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Peterson v. Murphy

United States District Court, D. Idaho

March 28, 2018

TREVIS D. PETERSON, Plaintiff,
v.
PATRICK J. MURPHY, Acting Secretary of the Army, UNITED STATES ARMY CORPS OF ENGINEERS, Agency, Defendants.

          MEMORANDUM DECISION AND ORDER RE: PLAINTIFF'S MOTION FOR PROTECTIVE ORDER (Dkt. 39) PLAINTIFF'S AMENDED MOTION FOR PROTECTIVE ORDER (Dkt. 40) PLAINTIFF'S MOTION FOR ADDITIONAL SETTLEMENT CONFERENCE AND SANCTIONS (Dkt. 41) DEFENDANT'S CROSS-MOTION FOR A PROTECTIVE ORDER, SANCTIONS, AND DISCOVERY (Dkt. 44)

          Honorable Ronald E. Bush Chief U.S. Magistrate Judge

         Presently before the Court are Plaintiff's Motion for Protective Order (Dkt. 39), Plaintiff's Amended Motion for Protective Order (Dkt. 40), Plaintiff's Motion for Additional Settlement Conference and Sanctions (Dkt. 41), and Defendant's Cross-Motion for Protective Order, Sanctions, and Discovery (Dkt. 44). Having carefully considered the record, heard oral argument on January 16, 2018, and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:

         BACKGROUND

         Plaintiff Trevis D. Peterson (“Peterson”) alleges his employer, Defendant United States Army Corps of Engineers (“USACE”), engaged in unlawful age discrimination and unlawful retaliation, both in violation of the Age Discrimination in Employment Act of 1991, 29 U.S.C. §§ 621-634. See generally Am. Compl. (Dkt. 2.) According to Peterson, the USACE wrongfully failed to promote him from his position as a maintenance worker at the Albeni Falls Dam in Oldtown, Idaho. Id. at ¶¶ 1, 10. His retaliation claim was dismissed on summary judgment (Dkt. 56), but his age discrimination claim remains pending.

         On February 15, 2017, a judicial settlement conference was held before U.S. Magistrate Judge Candy W. Dale. (Dkt. 30.) Prior to that conference, Judge Dale issued a routine order regarding various logistics relating to the conference. (Dkt. 23.) Among other things, the order required the personal presence of both Peterson and of a USACE representative with “full settlement authority.” Id. at ¶ 3. Among those attending the conference on USACE's behalf were Ryne Linehan (“Linehan”), the highest ranking USACE employee at Albeni Falls Dam, and counsel James Schaefer, Assistant United States Attorney for the District of Idaho.[1] The case did not settle. (Dkts. 30, 35.)

         Peterson moves for an order requiring an additional settlement conference and sanctioning USACE for bad faith in the February 2017 conference, alleging that USACE violated Judge Dale's order by failing to bring a representative with full settlement authority. Mem. ISO Plf.'s Mot. for Add'l Settlement Conf. and Sanctions (Dkt. 41-1). Based on declarations Linehan provided to Peterson's counsel, Peterson contends that Linehan did not have full settlement authority to settle the case. Id. at 2.

         In that regard, Linehan stated as follows:

Although I have never been involved in the Agency's case strategy regarding Mr. Peterson's case I was ordered, by my supervisor COL Buck, to attend a mediation session in the Peterson case. Before the mediation session I read the court order. The court order required that I be given “full settlement authority” to settle the case. I was not given “full settlement authority.” When I asked COL Buck, in writing, for “full settlement authority” I was told, by the Agency's attorney, James Schafer, that I did not have the authority to settle the case. Instead Mr. Schafer informed me that he (Schafer) would be making the decisions about the case. At no time did Mr. Shafer tell me that he (Schafer) represented me. No. other Agency lawyer has told me that I was represented by Agency attorneys on the Trevis Peterson case or in any other capacity. At no time did any agency employee, Mr. Schafer, or any other agency lawyer, tell me that I had the power to make the agency resolve Mr. Peterson's case. At no time did any Agency lawyer or supervisor tell me that I “spoke for” the Agency. At no time did any Agency lawyer or supervisor tell me that I could not have contact with Mr. Peterson's lawyers.

Second Linehan Decl. ¶ 5 (Dkt. 39-2 Ex. C).[2] Peterson asserts that Linehan's lack of full settlement authority means USACE violated Judge Dale's order regarding the settlement conference. Memo ISO Plf.'s Mot. for Add'l Settlement Conf. and Sanctions 5 (Dkt. 41-1). Accordingly, Peterson argues, a new settlement conference should be held, and USACE must have a representative with full settlement authority. Id. Peterson also requests an award of his fees and costs associated with the first settlement conference and with bringing the motion for an additional settlement conference. Id.

         USACE opposes Peterson's motion, arguing that (1) it met Judge Dale's requirement by bestowing the settlement authority it could properly extend, to AUSA Schaefer; (2) Judge Dale was aware of and did not object to Schaefer's limited settlement authority; and (3) the limits on settlement authority were not a barrier to any possible, but unrealized, settlement. Def.'s Opp. to Plf.'s Mot. for Add'l Settlement Conf. and Sanctions 4 (Dkt. 43). Further, USACE alleges that the contact with Linehan and the acquisition of his declarations by Peterson's counsel constituted ethical violations because such contacts were unauthorized ex parte communication with a represented person, given Linehan's role with USACE. Id.

         Both parties seek protective orders tied to Linehan's declarations. Plf.'s Mot. for Prot. Order (Dkt. 40)[3]; Def.'s Cross-Mot. for a Prot. Order, Sanctions, and Discovery (Dkt. 44) (“Def.'s Cross-Mot.”). Linehan's first declaration, dated June, 27, 2017, details allegations of age discrimination at USACE separate and apart from those Peterson alleges. Plf.'s Mem. ISO Mot. for Prot. Order 2 (Dkt. 39); see also generally Linehan Decl. (Dkt. 39-2 Ex. B). On June 28, 2017, Peterson's counsel Matthew Z. Crotty (“Crotty”) disclosed the declaration to AUSA Schaefer. Crotty Decl. ¶ 3 (Dkt. 39-2). Two days later, Schaefer sent Crotty (and Crotty's co-counsel) a letter alleging that Crotty had “engag[ed] in prohibited ex parte communications with Mr. Linehan.” Id.; see also Letter from Schaefer to Crotty et al, dated June 30, 2017) (Dkt. 39-2 Ex. A). The letter demanded that Crotty immediately cease unauthorized communications with USACE employees and that Crotty produce “a complete record of [his] communications with current USACE employees regarding the subject matter of this case.” In response, Crotty obtained from Linehan a second declaration detailing some of the circumstances of the contacts and communications between Crotty and Linehan. Second Linehan Decl. (Dkt. 39-2 Ex. C). Crotty also moved for an order to protect Peterson (via Crotty) from having to disclose the information Schaefer demanded in the letter.

         The record shows that Linehan and Crotty first interacted in November 2016, when Linehan contacted Crotty to ask about whether Crotty could represent Linehan against USACE. Crotty Decl. ¶ 6 (Dkt. 39-2); Second Linehan Decl ¶ 3 (Dkt. 39-2 Ex. C). Linehan subsequently contacted Crotty in April 2017 to inquire again about possible representation. Crotty Decl. ¶ 7 (Dkt. 39-2); Second Linehan Decl. ¶ 3 (Dkt. 39-2 Ex. C). Neither set of interactions resulted in Crotty agreeing to represent Linehan. Nonetheless, Peterson's motion for a protective order is based on Crotty's contention that Linehan was a prospective client under the Idaho Rules of Professional Conduct (“IRPC”); that, therefore, Linehan's communications with Crotty are privileged under IRPC 1.18(b); and, finally, that Crotty would violate IRPC 1.18(b) by disclosing the communications to Schaefer.[4]

         On the other side, USACE moves for a protective order, sanctions, and limited discovery related to what it perceives as a violation of IRPC 4.2, which prohibits counsel from engaging in unauthorized ex parte communications with certain constituents of an organization represented by counsel in the matter. USACE seeks the following:

(1) a protective order prohibiting Plaintiff's counsel from engaging in further unauthorized ex parte communications with USACE constituents;
(2) the exclusions from evidence of Ryne Linehan's declarations;
(3) the disqualification of Matthew Z. Crotty as Plaintiff's counsel in this case; and (4) limited discovery necessary for Defendant to assess both the scope of Plaintiff's counsel's violations of Rule 4.2 and whether additional sanctions are warranted.

Def.'s Cross-Mot. 3 (Dkt. 44). USACE additionally seeks an order from the Court disqualifying Crotty's co-counsel Michael B. Love (“Love”) and Thomas G. Jarrard (“Jarrard”), if they “participated in, approved, and/or were aware of the ex parte communications.” Id. at 4.

         The Court heard oral argument on the above-described motions on January 16, 2018. Based on the arguments made at the hearing, the Court concluded that it would be necessary to review the records of communications with Linehan (and communications regarding communications with Linehan). Therefore, the Court ordered Crotty to produce for in camera review all communications and office notes regarding Linehan, including communications between counsel. (Dkts. 57, 58.) 395 pages were timely provided to the Court and the Court has reviewed these documents. Given the context of the dispute and the fact that the Court ordered that the documents be submitted for in camera review, the Court does not summarize or describe these documents other than as necessary to support this memorandum decision and order.

         DISCUSSION

         A. Peterson's Motion for an Additional Settlement Conference and Sanctions Is Denied.

         On January 29, 2018, while Peterson's motion for an additional settlement conference and sanctions was pending, Peterson filed a Joint Written Statement Indicating How the Parties Intend to Proceed. (Dkt. 59.) That filing indicated that “[t]he parties do not desire to pursue further mediation/settlement negotiations, and request that the Court schedule a trial setting conference.” Id. This joint statement moots Peterson's motion to the extent it seeks an additional settlement conference.

         However, Peterson's motion also seeks sanctions for USACE's alleged failure to bring a representative with full settlement authority to the settlement conference. Mem. ISO Mot. for Add'l Settlement Conf. and Sanctions 4-5 (Dkt. 41-1). This request is based on the declaration of Linehan in which he says he had less than “full settlement authority.” Second Linehan Decl. ¶ 5 (Dkt. 39-2 Ex. C).

         There is no basis on this record to award Peterson his costs and fees or to impose any other sanctions against USACE relating to the February 2017 settlement conference. At the outset, the Linehan declaration on which Peterson relies does not support the premise that USACE violated Judge Dale's pre-settlement conference order. Linehan says that AUSA Schaefer said to Linehan that Linehan did not have the authority to settle the case; rather, “he (Schafer) would be making the decisions about the case.” Id. Such a statement from Linehan does not indicate that Schaefer lacked the authority required by Judge Dale's order. Indeed, USACE argues that AUSA Schaefer did, in fact, have authority to settle the case, subject to agency regulations which constrained the extent of such authority and which were discussed with Judge Dale at the beginning of the conference. Def.'s Opp. to Plf.'s Mot. for Add'l Settlement Conf. and Sanctions 4 (Dkt. 43). Judge Dale's Order provided that “[e]ach party to such settlement conference shall be represented by counsel authorized to participate in settlement negotiations.” Order ¶ 2 (Dkt. 23). It further provided that “[i]n the case of … governmental entities … a representative for every party with full settlement authority must be personally present at the settlement conference.” Id. ¶ 3. Nothing in the Order states the representative with full settlement authority could not be the government's attorney. Peterson argues that USACE was required to come to the settlement conference with unlimited settlement authority, presumably in the form of dollars, but USACE has placed in the record evidence showing that Schaefer came to the settlement conference with the full[est] settlement authority, and the power to settle within that amount, that the agency could send with him. In that setting, the Court is not persuaded that there has been a violation of Judge Dale's settlement conference order.

         Separately, however, Peterson's allegation that USACE violated the pre-conference order relies exclusively on information provided by Linehan. As described to follow, the Court concludes that it was ethically improper for Peterson's counsel to acquire and use that information in the manner employed. It would, of course, be untenable to award the requested relief sought by Peterson when the source of the information used to seek such relief came from improper conduct.

         Finally, USACE argues that the limits on AUSA Schaefer's settlement authority did not prevent the parties from reaching a settlement. Id. Schaefer echoed this notion in a filed declaration. Schaefer Decl. ¶ 6(e) (Dkt. 43-1). At the hearing on this matter, AUSA Schaefer argued that the barrier to settlement was not the monetary limit on his authority but, rather, that he perceived a significant weakness in Peterson's case related to causation. He claimed he acted in good faith by appearing and participating with what he believed to be adequate settlement authority based on his evaluation of the merits of Peterson's case. He claimed to have listened carefully, even changing his perspective on some matters, but ultimately concluding that USACE's settlement offer should not be raised. The nature of such statements are, of course, inherently subjective, and come from counsel for the Defendants. There is nothing unusual in that, for purposes of sorting through the instant dispute. Neither is there anything in the record or the Court's assessment of Peterson's arguments to suggest what Schaefer has to say, even if subjective and made from the view of counsel for the defendants, is untrue.

         The Court concludes that Peterson has not shown that USACE violated Judge Dale's order. Therefore, no sanctions are appropriate.

         B. Legal Standard Applicable to Pending Protective Order Motions

         Both parties move for protective orders. Peterson frames the authority to grant his motion as arising from Federal Rule of Civil Procedure (“FRCP”) 26. Plf.'s Mem. ISO Mot. for Prot. Order 6 (Dkt. 39). USACE does not expressly state the authority for its motion, but the motion title references “protective order” and it seeks “limited discovery necessary for Defendant to assess both the scope of Plaintiff's counsel's violations of Rule 4.2 and whether additional sanctions are warranted.” Def.'s Cross-Mot. 1, 3 (Dkt. 44). Hence, the Court also considers USACE's motion under FRCP 26.

         Under that rule, “[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.” FRCP 26(c)(1). Further, “[i]f a motion for a protective order is wholly or partly denied, the court may, on just terms, order that any party or person provide or permit discovery.” FRCP 26(c)(2).

         Here, the relief sought does not fit within the parameters FRCP 26. Protective order motions brought under FRCP 26 are appropriate where “discovery is sought.” But, per FRCP 26(b)(1), the scope of discovery does not extend beyond “nonprivileged matter that is relevant to any party's claim or defense.” The dispute at issue in the instant motions relates to the propriety of Crotty's communications with Linehan, not the content of such communications. Neither party has shown that this dispute is relevant to a particular claim or defense.[5] To begin, the instant motions arose based on a letter from AUSA Schaefer to Peterson's counsel. The letter was not a discovery request under the FRCP, no “discovery is sought, ” and therefore FRCP 26 does not apply. Moreover, the letter was sent June 30, 2017 - more than four months after discovery in this matter closed on February 3, 2017. Am. Sched. Order (Dkt. 19).

         This does not mean, however, that the parties' protective order motions will be summarily denied. There have been allegations of ethical misconduct levied by USACE against opposing counsel, and the Court must address those allegations squarely if it is proper to do so.

         In considering such matters, the Court begins from its “inherent authority to suspend or disbar lawyers” deriving from “the lawyer's role as an officer of the court which granted admission.” In re Snyder, 472 U.S. 634, 643 (1985); see also McCallum v. CSX Transp., Inc., 149 F.R.D. 104, 108-109 (M.D. N.C. May 4, 1993) (citing Snyder and relying on federal district court's inherent power rather than FRCP 26 when presented with an ethical issue raised under the same rule of professional conduct at issue in the instant case).

         As described supra, attorneys practicing before a court of the District of Idaho, including members of the bar as well as attorneys admitted pro hac vice for a specific matter, [6] “must familiarize themselves with and comply with the Idaho Rules of Professional Conduct of the Idaho State Bar and decisions of any court interpreting such rules.” ...


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