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McBeath v. Tucson Tamale Co.

United States District Court, D. Arizona

July 20, 2017

Melissa Martin McBeath, Plaintiff,
v.
Tucson Tamale Company, et al., Defendants. Tucson Tamale Company, Counterplaintiff,
v.
Melissa Martin McBeath, and John/Jane Doe Martin McBeath, husband and wife, Counterdefendants.

          ORDER

          BERNARDO P. VELASCO, UNITED STATES MAGISTRATE JUDGE

         Pending before the Court are the following discovery-related motions: (1) Plaintiff's two motions seeking protective orders (Docs. 30, 39); (2) Defendant Tucson Tamale Company's Motion to Quash and for Protective Order Protecting Third-Party Koty-Leavitt Insurance Agency from Plaintiff's Subpoena (Doc. 55); and (3) Plaintiff's Motion to Compel (Doc. 70). Although Defendants have requested oral argument, the Court, upon consideration of the parties' extensive briefing of the issues, has determined that oral argument is unnecessary to resolve the instant motions. See LRCiv 7.2(f), Local Rules of Practice of the U.S. District Court for the District of Arizona (“The Court may decide motions without oral argument.”).

         I. Introduction

         On April 15, 2016, Plaintiff filed a pro se[1] complaint in Arizona Superior Court alleging state law claims against Tucson Tamale Company (“TTC”), Todd and Sherry Martin, TTC's co-founders, and Lisa Martin, who works at TTC. See Complaint, McBeath v. Tucson Tamale Company, et. al., No. C20161794 (Arizona Superior Court, Pima County April 15, 2016) (“the state action”).[2] Plaintiff's state claims arose from her employment at TTC and subsequent termination. (See Id.). TTC filed several counterclaims. (May 26, 2016 Answer to Verified Complaint and Counterclaims; June 13, 2016 Amended Counterclaims filed in the state action).

         While the state litigation was ongoing, Plaintiff filed this pro se action against TTC, alleging employment discrimination in violation of the Age Discrimination in Employment Act, 29 U.S.C. § 631. (July 11, 2016 Complaint (Doc. 1)). After TTC unsuccessfully sought to dismiss this action based upon a theory of claim-splitting (see Defendant's Motion for Judgment on the Pleadings (Doc. 18); Report and Recommendation (Doc. 29); Order adopting Report and Recommendation (Doc. 31)), the parties agreed that Plaintiff could file a Second Amended Complaint (“SAC”) with this Court essentially combining her state and federal claims, and that the state court action would be stayed pending resolution of the federal court action.[3] (See Plaintiff's Notice of Withdrawal of Motion for Leave to Amend the Complaint (Doc. 43); Plaintiff's Notice of Entry of Order Staying Pima County Superior Court Proceedings (Doc. 50)). Where, as here, the plaintiff wishes to amend the complaint after the time period for amendment allowed by the rules has passed, and the defendant agrees to the amendment, there is no need to obtain court approval. See Fed.R.Civ.P. 15(a)(2). See also, American States Ins. Co. v. Dastar Corp., 318 F.3d 881, 888 (9th Cir. 2003) (parties who obtain consent to amendment of pleadings need not obtain court approval).

         In her Second Amended Complaint (“SAC”), Plaintiff added the Martins as co-defendants and alleges: (Count One) violation of the Age Discrimination in Employment Act against TTC; (Count Two) national origin, race and ancestry discrimination against TTC; (Count Three) retaliatory discharge against all Defendants; (Count Four) fraud against all Defendants; (Count Five) negligent misrepresentation against all defendants; (Count Six) failure to pay earned wages against TTC; (Count Seven) breach of employment agreement against TTC; and (Count Eight) restitution/unjust enrichment against all defendants. (SAC (Doc. 44)).

         TTC has filed the following counter claims: (Count I) breach of contract; (Count II) violation of the Arizona Uniform Trade Secrets Act, A.R.S. § 44-401, et seq.; (Count III) breach of fiduciary duty; (Count IV) violation of the Stored Communications Act, 18 U.S.C. §§ 2510, 2711; (Count V) civil conspiracy; and (Count VI) Aiding and Abetting.[4](Defendants' Answer to SAC and Counterclaims (Doc. 45)).

         The Court has thoroughly reviewed the parties' briefs together with the voluminous exhibits in support of same that reflect in great detail the factual and procedural path of the parties' discovery efforts and issues.

         II. The pending discovery-related motions

         A. Plaintiff's “Motion for a Protective Order that Protects Defendant's Employees from Intimidation and Declares that Plaintiff may have Ex Parte Contact with Them” (Doc. 30) (all capitalization omitted).

         Plaintiff requests a protective order that: (1) will shield TTC's employees “from harassment, intimidation and retaliatory adverse actions for speaking with [her]”[5]; and (2) “declares that she, as a pro se litigant, may have ex parte contact with TTC's employees.” (Doc. 30 at 2[6]). According to Plaintiff, “TTC has threatened [her] with sanctions if she contacts TTC's current and former employees.” (Id.). Although Plaintiff does not identify the employees whom she wishes to contact by name, she refers to them as “witnesses” who are not “officers”, “directors”, or “managing agents”. (Id. at 3). Plaintiff also requests permission for her attorney, should she retain counsel in the future, to speak with current and former TTC employees outside the presence of defense counsel. (Id. at 4).

         TTC contests Plaintiff's motion for a variety of reasons, including that the state court denied essentially the same motion.[7] TTC goes on to state that defense counsel has “met with these general managers for purposes of securing legal advice in connection with both the Superior Court Matter and the underlying matter[, ]” although TTC has not identified the general managers. (Doc. 35 at 10). TTC also asserts that defense counsel “has had various communications regarding this case with TTC and each of the employees with which McBeath seeks to communicate.” (Id. at 11). TTC has offered “to allow [Plaintiff] to record informal conversations in the presence of [defense] counsel so that she could save money taking depositions.” (Id. at 11 and Exh. H). However, Plaintiff rejected this offer because she felt defense counsel's presence would disrupt the free flow of conversation. (Id.).

         Plaintiff frames her request as a motion for a protective order. Under Rule 26(c) of the Federal Rules of Civil Procedure, in pertinent part: “A party or any person from whom discovery is sought may move for a protective order in the court where the action is pending. . . . The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense . . . .” Fed.R.Civ.P. 26(c)(1). “A party asserting good cause bears the burden, for each particular [item] it seeks to protect, of showing that specific prejudice or harm will result if no protective order is granted.” Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1130 (9th Cir. 2003) (citation omitted); see also Beckman Indus., Inc. v. Int'l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (“[B]road allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.”) (internal quotation marks and citation omitted). The district court should “identify and discuss the factors it considered in its ‘good cause' examination to allow appellate review of the exercise of its discretion.” Foltz, 331 F.3d at 1130 (citation omitted).

         Here, Plaintiff is not subject to a discovery request. Instead, she is the party desiring to question others. Consequently, Plaintiff has not shown that she is entitled to a protective order. To some extent, TTC's response may be construed as a request for a protective order in that TTC seeks to prevent Plaintiff from speaking to “general managers and employees.” (Doc. 35 at 9-11). Although TTC indicates that defense counsel “has had various communications regarding this case with . . . each of the employees” Plaintiff wishes to interview (Id. at 11), TTC has not suggested that the present and former non-managerial employees play any role other than as potential percipient witnesses.

         The Arizona Rules of Professional Conduct “apply to attorneys admitted or otherwise authorized to practice before the United States District Court for the District of Arizona.” LRCiv. 83.2(e). Arizona Rule of Professional Conduct 4.2 (“ER 4.2”) provides:

In representing a client, a lawyer shall not communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to do so.

         As the parties have acknowledged (see Doc. 30 at 2-3; Doc. 35 at 6), “[t]he prohibition is intended to (1) prevent unprincipled attorneys from exploiting the disparity in legal skills between attorneys and lay people, (2) preserve the integrity of the attorney-client relationship, (3) help to prevent the inadvertent disclosure of privileged information, and (4) facilitate settlement.” Lang v. Superior Court, 170 Ariz. 602, 604, 826 P.2d 1228, 1230 (Ariz.Ct.App. 1992). “Where an organization is involved, Rule 4.2 prohibits attorneys from communicating with three groups of individuals: ‘(1) those having a managerial responsibility on behalf of the organization; (2) any person whose act or omission in connection with the matter may be imputed to the organization; and (3) any person whose statement may constitute an admission[8] on the part of the organization.'” Dream Team Holdings, LLC v. Alacron, 2016 WL 5408318, at *2 (D. Ariz. Sept. 28, 2016) (quoting Lang 170 Ariz. at 604-05, 826 P.2d at 1230-31). “Importantly, this ethical obligation is triggered if the statement of the employee ‘might' be admissible-it need not be demonstrated that the statement is, in fact, admissible.” Id. (quoting State ex re. Ariz. Dept. of Health Servs. v. Gottsfield, 146 P.3d 574, 577 (Ariz.Ct.App. 2006)); see also Kaiser v. AT&T, 2002 WL 1362054 (D. Ariz. April 5, 2002) (restricting ex-parte access to high ranking former employees). After Lang was decided, the Arizona State Bar issued an ethics opinion recognizing in pertinent part, that whether the testimony of the current (or former) employee may be detrimental to the employer (or former employer) is not determinative. State Bar of Arizona Ethics Opinion No. 95-07 (1995).

         The “district court ‘has wide latitude in controlling discovery, and its rulings will not be overturned in absence of a clear abuse of discretion.'” Lane v. Dep't of Interior, 523 F.3d 1128, 1134 (9th Cir. 2008) (quoting White v. City of San Diego, 605 F.2d 455, 461 (9th Cir.1979)); see also Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988) (same). Although the parties have presented no Arizona authority to support the contention that Plaintiff, who is unrepresented, is bound by the ethical rules that govern attorneys, the policy reasons advanced by the promulgation of ER 4.2 support extension of the parameters of the Rule to this case.

         In light of the applicable authority discussed supra, Plaintiff shall not be permitted to speak to TTC's current and former general managers outside the presence of defense counsel. Plaintiff may speak outside the presence of defense counsel to other TTC former and current employees who are not or were not employed in a managerial or supervisory capacity; however, to do so, Plaintiff or any investigative representative must inform the employee or former employee at the beginning of any contact:

(1) of Plaintiff's reason for seeking the interview;
(2) the right of the employee or former employee to refuse the interview as there is no legal obligation to consent to the informal interview; and
(3) the right of the employee or former employee to have counsel of his or her choice present during the interview.

         Plaintiff is advised that should she fail to abide by this Order, Defendants may file an appropriate motion requesting to preclude such testimony and/or other information gained from the communication and may request any other sanctions they deem are in order.

         Plaintiff's request for permission for future counsel she may retain to speak ex parte with TTC employees is denied as premature. Plaintiff's request to protect any employees who choose to speak with her from intimidation by Defendants does not appear to fall within the realm of a protective order. Moreover, even if it did, Plaintiff's declaration (see Doc. 30 at 8) fails to provide a sufficient evidentiary basis as to why such protection would be required.

         B. Plaintiff's Motion for a Protective Order to Shield Experts Consulted Informally (Doc. 39)

         Plaintiff requests that the Court order TTC: (1) to cease all efforts to identify any experts she has or is consulting informally; (2) cease all efforts to discover the nature and content of the advice/services provided by these experts; and (3) neither mention nor comment on individuals in court filings whom Plaintiff has indicated she has consulted or may be consulting informally. (Doc. 39 at 2).

         Plaintiff's motion concerns Francisco Marquez and Ehud Gavron, and it appears that TTC has issued at least one subpoena duces tecum directed to Gavron. (See Doc. 48, Exhs. 12, 13).

         TTC's theory is that Plaintiff disclosed to Gavron and Marquez “TTC's protected information in violation of her employment duties and contractual obligations.” (Defendants' Opposition to Plaintiff's Motion for a Protective Order to Shield Experts Informally Consulted (Doc. 48 at 2)). TTC references both men in its First Supplemental Disclosure Statement filed with this Court. (See Doc. 48, Exh. 4 at ¶¶7, 8). According to TTC:

Mr. Marquez is a disbarred California attorney who, upon information and belief, is providing legal services and advice to McBeath without a license, coordinated with McBeath before the lawsuit to obtain relevant information to build a case against TTC, is in possession of protected confidential information belonging to TTC that McBeath provided to him without authorization, and who is aware of the facts and legal theories raised in Plaintiff's Complaint. He is expected to testify regarding his knowledge of the subject lawsuit, the facts and circumstances surrounding the events that occurred before the filing of this lawsuit, TTC's confidential information obtained in his possession, actions taken by him in collaboration with Plaintiff, any communications with Plaintiff or Defendant, or any witnesses with knowledge of the disputed facts. . . . Mr. Marquez may provide foundation for the admission of evidence, as necessary.

(Id. at 7) (emphasis omitted).

         TTC identifies Gavron as “a friend of the Plaintiff and one of the individuals [sic] McBeath disclosed TTC's confidential information.” (Id. at ¶8). TTC anticipates that Gavron will provide testimony along the same lines as TTC expects from Marquez. (Id.). According to TTC, over the course of Plaintiff's employment at TTC, Plaintiff sent Gavron over 100 e-mails. (Doc. 48 at 4). Further according to TTC, Plaintiff violated her confidentiality agreement when she sent Gavron information to access TTC's Revel Point of Sale system where TTC stores its business operational data.” (Id. at 5 (citing Doc. 48, Exh. 6 (October 21, 2015 e-mail from Plaintiff to Gavron))). Defendants also assert that Plaintiff sought advice from Gavron to circumvent mandatory liquor license training, one of her alleged improper acts forming the basis of Defendants' affirmative defense based on after-acquired evidence of wrongful acts. (Id. at 6 (citing Doc. 48, Exh. 8 (Aug. 12 2015 e-mail from Plaintiff to Gavron))). According to Defendants, when Plaintiff sent these e-mails, the factual basis supporting her claim of wrongful termination had not occurred. (Id.).

         Plaintiff has not disclosed either Gavron or Marquez as experts whom she intends to call to testify at trial. (See Plaintiff's Reply (Doc. 58 at 4, 7)). Gavron has stated that he is Plaintiff's friend and assists her in her lawsuit as her friend. (Doc. 48, Ex. 9). In addition to providing “generic legal information…direct[ing] [Plaintiff] to resources where she may find more information, . . .” Gavron, who has worked as a “computer expert”, is a providing free assistance to Plaintiff “as a computer technology consulting expert.” (Id. (Letter written sometime between October 14, 2016 and November 4, 2016)). He does not expect to testify at trial. (Id.; see Id. (Gavron also helps Plaintiff by proofreading documents for accurate grammar, spelling, and punctuation)). According to Defendants, Plaintiff claimed in state court that Gavron was acting as a consultant regarding TTC's counterclaims arising under the Stored Communication Act (“SCA”). (Doc. 48 at 8).

         Plaintiff does not dispute that TTC may discover Gavron's “personal knowledge of any material facts at issue in this case that predate his retention as an expert[, ]” although she fails to identify the date and circumstances of his retention. (Doc. 58 at 2). Additionally, Defendants are clear that they “do not seek information relating to the narrow scope of [Gavron's] purported expertise. . . . Defendants do not seek discovery on any such after-the-fact-, narrowly-construed consultation and advice [re the SCA]. Defendants do, however, seek discovery on all other aspects of interaction between Gavron and McBeath, including her underlying conduct, in which Gavron participated, violative of the SCA including, without limit, her dissemination and disclosure of TTC's legally and contractually protected information to various third-parties not authorized to receive said information.” (Doc. 48 at 8).

         Rule 26(b)(4)(D) of the Federal Rules of Civil Procedure governs disclosures from experts who are employed for trial preparation but are not expected to testify:

Ordinarily, a party may not, by interrogatories or deposition, discover facts known or opinions held by an expert who has been retained or specially employed by another party in anticipation of litigation or to prepare for trial and who is not expected to be called as a witness at trial. But a party may do so only:
(i) as provided in Rule 35(b); or
(ii) on showing exceptional circumstances under which it is impracticable for the party to obtain facts or opinions on ...

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