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HOLLINGER INTERNATIONAL INC. v. HOLLINGER INC.

May 16, 2005.

HOLLINGER INTERNATIONAL INC., Plaintiff,
v.
HOLLINGER INC., et al. Defendants.



The opinion of the court was delivered by: NAN NOLAN, Magistrate Judge

MEMORANDUM OPINION AND ORDER

Defendants Hollinger Inc., The Revelston Corporation Limited, Ravelston Management, Inc., Conrad Black, F. David Radler, John A. Boultbee, and Barbara Amiel-Black (collectively, the "Defendants) move to compel the production of documents from Plaintiff Hollinger International, Inc. ("Hollinger") pursuant to Federal Rule of Civil Procedure 37(a)(2)(B). For the reasons that follow, Defendants' Motion to Compel [174-1] is denied.

DISCUSSION*fn1

  As background, Hollinger states that it has produced more than 840,000 pages of documents, retrieved from more than ten locations found on two continents and spanning nine time zones. Hollinger has produced the 513-page Special Committee Report regarding all of the transactions at issue and will be producing all of its submissions to the government about those transactions. Defendants now move to compel production of three additional categories of documents: (1) documents in the possession, custody, and control of the Special Committee relating to this litigation and materials used by the Special Committee in creating its Report; (2) the Cook Report; and (3) certain documents related to Hollinger's financial condition.*fn2 Hollinger opposes production of these categories of documents on various grounds. The Court addresses the parties' contentions below.

  A. Documents Used to Create the Special Committee Report

  Defendants argue that they are entitled to discover all documents, including drafts of the Special Committee Report, notes from witness interviews, attorney memoranda and other unspecified materials, used to create the Special Committee Report.*fn3 Hollinger asserts that these documents are protected from disclosure as attorney work-product and by the attorney-client privilege. Because the Court holds that the work product privilege applies to all the undisclosed documents at issue and the parties have briefed only the work-product issue, the Court does not address the applicability of the attorney-client privilege.*fn4 Work Product Doctrine

  The work product doctrine is codified in Federal Rule of Civil Procedure 26(b)(3). Rule 26(b)(3) protects "documents and tangible things . . . prepared in anticipation of litigation or for trial." The work product doctrine encompasses documents prepared in anticipation of litigation by a party's representative or agent. See Fed.R.Civ.P. 26(b)(3) (covering material "prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent). . . .")); United States v. Nobles, 422 U.S. 225, 238-239 (1975) (recognizing that "attorneys often must rely on the assistance of investigators and other agents in the compilation of materials in preparation for trial."). Thus, the doctrine protects against "invading the privacy of an attorney's course of preparation [which] is so well recognized and so essential to an orderly working of our system of legal procedure that a burden rests on the one would invade that privacy to establish adequate reasons to justify production through a subpoena or court order." Hickman v. Taylor, 329 U.S. 495, 512 (1947).

  Most courts distinguish between ordinary work product and opinion work product. Ordinary work product "includes raw factual information." Baker v. General Motor Corp., 209 F.3d 1051, 1054 (8th Cir. 2000). Opinion work product includes counsel's mental impressions, conclusions, opinions, or legal theories. Id. An assertion of work-product privilege may be overcome upon a showing of substantial need, but the courts are cautioned to give even greater protection to attorney opinions which include mental impressions, conclusions, or legal theories concerning the prospective litigation.*fn5 Upjohn v. Co. v. United States, 449 U.S. 383, 399 (1981) (declining to decide whether attorney work product based on oral statements from witnesses are entitled to absolute protection from disclosure but making clear that when a party seeks to discover such information, a showing of substantial need and undue burden is not sufficient. Rather, the moving party must make "a far stronger showing of necessity and unavailability."); Logan v. Commercial Union Ins. Co., 96 F.3d 971, 976 n. 4 (7th Cir. 1996) (stating Fed.R.Civ.P. 26(b)(3) "expressly admonishes courts to give even greater protection against disclosure of opinion work product, meaning `the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.'").

  The parties do not directly distinguish between opinion work product and ordinary work product. Production of ordinary work product does not appear to be at issue here. As the Court understands it, the withheld materials include drafts of the Report, notes from witness interviews, and attorney memoranda.*fn6 The Court reaches no conclusion regarding any other category of documents. The undisclosed drafts of the Special Committee Report embody the impressions of its counsel. The drafts "reveal the Special Committee's confidential legal analysis, litigation strategy, and attorney-client communications." Rosenberg Dec. ¶ 6.*fn7 Counsel to the Special Committee states that the handwritten interview notes "tend to contain notations about, among other things, investigation and litigation strategy, follow-up questions to ask the witness, and other avenues of inquire to pursue." Id. ¶ 7. The Supreme Court has recognized that an attorney's notes of witness' oral statements tends to reveal the attorney's mental processes because it discloses "what he saw fit to write down regarding witnesses' remarks." Upjohn, 449 U.S. at 399 (quoting Hickman, 329 U.S. at 513) (stating "[f]orcing an attorney to disclose notes and memoranda of witnesses' oral statements is particularly disfavored because it tends to reveal the attorney's mental processes); see also Baker, 209 F.3d at 1054 (explaining "[a]ttorney notes reveal an attorney's legal conclusions because, when taking notes, an attorney focuses on those facts which she deems legally significant.").*fn8 Finally, the Court assumes that the memoranda at issue constitute internal, legal memoranda prepared by attorneys which analyze the facts under the applicable legal standards. The undisclosed documents thus constitute classic opinion work product of the Special Committee's counsel because they contain the attorneys' mental impressions, conclusions, opinions and legal theories.

  In Anticipation of Litigation

  Defendants maintain that the withheld documents are not entitled to work product protection because they were not created "in anticipation of litigation." The test for determining whether materials were prepared in anticipation of litigation is "whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation." Binks Mfg. Co. v. National Presto Indus., Inc., 709 F.2d 1109, 1119 (7th Cir. 1983). "The mere fact that litigation does eventually ensue does not, by itself, cloak materials prepared by an attorney with the protection of the work product privilege; the privilege is not that broad." Id. at 1118. Moreover, "it is important to distinguish between an `investigative report prepared in the ordinary course of business' as a precaution for the `remote prospect of litigation' and materials prepared because `some articulable claim, likely to lead to litigation . . . ha[s] arisen.'" Logan, 96 F.3d at 977. Given the context of the Special Committee's work, the Court has no problem concluding that it had an overriding litigation purpose. The Special Committee was formed in response to two letters and Form 13D SEC filings, dated May 19, 2003 and June 11, 2003, from Hollinger minority shareholder Tweedy Brown Company, who demanded "that the Board . . . investigate and take corrective action respecting the payments made to the Executives under the [non-competition] Agreements . . . [and] take all action necessary, including litigation, to recover" any damages to Hollinger. See Kirby Mcinerney & Squire LLP letter dated May 19, 2003, Ex. 1 to Pl's Opp. As the Delaware chancery court found: "Tweedy Browne demanded that the board investigate the payment of over $70 million in non-competition payments made to Black, Radler, Atkinson, and . . . Boultbee [and] asserted that these payments were violations of the duty of loyalty owed by the recipients to [Hollinger]." Hollinger Int'l, Inc. v. Black, 844 A.2d 1022, 1034 (Del.Ch. 2004), aff'd, 2005 WL 927015 (Del. Supr. April 19, 2005).

  On June 16, 2003, the Hollinger Board, including at that time Defendants Black, Radler, and Amiel Black, passed a resolution authorizing the Special Committee to investigate Tweedy Browne's allegations and "to determine, in its sole discretion, whether to prosecute litigation with respect to the allegations set forth in the [Tweedy Browne] demand letter." Defs' Memo., Ex. D at 4; see Hollinger Int'l Inc., 844 A.2d at 1034 (stating "the [Hollinger] board resolved to form a `Special Committee' with the mandate and power to investigate and, if it believed warranted, prosecute litigation on behalf of [Hollinger] as to the matters raised in the demand letters."). The Committee was further authorized "to take any other action, including the initiation of litigation, that the Special Committee deem[ed] appropriate in its sole discretion, against any director, officer, employee of the Company based on upon the Special Committee's determination that such individual improperly acted or failed to act with respect to [Tweedy's] Allegations." Defs' Memo., Ex. D at 4. The Chairman of the Special Committee, Gordon Paris, testified in the trial of the Delaware case that the mandate of the Special Committee was "to investigate all of the allegations enumerated within [Tweedy Browne's] 13D and the demand letter and any other matters that come to their attention, and take whatever action is appropriate to seek, if appropriate, any restitution with respect to those allegations." Defs' Memo., Ex. E at 16.

  Thereafter, in June of 2003, the Special Committee retained the Law Offices of Richard C. Breeden ("Breeden") and O'Melveny and Myers ("O'Melveny") as counsel to assist in the investigation. Rosenberg Dec. ¶ 2. Breeden then retained the services of Richard C. Breeden & Co., LLC ("Breeden & Co."), to assist in the investigation by providing forensic accounting, financial, and legal analysis. Id. During the course of its investigation, the Committee interviewed more than 60 witnesses and reviewed nearly 750,000 pages of documents. Report at 4. Its investigation took fourteen months to complete. In late-2003, O'Melveny and Breeden began preparing an interim report describing the Special Committee's findings on the "non-compete" payments made to Defendants Hollinger Inc., Ravelston, Black, Radler, and Boultbee one of the categories of related-party transactions the Special Committee was investigating. Rosenberg Dec. ¶ 4. On August 30, 2004, the Special Committee issued its final Report. The Report "covers the results of the Special Committee's investigation since it was formed in June 2003 in response to allegations of fiduciary duty violations and other misconduct at Hollinger." Id. at 1. The Report "includes a detailed review of dozens of individual payments and transactions during the period 1997-2003." Id. at 4.

  Hollinger has demonstrated that the Special Committee Report was created in anticipation of litigation. The Special Committee's Report was not developed in the "ordinary course of business" involving only "a remote prospect of litigation." Rather, the Special Committee was formed to investigate allegations of Defendants' alleged self-dealing and to recover damages from them, if necessary. At the time the investigation began, Tweedy Browne had articulated claims against Defendants including, among other things, improper non-competition payments, excessive management fees, and Hollinger's sale of newspaper assets to Horizon Publications and Bradford Publishing Company, entities that Black and Radler control. Tweedy Browne had demanded that the Hollinger Board take all action necessary, including litigation, to recover any damages to Hollinger from those claims. The Special Committee's work from the outset was in response to specific claims by Tweedy Browne, and the ...


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