Free Memorandum - District Court of Arizona - Arizona

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HINSHAW & CULBERTSON LLP
Suite 1600 3800 North Central Avenue Phoenix, Arizona 85012-1946 (602) 631-4400 (602) 631-4404 (fax)

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Brian Holohan (009124) [email protected] Darrell S. Dudzik (016465) [email protected] Attorneys for Defendants UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Ronald Craig Fish, a law corporation, a California corporation, vs. Plaintiff, ) ) No. CIV-03-67-PHX-SMM ) ) DEFENDANTS' MEMORANDUM RE ) PLAINTIFF S MOTION TO QUASH ) ) ) ) ) ) the Court should note that the

Thomas G. Watkins, III, an individual; et al., Defendants. Attorney Client Privilege As a starting point,

documents sought are almost entirely outside the attorney/ client privilege. In Arizona, the attorney/client privilege is created by statute, A.R.S. §12-2234, which protects

"communication made by the client to [the lawyer], or his advice given thereon in the course of professional

employment." From what we can divine from the privilege log, almost none of Mr. Falk's file fits that definition. But even those pieces of paper in his file that fit this definition are discoverable under the circumstances of this

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case. The Arizona courts have held the privilege can be waived by conduct by the holder of the privilege that to permit retention of the privilege would be unfair and inconsistent.1 State Farm v. Lee, 199 Ariz. 52, 13 P.3d 1169 (2000). As has been often stated by the courts, the privilege may not be used as both a sword and shield. See Ulibarri v. Superior Court,

184 Ariz. 382, 909 P.2d 449 (1996). Most often, the "sword/shield" waiver occurs when a party puts the substance of the privileged communication in issue. Ulibarri is an example. There, the plaintiff put the substance of her communications with her lawyer in issue by asserting the discovery rule as a way around the statute of limitations. In State Farm v. Lee, supra, it was State Farm's conduct of affirmatively alleging it had an appropriate mind state when denying (ultimately wrongly) thousands of first party claims. After the November 2005, Mr. Falk was first disclosed as a non-retained expert (whatever that is) who may give

testimony at the time of trial as to the reasonableness and necessity litigation. of attorney s fees incurred in the underlying

Putting Mr. Falk's bills at issue, and thereafter

disclosing him as an "expert" to offer opinion testimony, is the very kind of conduct State Farm v. Lee holds constitutes a waiver.
At the various hearings and in the motion to quash, Fish P.C.'s lawyers have cited federal authority on the privilege issue. None of the cases address §12-2234, the controlling authority.
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The Arizona courts have adopted the

fairness approach

to the issue of waiver. Arizona finds implied wavier where the plaintiff through his own affirmative conduct: (1) the

assertion of privilege is based on an affirmative act, such as filing suit, (2) through the affirmative act the asserting party puts the protected information at issue by making it relevant to the case and (3) application of the privilege would have denied the opposing party access to information vital to the defense. Elia v. Pifer, 194 Ariz. 74, 81, 977 P.2d 796, 803 (App., 1999).2 To permit Mr. Falk to testify

that the bills were reasonable and necessary while denying Defendants the opportunity to discover evidence to rebut that on the basis of privilege is the very sword/shield flip flop the Arizona courts eschew. All elements of the fairness doctrine are fulfilled here, plaintiff has filed suit seeking compensation for the attorney fees, the fees are relevant since they form the basis of plaintiff s claimed damages and absent evidence of the work performed, defendants would be denied evidence vital to the defense. Work Product Privilege By its terms, the work product protection of Rule

26(b)(3) is not absolute.
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Otherwise protected work product

The Court in Elia rejected the California approach to attorney-client privilege as did the Arizona Supreme Court in the case of State Farm v. Lee, 199 Ariz. 52 at 61, 13 P.3d, 1169 at 1178 (2000).

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can be ordered produced upon a showing of substantial need and the inability to "obtain the substantial equivalent" without undue hardship. The Ninth Circuit has held that opinion work

product may be discovered and admitted when mental impressions are at issue and the need for the material is compelling. Holmgren v State Farm, 976 F.2d 573, 577 (9th Cir. 1992). These tests are satisfied here. Plaintiff Fish, P.C. is claiming the bills submitted to it by Mr. Falk in the

underlying litigation as damages.

In five months, Mr. Falk

(whose P.C. practices in some kind of pseudo partnership with Fish P.C.) billed Fish P.C. over $375,000 in legal fees. compensable,3

Even assuming that attorneys' fees that one partner in a firm charges another partner in a firm are even

Defendants are entitled to delve through discovery into the reasonableness and necessity of those fees, an essential

element of Plaintiff's proof. ABC Supply, Inc. v. Edwards, 191 Ariz. 48, 52, 952 P.2d 286, 290 (App. 1998). Holmgren is demonstrative. There, approving the disclosure of an insurance company's claim file in bad faith litigation, the Court noted: Unless the information is available elsewhere, a Plaintiff may be able to establish a compelling need for evidence in the
In Lisa v. Strom, 183 Ariz. 415, 419, 904 P.2d 1239, 1243 (App. 1995), the Court vacated an award of attorneys' fees to a lawyer litigant who was represented by other colleagues in his office because of the lack of a genuine obligation to pay. That a genuine obligation to pay is missing here is demonstrated seemingly beyond any genuine dispute by the admission that little of Mr. Falk's elephantine bill was actually paid.
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insurers claim file regarding the insurer s opinion on the viability and value of the claim. Certainly, there will be 976 F.2d at 577. time entries that can be

corroborated or challenged by looking at matters of public record. But Mr. Falk's billings reflect extensive work that Thus, for example,

is not documented by the public record.

the bills claim Mr. Falk spent scores of hours researching various issues, an act which seems inconsistent with Fish

P.C.'s claim that probable cause was lacking.

(If the claims

so clearly lacked merit, why spend hours researching them?) Simply stated evidence of the work performed by Robert Hardy Falk upon which compensation is sought cannot be found anywhere else or obtained through any other means. obtained from his files. Holmgren product rule notes is to that the primary purpose of of the the work It must be

prevent

exploitation

parties

efforts in preparing for litigation, Admiral Insurance Company v. U.S. District Court, 881 F2d 1486 (1989). In this case the work product 976 F.2d at 576.

being requested is for the

underlying case that has been terminated, it is not for the instant case. Examining Mr. Falk s file does not provide

Defendants an advantage in the current case, but it does allow Defendants to prove that the attorney bills presented are

neither reasonable nor necessary. Defendants have presented compelling reasons. . . . 5
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DATED this 6th day of January, 2006. HINSHAW & CULBERTSON LLP

By /s/ Brian Holohan Brian Holohan ..Darrell S. Dudzik Attorneys for Defendants CERTIFICATE OF SERVICE I certify that on January 6, 2006, I electronically transmitted the attached document to the Clerk s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Robert Hardy Falk, Esq. [email protected] Attorney for Plaintiff Michael G. Ackerman, Esq. [email protected] Co-counsel for Plaintiff By
/s/ Brian Holohan

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