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Gateway Deliveries, LLC v. Mattress Liquidators Inc.

United States District Court, D. Arizona

January 19, 2016

Gateway Deliveries, LLC Plaintiff,
Mattress Liquidators, Inc., et al. Defendants.




At docket 89 plaintiff Gateway Deliveries, LLC (“Gateway”) moves pursuant to Rule 37 of the Federal Rules of Civil Procedure for an order compelling defendants Mattress Liquidators, Inc. (“Liquidators”) and Mattress Firm, Inc. (“Firm”) (collectively, “Defendants”) to produce documents they are withholding based on the attorney-client privilege and work product doctrine. Exhibits 1-3 to Gateway’s motion are filed under seal at docket 92. Defendants oppose Gateway’s motion at docket 98; Gateway replies at docket 100. Exhibits 22 and 23 to Gateway’s reply are filed under seal in a nonelectronic format. Oral argument was requested but would not assist the court.


Gateway entered into an exclusive mattress delivery agreement (“the Independent Contractor Agreement or ICA”) with third-party Bed Mart, Inc. (“Bed Mart”) in 2011. After Bed Mart’s assets were acquired by Liquidators, Liquidators continued to use Gateway for mattress deliveries. Liquidators’ assets were then acquired by Firm pursuant to an asset purchase agreement (“APA”). One of the APA’s conditions required Liquidators to prove before closing that Liquidators’ “arrangement” with Gateway had been terminated. Defendants also entered into a “letter agreement, ” which Gateway refers to as the “side letter” to the APA, whereby Firm agreed to try to “negotiate and enter into a non-exclusive delivery agreement with Gateway” and Liquidators agreed to indemnify Firm if Gateway sued.[1]

Before the APA’s closing date Defendants' former attorney, Gary Rosser (“Rosser”), wrote a November 4, 2013 opinion letter (“the Opinion Letter”) that was disclosed to Gateway. The letter concludes that the ICA was not binding on Liquidators and that Liquidators’ relationship with Gateway was terminable at will.[2] With this green light, Liquidators terminated its relationship with Gateway. Gateway describes the Opinion Letter as not only “wrong” but also “result-oriented.”[3] According to Gateway, Defendants knew at the time that the ICA was binding on Liquidators.[4]

Gateway’s action alleges bad faith against Liquidators and tortious interference with a contract or business expectancy against Firm. In its present motion Gateway argues that by disclosing various communications with counsel “Defendants have waived the attorney-client privilege concerning the subject matter of the APA, the existence and validity of a contract between Gateway and Liquidators, and how to address potential liability to Gateway through the APA and side letter thereto.”[5]


Evidence Rule (“Rule”) 502, adopted on September 19, 2008, sets out the circumstances under which the disclosure of a communication or information in a federal proceeding acts as a subject matter waiver of the attorney-client privilege or work-product protection. Rule 502’s protections against waiver apply in all federal court proceedings, even in diversity-of-citizenship-jurisdiction cases where state law provides the rule of decision.[6] Rule 502 does not, however, “alter the substantive law regarding attorney-client privilege or work-product protection in any other respect, including the burden on the party invoking the privilege (or protection) to prove that the particular information or communication qualifies for it.”[7] One element that the asserting party must establish to satisfy its burden is that it has not waived the privilege.[8]


Gateway argues that a subject matter waiver occurred as a result of two separate productions. The first is Defendants’ production of five privileged emails on October 2, 2015. And the second is Defendants’ production of privileged emails in response to Gateway’s initial requests for production.[9]

A. Defendants’ October 2, 2015 Production

Gateway focuses its first argument on Liquidators’ October 2, 2015 disclosure of “a number of . . . formerly-privileged documents and communications concerning” the Opinion Letter.[10] Specifically, Gateway points to the following five emails:

1. An email containing an attachment that Rosser sent to Liquidators’ executives Joe Partsch (“Partsch”) and David Dolan ...

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