In re Avantel, S.A.

• Decision Date: 12 August 2003
• Docket Number: No. 03-50474.,03-50474.
• Citation: 343 F.3d 311
• Parties: In Re: AVANTEL, S.A., Petitioner.
• Court: U.S. Court of Appeals — Fifth Circuit

343 F.3d 311

In Re: AVANTEL, S.A., Petitioner.

No. 03-50474.

United States Court of Appeals, Fifth Circuit.

August 12, 2003.

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James E. Tancula, Terry Dean Kernell, Timothy J. Tyler, Jennifer L. Mott, Gabriela Rivero Brown, Mayer, Brown, Rowe & Maw, Houston, TX, Robert Lawrence Bronston, Mayer, Brown, Rowe & Maw, Washington, DC, for Petitioner.

David Erwin Dunham, Karen Crook Burgess, Taylor & Dunham, Austin, TX, for Respondent.

On Petition for Writ of Mandamus to the United States District Court for the Western District of Texas.

Before JONES, DeMOSS and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

This is a proceeding for mandamus in which it is asserted that the district court erred by compelling production of documents ostensibly protected by the attorney-client privilege and the Mexican professional secret doctrine. We decline to issue the writ of mandamus at this time, as we are confident that the district court will reconsider its ruling in light of this opinion. Also before this court are four pending motions obliquely related to the mandamus petition. These motions are addressed in due course.

I.

Petitioner Avantel, S.A., is a Mexican corporation that provides telecommunications services in Mexico. Teleplus, also a telecommunications company, is a Texas corporation. The present controversy stems from events beginning around April 1996, when Avantel and Teleplus entered into a written contract under which Teleplus agreed to perform marketing services on Avantel's behalf. Prior to 1997, individuals and businesses in Mexico were required to purchase their long-distance telephone services from Telefonos de Mexico. In early 1997, Mexico launched its so-called Equal Access campaign, which allowed Mexican residents and businesses to choose their long-distance carrier.

Teleplus alleges in the instant lawsuit that Avantel solicited it to enter into an oral agreement (which it claims was separate from the written contract) under which Teleplus promised to solicit Mexican residents to select Avantel as their long-distance carrier. Teleplus alleges further that this oral agreement was for a three-year term, and that it entitled Teleplus to an ongoing percentage of the long-distance payments from all the customers it convinced to choose Avantel as their carrier.

Throughout the Equal Access campaign, Avantel dealt with two of Teleplus's Mexican affiliates, not Teleplus itself. These affiliates are Servicios de Comunicaciones Mexicanos, S. de R.L. de C.V. ("SCM") and Comunicaciones del Sol, S.A. de C.V. ("CDS"). SCM and CDS are both Mexican corporations and maintain their principal places of business in Mexico. SCM and CDS claim that they assigned their claims against Avantel under the purported oral agreement to Teleplus. Such an assignment establishes diversity jurisdiction in this matter.

Teleplus filed this lawsuit in the Western District of Texas on September 19, 1998, against MCI Telecommunications Corp. (together with other MCI-related subsidiaries later added to the case, "the MCI defendants"), which owns part of Avantel. Avantel was added as a defendant in December 2000. Teleplus dismissed its claims against the MCI defendants in July 2002, upon public disclosure of MCI's impending bankruptcy; thus, Teleplus's most recent complaint names only Avantel as a defendant. Teleplus currently seeks recovery under various theories, including breach of contract, promissory estoppel, negligent misrepresentation, quantum meruit, and fraud.

During discovery, Avantel withheld its ostensibly privileged documents from production, providing Teleplus with a log of those documents. In response, Teleplus filed a motion to compel production of the documents listed in the privilege log, asking the district court to conduct an in camera inspection of the documents. Avantel opposed that request on the ground that all of the listed documents were properly withheld from production during discovery, because they were protected by the attorney-client privilege under Texas law, the federal work-product doctrine, or the privileges established by the Mexican professional secret doctrine. Avantel provided the district court with a declaration from Roberto Rendon, a Mexican attorney, to help explain the scope of this Mexican legal doctrine. The district court then ordered that Avantel submit its privileged documents for an in camera inspection. After Avantel submitted these documents, the district court asked the parties to brief the choice-of-law issues surrounding application of the Mexican professional secret doctrine.

After considering the parties' arguments, the district court issued an order regarding Avantel's claims of the attorney-client privilege, the work-product doctrine, and the professional secret doctrine. See Teleplus, Inc. v. Avantel, S.A., No. SA 98-CA-849 WWJ (W.D.Tex. April 9, 2003) (order) (hereinafter "Order"). The district court held that Avantel failed to prove that the Mexican professional secret doctrine conflicted with Texas law and, therefore, it chose not to conduct a choice-of-law analysis. Order at 2-4. The district court determined, furthermore, that Rendon's testimony failed to prove the Mexican doctrine adequately and conclusively. Id. at 3.

The district court then analyzed the attorney-client privilege under Texas law. In March 1998, the district court noted, Texas abandoned its so-called control-group test used for determining the scope of the attorney-client for corporate clients and, in its place, adopted the more expansive subject-matter test.¹ The district court, however, determined that the control-group test should apply to communications made prior to March 1998.

After reaching its conclusions, the district court determined that 46 of the documents in issue were not privileged, and it ordered Avantel to produce them to Teleplus.² Avantel then petitioned this court for a writ of mandamus, asserting that the 46 documents are protected by the professional secret doctrine and that 29 of the documents are protected by the Texas attorney-client privilege.³ Avantel also filed a motion with this court for an emergency stay of the district court's Order, which motion was granted.

When Avantel filed its petition for the writ of mandamus, including the necessary accompanying appendices, it failed to request that volume one of the appendix, which contained the putatively privileged documents, be filed under seal. Furthermore, Avantel served counsel for Teleplus with an unredacted copy of this volume. Avantel maintains that these disclosures were inadvertent and, accordingly, none of its claimed privileges have been compromised. For this reason, Avantel filed an emergency motion to place volume one of the appendix under seal and to order Teleplus to return all copies of the unredacted appendix. In addition to filing a response to Avantel's petition and to its emergency motion, Teleplus also filed a motion to dismiss the petition on grounds that Avantel's failure to file its documents under seal and its serving Teleplus with the ostensibly privileged documents constituted a waiver of any privilege and, therefore, rendered moot Avantel's petition.⁴ Also pending before this court is Teleplus's motion for leave to file a sur-response to Avantel's motion to place volume one of the appendix under seal.

To summarize, then, the following petitions and motions are before this court:

(i) Avantel's petition for the writ of mandamus;

(ii) Avantel's motion to place volume one of the appendix under seal;

(iii) Avantel's motion to order Teleplus to return all copies of any produced privileged documents, specifically, volume one of appendix;

(iv) Teleplus's motion to dismiss Avantel's petition for the writ of mandamus; and

(v) Teleplus's motion for leave to file a sur-response to Avantel's motion to place volume one of the appendix under seal.

II.

At the heart of this matter lies Avantel's petition for the writ of mandamus. As such, that is where our analysis begins. Specifically, Avantel's petition seeks a determination compelling the district court to vacate its Order requiring Avantel to produce to Teleplus the ostensibly privileged documents in issue. The All Writs Act, 28 U.S.C. § 1651, and Rule 21, Fed.R.App. R., permit this court to issue the writ of mandamus should the circumstances warrant it.

Our standard for issuing the writ of mandamus has been addressed often and thoroughly, most notably in In re Occidental Petroleum Corp., 217 F.3d 293, 295 (5th Cir.2000). Mandamus is an appropriate remedy "when the trial court has exceeded its jurisdiction or has declined to exercise it, or when the trial court has so clearly and indisputably abused its discretion as to compel prompt intervention by the appellate court." In re Dresser Indus., Inc., 972 F.2d 540, 543 (5th Cir.1992) (internal citations and quotation marks omitted). Merely showing that the district court erred is insufficient to obtain mandamus relief. Occidental, 217 F.3d at 295 (citing In re United States, 878 F.2d 153, 158 (5th Cir.1989) (noting that "generally discovery and similar pretrial orders, even erroneous ones, are not reviewable on mandamus")). Rather, "[m]andamus is an extraordinary remedy reserved for extraordinary cases," one granted "not as a matter of right, but in the exercise of a sound judicial discretion." Southern Pac. Transp. Co. v. City of San Antonio Public Service Board, 748 F.2d 266, 270 (5th Cir. 1984). A mere showing of error, after all, may be corrected on appeal: "[I]t is more than well-settled that a writ of mandamus is not to be used as a substitute for appeal." In re American Marine Holding Co., 14 F.3d 276, 277 (5th Cir.1994). Thus, for Avantel to establish entitlement to mandamus relief, it must show not only that the district court erred, but that it clearly and indisputably erred. See Occidental, 217 F.3d at 295. Moreover, Avantel must...