In Re: VeroBlue Farms USA, Inc, Debtor

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CENTRAL DIVISION
CASSELS BROCK & BLACKWELL
LLP,
Appellant,
No. 25-CV-3034 CJW-KEM
vs. ORDER
VEROBLUE FARMS USA, INC.,
Appellee.
____________________
I. INTRODUCTION
A Report and Recommendation (“R&R”) by the Honorable Kelly K.E. Mahoney,
Chief United States Magistrate Judge, recommending the Court affirm the bankruptcy
court’s decision and enter judgment in favor of appellee, is before the Court. (Doc. 19).
Appellant filed an objection to the R&R, (Doc. 20), and appellee filed a response to
appellant’s objection, (Doc. 21). For the following reasons, appellant’s objection is
overruled, the R&R is adopted, the bankruptcy court’s decision is affirmed, and
judgment shall enter in favor of appellee.
II. STANDARD OF REVIEW
When a party files a timely objection to a magistrate judge’s R&R, a “judge of the
court shall make a de novo determination of those portions of the report or specified
proposed findings or recommendations to which objection is made.” 28 U.S.C.
§ 636(b)(1)(C); see also Fed. R. Civ. P. 72(b)(3) (“The district judge must determine de
novo any part of the magistrate judge’s disposition that has been properly objected to.”);
United States v. Lothridge, 324 F.3d 599, 600 (8th Cir. 2003) (noting that a district judge
must “undertake[ ] a de novo review of the disputed portions of a magistrate judge’s
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[R&R]”). “A judge of the court may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C);
see also Fed. R. Civ. P. 72(b)(3) (“The district judge may accept, reject, or modify the
recommended disposition; receive further evidence; or return the matter to the magistrate
judge with instructions.”). It is reversable error for a district court to fail to engage in a
de novo review of a magistrate judge’s R&R when such review is required. Lothridge,
324 F.3d at 600. Accordingly, the Court reviews the disputed portions of Judge
Mahoney’s R&R de novo.
Any portions of an R&R to which no objections have been made must be reviewed
under at least a “clearly erroneous” standard. See, e.g., Grinder v. Gammon, 73 F.3d
793, 795 (8th Cir. 1996) (noting that when no objections are filed “[the district court
judge] would only have to review the findings of the magistrate judge for clear error”).
As the Supreme Court has explained, “a finding is ‘clearly erroneous’ when although
there is evidence to support it, the reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been committed.” Anderson v. City of
Bessemer City, 470 U.S. 564, 573 (1985) (cleaned up) (quoting United States v. U.S.
Gypsum Co., 333 U.S. 364, 395 (1948)). A district judge may, however, elect to review
an R&R under a more exacting standard even if no objections are filed. See Thomas v.
Arn, 474 U.S. 140, 154 (1985).
III. BACKGROUND
Judge Mahoney set out the relevant background facts in her January 8, 2026 Order,
(Doc. 19, at 1–5), which are the same facts she previously set forth in her September 15,
2025 Order on appellant’s motion to stay, (Doc. 13, at 1–6). The background facts are
unobjected to and supported by this Court’s own review of the record, so the Court fully
adopts them and incorporates them by reference here.
In short, however, the primary issue in this adversary proceeding involves the
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application of the attorney-client privilege and whether appellant, a law firm, can be
compelled to produce documents it claims are subject to the attorney-client privilege.
(See Doc. 13, at 1). Appellant appealed the bankruptcy court’s summary judgment order
that found appellant did not prove the documents at issue are privileged and are therefore
subject to turnover. (Doc. 1). Appellant also moved to stay enforcement of the
bankruptcy court’s order pending resolution of the appeal. (Doc. 6). Judge Mahoney
denied the motion to stay, (Doc. 13, at 12), and the Court affirmed Judge Mahoney’s
decision (Doc. 18).
Judge Mahoney’s R&R on the merits of appellant’s appeal is before the Court
here. (Doc. 19).
IV. DISCUSSION
Appellant’s objection to Judge Mahoney’s R&R is generally repetitive of the
arguments it made in its motion to stay and its objection to Judge Mahoney’s order
denying the stay. See (Docs. 6-1 & 14). Here, appellant objects: (1) to Judge Mahoney’s
finding in the R&R that appellant “conflates the waiver doctrine with its burden of
proving privilege”; (2) to Judge Mahoney’s finding that “the bankruptcy court did not
make a finding whether [appellant] met its burden of proving that the documents were
confidential or that they related to [appellant’s] attorney-client relationship with VBF
Cananda”; (3) to Judge Mahoney’s recommendation to reject appellant’s “argument that
seeks to allow a law firm to raise a blanket claim of attorney-client privilege without
having to produce a privilege log or otherwise establish the elements of the attorney-
client privilege have been satisfied”; and (4) to the R&R expanding the attorney’s
obligation to properly assert the privilege into a burden of selectively waiving the
privilege as to each document and if not doing so satisfactorily, then the attorney
effectively waives the privilege that belongs to the client. (Doc. 20, at 1–2). Though
appellant lists these specific grounds, its brief primarily argues that appellant properly
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asserted the privilege on behalf of its client and that the bankruptcy court found as much
in its October 18, 2024 ruling on attorney-client issues.
Appellant’s first ground in its objection addresses general attorney-client
principles, including who the attorney-client privilege belongs to and who can waive it.
The second, third, and fourth grounds are interrelated and address what is required to
invoke and preserve the privilege and whether appellant met its burden to preserve the
privilege. The Court will first discuss appellant’s argument relating to who can waive
the privilege. The Court will then evaluate the remaining arguments together relating to
what is required to invoke the attorney-client privilege, whether appellant met its burden,
and whether the decision impermissibly expands existing obligations.
A. Attorney-Client Privilege, Assertion, and Waiver (Ground One)
In the R&R Judge Mahoney stated the attorney client privilege “belongs to and
exists solely for the benefit of the client.” (Doc. 19, at 6) (quoting United States v.
Yielding, 657 F.3d 688, 707 (8th Cir. 2011)). Judge Mahoney also stated that even
though the privilege does not exist to benefit the attorney, “‘the attorney has the duty,
upon any attempt to require him to testify or produce documents’ covered by the attorney-
client privilege, to ‘assert[] . . . the privilege . . . for the benefit of the client’ and ‘as a
matter of professional responsibility.’” (Id., at 7) (quoting Schwimmer v. United States,
232 F.2d 855, 863 (8th Cir. 1956) (alterations in original)).
Judge Mahoney explained that although she “tend[s] to agree that only the client
. . . may implicitly waive the privilege” an attorney may effectively “waive” the attorney-
client privilege by producing a deficient privilege log or failing to prove the privilege
applies. (Doc. 19, at 7–8). Citing Federal Rule of Civil Procedure 26(b)(5) and
substantial caselaw, Judge Mahoney explained the requirement for an attorney “to
produce a privilege log is better understood as part of the burden of proving privilege,
rather than under the waiver doctrine.” (Doc. 19, at 11). In short, Judge Mahoney
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distinguished between a client’s ability to waive the privilege and the attorney’s burden
to properly prove the elements of attorney-client privilege, though both could result in
the turnover of documents. Judge Mahoney concluded that even though appellant could
not waive the attorney-client privilege, it could fail to meet its burden of proving the
attorney-client privilege applied. (Id., at 12).
Appellant objects to Judge Mahoney’s findings and argues, in short, that the
attorney-client privilege belongs to the client so appellant cannot waive the attorney-client
privilege. In support of this conclusion, appellant argues Judge Mahoney incorrectly
found that appellant conflates the waiver doctrine with its burden of proving privilege.
In response, appellee argues both the bankruptcy court and Judge Mahoney got it
right. (Doc. 21). That is, Judge Mahoney’s R&R accurately distinguished between
waiving the privilege and failing to prove the elements of attorney-client privilege and
that the bankruptcy court’s decision was based on proving privilege, not on waiver.
According to appellee, Judge Mahoney also correctly stated that appellant had the burden
of proving the elements of attorney-client privilege and that the record shows it did not
do so here. (Id., at 9–10).
The Court agrees with Judge Mahoney’s analysis that distinguishes between a
client waiving the attorney-client privilege and an attorney’s failure to provide a
satisfactory privilege log or prove the elements of attorney-client privilege. The Court
also agrees with Judge Mahoney’s conclusion that, despite using the term “waiver,” the
bankruptcy court’s analysis relied on appellant’s failure to prove that the privilege applied
and not that appellant was impermissibly waiving the privilege.
First, as the Court explained in its order on appellant’s objection to Judge
Mahoney’s order denying the motion to stay, “it is well established under common law
that confidential communications between an attorney and a client are privileged and not
subject to disclosure absent consent of the client.” United States v. Ivers, 967 F.3d 709,
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715 (8th Cir. 2020). Even though the privilege belongs to the client, “the party seeking
to assert the privilege . . . has the burden of showing that the privilege applies.” Id.
Waiver of the privilege may occur “when a party fails to assert the privilege properly.”
St. Paul Reinsurance Co., v. Com. Fin. Corp., 197 F.R.D. 620, 640 (N.D. Iowa 2000);
see also Preston Hollow Cap. LLC v. Nuveen Asset Mgmt. LLC, 343 F.R.D. 460, 465–
69 (S.D.N.Y. 2023) (holding a law firm failed to prove attorney-client privilege for some
documents and requiring law firm to produce the documents). A blanket claim or
conclusory assertion of privilege does not satisfy the claimant’s burden of proof. St. Paul
Reinsurance Co., 197 F.R.D. at 640.
The rule that counsel can waive privilege if it does not properly prove the privilege
applies serves an important purpose of limiting the privilege to only what is necessary
because “assertion of privileges inhibits the search for truth.” Preston Hollow Cap. LLC,
343 F.R.D. at 465 (quoting Perkins v. Gregg Cty., 891 F. Supp. 361, 363 (E.D. Tex.
1995)). If counsel was allowed to assert attorney-client privilege without proving it
applied in the first place, the privilege could be expanded to include anything a party
wants withheld or concealed by simply placing a privilege label on it.
Thus, the Court agrees with Judge Mahoney’s finding that while an attorney cannot
waive the attorney-client privilege, it can forfeit the privilege if it fails to satisfy its burden
of proving the privilege attaches. Judge Mahoney, and the bankruptcy court, correctly
distinguished waiver and the burden to prove privilege and correctly identified that this
case should be evaluated under the attorney’s burden to prove the privilege and not under
the client’s ability to waive the privilege. Appellant’s objection is overruled as to this
first ground.
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B. Bankruptcy Court’s Application of Appellant’s Attorney-Client Privilege
Assertion (Ground Two, Three, and Four)
The Court turns next to appellant’s arguments relating to an attorney’s burden for
proving the attorney-client privilege, whether appellant satisfied its burden, and if not,
whether the court’s expectations for a privilege log impermissibly expand an attorney’s
obligations.
In the R&R, Judge Mahoney explained that the bankruptcy court gave appellant
several opportunities to correct its privilege log to cure deficiencies, but appellant
declined to do so. Judge Mahoney found that instead, appellant rested on its argument
“that seeks to allow a law firm to raise a blanket claim of attorney-client privilege without
having to produce a privilege log or otherwise establish that the elements of the attorney-
client privilege have been satisfied.” (Doc. 19, at 14). Judge Mahoney also found that
the bankruptcy court’s ruling on attorney-client issues “did not make a finding on whether
[appellant] met its burden of proving that the documents were confidential or that they
related to [appellant’s] attorney-client relationship with VBF Canada.” (Id.). Judge
Mahoney found “[i]nstead, the bankruptcy court simply found [appellant] had ‘standing’
to raise attorney-client privilege.” (Id.).
Appellant objects to Judge Mahoney’s findings that appellant cannot raise a blanket
claim of attorney-client privilege without establishing that the elements of the attorney-
client privilege are satisfied, and argues that Judge Mahoney’s R&R impermissibly
expands the attorney’s obligation to assert the privilege into a burden that waives the
privilege if the proof is not to the reviewing court’s satisfaction. (Doc. 20, at 1–2).
Appellant argues it did not submit a blanket claim for attorney-client privilege and instead
submitted the required privilege log. (Id., at 6). Appellant also argues the bankruptcy
court already found that appellant “had properly asserted the attorney-client privilege”
and the bankruptcy court’s statement finding as much was not taken out of context. (Id.,
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at 5). In short, appellant argues it already did what it needed to do to prove and maintain
the privilege, the bankruptcy court already found the same, and any finding to the
contrary impermissibly expands an attorney’s burden to prove privilege.
Appellee argues appellant misconstrues and contradicts the bankruptcy court’s
rulings and orders. (Doc. 21, at 11). More specifically, according to appellee the
bankruptcy court’s statement upon which appellant relies was made before the bankruptcy
court entered final judgment and, when placed in appropriate context only addresses
appellant’s standing to raise attorney-client privilege, not that it had properly done so.
(Id., at 13). Appellee also argues the Court already addressed this point in its order
affirming Judge Mahoney’s ruling on the motion to stay. (Id., at 15). Last, appellee
argues appellant waived any argument about the sufficiency of its privilege log because
it did not timely raise the argument. (Id., at 15).
First, the Court agrees with Judge Mahoney’s conclusion that an attorney cannot
raise a blanket claim of attorney-client privilege without having to produce a privilege
log or otherwise establish that the elements of attorney-client privilege have been
satisfied.
Federal Rule of Civil Procedure 26(b)(5) states:
When a party withholds information otherwise discoverable by claiming
that the information is privileged . . ., the party must:
(i) expressly make the claim; and
(ii) describe the nature of the documents, communications, or
tangible things not produced or disclosed—and do so in a
manner that, without revealing information itself privileged
or protected, will enable other parties to assess the claim.
“[A] ‘blanket claim’ or ‘conclusory assertion’ as to the applicability of the [privilege]
does not satisfy the privilege claimant’s burden of proof[.]” St. Paul Reinsurance, 197
F.R.D. at 640. Instead, ‘[t]he party asserting the privilege meets its burden of providing
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a factual basis for asserting the privileges when it produces a detailed privilege log stating
the basis of the claimed privilege for each document in question, together with an
accompanying explanatory affidavit of its counsel.’ Id. at 628 (cleaned up). “Typically,
a privilege log must identify each document and provide basic information, including the
author, recipient, date and general nature of the document.” S.E.C. v. Thrasher, C.A.
No. 92-6987, 1996 WL 125661, at *1 (S.D.N.Y. Mar. 20, 1996). In some
circumstances, a party can submit a privilege log that is organized by category instead of
document-by-document. See Fed. Deposit Ins. Corp. for Valley Bank v. Crowe Horwath
LLP, No 17 CV 04384, 2018 WL 3105987, at *6 (N.D. Ill. June 25, 2018) (“But
sometimes deciding a privilege dispute does not require the make-work of a document-
by-document privilege log, so long as asserting categories of documents subject to the
privilege is clear enough.”). Whether the privilege log asserts the privilege document by
document or categorically, there must be “enough information for the requesting party
to assess and the court to determine whether the withheld documents or information are
privileged or are work product.” Jolivet v. Compass Grp. USA, Inc., 340 F.R.D. 7, 21
(N.D. Tex. 2021). Thus, Judge Mahoney is correct that a blanket claim of attorney-
client privilege does not suffice.
Second, Judge Mahoney is correct that “the bankruptcy court did not make a
finding on whether [appellant] met its burden of proving that the documents were
confidential or that they related to [appellant’s] attorney-client relationship . . . the
bankruptcy court simply found [appellant] had ‘standing’ to raise attorney-client
privilege.” (Doc. 19, at 13–14).
In the bankruptcy court’s order on privilege issues, which predated the evidentiary
hearing on attorney-client privilege and judgment, the bankruptcy court was considering:
“(1) whether the attorney-client privilege has properly been asserted at all; and
(2) whether [appellant’s] actions, including failing to file a proper privilege log, have
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waived the privilege.” (Doc. 2-9, at 165–66). Under the heading of “assertion of the
privilege” the bankruptcy court evaluated whether an attorney is allowed to assert
privilege on behalf of the client, or whether the client must assert the privilege itself.
(Id., at 168-70). The bankruptcy court concluded an attorney can assert privilege on
behalf of their client and thus stated “[appellant, a law firm] has properly asserted the
attorney-client privilege.” (Id., at 170). The bankruptcy court then concluded the order
by explicitly reserving a finding on the contours of the privilege and whether it applied.
(Id., at 172). Taken in context, the bankruptcy court’s statements only mean appellant
is a proper party to assert the privilege, but it did not find appellant properly asserted
privilege. Appellant’s attempt to cherry-pick a single line from an eight-page order does
not show a contrary conclusion.
Also, Judge Mahoney did not ignore the fact that appellant produced a privilege
log. She specifically noted that it had, but that the bankruptcy court found the privilege
log deficient. (Doc. 19, at 12). Indeed, the bankruptcy court found the privilege log
was insufficient, and its decision is well supported by the record. Appellant submitted a
privilege log that included who sent the document to whom, the date it was sent, the type
of document, and a document label, but none of the information in the log provides any
indication of the contents of the documents. (Doc. 2-10, at 241-42). For example, one
entry is described as “Email to Rick,” and another is described simply at
“ATT00002.htm.” (Id., at 242). Further, appellant only completed the privilege log
after being held in contempt for not providing a log. (Id., at 240). The bankruptcy court
also reviewed some of the documents in camera and found many were not actually
privileged. (Id., at 241). The bankruptcy court was correct to seriously doubt the
accuracy of the privilege log, even aside from the faulty descriptions. Appellant had
multiple chances to fix it but they did not. The bankruptcy court was correct in finding
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that the log was inadequate and Judge Mahoney did not ignore the privilege log’s
existence.
Third, nothing about the finding that the privilege log was insufficient expands the
attorney’s obligation to properly assert the privilege such that the attorney is effectively
waiving the privilege that belongs to the client. “Privileges, as exceptions to the general
rule, are not lightly created nor expansively construed, for they are in derogation of the
search for truth.” In re Grand Jury Subpoena Duces Tecum, 112 F.3d 910, 918 (8th
Cir. 1997) (internal quotation marks omitted). “Accordingly, the attorney-client
privilege is narrowly construed and ‘protects only those disclosures—necessary to obtain
informed legal advice—which might not have been made absent the privilege.’” Ivers,
967 F.3d at 716 (quoting Fisher v. United States, 425 U.S. 391, 403 1976)). There is a
heavy burden to prove the privilege because it is a sacred privilege. If the burden were
lighter, there would be more risk for abuse and dilution of the privilege. The bankruptcy
court’s demanding standard protects the privilege. Without strong protections there is
serious risk that litigants will abuse the privilege, create distrust, and hamper the search
for truth. The bankruptcy court was correct to impose a demanding standard and to be
skeptical when appellant failed to provide what was necessary.
Thus, both the bankruptcy court and Judge Mahoney are correct that there is a
demanding standard to prove attorney-client privilege, that a blanket assertion of privilege
will not suffice, and that enforcing a demanding standard does not impermissibly broaden
an attorney’s burden of proving privilege. Appellant’s objection is overruled as to the
second, third, and fourth grounds.
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V. CONCLUSION
For these reasons, appellant’s objection is overruled, the R&R is adopted, (Doc.
19), the bankruptcy court’s decision is affirmed, and judgment shall enter in favor of
appellee.
IT IS SO ORDERED this 12th day of March, 2026.
__________________________
C.J. Williams, Chief Judge
United States District Court
Northern District of Iowa
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