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Mclane Foodservice, Inc v. Ready Pac Produce

June 1, 2012

MCLANE FOODSERVICE, INC., PLAINTIFF,
v.
READY PAC PRODUCE, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Joel Schneider United States Magistrate Judge

[Doc. No. 106]

MEMORANDUM OPINION AND ORDER

This matter is before the Court on the "Motion to Compel" [Doc. No. 106] filed by plaintiff McLane Foodservice, Inc. ("McLane"). The motion calls upon the Court to address the contours of what the Court will refer to as the community-of-interest ("COI") or common interest doctrine.*fn1 The discussion takes place in the context of plaintiff's request for documents related to a "traceback analysis" prepared by Ready Pac Produce, Inc. ("Ready Pac"). The analysis was prepared after an E-coli bacteria outbreak ("outbreak") at a number of Taco Bell Restaurants. The Court received the opposition of Ready Pac and co-defendant Tanimura & Antle, Inc. ("Tanimura"), held oral argument, and received the parties' supplemental submissions. The Court also reviewed the documents in question in camera. For the reasons to be discussed, plaintiff's motion is DENIED.*fn2

BACKGROUND

This lawsuit arises out of an E-coli outbreak in November and December, 2006, at Taco Bell Restaurants in New Jersey, New York and Pennsylvania. After the outbreak, various lawsuits were filed by, inter alia, customers, franchisees and suppliers, some of which have been settled. Plaintiff is a distribution company that receives and warehouses products from suppliers to Taco Bell Restaurants. Plaintiff is seeking damages allegedly resulting from the outbreak, including, but not limited to, litigation costs, destruction of product, lost business and lost profits.

Yum! is the largest restaurant company in the world and operates or licenses more than 35,000 Taco Bell, KFC, and other fast food chains. Complaint ¶7. The majority of Yum!'s restaurants are operated by franchisees. Id. Yum! selected Ready Pac "to be the exclusive regional processor and provider of all of the produce components that are used in many of Taco Bell restaurants' menu items. These include, for example, shredded lettuce, chopped onions, diced tomatoes." Complaint ¶8. Ready Pac procures raw produce from farms, processes it to Taco Bell's specifications, and then packages it according to Taco Bell's specifications. Id. at ¶9. Plaintiff alleges the outbreak was caused by the lettuce that Ready Pac supplied. Plaintiff also alleges that Tanimura supplied Ready Pac with the contaminated lettuce that was eventually sold at Taco Bell's Restaurants. Ready Pac and Tanimura deny the outbreak was caused by contaminated lettuce. In the alternative, if it is determined that lettuce caused the outbreak, Ready Pac and Tanimura blame each other.

After the outbreak, Ready Pac's counsel prepared a "traceback analysis." The analysis was a substantial undertaking to attempt to establish a distribution chain for each delivery from the subject Taco Bell stores to growers. In other words, the analysis attempted to trace the lettuce consumed by the customers who fell ill through the supply chain to the particular grower and field. The traceback was conducted using all of the information Ready Pac had for every individual about whom it could obtain information. Tanimura alleges: "[a] properly conducted trace-back analysis is a critical element both in assessing the strength of [its] defense (for better or worse) and in further developing it by identifying flaws in the analysis that can be addressed through further fact development or evaluation." See May 12, 2012 Letter Brief ("LB") at 2.

Plaintiff did not name Tanimura in its original complaint filed on November 19, 2010. On May 25, 2011, Ready Pac filed its third-party complaint against Tanimura. Ready Pac denied that its lettuce caused the outbreak but alleged that if the jury so finds then Tanimura supplied the contaminated lettuce. After the third-party complaint was filed, Ready Pac and Tanimura jointly requested the Court to stay the third-party proceedings. Plaintiff objected to the request. On August 8, 2011, Ready Pac voluntarily dismissed its third-party complaint.

On September 1, 2011, plaintiff filed an amended complaint naming Ready Pac and Tanimura.*fn3 In addition to their cross-claims in this case, Ready Pac and Tanimura filed lawsuits against each other in California. Ready Pac is seeking to recover the damages resulting from the outbreak including, inter alia, payments made to Yum! and injured consumers, business interruption losses and legal fees. In addition, related insurance coverage and franchisee litigation is pending in different courts. In the early part of 2012, the parties in the outbreak related litigation unsuccessfully attempted to mediate a settlement.

The exemplar documents selected by counsel fit into five categories: (1) drafts of the traceback analysis; (2) communications between counsel discussing the analysis; (3) communications regarding the drafting of defendants' "Common Interest and Confidentiality Agreement" ("CIC Agreement" or "Agreement"); (4) communications to prepare for the global mediation; and (5) a letter summarizing the pending outbreak related litigation. The documents generally reveal that in or about mid-2011, Ready Pac and Tanimura agreed to exchange documents to further their alleged common interests. Effective as of June 24, 2011, Ready Pac and Tanimura entered into their CIC Agreement. One of the common interests identified in the CIC Agreement was to develop common positions on issues raised by the outbreak claims. Presumably this includes the defense that defendants' lettuce did not cause the outbreak. Subsequent to the execution of the Agreement Ready Pac produced to Tanimura a copy of its traceback analysis. Defendants also exchanged written communications regarding the analysis and held a joint meeting to discuss the traceback. Defendants also discussed the joint strategy for their mediation.

The present motion addresses plaintiff's request for a copy of Ready Pac's traceback analysis and communication between Ready Pac and Tanimura regarding the analysis. Plaintiff is not contesting that the documents at issue are work-product, but claims that the work-product protection was waived when Ready Pac and Tanimura shared the documents. Defendants argue the documents are protected from discovery by the COI doctrine.

DISCUSSION

The first question to address is what law to apply. The parties agree that the claims in this matter are based solely on state law and no federal question is presented. As a federal court exercising jurisdiction of state law claims, the court must apply state law to questions of privilege, either New Jersey, the forum state, or the state law of California, where the alleged privileged materials were shared and where Ready Pac and Tanimura entered into their CIC Agreement. See Fed. R. Evid. 501; In re Teleglobe Communications Corp. ("Teleglobe"), 493 F.3d 345, 358 (3d Cir. 2007)(applying Delaware law to a contract dispute arising in connection with a bankruptcy proceeding). See also Pearson v. Miller, 211 F.3d 57, 66 (3d Cir. 2000)("In general, federal privileges apply to federal law claims, and state privileges apply to claims arising under state law."). The parties agree that visa-vis the common interest doctrine, New Jersey and California law do not materially differ. Therefore, New Jersey law will apply.

P.V. ex. rel. T.V. v. Camp Jaycee, 197 N.J. 132, 143 (2008)(if no conflict exists, there is no choice of law issue to be resolved, and the Court should apply New Jersey law). However, even if there was a conflict between New Jersey and California law, New Jersey law would still apply because New Jersey has the most significant relationship with the parties and issues. Id. This is evidenced by the fact that plaintiff's distribution facility is located in New ...


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