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Bof I Federal Bank v. Erhart

United States District Court, S.D. California

August 5, 2016

Bof I FEDERAL BANK, a federal savings bank, Plaintiff,
v.
CHARLES MATTHEW ERHART, an individual; and DOES 1-25, inclusive, Defendant.

          ORDER DETERMINING JOINT MOTION FOR DISCOVERY DISPUTE NO. 2 AND DENYING PLAINTIFF’S MOTION FOR CONTEMPT [Dkt. No. 50]

          Hon. Nita L. Stormes United States Magistrate Judge

         Plaintiff Bof I Federal Bank (Bof I) filed an action against its former employee, defendant Charles Matthew Erhart, for federal computer fraud and various state claims based on his alleged theft and dissemination of Bof I’s confidential, privileged and proprietary information.[1] Bof I and third party Carol Gillam-counsel of record for Erhart-filed a joint discovery motion in April 2016 to determine the propriety of discovery requests sent to Ms. Gillam through a Rule 45 subpoena. The court issued an order on April 26, 2016 compelling Ms. Gillam to produce all non-privileged, responsive documents, and to produce a privilege log.

         Now Bof I complains that Ms. Gillam is in contempt of that order because she is withholding documents protected by a purported law enforcement privilege and on other grounds. For the following reasons, the court DENIES Bof I’s motion for contempt.

         I. RELEVANT BACKGROUND

         In Joint Discovery Motion No. 1, Bof I sought documents showing Ms. Gillam’s own communications with third parties concerning Bof I.[2] While the subpoena sought all communications with third parties, the briefing focused on only Ms. Gillam’s communications with the media, and did not mention her communications with law enforcement agencies. This court found the documents relevant and overruled Ms. Gillam’s objections as to vagueness, ambiguity, breadth, undue burden and procedural defect, and ordered her to produce them by May 10, 2016. But it allowed Ms. Gillam to produce a privilege log for any documents over which she claimed work product protection. See Apr. 26 Order, pp. 6-8.

         Bof I reviewed Ms. Gillam’s May 10 production and believed it was incomplete. The parties were ultimately able to meet and confer on June 21, 2016 and resolved most issues. Also, albeit late, Ms. Gillam provided a privilege log to Bof I. The primary issue here is whether Ms. Gillam’s communications with law enforcement agencies are privileged.

         II. LEGAL STANDARD

         Ms. Gillam asserts that the relevant legal standard is discoverability under Rule 26(b) and Rule 45(d). But that standard was relevant for the original discovery order, and not for this motion for contempt.

         In a contempt proceeding, “The court… may hold in contempt a person who, having been served, fails without adequate excuse to obey the subpoena or an order related to it.” Fed.R.Civ.P. 45(g). “The party moving for contempt has the burden to establish by clear and convincing evidence that the contemnor has violated a clear and specific court order.” Forsythe v. Brown, 281 F.R.D. 577, 587 (D. Nev. 2012) (citation omitted). Once the moving party meets its clear and convincing evidence burden, the burden shifts to the contemnor to show that “she took every reasonable step to comply and to explain why compliance was not possible.” Id. To assess whether every reasonable step has been taken, courts can consider “(1) a history of noncompliance and (2) failure to comply despite the pendency of a contempt motion.” Id. (internal citation and quotations omitted).

         III. DISCUSSION

         A. Law Enforcement Privilege.

         In her initial response to the subpoena, Ms. Gillam generally objected to the requests on the basis of an unidentified privilege and work product doctrine. She did not produce a privilege log. The parties did not specifically litigate any privilege issue in the underlying motion because Ms. Gillam did not specifically assert or argue one. Instead, she argued for work product protection. But now-for the first time-Ms. Gillam asserts a “law enforcement privilege.” She argues that her communications with federal regulators in her capacity as an attorney for a whistleblower are privileged and constitute attorney work product.

         After this court considered the underlying discovery motion and ordered her to produce documents, Ms. Gillam asserted a “law enforcement privilege” as to her communications with the Securities and Exchange Commission (SEC) and Office of Comptroller of Currency (OCC). Because she never asserted this objection in the underlying discovery dispute, though, the court overrules it as waived. Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1473 (9th Cir. 1992); see Fed.R.Civ.Proc. 45(d)(3)(A)(iii) (stating that privilege can be waived in response to subpoenas).

         But even if the court were to consider this privilege, it would still overrule it. According to the Ninth Circuit, “[T]he federal privilege applicable to the government interest in preserving confidentiality of law enforcement records has various names, ” including “the official information privilege, ” the “law enforcement privilege, ” and “executive privilege.” Deocampo v. City of Vallejo, 2007 U.S. Dist. LEXIS 43744, at *13-14 (E.D. Cal. June 1, 2007); Hayslett v. City of San Diego, 2014 U.S. Dist. LEXIS 37738, at *5 (S.D. Cal. Mar. 21, 2014). It serves a specific purpose:

Although the Ninth Circuit has only mentioned the law enforcement privilege in passing . . . [t]he Second Circuit has explained that the law enforcement privilege is designed “to prevent disclosure of law enforcement techniques and procedures, to preserve the confidentiality of sources, to protect witness and law enforcement personnel, to safeguard the privacy of individuals ...

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