in Re: Union Carbide Corporation

Opinion issued November 13, 2003

In The

Court of Appeals

For The

First District of Texas

NO. 01-02-01153-CV

____________

IN RE UNION CARBIDE CORPORATION, Relator

Original Proceeding on Petition for Writ of Mandamus

MEMORANDUM OPINION

By petition for writ of mandamus, relator, Union Carbide Corporation,

challenges the trial court’s

ruling that Union Carbide’s claims of privilege to 17

documents were waived. We conditionally grant the petition for writ of mandamus

in part and deny in part.

Background

During a document-production deposition in an asbestos case in California,

Waters & Kraus, the attorneys representing the plaintiffs in that suit, submitted six

documents

for authentication by Union Carbide’s representative. Union Carbide

recognized that the documents were privileged, and it instructed its representative not

to answer the question.

Union Carbide filed a protective order, and the trial court in California declared

that the documents were privileged and that Union Carbide’s inadvertent disclosure

had not waived its privilege. The trial court ordered Waters & Kraus to return the

privileged documents to Union Carbide and the court also noted that Waters & Kraus

had violated the ethical rules of California for failing to return the documents to

Union Carbide earlier.

Shortly after the California court’s ruling, the Mimses, also represented by

Waters & Kraus, filed a motion in this Texas asbestos case to declare that the

documents at issue in California, as well as 17 additional documents, were not

privileged and that any privilege was waived. Union Carbide withdrew any assertion

of privilege for 6 of the 17 additional documents. As a result, the trial court was

asked to determine whether 17 documents were privileged—the six documents that

the California court had found were privileged and 11 additional documents.

The Texas trial court found that Texas law, not California law applied, and that

Union Carbide had “established circumstantially a prima facie case” that the

California documents were inadvertently produced. The court further found,

however, that Union Carbide had waived its claim of privilege by failing to comply

with the 10-day requirement of Texas Rule of Civil Procedure 193.3 (10 days to

amend response after inadvertent production). The trial court also found that a claim

of privilege as to one of the California documents was waived because the document

had been admitted, without objection, into evidence during a trial in another

proceeding. The court ruled that the California documents numbered 5031, 5215, and

5378 were not privileged. Finally, after admitting that it did not review the 11

additional non-California documents, the trial court held that, even if the 11

documents were privileged, any assertion of privilege was waived because of “non-compliance with the ten day requirement” of rule 193.3.

Union Carbide filed a petition for writ of mandamus, and the Mimses filed a

response. Before this Court ruled on the petition, Judge J. Ray Gayle, III , who had

signed the order from which Union Carbide sought mandamus relief, retired from the

bench. The Honorable Pat Sebesta was sworn in as the new judge of the 239th

Judicial District Court of Brazoria County, Texas. Because mandamus relief cannot

lie against a successor judge in the absence of a refusal by that judge to grant the

relief the relator seeks, we abated this mandamus proceeding in order to allow Judge

Sebesta the opportunity to consider Judge Gayle’s ruling.

On January 31, 2003, Judge Sebesta denied Union Carbide’s “Motion to

Reconsider” Judge Gayle’s ruling and stated “Judge Gayle’s Order of October 16,

2002 should not be disturbed.” Union Carbide filed an amended petition for

mandamus seeking mandamus relief from the trial court’s January 31, 2003 order,

which effectively adopted the prior order of October 16, 2002.

Mandamus

Union Carbide asserted that its documents are privileged. It was then the trial

court’s responsibility to determine whether the documents were privileged and, if

privileged, whether there was a procedural impediment to the privilege asserted.

Here, Union Carbide asserted its privilege. The trial court found that three of the

California documents

were not privileged. There was no explicit ruling as to the

privilege status of the remaining 14 documents—the remaining three California

documents and the 11 additional, non-California documents. The trial court found

that there was a procedural impediment—waiver based on rule 193.3 as well as the

admission of one of the documents in another trial.

Union Carbide asks that we

vacate the trial court’s order compelling production of the privileged documents.

Mandamus is an extraordinary remedy, available only when a trial court clearly

abuses its discretion and when there is no adequate remedy on appeal. Walker v.

Packer , 827 S.W.2d 833, 840-44 (Tex. 1992); In re Kellogg Brown & Root , 7 S.W.3d

655, 657 (Tex. App.— Houston [1st Dist.] 1999, orig. proceeding) . An appellate

remedy may be adequate even though it involves more delay or cost than mandamus.

Walker , 827 S.W.2d at 842 .

The scope of discovery is largely within the trial court’s discretion. Dillard

Dep’t Stores, Inc. v. Hall , 909 S.W.2d 491, 492 (Tex. 1995). However, mandamus

will issue to correct a discovery order if the order constitutes a clear abuse of

discretion and there is no adequate remedy by appeal. In re Colonial Pipeline Co. ,

968 S.W.2d 938, 941 (Tex. 1998). A trial court abuses its discretion when it acts in

an unreasonable or arbitrary manner or, stated differently, when it acts without

reference to guiding rules and principles. See, e.g., Beaumont Bank, N.A. v. Buller ,

806 S.W.2d 223, 226 (Tex. 1991). A party does not have an adequate remedy by

appeal when: (1) an appellate court would not be able to cure the trial court’s

discovery error, such as when privileged information or trade secrets would be

revealed or production of patently irrelevant or duplicative documents imposing a

disproportionate burden on the producing party is ordered; (2) a party’s ability to

present a viable claim or defense is severely compromised or vitiated by the

erroneous discovery ruling to the extent that it is effectively denied the ability to

develop the merits of its case; or (3) a trial court’s discovery order disallows

discovery which cannot be made a part of the appellate record, thereby denying the

reviewing court the ability to evaluate the effect of the trial court’s error. Walker , 827

S.W.2d at 843 .

Rule 193.3

In its order, the trial court found that “Texas law, not California law, is

applicable, and the provisions of Texas Rules of Civil Procedure 193.3 govern.”

Texas Rule of Civil Procedure 193.3 permits parties to assert privileges “from

written discovery.” Tex. R. Civ. P. 193.3. Further, rule 193.3 provides that

a party who produces material or information without intending to

waive a claim of privilege does not waive that claim under these rules

or the Rules of Evidence if – within ten days or a shorter time ordered

by the court, after the producing party actually discovers that such

production was made – the producing party amends the response,

identifying the material or information produced and stating the

privilege asserted.

Tex. R. Civ. P. 193.3(d) (emphasis added). As it states in its brief, “Union Carbide

has never been served with, and therefore has never responded to, any request for

production in this case.” Additionally, Union Carbide repeatedly maintained that it

did not produce the privileged documents. In the California litigation, Union

Carbide’s attorneys tried, on several occasions, to determine how the plaintiffs

obtained the six privileged documents. The Mimses’ attorney stated that he obtained

the documents from other plaintiffs’ counsel in asbestos litigation. Here, before it

issued an order, the trial court sent correspondence to the parties indicating that it was

granting the Mimses’ motion to declare the documents not privileged. In the letter,

the trial court acknowledged that the Mimses’ counsel “never stated to this court how

the documents in question came into their possession.” In its subsequent order, the

trial court found that “the ten day requirement of Rule 193.3, Texas Rules of Civil

Procedure , was not met by Union Carbide, because Union Carbide discovered the

production and release of these documents in the Baruch vs. Bondex International

case [in California].” In effect, the trial court found that Union Carbide waived its

claim of privilege concerning the use of these six documents in this Texas case

because, unbeknownst to Union Carbide, some unknown, non-Union Carbide entity

or person produced the documents, and Union Carbide did not amend its responses

(to discovery that had never been propounded) after discovering during a deposition

in a California case that the privileged documents had been obtained.

Accordingly, we hold that the trial court abused its discretion in finding that

the provisions of rule 193.3 govern.

Privileged Documents

Union Carbide disputes the trial court’s finding that documents 5031, 5215,

and 5378 were not privileged.

“Most Significant Relationship” Test

The Texas Supreme Court has used the “most significant relationship” test to

determine which state’s law should be used. The law of the state with the most

significant relationship will apply to a particular substantive issue. Duncan v. Cessna

Aircraft Co. , 665 S.W.2d 414, 421 (Tex. 1984). In regard to certain types of

privileged communications, Texas courts have held that the state where the

communication took place is the state with the most significant relationship to the

communication. Ford Motor Co. v. Leggat , 904 S.W.2d 643, 647 (Tex. 1995)

(holding attorney-client communication privilege governed by laws of state where

communication took place). Section 139(2) of the Restatement (Second) of the

Conflict of Laws states:

Evidence that is privileged under the local law of the state which has the

most significant relationship with the communication but which is not

privileged under the local law of the forum will be admitted unless there

is some special reason why the forum policy favoring admission should

not be given effect.

Restatement (Second) of Conflict of Laws § 139(2) (1988). Section 139(2)

recognizes the “strong policy” a forum state has in disclosing “all relevant facts that

are not privileged under its own local law.” Id . cmt. d. Thus, under section 139(2),

a forum state will admit evidence that is not privileged under local law, unless it finds

that the local policy favoring admission is outweighed by countervailing

considerations. Id .

Comment d to section 139 sets out certain factors a court should consider in

determining whether to admit evidence that, while privileged in the “most significant

relationship” state, is not privileged in the forum state. Those factors include:

(1) the number and nature of the contacts the forum state has with the

parties and the transaction involved;

(2) the relative materiality of the evidence sought to be excluded;

(3) the kind of privilege involved; and

(4) fairness to the parties.

Id . The forum state should, according to the Restatement, be more reluctant to give

effect to a foreign privilege if the contacts with the forum state are “numerous and

important.” Id . On the other hand, the forum state should be more inclined to give

effect to a foreign privilege if the facts established by the subject evidence would be

unlikely to affect the outcome of the case or could be proved in some other way. Id .

Likewise, the forum state should be more inclined to give effect to a foreign privilege

if it (1) is well established and recognized in many states, (2) is generally similar to

one or more privileges found in local law, and (3) was relied upon by the parties when

making the communication. Id .

The Mimses argue that Union Carbide “never formally moved for the trial court

to take judicial notice of any state’s laws” and neglected to provide the trial court

with information required by Rule of Evidence 202 that would enable the trial court

to take judicial notice of a foreign state’s law. However, Union Carbide’s response

to the motion to declare documents not privileged expressly states Union Carbide’s

contention that California law governs the privilege issue. Throughout its response,

Union Carbide provided the trial court with several California cases setting out that

state’s privilege law. See Keene Corp. v. Gardner , 837 S.W.2d 224, 227 (Tex.

App.—Dallas 1992, writ denied) (“Unless a party requests the court to take judicial

notice of or introduces proof of another state’s laws, or the court, on its own motion,

takes judicial notice of another state’s law, we presume the other state’s law is the

same as Texas law.”)

Here, whether it be Texas, California, or New York law, each state recognizes

a privilege for communications between attorneys and their clients as well as

communications made in anticipation of litigation. See Cal. Evid. Code §§ 950 et

seq. (West 1995 & Supp. 2002); Cal. Code Civ. P . § 2018 (West 1998); N.Y.

C.P.L.R. § 4503(a) (Consol. 1992); N.Y. C.P.L.R. § 3101(c) (Consol. 1991 & Supp.

2002); Tex. R. Evid . 503; Tex. R. Civ. P . 192.5. The purpose of the attorney-client

privilege is to protect the confidential relationship between attorney and client and

to promote full and open disclosure of facts so that the attorney can best represent his

client. See Mitchell v. Superior Court , 691 P.2d 642, 645-46 (Cal. 1984); Tekni-Plex,

Inc. v. Meyner & Landis , 674 N.E.2d 663, 671 (N.Y. 1996); Md. Am. Gen. Ins. Co.

v. Blackmon , 639 S.W.2d 455, 458 (Tex. 1982).

The work product doctrine preserves the rights of attorneys to thoroughly

prepare cases for trial and to investigate both favorable and unfavorable aspects of

their cases, while preventing attorneys from taking advantage of their opposing

counsel’s efforts. See Cal. Code Civ. P. § 2018(1) (West 1998); In re Pretino , 567

N.Y.S.2d 1009, 1012 (N.Y. Sur. Ct. 1991); Owens-Corning Fiberglas Corp. v.

Caldwell , 818 S.W.2d 749, 750 (Tex. 1991).

Documents 5031, 5215, and 5378

In its response to the Mimses’ motion to declare the documents not privileged,

Union Carbide attached a declaration from Margaret Johnson, an attorney

representing Union Carbide. Johnson described document 5031 as a letter dated

December 6, 1963 from Frederick A. Cassidy of the Food and Drug Administration

[in Washington, D.C.] to George T. Scriba, of Union Carbide [in New York.]

Attached to the letter is a memorandum containing the impressions, conclusions, and

opinions of Union Carbide’s Legal Department. The attorney-work product doctrine

and attorney-client privilege was claimed solely as to the attachment.

Here, the trial court found that this document was not privileged because it “was

generated by the Department of Health, Education and Welfare.” Union Carbide

repeatedly informed the Mimses that Union Carbide was not asserting a privilege as

to the document from the Food and Drug Administration, but, rather, to the

attachment that describes Union Carbide’s legal department’s conclusions based on

the FDA’s letter.

After review of the document, we hold that the trial court abused its discretion

in (1) finding that a document (the letter) was not privileged when no privilege was

asserted and (2) failing to find that the attachment to document 5031 was privileged.

Johnson described document 5215 as a Union Carbide internal memorandum

dated February 9, 1984 from John L. Myers

(in California) to S.L. Baye of Union

Carbide’s legal department (in Connecticut). The trial court found that the document

was not privileged because seven pages attached to the memo were not the work

product of any legal department. However, the document, on its face, is a litigation

memo. We hold that the trial court abused its discretion when it found document

5215 was not privileged.

Document 5378 is also internal correspondence from Union Carbide that was

sent from an illegible location in Union Carbide to someone in the metals division in

New York. The subject line on the document references a lawsuit. The trial court

found that the document “is an explanation of interrogatories, and qualifies as a

supplemental response.” Again, however, a review of the document reveals that it

was generated for internal use during litigation, and we hold that the trial court

abused its discretion in finding that document 5378 was not privileged.

We hold that the trial court abused its discretion in failing to reconsider Judge

Gayle’s erroneous finding that documents 5031, 5215, and 5378 were not privileged.

Moreover, because the trial court erroneously ordered the disclosure of privileged

information, Union Carbide does not have an adequate remedy by appeal. Walker ,

827 S.W.2d at 843 .

Conclusion

We dismiss the portion of the petition seeking a writ of mandamus on the

ruling by the trial court concerning document 5490. The trial court abused its

discretion in denying the motion to reconsider Judge Gayle’s October 16, 2002 order

which ordered the production of the documents disputed here because Judge Gayle

erroneously found (1) that Texas Rule of Civil Procedure 193.3 governed and (2) that

documents 5031, 5215, and 5378 were not privileged, and Union Carbide does not

have an adequate remedy by appeal. Id . Accordingly, we conditionally and partially

grant the mandamus relief requested, and direct Judge Pat Sebesta to vacate the order

of January 31, 2003 and enter an order in conformance with this opinion. We

presume that Judge Sebesta will comply, and mandamus will issue only should Judge

Sebesta fail to do so. All other relief is denied.

Relief conditionally granted in part.

Sherry Radack

Chief Justice

Panel consists of Chief Justice Radack and Justices Taft and Jennings.