Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_03-cv-03359/USCOURTS-cand-4_03-cv-03359-8/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:1 Antitrust Litigation

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United States District Court

For the Northern District of California

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1

 DSCPs are high-end, prestige or specialty beauty and cosmetic products and product lines (including

color products, treatment and fragrances) sold by the "Manufacturer Defendants" under various brand names

fromMay 29, 1994 through July 16, 2003. These products were sold primarily through traditional department

and/or specialty stores and not through mass distribution channels. The "Manufacturer Defendants" are: The

Estée Lauder Companies Inc., L'Oréal USA, Inc., Conopco, Inc., Christian Dior Perfumes, Inc., Guerlain,

Inc., Parfums Givenchy, Inc., Chanel, Inc., Boucheron (USA) Ltd., and Clarins U.S.A., Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

FATEMAH AZIZIAN, et al.,

Plaintiffs.

 v.

FEDERATED DEPARTMENT STORES, et al., 

Defendants.

_______________________________________

No. C 03-3359 SBA

CLASS ACTION 

ORDER

[Docket Nos. 566, 572, 589] 

This matter comes before the Court on Objector Kamela Wilkinson's Motion for Protective Order

[Docket No. 566], Class Plaintiffs' Motion to Take Deposition [Docket No. 572], and Objector Kamela

Wilkinson's Objections to Special Master's Order Granting Discovery Pursuant to Federal Rule of Civil

Procedure 27(b) [Docket No. 589]. Having read and considered the arguments presented by the parties in

the papers submitted to the Court, the Court finds these matters appropriate for resolution without a hearing.

The Court hereby SUSTAINS Objector Kamela Wilkinson's Objections to the Special Master's Order

Granting Discovery Pursuant to Federal Rule of Civil Procedure 27(b), GRANTS Objector Wilkinson's

Motion for Protective Order, and DENIES Class Plaintiff's Motion for Deposition. 

BACKGROUND

In1998,Class Plaintiffs ("Plaintiffs") filed a number of class action complaints on behalf ofpersons who

purchased Department Store Cosmetics Products ("DSCPs")1in California. The originalcomplaints were filed

in various California Superior Courts and were ultimately coordinated and assigned by the JudicialCouncil to

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 The "Department Store Defendants" are: Federated Department Stores, Inc., The Neiman-Marcus

Group, Inc., Nordstrom, Inc., The May Department Stores Company, Saks Incorporated, Gottschalks Inc.,

Target Corporation, and Dillard's, Inc.

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the Honorable M. Lynn Duryee, Judge of the Superior Court in and forthe County ofMarin. Plaintiffs alleged

that certain "Department Store Defendants"2engaged in anti-competitive practices that discouraged the

discounting of DSCPs in the United States. On May 17, 2000, after extensive discovery, Plaintiffs filed an

Amended Consolidated Complaint, which added the Manufacturer Defendants. The Amended Consolidated

Complaint alleged pervasive joint practices of the Department Store Defendants and the Manufacturer

Defendants to discourage discounting of DSCPs.

On January 5, 2001, Judge Duryee ordered the parties to mediation, and they retained the services of

former Judge Weinstein and Catherine Yanni of JAMS to mediate settlement negotiations. The parties

eventually reached settlement. In order to obtain nationwide settlement and relief, however, a federal complaint

was filed in this Court on July 18, 2003.

Class Counsel promptly sought preliminary approval of their proposed settlement, which this Court

granted on November 21, 2003. Nationwide notice was subsequently disseminated to the putative class

members. Only sixty-one persons purported to opt out of the class; of these, one was a duplicate, a second

was untimely, and a third was later withdrawn. Only twenty-six unique objections made on behalf of a total

of seventy-three persons were submitted to the Court. 

Hearings regarding final approval of the settlement were conducted on January 11, 2005 and March

8, 2005.

On March 30, 2005, the Court entered the FinalJudgment Granting FinalApprovalto the Class Action

Settlement with All Defendants and Awarding Attorneys' Fees and Costs. 

On April 29, 2005, Objectors Grace Wright and Kamela Wilkinson each filed a Notice of Appeal.

On July 6, 2005, Plaintiffs filed a Motion to Require Objectors Grace Wright and Kamela Wilkinson

to Post a Bond on Appeal ("Motion for Bond on Appeal"). 

On August 9, 2005, the Court issued an Order directing Objectors Grace Wright ("Wright") and

Kamela Wilkinson ("Wilkinson") to post a bond in the amount of $42,000 on or before August 23, 2005.

Pursuant to the Court's Order, Wright and Wilkinson were jointly and severally responsible for posting the

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3On or about August 22, 2005, Wright also filed several motions concerning the bond and requesting

a stay of the August 9, 2005 Order. Also on that date, Wright appealed the August 9, 2005 Order. Pursuant

to a settlement between the parties and Wright, Wright subsequently withdrew her motions and her appeals

on August 25, 2005.

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bond.

On August 19, 2005, Wilkinson appealed the Court's August 9, 2005 Order. Also on that date,

Wilkinsontendered to the Clerk ofCourt a check in the amount of $2,000.00. The Clerk rejected the check.

Neither Wilkinson nor Wright paid the bond. Instead, on August 23, 2005, the date the bond was due,

Objector Wilkinsonfiled a Motion for an Order Directing the Clerk to Accept $2,000.00 ("Motion to Accept

$2,000 Bond").3 

On August 31, 2005, Plaintiffs sent letters to Wilkinson and Wilkinson's attorneys, William Abbott

("Abbott"),L. Richard LeClair, III ("LeClair"), and Kent Brooks ("Brooks") requesting available datesfortheir

depositions. The following day, Plaintiffs issued subpoenas to depose Wilkinson, Abbott, LeClair, and Brooks.

Wilkinson, Abbott, LeClair, and Brooks were also directed to produce certain documents at their depositions.

On September 19, 2005, Wilkinson filed a Motion for Protective Order, seeking to prevent the

depositions of Wilkinson, Abbott, LeClair, and Brooks. On September 22, 2005, the Court referred the

Motion for Protective Order to the Special Master. On September 23, 2005, Plaintiffs filed a Motion for

Leave to Take Depositions Under Fed. R. Civ. P. 27(b) ("Motion to Take Depositions").

On September 29, 2005, Wilkinson filed a Motion forLeave to File a Motion for Reconsideration of

the Court's September 22, 2005 Order. Wilkinson's Motion for Leave to File a Motion for Reconsideration

was denied with prejudice on October 4, 2005. 

On October 5, 2005, the Special Master held a hearing on the Motion for Protective Order and

Motion to Take Depositions.

On October 6, 2005, the SpecialMaster issued an Order Granting Discovery Pursuant to Fed. R. Civ.

P. 27(b) ("Special Master's Order Granting Discovery"). 

On October 14, 2005, this Court issued an Order denying Wilkinson's Motion for Clerk to Accept

$2,000 Bond. 

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4As discussed in Torrisi v. Tucson Electric Power Co., 8 F.3d 1370, 1378 (9th Cir. 1993), a

"spoiler" is a person who, having objected to a class action settlement, files a baseless appeal in order to

advance his or her own personalinterests and, possibly, to extract an unwarranted financial settlement fromthe

parties. 

4

On October 26, 2005, Wilkinson filed the instant Objection to Special Master's Order Granting

Discovery. 

ANALYSIS

At the October 5, 2005 hearing, after considering the briefs submitted by Wilkinson and Plaintiffs on

the Motion for Protective Order and Motion to Take Depositions, and after considering the arguments of

counsel, Special Master Charles B. Renfrew issued a ruling allowing Plaintiffs to take the depositions of

Wilkinson, Abbott, LeClair, and Brooks. The SpecialMaster also ruled thatWilkinson, Abbott, LeClair, and

Brooks would be required to produce the documents identified in Plaintiffs' subpoenas unless Wilkinson can

show that the subpoenas are overbroad orseek irrelevant, immaterial, orunnecessary information. The Special

Master's rulings were based on his finding that, given the sizable nature of the class, the sophisticated nature

of the parties involved in the settlement, the amount at stake, and the fact that Wilkinson is the sole remaining

objector to the class settlement, Plaintiffs had presented a prima facie case that Wilkinson may be a mere

spoiler4to the settlement and that the interests ofjustice therefore support the discovery sought by the Plaintiffs.

In her Objection to Special Master's Order Granting Discovery, Wilkinson requests review of the

Special Master's ruling on the grounds thatPlaintiffs have notsufficiently demonstrated that they are entitled to

discovery under Federal Rule of Civil Procedure 27(b). Plaintiffs, on the other hand, argue that the Special

Master properly applied Rule 27(b) and that the depositions of Wilkinson's attorneys are justified under

Shelton v. American Motors Corp, 805 F.2d 1323 (8th Cir. 1986) because Plaintiffs suspect thatWilkinson

and her attorneys are currently engaged in a fraudulent scheme to extort money from the class. 

Rule 27(b) provides in pertinent part:

If an appeal has been taken from a judgment of a district court or before the taking

of an appeal if the time therefor has not expired, the district court in which the

judgment was rendered may allow the taking of the depositions of witnesses to

perpetuate their testimony for use in the event of further proceedings in the

district court. In such case the party who desires to perpetuate the testimony may

make a motion in the district court for leave to take the depositions, upon the same

notice and service thereof as if the action was pending in the district court. The

motion shall show (1) the names and addresses of persons to be examined and the

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5On Plaintiffs' MotionforBond onAppeal, thisCourt considered the potential likelihood that the Ninth

Circuit would find Wilkinson's appealto be frivolous as part ofthe basis for determining the appropriate amount

for the Rule 7 bond. However, contrary to Plaintiffs' current belief, the Court did not make any conclusions

with respect to whether the appeal is, in fact, frivolous. In fact, the Court specifically noted that this is a

determination to be made by the Ninth Circuit pursuant to Federal Rule of Appellate Procedure 38, not the

district court. 

5

substance of the testimony which the party expects to elicit from each; (2) the

reasons for perpetuating their testimony. If the court findsthat the perpetuation ofthe

testimony is proper to avoid a failure or delay of justice, it may make an order

allowing the depositions to be taken and maymake orders of the character provided

for by Rules 34 and 35, and thereupon the depositions may be taken and used in the

same manner and under the same conditions as are prescribed in these rules for

depositions taken in actions pending in the district court.

Fed. R. Civ. P. 27(b)(emphasis added). Accordingly, Rule 27(b) requires a party to show both: (1) that the

depositions are necessary to perpetuate testimony for use in the event of further proceedings in district court

and (2) that the perpetuation of the testimony is necessary to avoid a failure or delay of justice. 

After carefully considering the criteria set forth in Rule 27(b), and after conducting a de novo review

of the Motion for Protective Order and the Motion for Discovery, the Court finds that Plaintiffs' Motion for

Discovery is notsupported by the authorities upon which they rely. Plaintiffs primarily argue that they need the

requested discovery in order to determine whether Wilkinson is pursuing a frivolous appeal. However, a

significant flaw in Plaintiffs' Motion is the fact that Plaintiffs have failed to demonstrate how the discovery they

are seeking would be used in any further proceedings in this Court. Indeed, it is beyond dispute that the

decision ofwhether to impose sanctions for the pursuit of a frivolous appeal lies squarely within the discretion

ofthe court of appeals pursuant Federal Rule of Appellate Procedure 38. See Orr v. Bank of America, NT

& SA, 285 F.3d 764, 784 n. 34 (9th Cir.1992).5 Plaintiffs have not provided the Court with any relevant

authorities in support of their contention that a district court has the jurisdictionto entertain a sanctions motion

that concerns solely the papers filed by Wilkinson in the Ninth Circuit or actions undertaken by Wilkinson, or

her counsel, at the appellate level. Indeed, Plaintiffs grossly misstate the holding of Pensiero, Inc. v. Lingle,

847 F.2d 90, 98 (3rd Cir. 1988) in order to support their argument that "a sanctions proceeding 'is uniquely

separable' and collateralfromany decision on the merits." Pensiero, however, concerns an untimely Rule 11

motion forsanctions premised on a plaintiff'sfailure to reasonably investigate the facts and the law before filing

the initialcomplaint. Id. at 92; accord Hicks v. Southwest Md. Health Sys. Agency, 805 F.2d 1165, 1167

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(4th Cir. 1986). Farmhand, Inc. v. Anel Engineering Indus., Inc., 693 F.2d 1140, 1146 (5th Cir. 1982),

another case cited by Plaintiffs, concerns a district court's jurisdictionto oversee contempt proceedings relating

to an injunctionissued by that court. Thus, Pensiero, Hicks, and Farmhand do notstand forthe proposition

that a district court may entertain a motion for sanctions premised solely on proceedings in the appellate court.

Further, even if Plaintiffs could demonstrate that this Court does have jurisdiction to sanction Wilkinson or

Wilkinson's counselwhile her appealis pending, it would be entirely premature and inappropriate forthis Court

to make a determination regarding the merits of the appeal before the Ninth Circuit has had an opportunity to

consider it in the first instance. 

Additionally, Plaintiffs have also failed to demonstrate that it is likely that testimony will be lost if the

depositions are not allowed to proceed immediately. Vague assertions that testimony "could" be lost or that

evidence "could" be destroyed are not sufficient to justify discovery under Rule 27(b). Lombards, Inc. v.

Prince Mfg., Inc., 753 F.2d 974, 976 (11th Cir. 1985). 

Finally, Plaintiffs' desire to depose not just Wilkinson, but each of Wilkinson's attorneys, is also

troubling. As Wilkinson points out, although there is no express prohibition against the taking of attorney

depositions, attorney depositions are typically permitted only inthose unique circumstances where:(1) no other

means exist to obtain the information, (2) the information sought is relevant and non-privileged, and (3) the

information is crucial to the preparation of the case. Shelton v. American Motors Corp., 805 F.2d 1323,

1327 (8th Cir. 1986). Further, although Plaintiffs argue that the Shelton holding is not closely followed, even

Plaintiffs admit that Shelton is still valid when:(1) litigation counsel are being deposed and (2) the questioning

would expose litigation strategy in the pending case. United States v. Philip MorrisInc., 209 F.R.D. 13, 17

(D.D.C. 2002). 

Here, as the expected testimony goes to the heart ofthe attorney-client relationship betweenWilkinson

and her counsel, it is clear that the requested discovery would raise significant privilege issues. In fact, tacitly

conceding this, Plaintiffs do not even attempt to argue that Abbott, LeClair, and Brooks are critical fact

witnesses to non-privileged information. Instead, Plaintiffs rely on the "crime-fraud exception" and argue that

the attorney-client privilege should not attach to Wilkinson's communications with her attorneys because

Wilkinsonand her attorneys have engaged in "attempted extortion." Plaintiffs have not provided the Court with

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any evidence of extortion, however, and instead, vaguely refer to certain settlement demands Wilkinson made

during a confidential Ninth Circuit mediation that were, at worst, unrealistic and unsubstantiated. However,

Plaintiffs have not identified any cases where mere settlement demands – even ones that are completely

outlandish – are sufficient to establish that the attorney has engaged in fraud thereby completely eviscerating

the attorney-client privilege. Indeed, it is not clear that Plaintiffs can properly make such a showing without first

establishing that Wilkinson's appeal is frivolous byobtaining a dismissalof Wilkinson's appeal in the appellate

court. 

Moreover, although Plaintiffs argue that the crime-fraud exception applies to the filing of frivolous

litigation, it is significant that the cases cited by Plaintiffs are completely inapposite. For example, in In re

Richard Roe, 168 F.3d 69, 71-72 (2nd Cir. 1999), the Second Circuit held that the crime-fraud exception

could, conceivably, extend to the "bringing [of] baseless litigation intended to delay entry into a market by a

competitor" thus violating antitrust laws. Id. In Specialty Minerals, Inc. v. Pleuss-Stauffer AG, 2004 WL

42280 * 9 (S.D.N.Y. 2004), on the other hand, the plaintiff produced ample evidence that the defendants had

concealed priorart knownto themat the time they filed their patent application, and then failed again to disclose

the same prior art in the re-examination of the application. Finally, in Recycling Solutions, Inc. v. District of

Columbia, 175 F.R.D. 407, 408-409 (D.D.C. 1997), the plaintiffs raised serious allegations that the

defendants had employed counsel to pursue litigation in order to further facilitate the defendants' internal

unconstitutional racial and ethnic discrimination policies. Id. at 409. No such showing has been made here.

In fact, Plaintiffs appear to rely solely on mere speculation that Wilkinson's motives are unjustified. However,

this is the type ofpure speculation thatprompted the court in Motorola, Inc. v. Vosi Technologies, Inc., 2002

WL 1917256 (N.D. Ill. 2002) to reject the plaintiff's application of the crime-fraud exception. See id.

(concluding that it was "not prepared to say that[the defendant's allegations] . . . have 'little or no factualbasis,'

let alone that the litigation has been carried on for the purpose of further fraud."). 

Further, even in Recycling Solutions, Inc., the district court limited the discovery to "an inquiry as to

whether racial or ethnic factors were ever bespoken" between the defendants and their counsel. Recycling

Solutions, Inc., 175 F.R.D. at 410. The court did not allow discovery "encompass[ing] the merits of the

[Contract Appeals Board's] decision, or legal issues arising thereon, . . . [the] legal strategies to be employed

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Indeed, at the October 5, 2005 hearing before Judge Renfrew, counsel for Wilkinson repeatedly

stated that, with the exception ofthe Ninth Circuit mediation, they had never spoken to Plaintiffs' counsel. See

Oct. 5, 2005 Tr. at 27:13-17; 47:24-48:4 ("They don't have one scintella of evidence to deal with anything

because we don't speak to them. We refuse to speak to them except in a confidential setting for reasons

exactly like this."). 

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directed to the prompt and lawfulresolution thereof, [or] . . . issues previously considered or presently pending

either before the Superior Court of the District of Columbia or the District of Columbia Court of Appeals."

Id. Thus, Recycling Solutions, Inc. does not provide authority for the type ofdiscovery Plaintiffs are seeking

here. As such, Plaintiffs' reliance on the crime-fraud exception is far too tenuous to overcome the attorneyclient privilege. As the Second Circuit stated in In re Richard Roe, Inc.:

Given that the attorney-client privilege and work product immunity play a criticalrole

in our judicialsystem. . . the limited exceptions to them[i.e. crime-fraud and waiver]

should not be framed so broadly as to vitiate much of the protection they afford.

Where the very act of litigating is alleged as being in furtherance of a fraud, the party

seeking disclosure under the crime-fraud exception must show probable cause that

the litigationor an aspect thereof had little or no legalor factualbasis and was carried

on substantially for the purpose of furthering the crime or fraud. Absent such a

showing, the requisite finding that an otherwise privileged or immunized

communication was intended to further fraud cannot be made.

Id. at 71.

As a final matter, the Court finds it important to note that, between Plaintiffs, Wilkinson, and Wright,

no less than ten motions have been filed in this Court over the past five months relating to Wilkinson and

Wright's appeals. Indeed, this Court has become increasingly concerned that the recent stream of highly

contentious and acrimonious litigationfiled in this Court appears to be driven solely by the attorneys,ratherthan

the clients. The Court is also concerned that very little effort – if any – has been made to comply with this

Court's meet and confer requirement.6 Because such litigationcongests this Court's docket and drains scarce

judicial resources, the parties are hereby ordered that, to the extent they find it necessary to file any further

motions in this Court, the attorney who signs the motionmust also file a certificate of counsel indicating that he

orshe has met and conferred, in good faith, with opposing counsel prior to filing the motion. Further, because

this Court retains the inherent authority to manage its own proceedings, any abuse ofthe judicialprocess in this

Court or further disregard of this Court's Orders willresult in an order to show cause why sanctions should not

issue. However, the Court reminds the parties that, to the extent that they anticipate filing further motions

regarding the merits of Wilkinson's appeal, the Ninth Circuit is the appropriate forum for such matters to be

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heard. 

CONCLUSION

IT IS HEREBY ORDERED THAT Objector Kamela Wilkinson's Objections to the SpecialMaster's

Order Granting Discovery Pursuant to Federal Rule of Civil Procedure 27(b) [Docket No. 589] are

SUSTAINED. 

ITIS FURTHER ORDERED THAT Objector Wilkinson's Motion for Protective Order [Docket No.

566] is GRANTED and Class Plaintiff's Motion for Deposition [Docket No. 572] is DENIED.

IT IS FURTHER ORDERED THAT to the extent that Objector Wilkinson or the parties find it

necessary to file any further motions in this Court, the attorney who signs the motion must also file a certificate

of counsel indicating that he or she has met and conferred, in good faith, with opposing counsel prior to filing

the motion. Any abuse of the judicial process in this Court or further disregard of this Court's Orders will result

in an order to show cause why sanctions should not issue. The Court further reminds the parties that, to the

extent thatthey anticipate filing further motions regarding the merits of Wilkinson's appeal, the motions should

be directed to the Ninth Circuit. 

IT IS SO ORDERED.

 

Dated: 12-5-05 SAUNDRA BROWN ARMSTRONG

United States District Judge

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