Handloser v. HCL America, Inc.

Background

Gregory Handloser and Cerafin Castillo, described in the opinion as unsuccessful applicants for employment with HCL in the United States, allege that HCL engages in a pattern or practice of racial discrimination in violation of 42 U.S.C. § 1981. VDart, Inc. is one of several companies HCL uses to recruit applicants for its U.S. workforce.

Plaintiffs served VDart with a subpoena for documents about VDart’s recruiting work for HCL. Plaintiffs later contended that HCL pressured VDart to change its agreement to produce documents to plaintiffs and instead provide the documents to HCL. In opposing plaintiffs’ discovery dispute and sanctions motion, HCL made representations about its communications with Russell Etheridge, VDart’s counsel.

Plaintiffs then subpoenaed Etheridge for written communications and records of oral communications between him and HCL’s counsel concerning the VDart subpoena. HCL moved for a protective order barring that discovery, arguing that the requested material was privileged, protected attorney work product, covered by the common-interest doctrine, and irrelevant. HCL had also provided its counsel’s written communications with Etheridge to the court for confidential judicial review in connection with the sanctions motion.

Legal standards

Federal Rule of Civil Procedure 26(c) allows a court, for good cause, to protect a party from undue burden or expense by forbidding or limiting discovery. A party may seek protection concerning a subpoena directed to a nonparty when the subpoena threatens that party’s own interests.

Attorney-client privilege protects confidential communications made for the purpose of seeking or providing legal advice. The work-product doctrine generally protects materials prepared by or for a party or its representative in anticipation of litigation, including an attorney’s legal strategies and mental impressions. The party asserting either protection bears the burden of showing that it applies.

The common-interest, or joint-defense, doctrine is an exception to ordinary waiver rules. It can protect communications between separately represented parties who communicate confidentially about a shared legal interest. The doctrine does not independently create a privilege; an underlying privilege or protection must already apply.

Court’s analysis

The court first addressed relevance. It noted that a party ordinarily lacks standing to challenge a nonparty subpoena based only on relevance. Even assuming HCL had standing, however, the court agreed that communications concerning VDart’s compliance with the subpoena and HCL’s alleged interference were relevant to plaintiffs’ sanctions motion. HCL had made those communications relevant by describing them in its opposition to that motion.

The court next rejected HCL’s argument that HCL and VDart shared a common legal interest. VDart was HCL’s vendor, and the companies had a contractual relationship but were otherwise unaffiliated. HCL identified its asserted common interest as defending claims or potential claims brought by plaintiffs and their counsel. HCL conceded at the hearing that it knew of no claims or threatened claims against VDart and that the recruiting contract would not expose VDart to liability if HCL were found liable for discrimination.

The court held that HCL’s status as a defendant, combined with VDart’s status as a vendor in an industry where discrimination lawsuits had been filed, did not establish a common legal interest. A shared desire for the same outcome is not enough. The possibility that VDart might someday be sued was speculative, and the court’s review of the communications showed that HCL’s and VDart’s interests concerning the subpoena were adverse rather than common.

The court also held that HCL had placed certain communications at issue by relying on its counsel’s characterization of them while opposing plaintiffs’ positions. As a result, HCL had affirmatively waived any privilege or work-product protection that otherwise might have applied to communications during the period from May 8 through May 29, 2020. Because of that conclusion, the court did not decide whether the underlying communications would otherwise have been privileged or protected work product.

Disposition

The court denied HCL’s motion for a protective order. The court noted that plaintiffs had represented that the subpoena’s sole purpose was to support their third motion for sanctions and that they would not enforce it after the sanctions motions were resolved. Because those motions had been resolved, the court requested that plaintiffs withdraw the subpoena or explain why the discovery remained necessary, and requested a status report stating plaintiffs’ position by October 31, 2020. The order was signed by Virginia K. Demarchi, United States Magistrate Judge.