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USA v. KEYSTONE SANITATION CO.

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA


October 19, 1994

USA, plaintiff
v.
KEYSTONE SANITATION COMPANY, INC.; KENNETH F NOEL, Formerly doing business as Keystone Sanitation Company; ANNA M. NOEL, Formerly doing business as Keystone Sanitation Company; ARCATA GRAPHICS FAIRFIELD, INC.; C & J CLARK AMERICA, INC.; ESAB GROUP, INC.; GENLYTE GROUP, INC., THE; HANOVER BRONZE AND ALUMINUM FOUNDRY, INC.; KEMPER INDUSTRIES, INC.; R.H. SHEPPARD COMPANY, INC.; SKF USA, INC.; ARCATA GRAPHICS FAIRFIELD, INC.; C & J CLARK AMERICA, INC.; THE ESAB GROUP, INC; THE GENLYTE GROUP, INC; HANOVER BRONZE & ALUMINUM FOUNDRY, INC; R.H. SHEPPARD, CO., INC; AND SKF USA. INC.; ARCATA GRAPHICS FAIRFIELD, INC.; C & J CLARK AMERICA, INC.; THE ESAB GROUP, INC; THE GENLYTE GROUP, INC; HANOVER BRONZE & ALUMINUM FOUNDRY, INC; R.H. SHEPPARD, CO., INC; AND SKF USA. INC.; (CONSISTING OF DEFENDANTS: ARCATA GRAPHICS FAIRFIELD, INC.; C & J CLARK, AMERICA, INC.; THE ESAB GROUP, INC.; THE GENLYTE GROUP, INC.; HANOVER BRONZE AND ALUMINUM FOUNDRY, INC.,; KEMPER INDUSTRIES, INC.; R.H. SHEPPARD, INC. AND SKF USA INC.); QUEBECOR PRINTING FAIRFIELD INC., defendant; BIGLERVILLE BOROUGH, unknown; QUEBECOR PRINTING FAIRFIELD INC.; counter-claimant; THIRD PARTY PLAINTIFFS- CONSISTING OF ARCATA GRAPHICS FAIRFIELD; GENLYTE INC.; HANOVER BRONZE & ALUMINUM FOUNDRY; C&J CLARK AMERICA; THE ESAB GROUP, INC; KEMPER INDUSTRIES; R.H. SHEPPARD, INC.; SKF USA, INC.; QUEBECOR PRINTING FAIRFIELD INC., third-party plaintiff v. D. K. HERSHEY; DAL-TILE CORPORATION; DEL-WOOD KITCHENS; DER-TEX OF PENNSYLVANIA; DILLSBURG BOROUGH DONALD B. SMITH; DOUBLEDAY BOOK & MUSIC CLUB, INC.; CADBURY BEVERAGES, INC., successor to and formerly doing business as Duffy Mott Company, Inc.; DUPLEX PRODUCTS, INC.; EARL BARNHART CONTRACTORS; EDDIE'S CLEANERS; EICHOLTZ COMPANY; EISENHART WALLCOVERINGS COMPANY; EMECO INDUSTRIES, INC.; CAPITAL PRODUCTS, also or formerly known as Ethyl Corp.; F & W BLACKTOPPING; FOSTER STONESEIFER SANITATION; GAM PRINTING; GERLACH INSULATION; GERMANTOWN REFUSE; GERMANY TOWNSHIP; GETTYSBURG COLLEGE; GETTYSBURG TRANSFORMER; GETTYSBURG TIMES, THE; GETTYSBURG, BOROUGH OF; GETTYSBURG MUNICIPAL AUTHORITY; GETTYSBURG AREA SCHOOL DISTRICT; GIANT FOODS; GOBRECHT TRASH REMOVAL, INC; GOODYEAR TIRE CENTER; GROVER HANSFORD; GUILDCRAFT, INC., Doing business as Guildcraft Furniture & Bedding; HANOVER BOROUGH; HANOVER BRANDS; HANOVER DIRECT, INC.; HANOVER GENERAL HOSPITAL; HANOVER INDUSTRIAL M; HANOVER INDUSTRIAL M; HANOVER INDUSTRIES; HANOVER KLONDIKE; HANOVER PEN; HANOVER POTATO PRODUCTS, INC.; HANOVER TRANSFER COMPANY; HANOVER WIRE CLOTH; HBH CONTRACTORS, INC.; HEIDELBURG TOWNSHIP; HENSON PAVING COMPANY, INC.; HERFF JONES YEARBOOKS; HILL'S STORES, Doing business as or f/d/b/a Hills Department Stores, Inc.; HOFFHEINS BROTHERS; HOSTETTER CONSTRUCTION CORP.; INLAND CONTAINER; JAMESWAY CORPORATION; JOHN JACOBS; H. M. KELLEY, INC. TRUCKING; ROBERT A. KINSLEY, INC.; K-MART CORP.; KNOUSE FOODS COOPERATIVE; L.M. KLUNK & SONS; LEINHART BROTHERS FURNITURE; LEMOYNE, BOROUGH OF; LIONEL KIDDIE CITY; LITTLESTOWN LAUNDRY; LITTLESTOWN BOROUGH; LITTLESTOWN PATTERN WORKS; LITTLESTOWN HARDWARE & FOUNDRY COMPANY, INC.; LOWE'S HOME CENTERS, INC.; MASTER ROOFERS, INC.; MCCLARIN PLASTICS; MCSHERRYSTOWN BOROUGH OFFICE; MENELLAN TOWNSHIP; METROPOLITAN EDISON; MILLER CHEMICAL AND FERTILIZER CORP.; MOBIL OIL CORP., Doing business as or f/d/b/a Electro-Phosphorus Co.; MONTGOMERY COUNTY SANITATION, for itself and as successor to Lake Forest East Refuse Company; GERMANTOWN REFUSE CORPORATION; MONTGOMERY VILLAGE REFUSE INC.; MORTON BUILDING PLANT; MOUNT PLEASANT TOWNSHIP; NEIDERER SANITATION; NELL'S INC.; NEVIN L. BARNHART CONTRACTORS; NEW OXFORD MUNICIPAL AUTHORITY; NEW OXFORD, BOROUGH OF; OXFORD TOWNSHIP MUNICIPAL BUILDING; OXFORD CONTAINER COMPANY; COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF ENVIRONMENTAL RESOURCES; COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF ENVIRONMENTAL RESOURCES, BUREAU OF STATE PARKS, CODORUS STATE PARK; COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF TRANSPORTATION; COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF MILITARY AFFAIRS; COMMONWEALTH OF PENNSYLVANIA, PARADISE TOWNSHIP; PENN AUTO BODY SHOP; PENN TOWNSHIP; PENN TOWNSHIP WASTE WATER TREATMENT PLANT; PENN-MARR CASTINGS; RAY MAR ROOFING; REFUSE REMOVAL SERVICE; RENTAL UNIFORM SERVICE; J.F. ROHRBAUGH & COMPANY, INC.; ROUND HILL FOODS, INC.; SCHINDLER CORP.; SCHMUCKS; SCHUCHART OIL AND PROPANE; SEALED AIR CORPORATION, also, or formerly known as Jiffy Packaging Company; SENECA VALLEY REFUSE; SHEPHERD ALUMINUM PRODUCTS; SHERIDAN PRESS; SKETCHLEY SERVICES, INC., also or formerly known as Coyne and/or Rentex Corporation; SKI LIBERTY; SNYDER'S OF HANOVER, INC., formerly knows as Hanover Guest Quality, Inc.; SONOCO PRODUCTS COMPANY; SPECTRA-KOTE CORPORATION; SUPERIOR PLATING; LUMBER YARD, THE; THOMAS B. LAWVER; 3-D MANUFACTURING; TITUS TRASH REMOVAL; TRIMEN INDUSTRIES, INC.; UNION TOWNSHIP; UNITED DISPOSAL CORPORATION; U.S. SHOE CORP., successor to and f/d/b/a Freeman Shoe Company; UTZ POTATO CHIP COMPANY; VILLAGE DISPOSAL, INC.; WASTE MANAGEMENT OF PENNSYLVANIA; WESTINGHOUSE ELECTRIC CORP.; WILDASON ROOFING & REMODELING; YORK, CITY OF; YORK WASTE DISPOSAL, INC.; YORK GRAPHIC SERVICES, INC.; YORK SPRINGS, BOROUGH OF; THIRD PARTY DEFTS- GENERATORS AND TRANSPORTERS (CONSISTING OF ADVANCED DISPOSAL SERVICE & OTHER 3RD PARTY DEFTS EXCEPT KEYSTONE SANITATION, KENNETH NOEL & ANNA NOEL); THIRD PARTY DEFENDANT OWNER/OPERATORS (CONSISTING OF KEYSTONE SANITATION CO., KENNETH NOEL AND ANNA NOEL); FREEMAN SHOE COMPANY; GETTYSBURG HOSPITAL; SYLVANIA SHOE; EASTERN WASTE INDUSTRIES; J.A. MYERS BUILDING AND DEVELOPMENT, INC.; THIRD-PARTY DEFTS. ANDGROW FERTILIZER, INC., ET. AL. (CONSISTING OF: ANDGROW FERTILIZER, INC., BOROUGH OF EAST BERLIN, CONEWAGO TOWNSHIP, CRAMER-ZEIGLER TIRE COMPANY, GERMANY TOWNSHIP, J.F. ROHRBAUGH & COMPANY, INC., SCHMUCK COMPANY, INC., STONESIFER SANITATION SERVICE (NAMED AS FOSTER STONESIFER SANITATION) AND UNION TOWNSHIP); DOLLY MADISON INDIANA, INC.; (CONSISTING OF THIRD PARTY DEFTS. BOROUGH OF LEMOYNE, CAPITOL PRODUCTS CORPORATION, CITY OF YORK, CSX TRANSPORTATION, INC., DAL-TILE CORP., JURA SERVICES, INC. (FORMERLY KNOWN AS SKETCHLEY SERVICES, INC.), LITTLESTOWN HARDWARE & FOUNDRY COMPANY, INC. AND SPECTRA-KOTE CORPORATION), third-party defendant; KEMPER INDUSTRIES, INC., counter-claimant v. USA, counter-defendant; KEYSTONE SANITATION COMPANY, INC.; KENNETH F NOEL, Formerly doing business as Keystone Sanitation Company; ANNA M. NOEL, Formerly doing business as Keystone Sanitation Company, counter-claimant v. USA, counter-defendant; ARCATA GRAPHICS FAIRFIELD, INC., counter-claimant v. USA, counter-defendant; R.H. SHEPPARD COMPANY, INC., counter-claimant v. USA, counter-defendant; C & J CLARK AMERICA, INC., counter-claimant v. USA, counter-defendant; ESAB GROUP, INC., counter-claimant v. USA, counter-defendant; C & J CLARK AMERICA, INC., counter-claimant v. USA, counter-defendant; SKF USA, INC., counter-claimant v. USA, counter-defendant; ARCATA GRAPHICS FAIRFIELD, INC., counter-claimant v. USA, counter-defendant; KEYSTONE SANITATION COMPANY, INC.; KENNETH F NOEL, Formerly doing business as Keystone Sanitation Company; ANNA M. NOEL, Formerly doing business as Keystone Sanitation Company, counter-claimant v. USA, counter-defendant; HANOVER BRONZE AND ALUMINUM FOUNDRY, INC.; HANOVER BRONZE AND ALUMINUM FOUNDRY, INC., counter-claimant v. USA; USA, counter-defendant; ARCATA GRAPHICS FAIRFIELD, INC.; C & J CLARK AMERICA, INC.; ESAB GROUP, INC.; GENLYTE GROUP, INC., THE; HANOVER BRONZE AND ALUMINUM FOUNDRY, INC.; KEMPER INDUSTRIES, INC.; R.H. SHEPPARD COMPANY, INC.; SKF USA, INC., third-party plaintiff v. ADVANCED DISPOSAL SERVICE; AERO OIL COMPANY; AGRICULTURAL COMMODITIES, INC., Doing business as or f/d/b/a Agcom, Inc.; AGWAY PETROLEUM; AMERICAN NATIONAL CAN; AMES DEPARTMENT STORE; AMP INC.; ANDGROW FERTILIZER, INC.; ARENTZ ROOFING; ARISTOKRAFT, INC.; B & B AUTO BODY SHOP; B & K TRUCKING, INC.; BAIR WOODEN PRODUCTS; BALTIMORE GAS & ELECTRIC; BAUM & HERSH ASSOCIATION, INC.; BEELER BOX COMPANY, Doing business as or f/d/b/a Beeler Manufacturing; BERMUDIAN SPRINGS SCHOOL DISTRICT; BETHENERGY MINES CORPORATION, formerly operating as Bethlehem Mines Corporation; BIBB CO., INC., Doing business as or f/d/b/a Malcolm Spinning Co.; BIGLERVILLE SCHOOLS; UPPER ADAMS COUNTY SCHOOL DISTRICT; BIGLERVILLE BOROUGH; BLACK'S SUNOCO, INC.; BLUE BIRD FABRIC CORPORATION; BON-TON FOODS, INC.; BONNEAUVILLE BOROUGH; BOROUGH OF EAST BERLIN; BREAMS PRINT SHOP; BROOKS SHOE COMPANY; CAMBRIDGE RUBBER COMPANY, CLYDE A. WENSCHHOF, JR.; COLDSMITH ROOFING; COLONIAL SHOE COMPANY; COLONIAL FIBERGLASS; COLUMBIA GAS TRANSMISSION COMPANY; CONEWAGO TOWNSHIP; CONEWAGO CONTRACTORS, INC.; CONTINENTAL WIRE & CABLE COMPANY, also or formerly known as Anaconda-Ericson; COULSON HEEL COMPANY; CRAMER ZIEGLER TIRE COMPANY; CSX TRANSPORTATION, formerly known as, as successor to, Western Maryland Railway Company, third-party defendant; KEMPER INDUSTRIES, INC., counter-claimant v. USA, counter-defendant; KEMPER INDUSTRIES, INC., counter-claimant; KEMPER INDUSTRIES, INC., counter-claimant v. USA, counter-defendant; SCHINDLER CORP.; fourth-party plaintiff; WESTINGHOUSE ELECTRIC CORP., fourth-party defendant; R.H. SHEPPARD COMPANY, INC., counter-claimant v. USA, counter-defendant; C & J CLARK AMERICA, INC.; ESAB GROUP, INC.; GENLYTE GROUP, INC., THE; HANOVER BRONZE AND ALUMINUM FOUNDRY, INC.; KEMPER INDUSTRIES, INC.; R.H. SHEPPARD COMPANY, INC.; SKF USA, INC.; QUEBECOR PRINTING FAIRFIELD INC., third-party plaintiff v. BON-TON DEPARTMENT STORE, INC.; ISALY KLONDIKE CO., Doing business as successor of d/b/a or f/d/b/a the Hanover Klondike Co.; SUPERIOR FINISHERS, INC.; FELLOWES MANUFACTURING CO., Doing business as d/b/a or f/d/b/a Superior Finishers, Inc.; WAMPLER-LONGACRE INC, Doing business as successor of d/b/a of f/d/b/a Round Hill Foods, Inc.; BROOKS SHOE, INC.; WOLVERINE WORLD WIDE, INC., Doing business as successor to or d/b/a or f/d/b/a Brooks Shoe, Inc.; PILLOWTEX CORPORATION, Doing business as Hanover Industries, third-party defendant; FILIUS & MCLUCAS REPORTING SERVICE, unknown

The opinion of the court was delivered by: SYLVIA H. RAMBO

MEMORANDUM AND ORDER

 Introduction

 Before the court is correspondence addressed to the court from counsel for Keystone Sanitation Company, Inc., Kenneth F. Noel, and Anna M. Noel (the "Keystone Defendants") and counsel for Arcata Graphics Fairfield, Inc., regarding a discovery dispute. It is the court's understanding that Arcata is acting in this discovery dispute on behalf of itself and C & J Clark, America, Inc., The Esab Group, Inc., The Genlyte Group, Inc., Hanover Bronze and Aluminum Foundry, Inc., Kemper Industries, Inc., R.H. Sheppard Company, Inc., and SKF USA, Inc. (collectively the "Generator Defendants"). The court will treat the letters as a motion to compel submitted by the Generator Defendants.

 The Generator Defendants raised concerns in the past that the Keystone Defendants have been involved in an effort to dispose of their assets in order to avoid paying their share of any liability imposed in this CERCLA litigation. The Generator Defendants requested that the Keystone Defendants produce all documents related to their transfer of assets since the Environmental Protection Agency began its investigation of the Keystone Site in 1990. As part of that production, they requested any attorneys' billing statements that address this area of information, without the redaction of the names of attorneys or the narrative of the legal services provided. The Keystone Defendants argue that the narrative and identities of attorneys in billing statements are protected by the attorney-client and work product privilege. The Generator Defendants respond that the Keystone Defendants waived any privilege by including in a prior document production internal electronic mail printouts from their attorneys showing that attorneys were providing the Keystone Defendants with legal advice as to how to take their assets out of the corporation.

 The documents that give rise to the Generator Defendants' claim of waiver were produced in response to the court's August 26, 1994, order, which addressed the Keystone Defendants' refusal to provide information relevant to the disposition of their assets since 1990. The court's order directed each of the Keystone Defendants to respond without further delay to all requests aimed at discovering information about the sale, transfer, or other disposition of their assets since 1990, and about the individual (Noel) Keystone Defendants' financial dealings with Keystone. The order also directed the Keystone Defendants that, should they claim any privilege, they should submit to the Generator Defendants and the court a detailed statement of privilege.

 The two documents alleged to have been inadvertently disclosed are electronic mail messages from one attorney servicing the Keystone Defendants to others. One states: "I see out [sic] major goal, apart from defending the environmental liability claims, is to encourage the Noels to take as much out of the corporation as they legitimately can do." Another e-mail contains a message stating that Florida law exempts a principal residence from levy by creditors in an unlimited amount. The court understands the argument to be that since this category of information has been disclosed, to the extent the same category of information is contained in the narrative of billing statements, any privilege has been waived.

 Discussion

 As a preliminary matter, there is general agreement that attorney billing statements and time records are protected by the attorney-client privilege only to the extent that they reveal litigation strategy and/or the nature of services performed. See, e.g., Gonzalez Crespo v. The Wella Corp., 774 F. Supp. 688, 690 (D.P.R. 1991); Colonial Gas Co. v. Aetna Cas. & Sur. Co., 144 F.R.D. 600, 607 (D. Mass. 1992); Real v. Continental Group, Inc., 116 F.R.D. 211, 213-14 (N.D. Cal. 1986). Thus, statements and records that simply reveal the amount of time spent, the amount billed, and the type of fee arrangement between attorney and client are fully subject to discovery. Real v. Continental Group, Inc., 116 F.R.D. at 214. Here, of course, the Generator Defendants are interested precisely in the narrative and identities of attorneys and, therefore, the billing statements as they wish them to be produced would be protected by the attorney-client privilege, absent a waiver. *fn1"

  The Keystone Defendants claim that the documents at issue were disclosed inadvertently. Inadvertent disclosure may or may not require a finding of waiver, but it becomes more appropriate when the documents at issue were produced pursuant to Federal Rule of Civil Procedure 34. See O'Leary v. Purcell Co., 108 F.R.D. 641, 646 (M.D.N.C. 1985); Advanced Med., Inc. v. Arden Med. Sys., Inc., Civ. No. 87-3059, 1988 WL 76128 at *2 (E. D. Pa. July 18, 1988). Many courts use the following factors to determine whether a document has lost its privilege through inadvertent disclosure: (1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) any delay and measure taken to rectify the disclosure; and (5) whether the overriding interests of justice would or would not be served by relieving a party of its error. Advanced Med., Inc. v. Arden Med. Sys., Inc., supra, at *2 (collecting cases). The court views this waiver analysis as applying both to attorney-client and work product protection.

 Addressing the first prong of the waiver analysis, the court notes that the Keystone Defendants produced the documentation without further contact with the court. Although they now complain that it was and continues to be a massive production, the court set no immediate deadline for completion of that particular production and the Keystone Defendants did not request additional time to review the documents before they began production so that they could devise a statement of privilege. Given these circumstances, the court finds that the precautions taken were not reasonable.

 As to the number and extent of disclosures, although there were only two documents revealing that attorneys were advising the Keystone Defendants on the disposition of assets, the extent of disclosure in these documents is complete. The question the Generator Defendants want to have answered is whether the Keystone Defendants have removed assets to avoid CERCLA liability. They have questioned the purpose of the sale of Keystone's assets to Waste Management, Inc., and the disposition of the proceeds of that sale. They have also questioned the Noel's purchase of a home in Florida. In short, the inadvertently disclosed documents plainly allude to information pertinent to whether attorneys were assisting the Keystone Defendants to execute a calculated removal of assets from the reach of creditors (including the government), and that is precisely the type of information sought from the billing and time statements of the Keystone Defendants' attorneys. Thus, the second and third factors weigh in favor of a finding of waiver.

 The court does not find that the fourth factor, the issue of delay or measures taken to rectify the inadvertent disclosure, is significantly implicated in this case. The document production was ordered on August 26, 1994, and the parties appear to have been arguing the waiver question since early September.

 The last factor, however, weighs squarely in favor of waiver. As the court indicated in its August 26, 1994, memorandum and order, the primary goal of CERCLA is to ensure that liable parties bear their fair shares of the costs of environmental clean-up. To preclude discovery as to whether principal potentially responsible parties are or were engaged in the deliberate dissipation of assets for the purpose of avoiding a share of liability runs directly counter to that goal. To do so based upon a claim of privilege, when there has been an inadvertent disclosure of documents suggesting that this is the case, runs counter to the interests of justice.

 The balance of these factors weighs in favor of holding that the Keystone Defendants have waived any privilege that may have protected their attorneys' billing statements from disclosure with respect to the narrative of services and identities of attorneys performing services. The court does not mean to say that the Keystone Defendants must produce all attorney billing statements in unredacted form, but only those related to the disposition of assets.

 Accordingly, IT IS HEREBY ORDERED THAT:

  (1) The Keystone Defendants shall produce all attorney billing statements related to legal services provided with respect to the transfer of assets as defined in paragraph (1) of the court's August 26, 1994, memorandum and order;

 (2) The billing statement produced in accordance with paragraph 1, above, shall not be redacted to remove the names of attorneys performing services for the Keystone Defendants or the narrative of services performed.

 SYLVIA H. RAMBO, Chief Judge

 Middle District of Pennsylvania

 Dated: October 19, 1994.


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