UNITED STATES OF AMERICA 


FEDERAL TRADE COMMISSION 


OFFICE OF ADMINISTRATIVE LAW JUDGES 


) 

In the Matter of ) 

) 

McWANE, INC., ) 

a corporation, and ) DOCKET NO. 9351 

) 

STAR PIPE PRODUCTS, LTD., ) 

a limited partnership, ) 

Respondents. ) 

---------------------------------) 

ORDER GRANTING IN PART AND DENYING IN PART 


COMPLAINT COUNSEL'S MOTION TO EXCLUDE EVIDENCE 


OR IN THE ALTERNATIVE TO COMPEL DISCOVERY 


I. Introduction 

On June 25, 2012 Complaint Counsel filed a Motion to Exclude Evidence Relating to 

Advice Related to DIFRA and its Operations ("Motion to Exclude"), or in the Alternative, to 

Compel Related Discovery ("Motion to Compel") (collectively, "Motion"). According to the 

Motion, the Ductile Iron Fitting Research Association ("DIFRA") was created as a trade 

association in 2007, with a membership consisting of Respondent McWane, Inc., ("Respondent" 

or "McWane"), Star Pipe Products ("Star"), Sigma Corp. ("Sigma"), and United States Pipe and 

Foundry Company LLC ("U.S. Pipe"). The Complaint in this case alleges, inter alia, that during 

parts of2008 and 2009, DIFRA maintained an information exchange that collected and reported 

the total fittings shipped by DIFRA's members, and that this information exchange facilitated 

price coordination by indirectly enabling mutual monitoring of an alleged agreement to limit 

price discounting. Motion at 2; Complaint ~~ 35-37. 

McWane, Inc. filed an Opposition to the Motion on July 5, 2012 ("Opposition"). 

Although they are not parties to this action; because their interests were implicated, responses 

were also submitted on July 5, 2012 by Star and U.S. Pipe, and on July 9,2012 by Sigma. 

Having fully considered the Motion and Opposition, the Motion is GRANTED IN PART AND 

DENIED IN PART, as more fully explained below. 
II. Contentions of the Parties 

A. Complaint Counsel 

According to the Motion, DIFRA's counsel during the relevant time period in this case 

was the firm of Bradley Arant Boult Cummings LLC ("Bradley Arant"), and principally its 

attorney Thad Long. Complaint Counsel contends that, although Respondent previously 

disavowed any intent to rely on an advice of counsel defense in this case, Respondent appears to 

be doing so. In support ofthis contention, Complaint Counsel cites Respondent's Motion for 

Summary Decision, filed June 1,2012, in which Respondent, to support the claim that DIFRA 

was not a mechanism to facilitate price coordination, cited to the testimony {of DIFRA's lawyer 

denying that DIFRA was a mechanism to facilitate price coordination}. McWane Summary 

Decision Memorandum at 19 (Motion Exh. C). 

Complaint Counsel also states that in response to Complaint Counsel's Requests for 

Admissions 48-50 ("RFAs") concerning Respondent's use of data from the DIFRA information 

exchange, Respondent referred to the advice of its counsel, stating: {"As explained by Thad 

Long, the experienced antitrust counsel who was retained by the Association to provide it 

with competent legal advice, DIFRA was a pro-competitive trade association."} 

Respondent's Responses to Requests for Admissions 48-50 (Motion Exh. D). 

Complaint Counsel further contends that McWane's counsel elicited deposition 

testimony from DIFRA's president, Mr. Tom Brakefield; regarding Mr. Long's advice, as 

follows: 

{Q.... Mr. Long says in the first paragraph, I have received proposed 

reporting forms from two of the four DIFRA participants and I find they 

are fairly consistent in approach and seem to minimize antitrust 

concerns. Was that advice he gave the organization at that time? 

A. That's correct.} 

Brakefield Dep. at 56-57 (Motion Exh. E). Also cited by Complaint Counsel is deposition 

testimony elicited by McWane's counsel from Mr. Brakefield describing Mr. Long's advice 

concerning legal ways fittings sales could be reported to DIFRA. Id., at 37, 75 (Motion Exh. E). 

According to Complaint Counsel, in "meet and confer" discussions prior to filing the 

Motion, Respondent would not agree to forego relying at trial upon evidence concerning 

Mr. Long's advice regarding DIFRA, although according to Complaint Counsel, Respondent 

previously disclaimed any intent to offer such evidence. In addition, Complaint Counsel's Meet 

and Confer Statement, attached to the Motion, states that the other members ofDIFRA (Star Pipe 

Sigma and U.S. Pipe), communicated to Complaint Counsel that they would not waive the 

attorney-client privilege with respect to DIFRA. (Motion Exh. A).l Moreover, according to the 

I Star's response to the Motion took no position on the request to exclude evidence, and further stated that it was 

"unable to respond" to the request to reopen discovery but reserved the right to object in the future to specific 

discovery requests. The responses ofV.S. Pipe and Sigma were substantially the same. 

2 

Motion, Mr. Long has refused to answer deposition questions concerning his advice as to the 

legality ofDIFRA and the information exchange, based upon the attorney-client privilege. In 

addition, Complaint Counsel states that, although McWane has stated that it does not intend to 

call Mr. Long as a witness at trial, pre-trial discovery indicates that McWane may elicit 

testimony that DIFRA members acted in accordance with Mr. Long's advice. 

Invoking the "sword and shield" theory regarding privileges, Complaint Counsel argues 

that Respondent cannot fairly use advice of counsel in defense of claims in this case yet prevent 

Complaint Counsel from obtaining discovery regarding the claimed advice. Complaint Counsel 

seeks an order prohibiting Respondent from introducing at trial, or otherwise referring to or 

relying upon, any evidence regarding (1) the advice or opinions of counsel to DIFRA concerning 

the legality ofDIFRA's formation or operation, or (2) any reliance or compliance with such 

advice by any DIFRA member. IfRespondent is not so precluded, then Complaint Counsel 

requests in the alternative it be allowed to fully discover the substance ofDIFRA's counsel's 

advice and any reliance thereon by the members, by entry of an order (1) compelling production 

of all documents related to DIFRA that are currently being withheld by all DIFRA members and 

their attorneys, and (2) reopening discovery to allow Complaint Counsel to re-depose DIFRA's 

counsel, Mr. Long, DIFRA's president, Mr. Brakefield, and each DIFRA member. 

B. Respondent 

Respondent argues that Complaint Counsel's Motion should be denied for four reasons: 

(1) McWane has no right or ability to waive the attorney-client privilege on behalf ofDIFRA or 

other members ofthe organization; (2) McWane has not impliedly waived the privilege by 

relying on any privileged communication with DIFRA's counsel. Rather, Respondent argues, it 

has presented only non-privileged, underlying facts about DIFRA's structure, purpose and data 

gathering functions, including non-privileged facts that DIFRA was established, and its 

information gathering activities were "guided by" "experienced antitrust counsel," in order to 

rebut Complaint Counsel's DIFRA allegations; (3) Complaint Counsel has not identified any 

document withheld by McWane based on attorney-client privilege with Bradley Arant or 

Mr. Long, or any instance in which McWane instructed any witness not to answer questions 

based on attorney-client privilege; rather, the privilege has been asserted only by Bradley Arant 

and Mr. Long; and (4) Complaint Counsel has failed to comply with the procedural meet and 

confer requirement because, despite several tries, it did not actually speak with Mr. Long, whose 

refusal to answer questions on the ground of attorney-client privilege is at issue. 

McWane does not state whether or not it in fact intends to offer evidence at trial that it 

relied on advice of counsel as a defense to the charges in this case. Nor does McWane state 

whether or not it previously advised Complaint Counsel that it would not be offering evidence at 

trial regarding advice ofDIFRA's counselor members' reliance thereon. 

III. Analysis 

The "sword and shield" theory was addressed recently in In re OSF Healthcare System, 

a~ follows: 

3 

"[A] litigant cannot use the work product doctrine as both a sword and shield by 

selectively using the privileged documents to prove a point but then invoking the 

privilege to prevent an opponent from challenging the assertion." In re Motor Up 

Corp., Inc., 1999 FTC LEXIS 262, *5 (Aug. 5, 1999) (citing Frontier Refining 

Inc. v. Gorman-Rupp Co., Inc., 136 F.3d 695, 704 (10th Cir. 1998)) .... 

The operative case law holds that subject matter waiver occurs only where a party 

attempts to gain a tactical advantage by "us[ing] the disclosed material for 

advantage in the litigation but [invoking] the privilege to deny its adversary 

access to additional materials that could provide an important context for proper 

understanding ofthe privileged materials." Lerman v. Turner, 2011 U.S. Dist. 

LEXIS 715, at *25-26 (N.D. Ill. Jan. 5,2011). "Subject matter waiver thus 'is. 

reserved for those unusual situations in which fairness requires a further 

disclosure of related, protected information, in order to prevent a selective and 

misleading presentation of evidence to the disadvantage of the adversary.'" 2011 

U.S. Dist. LEXIS 715 at *26 (citing Fed. R. Evid. 502 advisory comm. nn. ' 

(2007)). 

Furthermore, "in the same vein of thought, 'waiver ofthe attorney client or work 

product privileges can occur when the privilege holder asserts a claim or 

affirmative defense which puts the privileged matter directly at issue.' The 

primary inquiry is whether the party claiming privilege will assert the allegedly 

protected material in aid or in furtherance of its claims or defenses." Chevron 

Corp. v. Stratus Consulting, Inc., 2010 U.S. Dist. LEXIS 110023, at *32 (D. Co. 

Oct. 1, 2010) (citation omitted). "In an adversarial proceeding, a process 

designed to reach the truth ofthe matter through the presentation of opposing 

perspectives, justice does not permit one side to inform and facilitate a damages 

assessment, purposed for the reliance ofthe court, without permitting its opponent 

access to the materials and process underlying the assessment." 2010 U.S. Dist. 

LEXIS 110023 at *33. 

2012 FTC LEXIS 70, at *4-6 (March 19,2012) (Chappell, ALJ). 

As the above-cited authorities make clear, the sword and shield theory applies to a 

litigant that seeks to use information as a "sword," in furtherance of a claim or defense, but at the 

same time "shields" such information from discovery by invoking a privilege. Although 

Complaint Counsel asserts Respondent has invoked the attorney-client privilege to prevent 

discovery into legal advice provided regarding DIFRA, which assertion Respondent denies, 

Complaint Counsel has not supported the assertion. Complaint Counsel attaches Respondent's 

privilege log as an exhibit to the Motion, but fails to cite any document allegedly being 

improperly withheld by Respondent. Moreover, based upon the document descriptions on 

McWane's privilege log, which are not challenged by Complaint Counsel, there do not appear to 

be any withheld documents regarding DIFRA, Bradley Arant, or Mr. Long. In addition, 

Complaint Counsel fails to identify any deposition testimony as to which McWane asserted a 

privilege or instructed a witness not to answer. Rather, it appears from Complaint Counsel's 

4 

exhibits that Bradley Arant and Mr. Long invoked the privilege to withhold documents and/or 

testimony. Thus, regardless whether or not Respondent seeks to use advice of counsel as a 

"sword" at trial, Complaint Counsel has not demonstrated that Respondent has invoked the 

attorney-client privilege as to such advice as a "shield" against discovery? Thus, the sword and 

shield theory is inapplicable. 

It would be unfair, based on the record presented by the Motion, to limit Respondent's 

defenses at trial because ofthe assertion of privilege by non-parties. However, based upon the 

sword and shield theory, it would also be improper to allow Respondent to offer evidence at trial 

which Respondent withheld from discovery on privilege grounds. Therefore, Respondent will be 

prohibited from doing so by this Order, as set forth infra. Accordingly, Complaint Counsel's 

Motion to Exclude is GRANTED IN PART and DENIED IN PART.3 

Moreover, because Complaint Counsel has not shown that Respondent is withholding any 

discovery from Complaint Counsel, there is no basis in law or fact for an order compelling 

discovery from Respondent. Indeed, Complaint Counsel's proposed order would have the effect 

of compelling production of documents and testimony from persons and entities other than 

McWane. If Complaint Counsel believes that privileged information is being withheld 

improperly by Bradley Arant, Mr. Long, DIFRA's president, or DIFRA members other than 

Respondent, it is unclear why Complaint Counsel directed the instant Motion only to McWaile. 

Thus, Complaint Counsel's Motion to Compel is DENIED. 

Finally, Complaint Counsel has not demonstrated any basis for modifying the Scheduling 

Order in this case to re-open discovery, which closed June 1,2012, for the purpose ofinquiring 

further into legal advice given to DIFRA, and reliance thereon by its members. Complaint 

Counsel appears to rely on alleged unfairness, asserting that Respondent previously disclaimed 

reliance on an advice of counsel defense, but now appears to be asserting just such a defense. 

However, Complaint Counsel's assertion that Respondent previously disclaimed reliance on an 

advice of counsel defense is not supported by Complaint Counsel's Motion or attachments 

thereto. The Meet and Confer Statement, upon which Complaint Counsel relies, states: 

2 Complaint Counsel does not allege, nor is there any evidence indicating, that Respondent has caused others to 

invoke the privilege. 

3 Complaint Counsel also asserts, without citing any legal authority, that reliance on advice of counsel is not a 

legally valid defense to the claims in this case and, therefore, evidence relating thereto should be excluded as 

irrelevant. In this regard, Complaint Counsel's Motion to Exclude is akin to a motion in limine. It is well 

established that evidence should be excluded on a motion in limine only when the evidence is clearly inadmissible 

on all potential grounds. Hawthorne Partners v. AT&T Technologies, Inc., 831 F. Supp. 1398, 1400 (N.D. Ill. 

1993); see also Sec. Exch. Comm 'n v. Us. Environmental, Inc., No. 94 Civ. 6608 (PKL)(AJP), 2002 U.S. Dist. 

LEXIS 19701, at *5-6 (S.D.N.Y. October 16,2002). Courts considering a motion in limine may reserve judgment 

until trial, so that the motion is placed in the appropriate factual context. US. Environmental, 2002 U.S. Dist. 

LEXIS 19701, at *6; see, e.g., Veloso v. Western Bedding Supply Co., Inc., 281 F. Supp. 2d 743, 750 (D.N.J. 2003). 

Based on the motion papers, and outside the context of trial, it cannot be determined that evidence of advice of 

counselor reliance thereon is irrelevant and inadmissible for all purposes, and therefore will not be precluded prior 

to trial. This determination should not be construed as a ruling on the admissibility of such evidence, should it be 

offered at trial. See In re Daniel Chapter One, 2009 FTC LEXIS 85, at *20 (Apr. 20, 2009) (Chappell, ALJ) 

("Denial of a motion in limine does not necessarily mean that all evidence contemplated by the motion will be 

admitted at trial. Denial merely means that without the context of trial, the court is unable to determine whether the 

evidence in question should be excluded.") 

5 
"Complaint Counsel discussed its concern that McWane was relying on the advice of counsel 

while still asserting privilege to prevent fair discovery on the issue. McWane claimed that it did 

not think that the attorney-client privilege had been waived, and that it would not agree to forego 

relying upon evidence at trial related to Mr. Long's advice regarding DIFRA, or any reliance 

thereofby any ofthe DIFRA members." (emphasis added). Complaint Counsel also notes that 

none ofthe DIFRA members would agree to waive the attorney-client privilege. Neither a 

refusal to forego a defense, nor a refusal to agree to a privilege waiver, establishes that 

Complaint Counsel has been unfairly misled so as to provide good cause to reopen discovery. 

See 16 C.F.R. § 3.21 (c) (2) ("Administrative Law Judge may grant a motion to extend any 

deadline or time specified in this scheduling order only upon a showing of good cause."). 

Moreover, it is not clear from the Motion papers that Respondent will, in fact, rely on the defense 

at trial. In addition, reopening discovery at this time -- less than two months before the 

commencement oftrial -- for the purposes identified by Complaint Counsel threatens to delay 

disposition ofthe proceedings. See id. ("In determining whether to grant the motion, the 

Administrative Law Judge shall consider ... the need to conclude the evidentiary hearing and 

render an initial decision in a timely manner."); see also 16 C.F.R. § 3.42(c) ("Administrative 

Law Judges shall have the duty ... to take all necessary action to avoid delay in the disposition 

ofproceedings, and to maintain order."). Accordingly, Complaint Counsel's request to reopen 

the discovery deadline is DENIED. 

IV. Conclusion 

Having fully considered the Motion and the Opposition, exhibits in support thereof, and 

for the foregoing reasons, it is hereby ORDERED: 

1. Complaint Counsel's Motion to Exclude is GRANTED IN PART and DENIED IN 

PART. Respondent is hereby precluded from offering at trial in this case, by documents or 

testimony, including deposition testimony, or by any other method or means, any evidence 

regarding legal advice related to DIFRA and its operations, or reliance thereon, that Respondent 

has previously withheld from Complaint Counsel on the basis of attorney-client privilege; 

2. Complaint Counsel's Motion to Compel is DENIED; and, 

3. Complaint Counsel's request to re-open discovery is DENIED. 

ORDERED: 

Date: July 13, 2012 

D. Michael Chappell 

ChiefAdministrative Law Judge 

6