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Patriot Rail Corp. v. Sierra Railroad Co.

September 11, 2009

PATRIOT RAIL CORP., A DELAWARE CORPORATION, PLAINTIFF,
v.
SIERRA RAILROAD COMPANY, A CALIFORNIA CORPORATION, DEFENDANT.



ORDER AND RELATED COUNTERCLAIMS

This matter was before the court on August 5, 2009, for hearing on: (1) plaintiff's motion to compel production of a document which defendant had inadvertently disclosed and then withdrew from disclosure, Dckt. No. 26; (2) plaintiff's motion to file under seal the unredacted declaration of plaintiff's counsel, Dckt. No. 27; and (3) the request of each party for attorney fees and costs in pursuing and defending these matters. Lisa Halko, Esq., and Sarah Asplin, Esq., appeared on behalf of plaintiff Patriot Rail Corporation ("Patriot"); and Scott Cameron, Esq., appeared on behalf of defendant Sierra Railroad Company ("Sierra"). After consideration of the moving and opposing papers and the arguments of counsel, and for the reasons that follow, the court denies plaintiff's motions to compel and to file under seal, and denies each party request for attorney fees.

BACKGROUND

This motion address the first three pages of a ten-page document which defendant disclosed. However, defendant contends that the first three pages (the pages now in dispute) are protected by attorney-client privilege and the work product doctrine. Copies of these pages were inadvertently disclosed by defendant to plaintiff's counsel but were either returned or destroyed upon notification by defendant of the claim of privilege. There is no claim of waiver because of the inadvertent disclosure and the defendant appears to have acted timely in correcting the error. Rather, the only dispute is whether the content of three pages are subject to either the attorney-client privilege and/or work product doctrine. The last seven pages of the document have been fully disclosed and are not in issue.

On April 1, 2009, plaintiff Patriot Rail Corporation propounded its Request for Production, Set Two, upon defendant Sierra Railroad Company. Request Number One sought "[a]ll documents and other tangible things illustrating Defendant's relationship and communications with McClellan Business Park." Defendant produced relevant documents the morning of June 4, 2009, immediately prior to plaintiff's deposition of Michael Hart, President of Sierra. After commencement of the deposition, during the lunchbreak, plaintiff's counsel reviewed the newly produced documents, including a ten-page document responsive to the above-noted production request, identified as Bates Number SRR 6786-6795. The document generally describes Sierra's business relationship with third party McClellan Business Park ("MCP" or "McClellan"). When the deposition resumed, plaintiff's counsel, Lisa Halko, asked Mr. Hart about the document. Mr. Hart responded initially, but defendant's counsel, Mr. Gonzalez, objected on the ground of inadvertent disclosure, stating that the first three pages, Bates Number SRR 6786-88, were drafted by Mr. Torgny Nilsson, Sierra's in-house counsel, and subject to attorney-client privilege. Plaintiff thereafter destroyed its copies of the disputed pages.

On June 9, 2009, defendant provided a privilege log, Ex. E to Halko Decl., which provides the following information as to the assertion a attorney client privilege:

Date Doc. Type/ Author Recipient Description Privilege

Bates No. Undated SRR 006786- T. Nilsson M. Hart, T. Nilsson Summary of Sierra Attorney-Client

SRR 006788 and Sierra Railroad Railroad's operations Privilege; management team at McClellan Park and Attorney Work opinions of T. Nilsson Product Doctrine re. same

Plaintiff filed this motion on June 16, 2009. On July 13, 2009, the court ordered defendant to produce the disputed pages for in camera review. The court deferred consideration of plaintiff's motion to file under seal the unredacted declaration of plaintiff's counsel, but directed that "[t]he parties may share the unredacted document pursuant to the provisions of their protective order approved by the district judge on May 21, 2009." Dckt. No. 28.

Defendant timely submitted the disputed pages on July 16, 2009, and the court has reviewed them in camera. On July 29, 2009, the parties filed their joint statement addressing this narrow discovery dispute.

Defendant's in-house counsel, Mr. Torgny Nilsson, filed a declaration in support of defendant's assertions of privilege, in which he states that he is, and "at all relevant times was, the General Counsel for Sierra Railroad Company and its subsidiaries Sierra Northern Railway and Sierra Entertainment." Nilsson Decl., Dckt. No. 32, at p. 1. Mr. Nilsson states that he wrote the disputed pages for the purposes of providing legal advice and in anticipation of possible litigation with McClellan,*fn1 and describes these circumstances as follows:

¶ 2. I prepared the first three pages of the document entitled "Sierra Benefits to MCP," which is now Bates labeled SRR 6786 through SRR 6788, when it became apparent that a dispute, which might lead to litigation, was arising between Sierra Northern Railway and the management of McClellan Business Park concerning Sierra Northern Railway's operation of the railroad facilities at McClellan Business Park.

¶ 3. In order for me to provide upper management at Sierra Northern Railway and Sierra Railroad Company with the best analysis of the arising dispute, and in order to decide the best course of action if and when that dispute led to litigation, I obtained information from those people in our company involved in obtaining and overseeing Sierra Northern Railway's operations at McClellan Business Park as to the history of Sierra Northern Railway's operations at McClellan Business Park, the benefits Sierra Northern Railway had brought to McClellan Business Park, and the arguments that might be made by both McClellan Business Park and Sierra Northern Railway in the event of any litigation. I also analyzed the potential merits and drawbacks of the arguments that might be made and the potential impact of those arguments.

ΒΆ 4. I at all times considered the document to be privileged as it was prepared in anticipation of litigation and its distribution was limited to those of Sierra's upper management who had a need to know the information so that they could best direct my actions in the growing dispute with the management of McClellan Business Park and in any resulting litigation. I am informed and believe that the document was never, prior to the instant litigation with Patriot, provided to anyone other than Mike Hart, President of Sierra Railroad Company, and David Magaw, Vice-President of Sierra Railroad Company and President of Sierra Northern Railway. In the document, I attempted to play "devil's advocate" by presenting ...


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