Ala. Aircraft Indus., Inc. v. Boeing Co., CIVIL ACTION NUMBER: 2:11-cv-03577-RDP

• Decision Date: 02 December 2016
• Docket Number: CIVIL ACTION NUMBER: 2:11-cv-03577-RDP,Case No.: 2:16-mc-01216-RDP
• Parties: ALABAMA AIRCRAFT INDUSTRIES, INC., ALABAMA AIRCRAFT INDUSTRIES, INC. - BIRMINGHAM, AND PEMCO AIRCRAFT ENGINEERING SERVICES, INC. Plaintiff, v. THE BOEING COMPANY, BOEING AEROSPACE OPERATIONS, INC. AND BOEING AEROSPACE SUPPORT CENTER, Defendant. THE BOEING COMPANY, Plaintiff, v. TENNENBAUM CAPITAL PARTNERS, LLC Defendant.
• Court: U.S. District Court — Northern District of Alabama

ALABAMA AIRCRAFT INDUSTRIES, INC.,ALABAMA AIRCRAFT INDUSTRIES, INC. - BIRMINGHAM,AND PEMCO AIRCRAFT ENGINEERING SERVICES, INC. Plaintiff, v. THE BOEING COMPANY, BOEING AEROSPACE OPERATIONS, INC.AND BOEING AEROSPACE SUPPORT CENTER, Defendant.

THE BOEING COMPANY, Plaintiff, v. TENNENBAUM CAPITAL PARTNERS, LLC Defendant.

CIVIL ACTION NUMBER: 2:11-cv-03577-RDP

Case No.: 2:16-mc-01216-RDP

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA

December 2, 2016

REPORT AND RECOMMENDATION

Before the Special Master are four (4) related motions, namely, (1) Boeing's Motion to Compel the Production of Documents by Tennenbaum Capital Partners ("TCP") (Doc. 1), (2) TCP's Motion to Quash Boeing's April 7, 2016 Subpoena (Doc. 6), (3) TCP's Motion to Strike Portions of the Declaration of J. Thomas Richie (Doc. 9), and (4) AAI's Motion to Quash Boeing's April 7, 2016 Subpoena (Doc. 3) (collectively, "the Motions" or "the TCP Subpoena Motions"), which were referred to the undersigned by Judge Proctor in an order dated August 16, 2016 (Doc. 40 at 1) in the matter of The Boeing Company v. Tennenbaum Capital Partners, LLC, Case No. 2:16-mc-01216-RDP.¹

Prior to the matter's transfer to Judge Proctor, the Motions were extensively briefed in the Central District of California (see Docs. 3, 18, 28, 32, 33, 35); at Judge Proctor's behest (Doc. 40 at 2), the undersigned convened a telephone conference on August 23, 2016 to discuss with counsel for Boeing, TCP, and AAI whether such briefing was sufficient to allow the undersigned to properly resolve the Motions. Counsel for TCP requested the opportunity to submit additional briefing as to the issue of cost sharing, but the parties were otherwise satisfied with the state of their briefing; however, by order dated August 26, 2016 (Doc. 41), the undersigned solicited supplementing briefing from the parties on the topicof privilege waiver, which the undersigned identified as a threshold issue in resolving the TCP Subpoena Motions after a review of the existing record. The parties responded on September 23, 2016 by submitting briefs and exhibits regarding privilege waiver, and, in turn, by order dated October 3, 2016 (Doc. 42), the undersigned requested additional, waiver-related information from TCP. TCP provided the requested information on October 10, 2016, and, as such, the Motions are now fully briefed, rendering them ripe for resolution. For the reasons explained below, it is the recommendation of the Special Master that the TCP Subpoena Motions be GRANTED IN PART, DENIED IN PART, and DEEMED MOOT IN PART.

I. FINDINGS OF FACT

A. Underlying Subpoenas & Independent Production Agreement

1. On February 18, 2015, Boeing served TCP with its first subpoena, issuing the document request out of the Southern District of California. (Doc. 3, Richie Dec. at Ex. 3).

2. Following TCP's objections to the court of issuance, Boeing re-issued the subpoena from the Central District of California, serving it on TCP on March 5, 2015. (Doc. 3, Richie Dec. at Exs. 4 & 5).

3. After extended negotiations over TCP's responsive obligations under the second subpoena (see, e.g., Doc. 3, Richie Dec. at Ex. 10), theparties entered into an independent production agreement in November 2015, pursuant to which TCP agreed to turn over certain documents in lieu of complying with the subpoena. (Doc. 3, Richie Dec. at Ex. 37).

4. Ultimately, TCP produced more than twenty-three thousand (23,000) documents in connection with the agreement, turning over hard copy documents on November 30, 2015 and electronic documents on December 22, 2015. (Doc. 3, Richie Dec. at ¶ 24). TCP also produced two privilege logs on January 19, 2016. (Doc. 3, Richie Dec. at Exs. 1 & 2).

B. Privilege Dispute, Third Subpoena, & TCP Subpoena Motions

5. After receiving TCP's privilege logs, Boeing informally challenged the privilege assertions made therein, exchanging numerous letters with TCP on the issue. (Doc. 3, Richie Dec. at Exs. 12-15). The parties were unable to resolve their privilege disputes, and, accordingly, Boeing filed a Motion to Compel on February 11, 2016 in the Northern District of Alabama. (Doc. 3, Richie Dec. at Ex. 40).

6. Construing Boeing's Motion to Compel as an attempt to enforce the underlying subpoena (rather than the operative production agreement) (Doc. 3, Richie Dec. at Ex. 41), the Court applied Rule 45(d)(2)(B)(i) of the Federal Rules of Civil Procedure ("At any time, on notice to the commanded person, the serving party may move the court for the districtwhere compliance is required for an order compelling production or inspection.") (emphasis added), concluding that the Motion to Compel should have been filed in the Central District of California, as opposed to the Northern District of Alabama. (Doc. 3, Richie Dec. at Ex. 41—"The subpoena was served in California on a California company and seeks documents maintained in California. Nothing in the discovery agreement alters Rule 45's tautological application here."). Accordingly, it dismissed Boeing's Motion, but did so without prejudice, noting that "Boeing may file its Motion in the court issuing the subpoena (or another court which may have jurisdiction over TCP)." (Doc. 3, Richie Dec. at Ex. 41).

7. On April 7, 2016, Boeing served a third subpoena on TCP, issuing it from the Northern District of Alabama. (Doc. 3, Richie Dec. at Ex. 22). The third subpoena was much narrower than its two predecessors, seeking only those documents that appeared on TCP's privilege logs ("the Disputed Documents")² in an attempt to circumvent the jurisdictional issuesthat had previously plagued Boeing's efforts (see supra at ¶ 6) to compel production of the Disputed Documents. (See April 7, 2016 Letter from Boeing to Special Master—Doc. 3, Richie Dec. at Ex. 24—"As you know, TCP produced documents and two large privilege logs under the subpoena Boeing issued. But when Boeing raised challenges to those privilege logs, TCP raised jurisdictional objections to Boeing's subpoena. The objections relate solely to the court out of which the subpoena issued and is a wholely technical matter, but for expediency we are simply issuing a revised subpoena rather than continue to dispute this point." (emphasis added); see also Doc. 3 at 12 (Boeing)—"To obviate TCP's new counsel's objection to Boeing's subpoena, Boeing issued a subpoena from the Northern District of Alabama on April 7. It seeks only documents that were at issue under the prior subpoena, specifically the documents identified on TCP's privilege log." (internal citations omitted)).

8. On June 24, 2016, Boeing filed two motions in the Central District of California, seeking to compel production of the Disputed Documents (Doc. 1) and/or transfer the enforcement proceedings to the Northern District of Alabama (Doc. 2). TCP concurrently filed a number ofcross-motions—including a Motion to Quash (Doc. 6), a Motion to Strike (Doc. 9), and a Motion for Sanctions and Cost Sharing (Doc. 8)—and AAI also filed a Motion to Quash (Doc. 3). Per local practice in the Central District of California, Boeing, TCP, and AAI submitted their briefing and evidentiary materials to the Court in a Joint Stipulation (Doc. 3).³

9. Although many of the issues addressed by the parties in the Joint Stipulation are no longer relevant (e.g., those relating to Boeing's Motion to Transfer or TCP's Motion for Cost Sharing), a number remain central to the Motions considered here, namely (1) timeliness, and (2) privilege. Indeed, in attempting to quash Boeing's third subpoena, TCP and AAI primarily argued that the subpoena was untimely, as it was issued by Boeing after the discovery deadline in the underlying case. (Doc. 3 at 15 (TCP)—"With fact discovery closed in Alabama as of Februrary 29, 2016, and without a valid subpoena on which to move against TCP, on April 7, 2016 Boeing issued a third subpoena expressly targeting documents appearing on the privilege log TCP voluntarily provided with its production. The April 7 subpoena is fatally defective, as it was issued more than a month after the Alabama court's fact discovery cutoff."; Doc. 3 at 17 (AAI)—"Boeing's Motion should be denied and the TCP Subpoena quashed for two reasons: (1) because Boeing improperly issued and served this subpoena more than one month after the close of fact discovery in the Alabama Lawsuit, in violation of the Scheduling Order in that case; and (2) because the untimely subpoena expressly seeks the production of AAI's privileged or otherwise protected documents."; Doc. 3 at 17, n.4 (AAI)—"[I]t is not necessary for the Court to reach the privilege issues becauseBoeing's Motion to Compel is due to be denied and the untimely TCP Subpoena quashed because it was served after the Alabama Lawsuit's discovery deadline."). In addition to making a threshold timeliness argument, TCP and AAI also argued that Boeing's subpoena improperly sought privileged documents. (See, e.g., supra at ¶ 7, n.2). Boeing, in turn, pushed back on TCP/AAI's timeliness and privilege arguments, framing its third subpoena as a continuation of earlier, more timely discovery efforts and asserting that TCP's possession of the Disputed Documents resulted in a waiver of their AAI-based privilege. (Doc. 3 at 11 (Boeing)—"Their latest effort is to claim that Boeing's subpoena is untimely. They are wrong. This dispute began with a subpoena Boeing issued to TCP in March 2015, and every document at issue is responsive to that subpoena. The documents at issue were collected, reviewed, and logged by TCP at least by January 2016. Although the scheduling order in the Underlying Action closed most fact discovery on February 29, 2016, all parties are well aware that several pending items were left open to continue past that date."; Doc. 3 at 24 (Boeing)—"[E]ven if the subpoenaed documents could have been privileged in AAI's hands, there is no possible basis for them to retain privileged status when all of the documents were available to TCP...