Court Opinion

ID: 1016608
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:52:07.583255+00
Date Added: 2024-06-11T12:38:50.708039
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 04-2030

POTOMAC ELECTRIC POWER COMPANY,

                                              Plaintiff - Appellee,

           and

SUPPORT   TERMINAL  SERVICES,   INCORPORATED;
SUPPORT TERMINALS OPERATING PARTNERSHIP, LP,

                                            Defendants - Appellees,

           versus

STEVEN LEAVITT,

                                                Movant - Appellant.

----------------------

WILLIAMS & CONNOLLY LLP,

                                                                Movant.

Appeal from the United States District Court for the District of
Maryland, at Baltimore. Peter J. Messitte, District Judge. (CA-
02-4076-PJM)

Argued:   March 16, 2005                    Decided:      July 21, 2005

Before MICHAEL and KING, Circuit Judges, and James R. SPENCER,
Chief United States District Judge for the Eastern District of
Virginia, sitting by designation.

Conditionally remanded and otherwise        held     in   abeyance   by
unpublished per curiam opinion.
ARGUED: Judith A. Miller, WILLIAMS & CONNOLLY, Washington, D.C.,
for Appellant. John W. Schryber, PATTON BOGGS, L.L.P., Washington,
D.C., for Appellees. ON BRIEF: Paul Mogin, Juli Ann Lund, WILLIAMS
& CONNOLLY, Washington, D.C., for Appellant. Edward S. Wisneski,
PATTON BOGGS, L.L.P., Washington, D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

                                2
PER CURIAM:

     Steven Leavitt appeals the decision of the district court

affirming the magistrate judge’s denial, in part, of his nonparty

motion   for   a   protective   order   with   respect   to   his   lawyers’

unredacted billing records (the “billing records”).            Leavitt had

provided the billing records to Potomac Electric Power Company

(“PEPCO”) pursuant to its obligation to indemnify him.               Without

Leavitt’s prior knowledge or consent, PEPCO produced the billing

records to appellees Support Terminal Services, Inc., and Support

Terminals Operating Partnership, LP (together, “ST”), which are

PEPCO’s adversaries in the underlying litigation in the District of

Maryland.      Leavitt then sought a protective order on privilege

grounds, seeking return of the billing records and a prohibition on

their dissemination and use by ST.         In its July 16, 2004 bench

decision addressing Leavitt’s appeals of the magistrate judge’s

rulings on privilege and retention issues, the district court ruled

against Leavitt.

     Following oral argument of this appeal, ST returned the

billing records to Leavitt’s counsel and filed a motion to dismiss

this appeal as moot.      As explained below, we hold the motion to

dismiss in abeyance and conditionally remand this matter to the

district court for an initial mootness determination.

                                    3
                                       I.

     The underlying litigation pertains to an April 2000 oil spill

in Prince George’s County, Maryland, from a pipeline owned by PEPCO

and operated by ST.         Leavitt served as a contract engineer on the

pipeline project for PEPCO, and he was at the scene of the spill.

Although Leavitt is not a party to the underlying litigation, he

was identified as a key witness to the spill, and he promptly

retained counsel in spill-related proceedings (including civil

litigation,    as    well    as   investigations     by     state   and    federal

authorities).      As part of PEPCO’s obligation to indemnify Leavitt,

PEPCO has been paying Leavitt’s legal expenses in connection with

the spill-related proceedings.         The billing records were provided

by Leavitt’s lawyers to PEPCO’s counsel on a monthly basis, in

order for PEPCO to satisfy its obligation to pay Leavitt’s legal

expenses.     Leavitt and PEPCO entered into an oral joint defense

agreement with respect to the spill-related proceedings, and their

counsel   agreed    in   writing    that    the   billing    records      would   be

maintained in confidence.

     In June 2002, without Leavitt’s prior knowledge or consent,

PEPCO provided ST with the billing records — among some 84,000

pages of documents produced by PEPCO as part of pre-litigation

settlement negotiations between it and ST.                PEPCO thereafter, in

December 2002, initiated the underlying litigation in the District

of Maryland against ST, seeking spill-related damages. ST asserted

                                       4
counterclaims against PEPCO, and formal discovery commenced between

the parties, during which PEPCO produced additional copies of the

billing records.1   The billing records detail the work of Leavitt’s

lawyers on a day-to-day basis over a period spanning at least two

and one-half years. Upon review of the billing records, ST decided

that they contained references to documents that had not been

disclosed to ST by PEPCO during discovery.

     On July 31, 2003, ST served on Leavitt a subpoena issued by

the district court for the District of Columbia, seeking documents

in his possession related to the underlying litigation.2          In

September 2003, in response to the subpoena, Leavitt produced

nearly 3000 pages of documents.       ST was dissatisfied with those

disclosures because they did not include some of the documents

referenced in the billing records.      In the course of subsequent

communications, Leavitt first learned that PEPCO had produced his

billing records to ST.    In mid-November 2003, counsel for Leavitt

demanded that ST return the billing records because they had been

inadvertently disclosed and contained privileged information, and

     1
      On appeal, Leavitt maintains that PEPCO inadvertently
produced his billing records, and that ST was obligated, pursuant
to a discovery agreement, to immediately return any documents that
were obviously produced by mistake. ST contends, however, that
PEPCO intentionally produced the billing records in support of its
since-withdrawn claim against ST for recovery of Leavitt’s legal
expenses.
     2
      ST’s decision to obtain the subpoena in the District of
Columbia has been a matter of controversy, but not one that is
before us in this appeal.

                                  5
that       counsel   for    ST   were     in    breach   of   their   ethical

responsibilities by keeping them. Counsel for ST refused to return

the billing records, advising that they would continue to use them

in the representation of their client.             ST’s counsel also pointed

out that the billing records established that Leavitt had continued

to withhold documents responsive to the July 31, 2003 subpoena.

       On November 28, 2003, ST filed a motion in the district court

for the District of Columbia, seeking to compel the production of

additional documents from Leavitt.             In support of that motion, ST

attached copies of the billing records.                  The motion and its

attachments thus became available to the public on the court’s

website.      Promptly thereafter, on December 1, 2003, Leavitt filed

motions to seal and for a protective order in the district court.

On December 17, 2003, the court denied Leavitt’s motions without

prejudice, pending resolution of related privilege issues raised by

PEPCO in the District of Maryland.             See Potomac Elec. Power Co. v.

Support Terminal Servs., Inc., No. 03ms3139, slip op. at 5 (D.D.C.

Dec. 17, 2003).       The court directed Leavitt to promptly file his

own motions in the District of Maryland, “or, alternatively, re-

file his motions in this Court after a decision in the Maryland

case is rendered.”         Id. at 5-6.3

       3
      On December 12, 2003, PEPCO filed a motion in the underlying
District of Maryland litigation, seeking, inter alia, the return of
the billing records on privilege grounds. In a December 22, 2003
Order addressing the discoverability of assorted legal bills in
PEPCO’s possession, the magistrate judge determined that PEPCO had

                                          6
      On December 23, 2003, Leavitt filed, in the District of

Maryland, the nonparty motion for a protective order at issue in

this appeal.     Leavitt thereby sought return of the billing records

and a prohibition on their dissemination and use by ST.                    He

contended   that    the   billing   records   were   protected    under   the

attorney-client privilege and the work product doctrine.              By Order

of January 29, 2004, and a clarifying Order of March 16, 2004, the

magistrate judge rejected any notion that the billing records were

presumptively privileged in their entirety.             See Mar. 16, 2004

Order at 2; Jan. 29, 2004 Order at 2.          However, the judge agreed

with Leavitt that PEPCO’s production of the billing records,

without his consent, did not waive any privilege shared by Leavitt

and PEPCO pursuant to their joint defense agreement.            See Jan. 29,

2004 Order at 2-3.        The judge thus permitted Leavitt to identify

the   portions     of   the   billing   records   for   which    he   claimed

protection, followed by briefing on the privilege issues. See Mar.

16, 2004 Order at 1-2; Jan. 29, 2004 Order at 3.          In the meantime,

the judge authorized ST to retain a copy of the billing records

“for the sole purpose of being able to effectively challenge any

waived any privileges it held in those bills by demanding recovery
of spill-related legal expenses from ST. Subsequently, on January
30, 2004, the judge deemed PEPCO’s motion for the return of the
billing records moot in light of the December 22, 2003 Order. That
Order did not address whether Leavitt — rather than PEPCO — was
entitled to assert privilege claims with respect to the billing
records. PEPCO later unsuccessfully appealed that Order to the
district court.

                                        7
misplaced claims of privilege.”        See Jan. 29, 2004 Order at 3; see

also Mar. 16, 2004 Order at 1-2.           Other copies of the billing

records were to be returned to Leavitt, and the filings in the

District   of   Maryland   that    referred   to   materials   subject   to

privilege claims were placed under seal with the Clerk.          See Jan.

29, 2004 Order at 3.

     On February 12, 2004, and March 31, 2004, Leavitt appealed the

magistrate judge’s Orders.        At a hearing on July 16, 2004, Leavitt

maintained to the district court that the billing records should

not be parsed for privileged and nonprivileged material, but rather

should be protected in their entirety. Leavitt also challenged the

magistrate judge’s ruling that ST could retain a copy of the

billing records for the purpose of opposing Leavitt’s privilege

claims.

     In its July 16, 2004 bench decision, the district court ruled

on Leavitt’s appeals and agreed with the magistrate judge that the

billing records “are not globally protected by any privilege,” and

that the parties should proceed with arguments over protections for

particular portions of them.        See Tr. Mots. Hr’g at 54-55, 58-59.

However, the court determined one privilege issue without waiting

for the magistrate judge’s initial assessment of it, ruling that

there was no privilege attached to references in the billing

records to specific documents, where those references bear on

whether PEPCO was forthcoming in its document production to ST, and

                                      8
where those documents were not the work product of Leavitt’s

counsel.   Id. at 55-59.   Finally, the court decided that ST could

retain a copy of the billing records, pending full resolution of

the privilege issues.   Id. at 59.     A docket entry for the July 16,

2004 hearing reflects that Leavitt’s appeal of the magistrate

judge’s Orders was “‘denied’ for reasons stated on the record in

open court.”4

                                 II.

     Leavitt filed a timely notice of appeal, and we conducted oral

argument on March 16, 2005.5     Leavitt has asked that we:       (1)

     4
      Pending this appeal, Leavitt has not pursued his remaining
privilege claims in the District of Maryland, or re-filed his
motions to seal and for a protective order in the District of
Columbia.
     5
      Leavitt has properly invoked our jurisdiction pursuant to
Perlman v. United States, 247 U.S. 7 (1918). The Perlman doctrine
provides an exception to the general rule that an appellant must be
held in contempt before appealing a discovery order. See Church of
Scientology of Calif. v. United States, 506 U.S. 9, 18 n.11 (1992).
Under this doctrine, “a discovery order directed at a disinterested
third party is treated as an immediately appealable final order
because the third party presumably lacks a sufficient stake in the
proceeding to risk contempt by refusing compliance.”      Id.   The
doctrine applies where, as here, the appellant (like Leavitt, a
nonparty to the underlying litigation) has asserted a privilege
with regard to documents in the hands of a third party. See, e.g.,
Gill v. Gulfstream Park Racing Ass’n, 399 F.3d 391, 397-98 (1st
Cir. 2005) (permitting immediate appeal of district court’s
decision to unseal its copies of nonparty’s allegedly privileged
documents for use by plaintiff in underlying litigation); cf. Sheet
Metal Workers Int’l Ass’n v. Sweeney, 29 F.3d 120, 121 & n.1 (4th
Cir. 1994) (allowing immediate appeal of district court’s denial of
nonparty’s motion to disqualify plaintiff’s counsel and quash
deposition subpoena, where nonparty asserted privilege with regard

                                  9
vacate the district court’s ruling that references in the billing

records to documents (other than documents created by his counsel)

are unprotected; (2) vacate the court’s ruling that ST can retain

and use a copy of the billing records in opposing his other

privilege claims; and (3) remand with instructions that ST return

all copies of the billing records pending full disposition of the

privilege claims.   See Appellant’s Br. at 33.

     On April 20, 2005, following oral argument, ST filed its

Motion to Dismiss Appeal for Mootness, relying on the principle

that, “‘[t]o qualify as a case fit for federal-court adjudication,

an actual controversy must be extant at all stages of review.’”

Toms v. Allied Bond & Collection Agency, 179 F.3d 103, 105 (4th

Cir. 1999) (quoting Arizonans for Official English v. Arizona, 520

U.S. 43, 67 (1997)).   Through its motion, reply memorandum, and

exhibits (including affidavits of its counsel), ST maintains that

this appeal is moot, because it has offered Leavitt the full relief

he seeks.   See Zimmerman v. Bell, 800 F.2d 386, 390 (4th Cir.

1986).

     More specifically, ST represents that it recently returned its

only copy of the billing records to Leavitt’s counsel.   According

to ST, it returned the billing records after PEPCO provided ST with

the sought-after documents referenced therein, eliminating ST’s

need for further use of the billing records to scrutinize the

to information that had been divulged to plaintiff’s counsel).

                                10
completeness      of   PEPCO’s       discovery    responses.                ST     has    also

“certified    that     it    has    destroyed     all    copies        of        all     notes,

memoranda,     and     other       materials     relating        to     or       containing

information derived from the unredacted billing records.” See Mot.

to Dismiss at 10.        ST maintains that it will not make further use

of the billing records or the information contained therein in the

underlying litigation.6 ST acknowledges that the earlier privilege

and retention rulings stand, but contends that they are no longer

of   any    practical       consequence,       because      ST        has     voluntarily

dispossessed itself of the billing records and, in any event, it

currently    is   only      authorized   to    use   those       records          to     oppose

Leavitt’s now-moot privilege claims. ST also acknowledges that, if

PEPCO stands by its demand for an award of its legal expenses, ST

will insist that PEPCO again produce the billing records, in order

to demonstrate that PEPCO is seeking recovery only for its own

counsel’s efforts. ST maintains, however, that the billing records

could be produced only with Leavitt’s consent.

     Leavitt      opposes      ST’s    motion     to     dismiss            this       appeal,

maintaining that the issues are not moot.                He questions whether ST

actually has returned all copies of the billing records, including

copies that may be in possession of its counsel and those included

in submissions to this Court, such as a sealed portion of the Joint

     6
      In addition to the foregoing, ST has agreed to join in any
renewed motion to seal the copies of the billing records on file in
the district court for the District of Columbia.

                                         11
Appendix.    Moreover, Leavitt questions ST’s assertion that PEPCO

has now produced all of the documents referenced in the billing

records.    Leavitt surmises that ST is eager to moot this appeal in

order to avoid a possible adverse decision.     More substantially,

Leavitt contends that there is an ongoing controversy concerning

the district court’s privilege ruling. Leavitt maintains that this

ruling effectively allows ST to make use of those portions of the

billing records deemed nonprivileged by the court (i.e., references

to documents not generated by Leavitt’s lawyers) beyond solely

opposing any remaining privilege claims.   Finally, Leavitt asserts

that any promise by ST to make no further use of the billing

records in the underlying litigation is inconsistent with its

position that PEPCO must again produce the billing records to

support its demand for recovery of its own legal expenses.7

                                III.

     The parties’ various mootness contentions obviously raise many

issues of disputed fact and law, and they are intertwined with

matters in the underlying litigation not before us in this appeal.

Accordingly, the district court is in a better position to address

the parties’ mootness contentions in the first instance.    We will

therefore hold ST’s motion to dismiss the appeal in abeyance and

     7
      PEPCO, substantially relying on the contentions of Leavitt,
also opposes ST’s motion to dismiss this appeal.

                                 12
conditionally remand this proceeding to the district court for an

initial mootness determination. In remanding, we request the court

to resolve any disputed issues of fact and address whether the

earlier privilege and retention rulings are now moot (and, if so,

whether they should be vacated).      See Friends of the Earth, Inc. v.

Laidlaw Envtl. Servs. (TOC), Inc., No. 97-1246, 2000 WL 265620, at

*1 (4th Cir. Mar. 10, 2000) (remanding “for appropriate factual

findings and a determination of whether this action is moot and, if

so,   whether   the   previous   district   court       judgment   should   be

vacated”) (unpublished); cf. Progner v. Eagle, 377 F.2d 461, 463

(4th Cir. 1967) (conditionally vacating judgment and remanding for

further inquiry by district court, where appellate record was

insufficient    on    whether   omission   of    voir    dire   question    was

prejudicial).

                                                CONDITIONALLY REMANDED AND
                                                OTHERWISE HELD IN ABEYANCE

                                    13