Gerald Pevey v. Bay Cities Container Corporation , 2023 Ark. App. 176 ( 2023 )

Cite as 2023 Ark. App. 176ARKANSAS COURT OF APPEALS
DIVISION IV
No. CV-21-371
Opinion Delivered March 29, 2023
GERALD PEVEY
APPEAL FROM THE BENTON
APPELLANT
COUNTY CIRCUIT COURT
[NO. 04CV-19-2135]
V.
HONORABLE DOUG SCHRANTZ,
BAY CITIES CONTAINER JUDGE
CORPORATION
APPELLEE AFFIRMED
CINDY GRACE THYER, Judge
Gerald Pevey has filed this interlocutory appeal pursuant to Rule 2(f) of the Arkansas
Rules of Appellate Procedure–Civil from the Benton County Circuit Court’s order requiring
him to respond to the discovery requests of Bay Cities Container Corporation despite his
claims of privilege and work product.1 Because the circuit court did not abuse its discretion,
we affirm.
1
Rule 2(f)(1) provides that the Arkansas Supreme Court “may, in its discretion, permit
an appeal from an order denying a motion for a protective order pursuant to Rule of Civil
Procedure 26(c), an order pursuant to Rule of Civil Procedure 37 compelling production of
discovery, or an order denying a motion to quash production of materials pursuant to Rule
45 when the defense to production is any privilege recognized by Arkansas law or the
opinion-work-product protection.” On September 9, 2021, the Arkansas Supreme Court
granted the request to file an interlocutory appeal.
While the issues in this case may be straightforward, the underlying dispute between
the parties is fairly complex and has been ongoing for almost four years necessitating a
somewhat lengthy recitation of the facts. Bay Cities Container Corporation (Bay Cities) is a
business based in Bentonville, Arkansas, that focuses on retail-packaging and display-design
services for its clients. As part of its business, Bay Cities receives confidential business
information from its clients. In order to safeguard such information, Bay Cities requires its
employees to agree to and abide by its written policies respecting confidential information.
Gerald Pevey was employed by Bay Cities from July 2014 until March 2019. As part
of his employment, Pevey signed (1) a confidentiality and nonsolicitation agreement and (2)
a trade-secret and confidential-company-information acknowledgement.2 The confidentiality
and nonsolicitation agreements prohibited him from soliciting Bay Cities’ customers or
employees for one year upon the termination of his employment with Bay Cities. It also
prohibited him from removing any confidential information or company property from Bay
Cities’ premises without express written permission; and it required that he promptly return
any confidential information or any other property in his possession upon termination of
the employment relationship. The trade-secret acknowledgment prohibited Pevey from
duplicating, replicating, or communicating any confidential information or trade secrets
without prior written permission and provided a laundry list of items it deemed to be
“confidential and proprietary trade secrets.”
2
Pevey signed two separate versions of these agreements during his employment, once
in 2014 and again in 2017.
2
Pevey left his employment with Bay Cities in March 2019 and immediately began
work for Bay Cities’ competitor, Vanguard Packaging (Vanguard). On March 25, 2019, Bay
Cities’ counsel sent Pevey a cease-and-desist letter claiming that Pevey had been contacting
Bay Cities’ customers on behalf of Vanguard. On April 3, 2019, counsel again sent a letter
to Pevey advising him that Bay Cities had evidence that he had retained certain property
containing proprietary and confidential information belonging to Bay Cities in violation of
his confidentiality agreement. Bay Cities demanded the immediate return of those items
listed in the letter as well as any hard copies of such information in his possession. Bay Cities
also demanded that Pevey completely delete all digital copies of the items and identify any
and all persons with whom he may have shared them. Finally, Bay Cities demanded that
Pevey make available to it any computers or data-storage devices once deletion had occurred
so that Bay Cities could confirm their deletion.
In response, Pevey’s counsel informed Bay Cities that Pevey had notified a handful
of his work contacts informing them of his departure from Bay Cities and his recent
employment with Vanguard but denied attempting to solicit any of Bay Cities’ customers or
clients. He further denied that any of his communications contained any confidential,
proprietary, or otherwise sensitive information related to Bay Cities.
As for the alleged confidential and/or proprietary information believed to be in his
possession, Pevey claimed that those items could possibly be located in emails associated with
his Gmail account and on two hard drives he had in his possession. Pevey asserted that the
emails had never been printed or shared in either hard-copy or electronic form with any
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third party. As for the two hard drives, one contained a “backup” of his work computer and
contained Bay Cities’ work-related information. He denied having accessed that hard drive
since his termination and claimed to have placed it in his counsel’s possession. Pevey also
claimed that he did not know what was contained on the other hard drive and was unsure
if it contained Bay Cities’ work-related information. He declared that he was willing to return
any of Bay Cities’ information that may be contained on either hard drive.
Thereafter, the parties entered into protracted negotiations into the timing, scope,
and breadth of the review of the search for Bay Cities’ information on Pevey’s accounts and
devices. Bay Cities identified multiple personal devices and accounts it wanted to inspect to
determine whether they contained Bay Cities’ information. In addition, Bay Cities claimed
that its inspection of Pevey’s work computer had indicated that data was transferred to the
three USB drives in the last three months.
Pevey objected to Bay Cities’ access to his personal information and photos as well as
information related to his work at Vanguard. He also objected to the inspections of some of
his personal accounts and further claimed he did not know where other devices identified
by Bay Cities—more specifically, three USB devices—were located.
On August 23, 2019, Bay Cities filed suit against Pevey alleging breach of contract
and violation of the Computer Fraud and Abuse Act and seeking a permanent injunction
and damages. Pevey answered, generally denying the allegations in the complaint.
Sometime thereafter, the parties began engaging in discovery. In June 2020, the
parties executed an agreed protective order that divided the protected electronic information
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into two categories: (1) confidential informatoin and (2) highly confidential—attorneys’ eyes
only (AEO) information; and established parameters surrounding the disclosure of each
type. It further provided that such information could not be disclosed to an expert witness
or consultant until the expert or consultant completed a certificate of acknowledgment
subjecting him or her to the jurisdiction of the court and agreeing to be bound by the
protective order.
As part of its discovery, Bay Cities propounded its first set of interrogatories and
requests for production. Pevey objected, in part, on the basis of attorney work product and
attorney-client privilege. This resulted in Bay Cities’ filing its first motion to compel.
The parties then drafted a protocol for the forensic imaging and analysis of the
computer-related equipment believed to contain Bay Cities’ electronic files. 3 The protocol
was designed to allow Technology Concepts & Design, Inc. (TCDI), to copy and complete a
forensic analysis of specified personal devices and accounts belonging to Pevey. As part of
the agreed protocol, TCDI would be allowed to analyze Pevey’s personal cell phone and
computing devices but would be prohibited from imaging his Vanguard email. Pevey further
agreed to provide TCDI with the login IDs, passwords, and other information necessary to
access certain identified accounts.
3
The parties seemingly settled their protocol issues at a March 2021 hearing; however,
Pevey later objected to the proposed draft submitted by Bay Cities. The court ultimately
overruled Pevey’s objections and entered the proposed order previously submitted by Bay
Cities in April 2021.
5
While the details of the protocol were being finalized, Bay Cities discovered that Pevey
had hired a forensic examiner to image and copy the devices that contained its confidential
information. On March 23, 2021, Bay Cities sent a letter expressing concerns regarding the
confidential designation of the imaged files from the devices, requesting information about
the imaging work, and seeking confirmation that counsel’s review of those items had been
conducted on an AEO basis. Bay Cities requested that Pevey fully describe the scope and
extent of the copying and review of the designated devices. Pevey did not respond. In a letter
dated March 31, Bay Cities specifically designated the copies of those devices as AEO and
requested confirmation that Pevey had complied with that designation. Counsel also
enclosed a second set of interrogatories and requests for production to determine how the
information was handled.
On April 12, 2021, Bay Cities filed a second motion to compel, claiming it had yet
to receive confirmation that Pevey was treating the information as AEO information and
that it had not been advised how the information had been handled or to whom it had been
disseminated. Pevey responded to the motion to compel, maintaining that the motion to
compel was unnecessary because the information was governed by the protocol order. He
also asserted that the bulk of the requested information was barred by the attorney-client
privilege, attorney work product, and the non-testifying-expert privilege.
In addition to his response to the motion to compel, Pevey filed a motion to strike,
or alternatively, a motion for a protective order. Pevey claimed that Bay Cities’ second set of
interrogatories and requests for production had sought information related to his attorneys’
6
legal strategies, including counsel’s work product and information regarding his
consultations with his non-testifying expert witness. In his motion, Pevey noted that Bay
Cities had agreed in an August 31, 2020 letter that it had no issue with him hiring his own
imaging company to conduct an additional independent review.
That same day, Pevey also filed an acknowledgment of AEO information under the
agreed protective order. In the acknowledgment, Pevey disputed Bay Cities’ right to
information that falls under the attorney-client privilege, the non-testifying-witness privilege,
and attorney work product.
In response to Pevey’s motion to strike, Bay Cities argued that the non-testifying-
expert privilege did not apply because exceptional circumstances required the production of
the requested information. Bay Cities claimed that the only way Bay Cities can determine
what information was disseminated by Pevey and to whom is by seeking this information
through discovery. Bay Cities also argued that the attorney-client privilege did not apply
because Bay Cities was not seeking confidential communications and because Pevey had
disclosed such information to Vanguard. Finally, Bay Cities argued that attorney-work-
product objection was inapplicable because the work-product designation only protects
documents created by or for counsel and does not protect the facts therein; nor does the
requested information threaten the mental impressions, conclusions, opinions, or legal
theories of Pevey’s attorney. It further argued that, even if the documents were deemed to be
work product, they were still discoverable because Bay Cities has a substantial need for the
7
materials, and it is unable to obtain the substantial equivalent of those materials without
undue hardship.
Pevey replied, arguing that the information sought had lost any commercial value, if
any such value ever existed; that experts were permitted under the protective order; that Bay
Cities’ counsel had agreed he could retain his own forensic expert, and he had done so; and
that destruction of information was addressed in the protective order. Finally, he denied that
he had provided any of the storage devices to Vanguard.
A hearing was held on the motions on May 27, 2021. Pevey’s counsel argued that the
protective order did not require any party to notify the other party when information has
been reviewed; nor did it require any party to designate who was reviewing it. In fact, Bay
Cities had even agreed that Pevey could hire his own expert. Pevey argued that it was
counsel’s responsibility to ensure that the protective order was followed, and that if anybody
had access to the information, they were required to sign the acknowledgement form
agreeing to abide by the terms of the protective order. Pevey’s non-testifying expert witness
had done so. Thus, Pevey claimed he had done everything he was required to do under the
protective order.
Counsel for Bay Cities stated that it only sought to determine why the material was
imaged, how it was imaged, who had access to the information, and where that information
was sent. Counsel agreed that if any of the documents were subject to the attorney-client
privilege, those could be withheld. Bay Cities noted that this information was reviewed and
disseminated prior to the AEO designation and before the protocol order was entered.
8
After reviewing the evidence and hearing the arguments of counsel, the court denied
Pevey’s motion to strike and granted Bay Cities’ motion to compel, but only to the extent
the information was not covered by attorney-client privilege. First, the court indicated that
because there had been so many conversations between the parties that the court was not
privy to, it was not going to assign any weight or credibility to the comments made in Bay
Cities’ August 31 letter regarding Pevey’s ability to hire his own expert. The court then stated
that it believed the information requested was limited to identifying who had access to the
electronic data and what data had been disseminated. The court noted that the information
in question belonged to Bay Cities and that it was entitled to know who had had access to
that information. With regard to the nontestifying expert, the court excepted
communications between counsel and the expert but ordered disclosure of the other items.
On June 18, 2021, Pevey requested that the court make factual findings and address
the factors set forth in Rule 26(f) of the Arkansas Rules of Civil Procedure. On July 21, the
court entered its written order denying Pevey’s motion to strike and granting Bay Cities’
motion to compel. The order set forth the following findings pursuant to Rule 26(f):
In accordance with Ark. R. Civ. P. 26(f), the Court finds that the information and
production sought by Bay Cities and as directed by the Court in the bullet points
above, are not privileged or subject to work product or other protections. The
compelled responses will not cause irreparable injury to Pevey as the information
requested is not protected from disclosure. The information sought by Bay Cities
specifically relates to the results of Pevey’s forensic imaging of materials that Pevey
admitted to copying and admitted to contain Bay Cities’ proprietary information.
Specifically, Bay Cities is entitled to obtain information on where the files are, who
has looked at them, when were they accessed, what files were copied, and how the
files were accessed. Therefore, the Court finds that the requests related to these copies
and the access to these copies—as limited by the Court’s specific rulings on each
9
Interrogatory and Request—do not seek privileged information or materials from
Pevey. Pevey’s conclusory and blanket claim of privilege regarding each of the
Discovery Requests is not well taken.
The next day, Pevey moved to vacate and amend the order, arguing that he had not
had the opportunity to comment or object to the provisions of the order before it was filed.
Pevey also requested a stay of the order compelling discovery pending appeal. Both motions
were denied.
On September 9, 2021, the supreme court granted Pevey’s petition for an
interlocutory appeal of the discovery issues. This appeal followed.
The appeal here involves Pevey’s objections to Bay Cities’ second set of discovery
requests. The challenged interrogatories, in essence, requested (1) the identities of those
persons or entities that had access to the devices and data at issue; (2) a complete list of all
electronic devices or data-storage units that have stored any of the imaged or transferred files;
(3) a complete list of all imaged files accessed or recovered; (3) the substance, type, and date
of any communication regarding the imaging or review conducted by Pevey or his counsel
and with whom such communication occurred; (4) a description of the files utilized or
accessed by Pevey and/or Vanguard; and (5) whether the review of the documents was
conducted on an AEO basis. The contested requests for production sought production of
copies of everything identified, relied on, and considered in preparing the answers to the
interrogatories; all imaged files recovered during forensic imaging by Pevey or his counsel;
any reports, opinions, summaries, correspondence, letters, emails, or other written
documents of any kind regarding any forensic imaging or accessing conducted by Pevey or
10
his counsel; and all items (including all storage devices) that Pevey identified as having stored
imaged or transferred files recovered during forensic imaging.
Pevey argues that the foregoing discovery seeks information covered by the non-
testifying-expert privilege, the attorney-client privilege, and the exceptions governing attorney
work product. We disagree and affirm.
I. Standard of Review
First, Pevey asks this court to utilize a de novo-review standard in analyzing his
arguments on appeal; however, our standard of review in discovery matters is well settled—
we employ an abuse-of-discretion standard. We have consistently held that a circuit court
has broad discretion in matters pertaining to discovery, and the exercise of that discretion
will not be reversed absent an abuse of discretion that is prejudicial to the appealing party.
Gonzales v. Cont’l Cas. Co., 2022 Ark. App. 501, 659 S.W.3d 277; Hardy v. Hardy, 2011 Ark.
82, 380 S.W.3d 354. This court has described abuse of discretion as a high threshold that
requires not only error but a ruling made improvidently, thoughtlessly, or without due
consideration. Gonzales, supra; Rhodes v. Kroger Co., 2019 Ark. 174, 575 S.W.3d 387. Thus,
the circuit court’s order compelling discovery in this case should not be overturned absent
an abuse of discretion.
II. Analysis
A. Non-Testifying-Expert Privilege
For Pevey’s first argument, he asserts a claim involving the non-testifying-expert
privilege. Pevey maintains that the information sought in the foregoing discovery includes
11
not only a detailed roadmap of the trial preparation performed by his non-testifying expert
but also the identity of his non-testifying expert. He asserts that Bay Cities is not entitled to
know either the identity of his non-testifying expert or the scope of his work.
Here, however, it is important to analyze the discovery requests in relation to the
specific facts of this case. The goal of discovery is to permit a litigant to obtain whatever
information he or she may need to prepare adequately for issues that may develop without
imposing an onerous burden on his adversary. Grand Valley Ridge, LLC v. Metro. Nat’l Bank,
2012 Ark. 121, 388 S.W.3d 24.
Pevey admittedly has in his possession confidential electronic information and data
that belongs exclusively and solely to Bay Cities. Bay Cities is entitled to know what
happened to that information while in Pevey’s possession. Bay Cities’ discovery requests are
designed to discover who had access to that information; to whom, if anyone, Pevey gave
that information; what information was accessed or disseminated, if any; and when that
information was accessed or disseminated, if at all. Thus, Bay Cities’ discovery requests are
specifically designed to illuminate those facts that go to the central issue in this case.
Rule 26(b)(4)(B) of the Arkansas Rules of Civil Procedure provides that a party may
discover facts known or opinions held by an expert who has been retained by another party
in anticipation of litigation or preparation for trial, and who is not expected to be called as
a witness at trial, only upon a showing of exceptional circumstances under which it is
impractical for that party to obtain the facts or opinions on the same subject by other means.
12
Only Pevey and his counsel know for sure what, if anything, and to whom Pevey had
disseminated Bay Cities’ information. Pevey and his counsel admittedly allowed a
nontestifying witness to access that information before the parties entered into an agreed
protective order. This is information and data exclusively under Pevey’s control. The court
allowed Bay Cities to obtain that information but expressly excluded any communications
between Pevey’s counsel and staff and the nontestifying expert. Clearly, the circuit court
exercised its discretion in such a manner as to provide Bay Cities with the necessary
information regarding the basic facts as to who had access to what information while also
preventing Bay Cities from obtaining the non-testifying expert’s analysis of such data. This
was not an abuse of discretion.
As for disclosure of the identity of the non-testifying expert, courts in some
jurisdictions have held that their versions of Rule 26(b)(4)(B) preclude discovery of the
identities of non-testifying experts unless discovery of their opinions and knowledge of facts
is also warranted. Other courts, however, have allowed discovery of experts’ identities
without a showing of exceptional circumstances. 2 David Newbern, John Watkins & D.P.
Marshall Jr., Arkansas Civil Practice & Procedure § 21:8 (5th ed. 2011). In this case, it appears
that exceptional circumstances exist; Bay Cities is entitled to know who has had access to its
confidential information.
B. Attorney-Client Privilege
Pevey next argues that the information requested in the second set of discovery is
protected from disclosure by the attorney-client privilege. He claims that the attorney-client
13
privilege extends to counsel’s communications with agents and experts who are retained by
counsel for the purpose of providing legal advice. Because the scope and size of the forensic
review as well as the production of information in this case is a “foreign language” to most
attorneys, he asserts that the nontestifying expert’s assistance was necessary for his attorney
to provide sound legal advice. As such, the work performed by his nontestifying expert
should fall within the attorney-client privilege.
Pevey fails to acknowledge, however, that the court excepted all communications
between Pevey’s counsel and his nontestifying expert; only the underlying facts regarding the
forensic imaging of the computer data was compelled—that is, which files were accessed,
where the files are, who looked at them, when they were accessed, and how they were
accessed. Thus, no attorney-client privileged communications are involved.
C. Attorney Work Product
For his last argument, Pevey seems to argue that the timing and identification of the
documents accessed by his counsel and his nontestifying expert constitute work product
entitled to protection from discovery. Bay Cities argues that the court found that it had a
substantial need for the documents in preparation for its case and that Rule 26(b)(3) of the
Arkansas Rules of Civil Procedure allows for the production of work-product information
“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.”
14
Here, the court specifically found the information requested by Bay Cities was not
obtainable through any other source. As stated before, Bay Cities is entitled to know the
who, what, when, where, and how these confidential documents were accessed. This
information is solely within Pevey’s control. Thus, the only way Bay Cities can obtain that
information is through the discovery process. It should be noted that the circuit court did
not give Bay Cities carte blanche access to that information—it excluded any attorney-
client/non-testifying-expert communications from its directive. Thus, the circuit court did
not abuse its discretion in compelling the production of this information.
Affirmed.
ABRAMSON and GLADWIN, JJ., agree.
Kelley Law Firm, PLLC, by: Glenn E. Kelley and Caroline W. Kelley, for appellant.
Wright, Lindsey & Jennings LLP, by: N. M. Norton; Gary D. Marts, Jr.; Eric Berger; and
Meredith Lowry, for appellee.
15