Flores v. Cooper Tire and Rubber Co., 1 CA-CV 06-0655.

• Decision Date: 25 March 2008
• Docket Number: No. 1 CA-CV 06-0655.,1 CA-CV 06-0655.
• Citation: 218 Ariz. 52,178 P.3d 1176
• Parties: Juan Carlos Franco FLORES, on his own behalf and as Personal Representative of the Estate of Bartolo Franco Molina and Virginia Flores Duran, deceased; Consuelo Franco Flores; Rosio Lizette Franco Flores and Maria Irma Franco Flores, surviving children of Bartolo Franco Molina and Virginia Flores Duran, deceased; Norma Alicia Franco Flores, on her own behalf and as a surviving child of Bartolo Franco Molina and Virginia Flores Duran, deceased, Plaintiffs-Appellees, and Scripps-Howard Broadcasting Co., dba KNXV-TV, and Abbie Boudreau, Intervenors-Appellees, v. COOPER TIRE AND RUBBER COMPANY, a Delaware corporation, Defendant-Appellant.
• Court: Arizona Court of Appeals

178 P.3d 1176

218 Ariz. 52

Juan Carlos Franco FLORES, on his own behalf and as Personal Representative of the Estate of Bartolo Franco Molina and Virginia Flores Duran, deceased; Consuelo Franco Flores; Rosio Lizette Franco Flores and Maria Irma Franco Flores, surviving children of Bartolo Franco Molina and Virginia Flores Duran, deceased; Norma Alicia Franco Flores, on her own behalf and as a surviving child of Bartolo Franco Molina and Virginia Flores Duran, deceased, Plaintiffs-Appellees, and Scripps-Howard Broadcasting Co., dba KNXV-TV, and Abbie Boudreau, Intervenors-Appellees, v. COOPER TIRE AND RUBBER COMPANY, a Delaware corporation, Defendant-Appellant.

No. 1 CA-CV 06-0655.

Court of Appeals of Arizona, Division 1, Department A.

March 25, 2008.

Richard A. Castillo, Phoenix, Attorney for Plaintiffs-Appellees.

Steptoe & Johnson, LLP by David J. Bodney, Peter S. Kozinets, Karen J. Hartman-Tellez, Phoenix, Attorneys for Intervenors-Appellees.

Lewis and Roca by Foster Robberson, Kimberly Demarchi, Karen Killion, Phoenix, Attorneys for Defendant-Appellant.

OPINION

PORTLEY, Judge.

¶ 1 Cooper Tire and Rubber Company ("Cooper") challenges the superior court's ruling that Abbie Boudreau ("Boudreau"), a reporter for Scripps-Howard Broadcasting, dba KNXV-TV ("KNXV"), did not breach the court's confidentiality order when the television station broadcast her story about the safety of Cooper's tires. In resolving this appeal, we address three issues: (1) whether the court properly balanced the reporter-informant privilege and Cooper's property interests when it fashioned an ex parte, in camera procedure to determine if Boudreau obtained information about Cooper in violation of a confidentiality order; (2) whether the court erred in holding that the reporter-informant privilege had not been waived; and (3) whether the court's procedure was consistent with our prior decision order. For the following reasons, we affirm the trial court's ruling.

FACTS AND PROCEDURAL BACKGROUND

¶ 2 The plaintiff, Juan C.F. Flores, sued Cooper on his own behalf and as the personal representative of his parents' estate. He alleged that a Cooper tire had a tread separation and caused his parents' car to roll over, which resulted in their deaths.

¶ 3 Boudreau attended portions of the trial. On September 20, 2005, the trial court informed Boudreau about a confidentiality order that had been entered mandating that all "[t]rial exhibits that contain confidential information will not become part of the public file, and will not be accessible to the public." Boudreau agreed in writing to be bound by the order even though she did not see it.

¶ 4 Boudreau asked the trial court if she could report things she learned after the trial. The court responded in part: "the answer to that is probably no." The court also told Boudreau to direct questions on what she could and could not report to Cooper's lawyer:

There are things you can obviously report and talk about, but when it comes to the specific documents that are the subject of these confidentiality orders, you cannot disclose their content to the public. If you need to find out which specific ones there are, I invite you after the proceedings to talk to defense counsel . . . and they will be able to advise you.

¶ 5 Later that day Boudreau learned from Cooper's counsel, Walter Yoka, that documents containing "formulas" or "numbers" were trade secrets subject to the confidentiality order. He also advised her to contact Patricia Brown, Cooper's Vice President of Global Branding and Communications, for answers to questions about confidential documents.

¶ 6 Weeks after a settlement,¹ a confidential source provided Boudreau with documents related to the safety and durability of Cooper's tires ("the Documents"). The Documents purportedly were authored by Cooper employees during the 1990s. They had no confidentiality notations or Bates² numbers. KNXV subsequently used two of the Documents to prepare a story concerning the safety of Cooper's tires, this lawsuit, and other products liability cases against Cooper.

¶ 7 Before airing the story, KNXV contacted Brown to request an interview for inclusion in the broadcast. KNXV informed her that it possessed documents regarding problems with Cooper's tires dating back to 1996 and documents that Cooper had refused to pursue safety measures suggested by its own employees due to cost concerns. Cooper declined to participate in the interview. Cooper did not inform KNXV that the Documents Boudreau described were confidential or might be subject to any confidentiality order.

¶ 8 KNXV aired the story ("the Broadcast") on November 3, 2005. KNXV made the Broadcast available on its website until November 9, 2005. A few days after the Broadcast, Cooper's counsel told KNXV's counsel that the documents shown in the Broadcast were confidential and subject to the trial court's confidentiality order. Cooper asked KNXV to (1) reveal its confidential source for the Documents, (2) return all copies of the Documents to Cooper, (3) agree not to disseminate the Documents and their contents further, including a prohibition on further disseminating the Broadcast, and (4) admit that KNXV had violated the trial court's confidentiality order.

¶ 9 KNXV declined to reveal its source, but did remove the Broadcast from its internet website.

¶ 10 On November 10, 2005, Cooper's counsel showed KNXV's counsel documents appearing to be the same as the Documents shown in the Broadcast, but with Bates numbers and notations that the documents were "Confidential." Cooper's counsel explained that the December 1996 memorandum had been marked and admitted into evidence, and the March 13, 2000 memorandum had been marked but was never offered or admitted into evidence.

¶ 11 Five days later, KNXV sought to intervene in the case. It sought a judicial declaration that it had complied with the confidentiality order and could continue to disseminate the Broadcast and the Documents. Cooper filed a "Cross-Motion For Affirmative Relief As To Intervenors" requesting, among other things, an order requiring KNXV to disclose the identity of its confidential source.

¶ 12 After a hearing in March 2006, the trial court permitted KNXV to intervene, but denied Cooper's request to compel Boudreau to reveal her confidential source. The court, however, granted Cooper's request to preclude further broadcasts of the Documents.

¶ 13 KNXV challenged the ruling by filing a petition for special action. We accepted jurisdiction and granted partial relief in a decision order. Specifically, we concluded that the constitutionality of the trial court's order depended upon whether the Documents came from a source outside the litigation. Accordingly, we directed the trial court to conduct "an in camera review of the underlying facts as to how the subject documents were obtained" and ordered KNXV to "provide further factual information sufficient to allow the trial court to make an informed determination as to whether the source of the three documents in question was independent of this litigation." Our mandate issued on August 15, 2006.

¶ 14 KNXV sought an in camera hearing. Cooper filed two responses and also requested the trial court to find that the reporter-informant privilege was waived. In reply, KNXV argued that in camera review meant review in chambers with no counsel present. Cooper contended that KNXV was changing what we had ordered because an in camera hearing did not equate to an ex parte hearing.

¶ 15 At oral argument, KNXV asked the trial court to review the Boudreau declaration in camera, along with forty-one sworn statements from trial participants who denied providing the Documents to KNXV.

¶ 16 After rejecting Cooper's waiver argument, the trial court adopted a two-step proceeding for its in camera review. First, the court would review, in camera, a declaration by Boudreau. The court invited Cooper to submit "a checklist of things [the court] should be looking for in th[e] declaration." If additional information were necessary, the trial court would then take the second step and conduct an in camera evidentiary hearing. Cooper declined to submit any checklist.

¶ 17 After reviewing the Boudreau declaration, the trial court found "that the source [for] the [D]ocuments was independent from and outside this litigation." The court then vacated its prior order restraining further dissemination of the Broadcast and the Documents.

¶ 18 Cooper unsuccessfully sought special action relief from this court. The Arizona Supreme Court, after receiving a special action petition and stay request, denied Cooper's request for stay but allowed it to seek relief from the United States Supreme Court. The Arizona Supreme Court treated Cooper's request for consideration by the full court as a petition for review and denied it. Cooper's Application to the United States Supreme Court for a Stay or Injunction Pending Disposition of Petition for Writ of Certiorari was denied, as was its petition for certiorari.

¶ 19 Cooper filed this appeal. Specifically, it challenges the court's order declining to find a waiver of the reporter-informant privilege and permitting the filing of the Boudreau declaration under seal for the trial court's eyes only. In addition, Cooper challenges the August 22, 2006 signed minute entry that found that the Documents' source was outside the litigation and that vacated the order preventing KNXV and Boudreau from further broadcasting or discussing the contents of the Documents.

DISCUSSION

¶ 20 We review whether an evidentiary privilege applies de novo because it is a legal question. See Twin City Fire Ins. Co. v. Burke, 204 Ariz. 251, 254, ¶ 10, 63 P.3d 282, 285 (2003). Whether a privilege has been waived poses a mixed question of law and fact, which we also review de novo, see id., unless that question hinges on resolution of conflicting facts or witness credibility issues, in which case we...