Chase Manhattan Bank, N.A. v. Turner & Newall, PLC

• Citation: 964 F.2d 159
• Decision Date: 18 May 1992
• Docket Number: No. 1034,D,1034
• Parties: CHASE MANHATTAN BANK, N.A., Plaintiff-Appellee, v. TURNER & NEWALL, PLC, formerly known as Turner & Newall Ltd., Defendant-Third-Party-Plaintiff-Appellant, Skidmore, Owings & Merrill, Turner Construction Company, Third-Party-Defendants. ocket 91-9177.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 159

964 F.2d 159

60 USLW 2737

CHASE MANHATTAN BANK, N.A., Plaintiff-Appellee, v. TURNER & NEWALL, PLC, formerly known as Turner & Newall

Ltd., Defendant-Third-Party-Plaintiff-Appellant,

Skidmore, Owings & Merrill, Turner Construction Company,

Third-Party-Defendants.

No. 1034, Docket 91-9177.

United States Court of Appeals, Second Circuit.

Argued Feb. 26, 1992.

Decided May 18, 1992.

Thomas I. Sheridan, III, New York City (Charles E. Dorkey, III, Haythe & Curley, Sara Q. Cobb, New York City, of counsel), for defendant-third-party-plaintiff-appellant.

Robert R. Elliott, III, New York City (Kent T. Stauffer, Janis G. White, New York City, of counsel), for plaintiff-appellee.

Irene C. Warshauer, New York City (Mary Beth Gorrie, Anderson Kill Olick & Oshinsky, P.C., New York City, of counsel), for amicus curiae Keene Corporation in support of defendant-third-party-plaintiff-appellant.

Before: TIMBERS, NEWMAN and WINTER, Circuit Judges.

WINTER, Circuit Judge:

Turner & Newall, PLC ("T & N") appeals from Judge Broderick's interlocutory discovery order permitting counsel for Chase Manhattan Bank, N.A. ("Chase") to examine thousands of documents that T & N claims are protected by the attorney-client privilege. This examination is to take place before an adjudication on the merits of the claims of privilege. We have no jurisdiction to review interlocutory discovery orders and dismiss the appeal. Alternatively, T & N petitions for a writ of mandamus vacating the order. Because the issues raised by the discovery order are important and of first impression and because the procedure prevents parties from effectively asserting the attorney-client privilege before disclosure to opposing counsel, we issue the writ.

BACKGROUND

Chase filed the instant action in the Southern District in 1987, seeking compensatory and punitive damages from T & N for damage to Chase's corporate headquarters caused by the installation of asbestos fireproofing materials. In December 1990, Judge Broderick referred the case to Magistrate Judge Roberts for all pretrial proceedings.

During the course of the next year, Chase and T & N served numerous document requests and interrogatories on one another. In responding to Chase's requests, T & N withheld thousands of documents based on an assertion of the attorney-client privilege. At various conferences before the Magistrate Judge, the parties disagreed over the format and scope of the privilege list that T & N produced. T & N contended that a privilege list it had prepared for a prior lawsuit--the so-called "Prudential log"--was sufficient to comply On July 17, 1991, Chase suggested that one means of resolving the claims of privilege would be an attorneys'-eyes-only review of the withheld documents. Chase's attorney, Robert Elliott, explained to the Magistrate Judge:

                with Local Rule 46(e)(2). 1  Chase, however, argued that the Prudential log did not satisfy Local Rule 46(e)(2)
                

apparently T & N is asserting the privilege with respect to thousands of documents at least. It doesn't seem an appropriate use of the court's time for them to be submitted to your Honor for in camera inspection. We would suggest that they be submitted to Chase's lawyers for an inspection. We would review the documents as to which privilege is asserted and essentially I think be able to as officers of the court divide them into three categories: Document irrelevant; we're not interested, no fight. Documents clearly privileged as to which we would not seek a ruling. Documents which are relevant, interesting and we believe not privileged.

The Magistrate Judge did not respond to this suggestion at the time, nor did the parties discuss it further during the July conference. On September 19, 1991, the Magistrate Judge ruled, inter alia, that the Prudential log did not comply with the requirements of Local Rule 46(e)(2) and directed T & N to submit, by November 15, a privilege list containing the information required by that Local Rule. To assist T & N in the preparation of this list, the Magistrate Judge ordered Chase to submit to T & N a list of all documents on the Prudential log that, in Chase's estimation, were not described in sufficient detail to allow Chase to make an informed determination whether to challenge particular claims of privilege.

On September 23, another conference was held. At this conference, Chase renewed its suggestion of an attorneys'-eyes-only review by Chase of documents for which T & N was asserting claims of attorney-client privilege. After a brief colloquy with Chase about the usefulness of such a procedure, the Magistrate Judge asked T & N:

Why not engage in a process which I can tell you has been engaged in repeatedly in litigation of all sorts, at least that I've handled in which these documents or at least most of them are made available to plaintiffs counsel on an attorneys'-eyes-only basis and look at the documents, that is, to decide whether or not they have any interest in them or ... whether they agree essentially that they are privileged documents, and then we only litigate about the remaining core that is, as [Chase] put it, of interest to Chase and as to which they challenge the assertion of privilege, whatever that may be[?]

T & N refused to consent to this procedure, explaining that it was concerned that, if it agreed, courts in other jurisdictions might interpret the agreement as a waiver by T & N of the attorney-client privilege with respect to the documents in question. The Magistrate Judge noted, however, that On September 26, 1991, a conference call was held during which counsel for T & N asked that a special master review the documents in camera and rule on the claims of privilege before disclosure to counsel for Chase. The Magistrate Judge denied this request.

"[i]t can't be a waiver if you are ordered to do it by the court." After further discussion, the Magistrate Judge directed T & N to provide the documents for review by counsel for Chase. The only documents exempted from this review were so-called "radioactive" documents, in the Magistrate Judge's words, "so sensitive from a strategy standpoint or whatever that you simply cannot show them even to Chase's counsel."

On October 7, T & N filed with Judge Broderick objections to the Magistrate Judge's order allowing counsel for Chase to review the documents for which claims of privilege had been made. As an alternative, T & N asked the court to appoint a special master to review the documents in camera and rule on T & N's claims of attorney-client privilege. On November 6, 1991, Judge Broderick overruled T & N's objection without opinion.

T & N filed a notice of appeal and sought a stay of the disclosure pending our hearing the appeal. Both the Magistrate Judge and the District Judge denied T & N's application for a stay, as did a panel of this court. The attorneys'-eyes-only review commenced on December 5, 1991. Chase moved to dismiss this appeal for lack of appellate jurisdiction. That motion has been referred to this panel. T & N asks, in the alternative, that we treat the appeal as a petition for a writ of mandamus.

DISCUSSION

A. Appellate Jurisdiction

We consider first whether we have jurisdiction over T & N's appeal. T & N concedes that the order appealed from is non-final but argues that appellate jurisdiction exists under the collateral order doctrine established in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). This argument, however, is squarely contrary to a long line of cases in this circuit. See, e.g., Xerox Corp. v. SCM Corp., 534 F.2d 1031, 1032 (2d Cir.1976) (per curiam); American Express Warehousing, Ltd. v. Transamerica Ins. Co., 380 F.2d 277, 280 (2d Cir.1967) (The Cohen Court "envisioned immediate appeal in only a 'small class' of cases, a term hardly descriptive of the number of cases raising discovery questions.").

Relying upon In re United States, 565 F.2d 19 (2d Cir.1977), cert. denied, 436 U.S. 962, 98 S.Ct. 3082, 57 L.Ed.2d 1129 (1978) ("Socialist Workers "), T & N argues that the collateral order doctrine provides for review of a discovery order when the order in question constitutes a manifest abuse of discretion or creates legal questions of first impression or extraordinary significance. There is language in Socialist Workers that seemingly supports T & N's position. See id. at 22 (review of a discovery order might be allowed where there was "a persistent disregard of the Rules of Civil Procedure or a manifest abuse of discretion ... [or] where the case presents legal questions of first impression or of extraordinary significance"). However, this language relates only to the standards for mandamus review or for certification pursuant to 28 U.S.C. § 1292(b). The pertinent language in Socialist Workers was based on analysis contained in Xerox Corp. and purports to be only a summary, rather than a modification, of that analysis. Socialist Workers, 565 F.2d at 22. In Xerox Corp. we stated that:

In recent years we have repeatedly sought to make clear that in the absence of a certification pursuant to 28 U.S.C. § 1292(b) or of a showing of "persistent disregard of the Rules of Civil Procedure," Will v. United States, 389 U.S. 90, 96, [88 S.Ct. 269, 274, 19 L.Ed.2d 305] (1967), or of "a manifest abuse of discretion," Baker v. United States Steel Corp., 492 F.2d 1074, 1077 (2d Cir.1974), on the part of the district court, no jurisdictional basis exists for interlocutory review of pretrial discovery orders....

. . . . .

No such showing is made here and Judge Newman understandably refused to certify his rulings for appeal pursuant to 28 U.S.C. § 1292(b). This case does not present legal questions of first impression or of "extraordinary significance." ... It is further settled that the exception created by Cohen ... to the finality requirement cannot be employed to obtain interlocutory review of discovery orders.

534 F.2d at 1031-32 (...