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Raymond v. Spirit Aerosystems Holdings, Inc.

United States District Court, D. Kansas

June 30, 2017

DONETTA RAYMOND, et al., Plaintiffs,
v.
SPIRIT AEROSYSTEMS HOLDINGS, INC., and SPIRIT AEROSYSTEMS, INC., Defendants.

          MEMORANDUM AND ORDER

          GWYNNE E. BIRZER UNITED STATES MAGISTRATE JUDGE

         This matter is before the Court on Defendants' Motion for Protective Order and Sanctions (ECF No. 172). On March 22, 2017, the Court convened an in-person hearing to address the pending motion. Plaintiffs appeared through counsel, Randall K. Rathbun and Diane S. King. Defendants appeared through counsel, James M. Armstrong and Boyd A. Byers. After consideration of both the arguments of counsel and the parties' briefing, Defendants' Motion (ECF No. 172) is GRANTED in part and DENIED in part for the reasons outlined below.

         I. Background [1]

         A. Nature of Suit

         In July and August, 2013, defendant Spirit AeroSystems (“Spirit”)[2] conducted a “reduction in force” (“RIF”) which terminated the employment of the named Plaintiffs[3]and more than two hundred other workers (Compl., ECF No. 1, at 5). The workers were all members of the Society of Professional Engineering Employees in Aerospace (“SPEEA”), a labor union. Plaintiffs claim the RIF eliminated a disproportionate number of Defendants' older employees. Defendants allege Plaintiffs and others like them were discharged, and not considered for rehire, for lawful reasons-primarily their poor performance.

         Plaintiffs filed this collective action in July 2016, claiming Defendants wrongfully terminated their employment and/or later failed to consider them for new job openings because of their age and, in some cases, the older employees' (or family members') medical conditions and related medical expenses. In addition to the collective action claims under the Age Discrimination in Employment Act[4] (“ADEA”), some Plaintiffs also assert individual ADEA claims, while other Plaintiffs claim their termination violated the Americans with Disabilities Act[5] (“ADA”) and/or the Family and Medical Leave Act[6] (“FMLA”).

         B. Procedural Posture

         The unique posture of this case was discussed in a recent order (ECF No. 202, Feb. 22, 2017) and will not be repeated to the extent addressed therein. Highly summarized, this case is progressing on a phased discovery plan, and the initial phase- focused on the validity of releases signed by Plaintiffs at termination-is underway. After the first phase issues are resolved through dispositive motions, as anticipated by the parties, the case will progress to a second phase of discovery, to focus on Plaintiffs' wrongful termination claims.

         Prior to commencing discovery, the Court held an in-person scheduling conference on October 19, 2016, to address the parties' phased discovery proposal. During that conference, Plaintiffs' counsel revealed to the Court they possessed certain proprietary, confidential, and/or privileged information belonging to Defendants, which had been delivered to counsel from an anonymous source. Plaintiffs asked the Court to review the documents in camera to determine whether the information is, in fact, privileged. Defendants reported their intent to pursue sanctions against Plaintiffs for their failure to notify opposing counsel when they initially received the documents. The Court instructed the parties to fully brief the issues, leading to the instant motion.

         II. Defendants' Motion for Protective Order and Sanctions (ECF No. 172)

         A. Factual Background

         1. History between the Parties and Counsel

         To illustrate the familiarity that most of these parties and counsel have with one another, a brief review of the parties' relationship is prudent. As noted above, Plaintiffs were SPEEA-represented, salaried employees selected for layoff in July and August 2013. Throughout the short history of this litigation, Plaintiffs have been represented by four groups of counsel: 1) Diane King and Kimberly Jones, of King & Greisen, LLP in Denver, Colorado and admitted here pro hac vice; 2) Thomas Buescher and M. Jeanette Fedele, of Buescher, Kelman, Perera & Turner, P.C., in Denver, and previously admitted pro hac vice but recently withdrawn;[7] 3) Daniel Kohrman, Dara Smith, and Laurie McCann of the AARP Foundation Litigation group in Washington, D.C., also admitted pro hac vice; and 4) local counsel, Randy Rathbun, of Depew Gillen Rathbun & McInteer, LC. Defendants are represented by counsel from the local law firm of Foulston Siefkin LLP (“Foulston”), including Boyd Byers, Charles McClellan, James Armstrong, Teresa Shulda, and Trisha Thelen.

         Although this is the first case in which Ms. King and Ms. Jones have appeared in this Court, and the first Spirit case in which the AARP lawyers have appeared, SPEEA and Spirit have been engaged in litigation in this District multiple times over the past several years.[8] Mr. Buescher and Ms. Fedele were involved in other cases on behalf of SPEEA, [9] while members of the Foulston firm have appeared on behalf of Spirit and its predecessor, Boeing Wichita, in numerous other matters.[10] Not only are these parties no strangers to litigation, but many of the counsel are familiar with one another and the parties they regularly represent, and they are regarded as experienced counsel.

         2. Before Receipt of the Documents

         In 2012-13, Spirit and SPEEA were involved in litigation[11] regarding Spirit's performance improvement process-the procedure through which Spirit addresses employee performance, including coaching, discipline, and termination of employees who do not meet performance standards.[12] As a result of the 2012 litigation, and reportedly in anticipation of future litigation, Spirit decided to revamp its employee performance evaluation process. In late 2012, it engaged the Foulston firm, specifically Mr. Byers, to provide advice to its Human Resources (“HR”) department on the performance improvement initiative.[13] Spirit continued to work on the initiative from approximately October 2012 to March 2013.[14] During that time period, Spirit's HR team created presentations and other documents for review and critique by its legal advisors. The information originating from the group initiative was treated as confidential, with much of it considered attorney-client privileged and attorney work product, and was accessible to only a few high-level HR personnel, in-house Spirit counsel, and Mr. Byers.[15]

         Following this initiative, in March 2013 Spirit terminated dozens of employees alleging they failed to meet performance expectations. Spirit contends the March 2013 terminations were unrelated to the July/August 2013 layoffs that form the basis of this action.[16] In March 2014, after the July/August 2013 layoffs, SPEEA and the King and Buescher law firms held a press conference to announce they would be filing charges of discrimination with the Equal Employment Opportunity Commission against Spirit.

         3.Initial Receipt of Documents

         In the spring of 2014, Ms. King and Ms. Jones made multiple trips to Wichita to interview potential plaintiffs and witnesses in their investigation of possible legal claims against Spirit.[17] During the investigation, Plaintiffs' counsel received reports of what witnesses considered unusual secrecy surrounding Spirit's performance review and layoff process in the months leading up to the July 2013 terminations.[18] Witnesses told Ms. King and Ms. Jones that members of HR were shredding documents and instructing managers to destroy documents related to the performance improvement initiative.[19]

         During a late March 2014 trip to Wichita, Bob Brewer, SPEEA's Midwest Director at the time, gave Ms. King, in Ms. Jones' presence, a packet of documents which he revealed had been delivered to the SPEEA office anonymously through a mail slot on or near the SPEEA office entrance.[20] The package of documents included the following note, handwritten on lined pink paper:[21]

         (Image Omitted)

         The original note was apparently misplaced at some unknown point between Mr. Brewer's transfer of the documents to Ms. King, and their eventual disclosure to Defendants. The copy of this note, produced by the parties, appears to have a redaction in the lower-right corner. Defendants suggest a signature was covered.[22] Despite the appearance of redaction, Ms. King affirms that, although the original note was misplaced, the copy is an exact replica of the original.[23] Mr. Brewer testified he gave the original, unaltered note to Ms. King; the copy is a complete and accurate copy of the original note; and the original did not contain a name or other indication of the identity of its author.[24]

         Mr. Brewer also testified he spent approximately 30 minutes reviewing the anonymously-received documents, but recognized they were confidential Spirit HR-related documents.[25] He decided to give the documents to Ms. King, because she would know what to do with them.[26] Mr. Brewer told Ms. King something to the effect that the documents might be helpful to her.[27]

         On review of the documents later that day, Ms. King realized some pages were marked with a “privileged” stamp, and she immediately ceased document review.[28]When she returned to her Denver law firm, she gave the packet of documents to her paralegal, Dianne Von Behren, and instructed her to look at the documents only for the purpose of separating any documents marked “privileged, ” and sealing those in a separate envelope.[29] Ms. King states prior to the privileged-marked documents being separately sealed, neither she nor Ms. Von Behren, nor other Plaintiffs' counsel, read or reviewed the contents of those documents, [30] nor did they contact Spirit's counsel to notify them of the receipt of the documents. Ms. Von Behren contends she did not read the substance of the documents, and is not involved in substantive drafting, legal research, or interviewing of witnesses in this case, but is generally involved with file maintenance.[31]

         The same day, Ms. King asked one of her law partners to research the Kansas Rules of Professional Conduct, along with relevant Kansas and Tenth Circuit caselaw, regarding the proper procedure for handling privileged documents intentionally produced by a third party prior to litigation.[32] The partner found no authority governing these specific facts, and Ms. King decided to retain the documents for three reasons: 1) to seek in camera review by the Court once a lawsuit was filed; 2) out of concern that relevant information was being destroyed by Spirit; and 3) because she did not review the privilege-marked documents and kept them sealed, she believed Spirit could suffer no harm.[33] On April 10, 2014, to avoid Spirit's potential destruction of information, Ms. King mailed a letter to Spirit, asking it to place a litigation hold on information related to the termination of employees in July 2013.[34] Ms. King's letter failed to alert Spirit's counsel to the documents she received.

         4. Second Set of Documents

         On approximately May 14, 2014, several weeks after receipt of the initial set of documents, a second set arrived by U.S. mail to Ms. King's law firm, addressed to Ms. King and Ms. Jones from an unknown source.[35] When Ms. King opened the envelope and saw it contained Spirit documents, she discontinued her review, and again gave the envelope to her paralegal, Ms. Von Behren, to separate those documents displaying a “privileged” marking.[36] As with the initial set of documents, Ms. King states neither she nor other counsel reviewed any documents marked privileged, and no copies were made of the privileged-marked documents.[37] Plaintiffs' counsel still failed to convey to counsel for Spirit the receipt of either set of documents.

         5. Nature of the Documents

All the anonymously-delivered documents can be grouped into two primary categories: 1) those specifically marked by Spirit as “privileged”, which were maintained in sealed envelopes by Ms. King following their receipt; and 2) those not privileged-marked by Spirit, a majority of which were marked “SPIRIT CONFIDENTIAL” and/or “Spirit Proprietary.” For the purposes of this order, the documents will generally be referred to as either “privilege-marked” or “non-privileged” (or confidential/proprietary), although in this context, these labels describe the physical markings on the documents themselves, not the documents' legal characterization as either privileged or not.[38]

         The non-privileged documents primarily contain copies of presentation slides from what Spirit describes as “a series of internal HR presentations and tracking sheets, ” developed by or at the direction of counsel, regarding the performance improvement initiative in 2012-13.[39] The non-privileged documents also include a calendar from December 2012 displaying appointments and tasks, and a task list for an eight-day period in late March 2013.[40] The documents, as produced by Plaintiffs to Spirit and to the Court for in camera review, lack a coherent order. Confusingly, it appears some documents marked “privileged” may be part, or even duplicates, of other documents not privilege-marked.

         6. After Receipt of Documents

         Ms. King and Ms. Jones swore they set aside the privilege-marked documents. But they reviewed the non-privileged ones in order to determine whether they appeared protected, and concluded they were neither privileged-from a legal standpoint-nor otherwise protected.[41] Plaintiffs' counsel admits they “understood, of course, that Defendants considered the documents to be confidential.”[42] Plaintiffs drew attention to one of the anonymously-produced documents, not privilege-marked, which plainly outlined Spirit's strict document retention and non-disclosure policy.[43] Later, during counsel's email correspondence, Mr. Byers confirmed, “information pertaining to Spirit's business or its employees . . . that is not generally known outside the organization (other than known only through improper means) is considered confidential.”[44] Despite her general awareness of Spirit's practices regarding confidentiality, Ms. King did not consider such a claim of confidentiality to prohibit review of the non-privileged information.[45]

         Ms. King states the documents she reviewed corroborated much of the information she learned from prior witness interviews.[46] And, she reviewed and considered the documents, believing them to be non-privileged, in both her pre-suit investigation and her preparation of the Complaint in this case.[47] Ms. King denies use of the information in Plaintiffs' administrative charges, but she acknowledges there are three references to information gained from the anonymously-received documents in the 92-page Complaint.[48]

         More than two years later, in July 2016, when preparing to file this lawsuit, Ms. King sought ethics advice regarding the handling of the documents from two initial sources: 1) from Colorado attorney Alexander Rothrock;[49] and 2) from local Kansas counsel, Mr. Rathbun. In her initial telephone contact with Mr. Rothrock, he forwarded to her a Pennsylvania federal court opinion, Burt Hill, Inc. v. Hassan, [50] and an Oregon state ethics opinion[51] he felt “may be useful.”[52] He also provided her with names of Kansas counsel experienced in ethics issues-none of which were available at that time. In a later telephone call with Ms. King, Mr. Rothrock distinguished the Burt Hill opinion from the facts of this case, and opined the applicable ethics rules do not set out a specific protocol to follow when counsel receives documents from an anonymous third party.[53]

         When Ms. King consulted local counsel, Mr. Rathbun, he recommended two local attorneys for ethical opinions, and also suggested she contact the Kansas Office of the Disciplinary Administrator for guidance.[54] Acting on Mr. Rathbun's advice, on July 13 and 15, 2016, Ms. King consulted a Wichita, Kansas attorney with experience in ethics concerns: Terry Mann, of Martin, Pringle, Oliver, Wallace and Bauer, LLP. Ms. Mann researched Kansas authorities, and later opined there was no clear guidance from those authorities on how best to handle unsolicited documents, intentionally provided by an anonymous source, prior to litigation.[55]

         On July 15, 2016, Ms. King discussed the situation with Deputy Disciplinary Administrator Kimberly Knoll by telephone. At that time, Ms. Knoll advised Ms. King to raise the issue of the privilege-marked documents with opposing counsel at the parties' Rule 26(f) planning conference, and to bring the issue to the Court's attention at the first Scheduling Conference.[56] Ms. Knoll also indicated the documents marked “confidential” were not a matter for attorney regulation.[57]

         Both Ms. Mann and Ms. Knoll recommended Ms. King seek the Court's in camera review of the privileged-marked documents to determine whether they are, in fact, privileged, and Ms. King contends none of the ethics advisors she contacted recommended she immediately notify Spirit or counsel of the documents, or immediately return them.[58]

         Plaintiffs filed their Complaint in this Court on July 11, 2016-more than two years after Ms. King received the first set of anonymous documents, and days before Ms. King contacted either Ms. Mann or Ms. Knoll. Surprisingly, and despite their legal experience, counsel justifies this behavior by advising the Court that none of the ethics opinions sought recommended earlier notification. Following the filing of the case, the privilege-marked documents remained sealed, and Ms. King (and all Plaintiffs' counsel) continued to maintain secrecy from Spirit surrounding the anonymous third-party disclosure.

         On September 20, 2016, Plaintiffs served their first set of written discovery on Spirit.[59] Spirit contends much of those requests mysteriously focused on its performance improvement initiative in late 2012 through early 2013, and its termination of employees in March 2013, despite the fact that the earlier terminations-which are not the subject of this lawsuit-focused on different employee groups and utilized different performance criteria.[60]

         Spirit outlines four separate telephone conversations and two email exchanges between counsel in August 2016, after Ms. King's conversations with Ms. Mann and Ms. Knoll, during which Ms. King-while having full knowledge-failed to inform opposing counsel about her anonymous receipt of Spirit's documents.[61] Ms. King admits counsel conferred on multiple occasions in advance of the first Court-led conference, but contends the first truly substantive telephone call between opposing counsel was held on October 12, 2016-six days prior to the scheduled in-person status conference with the Court.[62] It was during that telephone call when Ms. King disclosed the existence of the anonymously-received documents, her handling of them, and her intent to seek the Court's guidance and review at the upcoming conference.

         Ms. King's office then provided defense counsel with copies of the documents without privilege markings, and, through a third-party copy service, provided sealed envelopes to Spirit counsel containing duplicates of the privilege-marked documents.[63]The parties exchanged emails regarding specifics of the documents' disclosure and the extent of their dissemination and review. Ms. King also spoke with Mr. Brewer to confirm he neither knew the source of the documents nor made modifications to the pink note. Ms. King also searched Mr. Brewer's office to verify SPEEA did not maintain any copy of the documents, [64] and she verified none of the named Plaintiffs in this case were involved in disclosure of the documents.[65]

         Following the in-person status conference on October 19, 2016, and discussion with the Court, Defendant filed its motion for protective order and sanctions. Plaintiffs produced all anonymously-received documents to the Court for in camera inspection. After thorough consideration of the parties' briefs and oral arguments, the Court is now prepared to rule.

         B. Duty to Confer

         As a threshold matter, the Court first considers whether the parties have sufficiently conferred regarding this motion, as generally required by D. Kan. Rule 37.2 and Fed.R.Civ.P. 37(a)(1). Throughout the briefing, and during the in-person hearing, the parties demonstrated their multiple attempts to resolve their differences on these issues. Despite their unsuccessful efforts at resolution, the Court is satisfied they have adequately conferred as required.

         C. Arguments of the Parties

         Defendants contend Plaintiffs' counsel violated their obligation to notify them, or Defendants' counsel, when they received the clearly confidential and privileged documents. Defendants ask that, as a sanction for Plaintiffs' failure to notify and the surreptitious retention and use of the documents, the Court should require the return of the documents and exclude them from use in this litigation. Defendants also seek payment of their attorneys' fees for litigating the issue. Defendants rely both on ethical duty and on protections under Fed.R.Civ.P. 26 for privileged and work product-protected information to seek return and exclusion of the documents.

         Plaintiffs insist they acted under the guide of ethics advice, and they maintain a “cease review and notify” standard for intentionally-produced documents does not exist in the applicable law. And, because no such standard exists in this jurisdiction, they argue there is no basis for sanctions. Plaintiffs further contend they presented the issue to the Court at the earliest opportunity, kept the privilege-marked information under seal without review in order to protect the information, and therefore Defendants cannot be prejudiced by their retention of the documents. They claim Defendants blur the necessary line between “confidential” and “privileged” documents in an effort to inappropriately protect information which is merely confidential, but discoverable, and wrongly characterize many of the documents as privileged, when in fact, they are not.

         D. Analysis

         Defendants' Motion for Protective Order and Sanctions presents three primary issues for the Court's consideration: 1) whether Plaintiffs' lawyers were obligated, by ethical rule, caselaw, or otherwise, to notify Spirit they had anonymously received confidential or privileged documents, and/or refrain from using them; 2) if Plaintiffs' lawyers were obligated to notify and/or cease use of any of the documents, what would be an appropriate remedy or sanctions for their failure to do so; and 3) if use of any of the documents is allowed, whether the documents Plaintiffs' counsel received are protected under Fed.R.Civ.P. 26 by attorney-client privilege and/or the work product doctrine. Each of these issues is addressed in turn.

         1. Obligations of Counsel upon Unsolicited Receipt of Confidential or Privileged Documents from an Anonymous Source

         The central issue before the Court is whether Plaintiffs' attorneys were obligated to notify Defendants that they had anonymously received the documents, and/or to refrain from using them. Both parties cite authorities which analyze both ethical rules and various courts' opinions in manners they believe to be persuasive to their arguments. This is a novel issue in this district (and for the time being, in this Circuit[66]), and the Court has carefully reviewed each authority. No one authority is entirely persuasive; but given the novelty of the issue, some of the relevant authorities are analogous and are briefly addressed.

         a. Rules of Professional Conduct

         While professionalism should be inherent in all aspects of litigation, the parties seem to believe-and unfortunately the Court agrees-the black-letter ethical rules fail to control this factual situation. But a review of the applicable Rules of Professional Conduct is an appropriate starting point. Although violation of an ethics rule does not necessarily require legal action-and conversely, sanctionable litigation conduct does not mandate an ethical finding-“most courts look to the ethics rules as evidence of standards of conduct”[67] when considering motions for sanctions and in other nondisciplinary contexts.[68] In doing so, courts recognize the importance of ethical standards to maintain the integrity of, and public confidence in, the legal profession.[69]

         i. Kansas Ethical Rules

         Pursuant to D. Kan. Rule 83.6.1(a), the Kansas Rules of Professional Conduct (“KRPC”) as adopted by the Supreme Court of Kansas are “the applicable standards of professional conduct” for proceedings in federal courts in the District of Kansas.[70] The Kansas Supreme Court has also adopted the comments accompanying the rules.[71] The primary rule which appears somewhat applicable to this situation is KRPC 4.4, addressing “Transaction[s] with Persons Other Than Clients; Respect for Rights of Third Persons.” The rule provides:

(a) In representing a client, a lawyer shall not use . . . methods of obtaining evidence that violate the legal rights of such a person.
(b) A lawyer who receives a document or electronically stored information relating to the representation of the lawyer's client and knows or reasonably should know that the document or electronically stored information was inadvertently sent shall promptly notify the sender.

         Comment [2] to KRPC 4.4 defines the phrase “inadvertently sent” as an accidental transmission, “such as when an email or letter is misaddressed or a document or electronically stored information is accidentally included with information that was intentionally transmitted.” The Comment goes on to instruct,

If a lawyer knows or reasonably should know that such a document or electronically stored information was sent inadvertently, then this Rule requires the lawyer to promptly notify the sender in order to permit that person to take protective measures. Whether the lawyer is required to take additional steps, such as returning the document or electronically stored information, is a matter of law beyond the scope of these Rules, as is the question of whether the privileged status of a document or electronically stored information has been waived. Similarly, this Rule does not address the legal duties of a lawyer who receives a document or electronically stored information that the lawyer knows or reasonably should know may have been inappropriately obtained by the sending person.

         KRPC 4.4, and its accompanying comments, focus specifically on information received as a result of an unintentional transmission-not, as in this case, the result of a very intentional, yet anonymous, delivery. The Kansas ethical rules do not address a lawyer's duty to notify in an intentional disclosure situation.

         Interestingly, a recent edition of an “Ethics Refresher” email guidance issued by the Kansas Office of the Disciplinary Administrator posed a hypothetical question related to KRPC 4.4 to the members of its listserv.[72] The factual scenario involved a husband and wife embroiled in a divorce case scheduled for trial. Prior to trial, Wife accessed Husband's email account without his permission, and obtained information about trial strategy contained in an email from Husband's counsel. Wife gave the email to her own counsel and told him how she obtained it. Wife's counsel used the information to prepare for trial, and did not disclose his receipt of the email until the middle of trial. The Kansas Disciplinary office posed to its listserv members the question of whether Wife's counsel violated the Kansas Rules of Professional Conduct. In this guidance, the Disciplinary Office said “yes, ” Wife's counsel did violate KRPC 4.4 by failing to promptly notify opposing counsel of his receipt of the email. As authority for its conclusion, the disciplinary office cited a 2016 Missouri Supreme Court opinion[73] addressing very similar facts, and a May 2017 Ethics CLE presentation by a Kansas Court of Appeals Judge.[74] Although this guidance is by no means a formal or definitive opinion by either the Disciplinary Administrator or any Kansas court, and it dealt only with attorney-client privileged material, it does suggest Kansas might lean toward extension of KRPC 4.4 to, at a minimum, require notification of opposing counsel in an intentional disclosure situation, even if the rules themselves do not address the return or use of the information.

         ii. ABA Model Rules and Opinions

         Finding minimal guidance from the Kansas ethics rules, the Court examines the model rules. The American Bar Association's Model Rule of Professional Conduct 4.4 is identical to KRPC 4.4, and has been examined in ABA ethics opinions. One such opinion was issued in 1994, prior to the 2002 amendments to the Model Rules addressing inadvertent delivery. In ABA Formal Opinion 94-382, the ABA Ethics Committee required a lawyer who receives an adverse party's confidential-looking materials from an unauthorized source to refrain from reviewing materials “which are probably privileged or confidential;” notify the opposing party, and either follow the opposing party's instruction or cease review until a ruling is obtained by the court.[75] However, after the adoption of Model Rule 4.4(b) in 2002, specifically addressing inadvertent disclosure, ABA Formal Opinion 94-382 was withdrawn and replaced by ABA Formal Opinion 06-440.

         In ABA Formal Opinion 06-440, the Committee noted the 1994 opinion “was influenced by principles involving the protection of confidentiality, the inviolability of the attorney-client privilege, the law governing bailments and missent property, and general considerations of common sense, reciprocity, and professional courtesy.”[76]However, the Opinion conceded that “application of other law is beyond the scope of the Rules” and although those principles are “part of the broader perspective that may guide a lawyer's conduct, ” they are “not an appropriate basis for a formal opinion . . . for which [the Committee] must look to the Rules themselves.”[77] The Opinion goes on to clarify, “if the providing of the materials is not the result of the sender's inadvertence, Rule 4.4(b) does not apply” and “[w]hether a lawyer may be required to take any action in such an event is a matter of law beyond the scope of Rule 4.4(b).”[78]

         In the Annotations to Model Rule 4.4, the Committee acknowledges the lack of consistency among various jurisdictions in Rule 4.4's adoption and application.[79] The Annotations contain a reasoned discussion of the opposing views of the treatment of inadvertent disclosure as either similar, or distinct from, the unauthorized receipt of documents. Despite the various approaches, the Committee acknowledges the rule “tempers the zeal with which a lawyer is permitted to represent a client”[80] but articulates that the scope of the rules, as written, do not reach unauthorized receipt.

         Formal Opinion 06-440 and the comments to Model Rule 4.4 specifically note, “Rule 4.4(b) addresses receipt of documents sent inadvertently; it does not address the receipt of documents sent intentionally but from an unauthorized source.”[81] Both ABA sources acknowledge that a lawyer's receipt of materials sent intentionally but from an unauthorized source is a “matter of law beyond the scope of Rule 4.4(b).” A later ABA ethics opinion continues this train of thought. In ABA Formal Opinion 11-460, the Committee found the ethics rules do not independently impose an ethical duty to notify opposing counsel of the receipt of private, potentially privileged communications between an opposing party and its counsel.[82] However, the opinion acknowledges even if the rules do not impose an obligation on counsel, additional obligations may stem from a court's supervisory authority, or civil procedure rules governing discovery.[83]

         Despite the lack of clarity and direction from both the Kansas ethics rules and ABA Model Rules and opinions, the Court draws one important conclusion: although the black-letter rules do not specifically govern the situation currently before this Court, these rules do not end the Court's inquiry.[84]

         iii. Pillars of Professionalism

         The District of Kansas also looks to another source for guidance on the types of behavior expected of counsel. Most Scheduling Orders issued in this District (including the Phase I Scheduling Order in this case, ECF No. 153) include the following directive:

This court, like the Kansas Supreme Court, has formally adopted the Kansas Bar Association's Pillars of Professionalism (2012) as aspirational goals to guide lawyers in their pursuit of civility, professionalism, and service to the public. Counsel are expected to familiarize themselves with the Pillars of Professionalism and conduct themselves accordingly when litigating cases in this court.[85]

         Formally adopted in 2012, [86] the Pillars of Professionalism outline counsel's obligations to other lawyers, the Court, and the public. These guidelines note:

Professionalism focuses on actions and attitudes. A professional lawyer behaves with civility, respect, fairness, learning and integrity toward clients, as an officer of the legal system, and as a public citizen with special responsibilities for the quality of justice.
Admission to practice law in Kansas carries with it not only the ethical requirements found in the Kansas Rules of Professional Conduct, but also a duty of professionalism. . . . Kansas lawyers have a duty to perform their work professionally by behaving in a manner that reflects the best legal traditions, with civility, courtesy, and consideration. Acting in such a manner helps lawyers preserve the public trust that lawyers guard and protect the role of justice in our society. . . .[87]

         Although the Pillars are not law, the Court expects counsel to reflect these tenets in all aspects of litigation.

         b. Illustrative Caselaw

         Even if Plaintiff's counsel did not technically violate a written ethical rule, the Court must examine other law to determine whether other ethical standards apply. Neither the parties nor the Court's research unearthed binding opinions from the Tenth Circuit or this district; likewise, a review of caselaw from the Kansas state courts reveal nothing. The parties cited a number of opinions, though, from other jurisdictions which offer some guidance.

         When Ms. King reached out for ethics opinions in July 2016, Mr. Rothrock provided her a 2010 unreported opinion from the Western District of Pennsylvania- Burt Hill, Inc. v. Hassan.[88] In Burt Hill, the defendants obtained plaintiff's privileged and confidential documents on two occasions prior to litigation: first, from an anonymous source in an envelope left outside defendants' office; and later, in an envelope left anonymously at one defendant's residence. The court found the defendants' professed lack of knowledge surrounding the source suspicious, and criticized “defense counsel's failure to provide more specific information.”[89] The court reviewed both Pennsylvania Rule of Conduct 4.4(b) and ABA Model Rule 4.4(b), and concluded neither rule addressed a situation where documents were sent intentionally but from an unauthorized source, and the law is not static where this issue is concerned.[90]However, the court noted “cases addressing unauthorized disclosures are decidedly unfavorable to defendants” and the receipt of “‘anonymous source' documents would raise ‘red flags' for any reasonable attorney” under those circumstances.[91] Although Mr. Rothrock, when advising Ms. King, distinguished the Burt Hill opinion because it relied, in part, on withdrawn ABA opinions and outdated or distinguishable caselaw, this Court still finds its analysis illuminating. As the Burt Hill court aptly noted, “if something appears too good to be true, it probably is, ”[92] and if counsel is concerned to the point of hiring an ethics expert-let alone contacting multiple advisors-chances are, counsel may be best served to err on the side of caution. The Burt Hill court concluded sanctions were warranted, under its inherent sanctioning power, but declined to disqualify defendants' attorneys because counsel acted in reliance on ethical opinions, and disqualification would cause significant prejudice to defendants.[93] But the court determined that “firm sanctions [were] necessary to discourage similar conduct in the future.”[94] The court ordered defendants to return or destroy all documents received through the two anonymous sources, and prohibited the documents' use for the remainder of the litigation.[95]

         Also in 2010, the Northern District of Illinois addressed a similar situation. Chamberlain Grp., Inc. v. Lear Corp., [96] was a patent case where the plaintiff patent holders brought a lawsuit against their competitor. After one plaintiff, JCI, received confidential and privileged documents by email from defendant Lear's former employee, the court found JCI did not have any part in soliciting the documents, but it did breach its duty to timely disclose its receipt of the documents. Although the disclosure occurred during discovery, and the court noted JCI's duty to timely produce the documents under an outstanding document request, the court also addressed the issue in the terms of ethical duty. Discussing ABA Formal Opinion 06-440 and Model Rule 4.4(b), the court “failed to see why [the duty to disclose an inadvertent receipt under ethics rule 4.4] should cease where confidential documents are sent intentionally and without permission. If anything, the duty to disclose should be stricter when a party obtains the documents outside legitimate discovery procedures.”[97] The court went on to find “even in the absence of privilege, this duty to disclose extends to receipt of proprietary or confidential documents.”[98] Finding sanctions appropriate, Lear's former employee was barred from testifying, and JCI was barred from further contact with him. JCI was also prohibited from using the documents at issue, aside from those produced through legitimate discovery methods, and ordered to pay Lear's attorneys' fees expended in pursuing its motion for sanctions.[99]

         Although Burt Hill and Chamberlain extended the duty to notify to an intentional disclosure situation, in 2011, the Western District of Wisconsin disagreed when addressing a similar issue. In the context of determining appropriate class representatives when deciding a motion for class certification, the court in Chesemore v. Alliance Holdings, Inc. was faced with plaintiffs' possession of defendants' confidential documents.[100] Before plaintiffs filed the class action lawsuit, at least one plaintiff encouraged other employees of defendants to disclose confidential documents to plaintiffs' counsel. Even if plaintiffs' counsel was unaware of how the documents were being gathered, defendants argued, at minimum, they knew the documents were confidential and failed to notify defendants of their receipt.[101] The Chesemore court reviewed the Burt Hill case, but found it relied on withdrawn ABA Opinions, rather than the newest ABA Formal Opinion 06-440.[102] Additionally, the court found Burt Hill relied on cases involving privileged documents, not confidential or proprietary information. Although the court noted “[t]here may be policy reasons for sanctioning a lawyer who fails to notify a third party of improperly-obtained documents given to counsel without permission, ” it did not analyze those policy reasons because the defendants did not argue them, and the court determined “the ABA's revision of its position on this matter weighs against” looking outside the rules.[103] The court found the receipt of non-privileged, confidential documents without authorization to be unethical or sanctionable “only . . . if counsel directed others to obtain those documents and release them without authorization.”[104]

         But this Court finds Chesemore distinguishable on multiple bases. First, unlike counsel in Chesemore, here the parties do articulate policy arguments. Also, this Court respectfully disagrees with Chesemore's interpretation of ABA Formal Op. 06-440, because the Opinion clearly-along with the comment to the Model Rules-warns lawyers that the black-letter rules must not end their inquiry into ethical standards of attorney conduct. Rather, the Committee simply acknowledged it was unable to do more than analyze the Model Rules in its formal opinions, which does not limit the court's ability to address other law or policy. None of the documents in Chesemore appeared to be either attorney-client or work-product privileged, and it is unclear how long plaintiffs' counsel retained the documents before producing them in discovery.

         This Court finds the actions of counsel particularly compelling in a 2014 opinion from the Northern District of California. In Brado v. Vocera Commc'ns, Inc., [105] a former employee of defendant provided internal Vocera documents to an investigator for plaintiff's counsel, during plaintiff's fact investigation prior to the lawsuit. Upon receipt, the investigator suspected the documents might contain attorney-client privileged information. Plaintiff's counsel sequestered the documents without reviewing them, and immediately hired separate counsel to hold the documents and notify the opposing party. Neither plaintiffs nor their counsel ever reviewed any of the documents, and promptly sent a copy of the documents to the defendant for review. Defendant sought to bar use of the documents until produced pursuant to formal discovery.[106] The Brado court examined a number of previous cases and applied several factors to determine whether exclusion of the documents would be appropriate.[107] Finding no inappropriate conduct on behalf of plaintiffs' counsel, in addition to weighing other factors, the court permitted plaintiffs to use the documents, subject to a protective order and claims of privilege.[108]

         A 2016 case from the District of Utah, now on appeal to the Tenth Circuit, compared the actions of counsel in Brado to the facts before it. In Xyngular Corp. v. Schenkel, [109] the district court addressed the situation where the defendant collected confidential information, and encouraged another employee to collect information, regarding plaintiffs' business activities and employees. The collection of information occurred for at least a year prior to the parties' litigation. Although there was some disagreement about when plaintiffs discovered the extent of defendant's document gathering, the issue came to the court during a hearing on plaintiffs' motion for temporary restraining order. Plaintiffs later filed a motion for sanctions, including dismissal of defendant's counterclaims, claiming defendant improperly encouraged an employee to steal documents, shared them with his counsel, failed to return them, and used them to support his request for a restraining order. Defendant filed his own motion for terminating sanctions on other bases. The court cited its inherent powers to sanction litigation misconduct.[110] After considerable analysis, the court found that defendant engaged in sanctionable conduct and that terminating sanctions were warranted. The court concluded “it may use its inherent powers to sanction a party who circumvents the discovery process and the rules of engagement employed by the federal courts by improperly obtaining evidence before litigation and then attempting to use that evidence in litigation.”[111] The court also drew attention to defendant's inaction: both his failure to decline the information offered by the employee, and his lack of “complete or meaningful disclosure” of this document gathering until after the lawsuit began.[112] The court criticized defendant for circumventing the judicial process, noting “[i]t was also inappropriate for the [defendant] and his lawyers to unilaterally decide whether the documents were proprietary, confidential, or privileged, where ‘those decisions are best resolved through the formal discovery process.'”[113] The court dismissed defendant's counterclaim; excluded the improperly-obtained documents (except those which plaintiffs themselves utilized); and awarded plaintiffs their attorneys' fees and costs expended in filing and defending the sanctions motions.[114]

         In addition to the above decisions from federal district courts, two state court opinions also offer direction. In Merits Incentives, LLC, the Nevada Supreme Court in 2011 pronounced a new “notification rule” to “apply to situations where an attorney receives documents or evidence from an anonymous source or from a third party unrelated to the litigation.”[115] In Merits, plaintiffs received an anonymous package containing a disk, after filing its lawsuit. The disk contained over 500 confidential and privileged documents belonging to the defendant. Although plaintiff supplemented its pretrial disclosures by identifying and providing a copy of the disk, defendant sought disqualification of plaintiff's counsel.[116] The district court found, in part, that plaintiff's counsel acted reasonably by promptly notifying opposing counsel, and declined to disqualify counsel under those circumstances.[117] Defendant then petitioned the Nevada Supreme Court for mandamus, asking the court to either compel the district court to reconsider, or instruct the district court to disqualify counsel. Although the high court declined to overturn the district court's decision, it did “take [the] opportunity to adopt a notification requirement” by analogizing to Nevada Rule of Professional Conduct 4.4(b)-the rule requiring notification when receiving documents inadvertently.[118] The court also adopted a nonexhaustive list of factors to consider when deciding whether to disqualify an attorney who, through no wrongdoing of his or her own, received an opponent's privileged materials.[119]

         More recently, in 2016 the Missouri Supreme Court addressed a party's procurement and use of the opposing party's privileged information. In re Eisenstein[120]was a disciplinary proceeding before the Missouri Supreme Court arising from a divorce case. In the divorce action, attorney Joel Eisenstein represented the husband. Without the knowledge or permission of his wife, Husband accessed her personal email and obtained not only her pay records but attorney-client communications between Wife and her counsel, including a list of direct examinations questions in preparation for trial. Husband delivered the information to Eisenstein in November 2013, and Eisenstein did not notify opposing counsel of the information until the second day of the divorce trial, three months later. The Disciplinary Hearing Panel found that Eisenstein utilized the payroll information in a settlement proceeding prior to trial, and understood his possession of that information and the attorney-client communications was prohibited.[121]The Missouri Supreme Court found Eisenstein violated Missouri Rule of Professional Responsibility 4-4.4(a), which prohibits a lawyer from using methods of obtaining evidence that violate the legal rights of a third party, as well as Rule 4-8.4(c), prohibiting conduct involving dishonesty. The court found “Mr. Eisenstein's failure to promptly disclose his receipt of the information and return it to [opposing counsel] until after the trial had commenced supports a finding that Mr. Eisenstein utilized Husband's improper acquisition of Wife's personal information, including privileged attorney client communications.”[122] The court also found Mr. Eisenstein violated MRPR 4-3.4(a) by concealing his possession of Wife's payroll information and opposing counsel's direct examination questions until the second day of trial.[123]

         Discussion of the cases above is by no means intended to be exhaustive of the numbers of jurisdictions addressing intentional and/or unauthorized disclosures of sensitive or privileged information outside the confines of formal discovery. Although several jurisdictions addressed variations of the topic, there appears to be no binding authority within either this District or the Tenth Circuit. The parties disagree regarding which of the above cases, and others, are appropriate bases for analysis, but given the lack of binding authority, this Court looks to these other cases as simply illustrative of the broader perspective.

         c. Expectations for Counsel

         To determine the standards of conduct expected from counsel in this District, this Court looks to analogous ethical standards, persuasive caselaw, and its own inherent powers to sanction conduct of parties and counsel appearing before it. These inherent powers of the Court are not governed by any specific rule or statute, [124] but are “necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.”[125]And it bears repeating that counsel's violation of an ethical standard does not necessarily require legal action-and conversely, sanctionable litigation conduct does not mandate an ethical finding. However, it is well within this Court's power to expect a level of professionalism and ultimate fairness from counsel appearing in U.S. District Court for the District of Kansas.

         At the outset, it is important to note, and the Court acknowledges, Plaintiffs' counsel did not take part in obtaining the information at issue-both sets of documents were received anonymously. The circumstances surrounding the note attached to the first packet of documents, which appears redacted, are highly suspicious, but the Court has no information before it to conclude any named Plaintiff was involved in the disclosure of the documents, so the Court will not assume as much. Therefore, the central issue before the Court is counsel's receipt, retention, and use of an opposing party's confidential and privileged-marked information from an unknown source, without notifying the opposing party or counsel for more than two years.

         Again, although the Kansas Rules of Professional Conduct do not specifically address this situation, the Court finds it entirely appropriate to analogize to KRPC 4.4(b). If a lawyer receives information relating to the representation of his or her client, and knows or even reasonably should know the information was unintentionally sent by either the opposing party or its lawyer-the rule requires the lawyer to “promptly notify” the sender. The purpose behind this rule is to permit the accidental sender-assumed to be the proper custodian of the documents-to take protective measures.[126] Regardless of the omission in the rule, the Court frankly finds it nonsensical to apply a separate and lesser standard to intentionally-disclosed documents. In fact, given the documents' dubious origins, protections applied to Defendants' proprietary or privileged-marked information should be at least equal, if not heightened, when the disclosure is clearly unauthorized.[127]

         The Eisenstein case involved a party's own direct, unauthorized access of privileged information. But when the Missouri court, and later the Kansas Disciplinary Office in its Ethics Refresher, analyzed the issues involved, both specifically focused on the conduct of counsel after receiving the information.[128] The Missouri court noted, “[t]he fact that [the party] obtained the information does not negate the fact that [counsel] received the information, realized it was ‘verboten, ' and then failed to disclose his receipt of that information” until after he utilized it at trial.[129] Likewise, most troubling to this Court is not the receipt of the documents themselves, but the long period of retention and use prior to notification of Defendants.

         Instead of “lying in wait”[130] with the documents, even if Plaintiffs' counsel was not required by black-letter ethical rule to notify Defendants, obligations of decency, fundamental fairness, and frankly the golden rule, [131] should have prompted counsel to notify Defendants in order to avoid problems later. The ethical rules make clear the rules themselves should not end counsel's inquiry, and simply because the rules may not specifically address the situation before counsel does not mean counsel should “throw up their hands and conclude that nothing can or should be done to protect or ameliorate the document owner's privilege and confidentiality interests.”[132] In other words, just because you are not required by some written regulation to act in a certain manner does not mean you should not.

         Although the Court recognizes counsel's efforts to segregate those documents specifically marked “privileged, ” doing so does not remove the taint from the situation. Permitting counsel's paralegal to separate the documents is tantamount to counsel doing so, herself.[133] The best practice would have been to notify opposing counsel immediately, and seek outside counsel or an escrow agent, of sorts, to maintain the documents until the Court was able to examine the issue. Compare counsel's actions in this case to that of plaintiffs' counsel in Brado (discussed above).[134] There, the documents were immediately sequestered and sent to outside retained counsel prior to plaintiffs' counsel reviewing them. The outside law firm facilitated notice to defendants, permitting them to assert their claims of confidentiality and privilege.[135] Such a process eliminates any appearance of wrongdoing, and would mostly likely have preserved the documents' use in later discovery and avoided sanctionable conduct.

         But the method in which Plaintiffs' counsel, in this case, handled the disclosure sidesteps the orderly discovery process, and inappropriately permitted Plaintiffs' counsel to be the ultimate gatekeeper-for over two years-of Defendants' claims of confidentiality and privilege.[136] It was not Plaintiffs' prerogative to unilaterally determine whether the information received anonymously was truly proprietary, confidential, privileged, or some combination of those labels, and use the information it deemed appropriate. “Rather, those decisions are best resolved through the formal discovery process.”[137]

         Not only is the Court troubled by counsel's failure to immediately notify opposing counsel, but it is also concerned regarding the considerable length of retention-more than two years-and the use of the information for Plaintiff's benefit. Regardless of whether Plaintiffs' ultimate plan was to submit the documents to the Court at a later date, the timing of the ultimate notification gives the Court pause. Counsel did not immediately, upon the filing of the case, alert Defendants or the Court regarding this potential issue. Although they kept the privilege-marked documents sealed, they failed to notify Defendants until after reviewing and utilizing the alleged proprietary information in, at a minimum, Plaintiffs' pleadings and discovery requests. Given the longstanding history between SPEEA and Spirit, even if not through these particular named plaintiffs, Plaintiffs' counsel was well aware of the identities of Spirit's counsel, and disclosure would not have created a burden to Plaintiffs or their counsel. Instead-having been alerted to the documents' existence-Plaintiffs would surely have sought them through appropriate channels of discovery. Although Plaintiffs' counsel had the noblest of intentions to eventually disclose the documents, the disclosure simply came too late.

         Plaintiffs' concerns regarding potential evidence destruction are understandable, because witnesses informed counsel Defendants were destroying documents. But the “potential destruction of documents does not entitle a party to circumvent the court rules and engage in self-help.”[138] And, even if Defendants' alleged “discovery failures should be considered in connection with [Plaintiffs'] dubious ethical conduct, the Court views the latter as far more problematical and disconcerting than the former.”[139] Plaintiffs' counsel should have allowed the discovery process to work, rather than assuming it would be unavailing and taking matters into their own hands.

         Plaintiffs' counsel also maintains they acted on the advice of ethics experts. However, although counsel researched ethics rules when receiving the documents, a majority of the caselaw discussed above existed prior to that date, and a review of existing caselaw-even if non-binding-should have given counsel pause. Moreover, counsel did not seek additional, more thorough ethics advice until two years later, when preparing to file their lawsuit. Unlike in Burt Hill, where counsel's reliance on outside ethics opinions was a mitigating factor, counsel here did not rely upon ethics experts during the two years they reviewed and utilized the information. And, quite frankly, the Court is seriously baffled that out of all the legal minds which reviewed these facts, not one appeared to put themselves in the shoes of the opposing counsel or Defendants.

         On the facts before this Court, there appears to be no reason to distinguish between those documents marked privileged and those which are merely marked confidential or proprietary. KRPC 4.4 does not distinguish between privileged or confidential materials, but relates to information merely “relating to the representation of the lawyer's client” that a receiving lawyer “knows or reasonably should know were inadvertently sent.”[140] Likewise, here, receiving counsel knew both that the documents related to representation of their clients, and knew-from the markings on the documents themselves and from their prior dealings with Spirit-that the documents were not intended for disclosure outside Defendants' business. Therefore, the Court finds Plaintiffs' counsel had a duty to, at minimum, immediately notify Defendants of the disclosure, regardless of its intentional nature.

         2. Sanctions

         Defendants seek a range of sanctions for Plaintiffs' counsel's failure to notify. To be clear: the Court does not specifically rely upon the written rules of the KRPC or ABA, the ethical opinions of the ABA, or any specific caselaw as binding precedent. What the Court examines here are the standards expected of its parties and counsel, to act with “civility, courtesy, and consideration, ”[141] in order to maintain fairness and the public's confidence in both the legal profession and the legal process.[142] Both caselaw and ethics opinions discussing an attorney's unauthorized receipt of an adverse party's information focus on two primary interests: ...


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