Opinion
No. 2013-CV-119
10-01-2014
XTL-NH, Inc. v. New Hampshire State Liquor Commission and Exel, Inc.
ORDER
The Petitioner, XTL-NH, Inc. ("XTL"), has brought an action against the Respondents, the New Hampshire State Liquor Commission (the "Commission") and Exel, Inc. ("Exel"), arising out of XTL's unsuccessful bid for a liquor warehousing contract. The Commission awarded a contract to Exel, another bidder. XTL alleges that the bidding process by which the contract was awarded to Exel was unlawful under New Hampshire competitive bidding law. XTL seeks to depose Attorney Stephen Judge, who is one of the lawyers for the Commission in this case. The Commission objects. A hearing was held on August 25, 2014. For the following reasons, the Petitioner's Motion is DENIED.
I
Attorney Stephen Judge is an attorney at Wadleigh, Starr & Peters ("WS&P"). On March 8, 2011, the New Hampshire Office of the Attorney General retained WS&P to "provide legal services" to the Attorney General and the Commission "in regard to preparation of certain requests for proposals ('REP') and negotiations of the final contract terms with selected vendors." (Stephen Judge Aff. ¶ 6, Aug. 4, 2014.) Prior to entering private practice, Attorney Judge worked as an attorney at the Office of the Attorney General for 19 years, where he provided counsel as well as litigated matters related to contracts and competitive bidding. (Id. ¶¶ 2-3.)
Upon being retained, Attorney Judge began preparing the RFPs for the Commission, which included the long-term warehouse contract at issue here. (Id. ¶ 8.) In so doing, Attorney Judge worked closely with and solicited information from experts in order to draft the RFP. (Id. ¶ 9.) Based on his experience, he anticipated that litigation would arise from the RFP and the bidding process. (Id. ¶ 10.) In anticipation of this litigation, he advised participants in the process as if they would be deposed or called as a witness in the future, and further instructed them to maintain accurate records. (Id. ¶ 11.) In March of 2012, the Commission issued the long-term warehouse RFP to solicit proposals to provide warehouse services for 20 years beginning in November 2013. While he counseled the Commission during the evaluation process, he did not actively analyze or score the bids. (Id. ¶ 16.) He was also involved with the Office of the Attorney General when responding to all Right-to-Know requests made regarding the RFP and bidding process. (Id. ¶ 14.)
The long-term warehouse contract was awarded to Exel on November 20, 2012. (Id. ¶ 20.) Thereafter, XTL initiated a suit against both Exel and the Commission. From the inception of the litigation involving these parties, Attorney Judge has continuously participated in the litigation. (Id.) Attorney Judge has also filed an appearance as trial counsel for the Commission in this action.
The Petitioner seeks to depose Attorney Judge "as to all factual matters in the present case that are not protected by the work-product or attorney-client privileges, either because such privileges do not apply in the first instance or they have been waived." (Pet'r's Mot. for Deposition ¶ 2.)
II
The attorney-client privilege, set forth in New Hampshire Rule of Evidence 502, is a common-law privilege that has long been recognized in New Hampshire. Brown v. Payson, 6 N.H. 443, 443 (1833). The New Hampshire Supreme Court has long interpreted this common-law privilege utilizing the common law formulation of the rule by Wigmore:
Where legal advice of any kind is sought from a professional legal adviser in his capacity as such, the communications relating to that purpose, made in confidence by the client, are at his instance permanently protected from disclosure by himself or by the legal adviser unless the protection is waived by the client or his legal representatives.Riddle Spring Realty Co. v. State, 107 N.H. 271, 273 (1966) (citing 8 Wigmore, Evidence (McNaughton Rev. 1961)).
The Petitioner does not seriously claim that all of Attorney Judge's communications with the Commission are not entitled to privilege. Instead, it argues that "[e]ven if Attorney Judge's activities regarding the RFP and the bidding process somehow fall under the work product privilege . . . the disclosure of such activities should be compelled, as work product is not beyond pretrial discovery, and these relevant facts can only be elicited through Attorney Judge's testimony." (Pet'r's Mot. for Deposition ¶ 6) (quotation and citation omitted).
The classic formulation of cases in which a party makes a claim that a court should deny work-product protection involves discrete documents. See, e.g., State v. Chagnon, 139 N.H. 671, 673 (1995) (quoting Hickman v. Taylor, 329 U.S. 495, 510-11 (1947)). Such cases often concern statements taken by a lawyer from a witness, or an attempt by an opposing party to obtain an attorney's communications or notes. See, e.g., Chagnon, 139 N.H. at 672 (statement of witness); Riddle Spring Realty Co., 107 N.H. at 275 ("[Work Product] may consist of correspondence, memoranda, reports, . . . exhibits, trial briefs, drafts of proposed pleadings, plans for presentation of proof, statements, and other matters, obtained by him or at his direction in the preparation of a pending or reasonably anticipated case on behalf of a client."). Attorney Judge worked for many years at the Attorney General's Office; in fact, according to his affidavit, he was hired to represent the Commission because of his experience "managing the transactional side of the business processes, as well as litigating arising disputes." (Judge Aff. ¶ 7.) As the Commission notes in its Objection, Attorney Judge is a lawyer and would not even be qualified to act as a business strategist.
The party asserting the privilege has the burden of showing that it is applicable. This relationship exists when the following elements are met: "(1) a person seeks advice or assistance from an attorney; (2) the advice or assistance sought pertains to matters within the attorney's professional competence, and (3) the attorney expressly or impliedly agrees to give or actually gives the desired advice or assistance." McCabe v. Arcidy, 138 N.H. 20, 25 (1993).
Because an in-house lawyer often serves as a business strategist or a financial consultant, the invocation of the attorney-client privilege may be questionable in many instances involving in-house counsel, because the distinctions are often hard to draw. America's Growth Capital, LLC v. PFIP, LLC, d/b/a Planet Fitness, No. 12-12088-RGS, 2014 WL 1207128, at *3 (D. Mass., March 24, 2014). Here, the Commission has adequately demonstrated that an attorney-client relationship exists between Attorney Judge and the Commission. Indeed, there is no question that the Commission was Attorney Judge's client during the drafting of the RFP and the bidding process. During this period of time, Attorney Judge counseled both the Office of the Attorney General and the Commission regarding the submitted proposals, and further counseled the Commission regarding the legal requirements of the bidding process and the RFP in order to ensure compliance. (Judge Aff. ¶ 9.)
The First Circuit, like the New Hampshire Supreme Court, generally follows Wigmore's iteration of the attorney-client privilege. Id. at *3. Precedent from First Circuit courts is therefore particularly helpful.
Attorney Judge entered into a fee agreement with the State of New Hampshire, which specifically provided:
It was a pleasure discussing with you service by Wadleigh, Starr & Peters, PLLC ("WS&P") to assist you and the New Hampshire State Liquor Commission ("SLC") in regard to preparation of certain requests for proposals ("RFP") and negotiations of final contract terms with certain vendor(s). I am pleased that the Attorney General ("AG") selected this firm to handle these matters. The services for which we are being retained include attendance at meetings, research, writing progress reports, the provision of legal advice, and such other services as are necessary related to the RFP and contract.(Fee Agreement, Exhibit B to Mot. for Deposition.)
. . . .
As a result of a proposal I submitted, I am advised that the AG is responsible for engaging WS&P to provide legal services in regards to the matters described above.
By the terms of the agreement, Attorney Judge was retained to act as a lawyer and not a business consultant. The United States District Court for the District of New Hampshire has noted that when a party or the party's attorneys has an agent do work for it in anticipation of litigation, "one way to ensure that such work will be protected under the work product doctrine is to provide clarity of purpose in the engagement letter." Pacamor Bearings, Inc. v. Mineba Co., LTD, 918 F. Supp. 491, 513 (D.N.H. 1996) (quotations and citations omitted). Attorney Judge describes his role as "cooperatively work[ing] with the Attorney General's Office to address legal issues related to contract and statutory requirements that arose during the drafting process, as well as work[ing] with the Evaluation Committee to ensure strict legal compliance throughout the RFP and the bidding process." (Judge Aff. ¶ 9.) He states that based on his experience, he anticipated that litigation would eventually arise as soon as he was retained and that this anticipation was confirmed as early as April 2011 when Law Warehouse began alleging that the Commission was trying to replace it with a new vendor. (Id. ¶ 10.) He recites that he therefore viewed and conducted the RFP and bidding process in anticipation of litigation. For example, he "advised participants in the process as if they would be deposed or called as a witness in the future, and instructed them to maintain records as if they would be used as exhibits in the future." (Id. ¶ 11.) While he counseled his client, the Commission, through the evaluation process, he recites that "at no time did I participate in the actual analyzing or scoring of the bids." Rather, his role was to ensure that his client strictly adhered to the requirements of competitive bidding and the RFP. (Id. ¶ 16.) He recites that he has participated in discussions with the Attorney General's Office about how to respond to Right-to-Know requests, and since the initiation of lawsuits by Law Warehouse and XTL, he has participated in strategy meetings, assisted in developing legal theories in response to XTL's theories, assisted in outlining the scope of necessary discovery, and prepared responses to discovery. (Id. ¶ 21.) XTL's suggestion that Attorney Judge was involved in the case as a business consultant is not supported by any contemporaneous document. It follows that Attorney Judge's communications with the Commission during this time are protected by the attorney-client privilege.
Of course, even an attorney who communicates with proposed vendors would likely generate non-privileged information; plainly, communications with a potential litigant cannot be privileged. Here, those documents have been produced; indeed it is based upon these documents that XTL asserts its claim that Attorney Judge "acted in a business capacity for much of the bidding process, namely as a gatherer of business information, as a business strategist, and as a negotiator with the bidders regarding non-legal aspects of the bidders' proposals." (Pet'r's Mot. for Deposition ¶ 11.) But this is mere ipse dixit; having reviewed the attachments produced by XTL, the Court finds that there is nothing in any of them that is inconsistent with Attorney Judge's description of his role. Since they are not privileged, they have been produced. But of course, that is not the issue in this case; XTL seeks to go beyond these non-privileged documents, and question Attorney Judge about his thoughts and impressions regarding them, which is pure work product. Riddle Spring Realty Co., 107 N.H. at 275 (citing Hickman, 329 U.S. at 508).
A party who seeks material protected by the work product doctrine must show that the information is available from no other source without undue hardship. Chagnon, 139 N.H. at 674. XTL has not even addressed this issue in its Motion for Deposition or its Reply to the Objection. Rather, it simply seeks to depose Attorney Judge in order to question him about documents which have already been produced.
III
A
The New Hampshire Supreme Court has never considered the circumstances under which opposing counsel in a case may be deposed. However, courts have generally looked askance at such a request: "[a]lthough not strictly forbidden, the procurement of trial testimony from opposing counsel is generally disfavored." See, e.g., Bogosian v. Woloohojian Realty Corp., 323 F.3d 55, 66 (1st Cir. 2003). Superior Court Rule 36 (5) (ii) provides that an attorney who gives testimony at a trial hearing shall not act as an advocate at such trial hearing unless the attorney's testimony relates to an uncontested issue or to the value of legal services rendered in the case or unless the court determines disqualification would become unreasonable hardship for the attorney's client.
Because the attorney-client privilege is a common-law privilege, decisions from other jurisdictions are often helpful. The leading case on this subject is Shelton v. Am. Motors Corp., 805 F.2d 1323, 1327 (8th Cir. 1986). In Shelton, the Eighth Circuit noted that the Federal Rules of Procedure do not prohibit taking opposing counsel's deposition. However, the court viewed "the increasing practice of taking opposing counsel's deposition as a negative development in the area of litigation, and one that should be employed only in limited circumstances." Id. at 1327. The court noted a number of policy considerations when addressing this issue, all of which are applicable here:
Taking the deposition of opposing counsel not only disrupts the adversarial system and lowers the standards of the profession, but it also adds to the already burdensome time and costs of litigation. It is not hard to imagine additional delays to resolve work-product and attorney-client objections, as well as delays to resolve collateral issues raised by the attorney's testimony. Finally, the practice of deposing counsel detracts from the quality of client representation. Counsel should be free to devote his or her time and efforts to preparing the client's case without fear of being interrogated by his or her opponent.Id. Despite these policy concerns, the court recognized that there are circumstances when the court should order the taking of opposing counsel's deposition; however, those circumstances were to be limited to where the party seeking the deposition has shown that (1) no other means exist to obtain the information than to depose opposing counsel; (2) the information sought is relevant and non-privileged; and (3) the information is crucial to the preparation of the case. Id.
These factors have been widely applied by numerous courts. See, e.g., Nationwide Mut. Ins. Co. v. Home Ins. Co., 278 F.3d 621, 628 (6th Cir. 2002) (adopting the Shelton rule); Boughton v. Cotter Corp., 65 F.3d 823, 830 (10th Cir. 1995); Dunkin' Donuts, Inc. v. Mandorico, Inc., 181 F.R.D. 208, 210 (D.P.R. 1998); see generally E. Epstein, The Attorney-Client Privilege and the Work-Product Doctrine (5th ed. 2007).
Here, the Court is persuaded that the first factor of the Shelton rule—that is, no other means exist to obtain the information than to depose opposing counsel—has not been met. XTL does not even state specifically what information it seeks to obtain from Attorney Judge. (Pet'r's Mot. for Deposition ¶ 2.) ("The Petitioner wishes to depose Attorney Judge as to all factual matters in the present case that are not protected by the work-product or attorney-client privileges . . . ."). To the extent the Petitioner does provide examples of information it seeks, it is apparent that it is available through alternate means. For example, XTL seeks information regarding certain communications attached to its Motion for Deposition. See (Mot. for Deposition Ex. C.) These communications are between Attorney Judge and XTL Counsel Bianco; XTL President Louis Cerone; XTL Chairman Anthony Cerone; Exel employees Fred Takavitz, Scott Lyons, Greg Foreman, and Craig Bulkley; and the Evaluation Committee members. As the Commission notes, there are other means of obtaining information regarding these communications that do not involve deposing Attorney Judge. This would include obtaining information for deposition from XTL's President, Chairman, and also from the Evaluation Committee members. The only information which would not be available would be Attorney Judge's protected thoughts and impressions. XTL has not met its burden of proving that it cannot obtain the information it seeks from Attorney Judge through other means.
Second, even assuming that the information sought is relevant, XTL cannot depose Attorney Judge about his communications with the Commission regarding the RFP and the documents which have been produced without encroaching on the attorney-client privilege or the work-product doctrine. What the documents say and what communications occurred between Attorney Judge and other witnesses are not what is sought by XTL. The Commission has adequately demonstrated by the Attorney Judge's Affidavit that an attorney-client relationship existed between Attorney Judge and the Commission. XTL argues that Attorney Judge exceeded his capacity as a legal advisor and instead provided the Commission with non-legal advice that is discoverable. The Court disagrees. Although matters that could be considered business-related may have been brought up, XTL has produced no information that suggests that at any point did Attorney Judge act in a way that would break from his role as a legal advisor and move him into the role of business advisor or strategist.
Finally, XTL has made no showing that the information it seeks is crucial to the preparation of the case. Indeed, XTL does not even attempt to show why deposing Attorney Judge would be crucial.
Attorney Judge's work product is protected. As explained more fully above, Attorney Judge anticipated litigation regarding the RFP and bidding process, and he prepared accordingly for the inevitable litigation that would arise. (Judge Aff. ¶¶ 8-11.) While disclosure of work product may be compelled under certain circumstances, XTL has failed to demonstrate that the relevant facts are either unobtainable by other means or obtainable only under such conditions of hardship as would tend to unfairly prejudice it. Riddle Spring Realty Co., 107 N.H. at 275.
B
XTL makes two other arguments which can be dealt with summarily. First, it argues that the Commission waived its attorney-client privilege as to all documents involving Attorney Judge "disclosed in this litigation, and all documents and information from or about Attorney Judge that were disclosed to the public during the investigation by the New Hampshire House of Representatives Special Committee to Evaluate the State Liquor Commission . . . ." (Pet'r's Mot. for Deposition ¶ 17.) However, it does not attach any documents or testimony that supposedly waived privilege; nor, apart from a desultory citation to cases which stand for the unremarkable proposition that partial disclosure of a privileged document requires disclosure of the entire document, does it explain why release of documents to the public, or in discovery, would necessarily waive privilege.
Finally, in its Reply to the Commission's objection, XTL argues that Attorney Judge cannot legally or ethically act as trial counsel in this case given the prior advice he has provided to the Commission regarding the RFP bidding process. According to XTL, Attorney Judge has "a clear conflict of interest" under the applicable Rules of Professional Conduct because, since Attorney Judge participated in ensuring that the bidding was conducted fairly, "there is a significant risk that Attorney Judge, instead of advocating fully for the client, might be more interested in protecting and preserving his own professional reputation and his own interest." (Pet'r's Reply Br. ¶ 6.)
Not surprisingly, XTL provides no authority for this extraordinary proposition. It is sufficient to say that every lawyer, including XTL's counsel, has an interest in his or her reputation, but that hardly means that when a lawyer is engaged in representing a client, he or she may have a conflict of interest. Indeed, the opposite is true; New Hampshire lawyers are routinely counseled to think of their reputations when tempted to engage in what might be considered sharp practice.
The Court notes that the "Statement of Purpose" for the Rules of Professional Conduct provides, in relevant part, that they are "not designed to be a basis for civil liability. The purpose of the Rules can be subverted when the Rules are invoked by opposing parties as procedural weapons."
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XTL is not entitled to depose Attorney Judge. Its Motion to Depose him must be DENIED.
SO ORDERED
10/1/14
Date
s/ Richard B.McNamara
Richard B. McNamara
Presiding Justice