Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_03-cv-00949/USCOURTS-caed-2_03-cv-00949-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

EL DORADO IRRIGATION DISTRICT,

a political subdivision of the

State of California,

NO. CIV. S-03-949 LKK/GGH

Plaintiff,

v. O R D E R

TRAYLOR BROS., INC., an 

Indiana corporation,

Defendant.

 /

AND RELATED COUNTER-CLAIMS.

 /

On March 11, 2005, the magistrate judge issued an order 

adjudicating several issues concerning discovery disputes in 

the above-captioned case. Plaintiff, El Dorado Irrigation

District (“EID”), now moves for reconsideration of the denial of

its motion to compel return of privileged documents

inadvertently disclosed to defendant Traylor Brothers Inc.

(“Traylor Bros.”). I decide the motion based on the papers and

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pleadings filed herein and without oral argument. Local Rule 72-

303(e). 

I.

BACKGROUND

The instant discovery dispute began when EID inadvertently

forwarded to defendant documents which it had marked as

privileged under the attorney-client privilege and work product

immunity. Traylor Bros. disputed the privileged status of

certain documents, most of which are communications between

EID’s personnel and its engineer-on-site, Montgomery Watson

Harza (“MWH”), and refused to return them to EID. 

In adjudicating EID’s underlying motion for return of those

documents, the magistrate judge identified the question before

him as “whether MWH is a ‘third party’ for purposes of waiver of

the attorney-client privilege/work product immunity, or whether

MWH is simply an agent of EID such that disclosure of otherwise

privileged communications between EID and MWH do not waive

privileges.” Order at 17. The magistrate judge first explained

that “if MWH [were] . . simply EID’s representative in the

field, the court would have no difficulty in finding that [the

disclosures] were necessary for accomplishment of the lawyer’s

retention purpose . . .” and were therefore privileged. MWH

also acted as a neutral decisionmaker in issuing engineer’s

decisions, however, rendering the privileged status of the

documents uncertain. Accordingly, the magistrate judge examined

MWH’s dual roles and their effect on attorney-client

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privilege/work-product immunity of the communications at issue. 

The magistrate judge ultimately determined that the documents

could not maintain privileged or immunity status and denied

EID’s motion. 

EID asks that this court overturn the magistrate’s

determinations. Traylor Bros., of course, objects to EID’s

contentions and asserts that EID has not presented any

compelling legal grounds upon which the underlying decision may

be rejected. As I explain below, I agree with the defendant’s

contention.

II.

STANDARD OF REVIEW 

Federal Rule of Civil Procedure 72(a) provides that nondispositive pretrial matters may be decided by a magistrate

judge, subject to reconsideration by the district judge. See

also Local Rule 72-303. 28 U.S.C. § 636(b)(1)(A) provides that

the magistrate judge's order should be upheld unless it is

"clearly erroneous or contrary to law." Discovery motions are

non-dispositive pretrial motions within the scope of Rule 72(a)

and 28 U.S.C. Section 636(b)(1)(A). People ex rel. Wheeler v.

Southern Pacific Transportation Co., 1993 WL 816066 (E.D. Cal.

1993).

The parties first disagree as to how this court must apply

the "clearly erroneous or contrary to law" standard. EID

contends that pure issues of law are to be decided de novo. The

defendant, on the other hand, asserts that the standard of

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review on motions for reconsideration on a ruling of nondispositive matters is deferential to the magistrate judge’s

decision and that it may not be disturbed unless it is "clearly

erroneous or contrary to law." Because the outcome of this

court’s review may very well turn on the actual standard of

review, this question requires close scrutiny. 

An examination of this issue reveals that the courts have

been less than consistent in the application of the "clearly

erroneous or contrary to law" standard. Despite the

discrepancies, however, the Ninth Circuit has unambiguously

explained that courts should not review issues of law de novo in

non-dispositive matters, but rather under the more deferential

“clearly erroneous or contrary to law” standard. 

In Grimes v. City and County of San Francisco, 951 F.2d

236, (9th Cir. 1991), the court explained that: 

A non-dispositive order entered by a magistrate must

be deferred to unless it is “clearly erroneous or

contrary to law." Fed.R.Civ.P. 72(a), 28 U.S.C. §

636(b)(1)(A). The district court reviews "the

magistrate's order for clear error." Maisonville, 902

F.2d at 748. "Pretrial orders of a magistrate under

636(b)(1)(A) are reviewable under the 'clearly

erroneous and contrary to law' standard; they are not

subject to de novo determination...." Merritt, 649 F.2d

at 1017. The reviewing court may not simply substitute

its judgment for that of the deciding court. United

States v. BNS, Inc., 858 F.2d 456, 464 (9th Cir. 1988). 

Id. at 241 (emphasis added). The case cited by the Grimes court

in support of this rule, Merritt v. International Broth. of

Boilermakers, 649 F.2d 1013, 1017 (5th Cir. 1981), further

explains that “[p]retrial orders of a magistrate under 

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§ 636(b)(1)(A) . . . are not subject to a de novo determination

as are a magistrate's proposed findings and recommendations

under § 636(b)(1)(B).” See also United States v.

Abonce-Barrera, 257 F.3d 959 (9th Cir. 2001)(“The Magistrates

Act's specification that nondispositive matters are to be

reviewed by the district court under a far more deferential

standard-‘clearly erroneous’ and ‘contrary to law’-than

dispositive matters indicates that decisions by the magistrate

judge on nondispositive matters are essentially ‘final decisions

of the district court which may be appealed in due course with

other issues.’"(internal citations and quotation omitted). 

Following the Ninth Circuit’s teaching, this court has explained

that “[n]on-dispositive pretrial motions referred to the

magistrate judge pursuant to 28 U.S.C. § 636(b)(1)(A) are

reviewed under a clearly erroneous or contrary to law

standard[,] . . . [while], a magistrate judge's determination

concerning matters referred pursuant to 28 U.S.C. § 636(b)(1)(B)

are for the most part reviewed de novo.” Gordon v. Vasquez, 859

F.Supp. 413 (E.D. Cal. 1994).

Despite the Ninth Circuit’s teaching of the standard of

review, the majority of this Circuit’s district courts apply the

"clearly erroneous" standard to magistrate judges’ factual

determinations and apply the “contrary to law” standard to

issues of law by making a de novo determination. In Computer

Economics, Inc. v. Gartner Group, Inc., 50 F.Supp.2d 980, 983

(S.D. Cal. 1999), the Southern District court stated that “[t]he

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‘clearly erroneous’ standard applies to the magistrate judge's

factual determinations and discretionary decisions, including

orders imposing discovery sanctions,” (internal citation and

quotations omitted), and that “the ‘contrary to law’ standard

permits independent review of purely legal determinations.” See

also Green v. Baca, 219 F.R.D. 485 (C.D. Cal. 2003)(same). 

According to a Northern District court, “[t]he ‘contrary to law’

standard invites plenary review of purely legal determinations

by the magistrate judge.” Conant v. McCoffey, 1998 WL 16494

(N.D. Cal. 1998). 

In all candor, it appears to this court that the better

rule has been expressed by the district courts. This court is

not at liberty, however, to depart from Ninth Circuit precedent. 

The doctrine of stare decisis, i.e. the requirement to "adhere

to decided cases," Planned Parenthood of Southeastern Pa. v.

Casey, 505 U.S. 833, 953 (1992) (Rehnquist J. concurring in part

and dissenting in part), "compels lower courts to follow the

decisions of higher courts on a question of law." 18 James Wm.

Moore et al., Moore’s Federal Practice 134-7 § 134.01[1]. As a

general matter, this court must adhere to the Ninth Circuit’s

holding until it is overruled. See, e.g., United States v.

Milto, 714 F.2d 294, 298 (3d. Cir. 1983). The stare decisis

obligation of this court does not depend on the correctness of

the Circuit’s decision, see Hutto v. Davis 454 U.S. 370, 375

(1982) (obligated to follow binding decision "however

misguided"); regardless of its wisdom, therefore, the district

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courts are bound to follow the law as established by the Ninth

Circuit, since it is the holding which binds, not the rationale. 

Accordingly, this court will continue to apply the “clearly

erroneous or contrary to law” standard as explained in Grimes. 

III.

ANALYSIS

A. MWH’S ROLES

EID objects to the magistrate judge’s description of MWH as

an adjudicator and maintains that MWH was not a neutral arbiter. 

It contends that MWH was not “really” a neutral arbiter because

the parties selected a Dispute Resolution Board (“DRB”) to serve

in that capacity. Contrary to EID’s contentions, however, the

determination regarding MWH’s role as an adjudicator may not be

disturbed because it is not clearly erroneous. 

While the magistrate judge’s characterization of MWH’s role

as a neutral adjudicator may not be exact, there is evidence

which can support his conclusion that MWH served in the capacity

of a neutral decisionmaker in addition to being EID’s field

representative, thereby playing dual roles. Although it is true

that the parties agreed to submit certain disputes arising

during construction to a DRB, they also agreed to a preliminary

and more informal process by which MWH would resolve disputes. 

According to the contract between the parties, MWH served as the

engineer who, “[i]n his capacity as interpreter and judge, . .

[would] not show partiality to Owner or Contractor” in resolving

submitted claims. EID’s Mot. for Recon. Br. at 4. Therefore,

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in addition to functioning as EID’s field representative, the

magistrate judge concluded that MWH also served as a neutral

decisionmaker, and thus, the magistrate judge’s finding is not

clearly erroneous. 

B. ATTORNEY-CLIENT PRIVILEGE 

As expressed by the magistrate judge, the questions of

privilege here are “fairly unique.” After a review of

California state law, the magistrate judge concluded that he

could not practicably distinguish between the documents at issue

because “the dominant purpose for intended-to-be-confidential,

MWH-EID communications, [was] first and foremost potential

dispute resolution.” Order at 21. Accordingly, the

communications made in MWH’s role as EID’s field representative

as opposed to those made as the neutral decisionmaker were not

mutually exclusive for privilege purposes. 

This court’s independent review of California’s attorneyclient privilege doctrine confirms the magistrate judge’s

observation concerning the ambiguity in the law. Because there

is nothing on-point to guide the court’s determination, the

court must use its discretion in applying existing law to the

present case. After an examination of the state law, this court

cannot conclude that the magistrate judge’s determination was

clearly erroneous or contrary to law. 

C. WORK-PRODUCT DOCTRINE

EID does not fare any better under the federal work-product

immunity doctrine. The magistrate judge concluded that “EID’s

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disclosures to MWH and vice versa were inconsistent with the

need to keep the material secret from its adversary,” citing

United States v. American Tel. & Tel. Co., 642 F.2d 1285, 1299

(D.C. Cir. 1980), and that “MWH’s dual roles were blurred.”

Order at 22. Again, because the law as applied to these facts

is less than clear and the magistrate judge’s conclusion is not

unreasonable, this court cannot disturb that conclusion. 

IV.

CONCLUSION

For the reasons explained above, plaintiff’s motion for

reconsideration is DENIED.

IT IS SO ORDERED. 

DATED: June 13, 2005.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

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