Free Order on Motion to Compel - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 On June 27, 2005, the Court heard arguments from Plaintiffs Diane Mann, et al., and Defendant Kirkland & Ellis ("K&E") regarding certain discovery disputes. Such disputes involve the contested waiver of Plaintiffs' attorney-client privilege and a proposed form of order. Pl. Memo (doc. 223); Pl. Memo (doc. 224). Having carefully considered the arguments presented by the parties, the court now rules. I. Background Facts This action was originally filed in the Arizona state court, Vs. GTCR Golder Rauner, L.L.C., a Delaware limited liability company, et al., Defendants. Diane Mann, as Trustee for the Estate of LeapSource, Inc., et al., Plaintiffs, ) ) ) ) ) ) ) ) ) ) ) ) ) ) IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

No. CIV 02-2099-PHX RCB O R D E R

Case 2:02-cv-02099-RCB

Document 226-2

Filed 07/12/2005

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alleging numerous state law claims arising out of the financial demise of LeapSource, Inc. ("LeapSource"). LeapSource is a

Phoenix-based "business process outsourcing" company, formed to provide accounting and employee benefit services to mid-sized businesses. Motion (doc. 16) at 1. The defendants in this action

include a number of individuals and companies who were involved in various transactions related to the start-up and operation of LeapSource. The plaintiffs in this action include the LeapSource bankruptcy trustee, as well as eight individuals who served in principal positions with LeapSource (including Kirk). of Rem. (doc. 1) Ex. A, Amended Complaint. See Notice

Plaintiffs' complaint

alleges various causes of action against the defendants both collectively and individually. On March 28, 2005, a hearing was held in this matter regarding certain discovery issues. (doc. 180). Prior to the hearing, Plaintiffs and K&E submitted briefs defining the contested privilege issues to be discussed. (docs. 184 & 185). The Court ruled on these disputes in its Order of April 12, 2005. (doc. 191). Pursuant to the Court's order, K&E filed a motion to compel on April 15, 2005. (doc. 193). Plaintiffs, in their response to K&E's motion, raised no objections to producing the requested information. Resp. (doc. 201) at 2. Thereafter, however, the parties requested another hearing regarding additional discovery disputes. Such hearing was held on June 27, 2005. This order seeks to resolve the matters raised at the June hearing. 1. Andersen Litigation Documents At the hearing on June 27, 2005, K&E argued that Plaintiffs -2Document 226-2 Filed 07/12/2005

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waived any attorney-client privilege in relation to documents involving the Arthur Andersen litigation ("Andersen Litigation Documents"). (Hearing Transcript, June 27, 2005, at 11:57:05PM12:03:04PM).1 Specifically, K&E asserted that due to Plaintiffs' past partial production of such documents, Plaintiffs have waived their attorney-client privilege in relation to all the Andersen Litigation Documents. Id. This matter was previously raised by K&E in the discovery dispute hearing held on March 28, 2005. Def. Memo (doc. 184) at 4. In its Order of April 12, 2005, the Court resolved the majority of the discovery issues raised by the parties at the March hearing. Order (doc. 191). However, the Court did not resolve the issue, raised by K&E as dispute number "five," regarding whether Plaintiffs had waived its attorney-client privilege due to a "wholesale production" of protected documents. Id. at 10. Specifically, the Court held that such dispute and any others, if any still remained after the ruling, must be briefed and filed by a determined date. Id. IT IS FINALLY ORDERED that, to the extent that this Order has not resolved all the contested discovery issues and made moot the generalized waiver argument noted as point five (5) in the parties' briefs, the Court will allow Defendant to file a motion on that issue by or on Friday, April 18, 2005, with service on all parties by fax or hand-delivery. Id.2 Pursuant to the Court's order, K&E filed a motion to compel

The Court notes that K&E has not filed a motion to compel the production of the Andersen Litigation Documents. The Court notes its mistake of setting the deadline for filing any motions as "Friday, April 18, 2005." The date of April 18, 2005, Case 2:02-cv-02099-RCB -3Document 226-2 Filed 07/12/2005 Page 3 of 5
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before the deadline of April 18, 2005, but specifically excluded the Andersen Litigation Documents from the motion. Motion (doc. 193) at n. 2. Now, K&E attempts to raise the issue of waiver again, seventy (70) days after the Court's deadline for motions on such disputes. K&E asserts that it did not understand the Court's Order to require that it raise this matter by the April 18, 2005 deadline. (Hearing Transcript, June 27, 2005, at 12:08:01PM-12:08:19PM). However, the Court finds this argument disingenuous. K&E does not deny that this issue was previously raised at the prior discovery dispute hearing on March 28, 2005. Therefore, K&E had notice that the issue was contemplated in the Court's Order that resulted from that hearing. Moreover, the fact that K&E, in its timely motion to compel, explicitly attempted to defer consideration of the matter indicates to the Court that K&E was aware of the deadline defined in the Court's Order. Accordingly, the Court concludes that K&E has not raised the issue of waiver in a timely manner, and, therefore, is precluded from filing a motion to compel the Andersen Litigation Documents. 2. Proposed Order on Motion to Compel On April 15, 2005, K&E filed a motion to compel in this matter. (doc. 193). Plaintiffs, in their response, stated that they did not oppose K&E's motion due to its expressed limitations. (doc. 201) at 2. However, the parties now cannot agree upon a specific form of order that resolves the parties' discovery

was actually a Monday instead of a Friday. However, the Court finds that this mistake has no affect on the matters currently before the Court. Case 2:02-cv-02099-RCB -4Document 226-2 Filed 07/12/2005 Page 4 of 5

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disputes. Plaintiffs request that the proposed order include language that states that the order "does not extend to attorneyclient communications relating to the Arthur Andersen litigation, nor to attorney-client communications relating to the representation of the bankruptcy trustee in this litigation or in any other." Pl. Prop. Order (doc. 223). Plaintiffs ask that such language be included to indicate that "nothing was decided by the Court on the merits of the Motion." Pl. Memo (doc. 223) at 2. In contrast, K&E proposes an order that does not include such language. D. Prop. Order (doc. 225). The concerns Plaintiffs raise in connection with their proposed order are resolved by the Court's previous discussion in this order on the generalized waiver issue. Therefore, IT IS ORDERED that K&E's Motion to Compel, which excluded the Arthur Andersen documents, (doc. 193) is GRANTED. DATED this 12th day of July, 2005.

Copies to counsel of record.

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