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United States ex rel. Schutte v. Supervalu, Inc.

United States District Court, C.D. Illinois

May 29, 2018

THE UNITED STATES OF AMERICA et al., ex rel. TRACEY SCHUTTE and MICHAEL YARBERRY, Plaintiffs and Relators,
v.
SUPERVALU, INC., et al., Defendants.

          OPINION

          TOM SCHANZLE-HASKINS UNITED STATES MAGISTRATE JUDGE.

         This matter comes before the Court on Defendants' Motion for Determination of Privilege and Inadvertent Production (d/e 146) (Motion). For the reasons set forth below, the Motion is ALLOWED in part and DENIED in part.

         BACKGROUND

         The Relators Tracy Schutte and Michael Yarberry bring this False Claims Act case against Defendants Supervalu, Inc., and related entities (Supervalu), alleging that Supervalu made false claims to Medicare, Medicaid, and other federal and state government health and welfare plans. Supervalu made the claims for reimbursement for prescription drugs. Relators allege that Supervalu misrepresented the Usual and Customary price (“U&C” or “U and C”) on these claims for reimbursement. Relators allege Supervalu charged approximately $4.00 for certain 30-day generic drug prescriptions ($4 prescription price) to customers who paid cash through a price-matching program. This program matched the prices that Walmart and other major retailers charged. Relators allege that the $4 prescription price was in fact Supervalu's Usual and Customary price for these generic prescription drugs. Relators allege that Supervalu defrauded the government programs by falsely representing on reimbursement requests that its Usual and Customary prices were higher than the $4.00 prescription price that cash customers paid for the generic drugs under the price-matching program. Relators claim that, because of these false representations, the government programs overpaid Supervalu on its prescription reimbursement claims. See generally Plaintiffs' First Amended Complaint with Jury Demand Pursuant to Federal and State False Claims Acts (d/e 33). Supervalu denies these allegations. See generally Defendants' Answer to Plaintiffs' First Amended Complaint with Jury Demand Pursuant to Federal and State False Claims Acts (d/e 71).

         In the course of discovery, Defendants Supervalu produced documents to Relators. Supervalu withheld some documents and redacted information from some documents based on claims of privilege, including attorney-client privilege. Supervalu also produced unredacted copies of some of withheld or redacted documents. Supervalu asked Relators to return, or claw back, the unredacted copies pursuant to Federal Rule of Civil Procedure 26(b)(5)(B), and paragraph 18(d) of the Stipulated Protective Order entered February 7, 2017 (d/e 74). Supervalu stated that it produced these documents inadvertently.

         The parties conferred on this issue, but could not resolve the issue with respect to one complete email and portions of five other emails (collectively the Emails). Supervalu asks the Court to find that the Emails are privileged and to order Relators to return the Emails to Supervalu. Relators do not challenge Supervalu's claims that two of the Emails are covered by attorney-client privilege, but still challenge whether all the Emails were inadvertently produced in an unredacted form.

         ANALYSIS

         I. Attorney-Client Privilege

         Federal privilege law applies to this case because the Relators assert federal claims against Supervalu. Wilstein v. San Tropai Condominium Master Association, 189 F.R.D. 371, 375-76 (N.D. Ill. 1999). To establish the attorney-client privilege, Supervalu must show that the Emails consist of: (1) a confidential communication; (2) in connection with the provision of legal services; (3) to an attorney; and (4) in the context of an attorney-client relationship. United States v. BDO Seidman, LLP, 492 F.3d 806, 815 (7thCir. 2007). The privilege only extends to “those communications which ‘reflect the attorney's thinking [or] are made for the purpose of eliciting the lawyer's professional advice or other legal assistance' fall within the privilege.” Id. (quoting United States v. Frederick, 182 F.3d 496, 500 (7thCir. 1999)). Under appropriate circumstances, the privilege can extend to communications between non-attorneys who are properly privy to the privileged information. United States v. Dish Network, LLC, 283 F.R.D. 420, 423 (C.D. Ill. 2012). The privilege further “only protects disclosure of communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney.” Upjohn Co. v. United States, 449 U.S. 383, 395 (1981). Supervalu has the burden to show that the Emails are privileged. Towne Place Condominium Association v. Philadelphia Indemnity Ins. Co., 284 F.Supp.3d 889, 895 (N.D. Ill. 2018).

         Supervalu attached, under seal, the unredacted versions of the Emails as Exhibits M, N, and O to its Memorandum. Defendants' Memorandum in Support of Motion for Determination of Privilege and inadvertent Production (d/e 147) (Defendants' Memorandum), at 1 n.1; Sealed Exhibits (d/e 149). Four of the disputed Emails are included in Exhibit O. Defendants produced three redacted versions of Exhibit O that Supervalu produced in discovery. Relators' Response to Defendants' Motion for Determination of Privilege and Inadvertent Production (d/e 157) (Relators' Memorandum), Sealed Exhibits (d/e 159). Neither party filed the redacted versions of Exhibits M and N. The correspondence attached to the Relators' and Defendants' Memoranda, however, identify the redacted portions of these two Emails.

         1. Supervalu Exhibit M, Email from Maxine Johnson to Ronald Richmond dated May 14, 2008 (unredacted version Bates No. SVU00465079) (May 14, 2008 Email).

         In the first Email, Supervalu employee Maxine Johnson responded to an email from her subordinate Ronald Richmond. Richmond sought advice on how to respond to an inquiry from a third-party entity about Supervalu's corporate policy on $4 generic drugs programs operated by other retailers. Johnson told Richmond not to respond unless the third party first disclosed what it intended to do with the information. Supervalu does not claim a privilege to this portion of this Email.

         Johnson then wrote a sentence that Supervalu claims is privileged. Supervalu redacted the sentence from the redacted version of the Email. Supervalu described the sentence on its privilege log as “Redacted email from M. Johnson to R. Richmond requesting legal advice from inside counsel C. Morris relating to Price Match program and U&C price.” Defendants' Memorandum, Exhibit A, Privilege Log Excerpt (Privilege Log).

         The Court finds that the sentence is not privileged. The attorney-client privilege covers: (1) confidential communication made to or from the attorney seeking or receiving legal advice; or (2) a confidential communication concerning the legal advice provided. See BDO Siedman, LLP, 492 F.3d at 815-16; United States v. McPartlin, 595 F.2d 1321, 1337 (7th Cir. 1979). Privileged communications may include communications with parties who engage in a joint effort with a common legal interest, and to the employees and agents of those parties. BDO Siedman, LLP, 492 F.3d at 816. The ...


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