Dentsply Int'l, Inc. v. Lewis And Roca, LLP

• Decision Date: 25 June 2013
• Docket Number: No. 1:12-CV-00104-MCA/ACT,1:12-CV-00104-MCA/ACT
• Parties: DENTSPLY INTERNATIONAL, INC., a Delaware Business Corporation, and TULSA DENTAL PRODUCTS, LLC, a Delaware Limited Liability Company, Plaintiffs, v. LEWIS AND ROCA, LLP and THOMAS P. GULLEY, ESQ., Defendants.
• Court: U.S. District Court — District of New Mexico

DENTSPLY INTERNATIONAL, INC., a Delaware Business Corporation,and TULSA DENTAL PRODUCTS, LLC, a Delaware Limited Liability Company, Plaintiffs,

v.LEWIS AND ROCA, LLP and THOMAS P. GULLEY, ESQ., Defendants.

No. 1:12-CV-00104-MCA/ACT

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

Dated: June 25, 2013

MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court on Lewis and Roca, LLP's ("Lewis and Roca") Motion to Compel [Doc. 47] filed November 5, 2012 ("First Motion"). Dentsply International, Inc. ("Dentsply") and Tulsa Dental Products, LLC, ("TDP" and collectively "Plaintiffs") filed Plaintiffs' Opposition to Lewis And Roca LLP's Motion to Compel [Doc. 50] on December 3, 2012 ("Response to First Motion"). Lewis and Roca's Reply in Support of Motion to Compel (Doc. 47) [Doc. 61] was filed on January 3, 2013 ("Reply to First Motion").

THIS MATTER also comes before the Court on Lewis and Roca's Motion for Leave to File Surreply in Support of Motion to Compel (Doc. 47) [Doc. 74] filed on March 8, 2013 ("Motion for Surreply"). Plaintiffs' Response in Opposition to Lewis and Roca, LLP's Motion for Leave to File Surreply in Support of Motion to Compel [Doc. 81] was filed on March 25, 2013 ("Response to Surreply"). Lewis and Roca, LLP's Reply in Support of Motion for Leave to file Surreply in Support of Motion to Compel (Doc.74) [Doc. 85] was filed on April 8, 2013 ("Reply to Surreply").

THIS MATTER also comes before the Court on Lewis and Roca's Motion to Compel Answers to Deposition Questions [Doc. 75] filed March 8, 2013 ("Second Motion").¹ Plaintiffs' Response in Opposition to Defendant Lewis and Roca LLP's Motion to Compel Answers to Deposition Questions [Doc. 78] was filed on March 22, 2013 ("Response to Second Motion"). Lewis and Roca's Reply in Support of Motion to Compel Answers to Deposition Questions (Doc. 75) [Doc. 86] was filed on April 8, 2013 ("Reply to Second Motion"). The Court held a hearing on these matters on May 8, 2013. [Doc. 105.]

The Court, having heard the argument of counsel, reviewed the submissions of the parties, considered the relevant law, and being fully advised in the premises, finds that Defendants' First Motion is well taken and will be GRANTED, the Motion for Leave to file a Surreply is DENIED as moot, and Defendants' Second Motion is well taken and will be GRANTED.

INTRODUCTION

This legal malpractice action arose from legal services provided by Lewis and Roca and Thomas Gulley, Esq. ("Gulley" and collectively "Defendants") to Plaintiffs when they were sued in a contract dispute by Guidance Endodontics, LLC ("Guidance").² [Doc. 47 at 1; Doc. 50 at 1.] The underlying litigation was tried to a jury which returned a verdict on October 9, 2009, in favor of Guidance in excess of $44 million, including compensatory, nominal, and punitivedamages. [UL Doc. 440;³ Doc. 50 at 1; Doc. 47 at 2.] Finding this amount excessive, the trial judge, the Honorable James O. Browning, ordered a remittitur of the nominal and punitive damages so that the judgment against Dentsply and TDP in the underlying litigation totaled $8,160,002.00. Id.⁴ In the underlying litigation, Judge Browning offered Guidance the option of accepting the remittitur or "should Guidance Endodontics reject the Court's remitted award, the Court will conduct a full-blown retrial." Guidance Endodontics, 08-cv-01101-JB-KBM, Memorandum Opinion and Order [UL Doc. 632 at 49] filed on May 9, 2011.

After the trial, Plaintiffs hired Morgan Lewis & Bockius, LLP ("Morgan") as counsel for purposes of post-trial matters and the appeal. [Doc. 50 at 1.] Defendants remained counsel of record to Plaintiffs until June of 2011. [UL Doc. 641.] In August 2011, with the assistance of Morgan, Plaintiffs settled the underlying litigation for $11,500,000.00, an amount exceeding the remittitur. [Doc. 47 at 2; UL Doc. 672 (Stipulation of Dismissal filed August 19, 2011.] At the May 8, 2013, hearing, counsel explained that while Defendants conducted post-trial motions practice through the Court's ruling on the remittitur, they were not included in any discussions with regard to the option to settle the underlying case. Plaintiffs additionally retained GoodellDeVries Leech & Dunn, LLP ("Goodell") to pursue this legal malpractice action. [Doc. 50 at 1 - 2.]⁵

In the instant lawsuit, Plaintiffs assert that Defendants' alleged breach of the standard of care in the underlying litigation forced them to settle the matter. [Doc. 1 at 18, 20.] Plaintiffs seek damages of the full amount paid to settle the underlying litigation, attorney fees incurred in the underlying litigation, attorney fees incurred in post-trial and settlement proceedings, attorney fees for the instant malpractice action, and pre and post judgment interest all of which totals in excess of fifteen million dollars ($15,000,000.00). [Doc. 1 at 18, 20, and 21.]

Defendants served written discovery on Plaintiffs seeking documents generated during the underlying litigation, post-trial, and settlement proceedings. [Doc. 47 at 2; Doc. 47-1.] Plaintiffs objected to several discovery requests on the grounds the information sought is protected by the attorney-client privilege or work-product doctrine. [Doc. 47-1.] In January 2013, Defendants deposed Plaintiffs' in-house counsel, Brian Addison, in Baltimore, Maryland. [Doc. 75 at 1 - 2; Doc. 78 at 2, n. 2.] During the deposition, Mr. Addison was instructed not to answer three questions on the basis of attorney-client privilege. [Doc. 75 at 2.]⁶

Defendants argue that Plaintiffs have failed to establish that any privilege is applicable, and have failed to produce a privilege log with respect to the written discovery [Doc. 47 at 3 -4]; that Plaintiffs have implicitly waived the attorney-client privilege because they have put "at issue" the analysis and advice of counsel which led them to settle the case [Doc. 47 at 4 - 7; Doc. 75 at 2 - 3]; that Federal Rule of Civil Procedure 26(b)(3)(A)(i-iii) warrants production of any documents withheld under the work-product doctrine [Doc. 47 at 7 - 8]; that Rule 11-503(D)(3) NMRA provides a specific exception to the general rule of attorney-client privilege, which they claim is applicable in this case [Doc. 75 at 2]; and that designating Howard M. Radzely, Esq., a former attorney at Morgan involved in the underlying litigation, as a hybrid fact/expert witness, waives the attorney-client privilege [Doc. 75 at 3].

Plaintiffs argue that under the Federal Rules of Civil Procedure, they are not required to produce a privilege log, although they subsequently produced one; that there has not been any waiver of the privilege; and that Defendants have not met their burden to overcome the work-product doctrine. [Doc. 50.] Plaintiffs also argue that the exception to the attorney-client privilege under New Mexico Rule 11-505(D)(3) does not apply in this case; that the settlement of the underlying case does not waive the attorney-client privilege; and that designating Mr. Radzely as a witness does not waive the attorney-client privilege. [Doc. 78.]

The parties do not discuss the applicability of a particular privilege or work product protection to any specific document; instead, they argue the general validity and effect of the privileges to the discovery requested and deposition questions asked under the facts and circumstances of this case. Accordingly, the Court will address the applicability of the attorney-client privilege and work-product doctrine as they pertain to the particular facts of this case.

RELEVANT LAW

While discovery in federal court is very broad, the attorney-client privilege and the attorney work-product doctrine set boundaries on what litigants can obtain. In a diversity case, state law governs the scope of the attorney-client privilege, whether there has been a waiver, and the scope of any waiver. Federal law, however, continues to govern all issues related to the work-product doctrine. Anaya v. CBS Broad., Inc., 251 F.R.D. 645, 649 (D.N.M. 2007).

1. Scope of Discovery.

Rule 26(b)(1) of the Federal Rules of Civil Procedure provides:

Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.

Fed.R.Civ.P. 26(b)(1). The scope of discovery under the federal rules is broad and "discovery is not limited to issues raised by the pleadings, for discovery itself is designed to help define and clarify the issues." Gomez v. Martin Marietta Corp., 50 F.3d 1511, 1520 (10th Cir. 1995)(citation omitted). The attorney-client privilege and work-product protection, however, limit the broad scope of permissible discovery. Anaya, 251 F.R.D. at 650 (D.N.M. 2007).

2. Attorney-Client Privilege.

"The lawyer-client privilege rests on the need for the advocate and counselor to know all that relates to the client's reasons for seeking representation if the professional mission is to be carried out." Trammel v. United States, 445 U.S. 40, 51, 100 S.Ct. 906, 63 L.Ed.2d 186 (1980). The privilege's purpose is "to encourage clients to make full disclosure to their attorneys." Fisher v. United States, 425 U.S. 391, 403, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976). Pursuant to rule 501 ofthe Federal Rules of Evidence, state law supplies the rules concerning attorney-client privilege in diversity cases. Frontier Refining, Inc. v. Gorman-Rupp Co., Inc., 136 F.3d 695, 699 (10th Cir.1998).

Under New Mexico law, the attorney-client privilege applies to "confidential communications made for the purpose of...