Free Reply in Support of Motion - District Court of Arizona - Arizona

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Dan W. Goldfine (#018788) Richard G. Erickson (#019066) SNELL & WILMER L.L.P. One Arizona Center 400 East Van Buren Street Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070 [email protected] [email protected] Attorneys for Plaintiffs and Grant Woods, Esq. (#006106) GRANT WOODS, P.C. 1726 North Seventh Street Phoenix, Arizona 85006 Telephone: (602) 258-2599 Facsimile: (602) 258-5070 [email protected] Attorneys for Plaintiffs

12 13 14 15 Meritage Homes Corporation, et al., 16 Plaintiffs, 17 v. 18 Greg Hancock, et al., 19 Defendants. 20 21 22 23 24 25 26 27 28
Case 2:04-cv-00384-ROS Document 580 Filed 07/08/2008 Page 1 of 7

Snell & Wilmer L.L.P.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Case No. CV-04-0384-PHX-ROS PLAINTIFFS' REPLY TO ITS MOTION IN LIMINE TO BAR DEFENDANT'S USE OF ATTORNEY-CLIENT PRIVILEGED COMMUNICATIONS (Assigned to the Honorable Roslyn O. Silver)

Defendant Hancock's Response at Docket Item #575 neither cures nor addresses the heart of the issue raised by this Motion in Limine: Defendant's stated intention to disclose and use attorney-client privileged communications before the jury during the upcoming trial. Defendant's assertions and arguments are inapposite at best and reflect a lack of regard for the law at worse.

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

I.

DEFENDANT'S EFFORT TO GOAD MERITAGE INTO WAIVING PRIVILEGE IS WRONGFUL AND A FRAUD UPON THIS COURT As explained in the Motion in Limine, Defendant seems bent on goading Meritage

into waiving attorney-client privilege. See Frisbee Declaration at ¶ 8 (##575 and 577). Defendant further seeks to commit a fraud on this Court and misrepresent facts to the jury. Id. Defendant has no factual basis for claiming that Meritage management did not

disclose the Hancock litigation to the Board of Directors. Defendant is also wrong because the litigation has been disclosed to the Board of Directors repeatedly since October 2004. See Declaration of Tim White filed contemporaneously herewith under seal and for in camera review only. II. DEFENDANT'S FAILURE TO PROVIDE AN ELECTRONIC VERSION OF THE 3:37 PM EMAIL Defendant still fails to provide an electronic version of the purported 3:37 pm email. He does not dispute that he has not provided Meritage with an electronic version of the email which would permit a review of the metadata. See Frisbee Declaration at ¶¶ 2 and 3. He also fails to provide the electronic version to this Court as well ­ a telling omission. Id. III. DEFENDANT STILL HAS NOT PROVIDED THE PROMISED ACCESS Although Defendant promised access to his computer to an "IT person" on June 24, 2008, see id. at ¶ 4, he does not dispute that he still has not provided that access as of the date of this filing, which is more than two weeks later. See id. at ¶¶ 4 to 6. Without even discussing the matter with the outside IT consultant engaged for the purpose or learning that the IT consultant only needs to look at the 3:37 pm email and the metadata associated with it only, Defendant concedes that he has no intent to allow such a search. Id. at ¶ 6. This search will only take a few minutes ­ despite Defendant's counsel's assurances to the contrary. Id. (It is not clear how Defendant's counsel reached his conclusion with respect to the length of time since he never returned either the outside IT consultant's phone call or undersigned counsel's repeated phone calls, as set forth in
Case 2:04-cv-00384-ROS Document 580- 2 - Filed 07/08/2008 Page 2 of 7

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Snell & Wilmer L.L.P.

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Exhibit 4 to the Motion in Limine at ¶ 3.) IV. THE PURPORTEDLY PRIVILEGED "INNARDS" OF HIS COMPUTER IS A RED-HERRING The purported privilege concern as to other documents on his computer is a redherring. Id. at ¶ 6. First, Defendant could have resolved this by simply providing and electronic version of the purported 3:37 pm email he claims to have sent. Second, the outside IT consultant only needs to look at the actual email as it resides. The consultant does not have to, and has been expressly instructed not to, look at any other email. Third, the 3:37 pm email's text and metadata are not privileged. The text was sent to Meritage's counsel which obviously is not privileged. Furthermore, metadata, which shows data such format, date and time of creation, date and time sent, and data showing recipients, was never communicated from Defendant's counsel to Defendant and is not a mental impression of an attorney. Therefore, the metadata is not, in this instance, privileged from discovery. V. DEFENDANT'S REFERENCE TO THE FACT THAT MERITAGE OBJECTED TO BOTH TRIAL EXHIBITS MISSES THE POINT ENTIRELY Defendant's argument that Meritage waived its right to exclude the exhibits because Meritage objected to Defendant's disclosure of Exhibit 1 and Exhibit 2 to the Motion in Limine as trial exhibits misses the point. Frisbee Declaration at ¶ 9. Meritage properly maintained its objections because Defendant's reference and intended use of the exhibits is improper and should not be allowed. In this matter, because of changes to the trial date, the Court had ordered the parties to file their List of Trial Exhibits and Objections to the Trial Exhibits three times. Each time, Defendant submitted the same list, and Meritage submitted the same objections. Declaration of Rick Erickson at ¶ 2 attached hereto as Exhibit 1. Between the first and second filing of the List and Objections, the email exchange detailed in Exhibit 3 to the Motion in Limine and the fact that Defendant had pulled the two Exhibits from his Exhibit Book at the end of October 2007 after the email exchange happened, leading
Case 2:04-cv-00384-ROS Document 580- 3 - Filed 07/08/2008 Page 3 of 7

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Snell & Wilmer L.L.P.

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Meritage to believe that Defendant was no longer using the two exhibits. See Exhibit 5 to the Motion in Limine at ¶ 5. Significantly, Defendant's counsel does not dispute that his paralegal had removed the two Exhibits from the official Exhibit Book Defendant provided to Meritage for use by the Court's staff at trial. Defendant seems to suggest that Meritage's failure to remove the objection somehow amounts to a waiver, but his logic is mistaken. The "failure to remove an objection" would not be a waiver in any circumstances; indeed, it is oxymoronic to argue that it is. For certain, it is not a waiver to object where the proponent of the exhibits removes them from the official trial book but keeps them on a list that preceded the removal from the trial book. VI. DEFENDANT'S COUNSEL MISUNDERSTANDS ARIZONA RULE OF PROFESSIONAL CONDUCT 4.4(B) AND IGNORES HIS OWN ACTIONS Defendant's counsel misunderstands Arizona Rule of Professional Conduct 4.4(b) when he asserts that Meritage "ordered" him to destroy the two exhibits that were inadvertently disclosed. Rather, Meritage was merely taking "protective measures" as expressly envisioned by the Rule. Ariz. R. Prof. Conduct 4.4(b). Even assuming that Defendant's counsel did send the purported 3:37 pm email, which for some reason Defendant is unwilling to substantiate with the electronic version, it does not void Defendant's duty to "preserve the status quo." Id. Moreover, Meritage asked whether Defendant would agree to remove the two exhibits from his List of Trial Exhibits and destroy all copies. Exhibit 3 to the Motion in Limine. Defendant agreed twice. Id. First, in September 2007, his responses indicated agreement. Id. Second, at the end of October 2007, Defendant agreed when his paralegal removed the two exhibits for the official Exhibit Book. See Exhibit 5 to the Motion in Limine at ¶ 5. Defendant's second acceptance of the agreement to remove the two exhibits and destroy all copies of them is after and irrespective of the purported 3:37 pm

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Snell & Wilmer L.L.P.

Case 2:04-cv-00384-ROS

Document 580- 4 - Filed 07/08/2008

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

email.1 VII. DEFENDANT CONCEDES THAT HE REMOVED THE TWO EXHIBITS FROM THE OFFICIAL EXHIBIT BOOK As noted above and argued in the Motion in Limine, Defendant does not dispute that he removed the two exhibits from the official Exhibit Book to be shared with this Court. This concession not only signals an acknowledgement that the two exhibits

remained privileged but also Defendant's acceptance of the terms of the parties' agreement on how to handle the inadvertent disclosure. VIII. DEFENDANT DOES NOT DISPUTE THAT THE TWO EXHIBITS ARE AND REMAIN PRIVILEGED As argued in the Motion in Limine, the two exhibits are attorney-client privileged and attorney work product and remained so despite the inadvertent disclosure. Defendant does not dispute this. IX. DEFENDANT DOES NOT DISPUTE THAT THE PRIVILEGE LOG AS WELL AS THE TITLES AND CONTENTS OF THE TWO EXHIBITS PUT HIM ON NOTICE THAT THEY WERE PRIVILEGED As argued in the Motion in Limine, the privilege log as well as the titles and contents of the two exhibits put Defendant on notice upon Defendant's counsel's receipt that the two exhibits were attorney-client privileged and attorney work product. 1 The subject of the request of Defendant's purported 3:37 pm email is also telling in this regard. It reads: "I will agree with you that they are privileged unless you stipulate that the Hancock litigation is nowhere mentioned in any of the Meritage corporate legal documents." Basically, Defendant promises that he will not further use the secret, confidential attorney-client privileged communications and attorney work product if Meritage discloses additional attorney-client privilege communications. This is extortion under Arizona law and illegal. See A.R.S. § 13-1804(A)(6) (extortion includes "knowingly . . . seeking to obtain property or services by means of a threat to do in the future . . . expose a secret or an asserted fact, whether true or false, tending to . . . impair the person's credit or business"). Defendant's "request" that Meritage stipulate "that the Hancock litigation is nowhere mentioned in any of the Meritage corporate legal documents" and Meritage's nonresponse to Defendant's "request" are telling for another reason. Since Defendant's requested stipulation is untrue and would be a fraud on the Court, see Declaration of Tim White filed contemporaneously herewith under seal and for in camera review only, Meritage would have unequivocally declined Defendant's "request". The absence of this "declination" also speaks volumes as to whether Meritage ever received the purported 3:37 pm email.
Document 580- 5 - Filed 07/08/2008

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Snell & Wilmer L.L.P.

Case 2:04-cv-00384-ROS

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Defendant does not dispute this. X. DEFENDANT'S COUNSEL CONCEDES THAT HE DID NOT COMPLY WITH ARIZONA RULE OF PROFESSIONAL CONDUCT 4.4(B) As argued in the Motion in Limine, because the two exhibits are attorney-client privileged and attorney work product and Defendant's counsel should have known so, Defendant's counsel does not dispute that he had an ethical duty in March 2006 to inform Meritage that he had received the two exhibits and failed to do so. XI. DEFENDANT DID NOT CHALLENGE THE NEED FOR THE PROPOSED REMEDY Defendant argues for an alternative remedy which involves further disclosure of attorney-client privileged communications and attorney work product. He does not argue, however, that the remedy proposed by Meritage is somehow flawed or inappropriate. That remedy is for an Order: · barring Defendant and his counsel from introducing Exhibit 1 or 2 or making any reference in testimony, questioning or argument to either exhibit; · barring Defendant and his counsel from making any reference in testimony, questioning or argument to the contents or the alleged lack of certain information in the contents of Exhibit 1 or 2; · directing Defendant's counsel to undertake a search to identify all persons who saw the document or became aware of its contents and provide a copy of this Court's order to all such persons; · striking Defendant's Response to Meritage [sic] Motion in Limine re Eileen Carlson at 3:22 to 4:4 (June 16, 2008) (#566) from the record; · ordering the Clerk to remove it from the file and PACER; and · ordering Defendant's counsel to pay Meritage the fees and costs it has incurred and will incur with respect to the instant Motion, any reply, any oral argument and any fees application associated with the Motion. ... ... ... ...
Case 2:04-cv-00384-ROS Document 580- 6 - Filed 07/08/2008 Page 6 of 7

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Snell & Wilmer L.L.P.

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Accordingly, Meritage respectfully requests that the Court enter the above Order. RESPECTFULLY SUBMITTED this 8th day of July, 2008. SNELL & WILMER L.L.P.

By s/ Dan W. Goldfine Dan W. Goldfine Richard G. Erickson Snell & Wilmer, L.L.P. One Arizona Center 400 E. Van Buren Street Phoenix, Arizona 85004-2202 Attorneys for Meritage and

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Case 2:04-cv-00384-ROS

Snell & Wilmer L.L.P.

By s/ Grant Woods Grant Woods, Esq. GRANT WOODS, P.C. 1726 North Seventh Street Phoenix, Arizona 85006 Attorneys for Meritage

CERTIFICATE OF SERVICE I hereby certify that on July 8th, 2008, I electronically transmitted the foregoing document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to all CM/ECF registrants.

s/ Lindsey M. Perez
8913021.3

Document 580- 7 - Filed 07/08/2008

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