ENTERGY ARKANSAS, INC., et al., Appellants v. Ronnie FRANCIS, et al., Appellees

Entergy also included a more extensive affidavit from attorney Tim Matthews, which, unlike the earlier affidavit, distinguished the attorney-led root-cause evaluation of the stator-lift accident from more routine root-cause investigations ... done by facility personnel regarding relatively minor events. Mr. Matthews also averred that the post-accident root-cause evaluation was not done in the ordinary course of business because counsel, as opposed to other Entergy personnel, chose its methodologies and investigative techniques. There is no indication that the circuit court reconsidered its discovery order, at Entergys request or otherwise, in light of the new information in Mr. Matthewss second affidavit.

On appeal, Entergy first contends that the circuit court abused its discretion by relying only on lawyers argument, rather than evidence, to order disclosure of the root-cause evaluations, which, according to Entergy, is not sufficient. Second, Entergy asserts that Francis had no procedural right to seek production of the root-cause evaluations because he was not a discovering party entitled to production. Entergy raises two additional subpoints within this argument, including that Bigge was not entitled to production of the reports because Bigge failed to meet and confer with Entergy before filing its motion to compel, as required by Ark. R. Civ. P. 37(a)(2). Entergy further asserts that Francis and Bigge are not entitled, in any event, to production of the second root-cause evaluation because they failed to provide any notice prior to the hearing on February 28, 2017, that they would seek production of that document. Finally, Entergy contends that the circuit court abused its discretion because the root-cause evaluations are work product and Francis has not shown a substantial need that defeats the privilege.

III. Standard of Review

A circuit court has broad discretion in matters pertaining to discovery, and the exercise of that discretion will not be reversed on appeal absent an abuse of discretion that is prejudicial to the appealing party. Gerber Prods. Co. v. CECO Concrete Constr. , 2017 Ark. App. 568, at 6, 533 S.W.3d 139, 143. To have abused that discretion, the circuit court must have not only made an error in its decision, but also must have acted improvidently, thoughtlessly, or without due consideration. Id. The abuse-of-discretion standard is also applied to a circuit courts ruling on a protective order. See id.

IV. Discussion

A. The Basis of the Circuit Courts Ruling

Mr. OKeefes deposition testimony is at the heart of this issue. During the hearing that was held on February 28, 2017, Franciss counsel read excerpts from the deposition to support his argument that the root-cause evaluations were created in the ordinary course of business, rather than in anticipation of litigation. Entergy now claims that the circuit court erred by allowing Francis to use the deposition in that manner because he did not make the showing required by Ark. R. Civ. P. 32(a)(3)(A)-(E) (2017). Entergy further argues that Francis did not introduce the deposition-or any other exhibit-into evidence; therefore, the circuit court erroneously relied solely on the arguments of counsel when it found that the work-product rule did not apply to the root-cause evaluations. We decline to consider this issue because Entergy failed to preserve it for appellate review.

This court will not consider arguments raised for the first time on appeal. See Parkerson v. Brown , 2013 Ark. App. 718, at 5, 430 S.W.3d 864, 870. Entergy did not argue below, as it does now, that Francis failed to comply with the requirements of Ark. R. Civ. P. 32, before using Mr. OKeefes deposition at the hearing or that only the statements of counsel supported the argument that the work-product rule did not apply to the root-cause evaluations. Accordingly, we must decline to consider these arguments because Entergy makes them for the first time on appeal.

B. Franciss and Bigges Rights to Seek Production of the Reports

Entergy next argues that the circuit courts order should be reversed because Francis did not have standing to compel production of the root-cause evaluations. Specifically, Entergy contends that Francis did not separately propound interrogatories and requests for production to Entergy and was not a discovering party who had standing to file-or join-a motion to compel under Ark. R. Civ. P. 37(a)(2). Entergy also challenges Bigges right to compel production of the documents, alleging that Bigge failed to confer with Entergy, as also required by Rule 37(a)(2), before filing its motion to compel on December 18, 2014. Finally, Entergy asserts that the circuit court erred by ordering production of the second root-cause evaluation because Entergy did not have fair notice before the hearing that Francis and Bigge would seek its production.

Entergys argument about Franciss right to seek production of the root-cause evaluations is well taken. Francis never served Entergy with interrogatories or requests for production formally seeking the root-cause evaluations, and in the absence of making his own requests for discovery from Entergy, he lacked standing to join Bigges motion to compel. See Ark. R. Civ. P. 37(a)(2) (providing that only the discovering party may move for an order compelling discovery). Accordingly, we reverse the order of the circuit court to the extent that it orders Entergy to produce the root-cause evaluations to Francis.

Entergy is mistaken, however, that the circuit courts order to produce the documents to Bigge was an abuse of discretion because Bigge failed to confer with Entergy prior to filing its motion to compel. As an initial matter, the argument ignores that this is an appeal from the circuit courts order denying Entergys motion for an order of protection pursuant to Ark. R. Civ. P. 26(c) (2017), which required Entergy, and not Bigge, to state that it in good faith conferred or attempted to confer with other affected parties. Id. Additionally, the record demonstrates that Entergy waived the argument, which first appeared in its response to Bigges motion to compel, because it later met with Bigge and other parties regarding the items requested in the interrogatories and requests for production and provided its supplemental responses to the discovery in October 2016.

Finally, we decline to reach the merits of Entergys argument that it was denied fair notice that Francis and Bigge were going to request the second root-cause evaluation at the February 28, 2017, hearing. Quite simply, Entergy failed to preserve the argument for appellate review by raising it in the circuit court. See Parkerson , 2013 Ark. App. 718, at 5, 430 S.W.3d at 870. In any event, Entergy cannot credibly claim that it was unaware that the second root-cause evaluation was inextricably linked to the first, or that the second report, which was issued in December 2014, was outside the scope of the discovery that Bigge requested in Interrogatory No. 21 or Request for Production No. 9. Accordingly, we affirm.

C. The Work-Product Privilege

Entergy next contends that the circuit court abused its discretion by finding that the two root-cause evaluations did not qualify for the work-product privilege because they were created in the ordinary course of business. Specifically, Entergy asserts that, while its own policy required the root-cause evaluations, they had a far different character than those it performs in the ordinary course of business. Unlike more routine root-cause evaluations, those at issue here followed a severe accident that was certain to engender litigation; they were performed with the involvement of counsel; and they required a much more complex level of investigation. Entergy therefore contends that the two root-cause evaluations are opinion work product that warrant protection from disclosure even upon another partys showing of substantial need.

We hold that the circuit court did not abuse its discretion by finding that work-product protection did not apply to the two root-cause evaluations. The work product doctrine was designed to prevent unwarranted inquiries into the files and mental impressions of an attorney. Simon v. G.D. Searle & Co. , 816 F.2d 397, 400 (8th Cir. 1987) (quoting Hickman v. Taylor , 329 U.S. 495, 510, 67 S.Ct. 385, 91 L.Ed. 451 (1947) ). Ordinary work product, including raw data collected in the course of litigation and included in an attorneys file, Shook v. Loves Travel Stops & Country Stores, Inc. , 2017 Ark. App. 666, at 9, 536 S.W.3d 635, 640, is subject to qualified protection and is discoverable only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of his case and that he is unable without undue hardship to obtain the substantial equivalent of the materials by other means. Ark. R. Civ. P. 26(b)(3). Opinion work product, consisting of the mental impressions, conclusions, opinions, and or legal theories of an attorney or other representative of a party concerning the litigation, Ark. R. Civ. P. 26(b)(3), is subject to almost absolute protection. Regardless of the type of work product at issue, however, the threshold question governing application of the doctrine is whether the contested documents were prepared in anticipation of litigation. Shook , 2017 Ark. App. 666, at 9, 536 S.W.3d at 640.

The mere possibility that litigation may result is not sufficient to trigger the protection of the work-product doctrine. Id. Rather, the test is whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation. Id. at 10, 536 S.W.3d at 640. There is no work-product protection for documents prepared in the ordinary course of business. Id.

It is undisputed that Entergy would have performed the root-cause evaluations even in the absence of litigation, as required by its own policy and by the Nuclear Regulatory Commission. It argues, however, that the reports of those evaluations should nonetheless be protected as work product because the scale of the root-cause evaluations that followed the stator-lift accident were unlike those that are created in the ordinary course of business for more minor events. According to Entergy, the stator-lift root-cause evaluations were larger and more complex, were overseen by counsel, and were conducted when litigation was certain to occur. Entergy therefore argues that the circuit court abused its discretion by ordering it to produce the root-cause evaluations.

We must reject this argument. The party asserting work-product privilege has the burden of proving its application, see Shook , 2017 Ark. App. 666, at 9, 536 S.W.3d at 640, and Entergy failed to timely offer the evidence that, in its view, establishes that the root-cause evaluations following the stator-drop incident were prepared outside the ordinary course of business. As an initial matter, there is no unredacted version of the first report in the record to allow the circuit court-or this court-to evaluate that claim, and there is no version of the second report-redacted or otherwise-in the record at all. Further, as indicated above, Entergy submitted two substantially different affidavits from Entergys outside counsel, Timothy Matthews. The first affidavit did little more than establish that counsel was involved in the first root-cause evaluation that was otherwise performed in the ordinary course of business. The second affidavit went to greater lengths to distinguish both root-cause evaluations from those that are more routine, but it was not presented in a format that allowed the circuit court to consider it. Indeed, Entergy submitted the second affidavit in a reply to Franciss response to Entergys motion for protective order only after the circuit court entered its order denying the motion. Entergy did not request reconsideration of the discovery order based on the new information in the second affidavit. Therefore, Entergy cannot use the second affidavit now to demonstrate that the circuit court acted improvidently, thoughtlessly, or without due consideration, Gerber , 2017 Ark. App. 568, at 6, 533 S.W.3d at 139, when it ordered production of the root-cause evaluations. Because there was no abuse of discretion, we affirm the circuit courts order requiring production of the root-cause evaluations to Bigge.

V. Conclusion

Because we find that Entergy failed to meet its burden of proving that it created the root-cause evaluations in a form that was different from those it creates in the ordinary course of business, we hold that the circuit court did not abuse its discretion when it ordered Entergy to produce those documents to Bigge. The circuit courts order, therefore, is affirmed as it pertains to Entergys production of the root-cause evaluations to Bigge. We further hold, however, that the circuit court abused its discretion when it ordered Entergy to produce the root-cause evaluations to Francis, who did not propound discovery seeking those documents. Accordingly, the circuit courts order is reversed to the extent that it orders Entergy to produce the root-cause evaluations to Francis.

Affirmed in part and reversed in part.

Whiteaker, J., agrees.

Hixson, J., concurs.

Entergy now appears to have abandoned its initial claim that the reports are also covered by the attorney-client privilege.

As indicated above, Bigge argued-and the circuit court ruled-that Entergy waived the work-product privilege for the first root-cause evaluation by disclosing its conclusions in its publication, The Navigator. We decline to reach the waiver issue, however, because we find that Entergy has failed to meet its burden of proving that the work-product privilege applies to the root-cause evaluations.

Kenneth S. Hixson, Judge, concurring.

I concur with the majority that we must affirm in part and reverse in part. First, I agree with the majoritys analysis that we must reverse the circuit courts order compelling Entergy to produce the two root-cause evaluation reports to Mr. Francis. Mr. Francis never served Entergy with any interrogatories or requests for production to formally seek the reports and therefore lacked standing to join Bigges motion to compel. See Ark. R. Civ. P. 37(a)(2) (2017).

I must further agree with the majority that Entergys argument that Bigge failed to comply with Arkansas Rule of Civil Procedure 26(c) is without merit and that Entergy failed to preserve its arguments regarding the evidence considered by the circuit court and that it was denied fair notice that the second root-cause evaluation report was also at issue.

Additionally, I agree that we must affirm the circuit courts order that compelled Entergy to disclose the root-cause evaluation reports to Bigge under these particular facts. However, I write this concurrence to further clarify my reasons for doing so. In this case, we are confronted with dual-purpose documents, i.e., the root-cause evaluation reports. One purpose of the documents was that the reports were prepared in anticipation of litigation. The second purpose of the documents was that the reports were prepared in the ordinary course of business in that the reports were required by the U.S. Nuclear Regulatory Commission (NRC) and Entergys own internal policies. Hence, we have dual-purpose documents, and the issue is whether these dual-purpose documents can be afforded protection under the attorney-work-product doctrine. It appears that neither Arkansas nor the Eighth Circuit has addressed the specific issues herein. However, the United States District Courts in Louisiana, Mississippi, Arizona, and Utah and the Ninth Circuit Court of Appeals have addressed similar issues, and those opinions contain pertinent insight.

There appears to be at least two somewhat different approaches to determine whether the attorney-work-product doctrine applies in a dual-purpose document case. The first approach is often referred to as the primary motivating purpose approach, and the second approach is often referred to as the because of approach. The affidavit filed by Entergys attorney, Timothy Matthews, makes it clear that the two root-cause reports prepared by Entergy had dual purposes. First, the root-cause reports were ostensibly prepared in anticipation of litigation. Entergy received a demand letter from a plaintiffs attorney only four days after the accident. The affidavit also makes it clear that the root-cause reports were prepared because the NRC and its own internal policies and procedures required Entergy to prepare the root-cause reports to prevent future similar events.

The primary motivating purpose approach is adequately described in Galvan v. Miss. Power Co. , No. 1:10CV159-KS-MTP, 2012 WL 5873633 (S.D. Miss. Nov. 20, 2012). Mississippi Power Company (MPC) prepared a root-cause analysis to establish the facts and observations of an unidentified event. Id. In responding to a request for production of documents, MPC stated that a root-cause analysis existed, which was conducted at the behest of MPCs attorneys; however, MPC declined to deliver the analysis, citing the attorney-work-product doctrine. Id. The district court ultimately denied the motion for protective order by MPC and ordered the root-cause analysis to be delivered to Galvan. Id. The district court explained its reasoning as follows:

[T]he work-product doctrine does not apply to documents prepared in the ordinary course of business. In order for a document to be protected by the work-product doctrine, litigation need not be necessarily imminent ... as long as the primary motivating purpose behind the creation of the document was to aid in possible litigation.

Galvan , 2012 WL 5873633, at *2 (internal citations omitted and emphasis added). The Galvan court then stated that [b]ased on the limited information provided by MPC, the court is unable to determine whether the root cause analysis, or any other document withheld solely on the basis of work-product, was prepared primarily in anticipation of litigation or whether such documents were prepared in the ordinary course of business, and would have been prepared whether litigation was anticipated or not. Id.

The following excerpt from Galvan is of particular importance to this concurrence and to dual-purpose root-cause analysis cases:

In making this finding, the court in no way concludes that root cause analysis reports or conclusions are never protected by the work-product doctrine or the attorney-client privilege; in many cases they are protected from disclosure.... However, in this instance, based on the record before the court, MPC has failed to meet its burden of establishing that the root cause analysis should be protected from disclosure.

Id. at *2 (internal citations omitted).

This approach was also used by the U.S. District Court in Utah in Chevron Pipe Line Company v. Pacificorp , No. 2:12-CV-287-TC-BCW, 2016 WL 10520301 (D. Utah Feb. 22, 2016). The following excerpt from Chevron is pertinent:

Here, the Court has no doubt that the Draft Report was created with potential litigation in mind. However, the Court is not persuaded that litigation was a primary motivating purpose of this document. This is true in light of the very strong evidence RMP has presented with regard to environmental regulations Chevron had to comply with and Chevrons overarching concerns at the time the spill occurred. Namely, Chevron had legitimate business purposes for the creation of the Draft Report. Chevron was rightly concerned about determining the cause of the spill in order to prevent further leakage and prevent future events from occurring. In addition, upon review, despite the alleged purposes contained in the Legal Charter, the Draft Report contains no language that suggests a particular litigation strategy nor due to the collaborative manner in which this document was created, is it clear if any of its conclusions are explicitly made by counsel or are included solely for counsel to form a litigation strategy.

Id. at *4 (emphasis in original).

Louisiana has also used the primary motivating purpose approach in the dual-purpose-document arena. In Chevron Midstream Pipelines LLC v. Settoon Towing LLC , No. 13-CV-2809, 2015 WL 65357 (E.D. La. Jan. 5, 2015), the district court recognized the following:

The Fifth Circuit has described the standard for determining whether a document has been prepared in anticipation of litigation as follows:

It is admittedly difficult to reduce to a neat general formula the relationship between preparation of a document and possible litigation necessary to trigger the protection of the work product doctrine. We conclude that litigation need not necessarily be imminent, as some courts have suggested, as long as the primary motivating purpose behind the creation of the document was to aid in possible future litigation.

If the document would have been created regardless of whether litigation was also expected to ensue, the document is deemed to be created in the ordinary course of business and not in anticipation of litigation. ... As one court has observed:

Following any industrial accident, it can be expected that designated personnel will conduct investigations, not only out of a concern for future litigation, but also to prevent reoccurrences, to improve safety and efficiency in the facility, and to respond to regulatory obligations. Determining the driving force behind the preparation of each requested document is therefore required in resolving a work product immunity question.

Id. at *6-7 (internal citations omitted).

The second approach to determine whether a dual-purpose document may be protected by the attorney-work-product doctrine is sometimes referred to as the because of test. This approach was adequately discussed in United States v. Richey , 632 F.3d 559, 567-68 (9th Cir. 2011) as follows:

In circumstances where a document serves a dual purpose, that is, where it was not prepared exclusively for litigation, then the because of test is used. Dual purpose documents are deemed prepared because of litigation if in light of the nature of the document and the factual situation in the particular case, the document can be fairly said to have been prepared or obtained because of the prospect of litigation. In applying the because of standard, courts must consider the totality of the circumstances and determine whether the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of litigation.

(Internal citations omitted.)

That brings me to my conclusion. Regardless of whether the trial court utilizes the primary motivating purpose approach or the because of approach, Entergy failed to sustain its burden of proving an entitlement to the attorney-work-product doctrine. Here, the record indicates that the first root-cause report was heavily redacted, rendering appellate review meaningless. The second root-cause report was not introduced into evidence, thereby preventing any appellate review. Therefore, the only evidence in the record regarding the primary motivating purpose of the reports or whether the reports were in substantially similar form but for the prospect of litigation, is the affidavit of Entergy attorney, Timothy Matthews. Matthewss affidavit is sufficient to show that the reports were created for the dual purpose of preparation in anticipation of litigation and in the regular course of Entergys business; but the affidavit does not contain sufficient evidence to sustain Entergys burden of proving that the primary motivating purpose of the root-cause reports was in preparation of litigation or that the reports were in substantially similar form but for the prospect of litigation. Although the affidavit includes language explaining that the report was prepared in anticipation of litigation, it also states that the NRC-recognized methodologies were used to implement additional corrective actions to prevent the recurrence of an accident such as the one in the case at hand. Further, Entergys counsel at the hearing conceded that these two reports would have been produced regardless of the anticipation of litigation. Therefore, borrowing from the rationale in Galvan , Chevron , and Richey , and based on our standard of review, I would conclude the trial court did not err in finding that the root-cause reports are not subject to the attorney-work-product doctrine and should be delivered to separate appellee Bigge because Entergy failed to sustain its burden of proof. Having said that, I would repeat the admonition in Galvan , where the Galvan court stated: [T]he court in no way concludes that root cause analysis reports or conclusions are never protected by the work-product doctrine or the attorney-client privilege; in many cases they are protected from disclosure. Galvan , 2012 WL 5873633, at *2.