In re Motor Fuel Temperature Sales Practices Litig..

• Decision Date: 24 May 2011
• Docket Number: Nos. 10–3086,10–3101.,s. 10–3086
• Citation: 641 F.3d 470
• Parties: In re MOTOR FUEL TEMPERATURE SALES PRACTICES LITIGATION.
• Court: U.S. Court of Appeals — Tenth Circuit

641 F.3d 470

In re MOTOR FUEL TEMPERATURE SALES PRACTICES LITIGATION.

Nos. 10–3086

10–3101.

United States Court of Appeals, Tenth Circuit.

May 24, 2011.

[641 F.3d 476]

Tristan L. Duncan (Manuel Lopez, Kevin R. Corlew, and Sarah Lynn Baltzell, Shook, Hardy & Bacon, L.L.P., Kansas City, MO, Alphonse Alfano and Robert Bassman, Bassman, Mitchell & Alfano Chartered, Washington, D.C., Joseph M. Weiler, Alderson, Alderson, Weiler, Conklin, Burghart, & Crow, LLC, Topeka, KS, Rusty Rinehart, Rinehart Law Offices, Campbell, CA, John F. O'Connor, Steptoe & Johnson, LLP, Washington, D.C., with counsel on the briefs), Shook, Hardy & Bacon, L.L.P., Kansas City, MO, for Appellants.Elizabeth G. Taylor (Robert A. Horn and Joseph A. Kronawitter, Horn Aylward & Bandy, LLC, Kansas City, MO, with counsel on the briefs), Zuckerman Spaeder LLP, Washington, D.C., for appellees.Before KELLY and MURPHY, Circuit Judges, and TACHA, Senior Circuit Judge.TACHA, Senior Circuit Judge.

The appellants, who include the defendant motor fuel retailers (“defendants” or “retailers”) and non-party, retail motor fuel trade associations (“non-party trade associations” or “trade associations”) to which the retailers belong, seek reversal of the district court's discovery order directing them to disclose information that they claim is privileged under the First Amendment. To achieve this end, the appellants filed both an interlocutory appeal and a petition for a writ of mandamus in this court. We DISMISS the interlocutory appeal for lack of appellate jurisdiction, and we DENY the mandamus petition.

I. BACKGROUND

The plaintiffs filed twelve putative class actions in seven federal district courts against the defendant retailers. The plaintiffs seek damages and injunctive relief based on the retailers' maintenance of a volumetric pricing system for retail motor fuel that does not account for expansion of the fuel's volume due to temperature increases. The plaintiffs allege that when the temperature of motor fuel increases, its volume expands but its energy content remains the same. Furthermore, the plaintiffs contend that pricing mechanisms for motor fuel sales account for temperature variations at all levels of the distribution chain except at the retail level. Accordingly, the plaintiffs charge the retailers with conspiring to defraud American consumers by purchasing motor fuel at wholesale under a pricing system that compensates for temperature variations, and then selling that fuel, after its volume has expanded and without disclosing that fact, to consumers according to a pricing system that does not account for temperature variations. In response to the plaintiffs' consolidated complaint, the retailers alleged, among other things, that it would be illegal, impractical, and impossible to account for temperature variations in retail motor fuel sales.

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In 2007, the Judicial Panel on Multidistrict Litigation consolidated and transferred the plaintiffs' lawsuits to the District of Kansas for discovery and other pre-trial proceedings. The plaintiffs then served interrogatories and document requests on the retailers, seeking information relating to their communications with retail motor fuel trade associations, weights and measures organizations, government agencies, and each other regarding automatic temperature compensation (“ATC”).¹ The retailers opposed these discovery requests on the grounds that disclosure of such information would infringe on the their First Amendment rights to freely associate in order to pursue political, social, and economic ends and to petition the government. The plaintiffs then filed a motion to compel.

Shortly thereafter, the plaintiffs served subpoenas on the non-party retail motor fuel trade associations seeking information relating to their communications with the retailers, government entities, and other trade associations regarding the implementation of ATC in the United States. A number of the retailers, who are members of these non-party trade associations, filed a motion to quash the subpoenas. The retailers argued, among other things, that the disclosure of such information would infringe on the retailers' and the trade associations' First Amendment associational rights. The non-party trade associations filed motions stating that they joined in the retailers' motion to quash, but they did not formally seek to intervene in the lawsuit.

In subsequent briefing on both the motion to compel and the motion to quash, as well as during a hearing before the magistrate judge, the retailers argued for a “presumed privilege” not to disclose internal and inter-group communications regarding ATC, which the retailers characterized as strategic lobbying materials. In the alternative, the retailers argued that (1) they could demonstrate a reasonable probability that disclosure of that information would chill their First Amendment associational rights sufficient to establish a prima facie claim of privilege; and (2) the plaintiffs had not met their resultant burden to demonstrate a compelling need for the information that outweighed the retailers' and trade associations' interests in keeping the information private.

Holly Alfano, vice president of government affairs for the National Association of Truckstop Operators (“NATSO”),² provided an unsworn statement to the court in support of the retailers' privilege claim. Ms. Alfano gave her opinion regarding the temporal and economic costs of complying with the discovery requests; stated that she believed it would be unfair for NATSO to have to disclose its past research, strategy, and deliberative processes regarding ATC to its opponents in the ATC debate; and described what she thought the effects of a disclosure order would be. In relevant part, she stated:

You know, why should they [the plaintiffs] have everything we've done, all of our internal research, all of our private conversations with our members trying to understand this issue, you know, because they think maybe there's something there, you know, that's not, it's nonexistent....

So I just—I think it's very unfair for us to turn over all of our work and all of

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our strategy on this issue which is ongoing.

...

So if I have to plan my ... testimony at [weights and measures] hearings, because they're open hearings, where they get people—they invite interested parties to come up and speak, I'm very reluctant to call any of my members and ask them questions knowing that it's information that I have to provide to my adversaries....

I just don't think I would be able to do it and I won't be able to effectively represent the interests of my members. So that's a huge burden. And I kind of feel like this is an effort really to shut down our ... lobbying efforts....

You know, we have a right to gather those facts and present them in the best way we can. We're going to have a hard time doing that if ... every time I want to call a member ... I'd have to say ... if you tell me anything and I make a note of it, I've got to disclose it. I don't think I'm going to get a lot of help from them. So that's our big problem with this.

The retailers did not otherwise produce evidence to support their claim of privilege.

The magistrate determined that many of the communications at issue were privileged under the First Amendment and that the plaintiffs had not met their burden to overcome the privilege.³ See generally In re Motor Fuel Temperature Sales Practices Litig., 258 F.R.D. 407 (D.Kan.2009). On both the plaintiffs' and the defendants' motion for review, however, the district court found entirely in favor of the plaintiffs. See In re Motor Fuel Temperature Sales Practices Litig., 707 F.Supp.2d 1145 (D.Kan.2010). In doing so, the district court concluded that none of the requested information was entitled to a presumption of privilege under the First Amendment and that the retailers must instead make a prima facie showing that the privilege applies. See id. at 1155, 1158–59, 1163–64. The court went on to hold that the retailers failed to meet that burden because they had not presented evidence sufficient to demonstrate a reasonable probability that disclosure of any of the information would chill their associational rights.⁴ Id. at 1160, 1164.

The retailers then filed a motion to reconsider, arguing primarily that: (1) the requested information is presumptively privileged; (2) to the extent a presumption is inapplicable, the retailers satisfied their burden to make a prima facie showing that disclosure of the information would arguably chill their associational rights; and (3) the retailers should be permitted to supplement the record with additional evidence of a chilling effect. The retailers also moved for an emergency stay of the district court's order. The district court denied both the motion to reconsider and the motion for an emergency stay, reiterating its holding that the retailers had

[641 F.3d 479]

failed to meet their prima facie burden and declining the retailers' request to supplement the record. In re Motor Fuel Temperature, 707 F.Supp.2d at 1166–69.

The retailers and the non-party trade associations then filed an interlocutory appeal, a petition for a writ of mandamus, and a request for an emergency stay of the district court's order in this court. The plaintiffs seek dismissal of the interlocutory appeal for lack of appellate jurisdiction, and they oppose the mandamus petition and the request for an emergency stay. We consolidated the interlocutory appeal and the mandamus petition and temporarily stayed the district court's order pending our resolution of those matters.

II. DISCUSSION A. The First Amendment Privilege: Right of Association ⁵

Before reaching the interlocutory appeal and mandamus petition, we begin by setting forth the contours of the First Amendment privilege and how it is implicated in the case before us. The Supreme Court has long “acknowledged the importance of freedom of...