134 Nev., Advance Opinion 32.
IN THE SUPREME COURT OF THE STATE OF NEVADA
JAMES J. COTTER, JR., No. 71267
INDIVIDUALLY AND DERIVATIVELY
ON BEHALF OF READING
INTERNATIONAL, INC.,
Petitioner,
FILD
vs. MAY 0
THE EIGHTH JUDICIAL DISTRICT
COURT OF THE STATE OF NEVADA,
IN AND FOR THE COUNTY OF
CLARK; AND THE HONORABLE
ELIZABETH GOFF GONZALEZ,
DISTRICT JUDGE,
Respondents,
and
MARGARET COTTER; ELLEN
COTTER; GUY ADAMS; EDWARD
KANE; DOUGLAS MCEACHERN;
WILLIAM GOULD; JUDY CODDING;
MICHAEL WROTNIAK; AND READING
INTERNATIONAL, INC.,
Real Parties in Interest.
Original petition for a writ of mandamus or prohibition
challenging a district court order requiring disclosure of certain documents.
Petition granted.
Morris Law Group and Steve L. Morris and Akke Levin, Las Vegas; Yurko,
Salvesen & Remz, P.C., and Mark G. Krum, Boston, Massachusetts,
for Petitioner.
Cohen Johnson Parker Edwards and H. Stan Johnson, Las Vegas; Quinn
Emanuel Urquhart & Sullivan, LLP, and Marshall M. Searcy and
Christopher Tayback, Los Angeles, California,
for Real Parties in Interest Margaret Cotter, Ellen Cotter, Guy Adams,
Edward Kane, Douglas McEachern, Judy Codding, and Michael Wrotniak.
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Greenberg Traurig, LLP, and Mark E. Ferrari°, Kara B. Hendricks, and
Tami D. Cowden, Las Vegas,
for Real Party in Interest Reading International, Inc.
Maupin, Cox & LeGoy and Donald A. Lattin and Carolyn K. Renner, Reno;
Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhows, P.C.,
and Ekwan E. Rhow, Hemel' D. Vera, and Shoshana E. Bannett, Los
Angeles, California,
for Real Party in Interest William Gould.
BEFORE THE COURT EN BANC.'
OPINION
By the Court, DOUGLAS, C.J.:
In this original petition for extraordinary relief, we consider
whether documents disclosed to third parties constitute waiver of the work-product privilege. In considering this petition, we adopt the common
interest rule that allows attorneys to share work product with third parties
that have common interest in litigation without waiving the work-product
privilege. Petitioner shared assertedly work-product material through
emails with third parties who were intervening plaintiffs in the litigation,
suing the same defendants on similar issues. Without reviewing the emails,
the district court ruled that petitioner must disclose them based on his
insufficient showing of common interest between him and the intervening
plaintiffs. Because we conclude that petitioner and the intervening
plaintiffs share common interest in litigation, the district court erred in
iThe Honorable Kristina Pickering, Justice, voluntarily recused
herself from participation in the decision of this matter.
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concluding otherwise. We therefore grant petitioner's petition for
extraordinary relief and direct the district court to refrain from compelling
disclosure of the emails before it conducts an in camera review of the emails
to establish clear findings concerning the work-product privilege.
FACTS AND PROCEDURAL HISTORY
From approximately 2000 to 2014, petitioner James Cotter
served as the CEO and Chairman of the Board of Directors of Reading
International, Inc. (Reading). After Reading terminated petitioner, he filed
a complaint in the district court alleging breach of fiduciary duty against
the following members of the Board of Directors of Reading: Margaret
Cotter, Ellen Cotter, Guy Adams, Edward Kane, Douglas McEachern,
William Gould, Judy Codding, and Michael Wrotniak (collectively, real
parties in interest). Numerous Reading shareholders (the intervening
plaintiffs) filed a derivative action in the district court against real parties
in interest, asserting breach of fiduciary duty. Similar to petitioner, the
intervening plaintiffs included allegations concerning petitioner's
termination and other related events. The district court consolidated the
two actions.
During discovery, real parties in interest filed a motion to
compel petitioner to produce a supplemental privilege log. The district court
granted the motion and ordered petitioner to revise his privilege log and
reserved a ruling on the production of any of the communications between
the attorneys for petitioner and the intervening plaintiffs. Petitioner
subsequently produced 350 communications, as well as a supplemental
privilege log. The log labeled approximately 150 emails between Lewis Roca
Rothgerber LLP, counsel for petitioner, and Robertson & Associates,
counsel for the intervening plaintiffs, as work product. According to
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petitioner, these emails, dated from August 2015 to June 2016, constituted
work product because they contained mental impressions of matters related
to the case.
Real parties in interest filed a motion to compel production of
these emails, arguing that petitioner waived his claim of work-product
protection by sharing these communications with the intervening plaintiffs.
Real parties in interest also noted that there was no joint prosecution
agreement or confidentiality agreement between the parties. The district
court held oral arguments on the motion, though it did not conduct an in
camera review of the emails. Ultimately, the district court determined that
petitioner failed to show common interest between him and the intervening
plaintiffs and, thus, ordered petitioner to produce the emails. 2 This petition
for writ relief followed.
DISCUSSION
Writ relief is an extraordinary remedy, available when the
petitioner has "no plain, speedy and adequate remedy at law other than to
petition this court." Wardleigh v. Second Judicial Dist. Court, 111 Nev. 345,
350,
891 P.2d 1180, 1183 (1995). This court may exercise its discretion to
consider writ relief when presented with a situation where "the assertedly
privileged information would irretrievably lose its confidential and
privileged quality and petitioners would have no effective remedy, even by
later appeal." Id. at 350-51, 891 P.2d at 1183-84. Furthermore, a writ of
2Approximately one week after the hearing on the motion to compel,
petitioner filed an emergency motion for stay pending resolution of his writ
petition, pursuant to NRAP 8 and 27(e). Later that same day, this court
granted the emergency motion. See Cotter v. Eighth Judicial Dist. Court,
Docket No. 71267 (Order Directing Answer and Granting Motion for Stay,
Sept. 15, 2016). In light of this opinion, we lift this court's prior stay.
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prohibition is a more appropriate remedy than mandamus to correct an
order that compels the disclosure of privileged information. See id. at 350,
891 P.2d at 1183. Although this court rarely entertains writ petitions
challenging pretrial discovery, "there are occasions where, in the absence of
writ relief, the resulting prejudice would not only be irreparable, but of a
magnitude that could require the imposition of such drastic remedies as
dismissal with prejudice or other similar sanctions." Id. at 351,
891 P.2d at
1184.
In this case, without writ relief, compelled disclosure of
petitioner's assertedly privileged communication will occur and petitioner
would have no effective remedy, even by subsequent appeal. Accordingly,
we exercise our jurisdiction to entertain this writ petition.
In considering this petition, discovery rulings are reviewed for
an abuse of discretion. Club Vista Fin, Servs., LLC v. Eighth Judicial Dist.
Court, 128 Nev. 224, 228,
276 P.3d 246, 249 (2012). "A manifest abuse of
discretion is `[a] clearly erroneous interpretation of the law or a clearly
erroneous application of a law or rule." State v. Eighth Judicial Dist. Court,
127 Nev. 927, 932,
267 P.3d 777, 780 (2011) (quoting Steward v. McDonald,
958 S.W.2d 297, 300 (Ark. 1997)). In addition, when considering a writ
petition, this court reviews legal questions de novo and "gives deference to
the district court's findings of fact." Williams v. Eighth Judicial Dist. Court,
127 Nev. 518, 525,
262 P.3d 360, 365 (2011).
Petitioner asserts that the work-product privilege is applicable
and that he did not waive the privilege because he shares common interest
in litigation with the intervening plaintiffs. In response, real parties in
interest claim that the district court correctly concluded that no common
interest exists between petitioner and the intervening plaintiffs. We
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conclude the district court erred and that common interest exists between
petitioner and the intervening plaintiffs.
The work-product privilege "protects an attorney's mental
impressions, conclusions, or legal theories concerning the litigation, as
reflected in memoranda, correspondence, interviews, briefs, or in other
tangible and intangible ways." Wardleigh, 111 Nev. at 357,
891 P.2d at
1188; see also NRCP 26(b)(3). Rather than protecting the confidential
relationship between attorney and client, the work-product privilege exists
"to promote the adversary system by safeguarding the fruits of an attorney's
trial preparations from the discovery attempts of the opponent." United
States v. Am. Tel. & Tel. Co., 642 F.2d 1285, 1299 (D.C. Cir. 1980) (emphasis
omitted). Thus, "[u]nlike the attorney-client privilege, selective disclosure
of work product to some, but not to others, is permitted," and disclosure to
third parties does not automatically waive the privilege. Wynn Resorts, Ltd.
v. Eighth Judicial Dist. Court, 133 Nev., Adv. Op. 52, 399 P.3d 334, 349
(2017).
In particular, numerous jurisdictions have recognized a broad
common interest rule, allowing attorneys to share work product with other
counsel for clients with the same interest without waiving the privilege.
See, e.g., United States v. Gonzalez, 669 F.3d 974, 978 (9th Cir. 2012); In re
Grand Jury Subpoenas, 902 F.2d 244, 249 (4th Cir. 1990); Castle v.
Sangamo Weston, Inc., 744 F.2d 1464, 1466 (11th Cir. 1984); Am. Tel. & Tel.
Co., 642 F.2d at 1299. We take this opportunity to adopt the common
interest rule as an exception to waiver of the work-product privilege.
For the common interest rule to apply, the "transferor and
transferee [must] anticipate litigation against a common adversary on the
same issue or issues" and "have strong common interests in sharing the
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fruit of the trial preparation efforts." Am. Tel. & Tel. Co., 642 F.2d at 1299.
The rule is not narrowly limited to co-parties. Id. In addition, a written
agreement is not required, and common interest "may be implied from
conduct and situation, such as attorneys exchanging confidential
communications from clients who are or potentially may be codefendants or
have common interests in litigation." Gonzalez, 669 F.3d at 979. However,
waiver of the privilege is "usually found when the material is disclosed to
an adversary." Wynn Resorts, 133 Nev., Adv. Op. 52, 399 P.3d at 349. As a
result, disclosure to third parties will waive the privilege "when 'it has
substantially increased the opportunities for potential adversaries to obtain
the information." Id. (quoting 8 Charles A. Wright, Arthur R. Miller &
Richard L. Marcus, Federal Practice and Procedure §2024, at 532 (3d ed.
2010).
Here, the record demonstrates that petitioner and the
intervening plaintiffs, whose actions were consolidated, were all
shareholders of Reading and asserted derivative claims against real parties
in interest. The intervening plaintiffs have never filed claims against
petitioner in this case. It is also unlikely that the intervening plaintiffs
would disclose the work-product material to the real parties in interest
given that petitioner and the intervening plaintiffs filed similar claims
against the real parties in interest. Thus, we conclude that petitioner and
the intervening plaintiffs anticipated litigation against a common
adversary—real parties in interest—on similar issues concerning breaches
of fiduciary duty, and they shared a sufficiently strong common interest in
litigation as a matter of law.
As a result, we conclude that the district court erred in ruling
that petitioner must disclose the emails based on finding an insufficient
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showing of common interest between him and the intervening plaintiffs.
Accordingly, we grant petitioner's writ of prohibition and direct the clerk of
this court to issue a writ instructing the district court to refrain from
compelling disclosure of the emails until it reviews the emails in camera to
evaluate whether they contain impressions, conclusions, opinions, and legal
theories of counsel, as required pursuant to the work-product privilege.
, C.J.
Douglas
We concur:
, J.
Cherry
J.
CLA-A a VCJ.
4)
Parraguirre
AleLit-J2 J.
Stiglich
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