Motley v. Marathon Oil Company ( 1995 )

PUBLISH
UNITED STATES COURT OF APPEALS
Filed 12/15/95
TENTH CIRCUIT
MARTA M. MOTLEY, )
)
Plaintiff-Appellant, )
)
v. ) No. 95-6014
)
MARATHON OIL COMPANY, )
)
Defendant-Appellee. )
Appeal from the United States District Court
for the Western District of Oklahoma
D.C. No. CIV-93-2097-R
Mark Hammons, Hammons & Associates, Oklahoma City, Oklahoma, for
Plaintiff-Appellant.
Carolyn G. Hill, (Shelia D. Tims and Lynn O. Holloman, with her
on the brief ) Andrews, Davis, Legg, Bixler, Milsten & Prince,
Oklahoma City, Oklahoma, for the Defendant-Appellee.
__________________
Before TACHA, LOGAN, REAVLEY, * Circuit Judges.
REAVLEY, Circuit Judge
Marta Motley was laid off as part of a reduction in force by
her employer, Marathon Oil Company. Motley, who is white, sued
Marathon, claiming that Marathon discriminated against her on
account of her race, in violation of federal and state law. The
*
The Honorable Thomas M. Reavley, United States Court of
Appeals, Fifth Circuit, sitting by designation.
jury returned a verdict in favor of Marathon, and the district
court entered a take-nothing judgment against Motley. Motley
appeals, complaining of district court discovery and evidentiary
rulings. We affirm.
BACKGROUND
In 1992 Marathon decided that a nationwide reduction in
force was necessary. A company restructuring oversight committee
(ROC or Committee) was involved in the layoffs. Marathon
presented evidence at trial that Motley had been employed as a
"contracts analyst" at the Oklahoma City office, and that
Marathon decided that this office did not need a contracts
analyst because there was not enough work to justify the
position. Motley's position was eliminated after she was
terminated. Marathon's evidence was that it did not terminate
any employees whose job positions were not to be eliminated.
Motley offered evidence that the company considered "EEO
reasons" or "EEO purposes" in making its termination decisions.
For example, her supervisor, Don Morrison, who testified on her
behalf, stated in a memorandum that "even [Morrison's supervisor]
has indicated that [Motley] shouldn't have been on the final list
and wouldn't have been if it hadn't been for human resources in
Houston insisting that the two black women who were subpar
performers stay off the list for EEO reasons." She claims that
Ronald Becker, the regional manager, was instructed to remove a
number of minority employees from lists of employees to be
terminated, and that these minority employees were replaced with
2
non-minority employees on the lists. Marathon countered that the
four minority employees initially placed on a termination list
were removed from the list because Marathon decided that their
jobs were not to be eliminated. Marathon's witnesses also said
that the lists where names were substituted were lists of
"nonexempt" employees, and that Motley was an "exempt" employee.
Exempt employees are not paid overtime and operate with less
supervision than nonexempt employees.
DISCUSSION
I. Discovery Ruling
John Miller, an in-house attorney for Marathon, advised the
company regarding the reduction in force. Marathon prepared a
privileged document log. One document was described as a
"[d]raft of a May 21, 1992, memo from the Law Department on
proposed guidelines for implementation of involuntary
terminations." Another was described as "[l]ists prepared at the
request of John Miller, attorney, which he used to advise the
[ROC]." Motley moved to compel the production of these
documents, arguing that they were not privileged because they
were prepared in the ordinary course of business and not for the
purpose of giving legal advice, and because they fell within the
crime-fraud exception to the attorney-client privilege. Motley
also argued that Marathon had waived the privilege. Miller's
deposition was taken, and he also filed an affidavit in
opposition to the motion to compel. With the benefit of the
affidavit, the Morrison memorandum, the deposition of Miller and
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portions of Becker's deposition, as well as other materials, all
of which were before the court, the court denied the motion to
compel. The district court did not, however, conduct an in
camera inspection of the documents as Motley requested.
Our analysis begins with basic principles. The party
seeking to assert a privilege has the burden of establishing its
applicability. United States v. Lopez , 777 F.2d 543, 552 (10th
Cir. 1985). Generally, "[c]ontrol of discovery is entrusted to
the sound discretion of the trial courts, and a denial of a
motion to compel discovery will not be disturbed absent abuse of
discretion." Martinez v. Schock Transfer and Warehouse Co. , 789
F.2d 848, 850 (10th Cir. 1986).
Motley argues that the documents are not protected by the
attorney-client privilege because Marathon failed to show that
they were prepared for the purpose of giving legal advice rather
than for business purposes. We agree with Motley that the mere
fact that an attorney was involved in a communication does not
automatically render the communication subject to the attorney-
client privilege. However, Miller stated by affidavit that he
prepared the draft memorandum and that it contained legal advice
for the corporate restructuring of Marathon. He also stated that
the lists in question "were prepared for my use in giving legal
advice to the [ROC]," that the memorandum and lists were treated
as confidential documents, and that "I did not render business
advice in the Memorandum and Lists." He further testified at his
deposition that he served in the capacity of a legal advisor to
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the Committee. Motley offered no evidence directly contradicting
these statements. We cannot say that the district court abused
its discretion in concluding that the communications in issue
were for the purpose of providing legal rather than business
advice.
Motley next argues that the documents are not protected by
the attorney-client privilege because they fall within the crime-
fraud exception to the privilege. As evidence in support of this
argument, Motley offered to the district court the Morrison
memorandum discussed above. She also presented notes prepared by
Becker, Becker's deposition testimony, an interrogatory answer
(discussed in more detail below), and the affidavit of her own
counsel, all of which she claimed showed that Marathon engaged in
racial discrimination when it effected its reduction in force.
Motley argues that illegal racial discrimination is a tort
and that the crime-fraud exception is not limited to crime and
fraud, but extends to attorney communications made in furtherance
of the commission of a tort. While Motley cites some authority
in support of this argument, 1 we have not extended the privilege
to torts generally. Instead, we have construed the exception as
providing that "[t]he attorney-client privilege does not apply
where the client consults an attorney to further a crime or
fraud." In re Grand Jury Proceedings , 857 F.2d 710, 712 (10th
Cir. 1988), cert. denied, 492 U. 905 (1989); accord, In re Grand
1
See 24 CHARLES A. WRIGHT & KENNETH W. GRAHAM, JR., FEDERAL
PRACTICE & PROCEDURE § 5501 at 518 (1986).
5
Jury Proceedings, Vargas , 723 F.2d 1461, 1467 (10th Cir. 1983).
Motley asserted both federal and state causes of action. As to
state causes of action, a federal court should look to state law
in deciding privilege questions. F ED. R. EVID. 501; White v.
American Airlines, Inc. , 915 F.2d 1414, 1424 (10th Cir. 1990).
We have held that "some type of prima facie showing of a crime or
fraud is required under Oklahoma law in order to trigger the
applicability of the crime-fraud exception." Id.The party claiming that the crime-fraud exception applies
must present prima facie evidence that the allegation of attorney
participation in crime or fraud has some foundation in fact.
Vargas, 723 F.2d at 1467. The determination of whether such a
prima facie showing has been made is left to the sound discretion
of the district court. Id.; In re Grand Jury Proceedings, 727
F.2d 941, 946 (10th Cir.), cert. denied, 469 U.S. 819 (1984).
Here we find no abuse of discretion by the district court.
Motley at most offered some evidence of race-based decisions by
Marathon when it carried out the reduction in force. Motley
offered no evidence that the two documents in issue were prepared
in furtherance of a crime or fraud.
Motley separately complains that, in finding the crime-fraud
exception inapplicable, the district court did not conduct an in
camera review of the documents in issue. In United States v.
Zolin, 491 U.S. 554 (1989), the Supreme Court held that a
district court may conduct an in camera review to determine the
applicability of the crime-fraud exception, but only if the party
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requesting such a review makes a showing of a factual basis
adequate to support a good faith belief by a reasonable person
that in camera review of the documents may reveal evidence to
establish that the crime-fraud exception applies. Id. at 572,
575-76. Whether to conduct an in camera review is left to the
sound discretion of the district court. Id. at 572. As
explained above, Motley at most made a showing of race-based
decisions by Marathon in carrying out the reduction in force.
Since the court correctly ruled that the crime-fraud exception
does not extend to tortious conduct generally, but is limited to
attorney advice in furtherance of a crime or fraud, for the
reasons stated above the court did not abuse its discretion in
denying the request for an in camera review of the documents.
Motley argues that Marathon waived the attorney-client
privilege, for two reasons. She argues that Marathon waived the
privilege by failing to assert it timely, pointing out that
Marathon failed to comply with a local rule requiring the tender
of a privileged document log by or prior to the status
conference. Marathon points out that (1) suit was filed in
November of 1993 and Motley did not begin discovery until July 5,
1994, 58 days before the discovery cutoff, and (2) Marathon's
counsel disclosed the identity of the two disputed documents on
August 1, 1994, as soon as she learned that they existed and four
months before trial. In these circumstance we cannot say that
the district court abused its discretion by failing to order the
7
production of otherwise privileged documents due to the
timeliness of the assertion of the privilege. We are
particularly loath to find that a district court abused its
discretion with a decision regarding the enforcement of its own
local rules.
Motley also claims that Marathon waived the privilege by
relying on advice of counsel "as an explanation for the
employment actions in question," and using attorney-client
communication "as both as a sword and a shield." Motley relies
on the following conduct of Marathon. In one interrogatory
answer, Marathon stated that Becker made certain changes, which
were recommended by the ROC "upon advice of counsel," to a list
of employees to be terminated. The employees in question were
"Records Processors," and did not hold Motley's "Contracts
Analyst" position. Becker testified in his deposition that
changes were made on one list because his boss told him to do so
"for legal and business purpose reasons." Marathon designated
Miller, an in-house lawyer, as its representative to testify in a
deposition noticed to discover the activities, functions and
decisions of the ROC.
To be sure, there is some authority that attorney-client
communications cannot be used both as a sword and a shield 2, as
when a party defends the conduct which is the subject of the suit
by relying on advice of counsel. Here, however, Marathon did not
2
E.g., Chevron Corp. v. Pennzoil Co. , 974 F.2d 1156,
1162 (9th Cir. 1992).
8
attempt to justify its termination of Motley on the basis of
advice of counsel. It did not claim that Motley was terminated
because of a recommendation of counsel; instead, it defended its
decision, which was part of a company-wide reduction in force,
based on a lack of sufficient work to justify the position Motley
held. Further, the mere fact that it designated a lawyer,
pursuant to F ED. R. CIV. P. 30(b)(6), as its corporate
representative at one deposition, is a wholly insufficient ground
to hold that Marathon waived its attorney-client privilege.
Although Miller's counsel did state at the deposition that he
would not allow questions regarding the two privileged documents,
Miller did not otherwise assert the privilege a single time at
his deposition. Further, although Miller's memory regarding the
ROC was far from perfect, we agree with the district court that
"lack of memory . . . is not the same as the assertion of the
attorney-client privilege." Motley could have deposed the
members of the ROC if she had timely attempted to do so. Motley
did file a motion to extend the discovery cutoff to allow her to
depose a member of the ROC, but does not appeal the district
court's denial of that motion.
II. Evidentiary Ruling
Motley complains of a single evidentiary ruling by the
district court. The court allowed Becker to testify about his
understanding of a policy of the Committee. Specifically, he
testified on direct examination that based on his review of
Miller's deposition, the Committee did not permit the termination
9
of an employee unless that employee's position was to be
eliminated and no replacement was to be hired. Motley objected
on grounds that the witness was attempting to characterize the
testimony from the deposition, and that the deposition itself was
the best evidence of the Committee's policy. She also complains
on appeal that the testimony was not based on personal knowledge,
and that a lay witness cannot rely on hearsay in order to offer
an opinion as to another's motive.
The district court has broad discretion in determining the
competency of a witness to testify, and its decision will not be
reversed absent an abuse of discretion. United States v. Gomez ,
807 F.2d 1523, 1527 (10th Cir. 1986). Further, under F ED. R.
EVID. 103(a), "[e]rror may not be predicated upon a ruling which
admits or excludes evidence unless a substantial right of the
party is affected . . . ." Even assuming that the court erred in
allowing the testimony, Motley does not establish that her
substantial rights were affected. Miller's deposition testimony,
on which Becker based his testimony, had already been read to the
jury, and Becker in fact gave an accurate characterization of
Miller's testimony. 3 Further, on cross-examination Motley's
counsel revisited the subject of what Becker knew about
3
Miller testified by deposition: "As I told you, no one
would be terminated if he or she would be -- were to be replaced.
So if you were white, black, male or female, it didn't matter.
If you were going to be replaced, you could not be terminated."
Becker testified that, based on his review of Miller's
deposition, "what I learned was that [the] oversight committee
would not permit us to terminate or let go anybody who was in a
job that we weren't eliminating. . . ."
10
Marathon's policy of not terminating employees whose jobs were
not to be eliminated. Becker's testimony was merely cumulative
of other testimony the jury heard. See Fortier v. Dona Anna
Plaza Partners, 747 F.2d 1324, 1332 (10th Cir. 1984) (admission
of soil report over hearsay and foundation objections did not
affect party's substantial rights under Rule 103(a) where such
"documentary evidence was, at worst, cumulative.").
AFFIRMED.
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