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Moran v. Davita

September 26, 2008


The opinion of the court was delivered by: Hughes, U.S.M.J.


This matter comes before the Court on Motion by Plaintiff Judith Moran ("Plaintiff") to Compel Production of the August 14, 2006 correspondence identified as Bates stamped numbers D338-339 on Defendants' Privilege Log (the "Document") (written communication between DaVita's outside counsel Stewart Sheppard and Steven Cooper regarding his opinion as to how Section 409A affected certain severance packages) or to Strike Defendants' Seventh Separate Defense [dkt. entry no. 20], returnable September 15, 2008. Defendants DaVita, Inc. ("DaVita") and Javier Rodriguez ("Rodriguez") (collectively "Defendants"), opposed the Motion on September 2, 2008 [dkt. entry no. 25]. Plaintiff filed a reply brief on September 16, 2008. The Court heard oral argument on September 23, 2008. For the reasons stated herein, Plaintiff's Motion to Compel is denied and Plaintiff's Motion for alternative relief is denied in part and granted in part.


This litigation arises from the "alleged breach of contract of employment, gender discrimination, retaliation and misrepresentation of internal revenue code provisions which affected the payout of [Plaintiff's] wages and severance under [her] Employment Agreement [with DaVita]." (Pl.'s Br. at 1.)

On May 2, 2006, Plaintiff received notice that Defendant DaVita was terminating her employment pursuant to her August 24, 2000 Employment Agreement. Id. at 2. Donald Beuerle ("Beuerle") and Robert Oldfield ("Oldfield"), two other DaVita employees, were also issued notices of termination around the same time as Plaintiff received her termination notice. Id. at 2. DaVita advised all three employees that they must execute releases to receive severance under their respective Employment Agreements prior to the expiration of the six month waiting period pursuant to Section 409A of the Internal Revenue Code (regulates the tax treatment of the "nonqualified deferred compensation," whether paid to executives or any other employees) Id. Both Beurele and Oldfield executed releases and were paid severance prior to the expiration of their six month waiting period, while Plaintiff did not sign a release and was not paid severance until December 30, 2006. (Defs.' Opp'n Br. at 5.)

Plaintiff alleges that DaVita's inside counsel Steven Cooper, Esq. ("Cooper") communicated with Beuerle and Oldfield regarding whether Section 409A required the six month withholding of their severance. (Pl.'s Br. at 3.) Specifically, Cooper advised Oldfield in his August 21, 2006 e-mail that: "3) At your request, we have followed up with outside counsel to determine if you fall within any exception to Section 409A. We believe that you may fall within one of the exceptions and, therefore, have removed that provision from the [severance] agreement" Id. See also Pl.'s Exhibit 32. Cooper refused to disclose the contents of this document at deposition and no additional documents were supplied at defendant Rodriguez's deposition. (Pl.'s Br. at 4.) Plaintiff asserts that because she was similarly situated to both Beurele and Oldfield, DaVita had no grounds to withhold her pay or severance pursuant to Section 409A when it was determined that 409A required no deferral or withholding regarding both Beuerle and Oldfield. (Pl.'s Br. at 3.) On August 15, 2006, Plaintiff filed the present Motion to to Compel Production of the August 14, 2006 correspondence identified as Bates stamped numbers D338-339 on Defendants' Privilege Log (the "Document") or to Strike Defendants' Seventh Separate Defense [dkt. entry no. 20]. On September 2, 2008, the Motion was opposed [dkt. entry no. 25].

A. Plaintiff's Arguments in Support of the Motion to Compel

Plaintiff makes two arguments why the Motion to Compel should be granted. Specifically, Plaintiff argues that (1) Defendant waived any privilege as to the August 14, 2006 opinion from Stewart Sheppard ("Sheppard"); and (2) The communication from Sheppard to Cooper was never privileged communication, and dealt with a business issue concerning DaVita's fiduciary obligation to pay post-termination remuneration to terminated contract employees such as Moran. (Pl.'s Br. at 6, 8.)

Plaintiff concedes that the courts have long recognized the doctrine of attorney-client privilege. The Federal Circuit has stated that "confidential disclosures by a client to an attorney made in order to obtain legal assistance are privileged." See Pl.'s Br. at 6 (citing Wachtel v. Heathnet, Inc., 482 F.3d. 225, 230-31 (Third Circuit 2007) (quoting Fischer v. the United States, 425 U.S. 391, 403 (1976)). Plaintiff argues, however, "that a party's conduct or treatment of the communication may constitute a waiver of the privilege. Generally, the disclosure of privileged information to third persons constitutes a waiver of the privilege." See Pl.'s Br. at 7 (citing In Re Natta, 48 F.R.D. 319, 322 (D. Del. 1969)) (citations omitted). Plaintiff further argues that "the courts have recognized that when the opinions or advice of counsel is injected into a case, the attorney-client privilege is waived." See Pl.'s Br. at 7 (citing Smith v. Alyeska Pipeline Service Company, 538 F. Supp. 977, 979 (D. Del. 1982)).

Plaintiff argues that an opinion provided by Sheppard was clearly identified in the e-mail from Cooper to Oldfield, specifically that in Sheppard's opinion Oldfield was determined to fall within the withholding provisions of Section 409A. (Pl.'s Br. at 7.) Plaintiff argues that based upon that specific communication, the withholding provisions, from not only Oldfield's severance remuneration but also Beuerle's severance remuneration, were withdrawn and both received wages and severance during 2006, while Plaintiff's pay and severance continued to be withheld pursuant to 409A. Id. Plaintiff asserts that "DaVita may not specifically disclose the substance of an opinion to other employees of DaVita, act upon it and then claim that plaintiff Moran is not entitled to know why her wages and severance are continued to be withheld when both Beuerle and Oldfield received uninterrupted payments." Id. at 8. Plaintiff further asserts that "as an employee, [she] is entitled to see the information upon which her employer's determination was made." (Pl.'s Reply Br. at 4.)

Plaintiff argues that the communications between Sheppard and Cooper revolve around a business matter, specifically the determination of how Section 409A affected certain severance packages. (Pl.'s Br. at 9.) Plaintiff also argues that "[b]ecause DaVita based its conduct on the "outside counsel" communication, that communication is relevant to the issues in this case, is not privileged and must be disclosed." Id. at 6. Ultimately, Plaintiff asserts that she is entitled to all information which caused DaVita to make payments to both Oldfield and Beuerle, while continuing to withhold her remuneration pursuant to the six month withholding provisions of Section 409A. Id. at 9.

B. Defendants' Arguments Opposing the Motion to Compel

In opposition, Defendants argue that Plaintiff's Motion is untimely. (Defs.' Opp'n at 5.) Defendants also argue that the communications at issue are privileged and Plaintiff has failed to satisfy the legitimate need and relevance prongs of the Kozlov test which are necessary to lift the privilege. Id. at 9, 10; see also In re Kozlov, 79 N.J. 232, 243-44 (1979).

With regards to Defendants' claim that the Motion is untimely, they assert that June 30, 2008 marked the conclusion of discovery and an extension was never requested in order to pursue the subject of the present motion nor were the materials on the privilege log requested to be produced. Id. at 5. Defendants argue that barring the Motion to Compel as untimely is appropriate because said motion is merely an attempt to manufacture a disputed material fact to avoid summary judgment. Id. at 6-7. Defendants further argue that Plaintiff failed to comply with ...

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