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Hammer v. City of Sun Valley

United States District Court, D. Idaho

February 26, 2019

SHARON R. HAMMER and JAMES R. DONOVAL, husband and wife, Plaintiffs,
v.
CITY OF SUN VALLEY; NILS RIBI, in his individual and official capacity; and DeWAYNE BRISCOE, in his individual and official capacity, Defendants.

          MEMORANDUM DECISION AND ORDER RE: PLAINTIFFS' MOTION TO OVERRULE ASSERTIONS OF ACCOUNTANT-CLIENT AND ATTORNEY-CLIENT PRIVILEGE AND TO COMPEL RESPONSES (Docket No. 131) DEFENDANTS' MOTION TO DISQUALIFY JAMES R. DONOVAL (Docket No. 137)

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

         Now pending before the Court are (1) Plaintiffs'[1] Motion to Overrule Assertions of Accountant-Client and Attorney-Client Privilege and to Compel Responses (Docket No. 131), and (2) Defendants' Motion to Disqualify James R. Donoval (Docket No. 137). Having carefully considered the record and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:

         I. BACKGROUND

         This action is lamentably over five years old and, while a portion of that time was devoted to an appeal before the Ninth Circuit, its crawl toward a conclusion here is partly attributable to the constellation of claims pursued elsewhere and, in some measure, the parties' difficulty in agreeing upon the best way to focus the case for trial. These Motions are a continuation of that pattern, with (1) Plaintiffs requesting that certain objections (based on the accountant-client and attorney-client privileges) raised during the May 18, 2018 deposition of John Curran be overruled and that Mr. Curran be re-deposed; and (2) Defendants seeking the disqualification of Plaintiff James R. Donoval (a lawyer) from further representing Plaintiff Sharon Hammer (Mr. Donoval's wife) in this lawsuit. The relevant factual backdrop for each such Motion is set forth in chronological order as follows:

         A. Plaintiffs' Motion to Overrule Assertions of Accountant-Client and Attorney-Client Privilege and to Compel Responses (Docket No. 131)

         1. Plaintiffs filed this case on May 3, 2013, asserting 14 Counts against Defendants, seeking relief under various federal and state statutes related to Plaintiff Hammer's termination as the Sun Valley City Administrator in January 2012. See Compl. (Docket No. 1).

         2. On February 5, 2014, Defendants filed a Motion for Judgment on the Pleadings, requesting dismissal of certain identified Counts within Plaintiffs' Complaint. See Defs.' 12(c) Mot. for J. on the Pldgs. (Docket No. 18).

         3. On June 17, 2014, U.S. District Judge Edward J. Lodge granted Defendants' Motion for Judgment on the Pleadings and dismissed Counts 1-8, 10, and 12-14 of Plaintiffs' Complaint (leaving Counts 9 and 11 for trial). See 6/17/14 MDO (Docket No. 41).

         4. On June 27, 2014, Defendants moved for summary judgment on Counts 9 and 11 of Plaintiffs' Complaint. See Defs.' MSJ (Docket No. 47).

         5. On July 28, 2015, Judge Lodge granted Defendants' Motion for Summary Judgment, dismissed Counts 9 and 11 of Plaintiffs' Complaint, and dismissed the case in its entirety. See 7/28/15 MDO & J. (Docket Nos. 71 & 72).

         6. On August 11, 2015, Plaintiffs filed a Motion for Reconsideration of Entry of Summary Judgment (amended on August 28, 2015) related to the dismissal of her liberty interest, stigma plus claims (Count 9). See Mots. to Recon. (Docket Nos. 77 & 81).

         7. On August 27, 2015, Plaintiffs filed a Notice of Appeal, appealing Judge Lodge's above-referenced June 17, 2014 and July 28, 2015 Orders (granting Defendants' Motion for Judgment on the Pleadings and Motion for Summary Judgment). See Not. of Appeal (Docket No. 80).

         8. On January 29, 2016, Defendants issued a Notice of Intent to Subpoena Documents from Third-Party, informing Plaintiffs' counsel that, on February 1, 2016, Defendants intended to serve non-party Hagen, Streiff, Newton & Oshiro (“HSNO”) a subpoena for production of documents. See Not. of Intent to Subpoena Docs. from Third-Party, attached as Ex. D to Emergency Mot. to Quash Third-Party Subpoena (Docket No. 87). HSNO is an accounting firm that Plaintiff Hammer sued for defamation in a separate case in Idaho state court related to allegedly-false statements made in a forensic audit report issued by HSNO pertaining to Plaintiff Hammer's conduct as the Sun Valley City Administrator. See Emergency Mot. to Quash Third-Party Subpoena, p. 3 (Docket No. 87).

         9. On February 1, 2016, Plaintiffs filed an Emergency Motion to Quash Third-Party Subpoena, requesting that Defendants' subpoena to HSNO be quashed. See id. at p. 5 (“As (a) the entire case herein has been dismissed subject only to the Motion to Reconsider, (b) all discovery in the matter has been closed since at least May 14, 2014, and (c) the documents being sought by the Defendant are subject to the confidentiality provision of the Settlement Agreement, [Plaintiffs] seek that the Court quash the Subpoena pursuant to its authority under FRCP 45.”).

         10. On March 10, 2016, Judge Lodge denied Defendants' Motions for Reconsideration. See 3/10/16 MDO (Docket No. 94).

         11. On May 11, 2016, Defendants withdrew their subpoena to HSNO, indicating nonetheless that they “do not intend to waive any right to re-issue the subpoena if it becomes necessary to do so based on arguments made by Plaintiff in the pending appeal.” Defs.' Not. of Withdrawal of Third-Party Subpoena, p. 1 (Docket No. 99). That same day, the Court denied Plaintiffs' Emergency Motion to Quash Third-Party Subpoena as moot. See 5/11/16 Docket Entry Order (Docket No. 100).

         12. On August 11, 2017, the Ninth Circuit, affirmed, in part, reversed, in part, and remanded the action back to this Court, stating:

To conclude, we affirm the district court's grant of the 12(c) motion; the denial of Hammer's motion to convert; and the denial of Hammer's motion to amend. We reverse the district court's judgment of Hammer's unconstitutional bias claim; liberty interest, stigma plus claim; the claims against Ribi and Briscoe in their individual capacities; Donoval's claim; and the entry of costs . . . .
AFFIRMED in part, REVERSED in part, and REMANDED.

         8/11/17 Mem., p. 4 (Docket No. 104) (emphasis in original).

         13. On October 5, 2017, Judge Lodge directed the parties “to confer with one another and jointly file a notice with the Court indicating how the parties would propose or intend to proceed in light of the Ninth Circuit's decision.” 10/5/17 Order, p. 1 (Docket No. 107).

         14. On November 1, 2017, the parties filed a Joint Notice of Intent to Proceed. See Joint Not. (Docket No. 108). The parties' Notice spoke to the need for “additional discovery, ” stating in relevant part:

Previously, Defendant filed a third-party subpoena to HSNO seeking supplemental materials that did not exist during the original period of discovery that Plaintiffs moved to quash. Ultimately, Defendants withdrew that subpoena due to the Court dismissing Plaintiffs' motion for reconsideration. Now that the mandate has revived certain claims, the parties have agreed that the subpoena can now proceed without objection, and the discovery can be produced by HSNO. Further, any depositions or supplemental discovery pertaining to the subject matter of the HSNO subpoena would also be permitted.

Id. at pp. 1-2 (emphasis added).

         15. On November 22, 2017, Judge Lodge issued an Amended Scheduling Order, memorializing the parties' preferences as relayed in the Notice and indicating that “[t]he additional discovery anticipated and as stated in the Notice shall be completed by May 22, 2018.” See 11/22/17 Am. Sched. Order, p. 1 (Docket No. 109).

         16. On May 3, 2018 (presumably following the response to Defendants' renewed subpoena to HSNO), Plaintiffs subpoenaed John Curran to appear and testify at a deposition on May 18, 2018 in Seattle, Washington. See Subpoena to Test, attached as Ex. N to Mem. in Supp. of Mot. to Overrule and Compel (Docket No. 131, Att. 16). Mr. Curran was the principal HSNO accountant responsible for the HSNO forensic audit report. See Mem. in Supp. of Mot. to Overrule and Compel, p. 3 (Docket No. 131).

         17. Mr. Curran's deposition took place on May 18, 2018 in Seattle, Washington, during which time Plaintiffs claim that Defendants' and Mr. Curran's attorneys made numerous objections to matters related to the HSNO forensic audit report, and refused to allow Mr. Curran to answer questions related to the content of discussions he held with various Sun Valley officials and individuals that he interviewed during the course of the HSNO forensic audit report. See id. at p. 13 (“In particular, when Ms. Hammer's counsel sought information related to what was discussed with the (10) individuals who Mr. Curran interviewed as part of the Forensic Audit, Sun Valley's and Mr. Curran's attorneys directed Mr. Curran not to answer. In addition, when Ms. Hammer's counsel asked for information related to the discussions that occurred during an eight (8) hour meeting between Mr. Curran, Attorney Gill, Defendant Briscoe and Administrative Assistant Virginia Egger on August 9, 2012, Sun Valley's attorneys and Mr. Curran's attorney prohibited him from answering.”).

         18. On May 19, 2018, Plaintiff Donoval sent an email to counsel for Defendants and Mr. Curran's counsel, objecting to the assertions of accountant-client or attorney-client protections and, relatedly, their instructions to Mr. Curran that he should not answer certain questions related to the HSNO forensic audit report, including the production of the retainer agreements between HSNO and Defendants. See 5/19/18 email, attached as Ex. R to Mem. in Supp. of Mot. to Overrule and Compel (Docket No. 131, Att. 20).

         19. On May 22, 2018, Defendants' counsel responded, reasserting the privileges from Mr. Curran's deposition and the purported legal bases for doing so. See 5/22/18 Ltr., attached as Ex. S to Mem. in Supp. of Mot. to Overrule and Compel (Docket No. 131, Att. 21).

         20. Consistent with Judge Lodge's November 22, 2017 Amended Scheduling Order, the limited discovery period closed on May 22, 2018.

         21. On July 3, 2018, Plaintiffs filed the at-issue Motion, requesting that the accountant/attorney-client-related objections raised during Mr. Curran's May 18, 2018 deposition be overruled, that Mr. Curran be compelled to respond to matters related to the HSNO forensic audit report, and that Mr. Curran be re-deposed in Boise, Idaho at the ...


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