In re Fairway Methanol LLC, 14–16–00884–CV

• Decision Date: 31 January 2017
• Docket Number: NO. 14–16–00884–CV,14–16–00884–CV
• Citation: 515 S.W.3d 480
• Parties: IN RE FAIRWAY METHANOL LLC and Celanese Ltd., Relators
• Court: Texas Court of Appeals

515 S.W.3d 480

IN RE FAIRWAY METHANOL LLC and Celanese Ltd., Relators

NO. 14–16–00884–CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed January 31, 2017

Steven Dominic Sanfelippo, Dallas, TX, for Relator.

Anthony Glenn Buzbee, Manuel Solis, Houston, TX, for Real Party in Interest.

Panel consists of Justices Christopher, Jamison, and Donovan.

OPINION

Tracy Christopher, Justice

On November 7, 2016, relators Fairway Methanol LLC and Celanese Ltd. filed a petition for writ of mandamus in this court. See Tex. Gov't Code Ann. § 22.221 (West 2004) ; see also Tex. R. App. P. 52. In the petition, relators ask this court to compel the Honorable Brent Gamble, presiding judge of the 270th District Court of Harris County, to vacate his Order on Plaintiffs' Motion to Compel signed on October 12, 2016 that requires relators to: (1) remove any and all attorney-client privilege and work-product privilege objections to Plaintiffs' Request for "Any and all incident, accident and/or investigation reports made or filed by you regarding the Occurrence made the basis of this lawsuit, "any and all statements related to this Occurrence" and "all documents related to any interviews conducted by you", and (2) produce documents responsive to this request.

We conclude many of the documents at issue are protected by the attorney-client privilege and the work product privilege and that the trial court therefore abused its discretion by ordering their production. There is no adequate remedy by appeal for this error. We conditionally grant the petition for writ of mandamus as specified in the conclusion.

I. FACTUAL AND PROCEDURAL BACKGROUND

Relator Celanese Ltd. ("Celanese") owns and operates the Clear Lake Facility in Pasadena, Texas. Jose Salazar ("Salazar") was employed by Celanese as an electrician at the Clear Lake Facility. On November 19, 2014, Salazar was injured when he tripped on an angled iron that was protruding from the floor and fell into charged electrical equipment while working at the Clear Lake Facility.

Celanese asserts that because of the circumstances surrounding the accident and the severe nature of Salazar's injuries, it believed that there was a substantial likelihood that Salazar would bring personal injury and workers' compensation claims against Celanese and its related companies. On November 20, 2014, Gary Rowen ("Rowen"), who served as in-house attorney for defendant Celanese Corporation, requested that an investigative team provide the Celanese Law Department with the information needed to assess potential liability in potential litigation and to begin strategizing legal theories and defenses to any claims raised in anticipated legal or regulatory proceedings.

According to Rowen, the primary purpose for the investigation and creation of documents and communications therefrom was to aid Celanese in preparing to defend itself in anticipated litigation. As a secondary concern, the information communicated from the investigative team to the legal department was necessary for the legal department to provide Celanese with business and legal advice with respect to the potential termination of employees involved in the accident.

The team was comprised of Celanese employees, including Gregorio Aguilar, Paresh Bhakta, Linda Blais, Brian Connelly, Duard Franklin, Stuart Hightower, Thomas Mattix, and Doug Wallace. The team was supervised and directed by attorneys in the Celanese legal department with guidance from outside legal counsel. The team members were immediately informed that the investigation was for the purpose of assisting counsel and instructed that all communications and documents generated during their investigation must be kept confidential and marked as "Privileged and Confidential" or "Attorney–Client Privilege–Attorney Work Product."

The investigative team conducted interviews and site inspections and communicated their findings to the Celanese Law Department. This included a root cause analysis which was necessary for the Celanese Law Department to evaluate liability and begin developing a strategy for defending Celanese in likely impending civil and regulatory litigation.

Less than six months after the accident, on April 9, 2015, Salazar and his wife (collectively "Plaintiffs") filed suit, asserting claims against various entities including relator Fairway Methanol, LLC ("Fairway"). Fairway is a separate joint venture producing methanol at the Clear Lake Facility. Plaintiffs did not sue relator Celanese Ltd., but did sue two related entities, Celanese Corporation and Celanese International Corporation.

In May 2015, Plaintiffs served discovery requests on Fairway. Fairway responded and produced over 11,000 pages of documents. Among the category of documents requested from Fairway were "any and all incident accident and/or investigation reports made or filed by you regarding the Occurrence made the basis of this lawsuit," "any and all statements related to this Occurrence," and "all documents related to any interviews conducted by you, related to and following the Occurrence." Fairway objected to the request to the extent it sought attorney-client and work-product privileged documents, but because it did not participate in any investigation of the accident, it responded that it had no responsive documents or information in its possession, custody, or control.

Plaintiffs then served a deposition on written question with subpoena duces tecum on Celanese, with eighty-five separate requests for production. Celanese responded and produced over 42,000 pages of documents. In response to Plaintiffs' request for "any and all incident accident and/or investigation reports made or filed by you regarding the Occurrence made the basis of this lawsuit," "any and all statements related to this Occurrence," and "all documents related to any interviews conducted by you, related to and following the Occurrence", Celanese asserted the attorney-client privilege and work-product privilege and stated that it was withholding documents pursuant to these privileges.

On July 12, 2016, Plaintiffs filed a motion to compel the production of the documents that Celanese had withheld as privileged. Plaintiffs also sought to compel production of these same documents from Fairway.

On September 23, 2016, the trial court held a non-evidentiary hearing on Plaintiffs' motion to compel. At the hearing, the trial court requested Celanese to provide all documents it withheld for in camera inspection and Celanese did so. On October 12, 2016, the trial court signed an order granting the motion to compel and ordering the production of all of the documents:

Defendant Fairway Methanol, LLC and Celanese Ltd. must remove any and all attorney-client privilege and work-product privilege objections to Plaintiffs' Request for ‘Any and all incident, accident and/or investigation reports made or filed by you regarding the Occurrence made the basis of this lawsuit,’ ‘any and all statements related to this Occurrence’ and ‘all documents related to any interviews conducted by you’ respectively. Defendant Fairway Methanol and/or Celanese Ltd. must produce responsive documents to this Request no later than ten days after the signing of this Order.

In its petition for writ of mandamus, Celanese argues that the responsive documents that it withheld are protected by the attorney-client and work product privileges and that the trial court abused its discretion by ordering their production.

II. MANDAMUS STANDARD

To obtain mandamus relief, a relator generally must show both that the trial court clearly abused its discretion and that the relator has no adequate remedy by appeal. In re Prudential Ins. Co ., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding).

"Mandamus is proper when the trial court erroneously orders the disclosure of privileged information because the trial court's error cannot be corrected on appeal." In re E.I. DuPont de Nemours & Co ., 136 S.W.3d 218, 223 (Tex. 2004) (orig. proceeding) (per curiam); see also In re Living Centers of Texas, Inc ., 175 S.W.3d 253, 256 (Tex. 2005) (orig. proceeding) ("mandamus is appropriate if we conclude that [documents] are privileged and have been improperly ordered disclosed").

A trial court clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails to analyze the law correctly or properly apply the law to the facts. In re Cerberus Capital Mgmt. L.P. , 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam). "Whether a discovery privilege applies is a matter of statutory construction" and "[s]tatutory construction is a question of law we review de novo." In re Christus Santa Rosa Health Sys ., 492 S.W.3d 276, 280 (Tex. 2016). The issue of whether a trial court has properly applied the law of privileges to the documents sought to be discovered is reviewed with limited deference. See Keene Corp. v. Caldwell , 840 S.W.2d 715, 718 (Tex. App.–Houston [14th Dist.] 1992, no writ).

There is no presumption that documents are privileged, and the party seeking to resist discovery bears the burden of proving an applicable privilege. In re E.I. DuPont de Nemours & Co., 136 S.W.3d at 223, 225.

III. ANALYSIS

A. Celanese made a prima facie showing that the communications are protected by the attorney-client privilege.

The attorney-client privilege protects:

confidential communications made for the purpose of facilitating the rendition of professional legal services to the client (1) between himself or his representative and his lawyer or his lawyer's representative, (2) between his lawyer and the lawyer's representative, (3) by him or his representative or his lawyer or a representative of the lawyer to a lawyer, or a representative of a lawyer representing another party in a pending action and concerning a matter of common interest therein, (4) between representatives of the client or between the client and a representative

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