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Union County, Iowa v. Piper Jaffray & Co.: APPELLATE PROCEEDURE - abuse/discretion certifying interlocutory appeal of discovery order regarding attorney-client privilege;

1Section 1292(b) provides:
When a district judge, in making in a civil action an order not otherwise
appealable under this section [that disallows interlocutory appeals with
certain exceptions], shall be of the opinion that such order involves a
controlling question of law as to which there is substantial ground for
difference of opinion and that an immediate appeal from the order may
materially advance the ultimate termination of the litigation, he shall so
United States Court of Appeals
No. 08-8003
Union County, Iowa, *
Petitioner, *
* Appeal from the United States
v. * District Court for the
* Southern District of Iowa.
Piper Jaffray & Co., Inc., *
Respondent. *
Submitted: April 24, 2008
Filed: May 13, 2008
Before BYE, ARNOLD, and SHEPHERD, Circuit Judges.
This matter comes before this court upon a petition for leave to file an
interlocutory appeal under 28 U.S.C. 1292(b)1 from a discovery order of the district
state in writing in such order. The Court of Appeals which would have
jurisdiction of an appeal of such action may thereupon, in its discretion,
permit an appeal to be taken from such order . . . .
28 U.S.C. 1292(b).
court. Because we find that the district court abused its discretion in certifying this
interlocutory appeal, we dismiss this appeal for lack of jurisdiction.
The underlying diversity action arises out of the construction of a soybean
crushing plant in Union County, Iowa. The construction of the mill was to be
undertaken by CF Processing, a wholly owned subsidiary of Crestland Cooperative.
The petitioner, Union County, Iowa (the County), alleges that the respondent, Piper
Jaffray & Co., Inc., provided the County with advice regarding the Countys issuance
of two General Obligation Capital Loan Notes (the bond offerings) in connection
with the project. In total, the bond offerings amounted to .865 million. The mill
was to be assessed for property tax purposes at a certain amount, and if the tax
revenue generated on that assessment failed to cover debt service on the notes, CF
Processing agreed to pay any shortfall in order for the County to make the required
debt service payments. In turn, Crestland guaranteed CF Processings performance.
CF Processing and Crestland filed bankruptcy in 2001, defaulting on all
obligations to the County, when the tax shortfall occurred. The County filed suit
against Piper Jaffray, asserting claims of breach of fiduciary duty, breach of contract,
negligent misrepresentation, negligence, and fraud. The crux of the Countys case is
that Piper Jaffray failed to properly advise the County of (1) material information and
risks involved in the issuance of the bond offerings in the event of defaults by
Crestland and CF, and (2) alternative financing options.
After requesting documents and/or information concerning the professional
advice the County received in connection with the bond offerings, Piper Jaffray filed
a Motion to Compel, asserting that the County had refused to provide the
documentation sought. The County asserted, through a privilege log, that the
documents were not discoverable under the work product doctrine and attorney-client
privilege. The magistrate judge granted the motion in part and denied it in part,
specifying the documents that were to be produced because the County had waived
the attorney-client privilege with regard to the information contained in those
documents as a result of the litigation it had undertaken against Piper Jaffray. The
district court affirmed; in its order, however, the court certified the case for
interlocutory appeal pursuant to 28 U.S.C. 1292(b). The County then petitioned this
court for permission to file the appeal.
Because [t]he requirements of 1292(b) are jurisdictional, White v. Nix, 43
F.3d 374, 376 (8th Cir. 1994), if the case does not present circumstances satisfying the
statutory prerequisites for granting certification, this court cannot allow the appeal.
Id. at 377. Furthermore, even if the statutory criteria are satisfied, we possess
discretion whether to hear the appeal, id. at 376 n.2, and may deny the appeal for
any reason. Id. (citing Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978)). In
determining whether to grant the Countys petition, we keep in mind that [i]t has .
. . long been the policy of the courts to discourage piece-meal appeals because most
often such appeals result in additional burdens on both the court and the litigants.
Permission to allow interlocutory appeals should thus be granted sparingly and with
discrimination. Id. at 376 (quoting Control Data Corp. v. Internatl Bus. Machines
Corp., 421 F.2d 323, 325 (8th Cir. 1970)); see U.S. ex rel. Hollander v. Clay, 420 F.
Supp. 853, 859 (D.C.D.C. 1976) (Certification under section 1292(b) is far from the
normal course of procedure.); see also United States Rubber Co. v. Wright, 359 F.2d
784, 785 (9th Cir. 1966) (per curiam) (The legislative history of subsection (b) of
section 1292 . . . indicates that it was to be used only in extraordinary cases where
decision of an interlocutory appeal might avoid protracted and expensive litigation.
It was not intended merely to provide review of difficult rulings in hard cases.).
In requesting that this court follow the extraordinary course of interlocutory
review of this matter, the [County] bears the heavy burden of demonstrating that the
case is an exceptional one in which immediate appeal is warranted. White, 43 F.3d
at 376. Section 1292(b) establishes three criteria for certification: the district court
must be of the opinion that (1) the order involves a controlling question of law; (2)
there is substantial ground for difference of opinion; and (3) certification will
materially advance the ultimate termination of the litigation. Id. at 377 (internal
quotations omitted). The district court found that all three statutory criteria were met
because of the lack of Eighth Circuit precedent on this issue. We address each
requirement to determine whether the district court abused its discretion in certifying
this appeal. See id. at 377-79 (finding that the district court abused its discretion in
certifying appeal because: (1) it failed to adequately consider all the relevant criteria
before granting the motion for certification and (2) none of the statutory criteria were
First, the motion to compel was granted by the district court based upon waiver
of attorney-client privilege. We assume without deciding that the district courts
order, premised upon its resolution of the attorney-client privilege issue, involves a
controlling question of law. See id. at 377 n.3 (stating that appellants argument that
files were protected against discovery by some privilege presents a controlling legal
issue as to the existence of the privilege). However under 1292(b) there must also
exist substantial basis for difference of opinion with respect to such question. Id.
Because this is a diversity case, the determination of whether attorney-client privilege
applies is governed by state law. Fed. R. Evid. 501 (providing that state law supplies
the rule of decision on privilege in diversity cases); see Pamida, Inc. v. E.S. Originals,
Inc., 281 F.3d 726, 731 (8th Cir. 2002).
Under Iowa law, a client may waive attorney-client privilege. Iowa Code
622.10(2); see Miller v. Continental Ins. Co., 392 N.W.2d 500, 504 (Iowa 1986).
Though there was no express waiver here, implied waiver occurs where the [client]
has placed in issue a communication which goes to the heart of the claim in
controversy. Squealer Feeds v. Pickering, 530 N.W.2d 678, 684 (Iowa 1995),
abrogated on other grounds by Wells Dairy, Inc. v. Am. Indus. Refrigeration, Inc., 690
N.W.2d 38 (Iowa 2004) (quoting 81 Am. Jur. 2d Witnesses 348 (1992)); see
Brandon v. W. Bend Mut. Ins. Co., 681 N.W.2d 633, 642 (Iowa 2004) (providing that
waiver may be implied by conduct making it unfair for a client to invoke the
privilege); Miller, 392 N.W.2d at 505 (same). While identification of a sufficient
number of conflicting and contradictory opinions would provide substantial ground
for disagreement, White, 43 F.3d at 378 (quotation omitted), the County offered no
such Iowa opinions, statutes or rules, and a dearth of cases does not constitute
substantial ground for difference of opinion. Id. Accordingly, section 1292(b)s
second criterion for certification has not been satisfied.
With regard to the third statutory requirement, that the certification will
materially advance the ultimate termination of the litigation, the district court quoted
this portion of the statute, however, we do not see how the courts only stated reason
for certifying the appealthe lack of Eighth Circuit precedentdemonstrates that this
requirement has been met. Though this criterion may be satisfied here, the district
court should make the necessary findings to demonstrate that this statutory criterion
was satisfied. See id. (Although the district court quoted this portion of the statute,
it made no mention of it when making the necessary findings. Thus, we conclude that
the district court failed to consider this statutory criterion.); see also Isra Fruit Ltd.
v. Agrexco Agri. Export Co., 804 F.2d 24, 25 (2d Cir. 1986) (strongly suggest[ing]
to district judges the advisability of stating more than a bare finding that the statutory
requirements of 1292(b) have been met).
Finally, while this court has previously considered an interlocutory appeal
relating to attorney-client privilege, see Simon v. G.D. Searle & Co., 816 F.2d 397,
399 (8th Cir. 1987) (involving two issues: (1) whether the work product doctrine or
attorney-client privilege applied to corporate risk management documents prepared
by nonlawyer corporate officials and (2) whether Rule 26(b)(2) of the Federal Rules
of Civil Procedure limits discovery of corporate risk management documents that
relate to insurance considerations), we have also denied it. See White, 43 F.3d at
375-76 (involving prison officials assertion of attorney-client privilege with regard
to documents the district court ordered them to produce concerning an assault for
which the inmate was under investigation in inmates section 1983 action). In
dismissing the interlocutory appeal, the White Court distinguished Simon, stating that
Simon involved novel controlling issues of law concerning the work product
doctrine, attorney/client privilege and construction of Federal Rule of Civil Procedure
26(b)(2). Moreover, the Simon case was a consolidation of approximately 40 cases,
and was therefore extraordinary. Id. at 377 n.4. Thus, White suggests that, absent
the sort of extraordinary circumstances present in Simon, this court will not allow a
certified appeal of an attorney-client privilege case. Because this case is more like
White than Simon, in that it lacks novel controlling issues of law and does not consist
of a substantial number of consolidated cases, it constitutes a typical attorney-client
case inappropriate for interlocutory review pursuant to section 1292(b).
We conclude that the district court abused its discretion in certifying this
interlocutory appeal where the statutory criteria were not satisfied. Accordingly, we
dismiss this appeal for lack of jurisdiction.


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