UNPUBLISHED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unpublished per curiam opinion.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Unpublished opinions are not binding precedent in this circuit.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