Maxwell v. Advanced Sterilization Products Inc. et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge S. Kato Crews
Civil Action No. 1:22-cv-00894-SKC
ERIN MAXWELL
Plaintiff
v.
ADVANCED STERILIZATION PRODUCTS INC., a Delaware Corporation
Defendant.
ORDER RE: DISCOVERY OF INVESTIGATION REPORT
Defendant Advanced Sterilization Products, Inc. (“ASP”) is a medical-device
company 	that 	provides 	infection 	prevention 	services. 	It 	markets 	and 	sells
sterilization and related products and software. Plaintiff Erin Maxwell (“Maxwell”)
previously served as ASP’s Regional Sales Director for the Mountain South region.
Maxwell’s claims in this case arise from her employment termination after she
filed a “Speak Up”1 complaint, which was one of several complaints she alleges she
raised throughout 2021 regarding suspect company activities. In it, Maxwell detailed
1 The Speak Up Program provides, in relevant part: “Employees are encouraged and
expected to ask questions when unsure about any integrity or compliance issue, and
are required to report actual or potential violations of law, our Standards of Conduct
or other ASP policy. . . Report questions or concerns to your immediate supervisor or
manager, or to any of the following resources: . . .” [Dkt. 29-1, p.4.]
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her alleged prior reporting of compliance concerns relating to ASP’s failure to follow
its pricing and anti-kickback policies. She also reported that she was the subject of
harassment by other ASP employees because she had previously reported her
compliance concerns. ASP fired Maxwell shortly after she submitted her Speak Up
complaint.
Maxwell submitted her Speak Up complaint on November 20, 2021. ASP ended
her employment on December 17, 2021, effective December 31, 2021. Maxwell sued
ASP in this Court asserting state law claims for breach of implied contract, wrongful
termination in violation of public policy, and violation of the Colorado Wage Claim
Act, C.R.S. § 8-4-101 et seq. ASP contends it ended Maxwell’s employment for only
one reason—a reduction in force. According to ASP, the decision had nothing to do
with any alleged complaints Maxwell made, and such complaints, even if made, did
not implicate any cognizable public policy sufficient to support a wrongful discharge
claim. ASP claims it launched “a full scale investigation” into all of Maxwell’s
allegations, and it could not substantiate them. [Dkt. 18, p.4.]
This discovery dispute concerns a December 23, 2021 Investigation Report
prepared by Ximena Cajas, ASP’s Regional Compliance Leader. On August 19, 2022,
ASP produced its privilege log identifying the Report. In a discovery hearing on
January 23, 2023, the Court found ASP’s privilege log insufficient and ordered ASP
to amend the privilege log with appropriate details and provide it and the Report to
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the Court, the latter for the Court’s in camera review. The applicable entry from
ASP’s amended privilege log is the following:
The Court has conducted the in camera review, has carefully considered
applicable case law and the parties’ arguments made at the hearing and in their Joint
Discovery Dispute Report [Dkt. 25]. It now issues this Order.
A. 	Legal Principles
State 	law 	governs 	issues 	of 	privilege 	in 	cases 	premised 	on 	diversity
jurisdiction. Fed. R. Evid. 501; see also Frontier Refining, Inc. v. Gorman-Rupp Co.,
136 F.3d 695, 699 (1998). In Colorado, the attorney-client privilege is “established by
the act of a client seeking professional advice from a lawyer and extends only to
confidential matters communicated by or to the client in the course of gaining counsel,
advice, or direction with respect to the client’s rights or obligations.” People v. Tucker,
232 P.3d 194, 198 (Colo. App. 2009) (citing Losavio v. Dist. Court, 533 P.2d 32, 35
(Colo. 1975)). The privilege applies only to communications under circumstances
giving rise to a reasonable expectation that they will be treated as confidential.
Tucker, 232 P.3d at 198 (citing Wesp v. Everson, 33 P.3d 191, 197 (Colo. 2001)). It
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includes information given to the attorney to enable them to render legal advice.
Gordon v. Boyles, 9 P.3d 1106, 1123 (Colo. 2000). But mere statements of fact are not
protected by the attorney-client privilege. People v. Trujillo, 144 P.3d 539, 545 (Colo.
2006) (citing Gordon, 9 P.3d at 1123) (noting “the privilege protects only the
communications to the attorney; it does not protect any underlying and otherwise
unprivileged 	facts 	that 	are 	incorporated 	into 	a 	client’s 	communication 	to 	his
attorney”). 	“The burden 	of 	establishing 	the 	applicability 	of 	the 	attorney-client
privilege rests with the claimant of the privilege.” Black v. Southwesterm Water
Conservation Dist., 74 P.3d 462, 467 (Colo. App. 2003) (citing Clark v. District Court,
668 P.2d 3, 8 (Colo. 1983)); see also In re Foster, 188 F.3d 1259, 1264 (10th Cir. 1999).
“Unlike the attorney client privilege, the work product [doctrine] is governed,
even in diversity cases, by a uniform federal standard embodied in Fed. R. Civ. P.
26(b)(3).” Frontier Refining Inc., 136 F.3d at 702 n.10 (cleaned up). To be subject to
the work product doctrine, the materials must have been “prepared in anticipation of
litigation. It does not protect materials prepared in the ‘ordinary course of business.’”
Weitzman v. Blazing Pedals, Inc., 151 F.R.D. 125, 126 (D. Colo. 1993) (citation
omitted). Thus, to receive work product protection, the party resisting discovery must
demonstrate the information at issue was prepared in anticipation of litigation or for
trial. In re Grand Jury Proceedings, 616 F.3d 1172, 1184 (10th Cir. 2010).
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B. 	Analysis
1. 	Relevance of the Report
The scope of discovery in federal court is broad. Federal Rule of Civil Procedure
26 permits discovery regarding any nonprivileged matter that is relevant to any
party’s claim or defense, while the proportional needs of the case further tailor the
scope of discovery. Fed. R. Civ. P. 26(b)(1). When evaluating proportionality, courts
consider: (1) the importance of the issues at stake in the action; (2) the amount in
controversy; (3) the parties’ relative access to relevant information; (4) the parties’
resources; (5) the importance of the discovery in resolving the issues; and (6) whether
the burden or expense of the proposed discovery outweighs its likely benefit. Id.
Nothing in Rule 26(b)(1) requires the court to address all five proportionality factors.
See GSL Grp., Inc. v. Travelers Indem. Co., No. 18-CV-00746-MSK-SKC, 2020 WL
4282291, at *11 n.5 (D. Colo. July 24, 2020) (“If the movant is not required to address
all the factors, surely the Court is not required to either.”). Information within the
proper scope of discovery “need not be admissible in evidence to be discoverable.” Fed.
R. Civ. P. 26(b)(1).
The Court finds the Report relevant to Plaintiff’s claim for wrongful discharge
in violation of public policy. One element of that claim requires Maxwell to prove ASP
fired her because she exercised an important work-related right or privilege, or a
statutory, regulatory, or rule-based right relating to public health, safety or welfare.
CJI-Civ. 31:13 (CLE ed. 2023). Assuming, without deciding, that Maxwell’s Speak Up
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complaint(s) qualifies as the requisite exercise of an actionable public policy, ASP
defends this case by arguing it terminated her employment based solely on a
reduction in force. [Dkt. 18, p.3.] And to bolster its defense, ASP additionally argues
Maxwell’s Speak Up complaint(s) had no merit. [Id., p.4.]
The Court finds the Report is relevant—at least for discovery purposes—to
these defenses and ASP’s credibility.2 Fed. R. Civ. P. 26(b) (discovery must be relevant
to a claim or defense); New Jersey v. T.L.O., 469 U.S. 325, 345 (1985) (discussing the
relevance of certain evidence to the defendant's credibility); see also Scherbarth v.
Woods, No. 16-CV-2391-KHR, 2018 WL 851344, at *9 (D. Colo. Feb. 13, 2018)
(allowing discovery of evidence relevant to credibility). The Court further finds the
single, seven-page report, meets the proportional needs of the case in light of ASP’s
defenses and the parties’ relative access to this relevant piece of information.
2. 	Attorney-Client Privilege and Work Product Doctrine
Having determined the Report is discoverable, the Court now addresses ASP’s
claims of attorney-client privilege and work product. The Report is a seven-page
document authored by Cajas, ASP’s Regional Compliance Leader. Each page has the
watermark, “confidential,” placed diagonally across the page in capital letters. Each
page also contains the following header in red letters in the upper-left-hand corner:
Privileged and Confidential
Attorney-Client Communication
Prepared at the Direction of Legal Counsel
2 The Report may also have relevance to ASP’s Second and Fourth Affirmative
Defenses.
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The Report summarizes Cajas’ interviews with six individuals, including Maxwell,
concerning (in relevant part) Maxwell’s Speak Up complaint made on November 20,
2021. It also contains Cajas’ conclusions over whether Maxwell’s complaints were
substantiated.
ASP has failed to meet its burden to demonstrate the Report was prepared at
the direction of counsel for the purpose of rendering legal advice. First, and most
notably, the privilege log identifies no recipients of the Report. This is in stark
contrast to other privilege-log entries that identify Paul Bae, Esq. (ASP’s General
Counsel), or Laura Davis, Esq. (an attorney with Axiom Law who engages with ASP
to provide legal assistance with internal investigations) as recipients of other
documents over which ASP claims the attorney-client privilege. It strains credulity
that on the one hand, ASP claims the Report was prepared at the direction of legal
counsel, and on the other hand, it does not identify a single attorney (or anyone) as a
recipient. If the purported attorney-client-privileged information was not shared with
an attorney, it is not possible for the attorney-client privilege to inure to that
communication. Gordon, 9 P.3d at 1123 (the attorney-client privilege applies “to
matters communicated by or to the client in the course of gaining counsel”); see also
Bernardi v. Cmty. Hosp. Ass'n, 443 P.2d 708, 715 (Colo. 1968) (finding the attorney-
client privilege did not apply and stating, “[i]t well may be that the practice of making
an incident report resulted from the advice of counsel, but it seems rather plain that
these incident reports were not prepared for the attorney. Rather, they were prepared
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for certain administrative officials of the Hospital and they were available to the
Hospital's attorney if he wished to see them.”).
Second, the Report instead appears to have been prepared as a matter of
company policy based on ASP’s Speak Up program [Dkt. 29-1, p.4] or its Government
Business Ethics and Conduct (“Ethics Policy”) [Dkt. 29-3] policy. Both encourage
employees to report actual or potential violations of law or company policy. Once
reported, the Ethics Policy states, in relevant part: “ASP employees who report
violations and potential violations will be treated with respect. ASP's Compliance
Team will lead all investigations of alleged violations or misconduct with fairness and
impartiality. [E]mployees are expected to fully cooperate in internal investigations.”
[Dkt. 29-3, p.3.]
Just as this policy provides, Cajas, a member of the Compliance Team,
conducted the investigation into Maxwell’s complaints, and she cooperated with the
internal 	investigation 	by 	interviewing 	with 	Cajas. 	In 	other 	words, 	Cajas’
investigation appears to have been conducted as part of ASP’s ordinary course of
investigating employee Speak Up or other complaints. Gordon v. Sunrise Senior
Living Mgmt., Inc., No. 08-CV-02299-REB-MJW, 2009 WL 2959213, at *1 (D. Colo.
Sept. 10, 2009) (“T]his court finds that the defendant has not shown that the internal
investigation 	was 	primarily 	conducted 	at 	[attorney] 	Edmondson's 	direction 	in
anticipation of litigation . . . rather than just prepared in the ordinary course of
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business.”) And the fact that neither ASP’s privilege log nor the Report identify any
attorney as receiving the Report only bolsters this conclusion.
3. 	Conclusion
For these reasons, ASP has failed to meet its burden to show the Report was
prepared at the direction of legal counsel for the purpose of rendering legal advice;
the Court does not find the attorney-client privilege applies to the Report. For these
same reasons, ASP has failed to demonstrate the Report was prepared in anticipation
of litigation for the work-product doctrine to apply.3
* 	* 	*
3 At various points in the Joint Discovery Dispute Report, ASP argues the purpose of
its 	reporting 	policies 	is 	so 	that 	ASP 	can 	“determine 	litigation 	risk[,]” 	create
“documentation to aid in possible future litigation[,]” or “adequately prepare for
anticipated litigation.” [See generally Dkt. 25.] But this too strains credulity for
company policies of this sort. Just take the plain language of the policies themselves.
The Speak Up Program describes the purpose of reporting as follows: “In bringing
questions or violations to a manager's attention, you help to ensure ASP achieves and
sustains the highest levels of integrity and compliance, and you are (sic) help build
the foundation of our future success.” [Dkt. 29-1, p.4.] And the Ethics Policy describes
its purpose, in relevant part, as a means of aiding ethical business performance: “ASP
understands 	that 	our 	success 	depends 	on 	our 	reputation 	for 	ethical 	business
performance. Every day, we are expected to perform our jobs honestly, diligently, with
integrity, and in compliance with all applicable laws and regulations.” [Dkt. 29-3,
p.2.] Thus, the notion that ASP’s internal reporting procedures are solely designed to
determine 	litigation 	risk, 	as 	opposed 	to 	being 	designed 	to 	nip 	unethical,
inappropriate, or illegal workplace conduct in the bud, appears a stretch.
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ASP is ORDERED to produce the Report to Maxwell within 48 hours of the
date and time of this Order.
DATED: 	May 12, 2023
BY THE COURT:
______________________________
S. Kato Crews
United States Magistrate Judge
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