In re Gutierrez
| Decision Date | 11 May 2023 |
| Docket Number | 01-22-00188-CV,01-22-00190-CV |
| Parties | IN RE MAURICIO GUTIERREZ AND NRG ENERGY, INC., Relators IN RE ISSUANCE OF SUBPOENA FOR THE DEPOSITION OF MAURICIO GUTIERREZ |
| Court | Texas Court of Appeals |
On Appeal from the 152nd District Court Harris County, Texas Trial Court Case No. 2022-01400.
Panel consists of Justices Landau, Countiss, and Guerra.
A Louisiana court issued a letter rogatory asking a Harris County court to issue a subpoena for the deposition of Mauricio Gutierrez, a Texas resident and CEO of NRG Energy Inc. The parties seeking to depose Gutierrez-Washington-St. Tammany Electric Cooperative, Inc. (WST) and Claiborne Electric Cooperative, Inc. (Claiborne) (collectively, the Co-ops)-petitioned the Harris County trial court to issue the subpoena. Gutierrez and NRG opposed the petition and sought a protective order preventing the deposition. The trial court signed a discovery order denying Gutierrez and NRG's motion for protection and compelling the deposition. Gutierrez and NRG have challenged the trial court's discovery order in an appeal and in a petition for writ of mandamus, contending the trial court abused its discretion because (1) Texas's apex-deposition rule prevents the district court from enforcing the Louisiana letter rogatory and (2) the Co-ops' Texas counsel should have been disqualified based on an imputed conflict of interest.
Because we conclude these issues may be decided by appeal, we deny the mandamus petition. In the appeal, we affirm the district court's order.
The Louisiana lawsuit [1]
WST and Claiborne are member-owned electric cooperative corporations and plaintiffs in a Louisiana breach-of-contract lawsuit against LaGen. In their Louisiana lawsuit, the Co-ops allege that LaGen owns and operates electric power generation and transmission facilities in Louisiana, including the Big Cajun II power generating plant in Pointe Coupee Parish, and supplies them with power under contracts executed in 2002 and amended in 2011, as to Claiborne, and in 2012, as to Washington-St. Tammany. LaGen was a subsidiary of NRG when the power supply contracts in the Louisiana lawsuit were executed. NRG sold LaGen in 2019.
At issue are the power supply contracts' clause allocating the costs of complying with changes in environmental law. According to the Co-ops, the environmental law clause provides that the Co-ops are responsible only for a share of the "additional costs of complying" with post-contract changes in environmental laws and not for any costs to remediate pre-contract environmental conditions or any penalties or costs resulting from violations of any environmental law. In their view, LaGen is exclusively responsible for those costs.
The Louisiana petition states that three units at the Big Cajun II power generating plant "became operational in the early 1980s" and "were constructed to use coal as a fuel source." In 2009, the United States Environmental Protection Agency filed an enforcement action against LaGen under the Clean Air Act, alleging that unpermitted modifications to the Big Cajun II power generating plant in 1998 and 1999 increased the net emission of air pollutants. According to the Co-ops, the enforcement action resolved through a consent decree in 2012 (Consent Decree), which required LaGen to implement measures to reduce and control emissions of nitrogen oxides (NOx), sulfur dioxide (SO2), and particulate matter (PM). The petition alleges that LaGen agreed in the Consent Decree to:
One of the Consent Decree's recitals states that "a portion of the emissions technology, including related to PM emissions and refueling, under th[e] [C]onsent [D]ecree, will allow [LaGen] to comply with the Mercury Air Toxics Rule [sic], a change in environmental law promulgated after the filing of the [EPA's] complaint." The Co-ops contend that this recital references a Mercury and Air Toxic Standards (MATS Rule) that was promulgated by the EPA and became effective in 2012, during the enforcement action, and which, among other things, "required a reduction in certain toxic air pollutants from existing coal-fired power plants like those owned by LaGen." According to the Co-ops, LaGen used the recital to "re-characterize tens of millions of dollars in Consent Decree costs as related to the 2012 [MATS Rule]." For instance, the Co-ops allege that LaGen has identified, among other things, the cost of a boiler conversion from coal to natural gas at Unit 2, ESP upgrades at Units 1 and 3, and the CEMs for Units 1 and 3 as MATS Rule costs even though those emission controls were required by the Consent Decree. And they allege that LaGen breached the power supply contracts by improperly passing on these costs to comply with the Consent Decree, and others, as costs related to the MATS Rule. The Co-ops also seek declarations on these matters.
The Co-ops asserted in the Louisiana court that although they have taken 20 depositions in connection with their claims against LaGen, they require the deposition of Gutierrez, who is now NRG's chief executive officer. Neither Gutierrez nor NRG is a party to the Louisiana lawsuit or the power supply contracts.[2] But the Co-ops allege that at the relevant times LaGen was an NRG subsidiary and Gutierrez, then serving as NRG's chief operating officer, approved the Consent Decree. Because Gutierrez is a Texas resident, and therefore outside the subpoena range, the Co-ops obtained a letter rogatory from the Louisiana court, which requested that a Harris County district court issue a subpoena compelling Gutierrez's deposition in Houston for use in the Louisiana lawsuit.
The Texas proceeding
The Co-ops petitioned the Harris County district court under Texas Rule of Civil Procedure 201.2 to enforce the letter rogatory and issue a subpoena compelling Gutierrez's deposition in the Louisiana lawsuit.
Gutierrez and NRG appeared in the district court and jointly moved for a protective order to prohibit the deposition. They urged the district court to apply Texas's apex-deposition rule and find the Co-ops had not satisfied that standard by showing Gutierrez possesses "unique, non-repetitive knowledge" or that "less intrusive means of discovery have been exhausted without success." The motion accompanied Gutierrez's affidavit denying that he has "any unique or superior knowledge of relevant facts concerning the subject matter of the [Louisiana] lawsuit" or "the allegation that [LaGen] improperly classified costs it incurred to settle a matter with the [EPA] as costs related to LaGen's compliance with environmental regulations." As to his role in approving the Consent Decree, Gutierrez stated:
[I]n 2012, I was [COO] for NRG. In this position, I presented a proposed settlement with the EPA in the matter captioned Environmental Protection Agency v. Louisiana Generating, LLC (M.D. La. No. 09-100) to NRG's CEO at that time for his approval, who in turn had received settlement authority from NRG's Board of Directors []. I presented this settlement based on recommendations I received from other NRG employees, including those already deposed in the [Louisiana lawsuit]. These employees conducted an extensive evaluation of the matter prior to presenting any recommendations to me. In other words, while I have knowledge of some facts relating to the [Consent Decree] by virtue of my former position as COO, all of those facts were relayed to me by other NRG employees. As such, I do not have unique or superior knowledge about the allegations asserted in the [Louisiana lawsuit].
Gutierrez and NRG also moved to disqualify the Co-ops' counsel in the Texas proceeding-attorney John S. "Jack" Edwards with the law firm of Ajamie LLP. They asserted that Ajaime serves as local counsel for the law firm of Van Ness Feldman, LLP (VNF), which represents the Co-ops in the Louisiana lawsuit but previously represented NRG and LaGen between 1996 and 2001. According to Gutierrez and NRG, VNF's previous representation creates a conflict of interest because it was substantially related to the Louisiana lawsuit in that VNF advised LaGen on the Big Cajun II power plant acquisition, negotiated power supply contracts, and made filings with the Federal Energy Regulatory Commission (FERC), including opinions about whether LaGen's contracts allowed it to pass through to cooperatives a share of increased costs from changes in environmental law. They urged the district court to impute VNF's former-client conflict to Ajamie and disqualify Ajaime from representing the Co-ops in their request for a deposition subpoena.
In response, the Co-ops moved to compel Gutierrez's deposition. They challenged whether the apex-deposition rule applies in the letters-rogatory context and, if it did whether Gutierrez's affidavit was sufficient to invoke the rule's protections. And they asserted that the discovery already conducted on their Louisiana claims showed the need for Gutierrez's testimony because "only Gutierrez-who was the ultimate decision-maker on both the EPA [Consent Decree] and the disputed expenses-can answer questions about his own decision-making process and the primarily verbal communications about what role the plan to shift [] costs onto third parties, including [the...
To continue reading
Request your trial