documents with work-product privilege.” Id. Similarly, in Diversified Industries, Inc. v. Meredith,
the Eighth Circuit Court of Appeals noted that “the work product rule does not . . . come into play
merely because there is a remote prospect of future litigation” in holding that a report prepared by
a law firm at the request of the plaintiff’s board of directors was not protected by the work product
doctrine because the board sought information about “what actually had been going on and wanted
to frame policies and procedures that in the future would protect it against repetitions of the prior
misdeeds, if any, of its employees committed in the past.” 572 F.2d 596, 604 (8th Cir. 1977). And
in Binks Manufacturing. Co. v. National Presto Industries, Inc., the Seventh Circuit Court of
Appeals held that two emails written by the purchaser’s associate resident counsel were not
protected by the work product doctrine. 709 F.2d 1109, 1120–21 (7th Cir. 1983). Although at the
time of the communications the parties already had a business dispute related to the purchaser’s
assertions that the equipment did not meet specifications and the seller’s position that the sale price
was due and owing, and although there was a remote prospect of litigation, the court found that
other correspondence indicated the purchaser still intended to have the seller correct the problems
with the equipment and might withhold the purchase price and litigation had not yet been
threatened. 709 F.2d 1109, 1120–21 (7th Cir. 1983); see Simon v. G.D. Searle & Co., 816 F.2d
397, 401 (8th Cir. 1987) (holding that risk management documents generated to keep track of,
control, and anticipate the costs of the defendant’s products liability litigation and which contained
aggregate reserve information but no individual case reserves calculated by the defendant’s
attorneys were not protected by the work product doctrine because the risk management
department was not involved in giving legal advice or in mapping litigation strategy in any
individual case, because the aggregate reserve information served numerous business planning
functions but did not enhance the defense of any particular lawsuit, and, critically, because
business planning includes planning for litigation).
Although each case turns on its particular facts, courts consistently focus on determining
the purpose of the advice or information at issue. For example, in In re Tri State Outdoor Media
Group, Inc., a committee of bondholders hired a financial advisor to assist in negotiating the
financial restructuring of the debtor after its default but before they ultimately filed an involuntary
bankruptcy petition a few months later. 283 B.R. 358, 361 (Bankr. M.D. Ga. 2002). The court held
that analyses by the financial advisor was subject to the work product doctrine because the
engagement letter indicated that bankruptcy was contemplated at the inception of the advisor’s
work, and therefore, the documents were prepared in anticipation of bankruptcy, which, as an
adversary proceeding, was found to be in anticipation of litigation. Id. at 364.
2. Analysis
Here, there is no dispute that litigation was not pending or imminent at the time of these
communications. Thus, the court must determine whether LaPorte has established that “the
primary motivating purpose behind the creation of the document was to aid in possible
future litigation.” El Paso Co., 682 F.2d at 542. LaPorte argues that the emails here were generated
as a result of its attempts to obtain legal advice in anticipation of potential litigation that might
result from an improper disengagement. However, the emails cannot be construed as created to aid
LaPorte in future litigation the way the financial analyses in Tri-State would aid the bondholders
in asserting their claims against the debtor in bankruptcy. 283 B.R. at 364. More like the advice
obtained in BoDeans and Diversified, the LaPorte communications were focused on employing
best practices to avoid future litigation. See Diversified, 572 F.2d at 604; BoDeans, 678 F. Supp.
2d at 891. Of course, BoDeans and Diversified are not entirely equivalent to the present case as
they involved a more generalized risk of future litigation. Here LaPorte alleges it feared litigation
in a specific situation for which it sought assistance. In that sense, this case is similar to the Binks
case where the parties were in an active business dispute related to the sale of equipment but where
litigation was possible but had not yet been threatened. 709 F.2d at 1120. There, the Seventh
Circuit found the purchaser had failed to meet its burden to establish the document was prepared
because of the prospect of litigation or that some articulable claim was likely to lead to litigation.
Id.
Importantly, it is LaPorte that bears the burden of establishing the primary motivating
purpose was to aid in future litigation. In El Paso, the Fifth Circuit was persuaded that legal
analysis by counsel was not prepared in anticipation of litigation when it did not contain an actual
litigation strategy and where no item addressed in the analysis was under scrutiny by the IRS. 682
F. 2d at 543. The instant situation is even less compelling. Here, the documents were not created
by counsel; no lawyer is even cc’d. The documents do not contain any litigation strategy. Nor was
there any active dispute between LaPorte and FSW that might result in litigation. FSW did not
assert a claim against LaPorte until more than three years later. And considering that the present
litigation concerns alleged malfeasance in preparing the 2013 and 2014 audits and not an improper
disengagement from the 2015 audit, it is unclear whether litigation has ever resulted from
LaPorte’s disengagement.
The court must conclude that LaPorte has failed to meet its burden of establishing that the
primary motivating purpose in seeking and sharing the advice in the emails was to aid in future
litigation. Accordingly, the documents are not protected by the work product doctrine.
Conclusion
For the foregoing reasons, LaPorte’s Motion for Protective Order (Rec. Doc. 39) is
DENIED. LaPorte shall produce the emails listed on the privilege log to Hof within seven days.
New Orleans, Louisiana, this 6th day of August, 2020.
Vow Moe. vol
Janis van Meerveld
United States Magistrate Judge