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Nieman v. Hale

United States District Court, Fifth Circuit

December 26, 2013

KEITH HALE, ET AL., Defendants.


DAVID L. HORAN, Magistrate Judge.

Plaintiff Jason Lee Nieman filed a Motion to Compel Discovery Responses of Defendants Keith Hale and Insurance Search Group (the "Motion to Compel"). See Dkt. No. 44. Defendants Keith Hale ("Hale") and Insurance Search Group ("ISG, " and with Hale, "Defendants") filed a Response, see Dkt. No. 46, and Plaintiff filed a Reply. See Dkt. No. 47. Because Plaintiff apparently filed his Motion to Compel prior to receiving Defendants' discovery responses and initial production, the undersigned ordered the parties to confer and file a joint status report (the "JSR"). See Dkt. No. 48. In the order, the undersigned ordered Plaintiff to "identify each request for production ("RFP" or interrogatory for which he seeks to compel further information, and... specifically explain why he is entitled to relief as to each identified RFP or interrogatory." Dkt. No. 48 at 3.

On November 6, 2013, the parties filed the JSR. Unfortunately, contrary to the instructions set forth in the undersigned's prior order, the parties group multiple RFPs and interrogatories together and make overarching arguments that make the relief that each party seeks in the JSR at times difficult to determine. On November 22, 2013, the undersigned held a telephonic oral argument with Plaintiff and Defendants' counsel on the pending discovery motions. See Dkt. No. 58.

With the aid of the oral argument, the undersigned will address all RFPs and interrogatories that appear from the JSR to be at issue. To the extent that any additional RFPs and interrogatories at issue are not specifically addressed herein, Plaintiff's challenges are considered waived for insufficient briefing, and his Motion to Compel [Dkt. No. 44] is DENIED as to those requests. The RFPs and interrogatories are addressed below in the order presented by the parties in the JSR.

In addition to the Motion to Compel, Defendants' Motion for Protective Order [Dkt. No. 52] is also pending. Because the Motion for Protective Order simply contains additional briefing as to certain issues raised in the JSR, the undersigned has considered the Motion for Protective Order, as well as Plaintiff's Response to that motion [Dkt. No. 53], in ruling on the Motion to Compel. Consequently, the Motion for Protective Order [Dkt. No. 52] is GRANTED in part and DENIED in part to the same extent as the overlapping issues are addressed herein as to Plaintiff's Motion to Compel.

Legal Standards

Fed. R. Civ. P. 26(b) allows a party to obtain discovery "regarding any nonprivileged matter that is relevant to any party's claim or defense." FED. R. CIV. P. 26(b)(1). The information sought need not be admissible at trial "if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id. The United States Supreme Court has recognized that the discovery rules "are to be accorded a broad and liberal treatment." Hickman v. Taylor, 329 U.S. 495, 507-508 (1947). The party resisting discovery must show specifically how each request is not relevant or otherwise objectionable. See McLeod, Alexander, Powel and Apffel, P.C. v. Quarles, 894 F.2d 1482, 1485 (5th Cir. 1990). But the "party asserting a privilege exemption from discovery" - here, Defendants - "bears the burden of demonstrating its applicability." In re Santa Fe Int'l Corp., 272 F.3d 705, 710 (5th Cir. 2001).

Before addressing the applicability of which documents are protected by the attorney-client privilege, the undersigned must consider whether federal or state law of attorney-client privilege applies. In a diversity action raising only state law claims, the Court must apply the state law of attorney-client privilege. See FED. R. EVID. 501. In a case raising only federal claims over which the Court has federal-question jurisdiction, federal common law controls any privilege issues. See id.; Willy v. Admin. Rw. Bd., 423 F.3d 483, 495 (5th Cir. 2005). Here, invoking the Court's federal-question jurisdiction under 28 U.S.C. § 1331, Plaintiff asserts a retaliation claim under Title VII of the Civil Rights Act of 1964 ("Title VII"), as amended; the Texas Commission on Human Rights Act; and the Illinois Human Rights Act. See Dkt. No. 35. He raises the same allegations in support of his claim under the federal statute and the state statutes, see id., and the Court has previously explained that Plaintiff must prove the same elements to prevail on his claim under each of these statutes, see Dkt. No. 7. Other Texas federal courts have persuasively reasoned that federal privilege law applies where a plaintiff raises both federal and state claims and the evidence at issue is relevant to both. See Guzman v. Memorial Hermann Hosp. Sys., Civ. A. No. H-07-3973, at *4-*7 (S.D. Tex. Feb. 20, 2009) (discussing cases). Under the circumstances here, and for the reasons aptly explained by Judge Rosenthal in Guzman, the Court concludes that the federal common law of privilege applies in this case.

Representations involving multiple clients with separate counsel call for the application of what have been called the joint-defense or common-interest doctrine. The joint-defense or common-interest doctrine extends certain privileges, typically the attorney-client privilege and work product protection, to documents that are prepared by parties sharing a common litigation interest that would otherwise not enjoy such privilege. See FTC v. Think All Publishing, L.L.C., No. 4:07-cv-011, 2008 WL 687456, at *1 (E.D. Tex. Mar. 11, 2008) (citing Ferko v. NASCAR, 219 F.R.D. 396, 401 (E.D. Tex. 2003)). "Thus, while the attorney-client and work product privileges are typically waived upon disclosure to a third party, where that third party share[s] a common legal interest' with the producing entity, such production does not waive either privilege." Id. (quoting Ferko, 219 F.R.D. at 401).

The joint-defense or common-interest doctrine applies under federal common law in the Fifth Circuit to "(1) communications between co-defendants in actual litigation and their counsel and (2) communications between potential co-defendants and their counsel." Santa Fe, 272 F.3d at 710 (internal citations omitted). The joint-defense or common-interest doctrine "extends the attorney-client privilege to communications prompted by threatened or actual civil or criminal proceedings and intended to facilitate representation between potential co-defendants with a common legal interest and their counsel." Autobytel, Inc. v. Dealix Corp., 455 F.Supp.2d 569, 576 (E.D. Tex. 2006) (citing Santa Fe, 272 F.3d at 710-11). The doctrine "exists to protect communications between two parties or attorneys that share a common legal interest, " and, "[f]or example, courts have found that co-defendants, an insurer and an insured, and a patentee and a licensee share a common legal interest." Ferko v. NASCAR, 219 F.R.D. 403, 406 (E.D. Tex. 2003). But the "doctrine is to be narrowly construed because, although policy considerations support its use in some circumstances, it is an obstacle to truth seeking.'" Think All Publishing, 2008 WL 687456, at *1. For communications between potential co-parties to be covered by the doctrine, "there must be a palpable threat of litigation at the time of the communication, rather than a mere awareness that one's questionable conduct might some day result in litigation, before communications between one possible future co-defendant and another... could qualify for protection." Santa Fe, 272 F.3d at 711.

Plaintiff also invokes the crime-fraud exception. ""Under the crime-fraud exception to the attorney-client privilege, the privilege can be overcome where communication or work product is intended to further continuing or future criminal or fraudulent activity." In re Grand Jury Subpoena, 419 F.3d 329, 335 (5th Cir. 2005). This exception also applies to work-product protections. See In re Grand Jury Subpoenas, 561 F.3d 408, 411 (5th Cir. 2009). The party seeking discovery of privileged or protected information bears the burden of establishing a prima facie case that the attorney-client relationship was intended to further criminal or fraudulent activity. See Grand Jury, 419 F.3d at 335. To make the necessary prima facie showing for the application of the crime-fraud exception, Plaintiff "must produce evidence such as will suffice until contradicted and overcome by other evidence... a case which has proceeded upon sufficient proof to that stage where it will support [a] finding if evidence to the contrary is disregarded." Id. at 336 (internal quotation marks omitted). "Allegations in pleadings are not evidence and are not sufficient to make a prima facie showing that the crime-fraud exception applies." Id. The Fifth Circuit has required that Plaintiff also show "some valid relationship between the work product under subpoena and the prima facie violation" or that the communication or "[work product] material reasonably relate[s] to the fraudulent activity." Id. at 336 n.7 (internal quotation marks omitted). But, "where there is no discernible limit to the subpoena or discovery request at issue, a prima facie showing is made if the party seeking the otherwise privileged materials produces sufficient evidence that during the attorney-client relationship, the client intended to further a future or ongoing crime or fraud." Id. However, "the proper reach of the crime-fraud exception when applicable does not extend to all communications made in the course of the attorney-client relationship, but rather is limited to those communications and documents in furtherance of the contemplated or ongoing criminal or fraudulent conduct." Id. at 343. "After the party seeking disclosure meets its prima facie showing that the client intended to further an ongoing crime or fraud during the attorney-client relationship such that the crime-fraud exception applies, the only attorney-client communications and work product materials falling within the scope of the crime-fraud exception are those shown to hold some valid relationship to the prima facie violation such that they reasonably relate to the fraudulent activity." Id. at 346 (internal quotation marks omitted).

Defendants' Motion for Protective Order

Defendants' Motion for Protective Order provides some additional facts and arguments as to why Plaintiff's motion to compel privileged information should be denied. However, Defendants cite no authority in their motion. Specifically, Defendants seek to protect: (1) communications between Defendants and their counsel, both in this action and in another case involving many of the same parties currently pending in the Central District of Illinois, see Nieman v. RLI Corp., et al, 1:12-cv-01012-JES-JAG (C.D. Ill.) (the "Illinois Action"); and (2) the identity of John Doe Corp. Because the issues raised in the Motion for Protective Order are resolved by the undersigned's determinations concerning the Motion to Compel, the Motion for Protective Order [Dkt. No. 52] is GRANTED in part and DENIED in part to the same extent as these issues are addressed herein as to Plaintiff's Motion to Compel.

In addition, the undersigned notes that Defendants requested that the undersigned wait to resolve the privilege issue raised in the Motion for Protective Order until this issue is resolved in the Illinois Action in order to prevent "a potential for inconsistent rulings between sister courts." Dkt. No. 52 at 4. The undersigned has considered Defendants' request but determines the requested wait or abatement to be unnecessary. The Illinois Action and the instant case both involve a Title VII claim by Plaintiff against Defendants; however, each case is premised on different sets of facts and circumstances. Although some of the discovery issues are similar, different rulings by the Central District of Illinois and the Northern District of Texas may be different based on the set of facts and circumstances in each case. Moreover, to the extent that Plaintiff seeks documents in this action that were generated in connection with the Illinois Action, Defendants had the opportunity to - and did - point the Court to relevant orders in place by the Central District of Illinois. See, e.g., Dkt. No. 52-1.

Plaintiff's Motion to Compel

RFP Nos. 1, 2, & 17 and Interrogatory Nos. 3, 16, & 23

The undersigned notes that Plaintiff did not follow the procedure outlined in the undersigned's Order requiring Plaintiff to address each RFP or interrogatory at issue individually. It is therefore difficult for the Court to determine the basis of Plaintiff's argument that he is entitled to documents called for by these RFPs and interrogatories or, specifically, what documents and information Plaintiff believes that each RFP and interrogatory calls for. However, because the parties have lumped this group of RFPs and interrogatories together, the undersigned will address them in similar fashion.

Defendants respond that they have agreed to supplement their discovery responses to include production of non-privileged records and notes concerning Plaintiff's interest in going to work for both RLI Corp. and John Doe Corp, all communications between Defendants and Plaintiff concerning Plaintiff's interest in going to work for both RLI Corp. and John Doe Corp., and all non-privileged records, notes, communications that Defendants had with RLI Corp. about Plaintiff, communications between Defendants and RLI Corp. wherein Defendants submitted resumes or applications for other individuals that sought employment with RLI Corp. in the same capacity sought by Nieman (with redactions as to the identity of any such candidates), and redacted records evidencing Defendants' submission of an employment candidate for John Doe Corp.'s consideration.

Defendants do not agree to produce: (1) communications between Defendants and RLI Corp. that post-date Plaintiff's institution of legal proceedings against RLI Corp; (2) communications between Defendants and their attorneys in either the Illinois Action or this action; or (3) the identity of John Doe Corp. Defendants also stand by their objections regarding Interrogatory No. 23, on the grounds that the Interrogatory is not relevant to any claim or defense and is meant for the purpose of harassment.

Plaintiff asserts the documents at issue must be produced because they are relevant and (1) the interactions and statements of Hale are directly relevant to his retaliatory animus as to improperly and illegally disqualifying Plaintiff as to John Doe Corp.; (2) privilege was waived by intentional disclosure of the detailed billing records in the Illinois Action; (3) subject to disclosure based on the crime-fraud exception; and (4) subject to disclosure pursuant to the Faragher/Ellerth doctrine. Plaintiff also asserts that Defendants' Motion for Protective Order is untimely.

First, to the extent that Defendants claim that the joint-defense or common-interest doctrine applies to communications in connection with the Illinois Action, Defendants must log any withheld communications that post-date March 24, 2011 (the date that Defendants have put forth as the date when the common interest or joint defendant commenced) between Defendants' counsel and RLI Corp. (or RLI Corp.'s counsel) and provide an adequate showing of the privilege's or protection's applicability through the joint-defense or common-interest doctrine under the governing law laid out above. The fact that Defendants and RLI Corp. were being sued by Plaintiff does not automatically make every communication between or among them privileged. Even with the parties' supplemental briefing, see Dkt. Nos. 61 & 62, the Court is not in a position to make any blanket ruling as to the joint-defense or common-interest issue - either to find that it does not apply or that it does to such an extent - as Defendants request - that Defendants need not log any documents that they are withholding from production. Accordingly, Plaintiff's Motion to Compel is DENIED without prejudice to his renewing his challenges to any withheld documents based on Defendants' privilege logs.

Next, to the extent that Plaintiff seeks communications between Defendants and their counsel in either the Illinois Action or this lawsuit on the basis that Defendants have waived any privilege, Plaintiff's Motion to Compel is DENIED without prejudice. The Defendants' billing records, on which Plaintiff bases his waiver argument, are already the subject of a protective order in the Illinois Action, which limits their use to the Illinois Action and states that disclosure of the billing records "shall not constitute or be deemed a waiver or forfeiture of any claim of privilege or work product protection." See Dkt. No. 52-1. The undersigned sees no reason to disturb the Protective Order entered months ago by the Central District of Illinois. The undersigned acknowledges that the Seventh Circuit denied Defendants' motion to seal the billing records, see 1:12-cv-1012 [Dkt. No. 134-6] (C.D. Ill., filed 10/28/13); however, the Seventh Circuit's denial to seal does not, on its own, dictate that Defendants have waived the privilege with respect to any attorney-client communications.

In addition, Plaintiff has failed to provide sufficient evidence to establish the crime-fraud exception. Plaintiff's allegations do not amount to a prima facie showing of fraud or contemplated fraud as required by the governing federal common law. Neither will the Court, at this point, engage in an in camera examination to determine the applicability of the crime-fraud exception, because Plaintiff has not made a sufficient showing of a factual basis adequate to support a good faith belief by a reasonable person that the crime-fraud exception applies. See Grand Jury Subpoena, 419 F.3d at 335-36.

And, although Defendants moved for a protective order after their time to respond had passed, Defendants put Plaintiff on notice of their intention to withhold privilege documents in their Objections and Responses to Plaintiff's First Request for Production of Documents and Materials. See Dkt. No. 51-4. As such, the undersigned determines that Defendants preserved their right to assert privilege. See WRIGHT & MILLER, 8 FEDERAL PRACTICE AND PROCEDURE § 2035 ("A party may not remain completely silent ...

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