Gammons v. Adroit Medical Systems, Inc. (TV2)

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TENNESSEE

AT KNOXVILLE

SCOTT E. GAMMONS, )

)

Plaintiff, )

)

v. ) No. 3:21-CV-173-TAV-DCP

)

ADROIT MEDICAL SYSTEMS, INC., et al., )

)

Defendants. )

MEMORANDUM AND ORDER

This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court,

and Standing Order 13-02.

This matter is before the Court on Plaintiff’s Motion for Leave and Motion to Compel

[Doc. 82]. Defendants responded in opposition to the motion [Doc. 85], and Plaintiff filed a reply

[Doc. 86]. The motion is ripe for adjudication. For the reasons set forth below, the Court DENIES

Plaintiff’s motion [Doc. 82].

I. BACKGROUND

The Court detailed the allegations in this case in a previous Memorandum and Order [Doc.

35]. To summarize, Plaintiff filed this action pursuant to the anti-retaliation whistleblower

protection provision of the Taxpayer First Act (“TFA”), 26 U.S.C. § 7623(d)(2)(A)(ii); the

Tennessee Public Protection Act (“TPPA”), Tenn. Code Ann. § 50-1-304; and Tennessee common

law [Doc. 1 ¶¶ 1 & 9]. Plaintiff generally alleges that in light of Gene Gammon’s declining health,

Defendants Grazyna Gammons (“Ms. Gammons”) and Kelley Patten (“Ms. Patten”) engaged in

illegal activity by submitting false expense reports and using Adroit Medical Systems, Inc’s

(“Adroit”) funds for personal items [Id. ¶¶ 18–36]. Plaintiff reported these activities to law

enforcement authorities in 2019 and in early 2020 and was advised to file an emergency

conservatorship to protect his father and Adroit [/d. § 35]. On March 5, 2020, Plaintiff filed a

petition for a conservator to act in Mr. Gammons’s corporate capacity and majority shareholder of

Adroit [/d. § 38]. The petition detailed Plaintiff's reports to state and federal authorities [/d. ¥ 39].

The court granted a limited conservatorship appointing Plaintiff as his father’s emergency

conservator to exercise Mr. Gammons’s corporate capacity and president and majority shareholder

of Adroit [/d. § 40]. On March 10, 2020, the court conducted a hearing on the conservatorship,

and the court dismissed the petition [/d. § 45]. Subsequently, on March 11, 2020, Adroit’s

shareholders conducted a special meeting and removed Plaintiff from the board of directors □□□□

46]. On March 12, 2020, Ms. Gammons and Mr. Gammons sent a jointly signed letter terminating

Plaintiff Ud. 947]. Plaintiff filed his Complaint on May 5, 2021.

Relevant to the instant dispute, the Court allowed Plaintiff to conduct a forensic

examination of Ms. Gammons’s and Ms. Patten’s cellular phones in November 2022 [Doc. 51].

This forensic examination has been the subject of multiple disputes [See Doc. 77]. The Court

allowed Plaintiff another forensic examination in February 2023, which is the subject of the instant

motion. The forensic examiner uncovered three text messages (“Text Messages”) between Ms.

Patten and her husband, Clarence Patten (“Mr. Patten”). Defendants claim the Text Messages are

protected by the attorney-client privilege and Ms. Patten did not waive the privilege when she sent

the Text Messages to her spouse. Specifically, Defendants’ privilege log provides as follows:

Dates Document

3/9/2020 Kelley Patten’s text with Clarence Patten regarding preparation

for meeting with personal and corporate attorney, W. Edward

——————

from prior meeting with personal and corporate attorney, W.

|__ Edward Shipe. |

| 3/10/2020 Kelley Patten’s text with Clarence Patten regarding gathering

| court documents for personal and corporate attorney, W. Edward

Shipe. aa!

[Doc. 83 p. 2].

On March 9, 2020, Attorney Edward Shipe, Defendants, and Mr. Patten met regarding the

conservatorship proceeding that Plaintiff initiated [Doc. 83-4 p. 3]. Mr. Patten was not an

employee of Adroit at this time [Doc. 23-10 ¶ 2]. In addition, Mr. Patten was not personally

represented by Attorney Shipe [Doc. 83-4 p. 3]. Mr. Patten became a member of Adroit’s board

of directors on March 11, 2020 [Id. at 2]. During his deposition, Mr. Patten testified that he learned

that he would be asked to become a board member in the late morning of March 11, 2020 [Id.].

During his first board meeting on March 11, 2020, Mr. Patten voted to terminate Plaintiff [Id.].

According to Mr. Patten’s deposition, he met Ray Pinkstaff (“Pinkstaff”), Adroit’s counsel, at the

board meeting but never had communications with Pinkstaff prior to becoming a board member

[Id. at 4].

Defense counsel, Attorney Shipe, filed a declaration in this case, stating as follows:

1. My name is W. Edward Shipe. I am over eighteen (18) years of

age and competent to testify. I am counsel for the Defendants in this

action. I have personal knowledge of the facts stated herein.

2. I was retained to represent Gene Gammons in connection with the

conservatorship action filed by the Plaintiff, Scott Gammons.

3. At that time, Adroit Medical Systems, Inc., Grazyna Gammons,

Kelley Patten, and Gene Gammons, and Clarence Patten were

represented by corporate attorney, Ray Pinkstaff, for their

involvement with Adroit.

4. Following the state court’s dismissal of the conservatorship, I

began jointly representing Adroit Medical Systems, Inc., Grayzna

Gammons, Kelley Patten, Gene Gammons, and Clarence Patten.

5. Since that time, I have represented Adroit Medical Systems, Inc.,

Grazyna Gammons, Kelley Patten, Gene Gammons, and Clarence

Patten in all matters related to Plaintiff’s takeover of Adroit,

termination, and present lawsuit.

6. I have reviewed the challenged text messages. They all related to

my meetings with Kelley Patten, the other Defendants, and attorney

Ray Pinkstaff, during which we discussed confidential matters

related to ongoing and anticipated litigation.

[Doc. 85-1 ¶¶ 1–6].

Plaintiff claims that “Defendants waived any information communicated between

Defendants and Attorney Ed Shipe by permitting Mr. Patten to attend the March 9, 2020, meeting

despite Mr. Patten not being Mr. Shipe’s client nor being a [b]oard [m]ember as of that date” [Doc.

83 p. 4]. In addition, Plaintiff states that Ms. Patten “waived any privileged communications by

disclosing the contents of the same to Mr. Patten who, again was not Mr. Shipe’s client nor a

[b]oard [m]ember before March 11, 2020” [Id.]. Thus, Plaintiff asserts that any purported claim

of attorney-client privilege has been waived.

Defendants state that given the emergency conservatorship, “it was reasonable as of March

5, 2020, for Gene Gammons, Grazyna Gammons, Kelley Patten, and Clarence Patten to seek legal

guidance” [Doc. 85 p. 1]. In a footnote, Defendants claim that “[o]n March 9, 2020, Clarence

Patten was represented, along [with] the other individual defendants, by attorney Ray Pinkstaff”

[Id. at 5 n.3]. At that time, Attorney Shipe represented Gene Gammons for the purpose of the

emergency conservatorship, but Defendants claim that the “two groups of clients and counsel

worked together on a joint defense” [Id.]. Defendants argue that the circumstances surrounding

these messages prove the application of the attorney-client privilege, including that Mr. Patten “is

and was part of the core group of individuals charged with running the operations of Adroit[,]”

and his involvement made him a potential co-defendant [Id. at 12]. Defendants add that even if

the Court disagrees that the attorney-client privilege independently applies to Mr. Patten,

Defendants have not waived the privilege because “[a]n individual does not waive the attorney-

client privilege by sharing the contents of the communications with her spouse [Id. (citation

omitted)].

II. ANALYSIS

The Court has considered the parties’ filings in this matter, and for the reasons explained

below, the Court DENIES Plaintiff’s motion [Doc. 82].

Jurisdiction in this case is governed under 28. U.S.C. § 1331, and therefore, questions of

privilege are guided by Federal Rule of Evidence 501. Fed. R. Evid. 501; Reed v. Baxter, 134 F.3d

351, 355 (6th Cir. 1998) (“Questions of privilege are to be determined by federal common law in

federal question cases”) (citing Fed. R. Evid. 501); see also Prudential Def. Sols., Inc. v. Graham,

517 F. Supp. 3d 696, 701 (E.D. Mich. 2021) (stating the same). The attorney-client privilege

protects “confidential communications between a lawyer and his client in matters that relate to the

legal interests of society and the client.” In re Grand Jury Subpoena, 886 F.2d 135, 137 (6th Cir.

1989) (quotation omitted). “The privilege’s primary purpose is to encourage full and frank

communication between attorneys and their clients and thereby promote broader public interests

in the observance of law and the administration of justice.” Ross v. City of Memphis, 423 F.3d

596, 600 (6th Cir. 2005); see also Upjohn Co. v. United States, 449 U.S. 383, 389 (1981) (“The

privilege recognizes that sound legal advice or advocacy serves public ends and that such advice

or advocacy depends upon the lawyer's being fully informed by the client.”).

The elements of the attorney-clients are as follows:

(1) Where legal advice of any kind is sought (2) from a professional

legal adviser in his capacity as such, (3) the communications relating

to that purpose, (4) made in confidence (5) by the client, (6) are at

his instance permanently protected (7) from disclosure by himself

or by the legal adviser, (8) unless the protection is waived.

Reed, 134 F.3d at 355–56 (citation omitted). “The burden of establishing the existence of

the privilege rests with the person asserting it.” Prudential Def. Sols., 517 F. Supp. at 702 (quoting

United States v. Dakota, 197 F.3d 821, 825 (6th Cir. 1999)). “The privilege is ‘narrowly construed

because it reduces the amount of information discoverable during the course of a lawsuit.’” Id.

(quoting Ross, 423 F.3d at 600) (other quotation omitted).

There does not appear to be a dispute that the Text Messages are attorney-client privileged.

[Doc. 83 p. 4]. Instead, Plaintiff argues that Defendants waived the privilege by permitting Mr.

Patten to attend the meeting on March 9, 2020, and when Ms. Patten later disclosed the contents

of the same to Mr. Patten via the Text Messages. Defendants respond that the attorney-client

privilege extends to Mr. Patten. Under the circumstances of this case, the Court is not entirely

persuaded that the attorney-client privilege extends to Mr. Patten. For instance, Defendants assert

that the Supreme Court “extended attorney-client privilege for corporate clients to communications

by lower-level employees regarding matters within the scope of their corporate duties made at the

direction of their superiors and with knowledge that the information was being sought in order to

secure legal advice” [Doc. 85 p. 8 (citing Upjohn, 449 U.S. at 383)]. But prior to March 11, 2020,

Mr. Patten was not an employee of Adroit—only having served as a subcontractor “as needed”

[Doc. 23-10 ¶ 2]. Further, Defendants have not presented any evidence that the subject

communications involve “matters within the scope of [Mr. Patten’s] corporate duties[,]” likely

because he did not have any corporate duties until March 11, 2020. Upjohn, 449 U.S. at 383.

Defendants also rely on Dialysis Clinic, Inc. v. Medley, 567 S.W.3d 314, 324 (Tenn. 2019),

stating that “[t]he Tennessee Supreme Court recently took an even broader approach, protecting

communications with non-employee third parties who assist corporate clients” [Doc. 85 p. 8]. In

Dialysis Clinic Inc., the court articulated non-exclusive factors to determine whether a third party-

nonemployee is the functional equivalent of an employee for purposes of the attorney-client

privilege as follows:

whether the nonemployee performs a specific role on behalf of the

entity; whether the nonemployee acts as a representative of the

entity in interactions with other people or other entities; whether, as

a result of performing its role, the nonemployee possesses

information no one else has; whether the nonemployee is authorized

by the entity to communicate with its attorneys on matters within the

nonemployee’s scope of work to facilitate the attorney’s

representation of the entity; and whether the nonemployee’s

communications with the entity’s attorneys are treated as

confidential.

Dialysis Clinic, Inc., 567 S.W.3d at 324. Defendants state that Mr. Patten “was a confidant and

deeply involved in the corporation—and the family’s—affairs . . . perform[ing] specific roles on

behalf of Adroit; acted as a representative of Adroit; possessed information no one else had; was

authorized by Adroit to communicate with its attorney and facilitate representation” [Doc. 85 p.

12]. But there is no evidence of such involvement before the Court. The only evidence before the

Court is that Mr. Patten “was not an employee of Adroit at the time of Scott Gammons’[s]

termination, [but he] previously acted as a subcontractor to Adorit, as needed” [Doc. 23-10 ¶ 2].

His declaration provides no detail regarding his extensive involvement in Adroit’s affairs, as

Defendants’ brief suggests, until after he was appointed to the board on March 11, 2020. And

during his deposition, Mr. Patten testified that he became aware that he would be a board member

on the morning of March 11, 2020—two days after the March 9 meeting [Doc. 83-4 p. 2].

Defendants also assert that “[p]erhaps most relevant is the application of attorney client

privilege to potential co-defendants, even those who ultimately do not execute a joint defense

agreement” [Doc. 85 p. 9 citing Boyd v. Comdata Network, Inc., 88 S.W.3d 203, 213 (Tenn. Ct.

App. 2002)]. In Boyd, the court explained:

To carry its burden, the proponent must demonstrate: (1) that the

otherwise privileged information was disclosed due to actual or

anticipated litigation, (2) that the disclosure was made for the

purpose of furthering a common interest in the actual or anticipated

litigation, (3) that the disclosure was made in a manner not

inconsistent with maintaining its confidentiality against adverse

parties, and (4) that the person disclosing the information has not

otherwise waived the attorney-client privilege for the disclosed

information.

Boyd, 88 S.W.3d at 214–15. Defendants state that “[Mr.] Patten’s deep involvement in the family

corporation also made him a target” [Doc. 85 p. 12]. Again, there is little, if any, evidence of Mr.

Patten’s deep involvement in the family corporation. Defendants state that “Clarence Patten made

no secret that he was not on the Plaintiff’s side, actively working with the individual defendants

as they restored Mr. Gammons[’s] liberty and retook the company” [Doc. 85 p. 12 (citing Doc. 23-

10 ¶ 8)]. In paragraph 8 of Mr. Patten’s declaration, he explains the reasons why he voted to

terminate Plaintiff during the board meeting on March 11, 2022—which was after Ms. Patten sent

the Text Messages. At the time Ms. Patten sent the Text Messages, according to Mr. Patten’s

deposition, he had no knowledge that he would become a board member. Given that he was simply

a subcontractor for Adroit “as needed,” it is unclear how communications were disclosed due to

anticipated ligation against him.1 See Cooey v. Strickland, 269 F.R.D. 643, 652 (S.D. Ohio 2010)

1 In a footnote, Defendants assert that “[o]n March 9, 2020, Clarence Patten was represented,

along with the other individual defendants, by attorney Ray Pinkstaff” [Doc. 85 p. 5 n.3; see also

Doc. 85-1 ¶ 3]. Attorney Shipe represented only Gene Gammons at that point, but the “two groups

of clients and counsel worked together on a joint defense” [Doc. 85 p. 5]. The Court finds it

reasonable that the two groups worked together given that Plaintiff filed an emergency

conservatorship over Mr. Gammons to have control of Adroit. But it remains unclear to the Court

whether Pinkstaff, the corporate counsel for Adroit, represented Mr. Patten during this time.

Attorney Shipe states that Pinkstaff represented Mr. Patten given his involvement with Adroit

[Doc. 85-1 ¶ 2]. But Mr. Patten was not on the board, was not aware he was going to be on the

board until March 11, 2020, and had never communicated with Pinkstaff prior to the first board

meeting [Doc. 83-4 pp. 2 and 4].

(finding that the common interest doctrine applies only to protect communications regarding the

common interest and intended to further that interest).

Further, while the Court agrees with Defendants that the attorney-client privilege protects

communications “where legal advice of any kind is sought from a professional legal advisor[,]”

there is no evidence before the Court that Mr. Patten was seeking legal advice at the relevant time

[Doc. 85 p. 9 (quoting Reed, 134 F.3d at 355 (other citation omitted))]. According to Mr. Patten,

the meeting on March 9, 2022, was “for Gene Gammons” [Doc. 83-4].

Despite the above, and without finding whether there was a waiver of the attorney-client

privilege, the Court finds the Text Messages are protected. As several other circuits have held, “a

disclosure of documents to one’s spouse does not waive the attorney-client privilege.” United

States ex rel. Scott v. Humana, Inc., No. 3:18-CV-61-GNS-CHL, 2019 WL 7404032, at *5 (W.D.

Ky. Sept. 24, 2019) (citing Kirzhner v. Silverstein, 870 F.Supp.2d 1145 (D. Colo. 2012); L-3

Commc’ns Corp. v. Jaxon Eng’g & Maint., Inc., No. 10-CV-02868-MSK-KMT, 2014 WL

3732943, at *3 (D. Colo. July 29, 2014) (forwarding an email to spouse did not act as a waiver of

the attorney client privilege); Hiskett v. Wal-Mart Stores, Inc., 180 F.R.D. 403, 406 (D. Kan. 1998)

(“[I]t is not a waiver when the disclosure is made in the course of another privileged relationship,

as when the client tells his wife that he told his lawyer.”)).

The Court further finds that Mr. Patten’s presence at the March 9, 2020, meeting does not

necessarily constitute a waiver of all communications stemming from the meeting. Waiver of

privileged communications can waive other communications relating to the “same subject matter.”

In re Grand Jury Proceedings, Oct. 12, 1995, 78 F.3d 251, 256 (6th Cir. 1996). “This rule seeks

to avoid the unfairness that might result from selective disclosure while, at the same time,

upholding the privilege and preserving the interests it protects from excessive exposure.” United

States v. Skeddle, 989 F. Supp. 905, 908 (N.D. Ohio 1997). In determining the scope of any alleged

waiver, courts are “guided by fairness concerns.” In re Grand Jury Proceedings, Oct. 12, 1995,

78 F.3d at 256. “[R]ealizing that fairness is at the heart of the waiver issue, courts have generally

held that the ‘same subject matter’ is to be viewed narrowly.” Skeddle, 989 F. Supp. 909 (citing

cases).

Keeping in mind the doctrine of fairness and that the “same subject matter” is to be viewed

narrowly, the Court finds that the scope of any waiver of the attorney-client privilege does not

cancel the separate marital communications privilege.” Plaintiffs argument to the contrary

unnecessarily broadens the scope of the subject matter waiver, especially given that there are no

concerns regarding selective disclosure.

IV. CONCLUSION

For the reasons explained above, the Court DENIES Plaintiff's Motion for Leave and

Motion to Compel [Doc. 82].

IT IS SO ORDERED.

ENTER:

SY tty OW 2 Tool CP

Debra C. Poplin Med

United States Magistrate Judge

2 Plaintiff also asserts that Ms. Patten waived any potential spousal privilege by failing to

invoke the privilege with respect to all text messages exchanged with her husband that were

produced in discovery, but he cites no authority for the Court to find such a broad waiver. He

further asserts that Ms. Patten waived any attorney-client privilege via her communications with

her brother, but Plaintiff acknowledges that he can only “speculate as to what may have been

discussed by phone” [Doc. 86 p. 7]. Finally, he claims that defense counsel originally stated that

she was withholding the text messages based on the attorney-client privilege “not because they are

with Mr. Patten[,]” and therefore, Defendants have waived the spousal privilege [/d. at 6 (citation

omitted)]. The Court does not find that defense counsel’s statement operates as a waiver to the

spousal privilege given Defendants’ argument that the Text Messages are protected by the

attomey-client privilege, and they simply argued that this privilege had not been waived in light

of the spousal privilege.

10