in Re Robert R. McDaniel ( 2013 )

Petition for Writ of Mandamus Denied and Memorandum Opinion filed
March 28, 2013.
In The
Fourteenth Court of Appeals
NO. 14-13-00127-CV
IN RE ROBERT R. MCDANIEL, AVIS LLOYD McCRARY,
JOSHUA C. BROWN, PREFERRED UNLIMITED, INC.,
PREFERRED SANDS HOLDING CO., LLC, PREFERRED RESIN
HOLDING CO., LLC, PREFERRED TECHNOLOGY, LLC, and
PREFERRED PROPPANTS, LLC, Relators
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
On Appeal from the 234th District Court
Harris County, Texas
Trial Court Cause No. 2011-51663
MEMORANDUM OPINION
Relators, Robert R. McDaniel, Avis Lloyd McCrary, Joshua C. Brown,
Preferred Unlimited, Inc., Preferred Sands Holding Co., LLC, Preferred Resin
Holding Co., LLC, Preferred Technology, LLC, and Preferred Proppants, LLC,
filed a petition for writ of mandamus in this court. See Tex. Gov’t Code §22.221;
see also Tex. R. App. P. 52. In the petition, relators ask this court to compel the
Honorable Wesley Ward, presiding judge of the 234th District Court of Harris
County, to set aside the order refusing to compel discovery of chemical tests
performed a third party, finding the tests constitute the attorney work product of
the real party in interest, Momentive Specialty Chemicals, Inc. 1
Preferred Sands mines proppant sands used in “fracking” in the oil & gas
industry.2 The individual relators are former Momentive employees who later
worked for Preferred Sands. Momentive filed suit alleging misappropriation of
trade secrets and other business tort claims, claiming that Preferred had gained
proprietary trade secret information from these former employees and planned to
market its new resin-coated sand in direct competition with Momentive. The other
companies named as relators are affiliates of Preferred Sands who intervened in the
suit, alleging that Momentive had tortiously interfered with their business relations.
The tests at issue are chemical tests performed by a third party, Polyhedron
Laboratories, Inc., on behalf of Momentive. Relators allege that the tests compare
Momentive’s resin-coated sand with those of Preferred Proppants, one of the
relators. Momentive counters that the tests were of Preferred’s products that it
obtained from samples at a trade show.
1
The former judge of the 234th District Court, the Honorable Reece Rondon, ruled that the tests
at issue constitute Momentive’s attorney work product. Judge Rondon subsequently resigned
from the bench. After Judge Ward was appointed to the 234th District Court, he denied relators’
request to reconsider Judge Rondon’s ruling. Therefore, we need not abate this proceeding
pursuant to Rule 7.2 of the Texas Rules of Appellate Procedure. See Tex. R. App. P. 7.2(b)
(requiring abatement of original proceedings to allow successor judge to reconsider decision of
previous judge).
2
According to the pleadings filed below, the “fracking” process uses pressure to fracture rock
formations to improve the flow of hydrocarbons. “Frac sand” is injected into a well to release the
hydrocarbons. Sand, fluids, and other materials used to keep the fracture propped open after the
pressure is removed are referred to as “proppants.” Resin-coated sands are specially engineered
proppants designed to be strong and highly conductive.
2
Relators moved to compel production of the tests and completion of the
depositions of two Mementive witnesses who disclosed the existence of the tests.3
At the hearing on the motion to compel discovery, Momentive argued that the tests
are “non-core work product.” It asserted that the tests were performed after this
lawsuit was filed for use by its counsel. Momentive’s counsel expressly stated that
no expert had reviewed the tests at issue. In addition, Momentive made clear to the
court that the tests are of Preferred’s products only, and it argued that Preferred
may easily test its own products, if necessary. The tests were reviewed by the trial
court in camera.4 The trial court agreed with Momentive and denied the requested
discovery of the tests and analyses. The order permitted completion of the
depositions of the two Momentum witnesses.
Relators then filed this proceeding, claiming the tests are not work product,
or alternatively, asserting that they have a substantial need for the tests to defend
against Momentive’s claims and to proceed with their counterclaims. They assert
that new tests performed by a different party would not be the same as those at
issue and would not show Momentive’s “contemporaneous thinking” or
knowledge. Relators also complain that production of the tests is necessary for the
completion of the two Momentive depositions.
Relators raise two issues. They assert that the trial court abused its discretion
in declaring that the tests at issue constitute Momentive’s attorney work product.
They also assert that they lack an adequate remedy by appeal for this clear abuse of
discretion.
3
The depositions of the witnesses, Jerry Borges, Vice President of Momentive’s Oilfield
Technology Group, and Scott Spillars, Momentive’s Proppant Technology Manager, are not
included in our record as they are subject to the parties’ protective order.
4
The tests at issue have not been provided to this court for review.
3
When the trial court disallows discovery and the missing discovery cannot
be made part of the appellate record, thereby precluding appellate review,
mandamus is a proper remedy. Walker v. Packer, 827 S.W.2d 833, 843 (Tex.
1992). Where the party’s ability to present a viable claim or defense is vitiated or
severely compromised, an appellate remedy may be inadequate. See id.
Discovery generally is permitted regarding any unprivileged information
relevant to the subject of a lawsuit. Tex. R. Civ. P. 192.3(a). The scope of
discovery is a matter of trial court discretion. In re CSX Corp., 124 S.W.3d 149,
152 (Tex. 2003). An assertion that material or information is work product is an
assertion of privilege. Tex.R. Civ. P. 192.5(d). The primary purpose of the work
product rule is to shelter an attorney’s mental processes, conclusions, and legal
theories so the lawyer can analyze and prepare his or her case. In re Bexar Cnty.
Crim. Dist. Attorney’s Office, 224 S.W.3d 182, 186 (Tex. 2007).
In addition to communications made in anticipation of litigation, which are
not at issue here,5 “work product” is defined as “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.” Tex. R. Civ. P. 192.5(a)(1). “Core
work product” concerns an attorney’s mental processes and is not discoverable.
See Tex. R. Civ. P. 192.5(b)(1). “Other” or “non-core” work product “is
discoverable only 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.” Id. at 192.5(b)(2).
5
Relators expressly state that they are not seeking in this proceeding to compel discovery of
emails between Momentive personnel about the tests.
4
A party is entitled to discovery of all documents, physical models, reports,
compilations of data, or other material provided to, reviewed by, or prepared by or
for a retained testifying expert. Tex. R. Civ. P. 192.3(e)(6). 6 A party is entitled to
obtain the same information about a consulting expert whose work was reviewed
by a testifying expert. Id. The policy behind the consulting expert privilege is to
encourage parties to seek expert advice in evaluating their case and to prevent a
party from receiving undue benefit from an adversary’s efforts and diligence.
Werner v. Miller, 579 S.W.2d 455, 456 (Tex. 1979); see also General Motors
Corp. v. Gayle, 924 S.W.2d 222, 231 (Tex. App.—Houston [14th Dist.] 1996, orig.
proceeding) (holding that disclosure of tests to the opposing party would defeat
fundamental policy reasons for exempting consulting experts from discovery).
According to the rule’s express language, there is no work-product protection for a
testifying expert’s data, tests, reports, or opinions. See Tex. R. Civ. P. 192.3(e)(6).
Thus, in this case, the test data is discoverable once it has been reviewed by a
6
Rule 192.3(e) provides:
Testifying and Consulting Experts. The identity, mental impressions, and opinions of a
consulting expert whose mental impressions and opinions have not been reviewed by a testifying
expert are not discoverable. A party may discover the following information regarding a
testifying expert or regarding a consulting expert whose mental impressions or opinions have
been reviewed by a testifying expert:
(1) the expert’s name, address, and telephone number;
(2) the subject matter on which a testifying expert will testify;
(3) the facts known by the expert that relate to or form the basis of the expert’s mental
impressions and opinions formed or made in connection with the case in which the
discovery is sought, regardless of when and how the factual information was acquired;
(4) the expert’s mental impressions and opinions formed or made in connection with the
case in which discovery is sought, and any methods used to derive them;
(5) any bias of the witness;
(6) 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 a testifying
expert’s testimony;
(7) the expert’s current resume and bibliography.
Tex .R. Civ. P. 192.3(e).
5
testifying expert. Relators have not identified any evidence in the record showing
that test data was reviewed by a testifying expert, however.
Relators assert that data created by a third party cannot be considered
attorney work product. Relators have construed the rule too restrictively. Rule
192.5 broadly defines work product as material prepared in anticipation of
litigation or for trial. See Tex .R. Civ. P. 192.5(a)(1). The work product exemption
extends both to documents actually created by the attorney and memoranda,
reports, notes, or summaries prepared by other individuals for the attorney’s use.
Small, 346 S.W.3d at 668; GAF Corp. v. Caldwell, 839 S.W.2d 149, 151 (Tex.
App.—Houston [14th Dist.] 1992, orig. proceeding).
As authority for their narrow reading of the work product privilege, relators
cite to a criminal case, Pope v. State, 207 S.W.3d 352 (Tex. Crim. App. 2006).
Contrary to relators’ argument, Pope acknowledged that reports prepared in
anticipation of litigation have a qualified protection from discovery. Id. at 358. The
court stated that the work product doctrine “is premised on the notion that an
attorney should not be compelled to disclose the fruits of his labor to his
adversary.” Id. In addressing communications between attorneys and parties, the
court recognized that underlying factual information, such as descriptions of
potential witnesses, is not protected. Id. The court’s holding in Pope, however,
does not control the issue presented here. See id. at 366 (holding testimony that
defense expert had not requested additional DNA testing did not violate the work
product doctrine).
Relators also cite to Axelson, Inc v. McIlhany, 798 S.W.2d 550 (Tex. 1990).
In Axelson, the court addressed experts who serve in the dual capacity of both fact
witnesses who participated in the events material to the lawsuit and consulting
experts. Id. at 554. The court noted that the work product privilege protects mental
6
impressions and opinions, but not the facts. Id.; see also Leede Oil & Gas, Inc. v.
McCorkle, 789 S.W.2d 686, 687 (Tex. App.—Houston [1st Dist.] 1990, orig.
proceeding) (denying mandamus relief from order requiring production of redacted
documents containing attorney’s neutral recitation of facts in notes from interview
with dual fact and expert witness who died before being deposed).
The situation in this case is much different; discovery is not sought from a
fact witness who participated in events leading to the lawsuit. The record shows
that the tests were performed on relators’ products for use by Momentive’s counsel
after suit was filed. According to Momentive’s affidavit in our record, the tests
were performed in October through December of 2011, after Momentive filed the
underlying suit on August 30, 2011. The “facts” in the test data were generated
after the incidents giving rise to the underlying lawsuit. Contrary to relators’
assertion, the facts in the tests do not “comprise the factual bases of Momentive’s
case.” See Tex. R. Civ. P. 192.3(j) (“A party may obtain discovery of any other
party’s legal contentions and the factual bases for those contentions.”). Polyhedron
has no firsthand knowledge of the underlying facts that form the basis of the
lawsuit. Momentive argued to the trial court that relators may have their own
analyses of their products performed and obtain the substantial equivalent of the
test results by other means.
The tests at issue fall under the “non-core” or “other” work product
category. See Tex. R. Civ. P. 192.5(b)(2). Momentive stated at the hearing and in
its responsive documents that the tests have not been reviewed by a testifying
expert. Momentive assured the court and relators that if the tests are reviewed by a
testifying expert, they will be produced. Thus relators have the burden to show that
they have a substantial need for the materials and they are unable to obtain the
7
substantial equivalent of the material by other means without undue hardship. See
Tex. R. Civ. P. 192.5(b)(2).
The party seeking discovery of non-core work product labors under a heavy
burden to show both that a substantial need for the materials exists and that
materials equivalent to those sought cannot be obtained without substantial
hardship. In re Small 346 S.W.3d 657, 668 (Tex. App.—El Paso 2009, orig.
proceeding). “Substantial need is not merely substantial desire.” In re Bexar Cnty.,
224 S.W.3d at 188.
Relators have generally asserted that “they cannot adequately respond to
Momentive’s claims of trade secret misappropriation, nor press Relators’ counter-
claims, without the documents, which are solely in the possession of the Planitiff.”
No evidence was offered to support this conclusory statement. They assert that the
tests will show “what Momentive knew through its own testing of the Preferred
Intervenors’ products.” The trial court may have concluded that relators do not
have a substantial need for results from testing performed after suit was filed.
Based on the record before us, we determine that relators have not
established that the trial court abused its discretion in determining that the
information sought is work product. Relators have not established that they have a
substantial need for the materials and they are unable, without undue hardship, to
obtain the substantial equivalent of the tests by other means.
In conclusion, relators have not shown that they are entitled to extraordinary
relief. Accordingly, we deny relators’ petition for writ of mandamus.
PER CURIAM
Panel consists of Justices Boyce, Jamison, and Donovan.
8