in Re National Lloyds Insurance Company, Wardlaw Claims Service, Inc. and Ideal Adjusting, Inc. ( 2017 )

IN THE SUPREME COURT OF TEXAS
444444444444
NO . 15-0591
444444444444
IN RE NATIONAL LLOYDS INSURANCE COMPANY,
WARDLAW CLAIMS SERVICE, INC., AND IDEAL ADJUSTING, INC., RELATORS
4444444444444444444444444444444444444444444444444444
ON PETITION FOR WRIT OF MANDAMUS
4444444444444444444444444444444444444444444444444444
Argued February 7, 2017
JUSTICE GUZMAN delivered the opinion of the Court, in which CHIEF JUSTICE HECHT ,
JUSTICE GREEN , JUSTICE WILLETT , JUSTICE DEVINE, and JUSTICE BROWN joined.
JUSTICE JOHNSON filed a dissenting opinion, in which JUSTICE LEHRMANN and JUSTICE BOYD
joined.
The discovery dispute in this mandamus proceeding arises in the context of multidistrict
litigation involving allegations of underpaid homeowner insurance claims. The issue is whether a
party’s attorney-billing information is discoverable when the party challenges an opposing party’s
attorney-fee request as unreasonable or unnecessary but neither uses its own attorney fees as a
comparator nor seeks to recover any portion of its own attorney fees. We hold that, under such
circumstances, (1) compelling en masse production of a party’s billing records invades the attorney
work-product privilege; (2) the privilege is not waived merely because the party resisting discovery
has challenged the opponent’s attorney-fee request; and (3) such information is ordinarily not
discoverable.1
To the extent factual information about hourly rates and aggregate attorney fees is not
privileged, that information is generally irrelevant and nondiscoverable because it does not establish
or tend to establish the reasonableness or necessity of the attorney fees an opposing party has
incurred.2 A party’s litigation expenditures reflect only the value that party has assigned to litigating
the matter, which may be influenced by myriad party-specific interests. Absent a fee-shifting claim,
a party’s attorney-fee expenditures need not be reasonable or necessary for the particular case.
Barring unusual circumstances, allowing discovery of such information would spawn unnecessary
case-within-a-case litigation devoted to determining the reasonableness and necessity of attorney-fee
expenditures that are not at issue in the litigation. This is not a proper discovery objective. We
therefore conditionally grant mandamus relief and direct the trial court to vacate its discovery order.
I. Factual and Procedural Background
Following two hail storms that struck Hidalgo County in 2012, insured homeowners sued
various insurers and claims adjustors, alleging underpayment of insured property-damage claims.
The lawsuits were consolidated into a single multidistrict litigation (MDL) court for pretrial
proceedings, including discovery.3
1
See T EX . R. C IV . P. 192.5(b).
2
See T EX . R. E VID . 401 (defining relevant evidence as having “any tendency to make a fact more or less
probable than it would be without the evidence”); T EX . R. C IV . P. 192.3 (extending the scope of discovery to relevant
nonprivileged information, including relevant evidence that is inadmissible but “reasonably calculated to lead to the
discovery of admissible evidence”).
3
See T EX . R. J U D . A D M IN . 13, reprinted in T EX . G O V ’T C O D E , tit. 2, subtit. F app.
2
The discovery dispute in this mandamus proceeding involves four MDL cases in which
individual homeowners sued National Lloyds Insurance Co., Wardlaw Claims Service, Inc., and
Ideal Adjusting, Inc. (collectively, the insurer),4 asserting statutory, contractual, and extra-contractual
claims. Among other damages, the homeowners seek attorney fees incurred in prosecuting their
statutory and contractual claims. In addition to assailing the merits of the homeowners’ liability
claims, the insurer asserts the homeowners’ attorney-fee claims are excessive for a case of
comparable complexity in the relevant locality.
A mere two months before trial, and nearly a year after the parties served MDL master
discovery requests, the homeowners requested a trial continuance and sought leave to serve
additional discovery regarding the insurer’s attorney-billing information. Though the insurer is not
making a claim for attorney fees,5 the homeowners submitted (1) three interrogatories requesting
hourly rates, total amount billed, and total reimbursable expenses; and (2) four requests for
production seeking all billing invoices; payment logs, ledgers, and payment summaries; audits; and
any documents pertaining to flat-rate billing.6 The homeowners asserted additional discovery was
4
The homeowners also sued individual adjusters who are not parties to this proceeding.
5
The insurer acknowledges it made an offer of settlement, which could result in the insurer recovering attorney
fees in the future. See T EX . R. C IV . P. 167. If that event occurs, however, the civil-procedure rules permit the “party
against whom litigation costs are to be awarded” to seek leave to conduct discovery concerning the reasonableness of
the costs to be recovered. T EX . R. C IV . P. 167.5(b).
6
The specific discovery requests at issue are as follows:
Interrogatories:
(1) State the hourly rate of any and all attorneys who have provided legal services to this
Defendant in this case;
(2) State the total amount billed by each law firm providing legal services to this Defendant
in this case up to and including the time of trial; and
(3) State the total amount of reimbursable expenses incurred by any law firm providing legal
3
warranted “in light of” expert testimony in Amaro v. National Lloyds Insurance Co.,7 the first MDL
hailstorm case to proceed to a jury verdict.
According to the homeowners, the insurer’s attorney fees and billing information are
discoverable in the present cases because the insurer’s counsel, Scot Doyen, testified as an
attorney-fee expert in Amaro and admitted on cross-examination—albeit over objection—that an
opposing party’s fees could be considered as “a factor” in determining a reasonable fee recovery.
Doyen also used his law firm’s billing practices as an example of a proper way to allocate attorney
fees to avoid an artificially inflated fee claim in MDL cases.8 Prior to Doyen’s testimony in Amaro,
services to this Defendant in this case up to and including the time of trial.
Requests for Production:
(1) Produce all billing invoices received by Defendant and/or any of the firms the named
attorneys are affiliated with or employed by, in connection with this case;
(2) Produce all payment logs, ledgers, or payment summaries showing all payments paid to
Defendants’ attorneys and/or any of the firms that the named attorneys are affiliated with or employed
by, in connection with this case;
(3) [withdrawn discovery request not at issue in this appeal];
(4) Please produce all documents that show the flat rate, if any, being paid to Defense
Counsel and/or any of the firms that the named attorneys are affiliated with or employed by, in
connection with their services on this case; and
(5) Please produce all documents related to audits of the billing and/or invoices of Defense
Counsel and/or any of the firms that the named attorneys are affiliated with or employed by, which
were performed on behalf of Defendant in regards to the attorney services received by Defendant.
This request is limited to the last five (5) years. [The trial court further limited this request to
“documents regarding the specific case in which the request is propounded”].
7
Cause No. C-0304-13-H (206th Dist. Ct., Hidalgo County, Tex. Feb. 27, 2015).
8
Doyen initially testified:
W ell, I think that we have to look at the time components that are in some of these different entries.
And I will tell you that . . . I don’t [necessarily] take exception with . . . the amount of time that is in
a given entry as much as I do a couple of them that I think the time spent should have been allocated
across more than just the Amaro file.
....
The Motion to Remand was filed in the Amaro case. It was also filed in about a hundred other cases.
4
he had been designated in the underlying MDL case as a testifying expert in opposition to the
homeowners’ attorney-fee requests.
Based on the record in Amaro, the homeowners contend Doyen’s expert testimony in these
cases will necessarily be based on his experience as the insurer’s attorney in the same proceedings
and, more to the point, he has admitted that an opposing party’s fees are relevant to the disputed
attorney-fee issues. Accordingly, the homeowners argue that information about the insurer’s
attorney-fee expenditures is discoverable and relevant to the attorney-fee dispute.
The insurer objects on the basis that the requested discovery is overly broad and seeks
information that is both irrelevant and protected by the attorney-client and work-product privileges.
With regard to relevancy, the insurer principally relies on its stipulation that it “will not use its own
billing invoices received from its attorneys; payment logs, ledgers, or payment summaries showing
payments to its attorneys; or the hourly fees or flat rates being paid to its attorneys; audits of the
W hen the lawyer shows up to attend that hearing, and what have to do in our fee bills [sic], for
instance, the four hours for attending the hearing, I don’t have a problem with. That’s . . . a reasonable
expenditure of time. But, for instance, [on] my side, the lawyer that I have there has to take that and
then prorate that out over a number of files. Because you can’t bill that four hours to every file, it
would be as though you worked four hundred hours for that hearing and . . . that would never be
reasonable. So you have to take that time and prorate it out. W e do it on our side . . . .
As a point of clarification, Doyen later added:
On the motion to remand, I think it was a four-hour hearing that I was talking about earlier, what
struck me about this when I reviewed it was we prorated our time across every case on the appendix
to which that— those motions apply. And I cannot say that the [plaintiffs’ attorneys] did that the same
way. If, in fact, they did not and only billed it to the file that was for that hearing, then the four hours
would be appropriate because they did have somebody there for that period of time. And I don’t know
how it was billed inside their system, if— and they’ve put it on here with regard to it being this file and
this file alone. If it was billed there, then I think that’s completely appropriate to do. And . . . I don’t
have any indication [that] they did overbill it. And if I created that impression, then I apologize for
that. But what struck me was the way we did it. W e prorated it out across every one, but it has
occurred to me that they may not have done it that way. They may have gone and billed it to just that
one. If that’s the case, then it’s certainly appropriate to do so.
5
billing and invoices of its attorneys to contest the reasonableness of [the homeowners’] attorney’s
fees.”
After two non-evidentiary hearings, a discovery special master recommended that (1) an
opponent’s attorney-billing information is, as a general proposition, relevant to the reasonableness
of an attorney-fee request in the same case; (2) to the extent the discovery requests in this case seek
material from an expert witness on the attorney-fee issue, the information falls within the scope of
permissible discovery under Texas Rule of Civil Procedure 192.3(e); (3) some of the discovery
requests should be more narrowly tailored, but the insurer’s objections to the discovery requests as
modified should be overruled; and (4) “[s]pecific records may be redacted for content protected by
an appropriate privilege.” Adopting these recommendations, the MDL pretrial court ordered the
insurer to respond to the discovery requests.
The court of appeals denied the insurer’s petition for mandamus relief.9 While the court
acknowledged that an opposing party’s attorney-billing information may be irrelevant in a given
case,10 the court concluded the discovery order was not an abuse of discretion in the underlying cases
because (1) an opposing party’s attorney fees are germane to at least two factors that inform the
“reasonable and necessary” attorney-fee inquiry, as set forth in Arthur Andersen & Co. v. Perry
9
2015 W L 4380929, at *6, ___ S.W .3d ___ (Tex. App.— Corpus Christi 2015).
10
Id. at *4 (citing MCI Telecomms. Corp. v. Crowley, 899 S.W .2d 399, 403-04 (Tex. App.— Fort W orth 1995,
orig. proceeding)).
6
Equipment Corp.;11 (2) the Arthur Andersen factors are explicitly nonexclusive;12 (3) the insurer’s
designated expert witness previously testified he based his opinion on his own personal experience
in defending the same case in which he was testifying as an expert;13 (4) the requested information
is within the permissible scope of expert-witness discovery, as provided by Rule 192.3(e);14 and
(5) the insurer produced no evidence that redaction would be insufficient to protect its privileges.15
In this original proceeding, the insurer primarily relies on several lower-court cases declaring
information about a party’s attorney-fee expenditures is “patently irrelevant” to an opposing party’s
attorney-fee claim.16 The insurer maintains that the Arthur Andersen factors do not contemplate
discovery of an opposing party’s attorney-billing information, arguing those factors are textually
directed only to evidence about the claimant’s attorney fees. The insurer also reasserts its privilege
objections and disputes that its attorney fees are at issue in this litigation by virtue of the Amaro
litigation.
11
Id. at *5 (citing 945 S.W .2d 812, 819 (Tex. 1997) and T EX . D ISCIPLIN A R Y R. P RO F ’L C O N D U CT 1.04(a),
reprinted in T EX . G O V ’T C O D E tit. 2, subtit. G, app. A).
12
Id. at *4 (citing El Apple I, Ltd. v. Olivas, 370 S.W .3d 757, 761 (Tex. 2012)).
13
Id. at *4-5.
14
Id. at *5.
15
Id.
16
See In re Tex. Mut. Ins. Co., 358 S.W .3d 869, 872 n.3 (Tex. App.— Dallas 2012, orig. proceeding); In re AIG
Aviation (Tex.), Inc., No. 04-04-00291-CV, 2004 W L 1166560, at *1 (Tex. App.— San Antonio May 26, 2004, orig.
proceeding) (mem. op.); MCI Telecomms. Corp. v. Crowley, 899 S.W .2d 399, 403-04 (Tex. App.— Fort W orth 1995,
orig. proceeding); see also Duininck Bros., Inc. v. Howe Precast, Inc., No. 4:06-CV441, 2008 W L 4411641, at *2 (E.D.
Tex. Sept. 23, 2008).
7
Relying on authority from other jurisdictions, the homeowners argue trial courts have
discretion to order disclosure of an opposing party’s attorney-fee information and could permissibly
compel production in this case. In addition to citing counsel’s role as a testifying expert in this case
and Amaro as supporting the trial court’s discovery order, the homeowners rely on the concurring
opinion in El Apple I, Ltd. v. Olivas,17 which describes an opposing party’s attorney fees as a “surer
indicator[]” of the reasonableness of a fee request. With regard to privilege, the homeowners point
to a dearth of evidence that redaction would be ineffective to protect any applicable privileges and
argue, in the alternative, that attorney-billing information is not privileged as a matter of law or on
the record before the Court.
Germania Farm Mutual Insurance Association filed an amicus brief supporting the insurer.
Germania is a defendant in other cases pending before the MDL pretrial court and asserts the
plaintiffs in those cases are seeking nearly identical discovery from Germania even though
“Germania’s counsel has not testified about attorney’s fees in any MDL case or otherwise done
anything to put Germania’s attorney’s fees at issue.”
II. Discussion
A. Standard of Review
A trial court generally has discretion to determine the scope of discovery.18 However, “[a]
discovery order that compels production beyond the rules of procedure is an abuse of discretion for
17
370 S.W .3d at 766 (H ECH T , J., concurring).
18
In re CSX Corp., 124 S.W .3d 149, 152 (Tex. 2003) (orig. proceeding).
8
which mandamus is the proper remedy.”19 Under our procedural rules, the scope of discovery
extends to “any matter that is not privileged and is relevant to the subject matter of the pending
action.”20 Mandamus relief is appropriate when, as in this case, a trial court compels production of
irrelevant information or information that is relevant but privileged.21 Because either condition
suffices to warrant mandamus relief, we first consider whether the requested information is
privileged.
B. Privilege
The insurer asserted two privileges in response to the discovery requests: the attorney-client
privilege and attorney work-product privilege. Analogizing to our analysis in National Union Fire
Insurance Co. v. Valdez,22 we hold that a request to produce all billing records invades a party’s
work-product privilege because, cumulatively, billing records constitute a mechanical compilation
of information that, at least incidentally, reveals an attorney’s strategy and thought processes.
1. Legal-Representation Privileges
The attorney-client privilege protects communications between attorney and client that are
(1) not intended to be disclosed to third parties and (2) made for the purpose of facilitating the
19
In re Nat’l Lloyds Ins. Co., 507 S.W .3d 219, 224 (Tex. 2016) (orig. proceeding) (quoting In re Nat’l Lloyds
Ins. Co., 449 S.W .3d 486, 488 (Tex. 2014) (orig. proceeding)).
20
T EX . R. C IV . P. 192.3(a); see also In re CSX Corp., 124 S.W .3d at 152.
21
See, e.g., In re Nat’l Lloyds Ins. Co., 507 S.W .3d at 224-25 (granting mandamus relief when trial court
ordered discovery of irrelevant information); In re Living Ctrs. of Tex., Inc., 175 S.W .3d 253, 256 (Tex. 2005) (orig.
proceeding) (granting mandamus relief when trial court ordered discovery of privileged information).
22
863 S.W .2d 458, 460-61 (Tex. 1993) (orig. proceeding).
9
rendition of professional legal services.23 The privilege promotes free discourse between attorney
and client, thereby advancing the effective administration of justice.24
“The work product privilege is broader than the attorney-client privilege.”25 The discovery
rules define “work product” 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 . . . ; 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 [and] consultants.26
Certain matters are expressly excluded from the definition of “work product,” however, and are not
protected from discovery even if made or prepared in anticipation of litigation or for trial.27 The
carve-outs include “information discoverable under Rule 192.3 concerning experts, trial witnesses,
witness statements, and contentions.”28
“The primary purpose of the work product rule is to shelter the mental processes,
conclusions, and legal theories of the attorney, providing a privileged area within which the lawyer
can analyze and prepare his or her case.”29 Core work product—work product that contains “the
23
T EX . R. E VID . 503(a)(5), (b)(1).
24
Paxton v. City of Dall., 509 S.W .3d 247, 250 (Tex. 2017).
25
In re Bexar Cty. Crim. Dist. Attorney’s Office, 224 S.W .3d 182, 186 (Tex. 2007) (orig. proceeding).
26
T EX . R. C IV . P. 192.5(a).
27
T EX . R. C IV . P. 192.5(c)(1)-(5).
28
T EX . R. C IV . P. 192.5(c)(1).
29
Owens-Corning Fiberglas Corp. v. Caldwell, 818 S.W .2d 749, 750 (Tex. 1991) (orig. proceeding).
10
mental impressions, opinions, conclusions, or legal theories” of an attorney or an attorney’s
representative—is not discoverable.30 A trial court may order disclosure of noncore work
product—defined as “[a]ny other work product” that is not core work product—only if the requesting
party shows substantial need and undue hardship.31 In such a case, the trial court may order
disclosure even if doing so “incidentally discloses by inference attorney mental processes otherwise
protected [as core work product],” but “the court must—insofar as possible—protect against
disclosure of the mental impressions, opinions, conclusions, or legal theories not otherwise
discoverable.”32
The party asserting a privilege in opposition to a discovery request “must establish by
testimony or affidavit a prima facie case for the privilege,” although “[t]he party need produce ‘only
the minimum quantum of evidence necessary to support a rational inference that the allegation of
fact is true.’”33 In limited circumstances, “the documents themselves may, standing alone, constitute
30
T EX . R. C IV . P. 192.5(b)(1).
31
T EX . R. C IV . P. 192.5(b)(2).
32
T EX . R. C IV . P. 192.5(b)(3), (4).
33
In re Mem’l Hermann Hosp. Sys., 464 S.W .3d 686, 698 (Tex. 2015) (orig. proceeding) (internal quotations
removed) (quoting In re E.I. DuPont de Nemours & Co., 136 S.W .3d 218, 223 (Tex. 2004) (orig. proceeding)); see T EX .
R. C IV . P. 193.4.
11
sufficient proof” to establish a claimed privilege.34 Additionally, we have held that “evidence may
not always be necessary to support a claim of protection from discovery.”35
2. The Requested Documents, Collectively, Are Work Product
We have described the work-product privilege as encompassing “two related but different
concepts”:
First, the privilege protects the attorney’s thought process, which includes strategy
decisions and issue formulation. . . . Second, the privilege protects the mechanical
compilation of information to the extent such compilation reveals the attorney’s
thought processes.36
Billing records constitute “communication[s] made in anticipation of litigation or for trial between
a party and the party’s representatives or among a party’s representatives.”37 Moreover, as a whole,
billing records represent the mechanical compilation of information that reveals counsel’s legal
strategy and thought processes, at least incidentally.
Conceptually, the matter is similar to the issue we considered in National Union Fire
Insurance Co. v. Valdez, which involved a discovery request for an attorney’s entire litigation file.38
We observed that “[t]he organization of the file, as well as the decision as to what to include in it,
necessarily reveals the attorney’s thought processes concerning the prosecution or defense of the
case” and that, if such information were discoverable, an attorney would “be restricted in the
34
State v. Lowry, 802 S.W .2d 669, 671 (Tex. 1991) (orig. proceeding).
35
In re Union Pac. Res. Co., 22 S.W .3d 338, 341 (Tex. 1999) (orig. proceeding).
36
Occidental Chem. Corp. v. Banales, 907 S.W .2d 488, 490 (Tex. 1995) (orig. proceeding).
37
T EX . R. C IV . P. 192.5(a)(2).
38
863 S.W .2d 458, 460-61 (Tex. 1993) (orig. proceeding).
12
organization and maintenance of his or her files by the prospect that they might have to be revealed
in their entirety.”39 We thus held (1) an attorney’s litigation file goes to the heart of the work-product
privilege, (2) “an attorney’s selection and ordering of documents in anticipation of litigation is
protected work product even where the individual documents are not privileged,” and (3) a party is
therefore prevented “from requesting the entire file, which is almost certain to encompass numerous
irrelevant and immaterial documents . . . as well as privileged information.”40
A request for all billing invoices, payment logs, payment ledgers, payment summaries,
documents showing flat rates, and audits is analogous to the request in Valdez for an attorney’s entire
litigation file. These billing records—which are generated in anticipation of litigation and trial—are
“almost certain to encompass numerous irrelevant and immaterial documents.”41 When a party
neither seeks to recover its own attorney fees nor attempts to use its attorney-billing records to
challenge the opposing party’s attorney fees, the party’s attorney should not be restricted in the
preparation or presentment of his or her billing records by the prospect that they might have to be
revealed in their entirety. Further, these billing records, which are useful to the requesting party only
if they describe what the attorney has done in the case, reveal the attorney’s thought processes
concerning the prosecution or defense of the case.
For example, billing records reveal when and where attorneys strategically deploy a client’s
resources; which issues were addressed by experienced lawyers as compared to less experienced
39
Id. at 460.
40
Id. at 460-61; see also Banales, 907 S.W .2d at 490.
41
Valdez, 863 S.W .2d at 461.
13
counsel; the subject-matter expertise of an attorney working on a particular aspect of the case; and
who was hired as consultants—including consulting experts and jury consultants—and when. This
information provides detailed information regarding a party’s litigation decisions and also
illuminates the relative significance of or concern about particular matters. Especially when a party
is a repeat litigant, as the insurer is here, decisions revealed through billing records represent
strategic choices and are pieces of “an overall legal strategy for all the cases in which it is involved,”
which a party must be allowed to develop without intrusion.42 Discovery of billing records in their
entirety would provide a roadmap of how the insurer plans to litigate not only this particular case but
also other MDL cases.
The homeowners argue that redaction of privileged material, which the trial court allowed
in this case, should be sufficient to protect any privileged information. However, in Valdez, we held
the attorney’s entire litigation file is privileged per se, regardless of whether unprivileged
information is included in the file.43 We conclude that Valdez’s core analysis applies here as well
and logically applies even if privileged information within the requested records is redacted.
We also conclude that redacting privileged information—such as the specific topics
researched or the descriptions of the subject of phone calls—would be insufficient as a matter of law
to mask the attorney’s thought processes and strategies. The chronological nature of billing records
42
Owens-Corning Fiberglas Corp. v. Caldwell, 818 S.W .2d 749, 751 (Tex. 1991) (orig. proceeding).
43
See 863 S.W .2d at 460 (“[E]ven if some of the documents in the law firm files would not otherwise be
privileged, production of an attorney’s entire file necessarily reveals the attorney’s mental processes.”); see also Lewis
v. Wittig, 877 S.W .2d 52, 57 (Tex. App.— Houston [14th Dist.] 1994, orig. proceeding) (“An attorney’s ‘entire file’ is
work-product privileged per se, subject to waiver through offensive use. This, we believe, is the central holding of
Valdez.”).
14
reveals when, how, and what resources were deployed. With this knowledge, a party in the same
proceeding could deduce litigation strategy as to specific or global matters.
Aggregate fee summaries also reveal strategic choices. When litigation is pending, the
discovery rules impose a duty to amend or supplement discovery throughout litigation.44 A dramatic
increase in mid-litigation spending could imply an upcoming filing or significant research
expenditures related to elevated concerns over recent litigation events.45 For these reasons, redaction
would be inadequate to protect the work-product nature of the total billing information.
Further, objections and disputes regarding what should be redacted based on privilege would
lead to collateral litigation over attorney-fee claims, with the issues likely to recur throughout the
litigation as discovery is amended or supplemented. As the United States Supreme Court
admonished in Hensley v. Eckerhart, “[a] request for attorney’s fees should not result in a second
major litigation.”46
We therefore hold that requests for production of all billing invoices, payment logs, payment
ledgers, payment summaries, documents showing flat rates, and audits invade the zone of
work-product protection. Our holding does not prevent a more narrowly tailored request for
44
T EX . R. C IV . P. 193.5.
45
See L.A. Cty. Bd. of Supervisors v. Super. Ct., 386 P.3d 773, 781 (Cal. 2016) (“W hen a legal matter remains
pending and active, the privilege encompasses everything in an invoice, including the amount of aggregate fees. This
is because, even though the amount of money paid for legal services is generally not privileged, an invoice that shows
a sudden uptick in spending ‘might very well reveal much of [a government agency]’s investigative efforts and trial
strategy.’ Midlitigation swings in spending, for example, could reveal an impending filing or outsized concern about
a recent event.” (quoting Mitchell v. Super. Ct., 691 P.2d 642, 646 (Cal. 1984))).
46
461 U.S. 424, 437 (1983); see also Costa v. Sears Home Improvement Prods., Inc., 178 F. Supp. 3d 108, 114
(W .D.N.Y. 2016) (concluding that requiring production of defendants’ billing records to support the reasonableness of
plaintiff’s attorney-fee request would increase expenses, lead to various privilege objections, and result in a second major
litigation that courts should endeavor to avoid).
15
information relevant to an issue in a pending case that does not invade the attorney’s strategic
decisions or thought processes.47 Nor does our holding preclude a party from seeking noncore work
product “upon a showing that the party seeking discovery has substantial need of the materials in the
preparation of the party’s case and that the party is unable without undue hardship to obtain the
substantial equivalent of the material by other means.”48 But, here, the record bears no evidence of
either.
We acknowledge that an opposing party may waive its work-product privilege through
offensive use—perhaps by relying on its billing records to contest the reasonableness of opposing
counsel’s attorney fees or to recover its own attorney fees.49 But in this case, the insurer has
stipulated it will not use its own billing records to contest the homeowners’ attorney fees. Nor is the
insurer seeking to recover its own attorney fees from the homeowners. Although the court of appeals
indicated the insurer could seek attorney fees in the future based on a Rule 167 settlement offer,50
the offer-of-settlement rule provides a process for reopening discovery to enable a party to ascertain
the reasonableness of the requested costs.51
47
Cf. Valdez, 863 S.W .2d at 461 (“Our decision today does not prevent a party from requesting specific
documents or categories of documents relevant to issues in a pending case, even though some or all of the documents
may be contained in an attorney’s files. It does, however, prevent a party from requesting the entire file.”).
48
T EX . R. C IV . P. 192.5(b)(2).
49
See Valdez, 863 S.W .2d at 461-62; see also Republic Ins. Co. v. Davis, 856 S.W .2d 158, 164 (Tex. 1993)
(orig. proceeding) (holding a party may waive the attorney-client privilege through offensive use); Owens-Corning
Fiberglas Corp. v. Caldwell, 818 S.W .2d 749, 752 (Tex. 1991) (orig. proceeding) (observing a party may waive the
work-product privilege through offensive use).
50
2015 W L 4380929, at *3, ___ S.W .3d ___, ___ (Tex. App.— Corpus Christi 2015).
51
T EX . R. C IV . P. 167.5(b).
16
In describing billing records as work product when requested en masse, we do not foreclose
the possibility that some or all of the information may also be protected from compelled disclosure
by the attorney-client privilege.52 But to be protected by the attorney-client privilege, the insurer
must establish that the communications were confidential and made to facilitate the rendition of
professional legal services to the client. The insurer failed, however, to “establish [a prima facie case
for the privilege] by testimony or affidavit” or even by “only the minimum quantum of evidence
necessary to support a rational inference that the allegation of fact is true.”53
C. Relevance
Although we conclude the requested documents are protected by the work-product privilege,
factual information is not exempt from discovery by mere inclusion within protected documents.54
Accordingly, we must also consider whether interrogatories that request hourly rates, total amount
billed, and total reimbursable expenses seek discoverable information. Though the parties disagree
about whether the requested factual information is privileged, even unprivileged information is not
discoverable unless the information is relevant.
52
See, e.g., L.A. Cty. Bd. of Supervisors v. Super. Ct., 386 P.3d 773, 781 (Cal. 2016) (holding that “[w]hen a
legal matter remains pending and active, the [attorney-client] privilege encompasses everything in an [attorney’s] invoice,
including the amount of aggregate fees”). But see Paton v. GEICO Gen. Ins. Co., 190 So. 3d 1047, 1052 (Fla. 2016)
(holding that “the entirety of the billing records are not privileged, and where the trial court specifically states that any
privileged information may be redacted, the plaintiff should not be required to make an additional special showing to
obtain the remaining relevant, non-privileged information”).
53
In re Mem’l Hermann Hosp. Sys., 464 S.W .3d 686, 698 (Tex. 2015) (orig. proceeding) (citing In re Living
Ctrs. of Tex., 175 S.W .3d 253, 261 (Tex. 2005) (orig. proceeding), and State v. Lowry, 802 S.W .2d 669, 671 (Tex. 1991)
(orig. proceeding), and quoting In re E.I. DuPont de Nemours & Co., 136 S.W .3d 218, 223 (Tex. 2004) (orig.
proceeding)); see also T EX . R. C IV . P. 193.4.
54
Cf. Valdez, 863 S.W .2d at 460 (noting a document is not privileged simply because it is contained in an
attorney’s files); Owens-Corning, 818 S.W .2d at 750 n.2 (“W hile an attorney must be allowed to work with a degree of
privacy, the protection granted under the work product doctrine does not extend to facts the attorney may acquire.”).
17
We hold the requested information is generally not relevant because (1) the opposing party
may freely choose to spend more or less time or money than would be “reasonable” in comparison
to the requesting party; (2) comparisons between the hourly rates and fee expenditures of opposing
parties are inapt, as differing motivations of plaintiffs and defendants impact the time and labor
spent, hourly rate charged, and skill required; (3) “the tasks and roles of counsel on opposite sides
of a case vary fundamentally,” so even in the same case, the legal services rendered to opposing
parties are not fairly characterized as “similar”;55 and (4) a single law firm’s fees and hourly rates
do not determine the “customary” range of fees in a given locality for similar services. However,
when a party uses its “own hours and rates as yardsticks by which to assess the reasonableness of
those sought by [the requesting party]” or seeks to shift responsibility for those expenditures, the
party places its own attorney-billing information at issue, making the information discoverable.56
1. Scope of Discovery
The scope of discovery extends to any unprivileged information that is “relevant to the
subject matter” of the pending action, even if inadmissible at trial, so long as the information sought
“appears reasonably calculated to lead to the discovery of admissible evidence.”57 We broadly
construe the phrase “relevant to the subject matter” to provide litigants the opportunity “to obtain
55
McClain v. Lufkin Indus., Inc., 649 F.3d 374, 384 (5th Cir. 2011).
56
Mendez v. Radec Corp., 818 F. Supp. 2d 667, 669 (W .D.N.Y. 2011).
57
T EX . R. C IV . P. 192.3(a).
18
the fullest knowledge of the facts and issues prior to trial.”58 Evidence is relevant if “(a) it has any
tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact
is of consequence in determining the action.”59 Although the scope of discovery is broad, a request
for information “must show a reasonable expectation of obtaining information that will aid the
dispute’s resolution.”60
The discovery guideposts can be summarized as follows: only relevant evidence is
discoverable; relevant evidence that is privileged is not discoverable; relevant evidence that is not
privileged is discoverable when (i) it is admissible or (ii) it is inadmissible but reasonably calculated
to lead to the discovery of admissible evidence; and failing either of those admissibility criteria, the
request for discovery may be denied even if the requested information is relevant and unprivileged.
We turn now to the pertinent inquiry: whether information about opposing counsel’s hourly
rates, total fees, and total reimbursable expenses is relevant and reasonably calculated to lead to the
discovery of admissible evidence even when those expenditures are not independently at issue in the
litigation, as is the case here.
58
Ford Motor Co. v. Castillo, 279 S.W .3d 656, 664 (Tex. 2009) (quoting Axelson, Inc. v. McIlhany, 798
S.W .2d 550, 553 (Tex. 1990) (orig. proceeding)); see also In re Nat’l Lloyds Ins. Co., 449 S.W .3d 486, 488 (Tex. 2014)
(orig. proceeding).
59
T EX . R. E VID . 401.
60
In re CSX Corp., 124 S.W .3d 149, 152 (Tex. 2003) (orig. proceeding).
19
2. Establishing Reasonable and Necessary Attorney Fees
We begin by considering the issue to which the requested information is purportedly
relevant—the homeowners’ claim for reimbursement of reasonable and necessary attorney fees.
“Texas follows the American rule on attorney’s fees, which provides that, generally, ‘a party
may not recover attorney’s fees unless authorized by statute or contract.’”61 When fee-shifting is
authorized, the party seeking to recover those fees bears the burden of establishing the fees are
reasonable and necessary.62 This inquiry requires consideration of eight nonexclusive factors
articulated in Arthur Andersen & Co. v. Perry Equipment Corp.:
1. the time and labor required, the novelty and difficulty of the questions
involved, and the skill required to perform the legal service properly;
2. the likelihood . . . acceptance of the particular employment will preclude
other employment by the lawyer;
3. the fee customarily charged in the locality for similar legal services;
4. the amount involved and the results obtained;
5. the time limitations imposed by the client or by the circumstances;
6. the nature and length of the professional relationship with the client;
7. the experience, reputation, and ability of the lawyer or lawyers performing the
services; and
61
Wheelabrator Air Pollution Control, Inc. v. City of San Antonio, 489 S.W .3d 448, 453 n.4 (Tex. 2016)
(quoting Wells Fargo Bank NA v. Murphy, 458 S.W .3d 912, 915 (Tex. 2015)).
62
See In re Bent, 487 S.W .3d 170, 184 (Tex. 2016) (orig. proceeding); Stewart Title Guar. Co. v. Sterling, 822
S.W .2d 1, 10 (Tex. 1991).
20
8. whether the fee is fixed or contingent on results obtained or uncertainty of
collection before the legal services have been rendered.63
The homeowners cite the first and third Arthur Andersen factors as establishing the trial
court’s discretion to authorize discovery concerning the insurer’s attorney-fee expenditures. The
homeowners neither address the other enumerated factors nor identify any nonenumerated factor
affecting the analysis in this case. But relying on the concurring opinion in El Apple I, Ltd. v. Olivas,
the homeowners assert that a comparison of their own fees to the insurer’s fees is relevant to
discharging their burden of proof and is, in fact, a “surer indicator[]” of a reasonable fee.64
The insurer argues no Arthur Andersen factor is textually or practically directed to an
opposing party’s attorney fees because the fee-recovery analysis focuses solely on the reasonableness
and necessity of the claimant’s attorney fees. The insurer characterizes the El Apple concurrence as
involving a party’s election to use its own fees as a comparator and not as insinuating an opposing
party’s attorney-billing information is inherently relevant.
3. The Requested Information Is Not Relevant
Considering where the evidentiary burden lies with respect to a fee-shifting request and the
focus of the material inquiry, we hold that an opposing party’s hourly rates, total amount billed, and
total reimbursable expenses do not, in and of themselves, make it any more probable that a
requesting party’s attorney fees are reasonable and necessary, or not, which are the only facts “of
63
945 S.W .2d 812, 818 (Tex. 1997) (citing T EX . D ISCIPLIN ARY R U LES P RO F ’L C O N DUCT 1.04(b), reprinted in
T EX . G O V ’T C O D E tit. 2, subtit. G, app. A); see El Apple I, Ltd. v. Olivas, 370 S.W .3d 757, 761 (Tex. 2012) (the Arthur
Andersen factors are not exclusive) (citing T EX . D ISCIPLIN ARY R ULES P ROF ’L C O N D UCT 1.04(b), reprinted in T EX . G O V ’T
C O D E tit. 2, subtit. G, app. A).
64
See El Apple I, 370 S.W .3d at 766 (H ECH T , J., concurring).
21
consequence.”65 This is so because an opposing party’s litigation expenditures are not ipso facto
reasonable or necessary; indeed parties who are not seeking to shift responsibility for their fees may
freely choose to spend more or less time or money than would be “reasonable” or “necessary” for
parties who are.66
Despite superficial appeal, such “an apples-to-oranges comparison” is analytically faulty:
The most obvious flaw . . . is that making such a comparison—where the benchmark
for the award of plaintiff’s attorney fees is “reasonableness”—would require the trial
court to first determine whether the defendant’s counsel billed a reasonable amount.
Such a scheme does not make sense.67
In order for an opposing party’s fees to serve as a relevant measure to any legitimate degree, the
claimant would first have to establish those fees are themselves reasonable and necessary. Doing
so necessitates consideration of other data points beyond the instant parties’ expenditures. Because
other evidence would be required to make an opposing party’s fees relevant in the first instance,
discovery concerning an opposing party’s attorney-fee expenditures serves no purpose besides
unnecessarily complicating the litigation in pursuit of a collateral matter. Evidence of an opposing
party’s fees lacks genuine probative value as a comparator for a requesting party’s fees and, at best,
would be merely cumulative or duplicative of other evidence directed to that inquiry.68 Concisely
65
See T EX . R. E VID . 401.
66
However, a lawyer is constrained from entering into an arrangement for “an illegal fee or unconscionable fee,”
which is defined as “if a competent lawyer could not form a reasonable belief that the fee is reasonable.” T EX .
D ISCIPLIN ARY R U LES P RO F ’L C ON D U CT 1.04(a), reprinted in T EX . G OV ’T C O DE tit. 2, subtit. G, app. A.
67
Burks v. Siemens Energy & Automation, Inc., 215 F.3d 880, 884 (8th Cir. 2000).
68
See T EX . R. C IV . P. 192.4(a).
22
stated, two wrongs don’t make a right, and proving two rights is unnecessary when the only fact of
consequence is whether one is right.
This conclusion accords with both a literal and practical reading of the first and third Arthur
Andersen factors, which the homeowners cite as supporting the trial court’s discovery order. With
regard to the first factor—which considers the time, labor, and skill required and the novelty and
difficulty of the questions involved—there can be little dispute that different motivations and
different demands drive the time and labor spent, hourly rate charged, and skill required to defend
litigation as compared to prosecuting a suit.69 As to the third Arthur Andersen factor—the fee
customarily charged in the locality for similar legal services—opposing parties are not providing
“similar legal services” even in the same case, and the term “customarily” connotes a composite of
fee information for the area rather than a single data point. Fundamentally, the tasks and roles of
counsel on opposite sides of a case and the interests of opposing parties are so distinct that no
“logical comparability” exists with respect to their attorney fees and billing rates.70
For example, a party subject to repeat litigation, such as an insurer or corporate defendant,
may view the precedential value of a case more significantly than an opposing party who might not
anticipate ever being involved in similar litigation again. Likewise, one side may have more at risk
69
See, e.g., Mirabal v. Gen. Motors Acceptance Corp., 576 F.2d 729, 731 (7th Cir. 1978).
70
McClain v. Lufkin Indus., Inc., 649 F.3d 374, 384 (5th Cir. 2011) (criticizing district court for allowing
discovery of defense counsel’s fees because “[n]o prior Fifth Circuit authority requires this comparison, nor does
common experience” given the fundamentally different roles of opposing counsel, and that if “there were logical
comparability, this court’s decisions would have recognized it in the Johnson factors [which are similar to Texas’s Arthur
Andersen factors] or in past lodestar decisions”).
23
in a case.71 Such considerations could reasonably justify greater expenditures in time, labor, and
money than might be considered “reasonable” from the other party’s perspective.72 As the
expression goes, one side of the litigation may have more skin in the game than the other.
Similarly, the nature of the attorney-client relationship may differ in ways that affect the rates
charged and the demands on counsel’s time. In that vein, ongoing attorney-client relationships often
exist between corporate and governmental parties and their counsel and frequently involve
negotiated rates that take into consideration future litigation work.73 And “[l]arger organizations,
often armed with more resources to expend on litigation than individuals, are frequently more
demanding on their counsel in requesting constant updates on the litigation and detailed summaries
on recent rulings, thereby requiring more time by their attorneys.”74 These considerations are
especially pertinent in multi-party litigation, like the MDL proceedings here.
Even when working on the same tasks, attorneys litigating the same case do not approach
those tasks in a sufficiently comparable manner to be genuinely probative of the degree of effort or
skill required by one another. Indeed, while counsel for both sides may attend the same deposition,
71
Cf. Ohio-Sealy Mattress Mfg. Co. v. Sealy Inc., 776 F.2d 646, 659 (7th Cir. 1985) (“W e would normally
expect a defendant to invest more in defending an antitrust suit than a plaintiff would invest in prosecuting it. After all,
if a defendant loses, it must pay treble damages, the cost of defending, and the plaintiff’s reasonable costs of bringing
the suit; if the plaintiff loses, it is out only costs and whatever fees it paid its attorneys.”).
72
See Johnson v. Univ. Coll. of the Univ. of Ala. in Birmingham, 706 F.2d 1205, 1208 (11th Cir. 1983) (hours
needed by one side to prepare may differ substantially from that of opposing counsel, since the nature of the work may
vary dramatically and the case may have far greater precedential value to one side than the other).
73
Souryavong v. Lackawanna Cty., 159 F. Supp. 3d 514, 544 (M.D. Pa. 2016) (noting a defense counsel’s time
and billing records are not helpful in assessing reasonableness and that this is “particularly true here where defense
counsel represents a large governmental organization and Plaintiffs’ counsel represents three (3) non-corporate
individuals”).
74
Id. (citing Samuel v. Univ. of Pittsburgh, 80 F.R.D. 293, 295 (W .D. Penn. 1978)).
24
the attorney taking the deposition would reasonably be expected to expend more time and expense
in preparing for the deposition than the attorney defending the deponent. In like manner, the contrast
between responding to discovery requests and reviewing and analyzing information produced creates
significant variations in time and money spent. Suffice it to say that counsel in the same case are not
actually or even effectively performing “similar legal services” for the litigation.
Even if they were performing roughly the same legal services, a single law firm’s fees and
hourly rates in a particular case do not equate to a “customar[y]” fee for similar legal services:
[W]hat a single law firm charges for a particular set of services and its choice of
tactics in representing a given client are issues decidedly distinct from deciding what
constitutes a customary fee. The [customary-fee] factor is plainly aimed at a
composite of legal fees charged for a given service. Thus, focusing on one law firm’s
billing practices is unhelpful in determining what is “customary.” The thrust of this
lawsuit is whether [plaintiff’s] fees, not those generated by [defendant], fall within
the range of reason.75
Explaining the distinction, one court observed: “The particular rates charged by defendants’
attorneys in this action reflect only the rates charged in one specific case by one specific law firm
but do not have a bearing on the general hourly rate normally charged for similar legal work in the
area.”76
75
Duininck Bros. v. Howe Precast, Inc., No. 4:06-CV-441, 2008 W L 4411641, at *3 (E.D. Tex. Sept. 23, 2008)
(emphasis added).
76
Blowers v. Lawyers Coop. Publ’g Co., 526 F. Supp. 1324, 1328 (W .D.N.Y. 1981) (“The hourly rates charged
to defendants by their attorneys in this particular case is simply not relevant in determining the prevailing hourly rate in
the area. Plaintiff has not requested general information concerning the normal rates charged by defendants’ attorneys
in similar cases, but has particularized her Interrogatories.”).
25
The fact that the insurer challenges the homeowners’ attorney fees as excessive does not, in
and of itself, alter the analysis.77 A party can challenge another party’s fee request as not
“customary” even though that party also paid a fee that was not “customary,” as long as the
challenger does not rely on its own fees to prove the point.78
The homeowners cite several state and federal decisions for the proposition that an opposing
party’s attorney-billing information is at least minimally relevant and therefore the trial court has
complete discretion to order discovery of such information or not.79 While there is authority that
may be construed as supporting the homeowners’ discovery efforts, the jurisprudence reflects a wide
variety of approaches to this issue among state and federal courts.80 For the reasons explained above,
we agree with those cases concluding such information is generally not discoverable and, in the
ordinary case, “patently irrelevant.”81
77
In arguing the contrary, the homeowners cite, among other cases, Mendez v. Radec Corp., 818 F. Supp. 2d
667, 668-69 (W .D.N.Y. 2011) (“W here the opposing party challenges the reasonableness of the rate or hours charged
by the moving party’s counsel, courts are more likely to find that evidence of the nonmoving party’s counsel’s fees are
relevant and discoverable.”).
78
See id. at 669 (finding defense counsel’s billing records relevant and discoverable because defense counsel
objected to the fee request as excessive and “used their own hours and rates as yardsticks by which to assess the
reasonableness of those sought by plaintiffs”).
79
See, e.g., Paton v. GEICO Gen. Ins. Co., 190 So. 3d 1047, 1052 (Fla. 2016); Ex parte Vulcan Materials Co.,
992 So. 2d 1252, 1268 (Ala. 2008); see also Naismith v. Prof’l Golfers Ass’n, 85 F.R.D. 552, 562-64 (N.D. Ga. 1979).
80
See, e.g., Montgomery v. Kraft Foods Glob., Inc., No. 1:12-CV-00149, 2015 W L 881585, at *2-3 (W .D.
Mich. Mar. 2, 2015) (collecting contrasting authorities); Marks Constr. Co. v. Huntington Nat’l Bank, Civil Action No.
1:05CV73, 2010 WL 1836785, at *2-5 (N.D. W. Va. May 5, 2010) (same); Cohen v. Brown Univ., CA 92-197 L, 1999
W L 695235, at *2 (D.R.I. May 19, 1999) (same).
81
See, e.g., In re Tex. Mut. Ins. Co., 358 S.W .3d 869, 872 (Tex. App.— Dallas 2012, orig. proceeding); In re
AIG Aviation (Tex.), Inc., No. 04-04-00291-CV, 2004 W L 1166560, at *1 (Tex. App.— San Antonio May 26, 2004, orig.
proceeding) (mem. op.); MCI Telecomms. Corp. v. Crowley, 899 S.W .2d 399, 403 (Tex. App.— Fort W orth 1995, orig.
proceeding).
26
Even if a party’s attorney-billing information were marginally relevant to an opposing party’s
fee claim, discovery of such information should ordinarily be denied because the “probative value
is substantially outweighed by the danger of . . . unfair prejudice, confusion of the issues, misleading
the jury, undue delay, or needlessly presenting cumulative evidence.”82 When requested information
would manifestly foment these concerns and the probative value of the requested information is
minimal, the discovery request is not “reasonably calculated to lead to the discovery of admissible
evidence.”83
What’s more, barring unusual circumstances, evidence about an opposing party’s attorney
fees is not necessary for the requesting party to meet its burden of proof, but there is a genuine threat
that allowing such discovery would give rise to abusive discovery practices. “Discovery is often the
most significant cost of litigation” and a potential “weapon capable of imposing large and
unjustifiable costs on one’s adversary.”84 Especially in the context of multi-party litigation, costs
are magnified by expanding the scope of discovery, and “the costs of multi-party litigation can drive
defendants to settle regardless of the merits.”85 While litigants should have the opportunity “to
82
T EX . R. E VID . 403.
83
T EX . R. C IV . P. 192.3(a).
84
In re Alford Chevrolet-Geo, 997 S.W .2d 173, 180 (Tex. 1999) (orig. proceeding) (citing W ayne D. Brazil,
Views From the Front Lines: Observations by Chicago Lawyers About the System of Civil Discovery, 1980 A M . B.
F O U ND . R ES . J. 219, 229, and Frank H. Easterbrook, Discovery as Abuse, 69 B.U. L. R EV . 635, 636 (1989)).
85
Id. (citing CSR, Ltd. v. Link, 925 S.W .2d 591, 598 (Tex. 1996) (orig. proceeding) (G O N ZALEZ , J.,
concurring)).
27
obtain the fullest knowledge of the facts and issues prior to trial,”86 our rules also protect against
unnecessary burgeoning of litigation costs.
In sum, barring unusual circumstances, an opposing party’s attorney-fee information is not
relevant because there is no reasonable expectation that the information will aid the dispute’s
resolution. Moreover, whatever marginal relevance might theoretically exist would not come close
to surpassing competing concerns about undue prejudice, confusion of the issues, and abusive
discovery practices, among others. Aside from lacking genuine probative value, discovery of an
opposing party’s attorney-billing information should generally not be permitted for these additional
reasons.
D. Expert Discovery
Attorney-billing information may be discoverable by virtue of the opposing party designating
its counsel as a testifying expert. Per Rule 192.3, a party is entitled to expert discovery of facts
known by the testifying expert relating to the expert’s mental impressions and opinions formed, any
bias of the expert witness, and documents provided to or reviewed by the expert in anticipation of
testimony.87 Additionally, the work-product privilege does not apply to “information discoverable
under Rule 192.3 concerning experts, trial witnesses, witness statements, and contentions.”88 Thus,
the tactical decision to designate counsel as a testifying witness provides the opposing party with the
86
Ford Motor Co. v. Castillo, 279 S.W .3d 656, 664 (Tex. 2009) (quoting Axelson, Inc. v. McIlhany, 798
S.W .2d 550, 553 (Tex. 1990) (orig. proceeding)).
87
T EX . R. C IV . P. 192.3(e)(3)-(6).
88
T EX . R. C IV . P. 192.5(c)(1).
28
means to access information and attorney work product not otherwise available under the general
scope of discovery.89
In those circumstances, however, the requesting party must follow the discovery rules
applicable to testifying experts. Importantly, a party is limited in the tools available to discover
information concerning expert witnesses, even though the information may otherwise be within the
scope of testifying-expert discovery. “Rule 192.3(e) sets forth the scope of information that parties
may discover about a testifying expert . . . . Rule 195 addresses the methods for obtaining such
information, limiting testifying-expert discovery to that acquired through disclosures, expert reports,
and oral depositions of expert witnesses.”90 To minimize undue expense and curb discovery abuse,91
Rule 195 does not provide for interrogatories or requests for production like the discovery requests
at issue here.92 Further, because the disputed discovery requests are not permissible methods of
89
If a party is concerned about the discovery of its privileged information through expert discovery, the party
may designate another expert in the first place or, presumably, withdraw a currently designated expert and name another.
See In re Christus Spohn Hosp. Kleberg, 222 S.W .3d 434, 445 (Tex. 2007) (orig. proceeding).
90
In re Ford Motor Co., 427 S.W .3d 396, 397 (Tex. 2014) (orig. proceeding) (emphases added).
91
W e observed in In re Ford Motor Co. that:
The official comments to Rule 195 articulate a goal of minimizing “undue expense” in conducting
expert discovery. This goal comports with efforts by this Court and others to curb discovery abuse
through the implementation of carefully crafted principles and procedures. W e have expressed
concerns about allowing overly expansive discovery about testifying experts that can permit witnesses
to be subjected to harassment and might well discourage reputable experts from participating in the
litigation process.
Id. (citations and internal quotations omitted).
92
See T EX . R. C IV . P. 195.1 (“A party may request another party to designate and disclose information
concerning testifying expert witnesses only through a request for disclosure under Rule 194 and through depositions and
reports as permitted by this rule.” (emphasis added)). Via requests for disclosure, as authorized by Rule 195.1, a party
is entitled to limited expert-witness document discovery, including “all documents, tangible things, reports, models, or
data compilations that have been provided to, reviewed by, or prepared by or for the expert in anticipation of the expert’s
29
obtaining information discoverable under Rule 192.3(e), the exception to the work-product privilege
in Rule 192.5(c)(1) does not apply.93
While the distinctions may seem like a technicality, the limitations on expert discovery
ensure discovery is narrowly tailored to permissible purposes. In this case, for example, the
requested discovery seeks all billing information without any showing that those records “have been
provided to, reviewed by, or prepared by or for the expert in anticipation of the expert’s testimony.”94
By asserting the requested discovery is proper based on counsel’s designation as an expert witness,
the homeowners circumvent the requirement that there be at least some nexus between the expert
and the requested information. While counsel surely has reviewed his own bills and is
knowledgeable about his own billing practices, he has not necessarily reviewed the billing
information of other attorneys representing the insurer in the MDL cases.95
Because the homeowners chose not to use Rule 195’s permissible discovery methods to
request insurer’s expert information, the trial court erred insofar as it relied on Rule 192.3(e) in
determining the scope of discovery. Additionally, the Rule 192.5(c)(1) work-product exception does
testimony.” T EX . R. C IV . P. 194.2(f)(4); see also T EX . R. C IV . P. 192.3(e) (delineating the scope of expert discovery),
195.5 (“In addition to disclosure under Rule 194, a party may obtain discovery concerning the subject matter on which
the expert is expected to testify . . . and other discoverable matters, including documents not produced in disclosure, only
by oral deposition of the expert and by a report prepared by the expert under this rule.”).
93
T EX . R. C IV . P. 192.5(c)(1) (excepting from work-product protection “information discoverable under Rule
192.3 concerning experts, trial witnesses, witness statements, and contentions”).
94
T EX . R. C IV . P. 194.2(f)(4).
95
The record illustrates the point with counsel’s testimony in the Amaro case, which the homeowners rely on
as the impetus for the disputed discovery: “I can give you the range of what my firm has billed. W hat I cannot give you
today are the fees incurred and the amount that [co-counsel] has billed on it.”
30
not apply to requested information under these particular discovery methods and thus the trial court’s
discovery order improperly compels discovery of work-product privileged information.
E. Response to Dissent
“The line between who is a Rule 702 expert witness and who is a Rule 701 [fact] witness is
not always bright.”96 But when a witness is properly disclosed and designated as an expert and the
main substance of the witness’s testimony is based on specialized knowledge, skill, experience,
training, and education, “the testimony will generally be expert testimony within the scope of Rule
702.”97 Here, the insurer (1) challenged the reasonableness and necessity of the homeowners’
attorney fees, but has not requested its own fees; (2) stipulated that it will not use its own billing
information to contest the homeowners’ attorney fees; (3) designated one of its attorneys as an expert
based upon his experience, education, and skill; and (4) stated that counsel “is expected to testify as
to reasonable and necessary attorney fees for a case of such complexity as this case, pending in
Hidalgo County, Texas.”
The dissent’s analysis conflates the role of an expert with the role of a fact witness and
ignores the distinction between the discovery rules associated with those respective roles. We do
not disagree with the dissent that the insurer’s counsel can be cross-examined at trial in his role as
an expert witness; consequently, discovery as to his credibility, biases, and facts relating to or
forming the basis of his mental impressions and opinions is permitted under the expert-discovery
96
Reid Rd. Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 337 S.W .3d 846, 850-52 (Tex. 2011).
97
Id. at 851.
31
rules.98 But the homeowners did not use permissible methods for obtaining expert discovery.99 The
discovery methods matter; we require—as our rules of civil procedure require—that parties utilize
permissible tools for requesting expert discovery.
The dissent also misunderstands our holding regarding the attorney work-product privilege.
The dissent agrees that compelling en masse production of a party’s billing records invades the
work-product privilege but, somewhat confusingly, asserts the privilege is not impinged because the
order to produce billing records was limited to the billing records in this case and redaction would
be sufficient to protect the privilege.100 We confronted a similar situation in National Union Fire
Insurance Co. v. Valdez and squarely held that production of an attorney’s entire case file would
reveal an attorney’s thought processes and strategies, even if some of the documents in the file would
not otherwise be privileged.101 We did not provide for redaction then, nor do we conclude redaction
would be adequate in this context. Redaction is simply not sufficient to protect the privilege or mask
an attorney’s thought processes and strategies whether production of an entire litigation file is at
issue or en masse production of attorney billing records is involved. Thus concerns analogous to
those in Valdez compel the same conclusion in this case.
98
See T EX . R. C IV . P. 192.3(e)(3)-(6).
99
T EX . R. C IV . P. 195.1 (limiting a party’s expert discovery tools to only a request for disclosure and through
depositions and reports).
100
Post at ___.
101
863 S.W .2d 458, 460-61 (Tex. 1993) (orig. proceeding); see also supra notes 38-46 and accompanying text.
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Finally, the dissent’s preservation argument misses the mark.102 The insurer’s opposition to
discovery is two-pronged: (1) the requested information is privileged and irrelevant under the
general scope of discovery, and (2) the insurer’s designation of its attorney as an expert witness does
not change this fact. Whether designation of counsel as an expert alters the discovery analysis—as
the homeowners and dissent maintain—is well within the issue presented.
III. Conclusion
Making a claim for attorney fees or using attorney fees as a comparator in challenging an
opponent’s fee request puts a party’s attorney fees at issue in the litigation. In addition, designating
counsel as an expert opens the door to expert-witness discovery as provided and limited by the Texas
Rules of Civil Procedure. Outside of these scenarios and absent unusual circumstances, information
about an opposing party’s attorney fees and expenses is, in the ordinary case, privileged or irrelevant
and, thus, not discoverable. Given the circumstances in this case and the nature of the discovery
requests at issue, we conditionally grant mandamus relief and direct the trial court to vacate its order
compelling National Lloyds Insurance Company, Wardlaw Claims Service, and Ideal Adjusting to
answer requests for production 1, 2, 4, and 5, and interrogatories 1, 2, and 3. The writ will issue only
if the trial court fails to do so.
___________________________
Eva M. Guzman
Justice
OPINION DELIVERED: June 9, 2017
102
Post at ___.
33