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TIMES OF TRENTON PUB. CORP. v. PUBLIC UTILITY SERVICE CORP.

May 3, 2005.

THE TIMES OF TRENTON PUBLISHING CORPORATION, Plaintiff,
v.
PUBLIC UTILITY SERVICE CORPORATION, et al., Defendants.



The opinion of the court was delivered by: JOHN HUGHES, Magistrate Judge

MEMORANDUM OPINION

This matter comes before the Court upon Application*fn1 by Defendant, Public Utility Service Corporation ("Defendant"), to compel Plaintiff, the Times of Trenton ("Plaintiff") and Third Party Defendant Advance Publications, Inc. ("Third Party Defendant") to produce documents ("status reports") withheld under both the attorney-client privilege and work-product doctrines. Plaintiff submitted opposition to the Application. The Court has reviewed the papers submitted by the parties and heard oral argument on April 11, 2005. The Court also permitted supplemental memoranda. For the reasons stated below, Defendant's Motion to compel production of information is granted in part and denied in part.

I. BACKGROUND AND PROCEDURAL HISTORY

  This matter arises out of a utility consulting contract between Plaintiff and Defendant. On December 18, 2003, Plaintiff filed a Complaint seeking a declaratory judgment against Defendant. The Complaint alleges a dispute regarding amounts owed to Defendant pursuant to a utility consulting contract between the parties and seeks a declaration of the parties' respective rights pursuant to the contract. See Compl. On January 20, 2004, Defendant filed a motion to dismiss the Complaint, stay proceedings and/or transfer the case to the Eastern District of Pennsylvania. That motion was denied on February 17, 2004, and on February 10, 2005, Defendant submitted the instant Application, seeking to compel status reports withheld by Plaintiff on the basis of attorney-client privilege and work-product immunity. These status reports were prepared by API Systems Group, Inc., a subsidiary corporation of API, the owner of the Trenton Times and a number of other newspapers. In essence here, the reports were provided to Mark Newhouse, President of API Systems Group, to keep him advised of the internal activities of the Systems Group. According to the Director of the Systems Group during the relevant period of time, ". . . the Systems Group's status reports were not intended for distribution to the API companies . . ." Herring Cert. ΒΆ 5. Mr. Newhouse testified that upon receiving the status reports, he shared them with six individuals, each of whom was a member of the Newhouse family, and who collectively formed the upper management of API's newspaper business. It is this "sharing of reports" that represents the heart of the present controversy.

  A. Defendant Public Utility Service Corporation's Application to Compel all Status Reports

  Defendant asserts that Plaintiff and third-party Defendant have waived the assertion of attorney-client privilege and work-product immunity. Defendant argues that "confidentiality of communications covered by a privilege must be jealously guarded by the holder of the privilege lest it be waived." Def.[`s] Br. at 4 (citing In re Sealed Case, 877 F.2d 976, 980 (D.C. Cir. 1989). Defendant claims that Plaintiff did not "jealously guard" the information contained in the status reports because it was freely disseminated to all of API's newspapers and publishers, and therefore the privilege is waived. Id. at 5. Defendant further contends that the status reports should not receive work-product protection because they were not prepared by an attorney or an agent of an attorney, nor do they include any information provided by counsel. Id. at 13. Additionally, Defendant argues that the purpose of the status reports was to notify superiors of the activities performed over the course of any given week. Id. Consequently, Defendant argues that the status reports were not prepared or collected by an attorney in anticipation of possible litigation, but instead were prepared in the ordinary course of business. Id.

  B. Plaintiff's Opposition to Defendant's Application

  In opposition, Plaintiff contests Defendant's right to the status reports, maintaining that the documents were prepared in anticipation of the litigation. Specifically, Plaintiff argues that the documents make direct reference to strategic discussions with its attorney Mr. DiMino. These references include thoughts about the legal ramifications of the cancellation of the agreement between the parties and attempted settlement amounts purportedly due to Defendant under the agreement. Pl. [`s] Br. at 1. Additionally, Plaintiff contends that the entries of Mr. Petruzzelli, the reports' generator, reflect Mr. DiMino's thoughts and strategies on how to handle pre-litigation settlement negotiations and that these entries fall squarely within the work-product doctrine. Id. at 4.

  In response to Defendant's claims of waiver, Plaintiff contends that the status reports were only sent to Mr. Petruzzelli's boss, Joan Herring, who certified under oath that they were not disseminated to API subsidiaries. Moreover, Mr. Newhouse stated in his deposition that he only disseminated the documents to six upper-level API officers. Plaintiff argues that even if the status reports were disseminated, there would be no waiver of work-product immunity because it was not disseminated to an adversary, which is the only way to effect waiver of work-product immunity. Pl.[`s] Br. at 9.

  II. DISCUSSION AND ANALYSIS

  A. Scope of Discovery

  Initially, the Court notes that jurisdiction is based on diversity of citizenship. Federal Rule of Evidence 501 and District of New Jersey precedent require application of New Jersey state rules of evidence for diversity actions in New Jersey federal courts. Rule 501 reads in relevant part:
Except as otherwise required by the Constitution of the United States or provided by Act of Congress or in rules prescribed by the Supreme Court pursuant to statutory authority, the privilege of a witness, person, government, State or political subdivision thereof shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience. However, in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness, person, government, State, or political subdivision thereof shall be determined in accordance with State law.
FED. R. EVID. 501.

  Interpreting the privileges embodied in Rule 501, the United States District Court of New Jersey has said, "[I]n cases where a district court is exercising diversity jurisdiction, the law of privilege which controls is that which would be applied by the courts of the state in which it sits." Maertin v. Armstrong World Industries, Inc., 172 F.R.D. 143, 147 (D.N.J. 1997) (citing Samuelson v. Susen, 576 F.2d 546, 549 (3d Cir. 1978); In re Ford Motor Co., 110 F.3d 954, 964-65 (3d Cir. 1997)); Robertson v. Central Jersey Bank & Trust Co., 834 F. Supp. 705, 707 (D.N.J. 1993) ("When jurisdiction is based on diversity, Rule 501 of the Federal Rules of Evidence requires this Court to examine state law in deciding questions of privilege." (referring to United Coal Co. v. Powell Constr. Co., 839 F.2d 958, 965 (3d Cir. 1988))).

  While analysis of the issue as it applies to the attorney-client privilege is governed by the substantive law of New Jersey, the Court's analysis with respect to the work-product doctrine is governed by federal law. See United Coal Companies v. Powell Construction Company, 839 F.2d 958, 966 (3d. Cir. 1988) ("Unlike the attorney/client privilege, the work-product privilege is ...


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