In re Daugherty

• Decision Date: 15 August 2018
• Docket Number: No. 05-17-01436-CV,05-17-01436-CV
• Citation: 558 S.W.3d 272
• Parties: IN RE Patrick DAUGHERTY, Relator
• Court: Texas Court of Appeals

558 S.W.3d 272

IN RE Patrick DAUGHERTY, Relator

No. 05-17-01436-CV

Court of Appeals of Texas, Dallas.

Opinion Filed August 15, 2018

Jim Moseley, Andrew K. York, Dylan O. Drummond, Sonya D. Reddy, Gray Reed & McGraw, LLP, Dallas, TX, for Relator Patrick Daugherty.

Marc D. Katz, Crystal Woods, DLA Piper LLP (US), Michael K. Hurst, Lynn Pinker Cox & Hurst LLP, Dallas, TX, for Real party in interes Highland Capital Management, LP.

Thomas A. Uebler, Cooch & Taylor, PA, Wilmington, DE, for Real party in interest NexBank Capital, Inc.

Wendy Schreiber, Dallas TX, pro se.

Rogge Dunn, Brian Patrick Shaw, Clouse Dunn LLP, Dallas, TX, for Real party in interest Joshua Terry.

Judith L. Kunreuther, Livingston, NJ, for Real party in interest Veritext Corp.

Before Justices Bridges, Fillmore, and Schenck

Opinion by Justice Schenck

In this mandamus proceeding, relator Patrick Daugherty seeks relief from the trial court’s December 13, 2017 discovery order (the "Order") in this case. After reviewing the parties' briefs and the mandamus record, we have determined Daugherty is entitled to relief from the Order. We therefore conditionally grant the writ.

BACKGROUND

Daugherty resigned from his employment with real party in interest Highland Capital Management, L.P. ("Highland") in 2011. Highland brought suit against Daugherty in the 68th Judicial District Court of Dallas County ("Daugherty Lawsuit") and obtained a jury verdict against him for breaches of contract and fiduciary duty and a permanent injunction barring him from using or disseminating Highland’s confidential information. Since that time, Highland has brought additional actions against Daugherty for alleged violations of the permanent injunction by communicating with Joshua Terry, another former Highland employee. See In re Daugherty , No. 05-18-00290-CV, 2018 WL 3031658, at *1 (Tex. App.—Dallas June 19, 2018, orig. proceeding) (mem. op.); In re Daugherty , No. 05-17-01129-CV, 2018 WL 3031705, at *1 (Tex. App.—Dallas June 19, 2018, orig. proceeding) (mem. op.). Daugherty filed a separate suit in Delaware against one of Highland’s affiliates ("Delaware Lawsuit"). Daugherty also initiated a miscellaneous action ("Miscellaneous Action") seeking recordings that Terry had made while employed with Highland. That case was assigned to the 191st Judicial District Court of Dallas County, and on September 5, 2017, Daugherty issued a subpoena duces tecum directed to Terry, which commanded production of the recordings by 10 a.m. on September 22, 2017.

On September 21, 2017, Highland filed an emergency motion for entry of protective order and request to transfer the Miscellaneous Action to the 68th Judicial District Court. Later that day, Daugherty’s attorneys received ninety minutes' notice that the respondent, the presiding judge of the 68th Judicial District Court, wished to conduct a telephonic hearing on Highland’s emergency motion with counsel for Daugherty, Highland, and Terry. The court’s coordinator did not know if the court’s official reporter would be available to transcribe the hearing, so Daugherty’s attorneys engaged an independent court reporter, Wendy Schreiber, to transcribe the hearing from their offices. Unbeknownst to Daugherty’s attorneys, Schreiber’s stenographic program made an audio recording of the hearing and began recording several minutes before the hearing began. At various times during the call, Daugherty’s attorneys muted their telephone and conducted discussions amongst themselves, portions of which may have been captured by Schreiber’s recording device or overheard by her. Near the end of the call, it was revealed that Daugherty’s attorneys had engaged a court reporter to transcribe the telephonic hearing. The judge did not make a ruling during that call and ordered the parties to appear before him at a later date to argue the merits of Highland’s transfer request. When counsel for Daugherty asked the judge to clarify whether he was ordering Daugherty to appear at a subsequent hearing, the judge then ordered the parties to appear before him the next day.

Highland obtained a copy of the certified transcript from Veritext, Schreiber’s employer, and requested a copy of the entire audio recording made in connection with the telephonic hearing to check the accuracy of the transcript. Highland issued subpoenas to Schreiber and Veritext to respond to written questions regarding the hearing and to produce the audio recordings and notes made of the hearing and all communications related to the Miscellaneous Action. Daugherty filed a motion to quash and a motion for protective order in response to Highland’s subpoenas, urging that the audio recording of the hearing contained conversations among Daugherty’s attorneys before, during, and after the call that constitute their core work product and, in any event, are irrelevant to either the Delaware Lawsuit or the Miscellaneous Action. Highland filed a combined response to Daugherty’s motion to quash, motion to compel Veritext to comply with its subpoena, and motion for sanctions against Daugherty’s attorneys.

The trial court conducted a hearing on Daugherty’s motion to quash at which Schreiber appeared and answered the judge’s questions, but did not do so under oath. At that hearing, Schreiber did not confirm that the audio recording captured any particular statements unheard by the trial judge or opposing counsel, but indicated that her recording device was recording before the call began and throughout the call, leaving the possibility that the audio recording would reflect statements not heard (or intended to be heard) by the court or opposing counsel. She also indicated that she may have overheard statements among Daugherty’s counsel, but she did not pay attention to them. At the conclusion of the hearing, the judge ordered that Schreiber and Veritext produce the portion of the audio recording "from the moment that the ... other side basically gets on the phone to the moment they get off." The judge later signed the Order, denying Daugherty’s motion to quash, granting in part Highland’s motion to compel, and ordering production of the audio recording. Daugherty filed this petition for writ of mandamus urging this Court to stay the Order and issue a writ of mandamus directing the trial court to vacate the Order.

AVAILABILITY OF MANDAMUS REVIEW

To obtain mandamus relief, a relator must show both that the trial court has clearly abused its discretion and that the relator has no adequate appellate remedy. In re Prudential Ins. Co. , 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding); Walker v. Packer , 827 S.W.2d 833, 839–40 (Tex. 1992) (orig. proceeding). A trial court has no discretion in determining what the law is or applying the law to the facts. In re Prudential , 148 S.W.3d at 135 (quoting Walker , 827 S.W.2d at 840 ).

DISCUSSION

The audio recording evidently contains statements made while Schreiber was in the room with Daugherty’s counsel and may contain statements that were not heard by opposing counsel or the trial court judge and were not included in the certified transcript ("unheard statements").

Highland’s arguments in its response to Daugherty’s motion to quash/for protective order urge the production of the audio recording on two broad bases: (1) to verify the accuracy of the certified transcript and (2) to obtain relevant information not subject to any privilege either as a necessary augmentation to the official record of the hearing or as a general discovery matter. As to Highland’s claim it needs to verify the accuracy of the certified transcript of the hearing, it has failed to allege any relevant inaccuracy with respect to the recounting of the exchange between counsel and the court or to otherwise establish circumstances justifying compelling the production of any audio recording that may exist. See In re Todd , Nos. 12-15-00412-CV & 12-15-00413-CV, 2015 WL 4249799, at *3 (Tex. App.—Houston [14th Dist.] July 14, 2015, orig. proceeding) (mem. op. per curiam); see also In re Pratt , 511 F.3d 483, 485 (5th Cir. 2007). Indeed, the crux of Highland’s argument is that it is entitled to access to the audio recording to the extent it reflects statements that were not heard at the hearing, posing the legal question of whether statements that are not heard or intended to be heard are nevertheless part of the "hearing" or subject to discovery on account of their being overheard by a court reporter or captured by her recording device.

Before considering Highland’s second argument for production, we must determine whether the "unheard statements" on the audio recording are or should be part of the trial court’s record of the hearing. Unsurprisingly, there is sparse authority directly addressing this question.

We begin with the acknowledgement that the common law has long presumed a right of public access to inspect and copy all judicial records and documents. Nixon v. Warner Commc'ns, Inc. , 435 U.S. 589, 597, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978). While Nixon’s rule is broadly accepted and followed among state courts, including our own, see TEX. R. CIV. P. 76a, fewer courts have addressed the antecedent question of how a document becomes a judicial record in the first instance. The Seventh Circuit, for example, has consistently held that a document becomes a judicial document and thus becomes part of the public record only when it is filed under circumstances where a court might use it in determining litigants' substantive rights. City of Greenville, Ill. v. Syngenta Crop Prot., LLC , 764 F.3d 695, 697–98 (7th Cir. 2014) (limiting presumption of public access to materials that affect judicial decisions). A document that is simply filed with the clerk, for example, in hopes of converting it into an embarrassing and publicly available record, but that does not or cannot form any potential part of the judge’s reasoning, is not a judicial document. See id.¹ Our rules similarly limit what parties are expected to...