CIVIL ACTION No. 02-2979, SECTION "J" (3).
June 18, 2003.
ORDER AND REASONS
Before the Court is a Rule 12(b)(6) motion to dismiss (Rec. Doc. 27) filed by Defendants Fritz Companies, Inc. ("Fritz") and United Parcel Service, Inc. ("UPS") (collectively the "UPS Defendants"). This motion was set for hearing on the briefs on April 16, 2003. The UPS Defendants' motion seeks the dismissal of Plaintiffs' Second Supplemental and Amending Petition and each of its claims pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs have filed a memorandum in opposition (Rec. Doc. 28). The UPS Defendants have also filed a memorandum in reply to Plaintiff's opposition (Rec. Doc. 30). Upon consideration of the briefs submitted by counsel, the original petition and two subsequent amended complaints, the documents attached to the petition and complaints, and the applicable law, the Court concludes that the UPS Defendants' motion be granted in part and denied in part. Furthermore, Plaintiffs are ordered to file an amended petition which includes a more definite statement of several of their claims that have survived the instant motion.
Since this case has been removed to federal court, Plaintiffs' amended "petitions" should actually be referred to as complaints as required by Federal Rule of Civil Procedure 3.
Under Federal Rule of Civil Procedure 10(c), "[a] copy of any written instrument which is an exhibit to a pleading is part thereof for all purposes." Thus, the Court may consider the contracts attached to the complaints as exhibits in reviewing the UPS Defendants' motion.Associated Builders, Inc. v. AL Power Co., 505 F.2d 97, 100 (5th Cir. 1974).
After reading the numerous pleadings Plaintiffs have filed with the Court, it is very difficult to discern just exactly what they allege to have occurred. The pleadings are quite confusing and frequently make contradictory allegations. Despite this confusion, the Court believes that it can interpret Plaintiffs' allegations sufficiently for purposes of the instant motion.
The above-captioned matter involves a dispute over freight-forwarding services that were allegedly provided by Plaintiffs Advanced Logistical Support, Inc. ("ALS") and Bruce Smith ("Smith"), president of ALS. This matter can be traced back to alleged agreements involving ALS, Fritz, Defendant DeComercio, S.A. ("DeComercio"), and Babin Marine, L.L.C. ("Babin Marine").
UPS acquired Fritz in July 2001.
The Court previously rejected Plaintiffs' attempt join Babin Marine as a defendant in this matter. See Rec. Doc. 23.
The first agreement is a consulting services agreement ("CSA") between Fritz and ALS. Fritz and ALS entered into the CSA on March 19, 2001. Pursuant to the CSA, ALS agreed to sell the freight-forwarding services of Fritz, as well as negotiate pricing, in exchange for a 50% share of the profits associated with business generated for Fritz. The CSA further provided that:
• ALS agreed not to represent itself (either expressly or impliedly) as an employee, representative, or agent of Fritz;
• ALS agreed not to use Fritz's letterhead or business cards;
• ALS warranted that each person performing services on its behalf was an employee of ALS and that no employment relationship existed between such persons and Fritz;
• ALS agreed to indemnify and hold harmless Fritz against any and all claims arising out of ALS's or its employees' conduct;
• The parties' express intention was that ALS was to be an independent contractor and not an employee, agent, joint venturer, or partner of Fritz. Furthermore, an employment agreement between Fritz and ALS and/or its employees was not to be created;
• ALS agreed that it had not, nor would it perform the same or similar services for any other broker, freight forwarder, or competitor of Fritz. However, ALS retained the right to perform other services for others during the term of the CSA;
• Any changes to the CSA had to be in writing; • The CSA was to be the sole agreement between Fritz and ALS with respect to the rendering of the services. Fritz and ALS acknowledged that no representations, promises or agreements, orally or otherwise, were made by either party that were not contained in the CSA;
• Fritz had the right to terminate the CSA without cause and in its sole discretion upon five business days written notice to ALS. Fritz was required to compensate ALS for services rendered up to the termination; and
• The CSA was to be governed by and construed in accordance with. California law.
The second agreement (the "barge agreement") involved the sale of two barges from Babin Marine to DeComercio, a Guatemalan company. This agreement was signed by Babin Marine and DeComercio on February 26, 2002. According to the agreement, the two parties intended to hire Fritz as the freight forwarder to ship the barges to Guatemala. Fritz was to be paid $180,000 for its freight forwarding services. Neither Fritz nor ALS were parties to the barge agreement.
The UPS Defendants and Plaintiffs disagree as to the validity of the third agreement. Plaintiffs allege that DeComercio and Fritz entered into this third agreement (the "DeComercio agreement") whereby Fritz agreed to perform the maritime shipping services related to the two barges purchased by DeComercio. The agreement states that it takes effect on March 20, 2002. The UPS Defendants contend that Fritz never signed the agreement. However, the copy of the agreement attached to Plaintiffs' first amended complaint shows that a representative of Fritz signed the agreement on March 20, 2002. See Rec. Doc. 10, exhibit C. A DeComercio representative signed the agreement on April 20, 2002. ALS was not a party to this agreement, nor is it specifically mentioned as a third-party beneficiary. However, Plaintiffs contend that due to the relationship that developed between the parties, ALS was a third-party beneficiary to the DeComercio agreement.
By letter dated March 27, 2002, George Winters, a vice-president of Fritz, notified ALS that Fritz was terminating the CSA. Thus, the effective date of termination was April 3, 2002. On April 1, 2002, Fritz returned the $90,000 wired to it by DeComercio that signified the down payment for the maritime shipping services. In its letter to DeComercio, Fritz informed the Guatemalan company that "there is an outstanding agreement that this money be transferred to ALS, Inc. thereafter." See Rec. Doc. 27, exhibit 4b.
Plaintiffs allege that Fritz requested that ALS perform Fritz's maritime shipping obligations owed to DeComercio after Fritz decided it did not want to honor the DeComercio agreement. Plaintiffs further contend that the April 1, 2002 letter to DeComercio served as Fritz's request that ALS be allowed to perform the shipping services and that the $90,000 down payment be transferred to ALS. Plaintiffs allege that a revised shipping contract between DeComercio and ALS was then prepared in accordance with the April 1, 2002 letter. However, DeComercio refused to execute the agreement because it believed that it had a valid and binding agreement with Fritz, which Fritz was required to honor. Accordingly, DeComercio refused to release Fritz from its maritime shipping obligations. Plaintiffs do allege that DeComercio allowed Fritz to perform its obligations through ALS if it wished.
Plaintiffs allege that ALS "did undertake to perform the shipping services on behalf of Fritz and did in connection therewith issue payments for the barges' storage service and loading for shipment." See Rec. Doc. 25, at paragraph XVI. Plaintiffs allege that ALS did so "[b]ecause of the relationship between Bruce Smith, ALS and Fritz." See Id. Plaintiffs further allege that ALS performed the services for Fritz to prevent Fritz from being sued by DeComercio for delay damages.See Rec. Doc. 28, at 4. Apparently, DeComercio advised Fritz that it had contracted to build a port in Guatemala and that if the barges were not timely shipped, DeComercio would sue Fritz for $100 million arising out of Fritz's breach of the freight-forwarding contract. None of plaintiffs' pleadings allege the dates during which ALS performed such shipping services. Therefore, it is unclear whether the services were allegedly performed before, or after, Fritz's termination of the CSA became final.
Despite the express terms of the CSA, Plaintiffs allege that an employment relationship was created between Fritz and Smith and ALS. See id., paragraph VI. Furthermore, Plaintiffs allege that it was common knowledge that Smith had the authority to enter into contracts on behalf of Fritz. See id., paragraph VII. It also appears that Plaintiffs allege that Smith and ALS were performing all aspects of the freight-forwarding business on behalf of Fritz. See id., paragraph V-VII XVII.
Plaintiffs allege the following special damages: (1) approximately $5,000 in Zito charges; (2) $6,500 in towing charges; (3) $5,000 in travel expenses; and (4) $33,000 as the remainder of the agreed price (profit) due to ALS for its services. Plaintiffs have alleged the following claims against the UPS Defendants, Decomercio, Winters, and other unidentified individual officers of Fritz and UPS: (1) for money due in connection with certain maritime shipping services out of Louisiana waters; (2) bad faith termination of the CSA; (3) defamation; (4) restraint of trade; (5) unfair trade practices; (6) tortious interference with contract; and (7) unjust enrichment.
Plaintiffs also appear to have alleged that Fritz owes ALS approximately $22,000 representing a past invoice. See Rec. Doc. 25, paragraphs IX-XII. This claim is not at issue in the instant motion. Thus, despite the UPS Defendants' contention otherwise, the instant motion does not seek a complete dismissal of Plaintiffs' second amended complaint.
At the present time, Plaintiffs have only effected service upon the UPS Defendants. The UPS Defendants have filed the instant motion seeking dismissal of Plaintiffs' claims against them on the grounds that they fail to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6).
I. Standard of Review
Dismissal for failure to state a claim under Rule 12(b)(6) "is viewed with disfavor and is rarely granted." Lowrey v. Tex. AM Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997) (internal quotations and citation omitted). In addressing a 12(b)(6) motion, a court must liberally construe the complaint or petition and all facts plead therein must be taken as true. Id. A court may not dismiss a complaint or petition under Rule 12(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. (internal quotations and citation omitted). Thus, "[t]he question therefore is whether in the light most favorable to the plaintiff and with every doubt resolved in his behalf, the complaint states any valid claim for relief." Id. (internal quotations and citation omitted). However, dismissal under Rule 12(b)(6) is proper if the plaintiff fails to allege in the complaint or petition "a required element necessary to obtain relief." Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995) (internal citations omitted). Furthermore, a plaintiff must plead specific facts and may not rely on mere conclusory statements. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000).
Federal Rule of Civil Procedure 8(a) governs the level of specificity needed to state a claim under Rule 12(b)(6). See 5A CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1357 at 321-22 (2d ed. 1990). Under Rule 8(a), a plaintiff must provide "a short and plain statement of the claim showing that the pleader is entitled to relief."
II. Plaintiffs' Claims
A. Contractual Claim
Plaintiff appears to assert a claim as a third-party beneficiary to the DeComercio agreement for breach of contract against the UPS Defendants. Plaintiffs essentially allege that Bruce Smith, on behalf of ALS and pursuant to the CSA, sold Fritz's freight-forwarding services to DeComercio. Fritz then entered into the agreement with DeComercio with the intention of including ALS as a third-party beneficiary to the agreement. ALS then agreed to perform Fritz's obligations under the DeComercio agreement as a third-party beneficiary. Plaintiffs now seek to recover ALS's costs and lost profits from the UPS Defendants and DeComercio. The UPS Defendants argue that Plaintiffs cannot state a third-party beneficiary claim under Louisiana law because the DeComercio agreement shows no intention on the part of DeComercio or Fritz to stipulate a benefit in favor of ALS.
The Court must first determine what law governs Plaintiffs' claim. Plaintiffs contend that the DeComercio agreement is a maritime contract. However, the agreement contains a Louisiana choice of law clause. To determine whether a contract is maritime, a court must look to the nature and character of the contract. Theriot v. Bay Drilling Corp., 783 F.2d 527, 538 (5th Cir. 1986). Neither party seems to dispute that the DeComercio agreement involves services to be provided that are maritime in nature. In spite of this, where the parties have included a choice of law clause, such as in the instant case, that state's law governs unless the state has no substantial relationship to the parties or to the transaction or "the state's law conflicts with the fundamental purpose of maritime law." Stoot v. Flour Drilling Servs., Inc., 851 F.2d 1514, 1517 (5th Cir. 1988) (internal citation omitted).
Louisiana clearly has a substantial relationship to the transactions at issue in the instant case. The barges were to be shipped from Louisiana to Guatemala. Additionally, many of the services performed in negotiating the DeComercio agreement and in performing the land-based portions of the DeComercio agreement were likely done in Louisiana. Furthermore, it does not appear that Louisiana law conflicts with the fundamental purpose of maritime law-"the protection of maritime commerce." Sisson v. Ruby, 497 U.S. 358, 367 (1990). Both Louisiana and federal maritime law recognize third party beneficiaries to contracts. See Atl. Gulf Stevedores, Inc. v. Revelle Shipping Agency, Inc., 750 F.2d 457, 459 n. 3 (5th Cir. 1985) (discussing third-party beneficiary contracts under maritime law). Therefore, Plaintiffs' contract claim is governed by Louisiana law.
Louisiana Civil Code article 1978 provides that "[a] contracting party may stipulate a benefit for a third person called a third party beneficiary." This is called a stipulation pour autrui. Whitney Nat'l Bank v. Howard Weil Fin. Corp., 631 So.2d 1308, 1310 (La.App. 4th Cir. 1994). Such a stipulation is never presumed. An intent to confer a benefit on a third party must form the consideration for a condition of the contract, and the benefit may not be merely incidental to the contract. Paul v. La. State Employees' Group Benefits Program, 762 So.2d 136, 140 (La.App. 5th Cir. 2000). The parties' intent must be manifestly clear. Guidry v. Hedburq, 722 So.2d 1036, 1041 (La.App. 3d Cir. 1998).
Plaintiffs have probably alleged sufficient facts to survive a 12(b)(6) motion. The UPS Defendants argue that a Fritz representative never signed the DeComercio agreement. They contend that Smith and ALS improperly entered into the DeComercio agreement on Fritz's behalf. By returning the $90,000 wired to Fritz, the UPS Defendants contend that they never ratified the DeComercio agreement. Attached to the first amended complaint is a copy of the DeComercio agreement signed by representatives of DeComercio and Fritz. See Rec. Doc. 10, exhibit C. Based on the signature's illegibility, it is not possible to tell who signed the agreement on behalf of Fritz. However, it appears that a Fritz representative did sign the agreement.
Based on Plaintiffs' allegations of the relationship that existed between Fritz and ALS, it is possible that Fritz and DeComercio entered into the DeComercio agreement with the intention of stipulating a benefit for ALS. Smith and ALS allegedly helped bring DeComercio and Fritz together. Based on the alleged relationship between Fritz and ALS, ALS would have worked with Fritz in performing the DeComercio agreement. ALS was to receive its fee under the CSA for the services it provided on the DeComercio agreement. Finally, Plaintiffs essentially allege that as a third-party beneficiary, ALS agreed to perform on the DeComercio agreement when Fritz decided that it no longer wanted to. Based on the allegations made by Plaintiffs of the relationship that existed between Smith and ALS, DeComercio, and Fritz, it is possible that Plaintiffs could prove a set of facts whereby they could recover against the UPS Defendants as a third party beneficiary to the DeComercio agreement. The UPS Defendants' motion to dismiss Plaintiffs' contractual claim should be denied.
B. Bad Faith Termination of the CSA Claim
Next, Plaintiffs assert a tort claim for bad faith termination of the CSA. The UPS Defendants contend that the Court must look to California law in ruling on this claim because the CSA included a California choice of law clause. Since California law does not recognize a tort claim for bad faith termination of contract, the UPS Defendants contend that Plaintiffs' claim must be dismissed. In opposition, Plaintiffs argue that federal maritime law, not California, governs the resolution of this claim. The Plaintiffs claim that the choice of law clause is unenforceable because the parties lack the required substantial relationship with California. They further argue that maritime law should govern to protect maritime commerce, the fundamental interest of maritime jurisdiction.
Whether or not the Court may apply federal maritime law depends on whether or not the CSA is a maritime contract. There does not appear to be maritime jurisdiction on the basis of any tort claims made by the Plaintiff, since despite alleging a claim for tortious breach of contract, the Plaintiffs' tort-based claim does not meet the test for maritime jurisdiction under Grubart v. Great Lakes Dredge Dock Co., 513 U.S. 527 (1995). Id. at 534 (Party seeking to invoke federal maritime jurisdiction must show that the tort occurred on navigable water or injury suffered on land was caused by a vessel on navigable water). As stated above, to determine if there is federal maritime jurisdiction based on a contract cause of action, the crucial consideration is whether the contract in question is a "maritime contract". The nature and subject matter of the contract are the two main factors involved in this inquiry. Theriot, 783 F.2d at 538. The parties do not appear to dispute that the services being contracted for in the CSA involve a maritime service and are therefore subject to maritime jurisdiction.
As in the Court's above analysis of the contractual claim, the contract at issue contains a choice of law provision. Thus, California law will still apply unless California has no substantial relationship to the parties or the transaction or the California law conflicts with the fundamental purposes of maritime law." Stoot, 851 F.2d at 1517.
Plaintiffs argue that despite the fact that Fritz has its principal place of business in California, this is not enough to support the requisite substantial relationship with the designated state. However, Plaintiffs do not cite any authority to support this assertion. As the UPS defendants point out in their reply memorandum, the court in Hale v. Co-Mar Offshore Corp., 588 F. Supp. 1212, 1215 (W.D. La. 1984), found a substantial relationship where a party to the transaction was a corporation of the designated state in the choice of law provision. InCampbell v. Sonat Offshore Drilling, Inc., 1991 WL 350044 at *2 (W.D. La. 1991), the court found a substantial relationship where one of the parties had its company headquarters in the designated state. In this case, none of the parties are incorporated in California. However, Fritz's principal place of business is in California and UPS presumably has substantial contacts with the state of California. Therefore, it appears this element with regards to the applicability of the choice of law clause has been met.
Second, it is necessary to determine whether the application of California law conflicts with the protection of maritime commerce, the fundamental purpose of maritime law. See Stoot, 851 F.2d at 1517. Plaintiffs argue that the application of federal maritime law is required to further this interest vis-a-vis the impact of the defendants' actions on maritime commerce. This appears to beg the question of whether California law "conflicts" with the protection of maritime commerce. California law does not recognize a cause of action based on bad faith termination of contract. Freeman Mills, Inc. v. Belcher Oil Co., 11 Cal.4th 85, 102 (Cal. 1996) (abolishing tort-based claim for "noninsurance contract breach"); Denbicare U.S.A. Inc. v. Toys "R" Us, Inc., 84 F.3d 1143, 1153 (9th Cir. 1996). By declining to recognize a bad faith breach of contract cause of action, California law is not necessarily in contravention with the fundamental purpose of maritime law. Thus, Plaintiffs' claim must be dismissed.
C. Defamation Claim
Plaintiffs allege that employees and/or counsel of the UPS Defendants made "contentious claims and accusations and slanderous comments . . . in connection with the termination and post-termination of the CSA" and the execution and performance of the DeComercio agreement. Plaintiffs specifically allege that Fritz and UPS "accused [P]laintiffs of dishonesty, misrepresentation and false statements as related to the actions of Bruce Smith and ALS performing . . . the maritime contracts which are at issue. . . . Customers of ALS are being advised of the allegations of dishonesty of . . . Plaintiffs and [P]laintiffs have lost and are likely to lose business and are damaged accordingly." See Rec. Doc. 25, paragraph XXI, at 12. Plaintiffs contend that these allegedly defamatory statements were made by Fritz "in an effort to justify the bad faith termination of the CSA and the refusal of Fritz . . . to honor the agreements." See id., paragraph XXII, at 13. In their 12(b)(6) motion, the UPS Defendants argue that Plaintiffs have failed to allege with the requisite specificity under Louisiana law the defamatory statements allegedly published by the UPS Defendants. Furthermore, the UPS Defendants contend that Plaintiffs have not sufficiently alleged the individual employees or counsel of the UPS Defendants that made the statements. Additionally, the UPS Defendants charge that Plaintiffs have failed to allege that they were injured by the allegedly defamatory statements.
It is important to stress that the Federal Rules of Civil Procedure, not Louisiana law, govern the adequacy of the allegations made in Plaintiffs' second amended complaint. Davidson v. Cao, 211 F. Supp.2d 264, 276 (Mass. 2002). "Defamation claims are subject to the more relaxed pleading requirements of [Federal Rule of Civil Procedure 8]." Id. (citingCroixland Props. Ltd. P'ship v. Corcoran, 174 F.3d 213, 215 n. 2 (D.C. Cir. 1999); Geisler v. Petrocelli, 616 F.2d 636, 640 (2d Cir. 1980). "Federal courts `consistently refuse to require plaintiffs to set forth allegedly defamatory statements en haec verbis." Davidson, 211 F. Supp.2d at 276 (quoting Barber v. Nationwide Communications, Inc., 1995 WL 940517 at *3 (N.D.Tx. 1995). For purposes of Rules 8(a) and 12(b)(6), a plaintiff must allege sufficient facts such that the "defamation allegations . . . afford the defendant sufficient notice of the communications complained of to enable him to defend himself." Barber, 1995 WL 940517 at *3.
To state a claim for defamation under Louisiana law, a plaintiff must allege the following four elements: "(1) a false and defamatory statement concerning another; (2) an unprivileged publication to a third party; (3) fault (negligence or greater) on the part of the publisher; and (4) resulting injury." Fitzgerald v. Tucker, 737 So.2d 706, 715 (La. 1999). In the instant case, Plaintiffs fail to provide any specificity as to what statements were made by Fritz and UPS employees and/or counsel and how they were false and defamatory. Furthermore, Plaintiffs' fail to provide any specificity as to whom the statements were made, other than that they were "customers of ALS." Plaintiffs' allegations do not provide the UPS Defendants with sufficient notice of the claims against them to maintain a proper defense. However, the Court will treat the UPS Defendants' motion as a motion for a more definite statement and order Plaintiffs to amend their petition once again to set forth their defamation allegations in sufficient detail for purposes of Rule 8(a).Barber, 1995 WL 940517 at *3.
D. Restraint of Trade Claim
Plaintiffs appear to make two separate allegations of restraint of trade under Louisiana law. First, Plaintiffs allege that the indemnity and non-competition clauses contained in the CSA present an unlawful restraint on trade in that they are much broader than acceptable under LA. R.S. §§ 23:921(A) and 51:121 et seq., and are thus null and void. Secondly, Plaintiffs allege in their opposition memorandum that Fritz and UPS employees and/or counsel made statements
to DeComercio to deter DeComercio and others from associating or dealing with ALS and/or Bruce Smith. The communications contained intentionally false and defamatory statements to DeComercio and other businesses which resulted in damages to ALS and Bruce Smith in their ongoing business dealings with customers and shippers who perform services for ALS and Smith.See Rec. Doc. 28. at 12-13. The UPS Defendants argue that Plaintiffs' first allegation is purely hypothetical and based on speculation considering the fact that Plaintiffs make no allegation that the non-competition clause was ever enforced by Fritz. Since the clause was never enforced, Plaintiffs could not have suffered any damage or injury.Rec. Doc. 27, at 15. As to the second allegation, the. UPS Defendants contend that Plaintiffs' second amended petition makes no mention of statements made to DeComercio and other businesses which caused a restraint of trade.
As to Plaintiffs' first allegation, the parties disagree as to the governing law. The UPS Defendants contend that California law governs because of the California choice of law clause contained in the CSA. Plaintiffs make no attempt to refute the UPS Defendants' argument. Plaintiffs simply state that LA. R.S. § 23:921 governs this claim. It is not necessary for the Court to resolve which state's law applies because Plaintiffs do not allege that Fritz attempted to enforce the CSA's non-competition clause prohibiting ALS from performing similar services for other brokers, freight forwarders, or competitors of Fritz. Plaintiffs allege a hypothetical situation where the non-competition clause would be unenforceable were Fritz to attempt to enforce it. Therefore, Plaintiffs have made no factual allegations that they have been injured in any way due to the inclusion of the non-competition clause in the CSA. In fact, Plaintiffs' second amended complaint contains numerous allegations that ALS conducted freight-forwarding services independent of Fritz when Fritz chose not to participate. Plaintiffs even allege that they performed the DeComercio agreement as a competitor of Fritz. Finally, the CSA included an additional clause which allowed ALS to "retain the right to perform services for others during the term of the [CSA]." See Rec. Doc. 27, exhibit 1, at 3. Plaintiffs have failed to satisfy the requirements of Rule 8(a) because they have not alleged any facts which show that Fritz attempted to enforce the non-competition agreement or that Plaintiffs were injured in any way by the inclusion of the non-competition clause in the CSA. However, similar to Plaintiffs' defamation claim, the Court will allow Plaintiffs to file an amended petition which includes factual allegations that Fritz actually attempted to enforce the non-competition clause and how those actions caused ALS damage under the applicable state's law.
Both parties appear to agree that Louisiana law governs Plaintiffs' second allegation of unlawful restraint of trade since it involves actions taken by Fritz and UPS employees and/or counsel outside the terms of the CSA. Under LA. R.S. § 51:122, a conspiracy that restrains trade or commerce in Louisiana is illegal. Thus, to properly plead the elements of a claim under § 122, a plaintiff must allege that a defendant conspired with another party. Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 602 (5th Cir. 1981). For purposes of federal law, a corporation cannot conspire with its officers or employees. Id. at 603. However, the Fifth Circuit in Dussouy held that under Louisiana law there are circumstances which can allow such a conspiracy. 660 F.2d at 604 (citing Tooke Reynolds v. Bastrop Ice Storage, 135 So.2d 239 (La. 1931)). Additionally, under LA. R.S. § 51:123, "no person shall monopolize, or attempt to monopolize, or combine, or conspire with any other person to monopolize any part of the trade or commerce" within Louisiana. A private person whose business or property has been damaged pursuant to § 122 or § 123 may bring a cause of action against the party responsible for the damage. LA. R.S. § 51:137.
Based on the second amended complaint, it appears that Plaintiffs seek to assert an unlawful restraint of trade claim under LA. R.S. § 51:122 or § 51:123. Plaintiffs incorrectly cited to LA. R.S. § 51:151 et seq. as the legal basis for their recovery for unlawful restraint of trade. § 51:151 deals with the taxation and payment of discovery costs in unlawful restraint of trade cases brought by the state Attorney General.
Plaintiffs do not allege that the UPS Defendants conspired with another corporate entity to unlawfully restrain the trade and business of ALS. Furthermore, Plaintiffs do not specifically allege that the UPS Defendants conspired with corporate officers or employees. However, Plaintiffs' second amended complaint does attempt to allege facts which if proved, could establish a claim for unlawful restraint of trade under § 122. It appears that Plaintiffs allege that certain corporate officers, employees, or counsel conspired to make intentionally false and defamatory statements to DeComercio and other potential ALS customers in order to impair ALS's business. The problem for Plaintiffs is that they fail to allege what statements were made, how they were false and defamatory, and who they were made to. Plaintiffs are thus ordered to include in their third amended complaint, specific factual allegations to provide the UPS Defendants with proper notice.
E. Unfair Trade Practices Claim
Next, Plaintiffs allege that "ALS was asked by Fritz/UPS to fulfill [the DeComercio agreement] for Fritz/UPS in the capacity of a competitor, giving rise to claims for damages under the Louisiana Unfair Trade Practices Act ("LUTPA")". Under the LUTPA, "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." LA. R.S. § 51:1405(A). However, a plaintiff has standing to bring a private cause of action under the LUTPA only if the plaintiff is a direct consumer or business competitor. Jefferson v. Chevron U.S.A. Inc., 713 So.2d 785, 792 (La.App. 4th Cir. 1988). The plaintiff must allege that the unfair trade practices of the defendant caused the plaintiff damages in his business pursuits as the defendant's competitor. Sears, Roebuck Co v. Danny Williams Plumbing, Inc., 1999 WL 280439 at *3 (E.D. La. 1999).
Plaintiffs do not allege that they are consumers under the LUTPA. Thus, the Court must proceed by determining if Plaintiffs have properly alleged that they incurred damages under the LUTPA as a business competitor of the UPS Defendants. Plaintiffs allege that they assumed performance of the DeComercio agreement as a competitor of the UPS Defendants. However, this allegation directly contradicts other allegations made in the second amended complaint, as well as express terms contained in the CSA.
Plaintiffs allege that ALS rendered services in competition with Fritz "[t]o the extent that ALS conducted the freight forwarding business independently from Fritz/UPS on moves where Fritz/UPS elected not to participate as a joint venturer or handle the deal alone." See Rec. Doc. 25, paragraph V(G), at 4. This statement is completely contradictory. ALS cannot be in competition with Fritz in situations where Fritz chose not to participate. To be a competitor, ALS would have to be directly or indirectly competing with Fritz for business. Sears, 1999 WL 280439 at *3 (citing Delta Truck Tractor, Inc. v. J.I. Case Co., 975 F.2d 1192, 1205 (5th Cir. 1992). It is clear from Plaintiffs' allegations that Fritz gave ALS the opportunity to conduct its own independent freight-forwarding business when Fritz chose not to participate.
It is insufficient for purposes of defeating this Rule 12(b)(6) motion that Plaintiffs simply incorporate the term "competitor" in their complaint, when in fact additional allegations bare out the conclusion that ALS was not operating as a competitor of Fritz. In their second amended complaint, Plaintiffs allege that the UPS Defendants asked ALS to perform the DeComercio agreement. Furthermore, Plaintiffs allege that ALS performed Fritz's obligations under the agreement because of the employment and agency relationship that had developed between Smith, ALS, and Fritz. Finally, Plaintiffs cannot logically argue that they are entitled to relief from the UPS Defendants simultaneously under both a contract theory and a competitor theory. Under Plaintiffs' contract theory, they allege that the execution of the CSA created such a relationship between ALS and Fritz that ALS became a third-party beneficiary to the DeComercio agreement. It is difficult to see how ALS could be both a beneficiary and a competitor at the same time. Since Plaintiffs have failed to allege sufficient facts to assert a claim under the LUTPA, such a claim against the UPS Defendants must be dismissed.
F. Tortious Interference with Contract Claim
Plaintiffs have additionally asserted a claim for tortious interference of the DeComercio agreement against the UPS Defendants "as a result of their interference and/or refusal to comply with obligations owed to ALS and Bruce Smith in the performance of the shipping/freight forwarding contract with DeComercio." See Rec. Doc. 25, paragraph XIX, at 11. Plaintiffs contend that this claim arises under maritime tort law.
A district court's admiralty jurisdiction exists in tort cases "if the alleged wrong occurs on navigable waters (situs) and bears a significant relationship to traditional maritime activity (nexus)." Kuehne Nagel (AG CO) v. Geosource, Inc., 874 F.2d 283, 288 (5th Cir. 1989). In determining whether the tort occurred on navigable water, a district court is to look "to where the alleged wrong took effect rather than to the locus of the allegedly tortious conduct." Egorov, Puchinsky, Afanasiev Juring v. Terriberry, Carroll Yancey, 183 F.3d 453, 456 (5th Cir. 1999). Furthermore, "interference with a maritime contract does not vest the court with admiralty tort jurisdiction absent an impact on navigable waters." Kuehne, 874 F.2d at 289-90 (citing Wiedemann Fransen APLC v. Hollywood Marine, Inc., 811 F.2d 864 (5th Cir. 1987)) .
The Fifth Circuit has previously instructed that in cases such as the instant one where the defendant's actions clearly took place on land, such land-based acts must "directly produce . . . a major injury on navigable waters" to trigger a court's admiralty jurisdiction. Kuehne, 874 F.2d at 289. The Fifth Circuit in Wiedemann, Kuehne, and Egorov dealt with claims for tortious interference with contract that were dismissed for lack of admiralty jurisdiction. Egorov, 183 F.3d at 456-57; Kuehne, 874 F.2d at 289-90; Wiedemann, 811 F.2d at 866. In each of those cases, the Fifth Circuit held that the allegedly tortious conduct did not have a direct effect on navigable waters. Egorov, 183 F.3d at 456; Kuehne, 874 F.2d at 289; Wiedemann, 811 F.2d at 866. In each of those cases, the contracts were to be performed on land.
The instant case is a much closer call. Plaintiffs allege that the UPS Defendants themselves, and/or one or more corporate officers, interfered with the DeComercio agreement to the detriment of Plaintiffs. The direct effect of this alleged interference was that Plaintiffs chose to fulfill the alleged obligations of the DeComercio agreement on behalf of Fritz. This decision to fulfill the agreement was made by ALS on land. As a result of the alleged actions attributable to the UPS Defendant, Plaintiffs allege that they have been stuck with their costs and lost profits incurred in performing the DeComercio agreement. Furthermore, ALS allegedly provided many land-based services in performing the DeComercio agreement. Thus, while the contract at issue involved maritime freight-forwarding services, the alleged wrong that occurred on navigable waters "was too remote from the tortious act" to meet the locality requirement for admiralty tort jurisdiction. Kuehne, 874 F.2d at 289.
Plaintiffs' claim therefore must arise under Louisiana law. A claim for tortious interference with contract under Louisiana law can only be asserted against a corporate officer. 9 to 5 Fashions v. Spurney, 538 So.2d 228, 234 (La. 1989). Since the UPS Defendants are not corporate officers, they cannot be liable for tortious interference with contract. Thus, Plaintiffs' claim asserted against the UPS Defendants must be dismissed. This does not bar Plaintiffs' ability to assert such a claim against individual corporate officers of the UPS Defendants.
G. Unjust Enrichment Claim
Finally, Plaintiffs have asserted a claim for unjust enrichment against the UPS Defendants. Plaintiffs allege that the UPS Defendants were unjustly enriched by ALS's performance of the DeComercio agreement because DeComercio threatened to sue Fritz for $100 million in delay damages were the barges not shipped to Guatemala as contracted for in the DeComercio agreement. Plaintiffs do not allege that the UPS Defendants received money under the DeComercio agreement or profited from the agreement even though they did not perform the freight-forwarding services.
(2) John B. Lambremont Sr.'s Privilege Log (3) Ken Stewart Privilege Log 41 (4) Fleming Group Privilege LogNumber 48: Fee Sharing Agreement Not Privileged dated 2-20-96 Number 49: Confirmation of Fee Not Privileged Sharing Agreement dated October 11, 1995 Number 50: Joint Representation Not Privileged Agreement dated 3-27-95 Number 69: Fee Agreement and Not Privileged Confidentiality Agreement dated July 14, 1995 and July 24, 1995 Number 70: Fee Sharing Agreement Not Privileged Clarification dated July 20, 1995 and signed August 16, 1995 Number 71: Letter dated July 24 Not Privileged enclosing Clarification (same as Number 70) Number 75: 8-5-95 Handwritten Draft Not Privileged Addendum to Joint Representation Agreement Bates 88316-88317: Letter from Bruce Kemp Not Privileged dated July 15, 1999 No. 7 in Lambremont Binder Bates 27657-27658: Correspondence between Not Produced in co-counsel No. 18 not in camera Lambremont binder Bates 27659-27661: Correspondence between Not Produced in co-counsel No. 19 not in camera Lambremont binder Number 1: 7-24-96 Memorandum Work Product between counsel Plaintiff's strategy regarding tests for Edwards case [previously Item Number 78]. Number 10: Case investigation and Underlying Factual analysis of of the levels Data Not Privileged of elements [previously Item Number 11] Number 14: 7-18-99 Article — Underlying Factual Gulfport Explosion Data Not plaintiff strategy Privileged [previously Item Number 31] Number 76 1995 Memorandum Work Product Discussing Case Strategy and information regarding Banks and Curry clients [previously Item Number 261] Number 252: 10-30-95 unidentified Not Produced in handwritten notes not camera included for in camera review in new privilege log listing 80 documents for in camera review Number 260 11-16-95 Letter Not Produced in Discussing Case Strategy camera enclosing lists to correct errors and discrepancies Bates 8018 7/24/95 Clarification Not Privileged regarding Joint Representation Bates 7847-48 10/11/95 Fee Splitting Not Privileged Agreement Bates 6513-14 8/11/99 Revised Fee Work Product Arrangement instructions regarding litigations handling mental impressions of counsel Bates 5704 same as Lambremont Not Privileged 88316-88317 Bates 5690-91 9/13/99 Letter Regarding Not Privileged Case Expenditures, Division of Work Bates 5688-89 9/14/99 Letter Invoice Not Privileged and Notice of Breach of Agreement Bates 3688 9/3/99 Fax re Case Work Product Handling Bates 3677-78 10-10-99 Fax re redoing Not Privileged fee arrangement payment of case expenses Bates 3273-74 8-11-99 Letter same as Work Product Bates 6513-14 Bates 3264-67 10-11-99 Letter Not Privileged Requesting Execution of New Fee Arrangement Bates 900-02 12-8-97 Fee Arrangement Not Privileged Bates 625-31 8-15-96 Letter regarding Work Product legal strategy mental impressions of counsel Bates 583-85 1-9-96 Proposed Fee Not Privileged Arrangement regarding unrelated case not involving Southern Scrap Bates 294 undated statement of Not Privileged wages and withholding regarding unidentified individual with matching Bates 273-75 August 16, 1995 Not Privileged Clarification July 20, 1995 Letter Fee Agreement same as Stolze No. 70
B. Articles, Photographs, Maps and Videos
As previously noted the work-product doctrine shields materials prepared by or for an attorney in preparation for litigation. Blockbuster Entertainment Corp. v. McComb Video, Inc., 145 F.R.D. 402, 403 (M. D. La. 1992). It protects two categories of materials: ordinary work-product and opinion work product. See Upjohn Co. v. U.S., 449 U.S. 383, 400-02 (1981). The doctrine is not an umbrella affording protection to all materials prepared by a lawyer or an agent of the client. The law of the Fifth Circuit is that "as long as the primary motivating purpose behind the creation of the document was to aid in potential future litigation," the work-product privilege is implicated. See In re Kaiser Aluminum and Chemical Co., 214 F.3d 586, 593 (5th Cir. 2000). However, if the materials were assembled or came into being in the ordinary course of business, work-product protection does not reach that far. See United States v. El Paso Company, 682 F.2d 530 (5th Cir. 1982), cert. denied. 466 U.S. 944 (1984); Beal v. Treasure Chest Casino, 1999 WL 461970, *3 (E. D. La. July 1, 1999). Moreover, it does not extend to underlying facts relevant to the litigation. See Upjohn, 449 U.S. at 395-96. The burden of showing that documents were prepared in anticipation of litigation, and therefore, constitute work-product, falls on the party seeking to protect the documents from discovery. St. James Stevedoring Co., Inc. v. Femco Machine Co., 173 F.R.D. 431, 432 (E. D. La. 1997). The Court now turns to the documents and items listed on defendants' privilege logs to determine whether they are shielded from discovery pursuant to either the work-product or the attorney-client privilege.
(1) Frederick Stolzle Privilege Log No. 23 — Photographs and Exhibit Video:
Defendant Stolzle argues that the surveillance video and photographs are privileged under the work product doctrine and can only be produced upon a showing of "substantial need" and "undue hardship." The video tape and photographs at issue are clearly work product, having been gathered in anticipation of litigation, i.e., Banks, et al, inter alia.
Courts have expressed a diversity of views as to how to resolve the issue presented.42 However, there is a common thread running through all of the jurisprudence, i.e., surveillance can be a very important aspect of the party's case. The issue surfaces most often in the plaintiff-personal injury scenario; usually, it involves the defendant's surveillance of the plaintiff which tends to discredit the plaintiffs description of his or her injuries. Obviously, such surveillance evidence gathered in anticipation of litigation is generally protected as work product.
In Chiasson v. Zapata Gulf Marine Corp., 988 F.2d 513, 517 (5th Cir. 1993), the Fifth Circuit addressed the discoverability of videotape surveillance. The court held that, regardless of whether the surveillance video has impeachment value, it must be disclosed prior to trial if it is at all substantive evidence43 as opposed to solely "impeachment evidence." Id. at 517-18.44
Having reviewed the video tape and photographic surveillance ( i.e., the defendants' trial exhibits in the underlying litigation), the Court finds that the films, whether photograph or video, are of a substantive nature. More specifically, they may be used to either prove or disprove the plaintiffs' allegations in the underlying state court toxic tort litigation regarding the condition of Southern Scrap's facilities and the various operations conducted and materials stored upon or moved about the premises. Likewise, they may aid in either proving Southern Scrap's allegations or the defendants' affirmative defenses in the captioned RICO litigation. The thrust of Southern Scrap's claims herein is that the defendants made a concerted effort to prosecute baseless and frivolous claims against Southern Scrap for the purpose of extorting settlement funds in the underlying state court litigation. Because the subject video tapes and photographic materials are substantive in nature, and the same are not otherwise available to Southern Scrap,45 under Chaisson, these items are discoverable.
(2) John B. Lambremont, Sr.'s Privilege Log
Lambremont's Bates Numbers 0026979-80: Defendant Lambremont withdrew his objection to production of this document.
Lambremont's Bates Numbers 0026982 and 0026984: For the same reasons discussed above with respect to videotape discovery withheld by the defendant Stolzle, the defendant John Lambremont Sr. must produce this withheld video surveillance.
Lambremont's Bates Numbers 0088517-0088520: Defendant Lambremont agreed to provide a copy of this article which is Bates Stamped No. 0088516.
Lambremont's Bates Numbers 0027198-0027201: Defendant Lambremont notes that he will produce this article in camera ordered by the Court and that these are his notes. The Court orders the defendant to produce Bates Numbers 0027198-0027201 to the undersigned Magistrate Judge for in camera review, as was done in the case of all other contested documentation withheld by the defendants.
(3) Ken Stewart's Privilege Log
Stewart Number 159 on Stewart's previous privilege log ( i.e., a letter dated 10-26-95 enclosing an invoice representing all outstanding invoices, etc.), is not included in Stewart's 80 item submission tendered to the undersigned Magistrate Judge for in camera review.
(4) The Fleming Group's Privilege Log
Fleming Bates Numbers FSS 007883-84, as defense counsel submits, consists of a copy of a newspaper article which appeared in the Baton Rouge Advocate regarding the toxic tort suit against Southern Scrap. The article consists of non-protected factual information, and thus, must be produced. As previously noted, the mere fact that an attorney is copied with a newspaper article or document does not mean that the underlying data or that the document itself is privileged.46 Only confidential communications made with a legal objective are privileged.
Fleming Bates Numbers FSS 006792-95 is a fax communication between plaintiff's counsel commenting on faxed newspaper article regarding the settlement of a lawsuit. Mere transmittal or confirmation letters: which do not contain any confidential communications or attorney advice, opinion or mental impressions, are not protected.47 Whereas, here, the transmittal coversheets contain the opinion and/or mental impressions of counsel, the document is privileged. However, the newspaper article ( i.e., non-protected factual information) must be produced.
Flemings Bates Numbers FSS 001779, FSS 00937-938, FSS 000067-68 and 000046-48 must be produced for the same reasons set forth immediately above in subparagraphs a and b. These newspaper articles ( i.e., otherwise unprotected factual documents/data with comments removed, if any, per agreement of counsel) are NOT PRIVILEGED.
C. Purely Factual Matters are Discoverable
These documents are comprised of investigative materials, reports and opinions of experts who have been retained (possibly not testifying experts,) along with raw data, factual data displays on charts and maps, and other factual records, including but not limited to results of tests conducted on all air, water, soil and attic dust samples taken from various sites in and around Southern Scrap facilities in Baton Rouge and elsewhere in the state of Louisiana. Southern Scrap contends that these factual records, data and/or documentation is fully discoverable.
Defendant Stolzle contends that these documents are protected as attorney work product and that he should not be required to produce copies or disclose the contents. Moreover, the defendant urges the Court to find that unless and until the defendants disclose the names of their testifying experts, which disclosure is not due until July 9, 2003, these individuals should not be treated as "experts" in this RICO case at all. Stolzle notes generally that some of these experts may have or eventually will render opinions on issues pertinent to the underlying state court litigation; however, in this proceeding these individuals are presently only potential fact witnesses. Finally, defendant argues that via discovery in the instant federal RICO lawsuit, Southern Scrap is attempting to circumvent Louisiana's scope of discovery regarding experts as set forth in article 1424 of the Louisiana Code of Civil Procedure, which proscribes ordering the production or inspection of any part of a writing that reflects the mental impressions, conclusions, opinions, or theories of an attorney or an expert. See La. Code Civ. P. art. 1424. Stolzle contends that Southern Scrap is using this Court as a tool in its quest for production of documents and material otherwise unobtainable in the underlying pending state court litigation.
Southern Scrap counters that this third category of challenged documents are but recitations of purely factual matters learned from third parties. The plaintiff contends that this information is either discoverable as documents given to testifying experts or that any privilege that may be applicable has been waived because the Fleming Group produced such "work product" protected documents.48 Moreover, defendants point out that Stolzle and the other defendants challenge production on the basis of Louisiana procedural law, noting that the federal court must evaluate the claim of work product protection under the rubric of federal law.49
A As previously discussed, the work-product doctrine50 is a judicially created immunity to prevent a party to a lawsuit from receiving the benefits of an opposing counsel's preparations for trial.51 The doctrine is designed to protect the adversary process "by safeguarding the fruits of an attorney's trial preparations from discovery attempts of an opponent."52 The party who is seeking the protection of the work-product doctrine has the burden of proving that the documents were prepared in anticipation of litigation.53 Notwithstanding the foregoing, work product protection does not extend to the underlying facts relevant to the litigation.54
The Court here specifically distinguishes between the types of information sought by Southern Scrap. Insofar as documents sought recount factual information relevant to the claims against Southern Scrap in the underlying litigation, whether it is simply unannotated raw data, test results, maps indicating where samples were taken from, or a graphic display of test sample results, these factual matters are fully discoverable. This type of underlying factual information does not fall within the work-product doctrine. Moreover, this factual information goes to the very heart of the defendants' affirmative defenses in the captioned federal RICO case ( i.e., the existence of a basis in fact for the underlying state court cases filed against Southern Scrap).
(1) Frederick Stolzle Privilege Log
Stolzle Number 1: Correspondence between plaintiffs' counsel, authored by Bruce Kemp and mailed to co-counsel Lambremont and Stolzle, is protected WORK PRODUCT, rife with mental impressions and opinions of counsel.
Stolzle Numbers 3, 4: These documents are merely transmittal cover letters, without the appended test results and do not contain any confidential communications, mental impressions or other protected matters. Accordingly, the documents are NOT PRIVILEGED and should be produced.
Stolzle Number 5: The Fax Cover Sheet and Cover Letter dated 7-12-99, along with case narrative and Chain of Custody Form with instructions are PRIVILEGED and need not be produced. However, the remainder of the document consisting of 35 pages relevant factual data, including a map of sample locations, results of attic dust sampling, TAL metal lab results, and radiation survey records are NOT PRIVILEGED and shall be produced.
Stolzle Number 6: The Cover Letters dated 7-8-99 and 7-9-99 along with Expert Report and Analysis dates July 8, 1999 are protected WORK PRODUCT.
Stolzle Number 7: The Fax Cover Sheet dated 5-13-99 is PRIVILEGED and need not be produced. The one-page enclosure consisting of a recitation of lab results on a soil sample is NOT PRIVILEGED and shall be produced.
Stolzle Number 8: The Cover Letter dated April 23, 1999 and Report and Findings dated April 19, 1999 is protected WORK PRODUCT.
Stolzle Number 9: Histologic analysis and opinion of Dr. Daniel Perl regarding lung tissue taken from the autopsy of Mr. Eddie Edwards are protected WORK PRODUCT.
Stolzle Number 10: Correspondence to Mr. Kemp dated March 24, 1999 detailing the scope of the work is protected WORK PRODUCT.
Stolzle Number 14: Cover letter dated July 11, 1996, hand-sketched map, Report on Microscopic Analysis dated July 2, 1996 are protected WORK PRODUCT. However, Southern Scrap Materials Sampling Data Sheet (2 page chart) landscape mode and Southern Scrap Metals Sampling Results dated 6-23-96 (page chart) are NOT PRIVILEGED and shall be produced.
Stolzle Number 15: Cover letter dated October 22, 1996, Fax Cover Sheet dated 10-29-96 and Report of Results dated October 17, 1996 are protected WORK PRODUCT. However, the Southern Scrap Materials Sampling Data Sheet, Baton Rouge, La. (2 pages) is NOT PRIVILEGED and shall be produced.
Stolzle Number 16: Correspondence between plaintiffs' counsel discussing households with lead poisoning is protected WORK PRODUCT.
Stolzle Number 17: Handwritten pages and comments noted are protected WORK PRODUCT. However, Maps of Zip Code 70805, Soil Sample Test Results dated 9-20-95, LSU Graphic Depicting Baton Rouge Wind Rose (Annual 1965-1974) are NOT PRIVILEGED and shall be produced.
Stolzle Number 18: Cover Letters dated January 20, 1996 and January 19, 1996, the narrative entitled "Map Interpretations of Data" and Fax Cover Sheet dated December 12, 1995 with enclosures including handwritten notes are protected WORK PRODUCT. However the 8 charts graphing attic dust test results and the attic dust sampling results dated December 1995 are NOT PRIVILEGED and shall be produced.
Stolzle Number 19: Fax cover sheets are protected WORK PRODUCT, but test results dated 1-31-96 are NOT PRIVILEGED and shall be produced.
Stolzle Number 20: Fax cover sheet with notations and Report dated March 20, 1996 are protected WORK PRODUCT.
Stolzle Number 21: Non-Fasting Blood test results for lead (2 pages) are NOT PRIVILEGED and shall be produced.
Stolzle Number 22: Un-executed Contractor Service Agreement is protected WORK PRODUCT.
Stolzle Number 24: Fax message regarding house testing dated 12-1-95 is later addressed under the section captioned "ALR Customer" and "CLR Customer" below.
Stolzle Number 25: Cover letter and Report dated July 8, 1999 are protected WORK PRODUCT
Stolzle Number 26: Same Document as Item Number 5 above ( i.e., fax cover sheet and cover letter dated 7-12-99, plus same test results). Test results need not be produced again.
Stolzle Number 27: Cover letter dated June 26, 2000 and Narrative Report dated 6-26-00 are protected WORK PRODUCT. However, Radiation Survey dated 6-19-00 (1 page) and the Draft TAL metal test results (14 pages) dated 6-26-00 are NOT PRIVILEGED and shall be produced.
Stolzle Number 28: Cover letter and report dated 3-20-96 are protected WORK PRODUCT.
Stolzle Number 29: Cover letter dated 4-8-96 and report dated 4-5-96 are protected WORK PRODUCT.
Stolzle Number 30: Cover letter and report dated 7-2-96 are protected WORK PRODUCT.
Stolzle Number 31: Same Documents included in Item Number 14 above.
Stolzle Number 32: Same Documents included in Item Number 14 above.
Stolzle Number 33: Same Documents included in Item Number 15 above.
Stolzle Number 34: Same Documents included in Item Number 26 above.
Stolzle Number 35, 36, 37, and 38: Data charts, portions of which were included as part of Items 14 and 15 above, are NOT PRIVILEGED and shall be produced.
Stolzle Number 55: Letter dated April 15, 1997 is protected WORK PRODUCT.
Stolzle Number 56: Letter dated September 29, 1995 is protected WORK PRODUCT.
Stolzle Number 57: Letter dated September 22, 1995 is protected WORK PRODUCT.
Stolzle Number 60: Letter dated September 12, 1995 is protected WORK PRODUCT.
Stolzle Number 61: Letter dated September 6, 1995 is protected WORK PRODUCT.
Stolzle Number 62: Letter dated August 31, 1995 addressed to all "Residents" of a North Baton Rouge Neighborhood is NOT PRIVILEGED and shall be produced.
Stolzle Number 72: Correspondence to Mr. Grayson dated July 10, 1997 detailing the scope of the work is protected WORK PRODUCT.
Stolzle Number 73: Correspondence to Mr. Grayson dated August 5, 1998 discussing strategies is protected WORK PRODUCT.
Stolzle Number 74: Correspondence of Mr. Rastanis to Dr. George dated November 3, 1995 discussing the report of Dr. Ronald Gots is protected WORK PRODUCT.
Stolzle Number 79: Memorandum from Ken Stewart dated June 14, 1995 discussing the DEQ notification regarding the St. Thomas yard is protected WORK PRODUCT.
(2) John Lambremont, Sr.'s Privilege Log
Bates Numbers 0089024-31 is protected WORK PRODUCT. However, Fax Transmittal Cover Sheets are discoverable.
Bates Numbers 087481-515 consisting of client lists with annotations regarding each is protected WORK PRODUCT.
Bates Number 0088190 consists of correspondence between counsel for plaintiffs in the underlying state court litigation, discussing trial strategy and mental impressions. It is protected WORK PRODUCT.
Bates Numbers 0012561-656 and 0013095-96: Defendant withdrew his objections to these items.
(3) Ken Stewart's Privilege Log
Stewart No. 20 [previously #89]: Memorandum dated March 10, 1999 discussing case strategy is protected WORK PRODUCT.
Stewart No. 32 [previously #76]: Fax cover letter dated 7-11-96 sent by Keith Partin without remarks but enclosing 10 pages of air sample test results is NOT PRIVILEGED and shall be produced.
Stewart No. 36 [previously #45]: Unexecuted document which purports to be a Report of Patricia Williams, Ph.D., an expert consulted in a wholly unrelated matter number 89-23976 on the docket of the Civil District Court is protected WORK PRODUCT.
Stewart No. 39 [previously #50]: Attic Dust Sample Test Results dated December, 1995 is NOT PRIVILEGED and shall be produced.
Stewart No. 42, 43, 44 [previously #'s 57, 58, 59]: Annotated client lists are protected WORK PRODUCT and plaintiffs have already been advised of the names of the clients.
Stewart Nos. 41 and 45 [previously #'s 60 and 61]: Southern Scrap Materials Sampling Data Sheet is NOT PRIVILEGED and shall be produced.
Stewart No. 50 [previously #65]: Sample testing result data sheet dated January 31, 1996 is NOT PRIVILEGED and shall be produced.
Stewart No. 54 [previously #84]: Letter dated March 7, 1997 is protected WORK PRODUCT.
Stewart No. 55 [previously #88]: Letter dated August 31, 1998 along with enclosures are protected WORK PRODUCT.
Stewart No. 56 [previously #90]: Test Results of Soil Samples dated May 11, 1999 is NOT PRIVILEGED and shall be produced.
Stewart No. 57 [previously #91]: This Document consists of a Narrative Report by ETI and a Narrative Report of Results dated November 7, 1996 and both reports are protected WORK PRODUCT.
Stewart No. 58 [previously #92]: Information and sample surveys are protected WORK PRODUCT.
Stewart No. 70 [previously #115]: Defendant has failed to show how this list of individuals identified by Caller Identification is protected work product, and thus, it is NOT PRIVILEGED and shall be produced.
Stewart Items Previously Numbered 83, 85-87, 93-114, 116-119, 124, 126 and 128 are not included in Stewart's 80 item submission tendered to the undersigned Magistrate Judge for in camera review.
The Court here notes that if and/or when any one or more of the defendants' or the plaintiffs' experts are designated as trial (i.e., testifying) witnesses, their reports and all of the material furnished to them by counsel or utilized by them in producing their reports shall he produced to opposing counsel forthwith and without any further delay. This ruling obtains whether the designation of such an expert be as either a fact or an expert witness. This is so because any factual testimony elicited from such an expert will necessarily relate to their participation in the underlying case or cases as an expert witness. In other words, their trial testimony will inevitably touch upon matters which the parties, both plaintiffs and defendants, now claim are protected by privilege. Testimony of such experts at trial, even as to factual matters, would necessarily waive both the attorney-client privilege, to the extent such matters were disclosed, and any work product protection that is presently claimed.
Rule 26(a)(2) of the Federal Rules of Civil Procedure governs the disclosure of expert testimony and the Advisory Committee Notes to the 1993 Amendments clarify the intent of the disclosure requirement: "The [expert] report is to disclose the data and other information considered by the expert. . . . Given this obligation of disclosure, litigants should no longer be able to argue that materials furnished to their experts 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." (emphasis added). In other words, the plain language of Rule 26(a)(2)(B) and the accompanying Advisory Committee Note mandates the disclosure of any material, factual or otherwise, that is shared with a testifying expert, even if such material would otherwise be protected by the work product privilege.55
In TV-3, Inc. v. Royal Insurance Company of America, the Court noted that:
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.56
Given the plain language of Rule 26(a)(2), inter alia, the district judge affirmed the Magistrate Judge's ruling denying the defendants' motion for a protective order and ordering full disclosure.57 In In re Hi-Bred International, Inc., 238 F.3d 1370 (D.C. Cir. 2001), the Federal Circuit cited the TV-3 decision with approval and observed that:
The revised rule proceeds on the assumption that fundamental fairness requires disclosure of all information supplied to a testifying expert in connection with his testimony. Indeed, we are quite unable to perceive what interest would be served by permitting counsel to provide core work product to a testifying expert and then to deny discovery of such material to the opposing party.58
The Federal Circuit further specifically held that the attorney client privilege, to the extent such communications were disclosed, and any work product protection are waived by disclosure of confidential communications to a testifying expert.59
It is not clear on this record which of the defendants' experts have already testified or will in fact testify in the underlying proceedings. Additionally, the parties in this proceedings have not yet designated the witnesses who will testify on their behalf at the trial in the captioned matter. Moreover, considering that these proceedings only recently advanced to the brink of the commencement of discovery depositions, the record does not yet demonstrate the full extent of the disclosures made to any testifying experts. Absent a proper record, disclosure to a testifying expert cannot be the basis of ordering production.
D. Lambremont's Vintage Documents
Southern Scrap refers to items listed on John B. Lambremont, Sr.'s Privilege Log which comprise Tab 6 of his in camera submission, to wit: Bates Nos. 0075835, 007586, 0075871, 0075944, 0075955, 0075978, 0075982,0076003,76076081, 0076242, 0076456, 0076463, 0076614, 0076674, 0076738, and 0076146. Southern Scrap argues that the above enumerated documents bear dates between one and six years prior to the institution of the first lawsuit. Essentially, Southern Scrap contends that because these documents were not created during a time frame within which "a real and substantial possibility of litigation" existed, they cannot properly be categorized as work product. A review of these documents, which appear to be the attorneys handwritten research notes, belies plaintiffs' contentions. Most of the documents bear dates in 1994, and quite a few refer specifically to underlying lawsuits filed against Southern Scrap by plaintiff/client name. The documents are protected WORK PRODUCT.
E. "Scrap Notes"
The publication "Scrap Notes" was the vehicle utilized by the defendants to advise clients of the progress of their cases against Southern Scrap in the underlying proceedings. Southern Scrap suggests that simply because it somehow came into possession of a copy of this informational pamphlet bulk mailed to clients, that the attorney-client privilege has been waived as to all of the topics discussed therein. Southern Scrap urges the Court to order the production of all documents related to the topics discussed in "Scrap News."
Defendants Fleming Associates, LLC and George Fleming filed formal reply on this issue. Fleming denies that "Scrap Notes," which on its face purports to be a confidential attorney-client communication,60 was mailed to anyone other than clients. Essentially, the Fleming defendants contend that the simple fact that a third party somehow became possessed of a copy of an issue of its client newsletter, does not, in and of itself, effect a waiver of the attorney-client privilege in this matter. Moreover, the Fleming defendants highlight the facts that the newsletter was not circulated to potential clients and that the copy obtained by Southern Scrap was mailed to a plaintiff in the underlying proceedings.61
The attorney-client privilege exists to protect confidential communications and the attorney-client relationship and may be waived by disclosure of the communication to a third party.62 However, inadvertent disclosure to third party may or may not constitute a waiver of the attorney-client privilege; that determination depends on the facts of the disclosure.63
While it is not clear how counsel for Southern Scrap came into possession of the client newsletter, the submissions to date do not militate in favor of finding waiver. The memorandum is very clearly and obviously an attorney-client communication. Based upon the facts known at this time and considering the criteria set forth in the Fifth Circuit's decision in Alldread v. City of Grenada, 988 F.2d 1425 (5th Cir. 1993),64 the undersigned Magistrate Judge finds that the client newsletter is protected by the attorney-client privilege.
F. Becnel Communications
Southern Scrap disputes that Document No. 2 on the Stolzle Privilege Log can possibly be considered work product. Southern Scrap highlights the fact that the letter dated September 13, 1999 ( i.e., after the underlying litigation was filed) and is addressed to Daniel E. Becnel, Jr., one of Southern Scrap's attorneys. The Court agrees that no matter how the argument is pared, defendants' objection must be OVERRULED. The document is NOT PRIVILEGED, contains no privileged information65 and shall be produced.
G. "ALR Customer" and "CLR Customer"
Southern Scrap disputes the privilege claimed by defendants with respect to writings to and/or from either ALR Customer or CLR Customer, which items appear on the Stolzle Privilege Log at Tab 24 and on the Lambremont Privilege Log at Tab 5 (Bates No. 0029761-62).66 As Southern Scrap aptly points out, the defendants have not identified these parties, designated only by the title "ALR Customer" and "CLR Customer." The burden of demonstrating that the information contained in the document constitutes "work product" is the defendants, who are claiming the privilege. Only after the court is convinced that the subject document is protected "work product," does the burden shift to Southern Scrap to show that the materials that constitute work-product should nonetheless be disclosed.67 Accordingly, Stolzle No. 24 and Lambremont (0029761-62) are fully discoverable and shall be produced.
H. Miscellaneous Stolzle Log Items
Stolzle Numbers 43, 44, 45 and 46 are documents which simply refer to the division of work in a case. These documents are NOT PRIVILEGED, fully discoverable and shall be produced.68
I. Letters to Reverends
Stolzle Numbers 80, 81, 82, and 83, letters to various reverends in the community, regarding utilizing local church facilities for client meetings, constitute neither attorney-client communications nor protected work product; they are fully discoverable and shall be produced.
Accordingly and for all of the above and foregoing reasons, the Court issues the following orders. IT IS ORDERED that:
(1) Southern Scrap Material Co., LLC, SSX, L.C., and Southern Recycling Co. LLC's Motion for Maintenance of Privilege over various documents submitted for in camera review [Rec. Doc. #188] is hereby GRANTED;
(2) The Stolzle Defendants' Motion to Sustain Attorney-Client and Work Product Privileges [Rec. Doc. #187] is hereby GRANTED IN PART and DENIED IN PART, all as more specifically set forth herein above;
(3) The Fleming Defendants' Joint Motion to Sustain Work Product and Attorney/Client Privileges [Rec. Doc. #189] is hereby GRANTED IN PART and DENIED IN PART, all as more specifically set forth herein above;
(4) Ken J. Stewart's Motion to Sustain the Privilege on Documents Produced for In Camera Inspection [Rec. Doc. #198] is hereby GRANTED IN PART and DENIED IN PART, all as more specifically set forth herein above; and
(5) Defendant John B. Lambremont, Sr. et al's Motion to Sustain Work Product and Attorney-Client Privileges. [Rec. Doc. #186] is hereby GRANTED IN PART and DENIED IN PART, all as more specifically set forth herein above.