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Waste Management of Louisiana, LLC v. River Birch, Inc.

United States District Court, E.D. Louisiana

August 2, 2017


         SECTION: “N” (4)



         Before the Court is a Motion to Quash Subpoena to Attorney Peter J. Butler, Sr. or Alternatively for a Protective Order (R. Doc. 283) filed by Defendants River Birch LLC, Highway 90, LLC, Frederick Heebe, and Albert Ward, Jr. seeking an order quashing the subpoena issued by the Plaintiff to Peter Butler, Sr. The motion is opposed. R. Doc. 296. The motion was submitted on July 19, 2017 and heard with argument that same day.

         Following oral argument, the Court found that Topic No. 2, which seeks information related to “[a]ll communications between [Butler] and named Defendants, or any person or entity associated with or acting on behalf of the named Defendants, ” may involve discussion of privilege information. While the Court heard argument concerning the application of the crime-fraud exception to the attorney-client privilege, the Court determined that it required additional briefing on this matter, particularly given that Mouton's recently completed deposition may aid the Court's consideration. Both the Plaintiff and the Defendant have filed additional memorandums. R. Doc. 311; R. Doc. 314.

         I. Background

         This action was filed in the District Court on September 23, 2011. R. Doc. 1. Waste Management of Louisiana, LLC (“Plaintiff”) alleges that the Defendants have engaged in a long-running conspiracy to limit and exclude competition for landfill disposal services in and around New Orleans, Louisiana. R. Doc. 140, p. 1. The Defendants in this action are: River Birch, Inc., the owner and operator of River Birch landfill; Highway 90 LLC, who owns Highway 90 landfill; Frederick Heebe, the owner of Shadow Lake Management, Co., which is the parent corporation of River Birch, Inc.; and Albert Ward, who is the father-in-law of Heebe, and former President of River Birch, Inc. and Manager of Highway 90 LLC (collectively “Defendants”). In particular, the Plaintiff states that it suffered direct injury as a result of the Defendants actions in at least two instances: the premature closure of the Chef Menteur landfill in 2006 as part of a scheme to transfer more Hurricane Katrina clean-up debris to River Birch's landfill; and the efforts to prematurely oust the Plaintiff as operator of the Jefferson Parish landfill as part of a scheme to transfer the Parish's municipal solid waste to River Birch landfill under an exclusive 25-year contract. Id. at p. 2. As such, the Plaintiff has alleged two counts of violations under Federal Racketeer Influenced and Corrupt Organizations (“RICO”) Sections 1962(c) and Section 1962(d). Id. at p. 39-42.

         The Plaintiff further alleges that the closure of the Chef Menteur landfill resulted from the Defendants' RICO violations. In particular, the Plaintiff alleges that at least two RICO predicate activities demonstrate that the Defendants were engaged in a pattern of racketeering activity that led to the Plaintiff's harm: 1) the bribery of Henry Mouton; and 2) the bribery of Ray Nagin. Id. at p. 13-21. First, the Plaintiffs allege that starting as early as 2003 the Defendants or others at their behest began bribing Mouton to use his position and influence to further the commercial interests of the Defendants. Id. at p. 14. During 2005 and 2006, the Plaintiff further alleges that the Defendants bribed Mouton specifically for the purpose of using his position as a Louisiana Department of Wildlife and Fisheries Commissioner to oppose the approval, permitting, and/or operation of competing landfills to dispose of Katrina-related waste, including the Chef Menteur, Old Gentilly, and Two Rivers landfills. Id. Mouton allegedly used his influence to contact a number of public officials-including persons at the Environmental Protection Agency, the Federal Bureau of Investigation, the United States Attorney's Office, United States Senators, and others-to spread misinformation and seek their assistance in stopping other landfills from competing under the guise of environmental concerns. Id. at p. 15. Mouton also allegedly funneled $24, 000 in bribes on behalf of the Defendants to other public officials during April and May of 2006. Id.

         In May of 2011, Mouton plead guilty to one count of conspiracy to receive illegal payoffs; and, in the factual summary from that case, Mouton proffered that he conspired to shutter the competition with “Co-Conspirator A” and used the status and legitimacy of his office to successfully influence decision makers to stop the proposed Two Rivers landfill and to attempt to influence decision makers to shut down the Old Gentilly landfill. Id. at 14. The Plaintiff avers that “Co-Conspirator A” is Defendant Heebe. Id. at p. 3. However, the Court also notes that the Chef Menteur landfill was not listed nor discussed in the factual statement connected to that criminal case. R. Doc. 176-4. Moreover, the truthfulness of Mouton's statements in his plea agreement are hotly contested by the Defendants, particularly in light of the alleged prosecutorial misconduct of the United States Attorney's Office at the time of Mount's guilty plea. Even Mouton sought after his plea agreement to open discovery to determine if there existed exculpatory materials and to verify that the plea was fairly negotiated based on the alleged prosecutorial misconduct.

         At this time, the Defendants have filed a motion to quash or alternatively for a protective order in relation to the subpoena issued by the Plaintiff to Peter Butler, Sr. (“Butler”). Butler provided legal counsel to the Defendants for more than thirty years. R. Doc. 283, p. 1. As such, the Defendants state that the subpoena seeks privileged information. R. Doc. 283-1, p. 3-4. The Defendants further argue that the information is not subject to the crime fraud exception because Mouton's guilty plea alone is not enough to demonstrate that the Defendants were engaged in a crime. R. Doc. 307, p. 2-3. Moreover, the Defendants also state that the Supreme Court's decisions in McDonnell v. United States, 136 S.Ct. 2355 (2016) clarifies that Mouton's actions were not illegal. Finally, the Defendants also argue that the Plaintiff should pursue any discovery of Butler from some other means rather than a deposition, citing by analogy the factors used in determining whether to depose in-house counsel from the Shelton case.

         In reply, the Plaintiff argue that any privileged communication between Butler or the Defendants in connection with the alleged scheme to target rival landfills would fall under the “crime-fraud” exception. R. Doc. 296, p. 5. In particular, the Plaintiff argues that Butler's communications were in furtherance of the criminal scheme between the Defendants and Mouton. In reply to the Defendants' arguments, the Plaintiff argues that the McDonnell opinion is inapposite here as the McDonnell case involved the statutory interpretation of two statutes not at issue. The Plaintiff also argues that the Shelton factors do not apply here.

         II. Standard of Review

         Under the attorney-client privilege, “[t]he party asserting privilege bears the burden to show: (1) a confidential communication; (2) to a lawyer or subordinate; (3) for the primary purpose of securing a legal opinion, legal services, or assistance in the legal proceeding” Vicknair v. Louisiana Dept. of Pub. Safety & Corr., 555 F.App'x 325, 333 (5th Cir. 2014) (internal quotation and citation omitted). However, “despite its venerated position, the privilege is not absolute and is subject to several exceptions.” United States v. Edwards, 303 F.3d 606, 618 (5th Cir. 2002).

         “‘Under the crime-fraud exception to the attorney-client privilege, the privilege can be overcome where communication or work product is intended to further continuing or future criminal or fraudulent activity.'” In re Grand Jury Subpoena, 419 F.3d 329, 335 (5th Cir. 2005) (quoting Edwards, 303 F.3d at 618). “As the Fifth Circuit explained, ‘[t]he test is whether the client's purpose is the furtherance of a future fraud or crime. However, this focus on the client's purpose appears to be driven by the fact that the attorney-client privilege is, of course, held by the client and not the attorney.'” In re Chinese Manufactured Drywall Prod. Liab. Litig., MDL No. 2047, 2015 WL 7018483, at *2 (E.D. La. Nov. 12, 2015) (quoting In re Grand Jury Proceedings, 43 F.3d 966, 972 (5th Cir. 1994)); see also, In re BankAmerica Corp. Sec. Litig., 270 F.3d 639, 642 (8th Cir. 2001) (internal citations omitted) (“Because the attorney-client privilege benefits the client, it is the client's intent to further a crime or fraud that must be shown. Both the attorney's intent, and the attorney's knowledge or ignorance of the client's intent, are irrelevant.”).

         “The party seeking to overcome the privilege ‘bears the burden of establishing a prima facie case that the attorney-client relationship was intended to further criminal or fraudulent activity.'” In re Katrina Canal Breaches Consol. Litig., No. 05-4182, 2008 WL 4401970, at *10 (E.D. La. Sept. 22, 2008) (quoting In Re Grand Jury Subpoena, 419 F.3d at 335). To establish a prima facie case, the party attempting to overcome the privilege “must produce evidence such as will suffice until contradicted and overcome by other evidence ... a case which has proceeded upon sufficient proof to that stage where it will support [a] finding if evidence to ...

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