Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-02493/USCOURTS-azd-2_11-cv-02493-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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Richard G. Himelrick (004738) 

TIFFANY & BOSCO, P.A. 

Third Floor Camelback Esplanade II 

2525 East Camelback Road 

Phoenix, Arizona 85016-4237 

Telephone: (602) 255-6000 

Facsimile: (602) 255-0103 

rgh@tblaw.com

Special Master 

UNITED STATES DISTRICT COURT 

 DISTRICT OF ARIZONA

SGD Engineering Limited, an Israeli 

corporation, 

 Plaintiff, 

vs. 

Lockheed Martin Corporation 

Incorporated, a Maryland corporation, 

 Defendant. 

Case No.: 2:11-cv-2493-DGC

Special Master’s Report and 

Recommendation 

Table of Contents 

1. Introduction ............................................................................................................ 2 

2. Summary of Findings ............................................................................................. 2 

3. Procedural History .................................................................................................. 4 

4. Lockheed’s Privilege Logs ..................................................................................... 5 

5. Special Master’s Suggestions and the Parties’ Preliminary Responses ................. 8 

6. SGD’s Objections ................................................................................................... 9 

7. Analysis ................................................................................................................ 10

 A. SGD’s non-privilege objections and concerns .......................................... 10 

 B. Lockheed did not waive its privilege claims ............................................. 12 

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 C. Confidential (in camera) reviews by special master ................................. 14 

 1. Document 50 .................................................................................. 14 

 2. Document 111 ................................................................................ 15 

 3. Document 341 ................................................................................ 16 

 4. Other documents produced for confidential review ....................... 17 

 D. Confusion caused by Lockheed’s use of and/or privilege claims ............ 18 

8. Lockheed’s Fifth Privilege Log Satisfies Rule 26(b)(5) ...................................... 19 

9. Recommendation .................................................................................................. 19 

Report and Recommendation 

1. Introduction 

Defendant Lockheed Martin Corporation contracted to build an aircraft pod for 

Toshiba. The pod was to house equipment on F-15 military aircraft. Lockheed 

subcontracted construction of the pod’s external housing and some of the pod’s internal 

equipment to Plaintiff SGD Engineering Ltd. SGD sued Lockheed for allegedly 

breaching the subcontract by refusing to pay in full for SGD’s work. Lockheed 

counterclaimed for lost profits and liquidated damages it incurred to Toshiba because of 

SGD’s allegedly untimely and defective performance. 

 In connection with the parties’ document production, Lockheed served a privilege 

log. Lockheed revised the privilege log several times in response to objections and 

concerns expressed by SGD. After the parties were unable to resolve their differences 

over the sufficiency of Lockheed’s Fourth Privilege Log, the Court appointed me as a 

special master to prepare a report and recommendation. See Doc. 64. 

2. Summary of Findings 

The document production in this case is complex, and the effort required to 

understand the documents is time consuming. The controversy concerns not only 

litigation between the parties but potential litigation between Lockheed and Toshiba. 

Many of the documents on which SGD has challenged Lockheed’s privilege claims seem 

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to be dual-purpose documents that were prepared in part for business purposes and in part 

because of anticipated litigation. Privilege claims on dual-purpose documents can be 

difficult to resolve. See generally United States v. Richey, 632 F.3d 559, 567-68 (9th Cir. 

2011) (discussing dual-purpose documents); Phillips v. C.R. Bard, Inc., ___ F. Supp. 2d 

___, 2013 WL 1333790, at *7-10, *16-18 (D. Nev. Mar. 29, 2013) (explaining the legal 

standards for deciding disputes involving dual-purpose documents and finding in camera 

review needed); EDNA S. EPSTEIN, THE ATTORNEY-CLIENT PRIVILEGE AND THE WORKPRODUCT DOCTRINE 210 (5th ed. Supp. 2012) (“[M]ost of the standards courts apply to 

determine the primary purpose for production of a document, using concepts such as 

‘because of’ and ‘primary motivation,’ do not advance the analysis substantially.”). 

Lockheed’s Fifth Privilege Log (Doc. 77, Ex. A) provides reasonable detail for 

purposes of Fed. R. Civ. P. 26(b)(5). Lockheed’s Log describes the basis for its privilege 

claims with reasonably specific explanations of why the documents are privileged. In 

addition, at my suggestion Lockheed’s counsel conducted an e-mail-by-e-mail review to 

ensure that the documents were privileged and to determine whether parts of the 

documents could be produced by making redactions. This resulted in 105 redacted 

documents being produced. Lockheed then supplemented its privilege log with 

declarations from three of its attorneys representing that they had each reviewed all 

documents involving a privilege objection by SGD. See Doc. 77, Ex. B (attorney 

declarations). Each attorney represented that he or she was satisfied that the claims of 

attorney-client privilege and work-product protection were properly claimed. See id.

Lockheed also supplemented its privilege claims by producing 12 documents for 

confidential review. I reviewed these documents and concluded that all claims of 

attorney-client privilege and work-product protection had been properly made. 

Under the circumstances, I am satisfied and find that Lockheed’s Fifth Privilege 

Log—as supplemented by its counsels’ declarations and the sample of documents 

produced for my confidential review—satisfies Rule 26(b)(5). 

This does not, however, resolve the privilege dispute. Even with the supplemental 

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detail (and assurances that Lockheed’s declarations provide), it is not possible to be sure 

that all of Lockheed’s privilege claims are valid. SGD has identified 176 documents for 

which the document may have been over redacted, identified as work product despite 

being primarily a business document or communication, or may have been disclosed to a 

third-party, resulting in waiver. See Exhibit A (listing these 176 objections). It is only 

through in camera review and supplemental detail from Lockheed that SGD’s objections 

can confidently be ruled upon. Cf. Phillips, 2013 WL 1333790, at *2, *17-18 (finding 

that in camera review of a sample of dual-purpose documents was needed). 

Given my familiarity with the case, including my review of a sample of the 

documents, I am skeptical about SGD’s objections. But I am not prepared to find on the 

current record that SGD’s objections are without merit. Accordingly, as explained in Part 

9, I recommend that a further sample of 20 documents be reviewed in camera. To 

facilitate the in camera review, I also recommend that Lockheed be ordered to file a 

supplemental response explaining several issues relevant to the validity of its privilege 

claims. 

3. Procedural History 

 Shortly after my appointment, I scheduled a telephone conference with the parties. 

During the conference, the parties summarized their positions and agreed upon a schedule 

to brief their positions. So that I could better understand the controversy, I ordered the 

parties to each select five documents listed in the Fourth Privilege Log to be produced for 

me to confidentially review. See Doc. 65. The parties designated the documents as 

ordered, and Lockheed provided them to me. 

 On March 22, 2013, SGD filed its opening memorandum. See Doc. 66. Lockheed 

responded on March 27, 2013. See Doc. 69. 

 Lockheed’s Response did not address SGD’s objections. Instead, Lockheed 

focused exclusively on what it called a fraudulent document that was attached as Exhibit 

O to SGD’s Opening Memorandum. Lockheed’s Response asked that SGD’s claims be 

dismissed and that Lockheed be awarded fees and costs. A few days later, Lockheed 

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filed a Motion for Sanctions in which it renewed its request for dismissal with fees and 

costs. See Doc. 71. 

 On April 1, 2013, I filed a Preliminary Report and Recommendation (Doc. 72) in 

which I recommended that (1) Lockheed’s Motion for Sanctions be denied, (2) Lockheed 

be allowed until April 5, 2013 to file a complete response to SGD’s objections, (3) SGD 

be given until April 10, 2013 to file a reply, and (4) the time for my final report and 

recommendation be extended to April 17, 2013. 

 Afterward, the Court entered an order adopting my report and setting a revised 

schedule for Lockheed’s Supplemental Response, SGD’s Reply, and my Report. See

Doc. 73. The Court also denied Lockheed’s Motion for Sanctions. See Doc. 74. 

 As ordered, Lockheed filed a Supplemental Response (Doc. 77) and SGD filed its 

Reply (Doc. 79). 

4. Lockheed’s Privilege Logs 

The volume of documents involved in Lockheed’s document production is 

unclear. In a telephonic conference, Lockheed’s counsel stated that 100s of thousands of 

documents are involved. Whatever the volume, it is large enough that Lockheed hired an 

outside vendor to organize the documents, identify responsive documents, and segregate 

privileged documents. The vendor used a keyword search to identify privileged 

documents. This is common in large-volume document cases. See, e.g., Victor Stanley, 

Inc. v. Creative Pipe, Inc., 250 F.R.D. 251, 257-58 (D. Md. 2008). 

The vendor listed the privileged documents that were identified through the 

keyword search in a spreadsheet that Lockheed produced for SGD as Lockheed’s First 

Privilege Log. 

It became apparent to both parties that the First Privilege Log was over inclusive. 

Lockheed’s Log included documents that were not privileged as well as documents that 

were irrelevant. This is not unusual when a keyword search is used. See id. at 257 

(noting that over-inclusion is to be expected). The parties engaged in discussions that led 

to Lockheed producing many documents that were initially listed as privileged. On other 

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documents, Lockheed withdrew its privilege claims but refused to produce the documents 

because they were irrelevant and not calculated to lead to relevant information. 

As the scope of Lockheed’s document production expanded and its privilege 

claims narrowed, Lockheed modified its First Privilege Log in a series of new privilege 

logs. When documents were produced for which a privilege had been erroneously 

claimed, a notation showing that the document had been produced was inserted in place 

of the privilege objection that had been made. See, e.g., Lockheed’s Fifth Privilege Log 

nos. 2-42.1

 Similarly, when Lockheed found documents that were not privileged but 

were irrelevant and beyond the scope of discovery, Lockheed substituted the following 

notation for the previous privilege claim: Relevance—Not relevant to the instant case. 

See, e.g., Fifth Privilege Log nos. 488-506. 

Lockheed’s Fifth Privilege Log lists 652 documents. According to SGD’s Reply 

(Doc. 79) and Notice of Errata (Doc. 81), Lockheed has produced 266 of the 653 

documents. (Doc. 79, at 2; Doc. 81 at 1). That leaves 387 documents unproduced. As 

explained below, some of these documents are being withheld for reasons other than a 

privilege claim. Of the 266 documents that were produced, SGD states that 105 were 

produced with redactions. See Doc. 79, at 2. 

The parties have referred to the initial spreadsheet and its later versions as the 

First, Second, Third, Fourth, and Fifth Privilege Logs. But these documents include more 

information than a typical privilege log. Lockheed asserts two privileges—attorneyclient privilege and work-product immunity. In addition to identifying the documents for 

which these privileges are claimed (and the basis for claiming the privileges), Lockheed’s 

Second, Third, Fourth, and Fifth Privilege Logs include the following information: 

 Produced Documents. The Privilege Logs identify documents that 

were originally identified as privileged but for which privilege 

 

1

 The Fifth Privilege Log is attached as Exhibit A to Lockheed’s Supplemental Response 

(Doc. 77). 

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claims have been withdrawn and the documents produced. See, e.g., 

Fifth Privilege Log nos. 2-42. As mentioned, according to SGD, 266 

(about 40%) of the documents listed have been produced. 

 Boeing Proprietary Information. This notation identifies documents 

that Lockheed obtained from Boeing for which Boeing has refused 

to authorize production. See, e.g., Fifth Privilege Log nos. 43-49. 

 Toshiba Propriety Information. This notation identifies documents 

that Lockheed obtained from Toshiba that Toshiba has labeled 

proprietary and marked as not for distribution. See id. nos. 385, 

650.2

 Export-Control Information. See, e.g., id. nos. 225-32. Lockheed 

has agreed to produce these documents for SGD’s counsel’s review 

at the offices of Lockheed’s counsel. A protective order providing 

for such review was entered by the Court. See Doc. 22, ¶ 5. 

 LMC Proprietary Information. This notation identifies information 

that Lockheed believes is confidential. See, e.g., Fifth Privilege Log 

nos. 49-55. Lockheed has represented that although this notation 

appears in its Fifth Privilege Log, no documents have been withheld 

because the information is confidential. See Doc. 77, at 11-12. In 

other words, references to LMC Proprietary Information are 

informational only. 

 Placeholder Documents. These are electronically stored documents 

that Lockheed has partially produced. Three placeholder documents 

have not been produced. See Fifth Privilege Log nos. 355, 388-89. 

Lockheed represents that it has been unable to convert these 

 

2

 This objection was first made for entry 385 in Lockheed’s Third Privilege Log and for 

entry 650 in Lockheed’s Fourth Privilege Log. 

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electronic documents to a format in which they can be read. See 

Doc. 77, at 15. Lockheed has agreed to continue working on a 

solution and to provide additional information as soon as it is 

available. See id.

5. Special Master’s Suggestions and the Parties’ Preliminary Responses 

After I was appointed, I issued two memos to counsel in which I made suggestions 

about how to proceed. In my first memo, I suggested that Lockheed review the 

documents that were withheld to determine whether some of Lockheed’s privilege claims 

could be resolved through redactions. Lockheed filed declarations stating that it had 

made an e-mail-by-e-mail review. See Exhibit B to Doc. 77. As a result of this review, 

Lockheed concluded that by making redactions, additional documents could be produced. 

Lockheed identified these redacted documents in its Fifth Privilege Log. See, e.g., Fifth 

Privilege Log nos. 230-33, 349, 400, 407, 409, 411, 572. According to SGD, 105 

redacted documents were produced. See Doc. 79, at 2. Lockheed’s review also resulted 

in another 17 documents being produced without redactions. Id. 

After reading Lockheed’s Supplemental Response (Doc. 77), I recommended in a 

second memo to counsel that SGD focus its then-forthcoming Reply on documents for 

which Lockheed was claiming attorney-client privilege, work-product immunity, or both. 

I stated that I was not inclined to recommend that further document production, document 

descriptions, or in camera review occur because of the following document descriptions: 

LMC Proprietary Information, Boeing Proprietary Information, Relevance, Placeholder, 

or Export-Controlled Information. 

In the same memo I stated that it seemed likely that the documents in dispute had 

been narrowed. I requested that SGD’s Reply identify (1) the number of each document 

in Lockheed’s Fifth Privilege Log that remained in dispute and (2) as to each listed 

document, that SGD list the reasons that SGD contended Lockheed’s privilege claim(s) 

were insufficient under Rule 26(b)(5). 

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With scattered exceptions, SGD’s Reply did not list the specific documents to 

which SGD was objecting. Instead, SGD’s Reply (Doc. 79) provided only examples of 

what it perceived as deficiencies in Lockheed’s Fifth Privilege Log. From these 

examples, SGD extrapolated global objections to large blocks of Lockheed’s Fifth Log. 

By failing to provide a document-by-document list of objections, SGD failed to identify 

(and perhaps did not clearly think about) its privilege objections as well as the privilege 

descriptions to which it had no objection. 

One of the virtues of privilege logs is that they force parties to think about the 

correctness of their privilege claims. The same is true of a list of objections to a privilege 

log. A detailed list forces a party who is objecting to think about the reasonableness of 

the party’s objections and to drop objections that cannot be defended. 

In a third memo to counsel on April 10, 2013, I informed SGD that its Reply was 

unacceptable. I directed SGD to supplement its Reply by April 15, 2013 by identifying 

the number of each document in Lockheed’s Fifth Privilege Log that remained in dispute 

and to state as to each listed document the reasons that SGD contends Lockheed’s 

privilege claim(s) are insufficient under Rule 26(b)(5). 

On April 15, 2013, SGD filed its Supplemental Reply (Doc. 82). In its 

supplemental filing, SGD added detail to its objections and withdrew some of the 

objections. SGD also supplemented its objections with an April 15, 2013 e-mail to me 

and Lockheed’s counsel that clarified and further explained SGD’s remaining objections. 

SGD’s Supplemental Reply included as Exhibit A a document-by-document list of 

SGD’s objections. By my count, SGD’s Exhibit A listed 306 documents as Not 

Contested and listed another 163 as having been disclosed.3

6. SGD’s Objections 

SGD’s objections fall into seven categories: 

 

3

 SGD listed the Not Contested documents with the code “NC” and the disclosed 

documents with the code “D.” 

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 Attorney-client privilege claims are made for which an attorney is 

not identified as a party to the document. See Doc. 79, at 4-5. 

 Attorney-client privilege claims are made for which adequate detail 

is not provided. Id. at 5-7. 

 Work-product claims are made for which adequate detail is not 

provided. Id. at 7-9. 

 The Fifth Log includes references to “LMC Proprietary Documents,” 

which is not a privilege claim. SGD therefore asks that this notation 

be removed from the Log. Id. at 9. 

 Attorney-client privilege claims for e-mail attachments are made that 

do not provide enough detail. Id. at 9-10. 

 Documents are identified as being withheld on Relevance grounds. 

Id. at 10-11. According to SGD, not enough information is provided 

to understand why these documents are not within the scope of 

discovery. Id.

 SGD believes many of the documents that Lockheed produced with 

redactions contain overly broad redactions. Id. at 11-12. 

 Three documents described as Placeholders have not been produced. 

See Ex. A (nos. 355, 388-89) to Doc. 82. 

7. Analysis 

A. SGD’s non-privilege objections and concerns. 

The notations in Lockheed’s Fifth Privilege Log regarding Boeing Proprietary 

Information, Toshiba Proprietary Information, Export-Control Information, LMC 

Proprietary Information, Placeholder Documents, and Relevance are neither privilege nor 

work-product claims and are therefore not subject to Rule 26(b)(5). 

The notations for Boeing and Toshiba Proprietary Information identify documents 

that Lockheed says it cannot release without Boeing and Toshiba’s permission. On the 

Boeing documents, SGD has not challenged Lockheed’s position. Instead, SGD is 

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negotiating with Boeing to obtain Boeing’s permission to obtain the documents. What is 

happening regarding the Toshiba Proprietary Information is not explained in the briefs. 

In any event, because neither the Boeing nor Toshiba Proprietary Information entries 

involve a dispute about Rule 26(b)(5) detail or the sufficiency of a privilege claim, these 

matters are outside the scope of the matters on which I was appointed to report. 

Likewise, the notations identifying documents as LMC Proprietary Information do 

not involve a privilege or work-product claim that requires a recommendation or 

findings. Lockheed has represented that no documents have been withheld because of the 

designation LMC Proprietary Information. See Lockheed’s Supplemental Response 

(Doc. 77), at 11. A genuine discovery dispute on this issue does not therefore exist. 

Matters regarding documents identified by Lockheed as Export-Control 

Information are resolved by paragraph 5 of the Court’s Protective Order (Doc. 22). 

The Placeholder Documents involve three documents (nos. 355, 388, and 389). 

Technology difficulties have prevented Lockheed from converting these Placeholder 

Documents to a readable format. Lockheed does not claim privilege on these documents 

and represents that it is continuing to work on solving the technology problem. See Doc. 

77, at 15. A privilege issue for me to address is not presented by the Placeholder 

Documents. 

The final category of nonprivileged documents addressed in the parties’ briefing is 

the category that Lockheed marked Relevance. According to Lockheed, this means that 

the documents are irrelevant to this case. These documents were included in the initial 

spreadsheet prepared by Lockheed’s document vendor. After Lockheed reviewed the 

documents and realized they were irrelevant, it refused to produce them. But to avoid the 

confusion that might have occurred from simply deleting the documents from its 

Privilege Logs, Lockheed continued to list them with the Relevance notation. These 

Relevance documents do not raise a privilege issue that requires findings or a 

recommendation. SGD is free to pursue production of all potentially relevant documents 

by normal means. No authority has been cited, and I am aware of none, that requires 

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Rule 26(b)(5) descriptions for non-privileged documents mistakenly included in a 

privilege log. Requiring Lockheed to provide such information when it claims no 

privilege would unreasonably burden Lockheed. 

Moreover, although SGD challenges Lockheed’s Relevance notations in SGD’s 

briefing, SGD has stated that the documents withheld on relevance grounds are “Not 

Contested.” See, e.g., entries 548-71 in Ex. A to Doc. 82. SGD has not explained this 

apparent inconsistency. 

In summary, I find that the notations in Lockheed’s Privilege Logs regarding the 

following matters do not cover issues regarding Rule 26(b)(5): Boeing Proprietary 

Information, Toshiba Proprietary Information, Export-Control Information, Placeholder 

Documents, and Relevance. As such, Lockheed is not required to provide privilege 

descriptions for these documents. 

B. Lockheed did not waive its privilege claims. 

Citing Burlington N. & Santa Fe Ry. Co. v. U.S. Dist. Court for Dist. of Mont., 408 

F.3d 1142 (9th Cir. 2005), SGD argues that Boeing has waived its attorney-client 

privilege and work-product claims. SGD points out that nine months have been spent 

debating privilege issues; that Lockheed has filed five versions of its privilege log; and 

that Lockheed has dropped its privilege claims on 266 documents that have been 

produced. See SGD’s Reply (Doc. 79) at 1-3, 12-13. 

In large-volume document cases like this, it is not unusual for the privilege 

proponent to revise the details of its privilege log. Rule 26(b)(5) is deliberately imprecise 

on how much detail is required for privilege descriptions. See Burlington, 408 F.3d at 

1147-48 (explaining that the notice required by Rule 26(b)(5) is “explicitly left 

indeterminate”); 8 CHARLES ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE

§ 2016.1 (3d ed. 2012) (stating that the Rule was “consciously not precise”). The 

required detail is decided case by case. See Burlington, 408 F.3d at 1149. 

Parties are expected to confer on privilege and other discovery disputes and 

attempt to resolve their differences. That was done in this case. SGD articulated its 

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objections. Lockheed in turn evaluated its privilege claims, sometimes dropped privilege 

claims, sometimes produced documents, and other times provided more detail in a 

revised privilege log. This is what is expected in privilege disputes. On the complex 

facts of this case involving technical engineering issues, foreign-language issues, 

Japanese Defense Ministry issues, special requirements under export-control laws, and 

overseas clients, it is not unusual that time has passed and that Lockheed’s privilege 

claims have evolved. Cf. WRIGHT, supra § 2016.1 (“An initial response may lack details 

that the responding party should add if the other side challenges a privilege designation. 

More information still may be necessary if the matter is presented to the judge for 

resolution.”). 

Burlington does not support waiver, but it does provide a useful comparison. Five 

months passed before the defendant in Burlington served any kind of privilege log; the 

documents were relatively easy to assemble for production because many had been 

produced in an earlier case; and the facts suggested that the defendant was engaging in 

gamesmanship by deleting documents that the defendant had originally listed in its 

privilege log. Lockheed by contrast promptly produced a privilege log and engaged in a 

meet-and-confer process that led to documents being produced, some privilege claims 

being withdrawn, and details added to explain privilege claims that were not withdrawn. 

Cf. Phillips, 2013 WL 1333790, at *21 (applying Burlington and rejecting plaintiff’s 

argument for waiver where the case involved a huge number of documents; the defendant 

attempted to address the deficiencies asserted by plaintiff by providing supplemental 

privilege logs; and the document production overall was anything but “unusually easy”). 

In sum, I find that Lockheed proceeded in good faith. I also find that SGD was to 

some extent overbroad in asserting its privilege objections as evidenced by the fact that 

SGD has dropped some of its objections and has only recently added new details to 

explain the basis for its objections. In addition, the documents that I reviewed 

confidentially did not support SGD’s objections, and SGD complicated matters by 

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demanding Rule 26(b)(5) details for Relevance notations that did not involve a privilege 

or work-product claim. 

C. Confidential (in camera) reviews by special master. 

In connection with its Fifth Privilege Log, Lockheed produced three redacted 

documents. Each document consisted of an e-mail string. SGD asked me to review these 

three e-mail strings to assess the propriety of Lockheed’s redactions. The documents are 

described in entries 50, 111, and 341 in Lockheed’s Fifth Privilege Log. SGD provided 

me with copies of the three redacted documents. Lockheed provided me with clean 

copies of the three documents without redactions. For the reasons explained below, I find 

that Lockheed’s redactions were fair and confined to material that was either attorneyclient privileged or protected by work-product immunity. 

 1. Document 50 

Document 50 is the first document in Lockheed’s Fifth Privilege Log for which 

attorney-client privilege or work-product immunity is claimed. Lockheed’s description 

of the document, which articulates the basis for its privilege claim reads as follows: 

Redacted request for legal assistance from Richard Udicious 

to Barry Hennegan, Esq. re strategy for potential litigation 

and communication made in anticipation of litigation 

 Document 50 is an e-mail string that includes five e-mails exchanged on April 13, 

2011. Three of the e-mails were produced for SGD. Two were redacted in their entirety. 

The earliest of the two redacted e-mails (showing a time of 3:50 p.m.) is an e-mail from a 

Lockheed employee (Richard Udicious) to Barry Hennegan, a Lockheed attorney. Other 

Lockheed employees are also included in the To-Line to attorney Hennegan. The text of 

Udicious’ e-mail makes comments regarding potential litigation with Toshiba and 

requests Mr. Hennegan’s advice on responding to Toshiba. The redacted e-mail is clearly 

a client communication seeking legal advice from Lockheed’s attorney and was properly 

redacted. 

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 The second e-mail that was deleted was an e-mail sent later that same day, at 6:33 

p.m. This 6:33 p.m. e-mail concerns preparing a response to a Toshiba e-mail threatening 

to terminate Lockheed’s contract and assess damages. Lockheed produced the Toshiba 

e-mail without redactions. The redacted 6:33 p.m. e-mail is between Lockheed 

employees. It does not include Mr. Hennegan. Communications between employees do 

not qualify for attorney-client privilege. See Bickler v. Senior Lifestyle Corp., 266 F.R.D. 

379, 381-82 (D. Ariz. 2010) (finding under Arizona law that communications between 

non-lawyer employees were not covered by the attorney-client privilege). The parties 

seem to agree that Arizona law applies on the privilege issue. See Lockheed’s Supp. 

Response (Doc. 77), at 9 n.3 (noting that Lockheed and SGD’s contract is governed by 

Arizona law). 

 Although not protected by Arizona’s attorney-client privilege, the redacted e-mail 

between Lockheed’s employees was prepared in response to Toshiba’s anticipated 

termination of Lockheed’s contract and the risk of litigation that that termination created. 

The employee e-mail was also in furtherance of Mr. Hennegan’s role in providing advice 

on responding to Toshiba. In this setting, the 6:33 p.m. e-mail is protected by the workproduct doctrine. See Bickler, 266 F.R.D. at 383 (finding that communications between 

employees were in anticipation of litigation (rather than ordinary business 

communications) and were entitled to work-product protection). 

 2. Document 111 

 Document 111 is a string of e-mails generated on various dates beginning on 

October 27, 2010 and continuing through November 9, 2010. Two of the e-mails that 

were sent on November 9 were redacted in their entirety. The remaining e-mails were 

produced for SGD without redactions. 

The description in Lockheed’s Fifth Privilege Log of document 111 reads as 

follows: 

Redacted email from Richard Udicious to Mike Aspenson re 

strategy for preparing for potential litigation and redacted 

duplicate email (LMC00046655) from Mike Aspenson to 

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James Quinn and Barry Hennegan, Esq. also sent to Janet 

Adamo, Robert Robinson, Richard Udicious, and Susan 

Starks re strategy for potential litigation re Telecon with LM 

Goodyear regarding SGD request for payments (Marked 

LMC Proprietary Information) 

The two redacted e-mails concern Lockheed’s response to e-mails from SGD that 

suggested that SGD would begin litigation if it was not paid what SGD believed it was 

owed by Lockheed. The first e-mail that was deleted by redaction is an e-mail sent at 

7:55 a.m. by a Lockheed employee to Lockheed attorney Hennegan. The subject of the 

e-mail concerns preparing for anticipated litigation. The communication is a client-toattorney communication in furtherance of obtaining Mr. Hennegan’s legal advice. The 

e-mail is protected by the attorney-client privilege. 

The second redacted e-mail in document 111 is a communication by one Lockheed 

employee to other Lockheed employees. As a communication between non-lawyer 

employees, the e-mail is not protected by the attorney-client privilege. See Bickler, 266 

F.R.D. at 381-82. But the e-mail does qualify for work-product protection. The e-mail 

concerns responding to SGD’s e-mail threatening litigation and is in furtherance of 

preparing a response or approach to SGD’s litigation threat on which Lockheed’s 

employees had requested Mr. Hennegan’s legal advice. 

 3. Document 341 

Document 341 is another e-mail string. The e-mails span March 17, 2008 to 

September 22, 2008. The description of document 341 in Lockheed’s Fifth Privilege Log 

reads as follows: 

Redacted email from Rock Groupe to Barry Hennegan, Esq. 

re request for legal advice, and email from Rock Groupe 

which includes contents of communications from Barry 

Hennegan, Esq. to Rock Groupe 

Two of the e-mails in document 341 were deleted in their entirety by redaction. 

The first deletion is a 12:40 p.m. e-mail from a Lockheed employee named Rock Groupe 

to Lockheed attorney Hennegan. In the e-mail Mr. Groupe requests Mr. Hennegan’s 

advice on confidentiality agreements. This is a client-to-lawyer communication seeking 

legal advice and is protected by the attorney-client privilege. 

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The second e-mail that Lockheed deleted by redaction was an e-mail from Mr. 

Groupe to himself in which he summarized the advice he received from Mr. Hennegan. 

This too is a document containing advice from the client’s attorney and is protected by 

the attorney-client privilege. 

SGD makes the point that Mr. Groupe later sent a non-privileged e-mail to SGD 

asking various questions. Left attached to this e-mail were the two privileged e-mails 

that Lockheed redacted from document 341. Why Mr. Groupe left the privileged 

communications involving Mr. Hennegan attached is unexplained. But it seems likely 

that this was an inadvertent disclosure by Mr. Groupe, a non-lawyer. Lockheed did not 

act in bad faith by attempting to preserve the confidentiality of its communications with 

attorney Hennegan through a redaction of e-mails that SGD already had. To the contrary, 

it was appropriate for Lockheed to assert attorney-client confidentiality for privileged emails that were likely produced inadvertently by a nonlawyer. 

SGD remains free to argue waiver as to the privileged communications that Mr. 

Groupe sent to SGD. 

 4. Other documents produced for confidential review 

In addition to the documents discussed above, Lockheed produced ten documents 

that I requested as a sample of the documents that are in dispute. One of the ten 

documents was document 341, which is discussed in Part 7(C)(3) above. 

Another document in the ten is a document (no. 323) that has since been produced 

for SGD. A third document (no. 650) is a Toshiba document that is conspicuously 

marked by Toshiba to state that it is not to be produced without Toshiba’s consent. 

Lockheed has not claimed privilege on this document but did refuse to produce the 

document without Toshiba’s consent. As explained above in Part 7(A), disputes 

regarding Toshiba Proprietary Information do not involve privilege issues governed by 

Rule 26(b)(5). SGD is free to meet and confer with Lockheed’s counsel on the Toshiba 

document and pursue an order compelling production if appropriate. 

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The remaining seven documents (nos. 197, 268, 274, 289, 312, 390, and 572) 

involve claims of attorney-client privilege, work-product protection, or both. I have 

reviewed these documents and am satisfied that they qualify for either attorney-client 

privilege, work-product immunity, or both. Moreover, after these documents were 

produced for my confidential review, SGD revised its objections to state that Lockheed’s 

privilege claims for document nos. 197, 268, 274, 289, and 572 were Not Contested. See 

Ex. A to Doc. 82. 

D. Confusion caused by Lockheed’s use of and/or privilege claims 

Throughout its Privilege Logs, Lockheed use the words “Attorney-Client and/or 

Work Product Privilege.” See, e.g., Lockheed’s Fifth Privilege Log nos. 287-94. The 

words and/or are legalese that careful writers avoid. The words are often ambiguous. 

In this case, Lockheed’s use of and/or has created ambiguities. Many of the 

documents in Lockheed’s e-mail strings include e-mail in which some of the e-mails 

include attorney-client communications while others do not. Use of the and/or

expression makes it unclear for a given e-mail whether attorney-client privilege, workproduct protection, or both are claimed. 

More than 90% of the entries in Lockheed’s Fifth Privilege Log that SGD disputes 

involve and/or descriptions. See Exhibit A (listing SGD’s objections). Requiring 

Lockheed to separately identify, e-mail-by-e-mail, whether attorney-client privilege, 

work-product immunity, or both is claimed, would facilitate a ruling on the validity of 

Lockheed’s privilege claims. But even with this clarification, it would not be possible to 

make a fully informed ruling on Lockheed’s privilege claims. 

A major difficulty in resolving SGD’s objections is that many of the objections 

concern privilege claims that seem from Lockheed’s descriptions to involve dual-purpose 

documents—that is, documents that may have been prepared both for business purposes 

and in anticipation of litigation. See Part 2 supra (describing dual-purpose documents 

and relevant case law). Most of SGD’s objections assert that the document appears to be 

one that was prepared “primarily [for a] business purpose.” See Exhibit A. From the 

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information that Lockheed has currently provided it is impossible to tell, under relevant 

case law regarding dual-purpose documents, if these documents were prepared primarily 

for business or in anticipation of litigation. 

8. Lockheed’s Fifth Privilege Log Satisfies Rule 26(b)(5) 

Although Lockheed’s descriptions of the basis for its privilege claims are not 

sufficient to make a confident ruling on whether the privilege claims are valid, the 

descriptions are detailed enough to satisfy Rule 26(b)(5). See Phillips, 2013 WL 

1333790, at *19-21 (finding Rule 26(b)(5) satisfied even though further detail might be 

required from the defendant and even though in camera review was needed and stating: 

“the outcome of [in camera review] will provide direction and further guidance to the 

parties as to how the court evaluates the attorney-client privilege and work product 

doctrine assertions.”). Lockheed has therefore made a prima facie showing needed for its 

privilege claims. See Grand Canyon Trust v. U.S. Bureau of Reclamation, 2010 WL 

457397, at *2 (D. Ariz. Feb. 5, 2010) (finding that defendant’s privilege descriptions 

made a prima facie showing of privilege and ordering defendant to produce the 27 

disputed documents for in camera review). 

9. Recommendation 

As to the documents listed in Exhibit A, I conclude that at least some in camera 

review is needed to confidently determine the validity of Lockheed’s privilege and workproduct claims. To review all 176 documents listed in Exhibit A would be an undue 

burden, especially when many of the documents involve e-mail strings that include 

multiple documents. I recommend that SGD and Lockheed each identify ten documents 

to be submitted for in camera review. 

To facilitate in camera review of these 20-documents, I recommend that Lockheed 

be ordered to (1) delete all references to and/or in its privilege claims and to state 

document-by-document, as to the 20-document sample, whether attorney-client privilege, 

work-product protection, or both are claimed, (2) describe why documents in the 20-

document sample that SGD claims are primarily for business qualify for attorney-client 

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privilege or work-product protection, and (3) describe why a privilege exists for any 

document in the 20-document sample that SGD claims was or may have been sent to a 

third party. In this regard, Lockheed should explain, by declaration, Sumitomo’s role and 

why Lockheed maintains that documents sent to or through Sumitomo remain entitled to 

attorney-client privilege or work-product protection. 

I anticipate that the results of the in camera review will provide guidance on 

appropriate rulings (or recommendations) and whether further remedies (e.g., additional 

in camera review or evidentiary declarations from Lockheed) are needed. 

I also recommend that the Court enter an order finding that (1) Lockheed’s Fifth 

Privilege Log complies with Fed. R. Civ. P. 26(b)(5) and (2) Lockheed has made a prima 

facie showing of attorney-client privilege or work-product protection for the documents 

so designated in its Fifth Privilege Log. I further recommend that the Court find that (1) 

Lockheed did not waive its attorney-client privilege or work-product claims, (2) the 20-

document sample of documents be produced for in camera review (and rulings) by the 

Court (or recommendations by me as Special Master), and (3) the parties each be 

responsible for paying 50% of my fees to date. 

If the Court directs me to conduct the in camera review, I envision recommending 

that my fees be paid in inverse proportion to the validity of the parties’ positions. Thus, 

if SGD’s objections are largely invalid, as in the past, I envision recommending that all or 

most of my fees for the in camera review be paid by SGD.

Dated: April 17, 2013. 

 s/ Richard G. Himelrick 

Richard G. Himelrick 

TIFFANY & BOSCO, P.A 

Third Floor Camelback Esplanade II 

2525 East Camelback Road 

Phoenix, Arizona 85016 

Special Master 

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CERTIFICATE OF SERVICE 

I hereby certify that on April 17, 2013, I electronically filed the foregoing with the 

Clerk of the Court using the CM/ECF system which will send notification of such filing 

to the e-mail addresses denoted on the Electronic Mail notice list, and I hereby certify 

that I have mailed the foregoing document or paper via the United States Postal Service 

to the non-CM/ECF participants indicated on the Manual Notice list. 

I certify under penalty of perjury under the laws of the United States of America 

that the foregoing is true and correct. 

 s/ Shelley Boettge 

Shelley Boettge 

543707 

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