EXHIBIT B
IN THE CIRCUIT COURT OF THE STATE OF OREGON
FOR THE COUNTY OF MULTNOMAH
State ex rel. STILWELL ASSOCIATES, L.P., ) Case No. 01-02-01777
)
Relator, ) DEFENDANT'S MOTION TO COMPEL PRODUCTION OF
) DOCUMENTS
vs. )
) (Oral Argument Requested)
CHARLES HENRY ROUSE, )
)
Defendant. )
UTCR 5.010 CERTIFICATION AND REQUEST FOR ORAL ARGUMENT
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Counsel for the parties have conferred by telephone regarding the issues
raised by this motion, but have unable to resolve the discovery dispute.(1)
Defendant requests oral argument and estimates that 15 minutes will be required
for that purpose. Official court reporting services are not required.
MOTION
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Pursuant to ORCP 43 and 46, Defendant Charles Rouse ("Rouse") respectfully
moves the Court for an order compelling the production of all documents
specified in Defendant's Second Request for Production and awarding Rouse the
reasonable expenses incurred in obtaining the order, including attorney's fees.
Rouse properly seeks documents that would identify fact witnesses (or, in the
alternative, a witness list), and the "investigation file" upon which Stilwell
purportedly relied in bringing this action. The documents are plainly relevant,
any attorney-client privilege that might otherwise apply has been waived, and
the work-product doctrine is not a bar because the documents are vital to
Rouse's defense and are not otherwise readily available.
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(1) Relator's local counsel has tentatively agreed to provide the
requested privilege log, subject to confirmation by out-of-state
counsel. Defendant reserves the right to amend this motion to seek a
proper privilege log, too, if it is not promptly furnished.
Page 1
This motion is supported by the pleadings on file, the Affidavit of Nancie
Potter Arellano in Support of Defendant's Motion to Compel Production of
Documents ("Arellano Aff."), and the following Points and Authorities.
POINTS AND AUTHORITIES
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1. Background and First Formal Requests
Stilwell seeks Rouse's removal from the Board of Directors of Oregon Trail
Financial Corp. ("OTFC"), alleging that his admitted residence in Multnomah
County (Complaint,P.P. 7-8; Answer to Complaint,P.P. 7-8) disqualifies him from
service. Stilwell alleges that:
"Defendant Rouse violated the bylaws of OTFC because he does not
reside in a qualified county [,] having moved from a qualified
county, upon information and belief, no later than December
2000." (Complaint,P. 9.)
Stilwell acknowledges that the OTFC Board amended its bylaws to remove the
residency requirement for original directors such as Rouse (Complaint,P. 10),
but asserts that the amendment did not become effective in time. (Id.) Thus, the
date of Rouse's move is the decisive issue in this case. Since the amendment was
effective as of January 1, 2001, Stilwell cannot make out a prima facie case
unless it can offer satisfactory evidence that Rouse moved to Multnomah County
in 2000.
Rouse first asked for the straightforward production of "any and all
documents that support the allegations...that Rouse moved from a qualified
county no later than December 2000...." (Defendant's First Request for
Production of Documents (Arellano Aff., Ex. 1), Request No. 1.) To this and
related requests (2) Stilwell answered informally that it had no nonprivileged
documents but that Rouse should depose its private investigator, Max
Whittington, to learn the relevant facts upon which Stilwell relied in filing
the Complaint. (Arellano Aff, P. 3.)
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(2) The first formal request also asked for "[a]ny other documents that
relate in any way to the allegations of Plaintiff's Complaint...."
(Defendant's First Request for Production of Documents (Arellano Aff.,
Ex.1), Request No. 2), and "any and all documents that constitute,
reflect, or relate in any way to the receipt by Plaintiff of any
information concerning Rouse's county of residence." (Id., Request No.
3.)
Page 2
But Mr. Whittington has been deposed, and he had not turned up any reliable
evidence that Rouse moved to Portland before January, 2001. (Deposition of Max
Whittington ("Whittington Depo") (Arellano Aff., Ex. 3). (3)
All of the documentary evidence supports the finding that Rouse moved to
Portland in January 2001, as does the testimony of every other witness who has
been deposed. (Arellano Aff.,P. 4.) Stilwell's counsel states that there was at
least one other witness (besides Mr. Whittington) upon whom Stilwell relied in
filing the Complaint (id.,P. 5), but claims that information about the witness
is privileged because Stilwell's New York co-counsel, Spencer Schneider,
obtained the information. (Id.) In fact, Stilwell says that its only evidence
other than Mr. Whittington's testimony is "Spencer Schneider's investigation
file." (Id.) Stilwell has consistently refused to produce any part of this
investigation file.
2. Defendant's Follow-Up Document Requests
Against this backdrop, Rouse first sought informal production of documents
that would reveal information about fact witnesses. (Id.,P. 6.) Stilwell's
counsel agreed to provide the information in response to an informal request,
and Rouse's counsel confirmed the agreement in a letter delivered on April 19,
2001. (Id., Ex. 2.) Stilwell's counsel did not respond to the confirming letter.
(Id.,P. 6.) When neither the documents nor the alternative witness list was
provided as agreed, on May 22 Rouse served a second formal document request.
(Id., Ex. 4.) This request sought:
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(3) Citations are to page and line of the deposition transcript, not
exhibit pages.
Page 3
o Any and all documents, including those prepared in anticipation of
litigation, that reflect the name, address, and/or telephone numbers of any
witness to any fact alleged in the Complaint on file in this action. In
accordance with the Multnomah County Circuit Court Motion Panel rulings,
you may instead provide a list of such witnesses, including their addresses
and telephone numbers. (Defendant's Second Request for Production of
Documents (Arellano Aff., Ex. 4), Request No. 4.)
o Spencer Schneider's complete "investigation file." For purposes of this
request, "investigation file" means all documents of any kind that reflect
or constitute the results of the investigation Spencer Schneider
purportedly conducted prior to filing of the Complaint in this action, the
results of which are said by counsel for the plaintiff to have provided
some foundation for filing of the Complaint. (Id., Request No. 5.)
o To the extent they might not otherwise be included in Spencer Schneider's
"investigation file," all documents of any kind that reflect or constitute
communications to or from Spencer Schneider regarding any aspect of the
investigation of Charles Rouse that Mr. Schneider allegedly conducted prior
to filing of the Complaint in this action. (Id., Request No. 6.)
Stilwell refused to produce any of the requested documents, asserting that
the requests "seek documents that are beyond the permissible scope of discovery
or ... are protected by attorney work product or attorney client privilege."
(Relator's Response to Defendant's Second Request for Production of Documents
(Arellano Aff., Ex. 5 ), p. 2, lines 11-13.)
This motion followed.
3. Legal Analysis
a. The document requests do not exceed the scope of ORCP 36.
Rouse is entitled to discovery of any non-privileged matter relevant to the
claim against him or relevant to his defense to that claim. ORCP 36 B(1). At a
minimum, then, any evidence of the timing of his move to Multnomah County is a
proper subject for his discovery requests. In addition, Stilwell's critical
allegation is admittedly based "upon information and belief," something less
than firsthand observation. (Complaint,P. 9.) By its own choice Stilwell has
thus made relevant what it knows about Rouse's move to Multnomah County and the
source(s) of that knowledge. All of Rouse's document requests have been
specifically designed to obtain evidence on these subjects. Stilwell's refusal
to produce requested documents because they are "beyond the permissible scope of
discovery" has no legal merit. Absent an applicable privilege, then, Rouse is
entitled to the order he seeks and an award of reasonable fees and expenses.
ORCP 46 A(4).
Page 4
b. Stilwell waived the attorney-client privilege by putting at issue both the
date of Rouse's move to Multnomah County and its "information and belief"
on that subject.
The privilege that protects attorney-client communications may not be used
as a sword and a shield: "where a party raises a claim, which in fairness
requires disclosure of the protected communication, the privilege may be
implicitly waived." United States v. Ortland, 109 F3d 539, 543 (9th Cir 1997)
(quoting Chevron Corp. v. Pennzoil Co., 974 F2d 1156, 1162 (9th Cir 1992)
(emphasis in original), cert den 522 US 851, 118 S Ct 141 (1997).
A party waives the attorney-client privilege when:
a) the party asserting the privilege takes some affirmative act, such as
filing suit or asserting a defense;
b) through the affirmative act, the party asserting the privilege puts
the protected information at issue by making it relevant to the case;
and
c) application of the privilege would deny the party seeking the
discovery access to information vital to that party's defense.
See, e.g., Hearn v. Rhay, 68 FRD 574, 581 (ED Wash 1975). Rouse's motion to
compel should be granted because all of the applicable factors are present here.
Stilwell commenced an action against Rouse based solely upon its supposed
"information and belief" as to the date of Rouse's move to Portland, and new
wants to deprive Rouse of evidence that would provide him a complete defense;
i.e., that Stilwell has no facts to support its claim.
Page 5
Moreover, to the extent that Stilwell refuses to produce either "fact
witness documents" or a witness list, it has already waived any privilege claim
by agreeing to provide the documents in response to the informal request.
(Arellano Aff.,P. 6 , Ex. 2); see, e.g., Alderman v. Davidson, 326 Or 508, 513,
954 P2d 779 (1998) (waiver is a voluntary relinquishment of a known right.) Its
counsel's silence in response to the letter confirming the agreement to produce
is compelling evidence of the agreement. (Arellano Aff.,P. 6, Ex. 2.)
Finally, at this point there is no basis for concluding that the privilege
even applies. Stilwell's counsel has repeatedly advised that Joseph Stilwell,
Relator's principal, has no personal knowledge of any facts underlying Relator's
claims, but has relied exclusively upon what Spencer Schneider has learned
through his investigation. (Arellano Aff.,P. 10.) While this might support a
finding that Schneider's communications with his client on the subject are
privileged, the investigation itself -which is what Rouse has requested - is
work product, not privileged information. Browne v. AmBase Corp., 150 FRD 465,
471 (SDNY 1993) (the work product doctrine does not extend to facts known to a
party or its counsel, even if learned in the context of litigation).
Stilwell has the burden of proof on its assertion of attorney-client
privilege. Tornay v. United States, 840 F2d 1424, 1426 (9th Cir 1988); United
States v. Garr, 732 F2d 714, 723 (9th Cir 1984) cert den 469 US 1034 (1984).
c. Rouse is entitled to Schneider's work product because it is important to
Rouse's defense and the information cannot otherwise be reasonably
obtained.
"Work product" is not privileged. Trial preparation materials are subject
to protection under this doctrine, but the protection is not absolute. Upon a
showing of "substantial need" for trial preparation and an inability to obtain
"the substantial equivalent of the materials by other means" without "undue
hardship," even work product is discoverable. ORCP 36 B(3).
In this case the "substantial need" is clear: Stilwell has no case without
some sufficient evidence that Rouse moved to Portland before January, 2001.
While Rouse himself knows the fact to be contrary, the ongoing suggestions that
Stilwell has some evidence of such a move raise the prospect that Stilwell has
found a false document or a witness who has been untruthful with Stilwell. Rouse
should not be put to the burden and expense of defending against a sham claim.
Absent an opportunity to see this purported evidence, however, Rouse has no
other recourse. Under the circumstances, even having to bring a motion for
summary judgment would be an undue burden for Rouse. This Court should properly
exercise its discretion to order Stilwell to produce what it describes as the
only plausibly reliable evidence in support of it claim. ORCP 1B.
Neither could Stilwell obtain "substantially equivalent" evidence by any
means, much less without undue hardship. Taking at face value Mr. Neupert's
statement that there is at least one more witness to support Mr. Whittington's
"impression," (Arellano Aff.,P. 5), there is simply no meaningful way for Rouse
to uncover that information or to determine whether the witness purports to have
some documentary proof contrary to the facts. The Court should therefore order
Stilwell to produce the requested documents.
Page 6
CONCLUSION
For all of the reasons stated above, Rouse should be granted an order
compelling production of all documents sought by his second formal request
(Requests 4, 5, and 6), together with an award of the reasonable fees and
expenses incurred in bringing this motion before the Court.
DATED this 22nd day of June, 2001.
FOSTER PEPPER & SHEFELMAN LLP
/s/ Susan T. Alterman, OSB #87081 for
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Nancie Potter Arellano, OSB #80152
Attorneys for Defendant
Trial Attorney: Nancie Potter Arellano
