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Entrata Inc. v. Yardi Systems Inc.

United States District Court, D. Utah, Central Division

October 29, 2018

ENTRATA, INC., a Delaware corporation, Plaintiff,
v.
YARDI SYSTEMS, INC., a California corporation Defendants.

          MEMORANDUM DECISION AND ORDER DENYING DEFENDANT'S RULE 72(a) OBJECTION TO MAGISTRATE JUDGE'S ORDER

          Clark Waddoups United States District Judge

         Before the court is Defendant Yardi Systems, Inc.'s (Yardi) Rule 72(a) Objection, (ECF No. 302) to Chief Magistrate Judge Paul M. Warner's June 20, 2018 Memorandum Decision and Order. (ECF No. 287.) On May 21, 2018, Yardi filed a short form Motion to Claw Back Exhibit 473 and Strike Portions of Anant Yardi's Deposition Transcript. (ECF No. 237.) On June 20, 2018, Chief Magistrate Judge Warner entered an order denying Yardi's Motion. (ECF No. 287 at 6.) Yardi moves the court for review of Chief Magistrate Judge Warner's ruling, arguing that it was both clearly erroneous and contrary to law. (ECF No. 302 at 5.) As explained below, the court DENIES Yardi's Objection.

         I. Background

         Arnold Brier is Yardi's “Vice President and General Counsel.” (Brier Aff. ¶ 1, ECF No. 244 at 2.) Brady Bustany is “Yardi's Senior Counsel.” (Brier Aff. ¶ 2, ECF No. 244 at 2.) Anant Yardi is Yardi's President. (Brier Aff. ¶ 4, ECF No. 244 at 3.) Gordon Morrell is Yardi's Executive Vice President. (Brier Aff. ¶ 4, ECF No. 244 at 3.)

         According to Mr. Brier, “[b]eginning in late October 2014, ” he and Mr. Bustany “created and edited a draft letter to Yardi's customers about Yardi's ongoing [California] lawsuit with [Entrata] for Anant Yardi's signature.” (See Brier Aff. ¶ 2, ECF No. 244 at 2.) “An iteration of this draft letter, ” “marked Exhibit 473 at the deposition of Anant Yardi, ” “includes Mr. Bustany's” and Mr. Brier's “tracked edits.” (Brier Aff. ¶ 2, ECF No. 244 at 2.) At least three other iterations of the draft letter exist, each of which contains similar language to Exhibit 473. (See ECF Nos. 262-1, 262-2, and 262-3.) None of the iterations of the letter were ever sent to Yardi's customers. (See Brier Aff. ¶ 2, ECF No. 244 at 2.) Mr. Brier only shared “the draft letter” with Anant Yardi, Godron Morrell, and Mr. Bustany. (Brier Aff. ¶ 4, ECF No. 244 at 2.)

         On April 30, 2015, the Magistrate Court entered a Stipulated Protective Order. (ECF No. 32.) The Stipulated Protected Order contained a provision titled “Inadvertent Production of Privileged or Otherwise Protected Material.” (ECF No. 32 at 24.) That provision states, in part, that “[i]nadvertent or unintentional production of any document . . . subject to . . . work-product immunity shall not constitute a waiver of the . . . work-product immunity, if any, as they apply to those documents specifically or to the subject matter of those documents generally . . . .” (ECF No. 32 at 24.) The Stipulated Protective Order also required the Producing Party to “provide a written request [to the Receiving Party] for the return of those documents . . . within a reasonable time after determining the documents should not have been produced.” (ECF No. 32 at 24.) The Stipulated Protective Order also provided that “[i]f the Producing Party discovers that privileged, work-product, or otherwise protected documents and things have been inadvertently produced based upon the Receiving Party's use of such information during a deposition . . . the Producing Party may orally request the return of the information and the Receiving Party must immediately cease examination or argument regarding the specific substantive content of the document.” (ECF No. 32 at 24-25.) The Stipulated Protective Order also provided that “[t]his provision is not intended to modify whatever procedure may be established in an e-discovery order that provides for production without prior privilege review.” (ECF No. 32 at 25.)

         On September 20, 2017, the Magistrate Court entered an Order Governing Discovery of Electronically Stored Information. (ECF No. 124.) That Order contained a provision titled “Privileged Material.” (ECF No. 124 at 11.) That provision provided, in part, that “[t]he designation and treatment of . . . work-product, and any other protected material will be governed by the terms of the Stipulated Protective Order entered in this case on April 30, 2015 (Dkt. No. 32).” (ECF No. 124 at 11.) That provision also provided that “[t]he mere production of ESI as part of a mass production will not itself constitute a waiver under Federal Rule of Evidence 502, or for any other purpose.” (ECF No. 124 at 11.) The Order Governing Discovery of Electronically Stored Information also contained a provision titled “Materials Produced in California Litigation, ” which the Magistrate Court referred to as the “California Action, ” and which contained the case number and name of that lawsuit. (See ECF No. 124 at 5 (“The parties may, but need not, produce in this Action any ESI previously produced in Yardi, Inc. v. Property Solutions, No. 2:13-cv-07764 in the United States District Court for the Central District of California . . . .”).)

         On September 30, 2017, Yardi produced Exhibit 473 for the first time. (See Cross Decl. ¶ 4, ECF No. 260 at 3.) Yardi again produced Exhibit 473 “as part of the reproduction of Yardi's documents on December 5, 2017 . . . .” (Cross Decl. ¶ 4, ECF No. 260 at 3.) Yardi also produced three other iterations of Exhibit 473 on four occasions. (See Cross Decl. ¶ 2, ECF No. 260 at 2-3.) For example, Yardi produced one iteration of Exhibit 473 on September 30, 2017 and on December 5, 2017. (See Cross Decl. ¶ 2, ECF No. 260 at 2-3.) Yardi also produced a second iteration of Exhibit 473 on May 1, 2018. (See Cross Decl. ¶ 2, ECF No. 260 at 2.) And Yardi produced a third iteration of Exhibit 473 on that same day. (See Cross Decl. ¶ 2, ECF No. 260 at 2-3.) In total, Yardi produced Exhibit 473 or an iteration of Exhibit 473 a total of six times. (See ECF No. 332 at 10.[1])

         On May 15, 2018, a videotaped deposition of Anant Yardi was held in Los Angeles, California. (ECF No. 262-10.) At this deposition, Entrata's counsel asked Mr. Yardi questions about Exhibit 473. (See ECF No. 262-10 at 71-74.) For example, Entrata's counsel asked Mr. Yardi, “in this letter signed by you dated January 1 of 2015, it reads, ‘[e]ffective December 31, 2015, we will no longer permit Property Solutions to interface with Yardi cloud using their custom interface with the Yardi standard interface,' correct?” (ECF No. 262-10 at 5.) Mr. Yardi responded “I see that.” (ECF No. 262-10 at 5.) Entrata's counsel then asked: “as indicated in Exhibit 473, ” “you had already decided that you were going to no longer allow Entrata to interface with Yardi cloud using its custom interface or the Yardi standard interface, ” “correct, sir?” (ECF No. 262-10 at 5.) Yardi's counsel objected to the question, arguing that it “misstate[d] facts, misstate[d] the document, lacks foundation, [and] calls for speculation, ” but Mr. Yardi then answered “I have no recollection of this letter.” (ECF No. 262-10.) Entrata's counsel later asked “there is a draft letter dated only two weeks before Yardi took certain steps affecting the Entrata custom interface that has your signature where you were announcing termination of that partnership, as you sit here today, you have no recollection of it; is that right, sir?” (ECF No. 262-10 at 6.) Yardi's counsel again objected, but Mr. Yardi answered “I have no recollection.” (ECF No. 262-10 at 6.) Entrata's counsel later asked “this letter was never finalized and never went out, did it, sir?” (ECF No. 262-10 at 6.) Yardi's counsel again objected, but Mr. Yardi answered “I don't have any recollection of this letter and I can see my signature.” (ECF No. 262-10 at 6.)

         On May 21, 2018, Yardi filed its Motion to Claw Back Exhibit 473 and Strike Portions of Anant Yardi's Deposition Transcript. (ECF No. 237.) Yardi argued that Exhibit 473 was “inadvertently produced” and argued that “Yardi is entitled to claw it back.” (See ECF No. 237 at 2-3.) Yardi “respectfully request[ed] that the Court order [Entrata] . . . to destroy or return all copies of Exhibit 473 . . . and strike all references to, and questions and answers regarding, Exhibit 473 to the deposition of Anant Yardi.” (ECF No. 237 at 2.) Yardi argued that Exhibit 473 was a privileged attorney-client communication. (See ECF No. 237 at 2-3.) In support of this argument, Yardi stated that “all other instances of Exhibit 473 were withheld as privileged.” (ECF No. 237 at 2 (citing Walker Decl., ¶¶ 4-6, ECF No. 238-1).) Yardi further argued that “[t]he work product doctrine also protects Exhibit 473.” (ECF No. 237 at 3.) In support of its argument that “Yardi is entitled to claw [Exhibit 473] back, ” Yardi cited Federal Rule of Civil Procedure 26(b)(5)(B); Federal Rule of Evidence 502(d); and the court's Stipulated Protective Order. (ECF No. 237 at 3.) But nowhere in the Motion did Yardi argue that it had complied with the Stipulated Protective Order's (ECF No. 32 at 25) requirement that Yardi “provide a written request” to Entrata “for the return of those documents . . . within a reasonable time after determining the documents should not have been produced.” (ECF No. 32 at 24.)

         On June 1, 2018, Entrata filed its Opposition to Yardi's Motion. (ECF No. 259.) Entrata argued that “Yardi . . . failed to meet its burden.” (ECF No. 259 at 2 (citing Barclaysamerican Corp. v. Kane, 746 F.2d 653, 656 (10th Cir. 1984).) Entrata also argued that “Exhibit 473 is not an attorney-client communication, ” and argued that “[w]ork product protection is inapplicable.” (ECF No. 259 at 2.) Entrata also demonstrated, contrary to what Yardi had argued in its Motion, that Yardi had previously produced Exhibit 473. (ECF No. 259 at 2 (“Yardi produced three instances of Exhibit 473-and produced Exhibit 473 itself twice-refuting Yardi's claim of inadvertence.”).)

         On June 20, 2018, the Magistrate Court entered an order denying Yardi's Motion. (ECF No. 287 at 5.) The Magistrate Court “conclude[d] that” “Exhibit 473” “does not constitute an attorney-client privileged communication.” (ECF No. 287 at 5.) The Magistrate Court stated:

As Yardi has indicated, Exhibit 473 is a draft letter showing edits made by Arnold Brier (“Mr. Brier”), Yardi's Vice President and General Counsel. The mere fact that Mr. Brier was involved with Exhibit 473 does not automatically render it subject to attorney-client privilege protection. See In re Grand Jury Proceedings, 616 F.3d 1172, 1182 (10th Cir. 2010). Furthermore, documents prepared to be sent to third parties, like Exhibit 473, even when prepared by counsel, are generally not attorney-client privileged. See In re Syngenta AG MIR 162 Corn Litig., No. 14-MD-2591-JWL, 2017 WL 1106257, at *7 (D. Kan. Mar. 24, 2017). Finally, the court concludes that the types of edits made by Mr. Brier constitute nothing more than simple editorial changes, which do not qualify for attorney-client privilege protection. See id. (“[T]he attorney-client privilege does not attach to simple editing or ‘word-smithing' by counsel.”).

(ECF No. 287 at 6.) Because “Yardi . . . failed to persuade the [Magistrate Court] that Exhibit 473 was prepared ‘in anticipation of litigation, '” the Magistrate Court also “conclude[d] that Exhibit 473 does not qualify as attorney work product.” (ECF No. 287 at 6.)

         II. Analysis

         Under Federal Rule of Civil Procedure 72(a), a district court is required to “consider timely objections [to a nondispositive order from a magistrate judge] and modify or set aside any part of the order that is clearly erroneous or is contrary to law.” Fed.R.Civ.P. 72(a); see also 28 U.S.C. § 636(b)(1)(A) (“A judge of the court may reconsider any pretrial matter under this subparagraph (A) where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law.”). “Under Rule 72, a district court is ‘required to ‘defer to the magistrate judge's ruling unless it is clearly erroneous or contrary to law.'” Raytheon Co. v. Cray, Inc., No. 2:16-MC-898-DAK, 2017 WL 823558, at *2 (D. Utah Mar. 2, 2017) (quoting Allen v. Sybase, Inc., 468 F.3d 642, 658-59 (10th Cir. 2006)). “The ‘clearly erroneous' standard under Rule 72(a) applies to factual findings.” Id. (citation omitted). “In order for a district court to overturn a magistrate judge's decision as clearly erroneous, the court must be left with a ‘definite and firm conviction that a mistake has been committed.'” Id. (citation omitted). “Under the ‘contrary to law' standard, the district court conducts a plenary review of the magistrate judge's purely legal determinations, setting aside the magistrate judge's order only if it applied an incorrect legal standard.” Id. (citation omitted).

         Yardi makes two arguments. First, Yardi argues that the Magistrate Court made a factual finding that was clearly erroneous. (See ECF No. 302 at 7.) Second, Yardi argues that the Magistrate Court's order was “contrary to law because Exhibit 473 is a Privileged Attorney-Client Communication, the Privilege has not been waived, and Exhibit 473 constitutes attorney work product.” (ECF No. 302 at 8.)

         Magistrate ...


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