In Re Cendant Corp ( 2003 )

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
9-16-2003
In Re Cendant Corp
Precedential or Non-Precedential: Precedential
Docket No. 02-4386
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PRECEDENTIAL
Filed September 16, 2003
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 02-4386
IN RE: CENDANT CORPORATION SECURITIES
LITIGATION
Ernst & Young LLP,
Appellant
On Appeal from the United States District Court
for the District of New Jersey
D.C. Civil Action No. 98-cv-01664
(District Judge: Honorable William H. Walls)
Argued April 24, 2003
Before: SCIRICA, Chief Judge,* AMBRO and GARTH,
Circuit Judges
(Filed September 16, 2003)
ALAN N. SALPETER, ESQUIRE
(ARGUED)
Mayer, Brown, Rowe & Maw
190 South LaSalle Street
Chicago, Illinois 60603
* Judge Scirica began his term as Chief Judge on May 4, 2003.
2
DOUGLAS S. EAKELEY, ESQUIRE
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Attorneys for Appellant,
Ernst & Young LLP
GREGORY L. DISKANT, ESQUIRE
(ARGUED)
ROBERT P. LoBUE, ESQUIRE
Patterson, Belknap, Webb & Tyler
1133 Avenue of the Americas
New York, New York 10036
Attorneys for Appellee,
Cendant Corporation
HERBERT J. STERN, ESQUIRE
(ARGUED)
Stern, Greenberg & Kilcullen
75 Livingston Avenue
Roseland, New Jersey 07068
Attorney for Appellees, James E.
Buckman, Leonard S. Coleman,
Jr., Christel DeHaan, Martin L.
Edelman, Scott E. Forbes, Stephen
P. Holmes, Robert D. Kunisch,
Michael P. Monaco, Brian
Mulroney, Robert E. Nederlander,
Robert W. Pittman, E. John
Rosenwald, Leonard Schutzman,
Henry R. Silverman, Robert F.
Smith and John D. Snodgrass
3
DANIEL L. BERGER, ESQUIRE
Bernstein, Litowitz, Berger
& Grossmann
1285 Avenue of the Americas,
33rd Floor
New York, New York 10019
Attorney for Appellees,
California Public Employees’
Retirement System, New York
State Common Retirement Fund,
New York City Pension Funds
ANDREW ENTWISTLE, ESQUIRE
Entwistle & Cappucci
299 Park Avenue
New York, New York 10171
Attorney for Appellee,
State Board of Administration of
Florida
OPINION OF THE COURT
SCIRICA, Chief Judge.
At issue on appeal is whether the “work product” of a
non-testifying trial consultant in this case is privileged and
subject to only limited discovery. Ernst & Young, LLP, and
Cendant Corporation are co-defendants in a federal
securities class action involving Cendant’s alleged
accounting fraud. The class action claims were settled,
leaving claims asserted by Cendant and Ernst & Young
against each other as the focus of the remaining litigation.1
1. Cendant alleges that Ernst & Young was at least negligent in its
audits and that it actively participated in a conspiracy to hide fraud from
the investing public. Ernst & Young counter-claims that Cendant
defrauded its auditors.
4
I.
Cendant deposed Simon Wood, a former Ernst & Young
senior manager and auditor who prepared the Cendant
financial statements at issue in the underlying litigation.2
At Wood’s deposition, Cendant inquired into
communications that took place between Wood, Ernst &
Young’s counsel who also represented Wood, and Dr. Phillip
C. McGraw of Courtroom Sciences, Inc. Dr. McGraw is a
consulting expert in trial strategy and deposition
preparation who was retained as a non-testifying trial
expert to assist Ernst & Young’s counsel in anticipation of
litigation.
Specifically, Cendant’s counsel asked Wood: “Have you
ever met Phil McGraw?”; “On how many occasions did you
meet with Phil McGraw?”; “Did you understand Phil
McGraw to be a jury consultant?”; “Did Mr. McGraw
provide you with guidance in your conduct as a witness?”;
“Did you rehearse any of your prospective testimony in the
presence of Mr. McGraw?”; “In the course of preparing for
this deposition . . . did you review any work papers?”; “Did
you select the work papers that you reviewed?”; “Did you
ask anyone for the opportunity to review any particular
work papers?”; and “Did you ask to review work papers on
any particular subject?” Ernst & Young’s counsel objected,
citing the work product doctrine and the attorney-client
privilege and arguing the discovery sought related to private
communications relayed in the presence of counsel and for
the purpose of assisting counsel in rendering legal advice.
In March 2002, the Special Discovery Master3 held:
Wood may be asked whether he has met with Dr.
McGraw, the date and duration of any meetings, who
was present and the purpose for same. He may not be
asked what Dr. McGraw told the witness, whether
testimony was practiced, whether any part of the
meetings were recorded, whether the witness took any
notes, or whether Dr. McGraw provided the witness
2. Wood was manager on the Ernst & Young audit team for the audit
year that ended January 31, 1997 and senior manager on the audit
team for the calendar year that ended December 31, 1997.
3. The Special Discovery Master was Robert E. Tarleton, J.S.C. (Ret.).
5
with any documents. In my view, answers to the latter
questions would violate the work product doctrine.
From the information developed thus far, it appears
that Dr. McGraw is an expert retained by Ernst &
Young’s counsel to assist in trial preparation. He is not
expected to be called as a witness and no exceptional
circumstances have been cited to justify the
exploration Cendant seeks.
In November 2002, the District Court reversed the
Special Discovery Master’s determination, holding the work
product doctrine and attorney-client privilege did not apply.
The District Court said:
[W]ork product deals with things legal, things with
preparation, evaluation, strategies, tactics and it is at
first limited to lawyers and then will strictly or rigidly
expand it, or restrictively expand it to include people
such as paralegals and maybe assistants to lawyers
because of their intimacy with the lawyer.
The privilege is really that of the lawyers. . . .
because he or she has a right to tell his or her client
certain things. But, when we go beyond that into a
person who is not dealing with the law but telling
someone how to prepare it as Blumenthal v. Drudge
indicates, one of the questions where the lawyer was
telling this witness what to do, it’s a question what this
jury consultant [is] more or less telling that person
what to do.
Let me read from . . . the Blumenthal opinion . . . .
“It is true that in some cases the attorney-client
privilege may be extended to non lawyers who are
employed to assist the lawyer in the rendition of
professional legal services. This extension of the
privilege to non lawyers, however, must be strictly
confined within the narrowest possible limits
consistent with the logic of its principle and should
only occur when the communication was made in
confidence for the purpose of obtaining legal advice
from the lawyer. If what is sought is not legal advice or
if the advice itself is the accountant’s rather than the
lawyers, no privilege exists.
6
. . . .
Here it appears that Mr. Horowitz was retained for
the value of his own advice, not to assist the
defendant’s attorney in providing their legal advice, and
the attorney has not carried the burden of
demonstrating that the privilege applies.”
[W]e all know what a jury consultant does. He doesn’t
come down and tell you in the case of Expert Z you
have to blah, blah and you have to be careful of the
countervailing opinion in B versus J. He or she says
come on now, you’ve got to spruce up. You have to look
this way and you never know what the jury may be
composed of demographically. . . .
It’s not designed to augment. It’s not designed to
substitute for legal advice. That’s not legal advice.
That’s the cosmetic applied . . . .
(quoting Blumenthal v. Drudge, 186 F.R.D. 236, 243 (D.D.C.
1999)). Ernst & Young now appeals. We will reverse.4
II.
The District Court had jurisdiction under 28 U.S.C.
§ 1331. We have jurisdiction under 28 U.S.C. § 1291.5Although we generally review the decision to grant a motion
to compel for abuse of discretion, our review is plenary
where the decision was based upon the interpretation of a
legal precept. Armstrong v. Dwyer, 155 F.3d 211, 214 (3d
Cir. 1998).
4. Because we resolve this dispute on the federal work product doctrine
issue, we do not reach the attorney-client privilege issue.
5. We have jurisdiction under the collateral order doctrine of 28 U.S.C.
§ 1291 because the District Court Order compels the disclosure of
materials that Ernst & Young contends are protected by the work
product doctrine and attorney-client privilege. See Montgomery County v.
Microvote Corp., 175 F.3d 296, 300 (3d Cir. 1999) (stating that we follow
the “bright-line rule permitting appeals from discovery orders requiring
the disclosure of content putatively privileged by the attorney-client and
work-product privileges”).
7
III.
A.
The work product doctrine is governed by a uniform
federal standard set forth in Fed. R. Civ. P. 26(b)(3)6 and
“shelters the mental processes of the attorney, providing a
privileged area within which he can analyze and prepare his
client’s case.” United States v. Nobles, 422 U.S. 225, 238 &
n.11 (1975); United Coal Cos. v. Powell Constr. Co., 839
F.2d 958, 966 (3d Cir. 1988). Under Rule 26(b)(3), the work
product doctrine applies to “documents and tangible things
. . . 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) . . . .” Fed. R. Civ. P. 26(b)(3);
see also 8 Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 2024, at 359 (2d ed. 1994) (“[I]t is
clear that all documents and tangible things prepared by or
for the attorney of the party from whom discovery is sought
are within the qualified immunity given to work product, so
long as they were prepared in anticipation of litigation or
preparation for trial.”). The Supreme Court articulated the
essential nature of the doctrine in Hickman v. Taylor, 329
U.S. 495, 510-11 (1947):
In performing his various duties, it is essential that
6. Fed. R. Civ. P. 26(b)(3) provides, in relevant part:
Subject to the provisions of subdivision (b)(4) of this rule, a party
may obtain discovery of documents and tangible things otherwise
discoverable under subdivision (b)(1) of this rule and 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) only
upon a showing that the party seeking discovery has substantial
need of the materials in the preparation of the party’s case and that
the party is unable without undue hardship to obtain the
substantial equivalent of the materials by other means. In ordering
discovery of such materials when the required showing has been
made, the court shall protect against disclosure of the mental
impressions, conclusions, opinions, or legal theories of an attorney
or other representative of a party concerning the litigation.
8
a lawyer work with a certain degree of privacy, free
from unnecessary intrusion by opposing parties and
their counsel. Proper preparation of a client’s case
demands that he assemble information, sift what he
considers to be the relevant from the irrelevant facts,
prepare his legal theories and plan his strategy without
undue and needless interference. That is the historical
and the necessary way in which lawyers act within the
framework of our system of jurisprudence to promote
justice and to protect their clients’ interests. This work
is reflected, of course, in interviews, statements,
memoranda, correspondences, briefs, mental
impressions, personal belief, and countless other
tangible and intangible ways—aptly though roughly
termed . . . as the “work product of the lawyer.” Were
such materials open to opposing counsel on mere
demand, much of what is now put down in writing
would remain unwritten. An attorney’s thoughts,
heretofore inviolate, would not be his own. Inefficiency,
unfairness and sharp practices would inevitably
develop in the giving of legal advice and in the
preparation of cases for trial.
It is clear from Hickman that work product protection
extends to both tangible and intangible work product. Id.;
Federal Practice and Procedure § 2024, at 337 (“Rule
26(b)(3) itself provides protection only for documents and
tangible things and . . . does not bar discovery of facts a
party may have learned from documents that are not
themselves discoverable. Nonetheless, Hickman v. Taylor
continues to furnish protection for work product within its
definition that is not embodied in tangible form . . . .
Indeed, since intangible work product includes thoughts
and recollections of counsel, it is often eligible for the
special protection accorded opinion work product.”).
Furthermore, this protection extends beyond materials
prepared by an attorney to include materials prepared by
an attorney’s agents and consultants. As the Supreme
Court explained, “[A]ttorneys often must rely on the
assistance of investigators and other agents in the
compilation of materials in preparation for trial. It is
therefore necessary that the [work product] doctrine protect
materials prepared by agents of the attorney as well as
9
those prepared by the attorney himself.” Nobles, 422 U.S. at
238-39; see also Federal Practice and Procedure § 2024, at
361 (“[I]f statements of witnesses are to be protected from
discovery at all, the protection should not depend on who
obtained the statement. Accordingly the 1970 amendment
expressly extends protection to documents prepared by or
for a representative of a party, including his agent.”).
Similarly, in explaining Rule 26(b)(3), the Advisory
Committee on Civil Rules said:
Subdivision (b)(3) reflects the trend of the cases by
requiring a special showing, not merely as to materials
prepared by an attorney, but also as to materials
prepared in anticipation of litigation or preparation for
trial by or for a party or any representative acting on
his behalf. The rule then goes on to protect against
disclosure the mental impressions, conclusions,
opinions or legal theories concerning the litigation of
an attorney or other representative of a party.
Fed. R. Civ. P. 26, Advisory Comm. Notes, 1970
Amendment.
B.
But the work product doctrine is not an absolute bar to
discovery of materials prepared in anticipation of litigation.
Work product can be produced
upon a showing that the party seeking discovery has
substantial need of the materials in the preparation of
the party’s case and that the party is unable without
undue hardship to obtain the substantial equivalent of
the materials by other means. In ordering discovery of
such materials when the required showing has been
made, the court shall protect against disclosure of the
mental impressions, conclusions, opinions, or legal
theories of an attorney or other representative of a
party concerning the litigation.
Fed. R. Civ. P. 26(b)(3).
Thus, Rule 26(b)(3) provides that, even if the party
seeking discovery of information otherwise protected by the
work product doctrine has made the requisite showing of
10
need and undue hardship, courts must still protect against
the disclosure of mental impressions, conclusions,
opinions, or legal theories of an attorney and his agents.
Fed. R. Civ. P. 26(b)(3). Stated differently, Rule 26(b)(3)
establishes two tiers of protection: first, work prepared in
anticipation of litigation by an attorney or his agent is
discoverable only upon a showing of need and hardship;
second, “core” or “opinion” work product that encompasses
the “mental impressions, conclusions, opinion, or legal
theories of an attorney or other representative of a party
concerning the litigation” is “generally afforded near
absolute protection from discovery.” Id.; In re Ford Motor
Co., 110 F.3d 954, 962 n.7 (3d Cir. 1997). Thus, core or
opinion work product receives greater protection than
ordinary work product and is discoverable only upon a
showing of rare and exceptional circumstances.
Courts have wrestled with the idea of affording opinion
work product absolute immunity from discovery. Federal
Practice and Procedure § 2026, at 400; 6 Moore’s Federal
Practice § 26.70[5][e], at 26-224 (Mathew Bender 3d ed.). In
1946, the Advisory Committee on Civil Rules proposed a
rule that would create absolute protection against discovery
into information at the core of the work product doctrine,
but the Supreme Court declined to adopt it. Federal
Practice and Procedure § 2026, at 400.
In Upjohn v. United States, 449 U.S. 383 (1981), the
Supreme Court declined to establish a rule for discovery of
core or opinion work product, noting that “some courts
have concluded that no showing of necessity can overcome
protection of work product which is based on oral
statements from witnesses” and that other courts in
“declining to adopt an absolute rule have nonetheless
recognized that such material is entitled to special
protection.” Id. at 401-402. Although the Supreme Court
refused to “decide the issue at this time,” the Court took an
expansive approach to the work product doctrine,
explaining that “such work product cannot be disclosed
simply on a showing of substantial need and inability to
obtain the equivalent without undue hardship. While we
are not prepared at this juncture to say that such material
is always protected by the work-product rule, we think a far
11
stronger showing of necessity and unavailability . . . would
be necessary to compel disclosure.” Id.This holding is consistent with the language of Rule
26(b)(3) which provides that a court, in ordering discovery
once a showing of need and hardship has been made, “shall
protect against disclosure of the mental impressions,
conclusions, opinions, or legal theories of an attorney or
other representative of a party.” Fed. R. Civ. P. 26(b)(3).
Accordingly, we have held that opinion work product
protection is not absolute, but requires a heightened
showing of extraordinary circumstances. See Sporck v. Peil,
759 F.2d 312, 316 (3d Cir. 1985) (“Opinion work product
. . . is accorded an almost absolute protection from
discovery because any slight factual content that such
items may have is generally outweighed by the adversary
system’s interest in maintaining the privacy of an attorney’s
thought processes and in ensuring that each side relies on
its own wit in preparing their respective cases.”); see also
Rhone-Poulenc Rorer Inc. v. Home Indemnity Co., 32 F.3d
851, 866 (3d Cir. 1994) (“[E]fforts to obtain disclosure of
opinion work product should be evaluated with particular
care.”); In re Grand Jury Investigation, 599 F.2d 1224, 1231
(3d Cir. 1979) (“Memoranda summarizing oral interviews
. . . may indirectly reveal the attorney’s mental processes,
his opinion work product. . . . [S]pecial considerations . . .
must shape any ruling on the discoverability of interview
memoranda like those at issue in this case. The result, we
believe, is exactly that contemplated in Hickman; such
documents will be discoverable only in a ‘rare situation.’ ”);
accord In re San Juan Dupont Plaza Hotel Fire Litig., 859
F.2d 1007, 1015 (1st Cir. 1988) (“Courts typically afford
ordinary work product only a qualified immunity, subject to
a showing of substantial need and hardship, while
requiring a hardier showing to justify the production of
opinion work product.”); In re Sealed Case, 856 F.2d 268,
273 (D.C. Cir. 1988) (“As the work product sought here is
based on oral statements from witnesses, a far stronger
showing is required than the ‘substantial need’ and
‘without undue hardship’ standard applicable to discovery
of work-product protected documents and other tangible
things.”).
12
Nevertheless, Cendant argues that Rule 26(b)(3)’s work
product protection is superseded by Rule 26(b)(4)(B), which
governs discovery of “facts known or opinions held by an
expert who has been retained or specially employed by
another party in anticipation of litigation or preparation for
trial and who is not expected to be called as a witness at
trial.” Fed. R. Civ. P. 26(b)(4)(B).7 But Rule 26(b)(3) provides
work product protection independently of Rule 26(b)(4)(B).
In Bogosian v. Gulf Oil Corp., 738 F.2d 587 (3d Cir. 1984),
we held attorney opinion work product shown to experts in
an antitrust case was not discoverable. We explained:
[T]he first sentence [of Rule 26(b)(3)] requires protection
against disclosure of the mental impressions,
conclusions, opinions, or legal theories of an attorney
or other representative of a party. The proviso
introduces the first sentence of Rule 26(b)(3) (“Subject
to the provisions of subdivision (b)(4) of this rule, a party
may obtain discovery of documents . . . prepared in
anticipation of litigation or for trial . . .”) and signifies
that trial preparation material prepared by an expert is
also subject to discovery, but only under the special
requirements pertaining to expert discovery set forth in
Rule 26(b)(4). The proviso does not limit the second
sentence of Rule 26(b)(3) restricting disclosure of work
product containing “mental impressions” and “legal
theories.” Thus, it does not support the district court’s
conclusion that Rule 26(b)(3), protecting this category
of attorney’s work product, “must give way” to Rule
7. Rule 24(b)(4)(B) precludes discovery against an expert informally
consulted in preparation for trial. Fed. R. Civ. P. 26(b)(4), Advisory
Comm. Notes, 1970 Amendment. Under this rule, a party “may discover
facts known or opinions held by an expert who has been retained or
specially employed . . . upon a showing of exceptional circumstances
under which it is impracticable for the party seeking discovery to obtain
facts or opinions on the same subject by other means.” Fed. R. Civ. P.
26(b)(4)(B). Once such a showing is made, a court, before ordering
discovery, must analyze the policy considerations underlying the rule to
determine whether they outweigh the exceptional circumstances. Moore’s
Federal Practice § 26.80[2], at 26-236.5 (citing the policy consideration of
“allowing counsel to obtain the expert advice they need to properly
evaluate and present their clients’ positions without fear that every
consultation with an expert may yield grist for the discovery mill”).
13
26(b)(4), authorizing discovery relating to expert
witnesses.
Id. at 594.
C.
Litigation consultants retained to aid in witness
preparation may qualify as non-attorneys who are protected
by the work product doctrine. See, e.g., Ford Motor Co., 110
F.3d at 967 (the work product doctrine protected materials
prepared by an in-house technical assistant for meetings to
be attended by an outside technical consulting firm and
lawyers regarding an issue in a product liability suit);
Martin v. Bally’s Park Place Hotel & Casino, 983 F.2d 1252(3d Cir. 1993) (a technical report prepared by a consulting
firm was protected from discovery because the document
was prepared in anticipation of litigation by a party’s
representative (a consultant) for that party’s representative
(the company’s in-house lawyer)); United Coal Cos. v. Powell
Constr. Co., 839 F.2d 958, 966 (3d Cir. 1988) (the work
product doctrine extended beyond materials reflecting an
attorney’s mental impressions to encompass materials
prepared in anticipation of litigation by a party’s insurer);
Sprague v. Director, Office of Workers’ Compensation
Programs, 688 F.2d 862, 869-870 (1st Cir. 1982) (opinion
letter setting forth expert’s medical opinion was protected
because it was prepared to advise counsel); see also Dennis
P. Stolle et al., The Perceived Fairness of the Psychologist
Trial Consultant, 20 Law & Psychol. Rev. 139, 169 (1996)
(“Modern trial consulting methods typically consist of many
techniques such as witness preparation, and mock trials,
that clearly could not be framed as falling outside of the
work product rule.”). Moreover, a litigation consultant’s
advice that is based on information disclosed during private
communications between a client, his attorney, and a
litigation consultant may be considered “opinion” work
product which requires a showing of exceptional
circumstances in order for it to be discoverable. Duplan
Corp. v. Deering Milliken, Inc., 540 F.2d 1215, 1219 (4th
Cir. 1976) (“[O]pinion work product immunity now applies
equally to lawyers and non-lawyers alike.”); Stanley D.
Davis & Thomas D. Beisecker, Discovering Trial Consultant
14
Work Product: A New Way to Borrow an Adversary’s Wits?,
17 Am. J. Trial Advoc. 581, 619 (1994) (“[T]he attorney’s
discussions of case theory and the consultant’s suggestions
thereon should qualify for the higher protection accorded
mental impressions.”).
D.
Cendant concedes “that the work product doctrine
extends to materials compiled by a non-attorney, who, as
the ‘agent’ of a party or a party’s attorney, assists the
attorney in trial preparation,” and further, “that the
doctrine also protects the ‘intangible’ work product of an
attorney, such as testimony that would reveal counsel’s
mental impressions or trial strategy.” (Appellee Br. at 26).
But Cendant contends that a non-attorney’s advice
regarding witness testimony does not fall under the work
product doctrine. Cendant asserts that the jury is entitled
to know the consultant’s communications with the witness,
in the same way it is entitled to know and assess all other
factors that may have informed the witness’s testimony and
may affect credibility. The District Court held that the work
product doctrine should be cabined to lawyers and be
strictly limited when applied to a lawyer’s agent. The
District Court said:
[W]ork product deals with things legal, things with
preparation, evaluation, strategies, tactics and it is at
first limited to lawyers and then will strictly or rigidly
expand it, or restrictively expand it to include people
such as paralegals and maybe assistants to lawyers
because of their intimacy with the lawyer.
The privilege is really that of the lawyers. . . .
because he or she has a right to tell his or her client
certain things. But, when we go beyond that into a
person who is not dealing with the law but telling
someone how to prepare it as Blumenthal v. Drudge
indicates, one of the questions where the lawyer was
telling this witness what to do, it’s a question what this
jury consultant [is] more or less telling that person
what to do.
15
As noted, in reaching its decision, the District Court
relied on Blumenthal, which held communications between
a client and a political consultant were not protected by the
attorney-client privilege when no attorney was involved in
the communication. 186 F.R.D. 236. But the Blumenthal
court never considered the work product doctrine because
it was never raised. Id. at 243 n.9. The District Court’s
reliance on Blumenthal therefore was misplaced because
“the work product doctrine is distinct from and broader
than the attorney-client privilege.” Nobles, 422 U.S. at 238
n.11.
E.
As noted, the District Court held that the work product
doctrine should be cabined to lawyers and be strictly
limited when applied to a lawyer’s agent. The District Court
said:
I admit that if an attorney had prepped his witness like
I think all of us who are single or small firms have
done without the need for a jury consultant X, you’ve
got to shave, you’ve got to do this, you got to put this
question, you’ve got to put that answer that way and
all of that, I’m quite sure anyone in his right mind
would consider that part of work product and attorney-
client activity and no one even tries to find out what
went on.
But my problem is when you don’t bring in a lawyer,
you bring in someone who is not dealing with the law
but dealing with the manner in which things are
presented, then I think it may be a little bit much to
expect that to be countenanced . . . .
After the District Court made this determination,
Cendant conceded that it was not accusing Ernst & Young
of fabricating false testimony in the meetings between
Wood, his attorney, and Dr. McGraw.8 But Cendant argued
8. The protection afforded opinion or core work product may be breached
when there is a charge of falsified testimony. See In re Impounded Case,
879 F.2d 1211, 1213-14 (3d Cir. 1989) (noting that the attorney-client
16
that, as a result of the District Court’s conclusion that the
work product doctrine did not extend to meetings with Dr.
McGraw, they were entitled to inquire into the content of
those meetings. Cendant said “We are not here now
deciding what they did or accusing them of anything. But
once it is not privileged . . . once that veil is no longer
there, we are entitled . . . to show anybody, judge or jury,
what went on as they practiced with the witness.” (Tr. Dec.
13, 2002).
We disagree and hold that the work product of Dr.
McGraw is privileged and subject to only limited discovery.
Ernst & Young contends that questioning into the content
of advice Dr. McGraw gave to Wood during a private
consultation with Wood’s attorney clearly calls for attorney
work product protection. In retaining Dr. McGraw, Ernst &
Young expected all counsel’s communications with him to
be confidential and protected from discovery. Had Ernst &
Young or its counsel anticipated that counsel’s
communications with this litigation consultant would be
subject to discovery, Ernst & Young asserts Dr. McGraw
would not have been retained or the nature and extent of
the matters counsel communicated to him would have been
severely curtailed.
Ernst & Young asserts that, based upon the expectation
of confidentiality, Dr. McGraw participated in frank and
open discussions with Ernst & Young’s counsel regarding
counsel’s view of the important facts of the case, the
contentions of the parties, and Ernst & Young’s trial
themes, theories, and strategies. These discussions were at
all times understood and intended to be confidential by all
participants. Furthermore, in connection with these
discussions, Dr. McGraw was provided with documents
prepared by Ernst & Young’s counsel reflecting counsel’s
mental impressions, opinions, conclusions, and legal
privilege, like the work product doctrine, does not limit discovery into
matters where a law firm allegedly acted criminally); In re Doe, 662 F.2d
1073 (4th Cir. 1981) (affirming a district court order that allowed
disclosure of opinion work product where the government presented a
prima facie case of subordination of perjury by the attorney during his
representation of clients in criminal trials).
17
theories. In addition, Dr. McGraw’s notes of these
discussions may reflect the mental impressions, opinions,
conclusions, and legal theories of Ernst & Young’s counsel.
Discovery of this information goes to the core of the work
product doctrine and, therefore, is discoverable only upon
a showing of extraordinary circumstances. Cendant has
failed to cite any extraordinary circumstances that would
justify discovery of the information sought. Thus, the
private communications between Wood, Dr. McGraw, and
counsel merit protection under the work product doctrine,
as they reflect and implicate Ernst & Young’s legal strategy
regarding a deposition taken as part of this litigation.
IV.
Compelled disclosure of the substance of conversations
between Wood, his counsel, and Dr. McGraw would require
disclosure of communications protected by the work
product doctrine. The communications took place during a
consultation that focused on those issues that counsel and
Dr. McGraw perceived to be central to the case. Moreover,
the communications were intended to be confidential and
made in anticipation of litigation. As such, the
communications are at the core of the work product
doctrine and are only discoverable upon a showing of rare
and exceptional circumstances. The issue on appeal is
whether the District Court erred in concluding that
communications between Dr. McGraw, Wood, and counsel
are not protected from discovery by any privilege or
immunity.
We hold that the District Court erred and that the
Special Discovery Master’s ruling is essentially correct.
These communications merit work product protection. The
Special Discovery Master properly found that no exceptional
circumstances were cited to justify the exploration sought
by Cendant. Nonetheless, we believe Wood may be asked
whether his anticipated testimony was practiced or
rehearsed. But this inquiry should be circumscribed. As
with all discovery matters, we leave much to the sound
discretion of the District Court.
18
For the reasons outlined, we will reverse the order of the
District Court and remand for proceedings consistent with
this opinion.
19
GARTH, Circuit Judge, concurring.
I concur fully with the analysis and holding of the Court’s
opinion authored by Chief Judge Scirica. There is no
question but that Federal Rules of Civil Procedure 26(b)(3)
and (4) do not permit the discovery of Dr. McGraw which
Cendant sought.
I am also in accord with Chief Judge Scirica’s holding
that the Special Discovery Master’s ruling and directions as
to limited discovery are correct. In my view, that ruling and
those directions should govern the further discovery
proceedings.
I write separately, however, for I am also of the opinion
that the discovery which was sought in the instant context
was precluded as well by the attorney-client privilege—an
issue not reached by Chief Judge Scirica in his opinion. See
Maj. Op. at 6 n.5. The parties extensively briefed, and
presented oral argument on, the applicability of the
attorney-client privilege.
While I recognize that in certain respects the attorney-
client privilege has more narrow parameters than the work
product doctrine, see, e.g., United States v. Nobles, 422
U.S. 225, 238 n.11 (1975), I nevertheless am satisfied that
the attorney-client privilege was operative when Dr.
McGraw, the client Wood, and E&Y’s counsel were engaged
in contemporaneous and simultaneous discussions
concerning the instant litigation. As counsel for E&Y stated
in its brief, “the District Court’s attempt to ‘carve out’
allegedly non-privileged ‘two-way’ communications between
a client and a trial consultant during a ‘three-way’ meeting
among counsel, the client, and the trial consultant is . . .
impossible to execute.” (E&Y Br. at 15.) That view was
expressed even more forcefully in Stanley D. Davis &
Thomas D. Beisecker, Discovering Trial Consultant Work
Product: A New Way to Borrow an Adversary’s Wits?, 17
Am. J. Trial Advoc. 581, 626-27 (1994) (explaining that
communications between a client practicing testimony and
a consultant are not discoverable because “[i]ntertwined
with the client’s responses to mock questions, and the
consultant’s reactions thereto, will inevitably be client
communications . . . which are . . . intended by the client
20
to be a confidential part of the relationship with counsel.
Extirpating the comments of the consultant from this
context may well be impossible without bringing along
these communications and thus frustrating the purpose of
the attorney-client privilege.”).
The attorney-client privilege operates to protect from
disclosure communications among the client, counsel, and
in circumstances such as are present here, a third party
(here, Dr. McGraw) who was assisting E&Y’s counsel in the
formulation of legal advice. Thus, I am persuaded that in
addition to the work product privilege, the attorney-client
privilege also protected communications voiced at the
meetings of Wood’s counsel and Dr. McGraw. As I cannot
conceive of how this three-way interchange of views among
these three participants at their strategy conferences could
be dissected or parsed, leaving only E&Y’s questions and
advice, I would also hold that the attorney-client privilege
was implicated.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit