Free Memorandum - District Court of Arizona - Arizona

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BEUS GILBERT PLLC
ATTORNEYS AT LAW

4800 NORTH SCOTTSDALE ROAD SUITE 6000 SCOTTSDALE, ARIZONA 85251 TELEPHONE (480) 429-3000

Leo R. Beus/002687 ­ [email protected] Scot C. Stirling/005757 ­ [email protected] Steven E. Weinberger/015349 ­ [email protected] Kevin Breger/021004 ­ [email protected] Attorneys for Individual Plaintiffs and Trustee

STEVE BROWN & ASSOCIATES, LLC
8 9 10 11 UNITED STATES DISTRICT COURT 12 DISTRICT OF ARIZONA 13 14 15 16 17 18 19 20 21 vs. 22 23 24 25
H:\Leapsource\PLEADINGS\Memorandum re Gilman Attorney Client Privilege.doc

1414 E. INDIAN SCHOOL ROAD, SUITE 200 PHOENIX, ARIZONA 85014-2412 TELEPHONE (602) 264-9224

Steven J. Brown/010792 Co-Counsel for Trustee

DIANE MANN, as Trustee for the Estate of LeapSource, Inc., CHRISTINE V. KIRK, et al., Plaintiffs, vs. GTCR GOLDER RAUNER, L.L.C.; et al., Defendants. _______________________________ MICHAEL MAKINGS, Counterclaimant,
Case No.: CIV-02-2099-PHX-RCB

PLAINTIFFS' LEGAL MEMORANDUM RE ATTORNEY-CLIENT PRIVILEGE AND MENTAL IMPRESSION WORK PRODUCT PROTECTION FOR COMMUNICATIONS WITH PLAINTIFF TOM GILMAN (MATTER TO BE HEARD DURING TELEPHONIC CONFERENCE ON TUESDAY 01/10/06)

LEAPSOURCE, INC., et al., Counterdefendants.

Case 2:02-cv-02099-RCB

Document 308

Filed 01/06/2006

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INTRODUCTION Tom Gilman is one of the Individual Plaintiffs in this case, and is represented by counsel. While Mr. Gilman was the CFO of LeapSource, he was involved in efforts to sell the company or to find additional investors for the company, and the Plaintiffs have disclosed that Mr. Gilman will offer opinion testimony about the value of the business enterprise to support the Plaintiffs' damages claims.

7 Notwithstanding the Court's Order dated September 7, 2005, in which the Court ruled 8 9 10 11 12 13 14 15 16 17 decisions by Magistrate Judges (Kooima v. Zacklift Int'l, Inc., 209 F.R.D. 444 (D.S.D. 2002) 18 19 20 21 22 23 24 25 and Mushroom Ass'n. v. Monterey Mushrooms, Inc., 1992 U.S. Dist. LEXIS 20640 (N.D. Cal. Aug. 21, 1992)) who obviously assumed, incorrectly, that Rule 26(a)(2)(B) applies to parties as well as to retained experts ­ failing to recognize the distinction that the Court in this case recognized in its Order dated September 7, 2005 ­ and another case from California, applying a state court rule similar to Rule 26(a)(2)(B) that expressly applied both to retained experts and to parties. That rule has since been repealed. (Shooker v. Superior Court, 4 Cal.Rptr.3d 334 (Cal. App. 2nd Dist. 1st Div. 2003)).
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that Mr. Gilman was not an expert witness "retained or specially employed to provide expert testimony in the case," and therefore not obliged to produce an expert report in the manner provided for retained experts in Rule 26(a)(2)(B), the Defendants are attempting to force Mr. Gilman to testify about privileged communications with counsel, and to produce drafts of a summary of Mr. Gilman's opinions that was provided to his counsel. (See Exhibit A, a letter from Snell & Wilmer to Beus Gilbert dated December 13, 2005.) The only authority cited by the Defendants for their extraordinary claim that a plaintiff waives the attorney-client privilege by offering opinion testimony in a case are two

Neither of the federal
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Case 2:02-cv-02099-RCB

Document 308

Filed 01/06/2006

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decisions by the Magistrate Judges has ever been cited by any other court for the point argued by the Defendants here. The Defendants' argument is not only extraordinary and unsupported by any competent authority, but it would produce bizarre results. For example, in any case in which a landowner wanted to offer opinion testimony about the value of his own land in a

6 condemnation proceeding, the Defendants' argument would mean that the landowner waives 7 8 9 10 11 12 13 14 15 16 17 the ICG division of the business), to support the Plaintiffs' damages claims. 18 19 20 21 22 23 24 25 3
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the attorney-client privilege with respect to the subject of his opinions. In any case in which a plaintiff offered opinion testimony about the value of his business or property to support a claim for damages to the business or property, the Defendants' argument would mean that the plaintiff waives the attorney-client privilege. That is not the law. I. FACTUAL BACKGROUND TO THE DISPUTE In their disclosure dated July 15, 2005, the Plaintiffs disclosed that Individual Plaintiffs might be called upon to give opinion testimony under FRE 701, and/or 702, 703 and 705. The Plaintiffs also informed the Defendants' counsel that Mr. Gilman would be testifying about his opinions concerning the value of the business enterprise or its parts (i.e.,

The Defendants complained that Mr. Gilman was required to prepare and submit an expert report as provided in Rule 26(a)(2)(B) for "a witness who is retained or specially employed to provide expert testimony in the case," and moved to preclude the opinion testimony by Mr. Gilman. The Plaintiffs answered that Mr. Gilman was not a retained expert, and that he had no obligation to prepare such an expert report. In its Order dated September 7, 2005, the Court agreed with the Plaintiffs that Mr.

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Gilman (and the other Individual Plaintiffs) are not witnesses "retained or specially employed to provide expert testimony in the case," and that no expert reports were required to be prepared or served by such witnesses. At Mr. Gilman's deposition in August, before the Court had ruled on the Defendants' complaint, Mr. Gilman was asked whether he intended to prepare an "expert report." After

6 an objection from Plaintiffs' counsel and a discussion among counsel, Plaintiffs' counsel 7 8 9 10 11 12 13 14 15 16 with the Plaintiffs' answers to interrogatories from the Defendants about the Plaintiffs' 17 18 19 20 21 22 23 24 25 4
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explained that the Plaintiffs were under no obligation to prepare an expert report for Mr. Gilman's opinion testimony, but that the Plaintiffs were not averse to providing the Defendants with a written summary of his opinions before concluding Mr. Gilman's deposition, and allowing the Defendants to complete the deposition after that written summary was served upon them. Mr. Gilman subsequently prepared a draft summary of his opinions for review with Plaintiffs' counsel. It was provided to his counsel and discussed with counsel, and a final written summary of Mr. Gilman's opinions was subsequently prepared and served together

damages claims. The Plaintiffs maintain that the draft summary of Mr. Gilman's opinions are privileged and protected by the work product doctrine, in the same way that draft answers to interrogatory answers are privileged and protected by the work product doctrine. Mr. Gilman's oral communications with his attorneys about the subject of the opinions are also privileged. When Mr. Gilman's deposition was resumed after the summary of opinions and answers to damages interrogatories had been provided to Defendants, the Defendants asked

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Mr. Gilman about his privileged conversations with Plaintiffs' counsel and demanded the production of any drafts of the written summary of Mr. Gilman's opinions. The Plaintiffs' counsel objected and advised Mr. Gilman not to answer questions about his privileged communications with his attorneys, and the Plaintiffs have refused to produce any remaining drafts of the written summary of opinions (such drafts are not kept in the ordinary course;

6 instead, such documents are typically overwritten as revisions are made on the word 7 8 9 10 11 12 13 14 15 16 waived the attorney-client privilege with respect to the subject of his opinions by being 17 18 19 20 21 22 23 24 25 5
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processing system).

Because Mr. Gilman is not a retained expert, and has not been

designated as a retained expert, the Plaintiffs continue to insist ­ as the Court has already ruled ­ that the disclosure obligations relating to retained experts do not apply to Mr. Gilman, and that he is under no obligation to testify about privileged communications with his attorneys. After the conclusion of Mr. Gilman's deposition, the Defendants wrote to the Plaintiffs' counsel (Exhibit A), citing the three cases mentioned above (and discussed in the following section of this Memorandum) as support for their claim that Mr. Gilman has

identified as a person who will give opinion testimony.

The non-precedential federal

"authorities" cited by the Defendants are not only wrong, but flatly contradict the Court's Order in this case, dated September 7, 2005, which recognized the distinction made in the federal rules between (1) a party to a lawsuit who gives opinion testimony in the case and (2) "a witness who is retained or specially employed to provide expert testimony in the case," whose communications with counsel are not privileged precisely because they are not clients who are entitled to assert the attorney-client privilege. The federal authorities cited by the

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Defendants obviously did not recognize or understand the distinction. II. THE DEFENDANTS HAVE CITED NO COMPETENT AUTHORITY FOR THEIR CLAIM THAT A PLAINTIFF WAIVES THE ATTORNEY-CLIENT PRIVILEGE BY OFFERING OPINION TESTIMONY Mr. Gilman's communications with his attorneys about this lawsuit, including the subject of his opinion testimony, are privileged. See A.R.S. § 12-2234; Buell v. Super. Ct. of Maricopa County, 96 Ariz. 62, 391 P.2d 919 (1964); Rule 501, Federal Rules of Evidence.

7 The privilege for such communications is waived only if the client voluntarily testifies with 8 9 10 11 12 13 14 15 16 17 of an attorney." Hickman v. Taylor, 329 U.S. 495, 510, 67 S.Ct. 385, 393 (1947). Further, 18 19 20 21 22 23 24 25 6
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respect to such communications. A.R.S. § 12-2236. Here, Mr. Gilman has refused to testify about his privileged communications with counsel. Although the Defendants have attempted to cast Mr. Gilman in the role of a "designated expert" whose communications with counsel are not privileged (not because they are "designated experts," but because they are not clients), the Court has already recognized that Mr. Gilman is nothing of the kind. Mental impression work product is also protected and "[n]ot even the most liberal of discovery theories can justify unwarranted inquiries into the files and the mental impressions

where a party does try and invade the protection of work product the burden rests squarely with that party to show why they should be entitled to invade the protected material and why that material should be disclosed. As the Hickman Court points out: But the general policy against invading the privacy of an attorney's course of preparation is so well recognized and so essential to an orderly working of our system of legal procedure that a burden rests on the one who would invade that privacy to establish adequate reasons to justify production through a subpoena or court order.

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Id. at 512. As referenced above the three cases relied on by the Defendants do not help them since they are all Rule 26(a)(2)(B) cases and are quite simply not on point. Even if one were to assume that they were on point, which they are not, they do not help the Defendants: Kooima v. Zacklift Int'l, Inc., 209 F.R.D. 444 (D.S.D. 2002) is a

6 district court opinion penned by a Magistrate Judge. The opinion has no analysis on the 7 8 9 10 11 12 13 14 15 16 added). What they fail to point out is that the Magistrate Judge's holding was NOT that the 17 18 19 20 21 22 23 24 25 7
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distinction between a "party" and a "retained expert" with respect to the privilege issue, which is, as this Court recognizes, a pivotal and important distinction. In fact, none of the cases sighted in Kooima are cases where the "expert" was also a party. Moreover, and perhaps of even more significance, is the fact that what the court held is NOT consistent with what the Defendants suggest is the holding of the case. The Defendants correctly quote Kooima in Exhibit A: "Because Plaintiff has designated himself as an expert, therefore, all documents and information disclosed to him (including correspondence from his attorneys) in connection with his anticipated expert testimony are discoverable." Id. at 447 (emphasis

privilege had been waived, but that if there were documents that were privileged, such documents need be produced in a privilege log. "If Plaintiff wishes to withhold some on privilege or work product grounds, he must produce the "privilege log" described in Rule 26(b)(5)." Id. at 447. Shooker v. Superior Court, 4 Cal.Rptr.3d 334 (Cal. App. 2nd Dist. 1st Div. 2003) does not support the Defendant's argument for a number of reasons. Their quotation from the case does not reflect the holding of the case since the court found that the party had

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withdrawn his designation of himself as an expert witness. Since he had withdrawn himself as an expert witness any analysis by the court with respect to waiver is dictum. There is an even more important reason that Shooker does not help the Defendants. Shooker is a California case dealing with California law. The California Code Civ. Proc. § 2034, which is the equivalent of Federal Rule of Civil Procedure 26(a)(2), is very different to

6 Federal Rule of Civil Procedure 26(a)(2). Cal. Code Civ. Proc. § 2034(a)(2) specifically 7 8 9 10 11 12 13 14 15 16 contradistinction is personally a party and a Plaintiff in this case. Further, the Mushroom 17 18 19 20 21 22 23 24 25 8
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states "if any expert designated by a party under paragraph (1) is a party. . ." then such designation "shall include or be accompanied by an expert witness declaration" (which is equivalent of a report under Federal Rule of Civil Procedure 26). Thus the California rule specifically makes provisions for parties who designated themselves as experts to provide expert reports whereas the Federal Rules do NOT. Finally, Mushroom Ass'n. v. Monterey Mushrooms, Inc., 1992 U.S. Dist. LEXIS 20640 (N.D. Cal. Aug. 21, 1992) is not a case where a party named himself as an expert but rather where an employee of a corporation was named as an expert. Thomas Gilman in

case did not hold that privilege had been waived with respect to communications with counsel or with respect to any work product but rather that documents that the witness had reviewed to formulate his opinion, production documents, were discoverable. Id. at *7. It is uncontested that the Defendants were allowed to inquire of Mr. Gilman at his deposition as to what documents he considered when formulating his opinion. The Defendants did ask these types of questions. Mr. Gilman answered and Plaintiffs' counsel did not object to this line of questioning based on privilege or based on the mental impression work product

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doctrine. III. CONCLUSION For all the above reasons the Plaintiffs' respectfully submit that the court conclude that Mr. Gilman has not waived the attorney-client privilege by offering opinion testimony and that any communications relating to his opinion testimony are privileged and that no drafts of Mr. Gilman's summary or any other work product relating to his opinion need be

7 disclosed. To conclude otherwise would be contrary to the Courts previous order in this 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9
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case. Dated this 6th day of January, 2006. BEUS GILBERT PLLC

By

s/Kevin Breger Leo R. Beus Scot C. Stirling Steven E. Weinberger Kevin Breger 4800 North Scottsdale Road Suite 6000 Scottsdale, AZ 85251 Attorneys for Individual Plaintiffs and Trustee

STEVE BROWN & ASSOCIATES, LLC Steven J. Brown 1414 E. Indian School Road, Suite 200 Phoenix, AZ 85014 Co-Counsel for Trustee

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CERTIFICATE OF SERVICE I hereby 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: Kevin A. Russell David S. Foster Nicholas B. Gorga LATHAM & WATKINS LLP [email protected] [email protected] [email protected] Attorneys for Defendants GTCR Golder Rauner, LLC, GTCR Fund VI, LP, GTCR VI Executive Fund, LP, GTCR Associates VI, Joseph P. Nolan, Bruce V. Rauner, Daniel Yih, David A. Donnini and Philip A. Canfield Don P. Martin Edward A. Salanga QUARLES & BRADY STREICH LANG, LLP [email protected] [email protected] Attorneys for Defendants GTCR Golder Rauner, LLC, GTCR Fund VI, LP, GTCR VI Executive Fund, LP, GTCR Associates VI, Joseph P. Nolan, Bruce V. Rauner, Daniel Yih, David A. Donnini and Philip A. Canfield Merrick B. Firestone Veronica L. Manolio RONAN & FIRESTONE, PLC [email protected] [email protected] Attorney for Defendant Michael Makings

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 __s/Kevin Breger_______________________ 17 18 19 20 21 22 23 24 25 11
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Richard A. Halloran Jon Weiss LEWIS & ROCA, L.L.P. [email protected] [email protected] Attorneys for Defendants David Eaton and AEG Partners LLC John Bouma James R. Condo Patricia Lee Refo SNELL & WILMER LLP [email protected] [email protected] [email protected] Attorneys for Kirkland & Ellis Steven J. Brown STEVE BROWN & ASSOCIATES, LLC Co-Counsel for Trustee [email protected]