Asousa Partnership v. Smithfield Foods, Inc et al

UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 11
:
ASOUSA PARTNERSHIP, 	: 	Bankruptcy No. 01-12295DWS
:
Debtor. 	:
:
ASOUSA PARTNERSHIP, 	: 	Adversary No. 04-1012
:
Plaintiff, 	:
:
v. 	:
:
SMITHFIELD FOODS, INC., a Virginia Corporation, :
SHOWCASE FOODS, INC., a Delaware Corporation, :
JOSEPH W. LUTER, IV, MICHAEL H. COLE, 	:
:
Defendants. 	:
MEMORANDUM OPINION
BY: 	DIANE WEISS SIGMUND, Chief Bankruptcy Judge
Before 	the 	court 	is 	Debtor’s 	Motion 	to 	Compel 	Production 	of 	Documents
(the “Motion”) and the response thereto of Smithfield Foods, Inc., Showcase Foods, Inc.,
Joseph W. Luter, IV and Michael Cole (collectively “Smithfield”). For the reasons stated
herein, the Motion shall be granted in part and denied in part.
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1 These following background is provided merely to provide a context for the Motion
and should not be construed as findings of fact in this adversary action.
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FACTUAL AND PROCEDURAL BACKGROUND1
The Debtor is a Pennsylvania general partnership that owns the land and building(s)
located at 980 Glasgow Street, Pottstown, Montgomery County, Pennsylvania (the
“Premises”). 	In or around May, 2000, the Debtor entered into a lease on the Premises
(the “Lease”) with Pennexx Foods, Inc., formerly known as Pinnacle Foods, Inc.
(“Pennexx”). 	A dispute over the Lease led to an adversary action and subsequently
Pennexx’s eviction from the premises and a judgment against Pennexx for damage to the
Premises. See Asousa Partnership v. Pennexx Foods, Inc. f/n/a Pinnacle Foods, Inc. (In re
Asousa), Adv. No. 01-974 (the “Pennexx Litigation”). The monetary judgment was entered
on September 2, 2003.
The present adversary action against Smithfield stems from the fact that on or about
June 9, 2003 Smithfield, a creditor that held a controlling interest in Pennexx, took
possession of substantially all the assets of Pennexx. The exact nature of this transaction is
the subject of this adversary action. Debtor seeks, inter alia, to hold Smithfield liable for
judgment against Pennexx under a successor liability theory. 	Smithfield has denied any
relationship to Pennexx other than that of a secured creditor. 	See Answer to Amended
Complaint ¶¶ 36-38.
In the course of discovery, Smithfield has withheld or redacted certain documents on
the basis of the attorney-client privilege or work product doctrine. After a hearing on the
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2 Made applicable here by Fed. R. Bankr. P. 7026.
3 Rule 26(b)(3), made applicable here by Fed. R. Bankr. P. 1018, states in relevant part:
. . . a party may obtain discovery of documents and tangible things otherwise
discoverable under subdivision (b)(1) of this rule and prepared in anticipation of
litigation or for trial by or for another party or by or for that other party's
representative (including the other party's attorney, consultant, surety, indemnitor,
insurer, or agent) only upon a showing that the party seeking discovery has
substantial need of the materials in the preparation of the party's case and that the
party is unable without undue hardship to obtain the substantial equivalent of the
materials by other means. In ordering discovery of such materials when the required
showing has been made, the court shall protect against disclosure of the mental
impressions, conclusions, opinions, or legal theories of an attorney or other
representative of a party concerning the litigation.
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Motion, the parties voluntarily narrowed the scope of the Motion and objections thereto, and
submitted to the Court for in camera review the documents to which there still remains
a dispute (the “Disputed Documents”).
DISCUSSION
The scope of discovery is governed by Fed. R. Civ. P. 26,2 which states in relevant
part: “Parties may obtain discovery regarding any matter, not privileged, which is relevant
to the subject matter involved in the pending action.” Fed.R.Civ.P. 26(b)(1). Moreover, Fed.
R. Civ. P. 26(b)(3) 3 encompasses the “work product doctrine,” which protects documents and
tangible things prepared “in anticipation of litigation or for trial” unless the party seeking
production demonstrates “substantial need of the materials in the preparation of the party's
case,” and that they are “unable without undue hardship to obtain the substantial equivalent
of the materials by other means.” 	E.g., United Coal Companies v. Powell Const. Co.,
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839 F.2d 958, 966 (3d Cir. 1988) (quoting the rule). Smithfield has alleged that the Disputed
Documents are either subject to the attorney-client privilege or are protected work product
and as such are immune from discovery.
It is well-established that the attorney-client privilege constricts the truth-finding
process and is therefore to be construed narrowly. 	E.g., Westinghouse Electric Corp. v.
Republic of the Phillippines, 951 F.2d 1414, 1423 (3d Cir. 1991). The party asserting the
privilege bears the burden of showing (1) the asserted holder of the privilege is or sought to
become a client; (2) the person to whom the communication was made (a) is a member of the
bar of a court, or his subordinate and (b) in connection with this communication is acting as
a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by
his client (b) without the presence of strangers (c) for the purpose of securing primarily either
(i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and
not (d) for the purpose of committing a crime or tort; and (4) the privilege has been
(a) claimed and (b) not waived by the client. 	E.g., Rhone-Poulenc Rorer Inc. v. Home
Indem. Co., 32 F.3d 851, 862 (3d Cir. 1994) (citing In re Grand Jury Investigation, 599 F.2d
1224, 1233 (3d Cir. 1979)). 	See also Greene, Tweed of Delaware, Inc. v. Dupont Dow
Elastomers, LLC, 202 F.R.D. 418, (E.D. Pa. 2001). As noted above, part of this burden is
proving that the privilege has not been waived.
Many of the Disputed Documents represent communications to or from defendant
Michael Cole, Smithfield’s General Counsel (“Cole”), whom Smithfield concedes also held
for some undefined period the position of Secretary (see Answer to Amended Compl. ¶ 8),
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4 Smithfield identifies both Poulson and Cole as holding, inter alia, the title of “General
Counsel.” Defendants’ Memorandum in Opp. To Debtor’s Motion to Compel Production of
Documents (“Smithfield Mem.”) at 5, 7. At least one document indicates that Cole’s titles at one
time included Vice President, Secretary, and Deputy General Counsel. See SFD15424 (document
retention memo).
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or 	Richard 	Poulson, 	Smithfield’s 	General 	Counsel 	and 	Executive 	Vice 	President
(“Poulson”).4 Where, as here, a corporation seeks to protect communication to or from an
attorney who serves the corporation in both a legal and business capacity, the corporation
must clearly demonstrate that the communication to be protected was given in the attorney’s
legal capacity, Teltron v. Alexander, 132 F.R.D. 394, 396 (E.D. Pa. 1990). 	Simply
describing these individuals as “in-house counsel” on the privilege log will be insufficient
given their dual roles unless the document establishes the involvement of legal counsel.
Moreover, only communications made for the express purpose of obtaining or
giving legal advice are protected. 	“What would otherwise be routine, non-privileged
communications between corporate officers or employees transacting the general business
of the company do not attain privileged status solely because in-house or outside counsel is
‘copied in’ on correspondence or memoranda.” Andritz Sprout-Bauer, Inc. v. Beazer East,
Inc., 174 F.R.D. 609, 633 (M.D. Pa. 1997). Indeed, as noted by one commentator:
No misconception seems to be more common among litigators asserting the
attorney-client privilege than the belief that if a document or draft has been
through the hands of a lawyer, it is thereby automatically privileged from
disclosure. If a lawyer is merely copied on documents prepared for reasons
other than obtaining legal advice, the privilege is erroneously asserted and will
not attach. 	Insulation from discovery cannot be so readily or fraudulently
obtained.
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Edna Selan Epstein, The Attorney-Client Privilege and the Work Product Doctrine 153-54
(3d ed. 1997).
As noted above, the work product doctrine protects documents and tangible things
prepared in anticipation of litigation or for trial. In determining whether a document was
prepared “in anticipation of litigation,” the appropriate inquiry is “whether in light of the
nature of the document and the factual situation in the particular case, the document can
fairly be said to have been prepared or obtained because of the prospect of litigation.”
Martin v. Bally's Park Place Hotel & Casino, 983 F.2d 1252, 1258 (3d Cir.1993). There must
be a “reasonable anticipation” of litigation, i.e., not merely a remote prospect or inchoate
possibility. “Rather, a party must show that there existed ‘an identifiable specific claim of
impending litigation when the materials were prepared.’” In re Gabapentin Patent Litigation,
214 F.R.D. 178, 183 (D. N.J. 2003); accord In re Grand Jury Investigation, 599 F.2d 1224,
1229 (3d Cir. 1979); Schmidt, Long & Assoc., Inc. v. Aetna U.S. Healthcare, Inc., 2001 WL
605199, at *4 (E.D. Pa. 2001). Moreover, the document must have been prepared for the
prospect of litigation and no other purpose. 214 F.R.D. at 184.
Finally, Rule 26(b)(5) places upon Smithfield as the party invoking the privileges,
a duty to properly describe the documents:
When a party withholds information otherwise discoverable under these rules
by claiming that it is privileged or subject to protection as trial preparation
material, the party shall make the claim expressly and shall describe the nature
of the documents, communications, or things not produced or disclosed in a
manner that, without revealing information itself privileged or protected, will
enable other parties to assess the applicability of the privilege or protection.
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5 Even if Smithfield had identified King as its counsel, the document does not pertain to a
fact told by the client in private but rather simply relays what happened at a meeting that included
Mike Queen, President of Pennexx and Pennexx counsel John Gallagher, as well as Ellis Shore
(unidentified) and David Rosenfeld, identified as “bankruptcy counsel.” Communications between
corporate counsel and individuals outside the corporation will not ordinarily be privileged even if
the information is eventually conveyed by the attorney to the client. Union Carbide Corp. v. Dow
Chemical Co., 619 F.Supp. 1036, 1047 ( D. Del.1985).
6 Moreover, the subject matter of the memo is clearly the Pennexx Litigation, to which
Smithfield was not a party, belying the assertion that Smithfield created the memo in anticipation
of litigation. Smithfield failed to provide any factual basis that, at the time this memo was written,
there was a reasonable anticipation of litigation against Smithfield.
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Fed. R. Civ. P. 26(b)(5). Applying these principles, to the Disputed Documents submitted
in camera, along with the descriptions found in the privilege log and Smithfield’s
memoranda, I make the following findings:
1. SFD3721-22: This memo from Steven B. King to “File,” dated August 31, 2002,
re: “Asousa litigation” describes a meeting attended by the writer on July 31, 2002. While
the privilege log describes this as a “communication relating to legal strategy,” it fails to
identify Steven King as its counsel or Smithfield as a recipient. I cannot therefore find an
attorney-client communication subject to the privilege.5 The fact that the document is
marked “Privileged and Confidential Attorney Work Product,” without more, does not
establish that it is protected as such. Work product must be created by a party or its agent.
Smithfield’s failure to identify Mr. King precludes a finding of work product.6
2. SFD14895-98: A series of e-mails from Poulson, instructing outside counsel to
take certain actions or make statements to Pennexx Foods, Inc. (“Pennex”) on behalf of
Smithfield. 	Given the purpose of the privilege, to protect the confidential relationship
between attorney and client, it is not surprising that “whenever the communication is
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intended by the client to be made public or revealed to third persons the element of
confidentiality is destroyed and with it the privilege.” In re Langswager, 392 F.Supp. 783,
786 (N.D. Ill. 1975); accord United States v. Teller, 255 F.2d 441, 447 (2d Cir. 1958)
(“communications between an attorney and his client, though made privately, are not
privileged if it was understood that the information communicated in the conversation was
to be conveyed to others”). This clearly expressed intent to convey information to a third
party destroys the asserted attorney-client privilege. 	Nor has Smithfield indicated that
these e-mails were created in anticipation of litigation as required for protection under the
asserted work-product doctrine.
3. SFD15207: This is a memo/letter to Smithfield employees outlining its document
retention policy in light of pending shareholder class action litigation. While such documents
are typically created by counsel in preparation for litigation, I am not convinced that
something as routine as a document retention policy falls within the work product doctrine
or attorney-client privilege. See Doe v. District of Columbia, 230 F.R.D. 47, 55-56 (D. D.C.
2005) (finding that document retention policies fall within the purview of discoverable
material under 26(b)(1)’s allowance of “discovery regarding any matter, ... including the
existence, description, nature, custody, condition, and location of any ... documents.);
Nike, Inc. v. Brandmania.com, Inc., 2002 WL 32348549, *(E.D. Pa. Oct. 7, 2002)
(“Document retention policies have been held discoverable in other cases”) (citations
omitted). 	Smithfield has failed to indicate why the document retention policy should be
protected in this case.
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7 Marsh is a “risk and insurance services firm” providing services such as: “global risk
management, risk consulting, insurance brokering, financial solutions, and insurance program
management 	services 	for 	businesses, 	public 	entities, 	associations, 	professional 	services
organizations, and private clients in over 100 countries.” See http:/www.marsh.com.
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4. SFD15418-19: The privilege log labels these e-mail exchanges between Smithfield
employees and individuals at “marsh.com” 7 as “communications with agents of outside
counsel . . . for future litigation.” While the attorney-client privilege can be extended to the
client’s communication with an attorney’s agent, like the communications with the attorney
himself, the communication must be for the purpose of obtaining legal advice from the
attorney. E.g., In re Grand Jury Proceeding, 79 Fed.Appx. 476, 477 (2d Cir. 2003 (Oct 31,
2003) (citing United States v. Kovel, 296 F.2d 918 (2d Cir.1961)); accord HPD Laboratories,
Inc. v. Clorox Co., 202 F.R.D. 410, 414 (D. N.J. 2001). 	I cannot determine that these
exchanges were for the purpose of Smithfield obtaining legal advice from its outside counsel,
Hunton & Williams LLP (“H&W”). 	The privilege log’s ambiguous reference to future
litigation is insufficient to meet the reasonable anticipation standard required for work
product protection, nor is there any reference to litigation in the e-mails themselves.
Moreover, the subject matter of the e-mails is obtaining insurance from Marsh based
upon an appraisal. The only appraisal during this time period appears to be that which was
performed by Valuation Research. 	As discussed below, Smithfield engaged in a blatant
subterfuge, i.e., using H&W as a mere conduit, in order to make its relationship with
Valuation Research appear privileged. Infra Finding No. 40. As such, I am dubious of the
privilege log’s assertion, unsupported by anything else, that Marsh was an agent of H&W.
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8 These e-mails do not sufficiently indicate that they were prepared in anticipation of
litigation, notwithstanding the ambiguous reference to “possible litigation” in the privilege log.
While Cole does make a closing remark about hearing that Pennexx creditors, including Debtor, are
“coming after” Smithfield, this is made only after a consensus was reached as to how to handle the
transfer of funds to Pennexx. His comment appears at best to be an afterthought rather than the sole
impetus of this discussion, as required for the work product doctrine to apply.
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5. SFD15424: Duplicate of SFD15207. Supra Finding No. 3.
6. SFD15670-73, SFD15701-03, SFD15717-19, SFD15738-40, SFD15757-58,
SFD16387-88, SFD16389-90: 	This is a series of related e-mails on the subject of how
to handle transfers of funds to Pennexx. 	Smithfield has failed to meet its burden of
establishing that any attorney-client privilege has not been waived by the inclusion or
forwarding of the e-mails to an individual at Pennexx and/or Kronick Kalada Berdy & Co.
P.C., certified public accountants, specifically Joseph Beltrami (“Beltrami”). 	While
Smithfield asserts that Beltrami is Chief Financial Officer of co-defendant Showcase Foods,
Inc., the communications are not sent to a smithfieldfood.com address like those sent to other
Smithfield employees or a domain with the name Showcase Foods. Compare SFD00016471
(e-mail from Joseph Beltrami @showcase-foods.com). The pennexx.com and kkbcpas.com
addresses for Beltrami imply that he holds other positions with these third parties, and the
e-mails themselves do not establish that they are addressed to Beltrami in his capacity as
Showcase Foods CFO. Nor has Smithfield shown that these e-mails were sent in anticipation
of litigation so as to transform them into work product.8
7. 	SFD16466-68: 	This is a series of e-mails, two of which have been redacted.
The redacted e-mails, while copied to Cole, do not make clear whether they are sent to Cole
in his capacity as General Counsel or as Secretary of Smithfield. 	Nor is there a request,
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9 Liegel appears on many of the Disputed Documents, yet he is never identified other than
as an employee of Packerland, and Smithfield makes no attempt to identify his role in the Pennexx
transactions discussed in these documents. A corporate party asserting the attorney-client privilege
over communication between its attorney and another corporation cannot meet its burden by
merely identifying the second corporation as a related affiliate or subsidiary. Moore v. Medeva
Pharmaceuticals, Inc., 2003 WL 1856422, *3 (D. N.H. 2003). Indeed, as noted by the Ninth Circuit
Court of Appeals:
[The United States Supreme Court in] Upjohn rejected a mechanistic approach
to 	applications 	of 	the 	attorney-client 	privilege 	in 	the 	corporate 	context.
Thus, communications between employees of a subsidiary corporation and counsel
for the parent corporation, like communications between former employees and
corporate counsel, would be privileged if the employee possesses information critical
to the representation of the parent company and the communications concern matters
within the scope of employment.
Admiral Ins. Co. v. U.S. Dist. Court for Dist. of Arizona, 881 F.2d 1486, 1493 n.6 (citing, Upjohn v.
United States, 449 U.S. 383, 101 S.Ct. 677 (1981)). Having provided no information to the Court
regarding Liegel, Smithfield has failed to demonstrate that communications between H&W and
Liegel are critical to H&W’s representation of Smithfield.
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explicit or implicit, for legal advice apparent in these documents so as to support the alleged
attorney-client privilege.
8. 	SFD16469-70: 	These are e-mails between Craig Liegel (“Liegel”), whom the
parties agree is the CFO of Packerland, a subsidiary of Smithfield, and H&W attorneys.
Smithfield employees are copied on this e-mail. Even assuming communications from Liegel
fall within any attorney-client privilege between H&W and Smithfield,9 the subject of these
e-mails is an appraisal of Pennexx assets by Valuation Research. While Liegel states that
H&W is the “party engaging [Valuation Research’s] services,” other e-mails make it
abundantly clear that this was a “ghost-hiring” on Smithfield’s behalf to create the
appearance of attorney-client privilege over the appraisal, as was H&W’s subsequent receipt
and “laying of hands” upon the report. Infra Finding No. 40. Liegel’s communication with
H&W is not for the purpose of Smithfield securing legal advice/services, and the privilege
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does not attach. As to the asserted work product doctrine, nothing in these e-mails indicates
they were prepared in anticipation of litigation.
9. SFD16471: This e-mail from Beltrami (jbeltrami@showcase-foods.com) includes
Curtis Carlson (H&W) and Cole among seven addressees. There is nothing in this document
from which I can discern even an implicit request for legal advice or services. Rather, it
appears to simply copy outside counsel on a routine business discussion, i.e., the status of an
insurance payment. 	Nor is it clear this is being sent to Cole in his capacity as General
Counsel.
10. 	SFD16562-570: 	This is a draft appraisal report authored by Valuation
Research and addressed to H&W. As discussed below, contemporaneous e-mails evidence
that H&W’s involvement in Valuation Research’s work was artifice, used solely to create
the appearance of the now-asserted attorney-client privilege. 	Infra Finding No. 40.
Moreover, Smithfield’s privilege log identifies this report as sent to Beltrami, but not in what
capacity, therefore failing to meet its burden of showing non-waiver of the “privilege.”
Supra Finding No. 6. 	Finally, I note that the privilege log describes the report as an
attachment to a “communication with in-house counsel.” This is but one of many Disputed
Documents so identified. “Attachments which do not, by their content, fall within the realm
of the privilege cannot become privileged by merely attaching them to a communication with
the attorney. To permit this result would abrogate the well-established rule that only the
communications, not underlying facts, are privileged.” Sneider v. Kimberly-Clark Corp.,
91 F.R.D. 1, 4 (N.D. Ill. 1980. Accord O'Connor v. Boeing North American, Inc., 185 F.R.D.
272, 280 (C.D. Cal. 1999); Leonen v. Johns-Manville, 135 F.R.D. 94, 98 (D. N.J. 1990).
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10 This is another document described as an “attachment” to a communication to counsel.
Supra Finding No. 10. In addition, the log also indicates that this document was sent to Robert F.
Urell, whom Smithfield fails to identify notwithstanding its burden to prove non-waiver.
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While the appraisal report states Valuation Research’s belief that it will be used as a
basis for, inter alia, “potential litigation purposes,” this reference is too vague to support
a claim of work product. Gabapentin, 214 F.R.D. at183. Moreover, the assertion conflicts
with Valuation Research’s proposal letter, which states only that the report will be used only
for “management planning” purposes. Infra Finding No. 32. Given the artifice surrounding
the Valuation Research appraisal, I find it more likely that the reference to “potential
litigation,” like H&W’s involvement, was added solely to give rise to a colorable claim that
the report is a protected document.
11. SFD16728-31: This is a four-page financial statement, titled “Pennexx Foods,
Inc. - Reconciliation of CAR amounts.” The privilege log describes this document as being
authored by Pennexx and sent to Smithfield’s Vice-President and CFO, Daniel Stevens
(“Stevens”), with copies to Cole and outside counsel. Smithfield provides no explanation
as to how a document from Pennexx can fall within any attorney-client privilege between
Smithfield and its counsel.10
12. SFD17623-26: This is an engagement letter from Ernst and Young LLP (“E&Y”)
to John Schweiters, a board member of Smithfield. Smithfield describes this letter, along
with a string citation of other documents, as a communication between Smithfield and
“agents of outside counsel.” Smithfield Mem. at 8 n.6. However, the letter itself explicitly
“confirms [E&Y’s] understanding of the scope and terms of Smithfield’s engagement,” thus
indicating that it was Smithfield, not outside counsel that engaged E&Y. The privilege log
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indicates that the letter was an attachment to a communication with Cole, but nothing
indicates it was sent to him in his legal capacity. Nor would Smithfield’s transmittal of the
letter to in-house counsel change the otherwise unprivileged nature of the underlying
document. Supra Finding No. 10. Finally, while the letter bears the designation “Attorney
work-product” the letter is not so designated on the privilege log. In any case, a claim of
work product is inconsistent with the letter itself, which explicitly makes clear that E&Y
cannot, under the Sarbanes-Oxley Act of 2002, provide expert services for the audit client
or its legal representative for the purposes of litigation and requires that Smithfield
acknowledge that there is no pending or threatened litigation arising out of the engagement
issue.
13. 	SFD17627-29: 	This is a series of e-mails, some redacted, discussing (1) the
request of Pennexx’s President Mike Queen for directors and officers insurance in regards
to a pending class action against Pennexx and Smithfield and (2) the status of an escrow
account. While the parties to the redacted e-mails include Cole and Poulson, it is unclear
whether they are being copied in their business or legal capacity. Smithfield has failed to
show the applicability of the attorney-client privilege to the redacted e-mails. In addition,
while Cole mentions that an investigation of Pennexx might be useful to Smithfield in the
pending class action litigation, this does not satisfy the requirement that 	protected work
product be prepared solely in anticipation of litigation or for trial. This statement is at best
an afterthought to the main thrust of the redacted e-mails, D&O insurance and status of an
escrow account.
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11 This alone is insufficient to endow these documents with attorney-client privilege.
See supra finding No.10.
12 I gather this from statements in the memo, as Smithfield does not bother to identify
McClain.
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14. SFD19195-19217, SFD19598-99, SFD19600-01: The privilege log identifies
these documents as “attachments to communication” with in-house counsel and indicates
Cole as the sole recipient.11 The documents themselves appear to be a collection of schedules
and exhibits and draft contracts. Smithfield asserts that the authors of these documents are
Pennexx or Deborah A. Bentley (“Bentley”), whose identity is not explained. Smithfield’s
memorandum describes these documents generally, along with others, as drafts of documents
sent to attorneys for legal advice. Smithfield Mem. at 4 n.4. Without more detail, there are
two possible interpretations: (1) Smithfield received these documents from Pennexx and/or
Bentley and simply forwarded them to in-house counsel, which does not give rise to the
privilege, Snieder, 91 F.R.D. at 1; or (2) these documents represent Smithfield’s changes to
Pennexx drafts which it then submitted to counsel for legal advice, which would be
privileged. As Smithfield has the burden of showing the attorney client privilege, its failure
to be more descriptive is fatal to its claim of privilege.
15. SFD23478-85, SFD23486-93: These documents are two drafts (dated 6/1/2003
and 6/2/2003, respectively) of a memorandum written by Robert McClain (“McClain”),
who appears to be an employee of Smithfield.12 The later-dated draft bears the heading
“Prepared at Michael Cole’s request for possible litigation.” This designation is belied by
the introductory paragraph which indicates that McClain wrote the document on his own
initiative after reading certain affidavits presented to him by Cole from Pennexx employees
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13 The author and addressee on the e-mail itself belies the privilege log’s description of this
document as between in-house and outside counsel. Assuming Smithfield meant a communication
between in-house counsel, I have given Smithfield the benefit of the doubt that Poulson and/or Cole
were acting as General Counsel in this matter.
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and/or officers that made what McClain felt were slanderous statements. 	Moreover,
Smithfield provides no background facts or information from which the Court can construe
McClain to be talking to Cole in Cole’s capacity as in-house counsel for the purpose of
providing legal advice to Smithfield. 	The header’s reference to a “possible litigation”
purpose, in addition to being self-serving, is simply too vague to support a claim of work
product. 	No other explanation is provided, nor does the document itself mention any
specific, identifiable claim of impending litigation. 	Gabapentin Patent Litigation, supra,
214 F.R.D. at 183.
16. SFD27706: Duplicate copy of document retention memo. See Supra Finding
No. 3.
17. SFD29707: E-mail from Poulson to Cole instructing Cole to consult with outside
counsel regarding sending Pennexx notice of a default under a credit agreement. Outside
counsel is not addressed on this e-mail. However, it is likely that Poulson and/or Cole given
the subject of this communication, are acting in a legal capacity so as to implicate the
attorney-client privilege.13 This document is protected.
18. SFD34824: E-mail from Smithfield employee to numerous recipients, including
Cole and Poulson. I cannot ascertain that Cole or Poulson are being addressed in their legal
capacity or whether this communication is in furtherance of legal advice. 	In any case,
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Beltrami is also a recipient, which appears to obviate any asserted attorney-client privilege.
Supra Finding No. 6.
19. 	SFD34829-30: 	Series of e-mails between Cole and Poulson, with copies to
Smithfield President, Larry Pope (“Pope”) and outside counsel. The subject of the e-mails
is a letter from an attorney referring to a potential claim against Smithfield, unrelated to the
instant litigation. The subject matter and recipients sufficiently indicate an attorney-client
communication for the purpose of securing legal advice or services. 	This document is
protected by the attorney-client privilege.
20. 	SFD34936-44: 	The privilege log identifies this document, a draft agreement
between Smithfield and Pennex, as an “attachment to communication between outside
counsel, in-house counsel, and others.” Smithfield’s memorandum describes this generally
in a string citation along with other documents as drafts of documents sent to attorneys for
legal advice. Smithfield Mem. at 4 n.4. The log identifies the authors as Smithfield and
Pennexx and recipients as Poulson, Cole, and H&W attorneys. I can construe this document
as either (1) from Pennexx and forwarded by Smithfield to counsel, which does not give rise
to the privilege, Snieder, 91 F.R.D. at 1; or (2) a draft representing Smithfield’s changes,
submitted to counsel for legal advice, which would be arguably be privileged. Supra Finding
No. 14. 	Again, Smithfield’s failure to be more precise is fatal to its claim of privilege.
Nor does Smithfield provide any information in support of its claim of work product, i.e., that
the document was prepared in anticipation of litigation.
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21. SFD35120: The privilege log identifies this as a draft letter to Pennexx president
prepared by outside counsel for Pope’s signature. 	Smithfield’s intention to send this to
Pennexx obviates the requisite confidentiality. See Finding No. 2.
22. SFD35262: 	This is an e-mail from Cole to Poulson and outside counsel that
forwards an excerpt from a January 30, 2003 Pennexx press release. I cannot ascertain from
Cole’s commentary to the excerpt whether this communication is for the purpose of obtaining
legal advice or services. The privilege log merely identifies this as a communication between
in-house and outside counsel. This is insufficient to demonstrate the privilege. Nor does
Smithfield provide any basis whatsoever to support the claim of work product.
23. SFD35883: This is an e-mail from an H&W attorney to Poulson that references
a “clean and redlined version of our updated Pennexx analysis.” 	The attachment is not
included, but it is described in the privilege log as “research under Pennsylvania law.”
While the attachment (not provided in the in camera submission) might be protected, the
e-mail 	itself 	provides 	no 	legal 	analysis 	or 	advice 	nor 	discloses 	any 	confidential
communication from Smithfield; it is therefore not subject to the attorney-client privilege.
Nor is there anything in the e-mail itself which indicates applicability of the work product
doctrine to the e-mail.
24. SFD35983: This is an e-mail from Tracey Clontz on behalf of Pope, addressed
to Cole, Poulson, and other Smithfield executives. While the subject line states “Memo to
Pennexx File,” the memo is not attached and the body of the e-mail is blank. 	There is
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nothing here from which I can determine the asserted attorney-client privilege is applicable
to the e-mail.
25. SFD36007-10: Duplicate copies of SFD14895-98. Supra Finding No. 2.
26. SFD00036011: This is an e-mail from Poulson to outside counsel, with copy to
Stevens. I find that the body of the e-mail sufficiently evidences an explicit request for legal
services, with no outside parties included in the communication, and is therefore protected
by the attorney-client privilege.
27. 	SFD36028: 	This is a one-sentence e-mail from Poulson to Cole regarding a
Pennexx bond sale. It does not sufficiently indicate that either individual is acting in their
legal capacity so as to trigger any attorney-client privilege. Nor is there any indication that
it was created in anticipation of litigation.
28. SFD36037: This is a blank e-mail from Tracey Clontz to numerous Smithfield
recipients and Richard Vesta, president of Packerland. 	The subject line states”Pennexx
Document Retention Memo from Mike Cole.” While the referenced memo is not attached
as part of the in camera submission, this e-mail is dated August 18, 2003, the same document
date identified by the privilege log for the document retention memo discussed above.
See supra Finding No. 3. I have already determined that Smithfield failed to show that that
document is protected. Id. The e-mail itself is blank and merely operates as a transmittal
vehicle for the memo.
29. SFD36330-31: Duplicate of SFD16469-70. Supra Finding No. 8.
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14 The privilege log recipients seem at odds with the document description in Smithfield’s
memorandum as a draft agreement sent to outside counsel for legal advice. Smithfield Mem. at
4 n.4.
15 There are other recipients whom Smithfield fails to identify so as to meet its burden of
showing non-waiver of the privilege: Jeffrey Johnson, Mark Linzmeir, Jeff Deel, Mike Ragsdale,
Mike Kovach, Tracey Turner. 	There are also individuals at related entities whose roles are
unspecified, precluding me from determining non-waiver of the privilege: 	Richard Vesta
(Packerfield) and an individual at Moyer Packing Co. Supra Finding No. 8 n.9.
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30. SFD36485-88: This document is an unexecuted “assignment agreement” between
Showcase and unnamed party(ies). 	The privilege log describes it as an “attachment to
communication” between outside counsel and others, but the author is named as Showcase
and the recipients are Stevens and another Smithfield employee.14 A communication
between attorney and client is not apparent. Nor is there any indicia that this document was
prepared in anticipation of litigation or for trial.
31. SFD40807-15: Duplicate of SFD16562-570. Supra Finding No. 10.
32. SFD41020-21,SFD41022-26: 	E-mail from Liegel to numerous individuals
forwarding proposal letter from Valuation Research, and the proposal letter itself,
respectively. 	Beltrami (jbeltrami@pennexx.com), among others,15 is included as an
addressee on the e-mail. Absent any explanation, Smithfield fails to show non-waiver by
this disclosure to others. Supra Finding No. 6. Neither the e-mail nor the proposal letter
indicate they were prepared in anticipation of litigation, and in fact the letter states that
Smithfield’s engagement of Valuation Research is for “management planning purposes.”
Finally, 	Smithfield 	has 	already 	voluntarily 	produced 	the 	e-mail 	(SFD41020-21).
Infra Finding No. 40 (SFD42084-85 - unredacted portion).
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33. SFD41042-44: “Memo to file” on Ernst & Young (“E&Y”) letterhead regarding
E&Y’s visit to Pennexx. The privilege log identifies the author as “E&Y engagement team”
and recipients as Stevens ( Smithfield CFO and VP) and George Farragher (unidentified),
belying any attorney-client communication. 	Even giving credence to the privilege log
description of the memo as an “attachment to communication” with in-house and outside
counsel, merely forwarding the E&Y letter to counsel does not transform it into a privileged
document. Supra Finding No. 10.
34. SFD41052-55: Duplicate copies of SFD16389-90. Supra Finding No. 6.
35. 	SFD41094, SFD41106: 	E-mails from a Smithfield employee to several
recipients, including Cole and outside counsel. 	While the privilege log describes these
generally as communications with in-house and outside counsel, there is insufficient
information for the Court to determine whether these communications are for the purpose of
Smithfield securing legal advice or services.
36. SFD41873: Duplicate of SFD35983. Supra Finding No. 24.
37. SFD41924-25: This is a series of e-mails, most of which are redacted, and which
is for the most part a duplicate of SFD17627-29. Supra Finding No. 13. This copy, however,
ends with an e-mail from Stevens to Cole not found in the prior document. I do not find that
this final e-mail adds anything which would change my prior finding: Smithfield has failed
to show the applicability of the attorney-client privilege or work product doctrine to these
e-mail exchanges.
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38. SFD41936: The redacted email in this exchange is from Beltrami to Stevens and
outside counsel. From Beltrami’s e-mail address, jbeltrami@showcase-foods.com, I infer
he is acting in his capacity as a Showcase officer. The topic of the e-mail suggests that it is
related to a matter upon which outside counsel was advising Smithfield. 	Supra Finding
No. 19. Finally, there is an explicit request for legal advice. I therefore find the attorney-
client privilege protects the redacted e-mail.
39. 	SFD42080-81: 	The redacted email in this exchange was sent to, inter alia,
Beltrami (jbeltrami@pennexx.com) and an individual at Moyer Food Packing, a subsidiary
of Smithfield. As Smithfield fails to address in what capacity Beltrami is acting or the role
of the Moyer employee, it fails to show that the asserted attorney-client privilege has not
been waived.
40. 	SFD42082-85: This document consists of a series of e-mails, the majority of
which have been redacted. 	While the redacted e-mails include discussions between
Smithfield and its outside counsel, Liegel is included as an addressee or has been forwarded
the communication. 	Smithfield has failed to show that the inclusion of Liegel does not
destroy the attorney-client privilege. Supra Finding No. 8, n.9.
More significantly, the redacted e-mails evidence what can only be described as a
stratagem to create the appearance of attorney-client privilege. The unredacted e-mails make
it abundantly clear that Valuation Research submitted to Liegel a proposal to conduct an
appraisal of the Pennexx plant on behalf of Smithfield. Liegel forwarded the proposal to
Stevens (Smithfield). From this, and from the proposal itself, supra Finding No. 32, it is
clear that the engagement of Valuation Research was for a business purpose (“management
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16 In this, the privilege log is inconsistent with the assertion in Smithfield’s memoranda, that
it created the document. Smithfield Mem. at 4 n.2.
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assessment”) rather than to assist H&W in its legal representation of Smithfield as asserted.
See Smithfield Mem. at 9.
Notwithstanding this reality, the redacted e-mails show Cole forwarding the proposal
to H&W attorneys with the following questions: “Should the lawyers be involved [with the
Valuation Research appraisal] to keep it privileged?” 	In response, H&W attorney Peter
Partee responds:
. . . Curtis and/or I should have discussions with the appraiser beforehand, and
if you prefer, H&W can retain the appraiser directly for Smithfield’s benefit
in the hope that we can keep the appraisal privileged. 	Even if Smithfield
retains the appraiser, we can be the recipient of the appraisal, then forward it
to you, which also should help the case for maintaining it as privileged.
SFD42082-83. The purpose of the redacted communication is not to obtain H&W’s legal
advice or services. To the contrary, these redacted e-mail exchanges show that H&W was
brought into the Valuation Research engagement solely to “lay hands” upon the work of
Valuation Research in an attempt to create an attorney-client privilege around what would
be an otherwise an unprivileged appraisal report. The privilege clearly does not attach in this
situation. Epstein, supra, 153-54.
41. 	SFD42905-910: 	The privilege log identifies this document as a chart
summarizing Pennexx’s assets, created at the request of counsel. The log, however, also
identifies the author of this chart as Pennexx16 and the only recipient as Jeffrey A. Deel, who
is unidentified. 	There is no basis for Smithfield’s assertion of attorney-client privilege.
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Neither the log nor Smithfield’s brief indicates that the chart was prepared in anticipation of
litigation, belying its invocation of the work product doctrine.
42. SFD45554-59: This is a series of e-mails between H&W attorneys and Stevens
and another Smithfield employee conveying legal advice regarding an auction of Pennexx
property. It is protected by the attorney-client privilege.
43. SFD45560: This e-mail is from an H&W attorney to Cole, but it merely conveys
an order that was submitted to the United States District Court for the Eastern District of
Pennsylvania and sets forth what third parties arriving at the anticipated auction will be told.
The intent to relay the information in this communication to the general public destroys any
attorney-client privilege. Supra Finding No. 2.
CONCLUSION
For the reasons stated above, I find that Smithfield has met its burden of proving
that the following Disputed Documents are protected by the attorney-client privilege:
SFD34829-30; 	SFD36011; 	SFD29707; 	SFD41936 	(redacted 	portion 	only); 	and
SFD45554-59. 	As to the remaining documents, Smithfield has not met its burden of
showing either attorney-client privilege or work product. It shall produce them to Debtor
within ten days.
An Order consistent with this Memorandum Opinion shall issue.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
Dated: 	November 17, 2005
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UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 11
:
ASOUSA PARTNERSHIP, 	: 	Bankruptcy No. 01-12295DWS
:
Debtor. 	:
:
ASOUSA PARTNERSHIP, 	: 	Adversary No. 04-1012
:
Plaintiff, 	:
:
v. 	:
:
SMITHFIELD FOODS, INC., a Virginia Corporation, :
SHOWCASE FOODS, INC., a Delaware Corporation, :
JOSEPH W. LUTER, IV, MICHAEL H. COLE, 	:
:
Defendants. 	:
ORDER
AND NOW this 17th day of November 2005, upon consideration of Debtor’s Motion
to Compel Production of Documents (the “Motion”) and the response thereto of Smithfield
Foods, Inc., Showcase Foods, Inc., Joseph W. Luter, IV and Michael Cole (collectively
“Smithfield”), and for the reasons stated in the accompanying Memorandum Opinion;
It is hereby ORDERED that the Motion is GRANTED In Part and DENIED in
Part. 	Smithfield shall produce to Debtor, in unredacted form, within ten days following
entry of this Order all of the documents submitted to the Court for in camera review except
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Adversary No. 04-1012
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for: 	SFD34829-30; SFD36011; SFD29707; SFD41936 (redacted portion only); and
SFD45554-59.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
Copies to:
Steven M. Coren, Esquire
KAUFMAN, COREN, RESS & WEIDMAN, P.C.
1525 Locust Street, 17th Floor
Philadelphia, PA 19102
Milind M. Shah, Esquire
REED SMITH, LLP
2500 One Liberty Place
1650 Market Street
Philadelphia, PA 19103-7301
Edward J. Fuhr, Esquire
Eric H. Feiler, Esquire
Jessica M. Erickson, Esquire
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219-4074
Dave P. Adams, Esquire
Office of the U.S. Trustee
833 Chestnut Street
Suite 500
Philadelphia, PA 19107
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