Western Resources, Inc. v. Union Pacific Railroad Co.

Full title: Western Resources, Inc., Plaintiff, v. Union Pacific Railroad Co., et al.…

Court: United States District Court, D. Kansas

Date published: Jan 31, 2002

No. 00-2043-CM (D. Kan. Jan. 31, 2002)

Opinion

No. 00-2043-CM

January 31, 2002

MEMORANDUM AND ORDER

DAVID J. WAXSE, United States Magistrate Judge

This matter is before the Court on Defendants' Motion to Compel Plaintiff to Produce Documents Described in Plaintiff's Privilege Log (doc. 196), Defendants' Motion to Compel Plaintiff to Produce Documents Described in Plaintiff's Supplemental Privilege Log (doc. 268) and Defendants' Motion to Compel L.E. Peabody and Thomas Crowley to Produce Documents Described in Privilege Log (doc. 282). Upon review of the arguments presented, Defendants' Motion is granted in part and denied in part as specifically set forth below.

I. Factual Background

Plaintiff Western Resources ("Plaintiff," "WR") generates, distributes and sells retail electric power in Kansas and is co-owner and designated operator of the Jeffrey Energy Center ("JEC"), a coal-fired electric generating facility located in Pottawatomie County, Kansas. Defendants Union Pacific Railroad Company ("UP") and Burlington Northern and Santa Fe Railway Company ("BNSF") are both interstate railroads that, among other things, provide transportation of coal by rail.

In 1972, WR and Defendants allegedly entered into a "Letter of Understanding" setting forth various terms and conditions by which Defendants would transport coal from the Powder River Basin in Wyoming ("PRB") to WR at its JEC facility in Kansas. According to WR, the Letter of Understanding contained a clause providing that if either party suffered "gross inequity" as a result of unusual economic conditions, such inequity would be resolved by mutual agreement between the parties.

WR maintains that in early 1990, it determined the rate it was paying Defendants was disproportionately high as compared to the cost incurred by Defendants in transporting the coal. At this time, WR allegedly retained L.E. Peabody and Thomas Crowley as a consulting expert to provide technical advice to WR's attorneys in developing the gross inequity claim against Defendants. WR states Crowley is an independent consultant who has advised WR from time to time since the late 1970's in the areas of coal transportation, coal supply economics, procurement and contract issues.¹

1 Crowley is President of L.E. Peabody Associates, Inc. ("Peabody"), an economic consulting firm headquartered in Alexandria, Virginia.

WR asserts it ultimately decided not to file the above-referenced gross inequity claim against Defendants due to developing contract negotiations with Defendants in 1993. These negotiations eventually led to two Rail Transportation Agreements between WR and Defendants, which, although signed in 1994, became retroactively effective as of January 1993. Although Crowley purportedly did not participate in any discussions with Defendants concerning these two Agreements, WR states Crowley provided technical advice to WR's attorneys so the attorneys could, in turn, provide legal advice to WR. WR maintains that in early 1998, Crowley began consulting with WR with respect to potential claims against the Railroads with regard to the two Agreements. WR further maintains that in late 1999, Crowley's role as a consulting expert evolved into that of an expert who would be expected to testify at trial and, in a Complaint filed on January 24, 2000, WR ultimately brought suit against Defendants alleging they breached both the express terms of the two Rail Transportation Agreements and the implied duty of good faith and fair dealing in performing them. On May 24, 2001, WR formally designated Crowley as a testifying expert in this case and, pursuant to Fed.R.Civ.P. 26(a)(3), Crowley submitted an expert report on that same day.

The expert report submitted by Crowley spans 123 pages and has attached to it 23 exhibits. See Crowley Report, Ex. O to WR's Memorandum in Opposition (doc. 216). The following Table of Contents preceding the report reflects a brief summary of the facts and opinions presented by Crowley as a testifying expert:

• Introduction

• Summary and Findings

• Railroads' Performance

• Description of Movement to JEC

• Historical Relationship Between Railroads and WR

• 1972 Letter of Understanding

• 1985 Transportation Agreement Between WR and BN

• WR's Acquisition of Aluminum Railcars

• Current Contracts

• Historical Performance

• Key Provisions of the Transportation Contracts

• Whereas Clauses

• Requirements Contract

• Equipment and Facilities Commitments

• Force Majeure Provisions

• Post-1993 Railroad Performance

• Performance Under the Contracts

• General Discussion of UP Crisis

• Dynamics of the System-Wide Crisis

• Impact on UP Operations

• Impact on BNSF Operations

• STB Involvement in Service Crisis

• Service on the PRB Joint Line

• BNSF Assistance to Other UP PRB Shippers

• Use of UP Assets During the Crisis

• Railroads' Admissions of Service Failure

• Causes for Railroads' Performance Failure

• Railroads' Failure to Perform

• Railroads' Overbooked System

• Changes in Volume Over the WR Route

• BNSF and UP Train Velocities by Rail Segment

• BNSF and UP Recognition of Capacity Deficiencies

• Analysis of Trend in Other Key Measures

Line Capacity (i.e. UP's T.U.C. index)

Terminal Capacity

Locomotive Productivity (Trains held for Power)

Re-Crew Rates (Relief Crews)

• Prioritization of Traffic on the System

• Coal's Priority on Both Railroad Systems

• Railroads' Disregard of Contract Obligations

• Rehabilitation of Other Railroad System Traffic

• UP's Energy Business "Scorecard"

• Poor Coordination of Railroads' Marketing and Operations

• Railroads' Capital Investment

• Discussion of Inter-Carrier Agreements Between Railroads

• Railroads' Revenue Division

• Railroads' Operational Obligations

• Railroads' Treatment of WR versus other Shippers

• Railroads' Failure to Cooperate with Each Other

• Equipment Utilization and Operational Cooperation

• Growth in PRB Coal Traffic

• UP Refusal to Take Full Advantage of BNSF Assistance

• Consideration of Revenue Divisions

• Railroads' Failures to Perform Under the Contracts Were Serious and Substantial

• Significance of Tonnage Shortfall to WR

• Shortfall in JEC Shipments Was Significant

• Shortfall of JEC Tonnage Mitigated by WR's Efforts

• Railroads' Service Problems Continue to this Day

• No Force Majeure Claim by Railroads

• Adverse Effects of Lack of Railroad Efficiency

• Railroads Did Not Facilitate DP Trains

• Railroads' Problems Continue Through Present Time

• WR Required to Provide Too Many Railcars

• Railroads Did Not Use the Most Efficient Route

• Railroads Did Not Allow WR to Add Railcars

• WR is a Captive Customer of the Railroads

• Post-April 1997 Rate

• Development of Market Rate for Comparable Existing Service

• Calculation of Post April 1997 Charges

• Other Costs Incurred by WR

• Cost of Replacement Energy

• Energy from Non-JEC Sources

• Sale of Natural Gas

• Loss from Inefficient Service

• Leased Trainees

• DP Train Service

• Lost Off-System Sales

• Increased Coal Handling Costs at JEC

• Increased Coal Costs at JEC

• Summary

See Crowley Report at pp. ii-iii, Ex. O to WR's Memorandum in Opposition (doc. 216).

The parties have engaged in extensive discovery in this lawsuit. As part of this discovery, WR provided to Defendants various privilege logs identifying documents responsive to Defendants' request for production that were withheld under claims of privilege. In addition, Crowley and Peabody provided to Defendants a privilege log identifying documents responsive to a subpoena that were withheld under claims of privilege.

In support of their claims of protection and privilege, WR, Crowley and Peabody ("Respondents") maintain Crowley has worked for WR in three separate and distinct capacities over the years:

(1) a consulting expert retained in anticipation of litigation; (2) a consulting expert retained for purposes other than anticipation of litigation; and (3) a testifying expert.

Respondents argue work done by Crowley in his capacity as a consulting expert retained in anticipation of litigation is protected from disclosure by Fed.R.Civ.P. 26(b)(3) and/or 26(b)(4)(B). Respondents further argue that work done by Crowley as a consulting expert retained for purposes other than anticipation of litigation is protected from disclosure by the attorney-client privilege because, in that capacity, he must be considered the equivalent of a WR employee.²

2 Respondents concede work done by Crowley in his capacity as a testifying expert is discoverable, but maintain that such materials already have been produced.

II. Discussion

A. What are the Applicable Burdens of Proof?

It is well-settled that the party seeking to invoke work product immunity or attorney-client privilege has the burden to establish the applicability of the immunity/privilege. See, e.g., Peat, Marwick, Mitchell Co. v. West, 748 F.2d 540, 542 (10th Cir. 1984), cert. denied, 469 U.S. 1199 (1985); Johnson v. Gmeinder, 191 F.R.D. 638, 642 (D.Kan. 2000) (citing Audiotext Communications Network, Inc., v. U.S. Telecom, Inc., No. 94-22395-GTV, 1995 WL 625962, at *7 (D., Kan. Oct. 5, 1995); National Union Fire Ins. Co. v. Midland Bancor, Inc., 159 F.R.D. 562, 567 (D.Kan. 1994)). The party asserting the privilege must establish all elements of the immunity/privilege. Gmeinder, 191 F.R.D. at 642 (citing Audiotext, 1995 WL 625962, at *7; National Union, 159 F.R.D. at 567).

With respect to the attorney-client privilege, one of the eight essential elements that must be established under Kansas law³ is that the privilege has not been waived. Johnson v. Gmeinder, 191 F.R.D. at 642-43; ERA Franchise System, Inc. v. Northern Ins. Co. of New York, 183 F.R.D. 276, 278 (D. Kan 1998) (citing State v. Maxwell, 10 Kan. App. 2d 62, 63, 691 P.2d 1316, 1319 (1984); K.S.A. 60-426(c)(2)). In other words, the burden to establish that waiver has not occurred remains with the party who is asserting the attorney-client privilege. Gmeinder, 191 F.R.D. at 643.

3 In a diversity case such as this, Kansas law governs any attorney-client privilege asserted and the scope of that privilege. ERA Franchise System, Inc. v. Northern Ins. Co. of New York, 183 F.R.D. 276, 278 (D. Kan 1998).

In contrast, a party asserting work product immunity⁴ is not required to prove "non-waiver." Id. The only three elements that must be established by the party seeking to invoke work product immunity are that (1) the materials sought to be protected are documents or tangible things; (2) they were prepared in anticipation of litigation or for trial; and (3) they were prepared by or for a party or a representative of that party. Id. (citing Zapata v. IBP, Inc., 175 F.R.D. 574, 579 (D.Kan. 1997); Mackey v. IBP, Inc., 167 F.R.D. 186, 200 (D.Kan. 1996); Fed.R.Civ.P. 26(b)(3)). Thus, it follows that the party asserting waiver of work product immunity, rather than the party asserting the work product protection, should have the burden to establish waiver. Id. (citing Aull v. Cavalcade Pension Plan, 185 F.R.D. 618, 624 (D.Colo. 1998); In re Gibco, Inc., 185 F.R.D. 296, 298 (D.Colo. 1997); Hatco Corp. v. W. R. Grace Co., No. 89-1031, 1991 WL 83126, *7 (D.N.J. May 10, 1991); In re Convergent Technologies Second Half 1984 Securities Litigation, 122 F.R.D. 555, 565 (N.D. Calif. 1988) and distinguishing Musselman v. Phillips, 176 F.R.D. 194, 201 (D.Md. 1997) (where party asserting immunity of work product that was provided to expert has burden "to demonstrate that the materials were not furnished to their expert to be used in forming an opinion, or that the expert did not consider the materials in forming the opinion")).

4 Federal law governs the applicability of the work product doctrine in federal court. Burton v. R.J. Reynolds Tobacco Co., 167 F.R.D. 134, 139 (D.Kan. 1996).

In light of the above, WR here shall bear the burden to establish that the documents they claim are protected by the attorney-client privilege are in fact so privileged, which includes carrying the burden to prove that no waiver of the privilege occurred. In contrast, with respect to the documents that WR claims are protected work product and/or "privileged" pursuant to Fed.R.Civ.P. 26(b)(4)(B), WR shall bear the burden to establish that they are work product and/or materials prepared by a non-testimonial expert retained in anticipation of trial, and Defendants shall have the burden to prove waiver.

B. Documents 3 and 330 within WR's Second Amended Privilege Log

WR contends privilege log document numbers 3 and 330 are protected from disclosure as attorney-client privilege and work product materials. Defendants disagree and specifically request the Court review these two documents in camera to determine whether they are protected from disclosure by privilege. Based on the arguments presented by the parties, the Court is persuaded that an in camera review of these two documents is necessary in order to determine accurately the applicability of privileges asserted. Accordingly, WR will be ordered to produce for "in camera" inspection documents numbered 3 and 330 as described in WR's Second Amended Privilege Log.

C. Materials Authored or Received by Crowley from 1990 to 1999 as Consultant and/or Non-Testifying Expert in Anticipation of Litigation ("the Crowley Documents")

1. Are the Crowley Documents Listed in WR's Second Amended Privilege Log, WR's Supplemental Privilege Log and Peabody/Crowley's Second Amended Privilege Log Attorney-Client Communications, Protected Work Product or "Privileged" Rule 26(b)(4)(B) Materials?

The Court must decide, as a preliminary matter, whether WR has met its initial burden to show that the documents at issue are protected work product or otherwise privileged. Defendants do not dispute — at least for purposes of these motions — that the documents prepared and/or reviewed by Crowley in his capacity as a general consulting expert and/or a non-testifying expert in anticipation of litigation are protected from disclosure in the first instance by either Fed.R.Civ.P. 26(b)(3) or 26(b)(4)(B). The Court therefore concludes that such documents are both protected work product and "privileged" materials of a non-testimonial expert. Defendants do, however, dispute Respondent's contention that the Crowley Documents are protected in the first instance from disclosure pursuant to the attorney-client privilege. In support of their position, Defendants argue that Crowley is neither an employee of the client nor an attorney here, and, therefore, the privilege is not applicable to materials created or reviewed by him.

"In federal court, the determination of what is privileged depends upon the dictates of Rule 501 of the Federal Rules of Evidence." ERA Franchise Sys., Inc. v. Northern Ins. Co., 183 F.R.D. 276 (D.Kan. 1998) ( quoting Fisher v. City of Cincinnati, 753 F. Supp. 692, 694 (S.D.Ohio 1990)). Pursuant to Rule 501, state law governs claims of attorney-client privilege in a diversity action.⁵ Pacific Employers Ins. Co. v. P.B. Hoidale Co., Inc., 142 F.R.D. 171, 173 (D.Kan. 1992). Accordingly, Kansas law defines the scope of the attorney-client privilege applicable in this case.

5 Jurisdiction lies before the Court here pursuant to 28 U.S.C. § 1332 (diversity jurisdiction.)

K.S.A. 60-426 sets forth the attorney-client privilege and the exceptions thereto. The general rule may be summarized as follows:

(1) Where legal advice is sought (2) from a professional legal advisor in his capacity as such, (3) communications made in the course of that relationship (4) made in confidence (5) by the client (6) are permanently protected (7) from disclosure by the client, the legal advisor, or any other witness (8) unless the privilege is waived.

Cypress Media, Inc. v. City of Overland Park, 268 Kan. 407, 418, 997 P.2d 681, 689 (2000) (quoting State v. Maxwell, 10 Kan. App. 2d 62, 63, 691 P.2d 1316, 1319 (1984)); see, also, K.S.A. 60-426 (1994). As used in the statute, the term "client" means "a person or corporation or other association that, directly or through an authorized representative, consults a lawyer or lawyer's representative for the purpose of retaining the lawyer or securing legal service or advice from the lawyer in his or her professional capacity." K.S.A. 60-426(c) (emphasis added).⁶

6 This definition does not conflict with federal law. See, Upjohn Co. v. United States, 449 U.S. 383, 389 (1981) (holding "the privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.").

Although this statute specifically includes within the scope of the privilege those communications between an attorney and a "representative of the client," neither the legislature nor the Kansas courts have defined the term "representative." Given the issue presented is whether Crowley was acting in the capacity of a an "authorized representative" of WR when he prepared and/or reviewed the referenced documents, this Court must determine how it believes the Kansas Supreme Court would rule if confronted with this issue. See, Frontier Refining, Inc. v. Gorman-Rupp Co., Inc., 136 F.3d 695, 700 (10th Cir. 1998) (where Wyoming Supreme Court has not directly announced a definitive test on issue, federal court must predict how that court would resolve it.). In making this determination, the court should consider "other state-court decisions, well-reasoned decisions from other jurisdictions, and any other available authority to determine the applicable state law." Id. (citing Burns v. International Ins. Co., 929 F.2d 1422, 1424 (9th Cir. 1991)).

A useful starting place for a discussion regarding the type of representative relationship the Kansas Supreme Court would require to fall within the scope of the Kansas privilege statute is the case of In re Bieter Co., 16 F.3d 929 (8th Cir. 1994).⁷ In that case, the petitioner (a partnership) appealed an order from the district court, which required the petitioner to disclose information from the petitioner's independent consultant. Id. Although the petitioner claimed the information was protected by the attorney-client privilege, the district court ruled that the partnership had waived its privilege by disclosing the materials to a consultant who was neither an employee of the partnership nor an attorney for the partnership. Id. Upon review of the district court decision, the Eighth Circuit Court of Appeals ultimately held that, under the circumstances presented, there was no principled reason to distinguish between the consultant and an employee. Id. at 936-37 (citing McCaugherty v. Sifferman, 132 F.R.D. 234, 239 (N.D.Cal. 1990)); see, also In re Copper Market Antitrust Litigation, 200 F.R.D. 213, 218-19 (S.D.N.Y. 2001) (holding consultant's "independent contractor status provides no basis for excluding [the consultant's] communications with [the corporations's] counsel from the protection of the attorney-client privilege.").

7 The Court notes that In re Bieter was decided under the federal common law of attorney-client privilege and Proposed Fed.R.Evid. 503 as opposed to a state statute, as the Court is required to do here. This fact is immaterial to the Court's analysis on the issue, however, because Kansas courts have determined that there is no real conflict between federal and state law regarding the attorney-client privilege. See Hiskett v. Wal-Mart Stores, Inc., 180 F.R.D. 403, 405 (D.Kan. 1998); Marten v. Yellow Freight Sys., Inc., No. Civ.A. 96-2013-GTV, 1998 WL 13244, at *4-6 (D.Kan. Jan. 6, 1998). Whether the court applies federal or Kansas law generally makes no difference in determining whether the attorney-client privilege applies. See Great Plains Mut. Ins. Co. v. Mutual Reinsurance Bureau, 150 F.R.D. 193, 196 n. 3 (D.Kan. 1993) (citing K.S.A. 60-426; Wallace, Saunders, Austin, Brown Enochs, Chtd. v. Louisburg Grain Co., 250 Kan. 54, 824 P.2d 933 (1992)). Accordingly, the Court will at times utilize federal case law when it appears consistent with the Kansas law of privilege.

Although acknowledging the proposition for which the Bieter case stands supports WR's position, Defendants attempt to distinguish Bieter on its facts and cite to alternative cases they contend stand for a proposition contrary to the one set forth in Bieter.

First, in an attempt to distinguish Bieter on the facts, Defendants argue that in Bieter, the third-party consultant worked full-time⁸ for the client, operated out of the client's offices and acted on behalf of the client but that, in this case, Crowley did not work full-time for WR, Crowley did not work out of WR's offices and Crowley did not act on behalf of WR.

8 Contrary to Defendants' argument, it appears the consultant in Bieter also worked for another real estate development company. Bieter, 16 F.3d at 934, 937.

Although it appears to be true that Crowley did not work full-time for WR or work out of WR's offices, the facts in Bieter establish the consultant there was the principal in another real estate firm that happened to be located in the same office as Bieter. Moreover, the consultant entered into a written agreement with Bieter that expressly stated he was an independent contractor — not an agent, employee or partner of Bieter. Bieter, 16 F.3d at 933-34. The consultant had extensive involvement and communication with Bieter's attorneys, and the evidence presented established that it was the intent of Bieter, the consultant and the attorneys that the communications were intended to be confidential.

Based on this information, the Court does not believe that any difference in facts between the two cases should be determinative on the issue. Moreover, the Court is not convinced here that Crowley never acted on behalf of WR. As pointed out by Defendants in their original briefing, WR designated Crowley pursuant to Fed.R.Civ.P. 30(b)(6) to appear at deposition as a WR corporate representative to testify on its behalf about damages WR claims to have suffered. Defendants' Memorandum in Support of Motion to Compel at p. 9 (doc. 197). In sum, the Court is not persuaded the cited factual distinctions appropriately distinguishes the two cases from a legal standpoint.

Notably, Defendants also attempt to minimize any usefulness to this Court of the legal holding in Bieter by arguing that, in limiting the privilege in this jurisdiction to only those communications made for purposes of obtaining or providing legal service, the privilege as applied in this jurisdiction automatically becomes limited in circumstances involving an independent contractor to only those cases where the consultant "assembles information collected from the client into a readable form for the attorney." Defendants' Reply at pp. 18-19 (doc. 235) (citations omitted). As a preliminary matter, the Court is not convinced that the holdings of the cases cited by Defendants in support of this argument stand for the narrow proposition Defendants desire this Court to adopt. Even if the Court were convinced the cases cited stood for such a proposition, however, the Court finds the rationale underlying the Bieter decision to be much more persuasive.

In Bieter, the court acknowledged the complexities of modern day corporate activities and the need to apply existing law in accordance with such realities. In re Bieter, 16 F.3d at 937-38 (citing Upjohn v. United States, 449 U.S. 383 (1981)).⁹ The court noted "there undoubtedly are situations . . . in which too narrow a definition of `representative of the client' will lead to attorneys not being able to confer confidentially with nonemployees who, due to their relationship to the client, possess the very sort of information that the privilege envisions flowing most freely." Id. The court further noted that sound legal advice and advocacy serves important public interest and depends on the free flow of information to the attorney. Bieter, 16 F.3d at 937-38. For these reasons, the Bieter court ultimately concluded that, based on the evidence presented regarding the relationship between the consultant and the members of the partnership, the consultant likely possessed information possessed by no other, and that this made him precisely the sort of person with whom a lawyer would wish to confer confidentially in order to fully advise his client. Id.; see, also Steele v. First Nat'l Bank in Wichita, No. 90-1592-B, 1992 WL 123818, at *2 (D.Kan. May 26, 1992) (under specific facts presented, and noting existence of privilege should be determined on a case-by-case basis, court held presence of client's consultant at meeting between client and client's attorney did not result in waiver of attorney-client privilege) (citing Upjohn Co. 449 U.S. at 396-97).

9 In Upjohn, the Supreme Court rejected the "control group" test then used by some lower courts to determine the parameters of the corporate attorney-client privilege. Upjohn, 449 U.S. at 393. The Upjohn Court considered such a rigid approach to be too restrictive "in light of the vast and complicated array of regulatory legislation confronting modern corporations." Id. at 392. Accordingly, the Court instructed determinations of this kind should be made on a case-by-case basis by considering in each instance whether the employee was communicating with counsel at the direction of superiors in order to secure legal advice. Id. at 394.

Turning to the instant case, and based on the principles outlined by the Bieter court, this Court concludes the Kansas Supreme Court would find Crowley's relationship with WP — in Crowley's capacity as an expert consultant to WP in non-litigation matters — qualifies under the Kansas statute as one in which Crowley is an "authorized representative" of WR. What is vital to the privilege is that the communication be made in confidence for the purpose of obtaining legal advice from a lawyer. See State v. Maxwell, 10 Kan. App. 2d 62, 63, 691 P.2d 1316, 1319 (1984) (citation omitted); see also, K.S.A. 60-426 (1994). Thus, if what is sought is not legal, but business, advice or if the advice is sought from the consultant and not the lawyer, no privilege exists. Based on this discussion, the Court hereby determines — under the specific facts presented — that preparation or review of documents by Crowley in his capacity as an expert consultant to WP in non-litigation matters is not tantamount to disclosure of privileged materials to an outside third party.

2. Did Respondents Waive Protection of the Crowley Documents in WR's Second Amended Privilege Log, WR's Supplemental Privilege Log and Peabody/Crowley's Second Amended Privilege Log By Designating Crowley as a Rule 26(a)(2) Testifying Expert in this Lawsuit

The appropriate starting place for a discussion on the issue of waiver and expert disclosures is Rule 26(a)(2) of the Federal Rules of Civil Procedure. As amended in 1993, Rule 26(a)(2)(B) requires that reports be prepared for each testifying expert and that such reports contain "the data or other information considered by the [expert] witness in forming the opinions." Fed.R.Civ.P. 26(a)(2)(B). Thus, facts considered and opinions held by an expert who is retained by a party to testify at trial are discoverable by other parties to the lawsuit.¹⁰

10 The advisory committee notes explain this requirement as follows:

Given this obligation of disclosure, litigants should no longer be able to argue that materials furnished to their expert to be used in forming their opinions — whether or not ultimately relied upon by the expert — are privileged or otherwise protected from disclosure when such persons are testifying or being deposed.

Advisory committee note to Fed.R.Civ.P. 26(a)(2), 146 F.R.D. 401, 634 (1993).

Unlike a testifying expert, facts and opinions held by a consulting expert who is retained in anticipation of litigation but not expected to testify at trial are discoverable only "upon a showing of exceptional circumstances under which it is impracticable for the party seeking such discovery to obtain facts or opinions on the same subject by other means." Fed.R.Civ.P. 26(b)(4)(B). Similarly, with regard to materials prepared in anticipation of litigation by or for a party (or by or for a party's representative) — regardless of whether the person preparing the material is expected to be called as a witness at trial — such materials are discoverable only "upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means." Fed.R.Civ.P. 26(b)(3).

Woven into these governing principles is the unique situation presented here, where WR retained Crowley in 1990 as a consultant and/or a non-testifying expert in anticipation of litigation, continued in subsequent years to retain Crowley as a consultant and/or non-testifying expert in anticipation of litigation and finally made the decision in September 1999 that it would designate Crowley as a testifying expert witness under Rule 26(a)(2)(B) in anticipation of this litigation. WR maintains that only specific data and information considered by Crowley in drafting his 26(a)(2)(B) report in this lawsuit are discoverable and that none of the materials authored or received by Crowley from 1990 to September 1999 as a consultant and/or a non-testifying expert in anticipation of litigation were considered by Crowley in forming his expert opinion and drafting his expert report in this lawsuit. Defendants disagree, arguing WR waived protection of all Crowley's prior work as a consultant and/or non-testifying expert when WR subsequently designated Crowley as a testifying expert in this lawsuit pursuant to Fed.R.Civ.P. 26(a)(2).

This Court recently held any type of work product or other privileged information lose their privileged status when disclosed to, and considered by, a testifying expert. Johnson v. Gmeinder, 191 F.R.D. 638, 645-47 (D.Kan. 2000) (holding investigative report and other materials prepared by a non-testifying expert in connection with investigation of an automobile accident loses privileged status when disclosed to testifying expert) (citing Fed.R.Civ.P. 26(a)(2)(B) and advisory committee notes appended thereto; Lamonds v. General Motors Corp, 180 F.R.D. 302, 305 (W.D.Va. 1998) (applying rule to opinion work product); Musselman v. Phillips, 176 F.R.D. 194, 202 (D.Md. 1997) (same); B.C.F. Oil Refining, Inc. v. Consolidated Edison Co., 171 F.R.D. 57, 66 (S.D.N.Y. 1997) (same); Karn v. Ingersoll-Rand Co., 168 F.R.D. 633, 639-40 (N.D.Ind. 1996) (same); Barna v. United States, No. 95 C 6552, 1997 WL 417847 (N.D. Ill. July 28, 1997) (same); 8 Charles A. Wright, Arthur R. Miller, Richard L. Marcus, Federal Practice and Procedure § 2016.2 at 250-52 (1994) ("[W]ith respect to experts who testify at trial, the disclosure requirements of Rule 26(a)(2), adopted in 1993, were intended to pretermit further discussion and mandate disclosure despite privilege"); Lee Mickus, Discovery of Work Product Disclosed to a Testifying Expert Under the 1993 Amendments to the Federal Rules of Civil Procedure , 27 Creighton L.Rev. 773, 808 (1994)).¹¹

11 See, also, In re Air Crash at Dubrovnik, No. MDL 1180, 3:98:CV-2464 (AVC), 2001 WL 777433, at *3 (D.Conn. June 4, 2001); QST Energy, Inc. v. Mervyn's and Target Corp., No. C-00-1699MJJ (EDL), 2001 WL 777489, at *3-5 (N.D.Cal. May 14, 2001) (in naming former consultant as witness, party waives attorney client privilege in regard to all subjects on which expert likely to offer testimony); Vaughan Furniture Co. v. Featureline Mfg., Inc., 156 F.R.D. 123, 128 (M.D.N.C. 1994) (waiver of privilege resulting from designation of attorney as expert witness applies to those documents expert reviewed at any time and that would be relevant to formulation of expert opinion) (emphasis added); Chemical Bank v. Affiliated FM Ins. Co., No. 87-Civ-0150 (SHS), 1996 WL 445362 (S.D.N.Y. Aug. 7, 1996); Douglas v. Univ. Hosp., 150 F.R.D. 165, 168 (E.D.Mo. 1993) (once non-testifying expert is designated as testifying expert, non-testifying expert subject to cross-examination); County of Suffolk v. Long Island Lighting Co., 122 F.R.D. 120, 123 (E.D.N.Y. 1988) (Party cannot proffer consultant as disinterested expert and at same time shield his major role in formulation of case.).

In Gmeinder, this Court observed that obtaining the materials or documents considered by a testifying expert is "crucial if an adverse party is to determine the extent to which the opinion of the expert may have been influenced by counsel or, in this case, by the non-testifying expert." 191 F.R.D. at 646. Without access to the materials reviewed by an expert witness, the opposing party will be denied the opportunity to a full and fair cross-examination. Id.

WR does not dispute that the Crowley documents were disclosed to Crowley. The crux of WR's argument against waiver is that none of the materials authored or received by Crowley from 1990 to September 1999 in his capacity as a WR consultant and/or a WR non-testifying expert in anticipation of litigation were considered by Crowley in forming his expert opinion and drafting his expert report in this lawsuit.¹²

12 WR cites several cases for the proposition that the documents a testifying expert saw when he or she was acting in a different role are not discoverable. WR's Memorandum in Opposition at pp. 28-32 (doc. 216) (citing Grace A. Detwiler Trust v. Offenbecher, 124 F.R.D. 545, 546 (S.D.N.Y. 1989); United States v. 215.7 Acres of Land, 719 F. Supp. 273 (D.Del. 1989); Inspiration Consol. Copper Co. v. Lumbermens Mut. Cas. Co., 60 F.R.D. 205 (S.D.N.Y 1973)). As Defendants accurately note, however, none of the cases cited by WR were decided under the current version of Fed.R.Civ.P. 26; instead, the courts were interpreting an earlier, more restrictive view of Rule 26.

As WR correctly asserts, courts generally have required that "in order for waiver to occur, the work product must have been `considered' by the expert in formulating his or opinions." Gmeinder, 191 F.R.D. at 647 (citing Lamonds v. General Motors Corp., 180 F.R.D. 302, 305 (W.D.Va. 1998); Mussulman v. Phillips, 176 F.R.D. 194, 201 (1997); Baran v. United States, No. 95 C 6552, 1997 WL 417847, at *2 (N.D.Ill. July 28, 1997); Kahn v. Ingersoll-Rand Co., 168 F.R.D. 633, 635 (N.D.Ind. 1996); Baxter Diagnostics, Inc., v. Scientific Corp, 1993 WL 360674, at *1 (C.D.Cal. Aug. 6, 1993)). This conclusion is consistent with the language of amended Fed.R.Civ.P. 26(a)(2)(B), which, as noted above, requires the expert's report to identify all data or other information " considered by the witness in forming the opinions." (Emphasis added.)

With that said, there is no requirement that the expert must have "relied" upon the work product in formulating his or opinion.¹³ Gmeinder, 191 F.R.D. at 647 (citing Lamonds, 180 F.R.D. at 306) (noting that the term "considered" "clearly invokes a broader spectrum of thought than the phrase `relied upon,' which requires dependence on the information"); Karn, 168 F.R.D. at 635; Baxter Diagnostics, 1993 WL 360674, at *1).¹⁴

13 As one court has stated, "[d]ocuments considered but rejected by the testifying expert in reaching opinions may be equally necessary for effective cross-examination. . . . In fact, the documents considered but rejected by the expert trial witness could be even more important for cross-examination than those actually relied upon by him." Eliasen v. Hamilton, 111 F.R.D. 396, 400 n. 5 (N.D.Ill. 1986) (citations omitted); see, also, Douglas v. Univ. Hosp., 150 F.R.D. at 168 (same).

14 In fact, the drafters of the 1993 amendments to Rule 26 rejected a version of subsection 26(a)(2) that would have required the expert's report to identify all data or information "relied upon" by the expert in forming his opinions. See August 1991 Proposed Rules, 137 F.R.D. 53, 89 (1991).

In Gmeinder, this Court determined that an expert is deemed to have "considered" materials for purposes of Rule 26(a)(2)(B) if such expert "has read or reviewed the privileged materials before or in connection with formulating his or her opinion." Id. (stating that "to determine whether an expert has `considered' certain materials, as that term is commonly used, would require the court to explore the expert's subjective mental processes and risks the creation of an unwieldy rule that would provide uncertainty as to the protected status of work product or other privileged materials. The Court believes it is important for practitioners to have a more definitive rule under which they can determine whether waiver has occurred.") (Emphasis in original). This is so even if the testifying expert avers under oath that he did not actually consider such materials in formulating his opinion. See United States v. City of Torrance, 163 F.R.D. 590, 593 (C.D.Cal. 1995) (holding that, where expert has acquired information relevant to his opinion, defendants should not be bound by his statement that he did not consider it); accord, County of Suffolk, 122 F.R.D. at 123. In Gmeinder, this Court concluded waiver occurs even if the privileged documents are attorney opinion work product.¹⁵ Id. at 646-47.

15 Respondents suggest this Court reconsider and narrow its prior decision in Gmeinder to hold disclosure of attorney opinion work product to a testifying expert does not waive privilege. In support of its suggestion, Respondents assert there is a significant split among federal courts on whether opinion work product will be waived by designation of a testifying expert, and that this Court failed to adequately consider this division when it decided Gmeinder. The Court has reviewed the cases cited by Respondents and hereby confirms its earlier holding that any type of work product or other privileged information, including opinion work product, loses its privileged status when disclosed to, and considered by, a testifying expert. See, Johnson v. Gmeinder, 191 F.R.D. 638, 645-47 (D.Kan. 2000).

Applying the rule of law set forth in Gmeinder to the facts presented here, the Court necessarily must find Crowley did in fact "consider" materials authored or received by him from 1990 to September 1999 in his capacity as a WR consultant and/or a WR non-testifying expert in anticipation of litigation in formulating his opinion as a testifying expert in this lawsuit.¹⁶ Under Gmeinder, then, it appears WR has waived its right to invoke the attorney-client privilege, work product protection and the Rule 26(b)(4)(B) "privilege" for those materials.

16 WR does not claim Crowley did not "read or review" the materials at issue before formulating his opinion, but only that Crowley did not "read or review" the materials "in conjunction" with formulating his opinion.

Respondents, however, seek to distinguish the rule established in Gmeinder on several grounds. First, Respondents argue this case and the Gmeinder case are factually distinguishable because the testifying expert in Gmeinder reviewed materials created by another consulting expert, as opposed to this case where the same expert was retained first as a consulting expert and later as a testifying expert. The Court is unpersuaded by WR's argument that the cited factual distinction between the Gmeinder case and this case results in divergent legal conclusions regarding waiver. In both instances, work product protection and privilege are waived with regard to protected materials prepared by or transmitted to a non-testifying expert in anticipation of litigation but subsequently read and reviewed by a testifying expert — even if the testifying expert avers under oath that he did not actually consider such materials in formulating his opinion. See, Gmeinder, 191 F.R.D. at 641, 649. The outcome does not change here just because WR voluntarily chose to retain the same individual as both its non-testifying expert and its testifying expert.

Respondents further argue, however, that the Gmeinder case is also distinguishable because the protected materials deemed to have been "considered" in Gmeinder were factually related to the information contained in the subsequent expert opinion. Respondents maintain that in this case, the pre-September 1999 Crowley Documents are not factually related to the opinions expressed in Crowley's expert disclosures. Although no court in this jurisdiction has addressed the unique combination of factual and legal issues presented by this scenario, several other jurisdictions have done so and the court is persuaded by the standards set forth therein.

In the 1998 case of Messier v. Southbury Training School, the district court held that where an expert is retained as both a consultant and a testifying witness, the work product doctrine may be invoked to protect work completed by the expert in his consultative capacity as long as there exists a clear distinction between the two roles. Messier v. Southbury Training Sch., No. 3:94CV1706 (EBB), 1998 WL 422858, at *2 (D.Conn. June 29, 1998). The Messier court included a caveat, however, stating that any ambiguity about which function was served by the expert when creating a document must be resolved in favor of discovery. Id. at *4.

The Messier case, in turn, cites B.C.F. Oil Refining Inc. v. Consolidated Edison Co. of New York, Inc., 171 F.R.D. 57 (S.D.N.Y 1997), which also provides guidance on this issue. In B.C.F. Oil, the district court addressed a discovery dispute in which the defendant sought to compel production of documents concerning "communications with and work performed by [the] plaintiff's expert and [that] expert's subcontractor." Id. at 60. The defendant argued that the documents should be disclosed in compliance with the mandate of Rule 26 that an expert disclose all material considered by the expert witness in forming the expert's opinion. Id. at 60. The plaintiff objected, however, maintaining that the information sought was protected by the work-product doctrine. Id.

In addressing the discovery dispute, the court divided the contested documents into five categories. Id. Category one consisted of "documents which, though coming from plaintiff's expert (or sent to him) have nothing to do with the preparation of his expert report or his expert testimony[.]" Id. The B.C.F. Oil court concluded that it would not require the plaintiff to produce documents having "no relation to the expert's role as an expert . . . but that any ambiguity as to the role played by the expert when reviewing or generating documents should be resolved in favor of the party seeking discovery." Id. at 62. Despite the plaintiff's insistence that the "vast majority of the documents submitted [for in camera review] relate[d] to the expert's role as a consultant," the court concluded that it was not clear whether the expert reviewed them solely as a consultant or whether they informed his expert opinion as well. Id. The court ordered all the documents in this category be produced, with the exception of ten where the court found that the consultant role played by the expert was "clearly established." Id.

Category two included "documents consisting of material consulted or generated by the expert in connection with his role as an expert[.]" Id. With respect to this category, the plaintiff argued that disclosure was not required because none of the disputed documents related to the expert's testimony. Id. at 62. The court rejected this argument, observing that the party seeking to compel the production of the documents "should not have to rely on the [resisting party's] representation that the documents were not considered by the expert in forming his opinion." Id. The documents falling into this category ultimately were ordered produced. Id.

Category three comprised "data provided by . . . counsel to the expert for his review . . . [which] do not contain the attorney's mental impressions or opinions but merely relay facts which the expert is presumably expected to consider." Id. The court ordered these documents produced. See id. ("[I]t would strain credulity to maintain that [Rule 26(a)(2)] somehow exempts factual information that counsel gave the expert.").

Category four included documents containing "the thoughts and mental impressions of the attorney [which] were given to the expert for his consideration." Id. The court acknowledged that the documents in this fourth category "require[d] the most rigorous analysis since there is a clear split of authority on how to deal with them." Id. at 60-61. The court ultimately ordered documents falling into this category to be produced, observing that "the [advisory committee note] evinces an intent to require parties to produce attorney opinions given to the expert and considered by the expert in forming his or her opinion." See id.

Finally, category five included "a series of documents consisting of notes taken or memoranda generated by counsel after having had oral conversations with the expert." Id. At 67. The expert in B.C.F. Oil never saw these documents and, accordingly, the court found that the work product privilege shielded them from discovery.

With these standards in mind, the Court now addresses the various groups of documents that WR contends are protected from disclosure as attorney-client privilege, work product pursuant to Fed.R.Civ.P. 26(b)(3) and Fed.R.Civ.P. 26(b)(4)(B).

• Crowley Documents Listed in WR's Second Amended Privilege Log

• Crowley Documents related to WR's Gross Inequity Claim WR identifies Crowley documents numbered 44, 271, 272, 273, 274, 337, 10, 10A, 335, 370, 256, 260, 276, 334, 323, 261, 263, 264, 281 and 41 within its Second Amended Privilege Log as materials pertaining to WR's claim against Defendants under the gross inequity provision of prior contracts. WR contends it anticipated filing suit in the early 1990's to prosecute that claim and specially retained Crowley as a consulting expert to advise WR in bringing the lawsuit. WR maintains the referenced documents were prepared by WR representatives in anticipation of that litigation to enable WR counsel to advise WR regarding imminent claims and are, therefore, protected from disclosure by the attorney-client privilege, Fed.R.Civ.P. 26(b)(3) and Fed.R.Civ.P. 26(b)(4)(B). WR further contends the protection and/or privilege enjoyed by these documents have not been waived by disclosure to Crowley because the documents do not relate to opinions expressed in Crowley's expert report. Upon consideration of the facts presented and existing law, ¹⁷ the Court concludes any protection and/or privilege shielding the referenced documents from disclosure was waived based on the Court's finding that, contrary to Respondent's contentions, the subject matter of the documents — prospective claims under the gross inequities clause of an earlier contract between WR and Defendants — relates to matters contained in Crowley's expert report. In support of this finding, the Court refers to WR's assertion that the impending threat of the gross inequity lawsuit prompted Defendants to enter into good faith contract negotiations, which ultimately led to formation of the 1993 Agreement at issue in the current lawsuit. Reid Aff. dated July 12, 2001 at ¶¶ 8 and 10; Green Aff. dated July 12, 2001 at ¶ 12, Exs. C and 1 to WR's Memorandum in Opposition (doc. 217). In addition, affidavits submitted by WR aver that Crowley "has worked as a consultant for Western in coal and railroad operations for more than twenty years and has obtained an extensive working knowledge and understanding of Western's coal procurement operations." See Reid Aff. dated July 12, 2001 at ¶ 14, Ex. C to WR's Memorandum in Opposition (doc. 217). Crowley discusses the parties' historical relationship in his expert report and asserts in his opinion therein that Defendants' "historical performance formed the basis for future service to JEC." See Crowley Report at pp. 9-13, 15-16, Ex. O to WR's Memorandum in Opposition (doc. 216). Crowley also analyzes the Railroads' history of capital investment on the JEC route. See id., at pp. 52-54, 75-77.

17 As the Court concluded, supra, WR bears the burden of establishing an absence of waiver for those documents it asserts are protected by the attorney-client privilege and Defendants bear the burden of establishing waiver for those documents WR asserts are protected from disclosure pursuant to Fed.R.Civ.P. 26(b)(3) and Fed.R.Civ.P. 26(b)(4)(B).

Based on these facts, the Court hereby determines that those Crowley Documents bearing on WR's gross inequity claim sufficiently relate to the facts and opinions expressed by Crowley in the expert report submitted in this lawsuit. See B.C.F. Oil Refining, Inc. v. Consolidated Edison Co., 171 F.R.D. at 62 (although it did not require plaintiff to produce documents having "no relation to the expert's role as an expert," the court held that "any ambiguity as to the role played by the expert when reviewing or generating documents should be resolved in favor of the party seeking discovery."). Although it may never be possible to conclusively determine whether Crowley reviewed the documents as a consultant/non-testifying expert in the prospective gross inequity lawsuit or whether they informed his expert opinion in this case as well, there exists, at a minimum, an ambiguity as to the capacity in which Crowley generated or reviewed these materials.¹⁸ Where this is so, the Court must resolve the dispute "in favor of discovery." Messier v. Southbury Training Sch., No. 3:94CV1706 (EBB), 1998 WL 422858, at *2 (D.Conn. June 29, 1998). Accordingly, the documents shall be produced.

18 For example, if WR had retained a testifying expert who had no experience with the company, such expert would have lacked knowledge of the relationship between WR and Defendants and Defendants' historical performance. Thus, the only way that historical perspective would have contributed to forming opinions set forth in the testifying expert's report is if WR provided the testifying expert with the information in this lawsuit. If WR would have provided the testifying expert with that information, any privilege attached would have been waived. By retaining someone who already acquired knowledge through prior consulting work, WR seeks to have a testifying expert cite his current perception of the history of the parties' relationship and Defendants' performance as a basis for his opinion but shield from disclosure the documents from which that information came — all because they were drafted by or given to him before WR contemplated the instant lawsuit.

• Crowley Documents related to the 1993 Rail Transportation Agreements

WR identifies documents numbered 25, 33, 34, 35, 254, 255 and 332 as materials pertaining to attorney strategy in drafting the 1993 Rail Transportation Agreements between WR and Defendants and are, therefore, protected from disclosure by the attorney-client privilege. WR further contends the privilege enjoyed by these documents has not been waived by disclosure to Crowley because the documents do not relate to opinions expressed in Crowley's expert report.¹⁹ More specifically, WR argues that although Crowley's opinions in this lawsuit refer to the 1993 Agreements, such opinions primarily focus on the language used within the Agreements and not on the negotiation thereof.

19 Because WR asserts protection on the basis of attorney-client privilege only with respect to these materials, WR bears the burden of establishing the privilege has not been waived.

Contrary to WR's contention, the Court finds that the 1993 Rail Transportation Agreements do relate to matters contained in Crowley's expert report and any protection afforded these materials by the attorney-client privilege has been waived. First of all, Crowley sets forth opinions in his report regarding the parties' intentions in negotiating the terms of the Agreements, as well as both the express and implied meanings of contractual terms ultimately included within them. See Ex. O to WR's Memorandum in Opposition, Crowley Report at pp. 13-15, 17-22 (doc. 216).

Moreover, evidence submitted by WR in opposition to the pending motions demonstrate that WR's attorneys "relied upon Mr. Crowley as an expert in railroad and utility operations and costing to assist [them] in providing legal advice to Western" during negotiation of the 1993 Agreement. DiMichael Aff. dated July 11, 2001 at ¶ 17, Ex. J to WR's Memorandum in Opposition (doc. 217); see also Reid Aff. dated July 12, 2001 at ¶ 5, Ex. C to WR's Memorandum in Opposition (doc. 217) (Crowley provided "technical information to Western's counsel that was used to assist counsel in providing legal advice" on negotiation of the 1993 Agreement). It appears from the evidence presented that Crowley played a meaningful behind-the-scenes role in negotiation of the terms set forth in the Agreements at the heart of the lawsuit currently pending before the Court.

Based on the finding that Crowley Documents relating to negotiation of the 1993 Rail Transportation Agreements sufficiently relate to the facts and opinions expressed by Crowley in the expert report submitted in this lawsuit, the Court concludes WR has waived any protection afforded these documents by the attorney-client privilege. See B.C.F. Oil Refining, Inc. v. Consolidated Edison Co., 171 F.R.D. at 62 (although it did not require plaintiff to produce documents having "no relation to the expert's role as an expert," the court held that "any ambiguity as to the role played by the expert when reviewing or generating documents should be resolved in favor of the party seeking discovery.").

Again, although the Court may never be able to conclusively determine whether Crowley reviewed the documents solely as a behind-the-scenes consultant in negotiation of the terms set forth in the Agreements or whether they informed his expert opinion in this case, which turns on interpretation of the Agreements, there exists, at a minimum, an ambiguity as to the capacity in which Crowley generated or reviewed these materials. Where this is so, the Court must resolve the dispute "in favor of discovery." Messier v. Southbury Training Sch., No. 3:94CV1706 (EBB), 1998 WL 422858, at *2 (D.Conn. June 29, 1998). The referenced documents shall be produced.

• Crowley Documents related to the Economic Consequences to WR as a Result of Defendants' Alleged Poor Rail Service to JEC

WR identifies Crowley documents numbered 158, 159, 205, 220, 223, 166, 167, 168, 169, 175, 176, 177, 178, 179, 180, 182, 189, 206, 226, 232, 233, 234, 383, 181 , 372, 373 and 381 as materials related to the economic consequences suffered by WR as a result of Defendants' alleged service failures and for which WR seeks recovery in this lawsuit.

By way of background, WR contends that beginning in April 1997 and extending through December 1998, attorneys for WR began evaluating, on a preliminary basis, whether, and the extent to which, WR may have incurred damages due to Defendants' service failures. WR further contends attorneys for WR anticipated that litigation ultimately would be necessary to resolve WR's claims against Defendants for damages incurred due to Defendants' alleged service failures and thus subsequently retained Crowley to assist them in their determination regarding damages incurred to date.

WR maintains Crowley's services ultimately evolved from the role of a general expert consultant in anticipation of litigation to a specially retained non-testifying expert consultant in anticipation of the present lawsuit. Among other things, WR asserts its attorneys utilized Crowley's analysis in this new role to help it prepare a demand letter and a draft Complaint in the current lawsuit. WR argues the Crowley Documents related to Crowley's role as general expert consultant in anticipation of litigation and his role as specially retained non-testifying expert are protected from disclosure by the attorney-client privilege, as well as pursuant to Fed.R.Civ.P. 26(b)(3) and Fed.R.Civ.P. 26(b)(4)(B).

Once again, the Court is not persuaded by WR's argument. The issue of economic consequences suffered by WR as a result of Defendants' service failures — the actions for which WR seeks recovery in this lawsuit — directly relates to matters contained in Crowley's expert report. Crowley himself concedes that he performed "preliminary analyses for WR counsel relating to some of the issues that would later be covered in my May 24 Report." Crowley Aff. dated July 10, 2001 at ¶ 5, Ex. B to WR's Memorandum in Opposition (doc. 217). In fact, WR does not argue lack of relationship for documents 166, 167, 168, 169, 175, 176, 178, 179, 180, 182, 189, 206, 226, 232, 233, 234, 381 and 383, but instead concedes that these documents relate to Crowley's analysis of alleged damages in this case. See, WR's Memorandum in Opposition at pp. 34-39 (doc. 217); Wilcox Aff. dated July 11, 2001 at ¶ 7, Ex. N to WR's Memorandum in Opposition (doc. 217).

With reference to documents 158, 159, 181, 205, 220 and 223, WR argues they need not be produced because they involve counsel's preparation of a draft complaint for this case and Crowley allegedly does not base his opinion on such analyses. See WR's Memorandum in Opposition at pp. 39 (doc. 217). The referenced documents, however, are described by WR in its log as relating to WR's claim against the Railroads due to alleged service failure, and a large portion of Crowley's report involves facts and opinions related to these alleged failures. See, e.g., Crowley Report, pp. 44-86, Ex. O to WR's Memorandum in Opposition (doc. 216).

For example, documents 158 and 159 relate to "service standards and equipment utilization." Wilcox Aff. dated July 11, 2001 at ¶ 11, Ex. N to WR's Memorandum in Opposition (doc. 217). Both are topics covered in Crowley's Report. Crowley Report at pp. 20-22, 82, Ex. O to WR's Memorandum in Opposition (doc. 216). Moreover, document 181 discusses Crowley's preliminary damage calculations in this case. Wilcox Aff. dated July 11, 2001 at ¶ 12, Ex. N to WR's Memorandum in Opposition (doc. 217). As discussed above, this is a subject covered at length in Crowley's report. Document 177 is described as a document relating to JEC fuel handling charges, which is one component of WR's alleged damages in this case. See Crowley Report at pp. 119-120, Ex. O to WR's Opposition (doc. 216).

In addition, documents 223 and 220 discuss various theories of this case expressed by both WR and counsel. Id. Defendants are entitled to cross-examine Crowley on the extent to which WR and/or counsel's analysis may have influenced opinions he now expresses. For instance, "[i]f the attorney hiring the expert sets forth the desired theory of the case on the front end, then the opposing side should have the right to be made aware of the fact that the expert's viewpoint was initially couched by the attorney's desired theory." TV-3, Inc. v. Royal Ins. Co. of America, 193 F.R.D. at 491; see, also, Simon Property Group, L.P. v. my Simon, Inc., 194 F.R.D. 644, 649 (S.D.Ind. 2000) (same). Similarly,

when an attorney hires an expert both the expert's compensation and his "marching orders" can be discovered and the expert cross-examined thereon. If the lawyer's "marching orders" are reasonable and fair, the lawyer and his client have little to fear. If the orders are in the nature of telling the expert what he is being paid to conclude, appropriate discovery and cross-examination thereon should be the consequence. Such a ruling is most consistent with an effort to keep expert opinion testimony fair, reliable and within the bounds of reason.

Id. at 492.

Based on this discussion, even if all of the referenced documents were protected from disclosure in the first instance, such protection was waived due to the fact that (1) they were either authored or received by Crowley; and (2) their subject matter relate to the facts and opinions expressed by Crowley in the expert report submitted in this lawsuit. See B.C.F. Oil Refining, Inc. v. Consolidated Edison Co., 171 F.R.D. at 62 (although it did not require plaintiff to produce documents having "no relation to the expert's role as an expert," the court held that "any ambiguity as to the role played by the expert when reviewing or generating documents should be resolved in favor of the party seeking discovery."). Accordingly, the documents shall be produced.

• Crowley Documents related to Crowley's Role as a Consultant in Railroad and Utility Operations

WR identifies Crowley documents numbered 14, 15, 152, 160, 162, 187, 194, 214, 215, 229, 317, 319, 320, 331, 376, 377 and 378 as materials related to Crowley's role as a consultant — both as a non-testifying consultant in anticipation of litigation and a general consultant not in anticipation of any litigation — in railroad and utility operations. More specifically, WR asserts that Crowley has worked for WR as a consultant in coal supply and coal transportation matters since the late 1970's and, in that capacity, frequently relied on Crowley's technical expertise in assisting them to make legal decisions that would affect WR's rights and obligations under its various coal and transportation contractual agreements. WR argues these documents relate to such communications and, therefore, are protected by the attorney-client privilege. In addition, WR argues documents numbered 194, 229, 319 and 320 related to anticipated or pending litigation and thus, in addition to the attorney-client privilege, are protected from disclosure pursuant to Fed.R.Civ.P. 26(b)(3) and Fed.R.Civ.P. 26(b)(4)(B). WR further argues the subject matter of the referenced documents do not relate in any way to the opinions expressed by Crowley in the expert report he prepared for this case and therefore, the attached privileges and protections from disclosure have not been waived.

Before reaching the issue of waiver with respect to these documents, the Court finds it helpful to briefly describe their subject matter:

Doc. 14 3/31/92 letter from Crowley to WR attorneys regarding KPL's²⁰ coal supply agreement with Amax and analyzing the effect changes in the gross national product/implicit price deflator indices would have on the coal supply contract with Amax.

Doc. 15 4/24/92 letter with two attachments from Crowley to WR attorneys and WR executives regarding KPL's coal supply agreement with Amax analyzing the effect changes in the gross national product/implicit price deflator indices would have on the coal supply contract with Amax.

Doc. 152 4/3/96 letter from WR executive to Crowley, WR attorneys and other WR executives forwarding data related to JEC's coal supply contract and rail agreements.

Doc. 160 6/4/99 e-mail from WR executive to Crowley, WR attorneys and other WR executives requesting legal advice concerning cost savings UP would realize upon entering into a third party switching agreement with WR.

Doc. 162 3/25/97 e-mail from WR attorney to Crowley, another WR attorney and a WR executive containing legal advice concerning proposal by UP to move Colorado coal to JEC (Crowley provided underlying rate information to WR attorney).

Doc. 187 9/26/96 letter from WR attorney to Crowley, another WR attorney and a WR executive containing WR attorney's mental impressions and legal opinion concerning fuel supply strategies for WR (Crowley assisted WR attorney in conducting economic analysis of various fuel supply options).

Doc. 194 3/25/97 e-mail from WR executive to Crowley, WR attorneys and another WR executive concerning a draft letter to UP discussing whether to proceed with a rate case before the Surface Transportation Board ("STB") against Burlington Northern for its service to the Lawrence Energy Center and the Tecumseh Energy Center ("LEC/TEC") (Crowley provided WR attorney with underlying information regarding various transportation rates and tariffs).

Doc. 214 6/9/99 and 6/15/99 letters from WR attorney to Crowley and one WR executive

Doc. 215 discussing and attaching draft Memorandum of Understanding between WR and UP (Crowley provided underlying information regarding his opinion of feasibility and desirability of entering into a third party switching agreement).

Doc. 229 1/4/99 letter from Crowley to WR attorney and WR executive with attachments discussing deterioration in railroad service in conjunction with Amax lawsuit on WR's force majeure claim for relief.

Doc. 317 1/29/97 report from WR attorneys, a WR executive and Crowley containing legal advice to other WR attorneys and WR senior management regarding fuel supply at JEC and discussion of potential legal remedies under coal supply and rail transportation contracts (Crowley analyzed economic impact of various potential legal remedies).

Doc. 319 12/3/96 and 12/4/96 meeting agenda with attachments regarding pending judicial

Doc. 320 matters and proceedings before administrative agencies. Agenda created by WR attorneys and attachments created by Crowley. Both agenda and attachments sent to WR attorneys and WR executives. Matters addressed include ongoing rate complaint against Santa Fe for service to LEC/TEC and the BNSF merger appeal (Crowley attachments analyze economic impact of potential legal remedies under various contracts).

Doc. 331 12/18/96 letter from WR executive to Crowley, WR attorneys and other WR executives seeking advice regarding redetermination of incremental pricing under Amax contract.

Doc. 376 3/22/99 letter from Crowley to WR executive regarding analysis of cost savings UP would realize by entering into a third party switching agreement with WR.

Doc. 377 3/25/97 letter from Crowley to WR executive and WR attorney regarding rate analysis of UP's offer to move Colorado coal to JEC and resulting impact of such movement on WR's various contractual relations with the railroads and Amax.

Doc. 378 5/3/96 letter from WR executive to Crowley, WR attorneys and other WR executives regarding distributive power (Crowley advised attorneys regarding impact on railroads' cost structure).

20 Kansas Power and Light ("KPL") is WR's predecessor.

WR contends disclosure of these documents are not required because none of them relate to Crowley's expert opinion in this case.

Based on the arguments of counsel and the materials submitted to the Court regarding these documents²¹, the Court hereby determines that the documents described above sufficiently relate to the facts and opinions expressed by Crowley in the expert report submitted in this lawsuit. See B.C.F. Oil Refining, Inc. v. Consolidated Edison Co., 171 F.R.D. at 62 (although it did not require plaintiff to produce documents having "no relation to the expert's role as an expert," the court held that "any ambiguity as to the role played by the expert when reviewing or generating documents should be resolved in favor of the party seeking discovery.").

21 Contrary to Defendants' assertion, the Court does not find the description of these documents to be ambiguous with regard to determining whether such documents relate to the expert report submitted by Crowley in this matter. For example, doc. 378 is described in WR's privilege log as a document relating to "distributive power." WR concedes that this document relates to "possible construction of an interchange siding at Northport, Nebraska and use of distributed power to move coal to JEC . . .," Reid Aff. dated dated July 12, 2001 at ¶ 19, Ex. C to WR's Memorandum in Opposition (doc. 217), and Crowley opines on this same subject in his report. See Crowley Report at pp. 94-96, Ex. O to WR's Memorandum in Opposition (doc. 216).

As a preliminary matter, many of the referenced documents appear to contain information about the parties' historical relationship — a subject about which Crowley discusses in his expert report²² — as well as the market rate discussion on pages 102 through 104 of Crowley's expert report. Moreover, a number of the referenced documents contain historical and current information relating to WR's cost of coal under its agreement with Amax. The Complaint in this matter establishes WR is seeking damages in the current lawsuit due to a claimed increase in WR's cost of coal under its agreement with Amax. Crowley discusses these and other WR damages in his expert report. Accordingly, the Court finds that documents containing historical and current information relating to WR's coal supply contracts with Amax sufficiently relate to the facts and opinions expressed by Crowley in his report.

22 For a discussion regarding the relationship between the subject matter of these documents and Crowley's expert report, see, generally, supra, Section II(B)(2)(a), Crowley Documents related to WR's Gross Inequity Claim.

Although it may never be possible to conclusively determine whether Crowley reviewed the referenced documents as a consultant/non-testifying expert only or whether they informed his expert opinion in this case as well, there exists, at a minimum, an ambiguity as to the capacity in which Crowley generated or reviewed these materials. Where this is so, the Court must resolve the dispute "in favor of discovery." Messier v. Southbury Training Sch., No. 3:94CV1706 (EBB), 1998 WL 422858, at *2 (D.Conn. June 29, 1998). Accordingly, the referenced documents shall be produced.

• Crowley Documents Listed in Western's Supplemental Privilege Log

• Crowley Documents Relating to Rail Transportation Agreement under which BNSF shipped coal to WR's Lawrence/ Tecumseh Energy Centers and Proposed Third Party Switching Agreement between UP and WR

WR identifies documents numbered 385, 427a, 428, 430, 431, 435, 471, 489, 490, 492, 498, 501a, 502 and 503 within its Supplemental Privilege Log as materials authored or reviewed by Crowley pertaining to the Rail Transportation Agreement under which BNSF shipped coal to WR's Lawrence and Tecumseh Energy Centers and documents numbered 442 and 456 as related to a proposed third party switching agreement between UP and WR. Joint Memorandum in Opposition at p. 22 (doc. 304); Wilcox Aff. dated December 6, 2001 at ¶ 8, Ex. B to Joint Memorandum in Opposition (doc. 304); Reid Aff. dated December 6, 2001 at ¶ 6, Ex. D to Joint Memorandum in Opposition (doc. 304). WR maintains almost all of the referenced documents are protected from disclosure by the attorney-client privilege, Fed.R.Civ.P. 26(b)(3) and Fed.R.Civ.P. 26(b)(4)(B) .²³ WR further contends the protection and/or privilege enjoyed by these documents have not been waived by disclosure to Crowley because the documents — relating to an agreement to ship coal to two energy centers not involved in this litigation — do not relate to opinions expressed in Crowley's expert report. Upon consideration of the facts presented and existing law, the Court concludes any protection and/or privilege shielding the referenced documents from disclosure was waived based on the Court's finding that, contrary to WR's contentions, the subject matter of the documents — the on-going business relationship between WR and BNSF and WR and UP — relates to matters contained in Crowley's expert report. In support of this finding, the Court refers to affidavits submitted by WR, averring Crowley "has worked as a consultant for Western in coal and railroad operations for more than twenty years and has obtained an extensive working knowledge and understanding of Western's coal procurement operations." See Reid Aff. dated July 12, 2001 at ¶ 14, Ex. C to WR's Memorandum in Opposition (doc. 217). Crowley discusses the parties' historical relationship in his expert report and asserts in his opinion therein that Defendants' "historical performance formed the basis for future service to JEC." See Crowley Report at pp. 9-13, 15-16, Ex. O to WR's Memorandum in Opposition (doc. 216).

23 More specifically, WR does not assert protection pursuant to Fed.R.Civ.P. 26(b)(4)(B) for documents numbered 498 and 501a and does not assert protection pursuant to Fed.R.Civ.P. 26(b)(3) or Fed.R.Civ.P. 26(b)(4)(B) for documents numbered 442 and 456.

Based on these facts, the Court hereby determines that those Crowley Documents bearing on the Rail Transportation Agreement under which BNSF shipped coal to WR's Lawrence and Tecumseh Energy Centers and the proposed third party switching agreement between WR and UP sufficiently relate to the facts and opinions expressed by Crowley in the expert report submitted in this lawsuit. See B.C.F. Oil Refining, Inc. v. Consolidated Edison Co., 171 F.R.D. at 62 (although it did not require plaintiff to produce documents having "no relation to the expert's role as an expert," the court held that "any ambiguity as to the role played by the expert when reviewing or generating documents should be resolved in favor of the party seeking discovery."). Although it may never be possible to conclusively determine whether Crowley reviewed the documents as a consultant/non-testifying expert or whether they informed his expert opinion in this case as well, there exists, at a minimum, an ambiguity as to the capacity in which Crowley generated or reviewed these materials.²⁴ Where this is so, the Court must resolve the dispute "in favor of discovery." Messier v. Southbury Training Sch., No. 3:94CV1706 (EBB), 1998 WL 422858, at *2. Accordingly, the referenced documents shall be produced.

24 As noted in footnote 11, supra, if a testifying expert had been retained who had no prior relationship with WR, such expert would have lacked the historical knowledge held by Crowley.

• Crowley Documents Pertaining to this Litigation

WR identifies documents numbered 391, 440, 441, 457, 480, 513 and 514 within its Supplemental Privilege Log as materials authored or reviewed by Crowley pertaining to the claims alleged and damages sought by WR in the current lawsuit. Joint Memorandum in Opposition at p. 22 (doc. 304); Wilcox Aff. dated December 6, 2001 at ¶¶ 6-8, Ex. B to Joint Memorandum in Opposition (doc. 304); Reid Aff. dated December 6, 2001 at ¶¶ 6, 18-21, Ex. D to Joint Memorandum in Opposition (doc. 304). WR argues Crowley Documents created or reviewed by Crowley in his role as a specially retained non-testifying expert in anticipation of this lawsuit (prior to WR's formal designation of Crowley as a testifying expert in late 1999) are protected from disclosure by the attorney-client privilege, as well as pursuant to Fed.R.Civ.P. 26(b)(3) and Fed.R.Civ.P. 26(b)(4)(B). WR further contends the protection and/or privilege enjoyed by this document has not been waived by disclosure to Crowley because the documents do not relate to opinions expressed in Crowley's expert report.

The Court is not persuaded by WR's argument. The alleged service failures — and damages incurred as a result of such failures — as set forth in WR's Complaint directly relate to matters contained in Crowley's expert report. Thus, even if all of the referenced documents were protected from disclosure in the first instance, such protection was waived due to the fact that (1) they were either authored or received by Crowley; and (2) their subject matter relate to the facts and opinions expressed by Crowley in the expert report submitted in this lawsuit. See B.C.F. Oil Refining, Inc. v. Consolidated Edison Co., 171 F.R.D. at 62 (although it did not require plaintiff to produce documents having "no relation to the expert's role as an expert," the court held that "any ambiguity as to the role played by the expert when reviewing or generating documents should be resolved in favor of the party seeking discovery."). Accordingly, these documents shall be produced.

• Crowley Documents Pertaining to the Amax Litigation WR identifies documents numbered 491, 507 and 510 within its Supplemental Privilege Log as materials authored or reviewed by Crowley pertaining to damages sought by WR in the current lawsuit due to a claimed increase in WR's cost of coal under its agreement with Amax. Wilcox Aff. dated December 6, 2001 at ¶ 8, Ex. B to Joint Memorandum in Opposition (doc. 304); Reid Aff. dated December 6, 2001 at ¶¶ 14 and 16, Ex. D to Joint Memorandum in Opposition (doc. 304). WR contends disclosure of these documents is not required because none of them relate to Crowley's expert opinion in this case. The Court disagrees. These documents appear to directly relate to WR's claimed damages in this litigation — a subject upon which Crowley spends quite a bit of time discussing within his expert report. See B.C.F. Oil Refining, Inc. v. Consolidated Edison Co., 171 F.R.D. at 62 (although it did not require plaintiff to produce documents having "no relation to the expert's role as an expert," the court held that "any ambiguity as to the role played by the expert when reviewing or generating documents should be resolved in favor of the party seeking discovery."). Although it may never be possible to conclusively determine whether Crowley reviewed the referenced documents as a consultant/non-testifying expert only or whether they informed his expert opinion in this case as well, there exists, at a minimum, an ambiguity as to the capacity in which Crowley generated or reviewed these materials. Where this is so, the Court must resolve the dispute "in favor of discovery." Messier v. Southbury Training Sch., No. 3:94CV1706 (EBB), 1998 WL 422858, at *2 (D.Conn. June 29, 1998). Accordingly, the referenced documents shall be produced.

¶ Document Number 474

WR identifies document numbered 474 within its Supplemental Privilege Log as "Internal Correspondence regarding Crowley's potential testimony for Western's rate case before the KCC." See Page 16 of Ex. 1 to Defendants' Memorandum in Support of Motion to Compel (doc. 269). The document is dated October 6, 1996. From the description provided, the Court is unable to discern any relationship between the subject matter of the document and the subjects discussed in Crowley's expert report. As such, the required "clear distinction" between roles is present and document 474 need not be produced. See Messier v. Southbury Training Sch., No. 3:94CV1706 (EBB), 1998 WL 422858, at *2 (D.Conn. June 29, 1998).

• Crowley Documents Listed in L.E. Peabody Associates/Crowley Second Amended Privilege Log

On May 1, 2001, UP served Peabody and Crowley with a subpoena pursuant to Fed.R.Civ.P. 45 seeking information about work performed by Peabody and Crowley for WR. On October 1, 2001, Peabody served UP with a privilege log asserting attorney-client privilege, work product protection and/or Fed.R.Civ.P. 26(b)(4)(B) protection on behalf of WR for 370 documents authored or reviewed by Peabody and/or Crowley (the "Crowley Documents").

On November 30, 2000, UP filed a Motion to Compel production of "Crowley Documents" listed in the Peabody/Crowley Second Amended Privilege Log. In support of its motion, UP attaches a copy of the Peabody/Crowley Second Amended Privilege Log and makes many of the same factual and legal arguments set forth in briefing related to its Motion to Compel Crowley Documents in WR's Second Amended Privilege Log and its Motion to Compel Crowley Documents in WR's Supplemental Privilege Log. In repeatedly referencing its prior briefing, UP notes that the subject matter of many of documents described in the Peabody/Crowley Second Amended Privilege Log are identical to the subject matter of documents described in WR's Second Amended and Supplemental Privilege Logs.

Likewise, the three Respondents jointly respond to UP's second and third motions to compel in the same brief for the reason that many of the same factual and legal arguments apply to both privilege logs and have been set forth in earlier pleadings. In fact, Respondents attach to their Supplemental responsive brief a table providing cross references for 57 identical documents found in different logs and identified by different bates numbers.

In reviewing the Peabody/Crowley Second Amended Privilege Log, the Court finds that, as asserted by Defendants, the subject matter of many of the 370 documents appear to directly correspond to the subject matter of documents identified in WR's Second Amended Privilege Log and WR's Supplemental Privilege Log. The Court also verifies that, as Respondents assert, at least 57 of the Peabody/Crowley log documents are exact copies of documents identified in prior WR logs. Given these circumstances, the Court concludes there is a strong likelihood the rulings set forth above will apply to a large portion, if not all, of the documents set forth in the Peabody/Crowley Second Amended Privilege Log. Based on this conclusion, the Court finds it appropriate to order the parties to meet and confer in good faith regarding whether, and the extent to which, production of the 370 documents set forth in the Peabody/Crowley log are still in dispute in light of the findings of fact and conclusions of law set forth above. If, after such good faith conference, the parties are still unable to agree upon whether various documents within the Peabody/Crowley log are protected from disclosure, Defendants shall have the right to file the appropriate discovery motion.

III. Conclusion

Based on the discussion above, it is hereby ordered that

• Defendants' Motion to Compel Plaintiff to Produce Documents Described in Plaintiff's Privilege Log (doc. 196) is granted to the extent that

• Plaintiff shall produce the "Crowley Documents" within five (5) days from the date of this Memorandum and Order; and

• Plaintiff shall produce for "in camera" inspection documents 3 and 330 as described in WR's Second Amended Privilege Log within five (5) days of the date of this Memorandum and Order.

• Defendants' Motion to Compel Plaintiff to Produce Documents Described in Plaintiff's Supplemental Privilege Log (doc. 268) is

• granted to the extent that Plaintiff shall be required to produce documents 385, 427a, 428, 430, 431, 435, 442, 456 471, 489, 490, 492, 498, 501a, 502, 503, 391, 440, 441, 457, 480, 513, 514, 491, 507 and 510 within five (5) days from the date of this Memorandum and Order; and

• denied to the extent that Plaintiff shall not be required to produce document 474.

• Defendants' Motion to Compel L.E. Peabody and Thomas Crowley to Produce Documents Described in Privilege Log (doc. 282) is denied — without prejudice to refiling — and the parties shall be required to meet and confer in good faith regarding whether, and the extent to which, production of the 370 documents set forth in the Peabody/Crowley log are still in dispute in light of the findings of fact and conclusions of law set forth in this Memorandum and Order. If, after such good faith conference, the parties are still unable to agree upon whether various documents within the Peabody/Crowley log are protected from disclosure, Defendants shall have the right to file the appropriate discovery motion with respect to the remaining disputed documents. Any such discovery motion shall be filed within eleven days (11) days from the date of this Memorandum and Order.

IT IS SO ORDERED.