I probably enjoy reading a ruling on a motion to compel a whole lot more than the judge does in writing it. So of course I enjoyed reading Judge Murphy’s Order on a Motion to Compel yesterday in County of Catawba v. Frye Regional Medical Center. It’s actually pretty interesting. It’s got discovery issues, a 30(b)(6) issue, and an attorney-client privilege issue too.
Frye Regional moved to compel because the County hadn’t organized and labelled its document production to respond to the request to which the documents were responsive. Frye Regional’s co-defendant re-served the same document requests to which the County had already responded, demanding labelling. Rule 34 requires labelling, but it also allows a party in the alternative to produce documents as they are kept in the "ordinary course of business." Judge Murphy accepted the County’s representation that it had produced its documents as they were kept in the ordinary course of business, and denied that aspect of the motion to compel.
The County was more successful on its own Motion to Compel. Frye Regional had refused to produce a witness on some of the topics listed in the County’s 30(b)(6) deposition notice. The Defendant had argued that a number of the topics in the notice requested information not "known or reasonably available" to it. Frye Regional said that the proposed topics — on its financial performance — would require its witness to make burdensome calculations and compilations that it did not ordinarily perform.
Judge Murphy said:
While the Court is cognizant of the fact that the Rule 30(b)(6) Notice, by its nature, imposes a heavy burden on Frye and its designee, this burden does not relieve Frye of its obligation to appoint a designee to provide deposition testimony on behalf of the company. Rule 30(b)(6) clearly states that, upon notice from the requesting party, the organization “shall designate” a representative to “testify as to matters known or reasonably available to the organization.” N.C. R. Civ. P. 30(b)(6). Having considered Plaintiff’s Motion and the arguments of counsel, the Court finds no basis to relieve Frye of its obligation under Rule 30(b)(6). Therefore, the Court concludes that Frye must respond to the Rule 30(b)(6) Notice [and] designate a witness to testify on the company’s behalf.
The County also sought documents from Frye Regional by its Motion to Compel. These were "Quarterly Certifications" prepared by Frye Regional’s parent to prepare filings required by the federal government under the Sarbanes Oxley Act.
Frye Regional had withheld those documents on the basis of attorney-client privilege, but Judge Murphy said that any privilege belonged to Frye Regional’s parent company (Tenet), not to Frye Regional. He held:
the documents in question reflect communications between a Tenet employee and Tenet executives and counsel. Although Frye appears to be a subsidiary of Tenet, Frye remains a third party to any privileged communications between Tenet and its counsel, and therefore, has no standing to assert a claim of privilege over such communications. . . . Therefore, the Court concludes that only Tenet or an attorney on its behalf may raise a claim of privilege over the requested portions of the Quarterly Certifications and accompanying memos.
If the issue of the invocation of the parent’s attorney-client privilege by a subsidiary is ringing a distant bell in your mind, you might be thinking of Judge Gale’s recent opinion in SCR-Tech v. Evonik Energy Services LLC, 2013 NCBC 42,which I wrote about in August. Though the issue in SCR-Tech wasn’t precisely whether a subsidiary can claim its parent company’s privilege, that certainly seemed assumed in the opinion. At the hearing in this case, Frye Regional’s counsel stated that the privilege belonged to Tenet, not Frye Regional. Op. ¶22.
But all is not lost for the privilege — Judge Murphy ordered that Tenet should be given notice of his ruling and be allowed to intervene to protect its privilege.