The Rendon Group, Inc. v. State Farm Mutual Insurance Company ( 2010 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
THE RENDON GROUP, INC.,
Petitioner,
v.
CORI RIGSBY, et al., No. 1:10-mc-00164 (HHK/JMF)
Interested Party, Underlying Litigation:
Case No. 1:06cv0433 LTS-RHW
v. United States District Court
Southern District of Mississippi
STATE FARM MUTUAL INSURANCE
COMPANY,
Respondent.
MEMORANDUM OPINION
This case involves the records in the possession of a public relations firm that
provided service to lawyers in Mississippi.
The complicated story begins with the Rigsby sisters, who, while working as
claims adjusters for E. A. Renfroe & Company, a contractor for State Farm Mutual
Insurance Company (“State Farm”), found information that they claim showed that State
Farm was defrauding the United States in the manner in which it was processing the
claims that the insureds were making for damage to their homes and businesses caused
by Hurricane Katrina. Several law firms in Mississippi then began to investigate and
prosecute claims by those insureds against State Farm. The Rigsby sisters also brought a
qui tam action against State Farm in Mississippi. The law firms in Mississippi hired The
Rendon Group, Inc. (“TRG”), a Washington D.C.-based public relations firm, which
apparently had the obligation to create a favorable public atmosphere for the lawsuits that
the Scruggs Law Firm, P.A. (“Scruggs”) and other law firms who were bringing or going
to bring in relation to Hurricane Katrina. The atmosphere became a lot less favorable to
the Rigsbys and the law firms when an Alabama court was convinced that the Rigsby
sisters had illegally taken from State Farm the documents upon which the law firms were
predicating their claims against State Farm. Additionally, there was an apparent public
disclosure that the Rigsby sisters had accepted a large amount of money from Scruggs for
their services as plaintiffs. To make it all the more interesting, Richard “Dickie”
Scruggs, the head of Scruggs, has since gone to jail for bribing a judge in what I can only
hope is an unrelated matter. The Scruggs law firm1 has since dissolved.
In the meanwhile, the qui tam action has been distilled to a single claim by the
Rigsby sisters pertaining to a single home on the Gulf Coast, “the McIntosh House.”
Motion to Quash or Modify Subpoena for Documents [#1] (“Mot. to Quash”) at Ex. D.
State Farm filed a counter-claim against the Rigsby sisters, premised on their
misappropriation of confidential State Farm information relating to Hurricane Katrina
claims and their subsequent improper disclosure of this information to lawyers
representing Hurricane Katrina claimants.2 Mot. to Quash at Ex. C. The trial of the qui
1
A mysterious entity, said to be a successor to the Scruggs Law Firm, P.A., SLF, Inc., a
corporation not engaged in the practice of law, has also sought to intervene. Its standing
is a riddle. Since TRG is resisting the subpoena, it adequately protects whatever interest
this entity could claim and there is no warrant for its intervention. See Fed. R. Civ. P.
24(a). Further, to the extent SLF, Inc. seeks to intervene to protect its interest in
documents related to the defense of its members from criminal contempt charges, I
believe that those documents are squarely outside of the scope of discovery ordered by
the court in Missippippi, and I find, for the reasons discussed herein, that TRG will not
have to produce such documents. I therefore will deny the motion to intervene.
2
A court in Alabama, in separate litigation, E.A. Renfroe & Company, Inc. v. Cori
Rigsby, et al., No. 2:06-cv-1752-SLB, considered the propriety of taking the documents
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tam action and counter-claim have been bifurcated and discovery stayed on the counter-
claims until after the trial of the qui tam action, set for December 2010. Mot. to Quash at
Ex. E.
State Farm served a subpoena duces tecum on TRG that sought records pertaining
to work it did for the Mississippi firms, including, of course, Scruggs. Mot. to Quash at
Ex. A. Efforts to narrow the scope of the subpoena failed,3 and TRG has moved to
quash it. Mot. to Quash 1.
I. Legal Standard
Under Rule 26 of the Federal Rules of Civil Procedure, “[p]arties may obtain
discovery regarding any nonprivileged matter that is relevant to any party’s claim or
defense.” Fed. R. Civ. P. 26(b)(1). If, however, the discovery sought, in this case through
a subpoena to a third party, “requires disclosure of privileged or other protected matter, if
no exception or waiver applies; or [ ] subjects a person to undue burden,” the third party
may move to quash the subpoena under Rule 45 of the Federal Rules of Civil Procedure.
See Fed. R. Civ. P. 45(c)(3); see also Northrop Corp. v. McDonnell Douglas Corp., 751
F.2d 395, 403 (D.C. Cir. 1984). Rule 26 of the Federal Rules of Civil Procedure defines
and governs the scope of discovery for all discovery devices, and, therefore, Rule 45
must be read in light of it. 9A Charles Alan Wright & Arthur R. Miller, Federal Practice
and Procedure § 2452 at 392-393 (3d ed. 2008); see also Briggs v. Wash. Metropolitan
Area Transit Auth., No. 01-CV-1876, 2005 WL 357190, at *5 (D.D.C. Feb. 15, 2005)
(citing Heat & Control, Inc. v. Hester Indus., Inc., 785 F.2d 1017, 1023 (Fed. Cir. 1986)
and issued an order of permanent injunction requiring the Rigsbys to return the State
Farm documents.
3
See Reply Memorandum of The Rendon Group, Inc. [#9] (“Reply”) at Ex. H
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(noting that Rule 45 must be read in light of Rule 26(b)). Thus, “courts generally employ
a balancing test, weighing the burdensomeness to the moving party against the [issuing
party’s] need for, and the relevance of, the information being sought.” Flanagan v.
Wyndham Intern. Inc., 231 F.R.D. 98, 102-03 (D.D.C. 2005) (citing Farnsworth v.
Procter & Gamble Co., 758 F.2d 1545, 1547 (11th Cir. 1985); Wyoming v. U.S. Dep’t. of
Agric., 208 F.R.D. 449, 452-53 (D.D.C. 2002); Alexander v. FBI, 186 F.R.D. 71, 75
(D.D.C. 1998); Insulate Am. v. Masco Corp., 227 F.R.D. 427, 432 (W.D.N.C. 2005)).
II. Analysis
TRG seeks to quash the subpoena duces tecum first on the grounds that the
records may be protected by the attorney-client privilege. Mot. to Quash 8-10. TRG
cannot, however, assert this claim; no one is claiming that there was ever an attorney-
client privilege between TRG and the Mississippi firms. The firms’ clients were, one
supposes, State Farm insureds who sued State Farm or who were once relators in the qui
tam action. The Rigsby sisters were only the latter. Those persons might or might not
have grounds to claim an attorney-client privilege for information in the possession of
their lawyers that reflects a confidential communication between them for the purpose of
seeking legal advice or securing legal services. Had such a claim been asserted by such
persons, it would then be pertinent to explore whether the lawyers’ transmittal of
privileged information to a public relations firm was or was not a communication that
vitiated or forfeited the privilege. See Fed. Trade Comm’n v. GlaxoSmithKline, 294
F.3d 141, 147-48 (D.C. Cir. 2002); Trustees of Elec. Workers Local No. 26 Pension Trust
Fund v. Trust Fund Advisors, Inc., No. 03-CV-2662, 266 F.R.D. 1, 8 (D.D.C. 2010). It
hardly follows, however, that a third party can claim a privilege that it has never held.
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Indeed, the only putative holder of the privilege who has communicated its intentions, the
Rigsby sisters, has sent a letter, made available to me, in which they, by their counsel,
insist that they will not intervene and assert any claim of privilege. See Supplemental
Support for Motion to Quash [#19] at Ex. 1 (“Rigsby Letter”). They suggest, however,
that they expect TRG to protect their interests:
[N]either the Rigsbys nor their current counsel can, without
risk to their best interests, specifically assert privilege
claims as to individual documents in the Rendon Group’s
possession. The review necessary to permit such assertions
would risk the taint [related to the issues that caused the
disqualification of the Rigsbys’ prior counsel] we need to
avoid. But, the Rigbsbys clearly have rights to maintain
the privileged nature of communications with their prior
counsel and the professionals retained by prior counsel.
The Rigsbys do not waive any of their rights to privilege.
The Rigsbys expect prior counsel and professionals
retained by prior counsel to protect those privilege, and the
Rigsbys generally support efforts to do so.
Rigsby Letter 1.
Thus, we have the curious situation where the only parties with actual standing to
assert an attorney-client privilege have insisted that they will not intervene and claim it.
As counsel for State Farm put it so well at the hearing, they cannot pass it off to TRG
and tell TRG to assert that privilege on their behalf, while they sit on the sidelines.
Second, TRG claims that the subpoena is overly burdensome. Like every other
judge who has been confronted by such a claim, I refuse to consider it without a detailed
showing by affidavit specifying the actual burdens that it will incur if it has to comply.
See Miller v. Holzmann, 240 F.R.D. 1, 3 (D.D.C. 2006) (citing Pleasants v. Allbaugh,
208 F.R.D. 7, 12 (D.D.C. 2002)). But, prior cases where I have demanded such affidavits
were cases that involved discovery between the parties and not discovery directed at a
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third party, where there should be a greater sensitivity to the potential burden that will be
imposed on a third party, even if that party could and should have made a greater
showing of the burdens it will endure. 2006 Advisory Committee Notes. The subpoena
as written, requests the following information:
1. All Documents concerning any communications
between The Rendon Group Incorporated and
Scruggs Katrina Group from August 29, 2005 to the
present.
2. All Documents concerning any communications
between The Rendon Group Incorporated and
Scruggs Law Firm, P.A. from August 29, 2005 to
the present.
3. All Documents concerning any communications
between The Rendon Group Incorporated and
Graves, Bartle & Marcus, LLC from August 29,
2005 to the present.
4. All Documents concerning any communications
between The Rendon Group Incorporated and
Bartimus, Frickleton, Robertson & Gorny, PC from
August 29, 2005 to the present.
5. All Documents concerning any communications
between The Rendon Group Incorporated and
Zuckerman Spaider LLP including Andrew N.
Goldfarb, Cyril V. Smith, III, Michael R. Smith,
and/or William W. Taylor, III.
6. All Documents concerning any communications
between The Rendon Group Incorporated and
White, Arnold & Dowd, PC including George H.
Hawley and/or Katherine Rogers Brown.
7. All Documents concerning any communications
between The Rendon Group Incorporated and
Battle, Fleenor, Green, Winn & Clemmer, LLP
including Harlan F. Winn, III, Robert E. Battle,
and/or Jon H. Patterson.
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8. All Documents concerning any communications
between The Rendon Group Incorporated and
Bainbridge, Mims, Rogers & Smith, LLP including
Bruce F. Rogers and/or Frank M. Bainbridge.
9. All Documents concerning any communications
between The Rendon Group Incorporated and
Keker & Van Next, LLP including John Keker
and/or Brook Dooley.
10. All Documents concerning any payments from
Scruggs Katrina Group to The Rendon Group
Incorporated from August 29, 2005 to the present.
11. All Documents concerning any payments from
Scruggs Law Firm, P.A. to The Rendon Group
Incorporated from August 29, 2005 to the present.
12. All Documents concerning any payments from
Graves, Bartle & Marcus, LLC to The Rendon
Group Incorporated from August 29, 2005 to the
present.
13. All Documents concerning any payments from
Bartimus, Frickelton, Robertson & Gorny, PC and
The Rendon Group Incorporated from August 29,
2005 to the present.
14. All Documents concerning the Relators.
15. All Documents concerning any communications
between Scruggs Katrina Group, Scruggs Law
Firm, P.A., Graves, Bartle & Marcus, LLC,
Bartimus, Frickelton, Robertson, & Gorny, PC
and/or Relators and any media outlet, media
organization, media representative or agent, or
website from August 29, 2005 to the present.
16. All Documents concerning State Farm Fire and
Casualty Company and Hurricane Katrina including
corresponding claims or cases.
17. All Documents concerning State Farm Mutual
Automobile Insurance Company and Hurricane
Katrina including corresponding claims or cases.
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18. All Documents concerning E.A. Renfroe &
Company and Hurricane Katrina including
corresponding claims or cases.
19. All Documents concerning Forensic Analysis
Engineering Corporation and Hurricane Katrina
including corresponding claims and cases.
20. All Documents concerning Haag Engineering Co.
and Hurricane Katrina including corresponding
claims or cases.
Mot. to Quash at Ex. 1.
In this case, there has been a sufficient narrowing of the qui tam claims and the
bifurcation of the counter-claims to determine, in light of both Rule 26 and Rule 45 of the
Federal Rules of Civil Procedure, that compliance with the subpoena, as written, would
be overly burdensome for TRG. Applying a balancing test, “weighing the
burdensomeness to the moving party against the [issuing party’s] need for, and the
relevance of, the information being sought,” I cannot come to the conclusion that State
Farm’s need for the information, nor the relevance of the information, is sufficient to
overcome the great burden of producing such a broad amount of information. See
Flanagan, 231 F.R.D. 98 at 102-03. In its oral argument, State Farm emphasized its need
for information that would demonstrate the Rigsbys’ bias. The list of documents sought
in the subpoena would not only result in the production of documents relevant to the bias,
but thousands of documents completely unrelated to it. The narrowing of the discovery
in the underlying qui tam litigation and the bifurcation of that cause of action from State
Farm’s counterclaim adds weight to the balance in favor of TRG. Thus, I will authorize
that the production pursuant to the subpoena be limited. I will begin with the Rigsby
sisters themselves and require TRG to produce the following:
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1. All documents concerning the Relators, Ms.
Cori (Moran Rigsby) and Ms. Kerri Rigsby.
2. All documents concerning the False Claims
Act action filed by the Relators.
Once that production has taken place, and State Farm has had sufficient
opportunity to analyze what it has received, it may appeal to me to enforce more of the
terms of the subpoena as originally issued.
An order accompanies this memorandum opinion.
Digitally signed by John M.
Facciola
Date: 2010.06.16 16:05:37
-04'00'
JOHN M. FACCIOLA
UNITED STATES MAGISTRATE JUDGE
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