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Portland Pipe Line Corp. v. Cityof South Portland

United States District Court, D. Maine

August 14, 2017

PORTLAND PIPE LINE CORPORATION, et al., Plaintiffs,
v.
CITY OF SOUTH PORTLAND, et al., Defendants.

          ORDER

          JOHN A. WOODCOCK, JR. UNITED STATES DISTRICT JUDGE

         In connection with their motion for summary judgment, the City of South Portland and its code enforcement officer (Defendants) seek to file a document that Portland Pipe Line Corporation (PPLC) and the American Waterways Operators (AWO) (collectively, Plaintiffs) contend is an attorney-client communication and attorney work product. The Defendants move the Court to conduct an in-camera review of the document to determine if it enjoys privileged or protected status. Upon review, the Court concludes that the document is neither privileged nor protected.

         I. BACKGROUND

         A. The Document in Dispute

         The parties' filings indicate that on December 29, 2016, PPLC filed an application for abatement of property taxes pursuant to 36 M.R.S. § 841. Pls.' Mot. for Leave to File Pleading Under Seal, Attach. 3, Application for Abatement of Property Taxes at 2 (ECF No. 144). In the application, PPLC asserted that the City of South Portland's assessment of the value of PPLC's property was “manifestly wrong” and “substantially overvalued.” Id. at 3. In support of the tax abatement application, PPLC and its attorneys at Pierce Atwood, LLP, jointly engaged a real estate appraiser named Darrell R. Lloyd, Jr. of IREM Solutions to appraise PPLC's assets and to prepare an appraisal report. Pls.' Mot. for Leave to File Pleading Under Seal, Attach. 1, Pls.' Mem. in Opp'n to Defs.' Mot. for Leave to File Document in Connection with Mot. for Summ. J. for Which Privilege is Disputed at 1-3 (ECF No. 144) (Pls.' Opp'n); Defs.' Mot. for Leave to File Pleading Under Seal, Attach. 3, Restricted Appraisal Rep. (ECF No. 133) (Appraisal Report). On May 20, 2016, Mr. Lloyd sent a draft of his appraisal report to PPLC. Pls.' Mot. for Leave to File Pleading Under Seal, Attach. 2, May 20, 2016 Email at 2-3 (ECF No. 144). The pleadings suggest that PPLC then sent the draft report to Pierce Atwood for review. See Pls.' Opp'n at 5-6.

         The document in dispute (Document) is a two-page excerpt from a draft of Mr. Lloyd's report. See Defs.' Mot. for Leave to File Pleading Under Seal, Attach. 2 at 1- 2 (ECF No. 133) (Document). The Document contains Mr. Lloyd's original text, as well as edits that Pierce Atwood attorneys made to the text using a word processor's “track changes” editing tool. Document at 1-2; Defs.' Mot. for Leave to File Pleading Under Seal, Attach. 1, Defs.' Mot. for Leave to File Document in Connection with Mot. for Summ. J. for Which Privilege is Disputed at 2-3 (ECF No. 133) (Defs.' Mot.); Pls.' Opp'n at 2-3. The edits include formatting changes, in-line insertions and deletions, and one comment in the margin. Document at 1-2; Pls.' Opp'n at 2-3.

         In the original text of the Document, Mr. Lloyd noted that, given potential competition from oil shipped via tankers from Montreal and the anticipated TransCanada pipeline from Alberta to St. John, PPLC's pipeline could “best be classified as a distressed asset. It is possible the line could go idle or possibly be repurposed.” Document at 2. The Document shows that upon review of Mr. Lloyd's proposed language, a Pierce Atwood attorney crossed out the words “or possibly be repurposed.” Id. Elsewhere in the Document, Mr. Lloyd wrote, “[c]onsidering the level of environmental opposition it is unlikely, even if [the Plaintiffs] win the [pending federal] lawsuit, that the Portland-Montreal Pipeline will be reversed.” Id.

         A Pierce Atwood attorney crossed out this statement in its entirety and added a comment in the margin:

Comment [MM1]: The City is arguing that even if the ordinance goes away, we won't be able to get our other approvals, so the matter isn't ripe. They might cite this text to support that argument. I think [Mr. Lloyd] should just leave out any guessing as to what the future may hold for this-the law today is the law that applies to this appraisal. If the court overturns the law, the appraiser then can consider whether reversal is likely, and how quickly.

Id. at 2. The Document contains various other grammatical and minor edits to the language of Mr. Lloyd' draft. Id. at 1-2.

         On May 25, 2016, PPLC emailed Mr. Lloyd and attached the proposed changes to the draft report. Pls.' Mot. for Leave to File Pleading Under Seal, Attach. 2, May 25, 2016 Email at 1 (ECF No. 144) (May 25, 2016 Email); Pls.' Opp'n at 6. In the email, the PPLC representative wrote, “As you know, we are currently in a federal lawsuit with the City of South Portland. As such, we need to be extremely careful what we say in the public domain regarding our business and the effect the South Portland Clear Skies Ordinance is having on our business.” May 25, 2016 Email at 1. On June 3, 2016, PPLC submitted the finalized Restricted Appraisal Report (Report) to the Assessor's Office of the City of Portland as part of its tax abatement application. Appraisal Report at 1-2. The Report incorporated the edits that the Pierce Atwood attorneys proposed in the Document. Id. at 6-8.

         B. Discovery and Subsequent Procedural History

         The Plaintiffs produced the Document to the Defendants as part of their “e-discovery” submission on July 26, 2016. Defs.' Mot. at 2. The Plaintiffs designated the Document as “Document PPLCAWO-0077728” and marked the Document as “confidential” pursuant to the Confidentiality Order that the Court entered on June 27, 2016. Document at 1-2; Pls.' Opp'n at 1, n.1. On August 2, 2016, the Plaintiffs sent the Defendants a list of documents that the Plaintiffs claimed were inadvertently produced or required additional privilege redactions. Defs.' Mot. at 2; Defs.' Mot. for Leave to File Pleading Under Seal, Attach. 4, August 2, 2016 Email at 1-5. The list did not include the Document. Id.

         On December 19, 2016, in accordance with the Confidentiality Order, the Defendants notified the Plaintiffs of their intent to use the Document in connection with their Opposition to the Plaintiffs' Motion for Summary Judgment. Defs.' Mot. at 2. The Plaintiffs then asserted a claim of privilege and work product over the Document. Id.

         On December 30, 2016, the Defendants filed a motion for leave to file the Document.[1] Defs.' Mot. The Plaintiffs responded on January 20, 2017, Pls.' Opp'n, and on February 10, 2017, the Defendants replied.[2] Defs.' Mot. for Leave to File Reply Mem. Under Seal, Attach. 1, Defs.' Reply Mem. in Resp. to Pls.' Opp'n to Defs.' Mot. for Leave to File Document (ECF No. 150) (Defs.' Reply).

         II. PARTIES' POSITIONS

         A. The Defendants' Motion

         1. Attorney-Client Privilege

         The Defendants explain that the attorney-client privilege protects confidential communications between a lawyer and a client made for the purpose of seeking or giving legal advice. Defs.' Mot. at 4-5 (citing XYZ Corp. v. United States (In re Keeper of the Records), 348 F.3d 16, 22 (1st Cir. 2003)). They assert that the attorney-client privilege does not protect the Document for three reasons. First, they contend that the Document is not a communication between the lawyer and the client because Mr. Lloyd, a third-party real estate appraiser, drafted the Document. Id. at 4. Next, they argue that the Document was not made for the purpose of seeking or giving legal advice; rather, the Document “was prepared to support a request for a municipal tax abatement.” Id. at 5. Finally, the Defendants allege that the Document is not confidential due to Mr. Lloyd's involvement in the purported attorney-client communication. Id. at 5. Moreover, the Defendants maintain that the limited exception to confidentiality for necessary third-party consultants is inapplicable. Id. at 5-6.

         2. Work Product

         The Defendants also claim that the work product doctrine does not protect the Document because the Document was not created by an attorney or consultant in anticipation of this, or any other, litigation. Id. at 6-7 (citing United States v. Textron, Inc., 577 F.3d 21, 29-30 (1st Cir. 2009); In re San Juan Dupont Plaza Hotel Fire Litig., 859 F.2d 1007, 1014 (1st Cir. 1988)). Further, the Defendants contend that even if the Document is work product, the Court should permit the Defendants to use the Document under Federal Rule of Civil Procedure 26(b)(3), which allows for discovery of otherwise undiscoverable information if a party “shows that it has a substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means.” Id. at 7 (citing Fed.R.Civ.P. 26(b)(3)). The Defendants argue that they have a substantial need for the Document because it speaks to the “actual intent” of PPLC and its plans for the pipeline. Id. According to the Defendants, the Document confirms that the Plaintiffs' representations concerning the ripeness of the controversy are disingenuous. Id. Moreover, the Defendants assert that they cannot, “without divining the inner thought processes of PPLC management, obtain this information from any other source.” Id. Thus, the Defendants urge the Court to allow them to file the Document notwithstanding the work product doctrine.

         3. Waiver

         Finally, the Defendants allege that the Plaintiffs waived any claim to protection or privilege by failing to take reasonable measures to protect the Document and by failing to take reasonable steps to rectify the disclosure after they produced the Document. Id. at 8 (citing Fed.R.Civ.P. 502(b)). The Defendants point out that only when the Defendants brought the Document to the Plaintiffs' attention did the Plaintiffs' claim protected status, and therefore, the Plaintiffs have waived any claimed privilege. Id.

         B. The Plaintiffs' Response

         1. Attorney-Client Privilege

         The Plaintiffs contend that the Defendants' motion “rests on a series of misapprehensions concerning the nature of the Document, and PPLC's current and intended use of it.” Pls.' Mot. at 2. The Plaintiffs explain that a Pierce Atwood staff person technically created the Document[3] and that, although Mr. Lloyd drafted the Document's original text, Pierce Atwood attorneys were responsible for the comment and the other in-line edits. Id. at 2-3. Furthermore, the Plaintiffs allege that PPLC and Pierce Atwood jointly engaged Mr. Lloyd as an expert to prepare the appraisal reports in anticipation of what the Plaintiffs describe as “property tax litigation.” Id. at 3.

         The Plaintiffs assert that, based on this proper understanding, the Document is protected under the attorney-client privilege. Id. at 5-6. They argue that “counsel for PPLC created the Document and included within it revisions and comments for the specific purpose of providing PPLC with legal advice relevant to both the ongoing litigation over the Ordinance and the then-anticipated (now-commenced) property tax litigation against the city.” Id. Additionally, they point out that the Pierce Atwood attorneys then sent the Document directly ...


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