In re Monsanto Co., 083199

• Decision Date: 31 August 1999
• Docket Number: No. 10-99-137-CV,10-99-137-CV
• Citation: 998 S.W.2d 917
• Parties: (Tex.App.-Waco 1999) IN RE MONSANTO COMPANY, ET AL
• Court: Texas Court of Appeals

Page 917

998 S.W.2d 917 (Tex.App.-Waco 1999)

IN RE MONSANTO COMPANY, ET AL.

No. 10-99-137-CV

IN THE TENTH COURT OF APPEALS

August 31, 1999

Original Proceeding

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Chief Justice Davis, Justice Vance, and Justice Gray

O P I N I O N

BILL VANCE, Justice

Relators, Monsanto Company and other entities, seek a writ of mandamus requiring Respondent, the Honorable Robert Stem, Judge of the 82nd District Court of Falls County, to vacate an order by which he denied their claims of privilege as to almost 400 documents. The Real Parties in Interest (Plaintiffs) are farmers and farming entities who planted Relators' genetically-engineered cotton seed during the 1996 growing season. They seek damages for spraying costs and lost yields, alleging that Relators made false claims concerning the insect-resistant nature of the product. During the litigation, a discovery dispute arose concerning whether the attorney-client and work product privileges apply to certain documents.

THE UNDERLYING LITIGATION

Monsanto Company (Monsanto) developed a gene technology called "Bollgard" designed to produce cotton plants that are resistant to certain insects. The Bollgard gene was spliced into cotton seed prepared by Delta and Pine Land Company ("D&PL") and distributed by other Relators. After problems developed in the fields during the growing season, the Plaintiffs filed suit against Relators on August 30, 1996, alleging fraud and usury.

The Plaintiffs served Relators with requests for production. Relators produced numerous documents but withheld certain documents asserting several privileges, including attorney-client, work product, and trade secrets.¹ Relators filed a motion for a protective order, supported with affidavits. The Plaintiffs filed a motion to compel production of the documents. Relators responded to the motion to compel and supplemented their motion for a protective order with more affidavits. "Privilege logs" were furnished identifying the privilege(s) asserted to each document and describing the documents to which the privileges were claimed. The privilege logs group the disputed documents into four sets. The Plaintiffs objected to Relators' affidavits on the grounds that they did not show personal knowledge of the persons making the affidavits. The Plaintiffs also filed an affidavit in an attempt to establish the crime-fraud exception to the attorney-client privilege.

The court conducted a hearing on May 11, 1999. By that time, Relators had reduced the number of documents to which they claimed a privilege to the approximately 400 now at issue. At the hearing, neither party offered additional evidence; both relied on their respective affidavits; each asked the court to review the documents in camera. The court took the matter under advisement and conducted an in camera inspection of the documents. On May 5, the court ordered that all but two of the documents be immediately released to the Plaintiffs, who took possession of the documents and made a copy of each. When Relators asked for a delay to seek relief by mandamus, counsel for the Plaintiffs agreed to wait until noon on May 27 to review the copies of the documents. By then, the originals had been returned to the Respondent.

THIS PROCEEDING

Relators filed this original proceeding on May 27. At their request, we granted emergency relief directing that the documents not be reviewed by the Plaintiffs, that no further copies be made, and that the copies already made be immediately transmitted to the clerk of this court. Plaintiffs complied with that order.

Plaintiffs filed a response to the petition, and we heard oral argument.

Relators argue that the court abused its discretion in finding only two of the almost 400 documents to be privileged. They assert that they met the burden of alleging and proving the privileges and that the Plaintiffs did not controvert the privileges.² They further say they have no adequate remedy at law. The Plaintiffs, on the other hand, assert: Monsanto failed to prove any privilege; Respondent did not abuse his discretion; the "crime-fraud exception" set out in Rule of Evidence 503(d)(1) applies to the documents for which the attorney-client privilege is claimed; and Monsanto waived the privileges by substantially disclosing the documents.

STANDARD OF REVIEW

To justify mandamus relief, Relators must establish that the court committed an abuse of discretion and that they have no adequate legal remedy. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding).

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." Johnson v Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex. 1985). This standard, however, has different applications in different circumstances.

On factual issues or matters committed to the trial court's discretion, the reviewing court may not substitute its judgment for that of the trial court. Walker, 827 S.W.2d at 840. The relator must establish that the trial court could reasonably have reached only one decision. Id. Even if the reviewing court would have decided the issue differently, it cannot disturb the trial court's decision unless it is shown to be arbitrary and unreasonable. Id.

A review of a trial court's determination of the legal principles controlling its ruling, however, is much less deferential. A trial court has no "discretion" in determining what the law is or applying the law to the facts. Thus, a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion, and may result in reversal by extraordinary writ. Id.

When a trial court erroneously orders the production of documents protected by a privilege, the aggrieved party has no adequate remedy at law. See id. at 843-44; In re Continental General Tire, 979 S.W.2d 609, 615 (Tex. 1998) (orig. proceeding) (trade secrets); Humphreys v. Caldwell, 888 S.W.2d 469, 471 (Tex. 1994) (orig. proceeding) ("attorney work product"); Osborne v. Johnson, 954 S.W.2d 180, 183 (Tex. App.-Waco 1997, orig. proceeding); Marathon Oil Co. v. Moy, 893 S.W.2d 585, 589 (Tex. App.-Dallas 1994, orig. proceeding). Thus, the central issue we must determine in this proceeding is whether any document the Respondent ordered produced is covered by a privilege prohibiting involuntary disclosure.

THE ATTORNEY-CLIENT PRIVILEGE

"A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client." TEX. R. EVID. 503(b). The purpose of the attorney-client privilege is to secure the free flow of information between attorney and client on legal matters, without the fear that details of their communication will be disclosed. Ford Motor Co. v. Leggat, 904 S.W.2d 643, 647 (Tex. 1995); In re Bloomfield Mfg. Co., 977 S.W.2d 389, 392 (Tex. App.-San Antonio 1998, orig. proceeding).

The "joint-defense" privilege protects "confidential communications made for the purpose of facilitating the rendition of legal services . . . by the client or a representative of the client, or the client's 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." TEX. R. EVID. 503(b)(1)(C). The "joint-defense" privilege is included within the attorney-client privilege. Id.

Effective March 1, 1998, Rule of Evidence 503 was amended to adopt the "subject matter" test for an entity's assertion of the privilege, replacing the "control group" test previously used. TEX. R. EVID. 503(a)(2) & cmt; National Tank Co. v. Brotherton, 851 S.W.2d 193, 197-98 (Tex. 1993). Under the subject-matter test, an employee's communication is deemed to be that of the corporation/client if:

the employee makes the communication at the direction of his superiors in the corporation and where the subject matter upon which the attorney's advice is sought by the corporation and dealt with in the communication is the performance by the employee of the duties of his employment.

National Tank, 851 S.W.2d at 198 (quoting Harper & Row Publishers, Inc. v. Decker, 423 F.2d 487, 491-92 (7th Cir. 1970), aff'd per curiam by an equally divided court 400 U.S. 348, 91 S.Ct. 479, 27 L.Ed.2d 433 (1971)).

There is no attorney-client privilege if the "crime-fraud" exception in Rule 503 applies: "If the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or reasonably should have known to be a crime or fraud." TEX. R. EVID. 503(d)(1).

THE WORK PRODUCT PRIVILEGE

"Work product" is now defined in the discovery rules as:

(1) material prepared or mental impressions developed in anticipation of litigation or for trial by or for a party or a party's representatives, including the party's attorneys, consultants, sureties, indemnitors, insurers, employees, or agents; or

(2) a communication made in anticipation of litigation or for trial between a party and the party's representatives or among a party's representatives, including the party's attorneys, consultants, sureties, indemnitors, insurers, employees, or agents.

Tex. R. Civ. P. 192.5(a). This definition encompasses the "attorney work product" and "party communications" discovery exemptions in former Rule 166b. Id. cmt. 8.

Rule 192.5(b) further elaborates on what work product is protected:

(1) Protection of Core Work Product-Attorney Mental Processes. Core work product-the work product of an attorney or an attorney's representative that contains the attorney's or the attorney's representative's mental impressions, opinions, conclusions, or legal theories-is not discoverable.

(2) Protection of Other Work Product. Any other work product...