Magee et al v. B H P Billiton Petroleum Properties (N A) L P
MEMORANDUM ORDER terminating 60 Appeal of Magistrate Judge Decision, affirming 57 Order on Motion to Compel, Order on Motion for Attorney Fees, Order on Motion for Protective Order. Signed by Judge S Maurice Hicks on 5/3/2017. (crt,McDonnell, D)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
JOE D. MAGEE, ET AL.
CIVIL ACTION NO. 15-2097
JUDGE S. MAURICE HICKS, JR.
PHIL MCMILLIAN, ET AL.
MAGISTRATE JUDGE HORNSBY
Before the Court is Plaintiffs’ Magistrate Appeal from a Memorandum Order issued
by Magistrate Judge Mark Hornsby on January 4, 2017. See Record Documents 57 & 60.1
The appeal challenges Magistrate Judge Hornsby’s decision denying Plaintiffs’ Motions to
Compel Discovery and granting Defendant BHP Billiton Petroleum Properties (NA), LP’s
(“BHP”) Motion for Protective Order. See Record Document 60.
Decisions by a magistrate judge as to discovery issues are non-dispositive matters.
Such actions are not listed in 28 U.S.C. § 636(b)(1)(A) as one of the dispositive motions
(often referred to as the “excepted motions”) that a magistrate judge may not conclusively
decide. Magistrate Judge Hornsby’s order is not a recommendation to the district court,
which normally requires de novo review under Rule 72. Rather, it is an order from the
magistrate judge on non-dispositive discovery matters that requires the district court to
uphold the ruling unless it is clearly erroneous or contrary to law. See 28 U.S.C. §
636(b)(1)(A); see also Castillo v. Frank, 70 F.3d 382, 385 (5th Cir. 1995).
This case involves a lease dispute regarding the payment of royalties. Magistrate
Judge Hornsby’s Memorandum Order of January 4, 2017 related to Plaintiffs’ six sets of
written discovery, which eventually resulted in three discovery motions being filed:
The Plaintiffs in this matter are Joe D. Magee, Joann Fulmer Magee, and the
Pesnell Law Firm.
Plaintiffs’ Motion to Compel; BHP’s Motion for Protective Order; and Plaintiffs’
Supplemental Motion to Compel Discovery. The discovery related to royalty payments
made to the Talleys, the legal suspense account, BHP’s legal team, and royalty distribution
statements. Ultimately, Magistrate Judge Hornsby denied Plaintiffs’ motions and granted
BHP’s request for a protective order. More specifically, he ruled:
Discovery Regarding the Talleys
Plaintiffs argue that the documentation relied upon by Defendant in
paying royalties to the Talleys is relevant to whether Defendant acted in good
faith with regard to Plaintiffs. . . .
The information sought by Plaintiffs is irrelevant. The Talleys are not
[a] party to this lawsuit, and Defendant’s dealings with the Talleys are not at
issue. Furthermore, requesting “all communications” between the Talleys
and Defendant regarding royalty payments far exceeds the scope of
allowable discovery in this matter.
Discovery Regarding the Legal Suspense Account
Plaintiffs also seek discovery regarding Defendant’s placement of the
disputed royalty payments into a special suspense account. Apparently,
Plaintiffs contend that if Defendant had access to the disputed funds,
Defendant owes interest from an earlier date.
Defendant represents to the court that the legal suspense account is
simply a balance sheet account. Defendant further represents that it did not
have use of the disputed funds. . . .
Whether Plaintiffs are ultimately entitled to interest and, if so, when
interest started to accrue, is ultimately a question to be decided based on the
lease agreement. For the purpose of discovery, Defendant has adequately
explained the basic use and operation of the legal suspense account.
Plaintiffs’ repeated and duplicative requests for “all documents” concerning
the suspense account are overly broad.
Discovery Related to Defendant’s Legal Team
Plaintiffs seek discovery regarding the members of Defendant’s legal
team who performed services regarding ownership status or in determining
who should be paid royalties. In response, Defendant identified the
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members of the legal team but objected to providing any additional
information based on the attorney-client privilege. Defendant is correct.
Communications among the members of the legal team and Defendant’s
representatives are clearly privileged. Moreover, asking each member of the
legal team to detail what they did for more than a month during their review
is unduly burdensome.
Discovery Regarding Royalty Distribution Statements
Plaintiffs seek information regarding all persons who were involved or
had input into the preparation of certain royalty distribution statements.
Plaintiffs also ask Defendant to identify the persons who authorized the
payment of royalties to Plaintiffs. In response, Defendant identified Beau
Roy, Christopher Griffin, and Micah Strother. This response is sufficient. It
is irrelevant that other individuals may have signed royalty checks sent to
Record Document 57 at 2-4.
This Court has reviewed the discovery requests at issue, the Memorandum Order
of Magistrate Judge Hornsby, and the briefs of all parties (Record Documents 60-62) and
finds that the Memorandum Order entered on January 4, 2017 was neither clearly
erroneous nor contrary to law. Plaintiffs’ general objection that Magistrate Judge Hornsby
was biased is unfounded and wholly unsupported by the record. As to the Talleys, this
Court notes that Plaintiffs are not privy to any leases BHP had with the Talleys. BHP’s
payment of royalties to the Talleys is irrelevant as to the contractual obligations between
Plaintiffs and BHP. Moreover, this Court is unconvinced that “the potential defense of
waiver,” as argued by Plaintiffs in their appeal, heightens the relevancy of the propounded
discovery relating to the Talleys.
Magistrate Judge Hornsby’s ruling as to discovery relating to the legal suspense
account is not clearly erroneous or contrary to law. Plaintiffs admitted in motion practice
and in the instant appeal that the placement of royalties into a balance sheet account is
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the industry practice. See Record Document 41-11at 10; Record Document 60 at 9-10 n.
6. Moreover, this Court agrees that BHP, for purposes of discovery, has adequately
explained the basic use and operation of the legal suspense account at issue. Plaintiffs’
repeated requests for “all documents” concerning this account are overly broad and
disproportionate. The terms of the lease agreement will ultimately determine whether
Plaintiffs are entitled to interest and, if so, the accrual date of such interest.
The Court is unpersuaded by Plaintiffs’ arguments regarding the relevancy of their
discovery request relating to BHP’s legal team. Plaintiffs’ discovery request not only seeks
privileged information, but is overly broad. The undersigned holds that BHP’s privilege log
(Record Document 41-10) establishes that the communications at issue fall within the
scope of Louisiana Code of Evidence 506,2 as the emails withheld on the basis of
employee/representative and BHP’s attorney, or between BHP employees and/or
representatives. The emails were either made for the purpose of facilitating the rendition
of professional legal services or reflected the perceptions or observations of BHP
employees regarding such communications. This Court believes the descriptions set forth
in the privilege logs provided are specific enough to put Plaintiffs on notice as to the
existence of the privilege without disclosing the privileged information itself. Magistrate
Judge Hornsby’s conclusion that such communications were privileged and that Plaintiffs’
requests were unduly burdensome was not clearly erroneous or contrary to law.
Federal Rule of Evidence 501 provides, in pertinent part that “in a civil case, state
law governs privilege regarding a claim or defense for which state law supplies the rule of
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Discovery Regarding Royalty Distribution Statements
Finally, this Court holds that Magistrate Judge Hornsby’s ruling as to the royalty
distribution statements was neither clearly erroneous nor contrary to law. Plaintiffs sought
information regarding all persons who were involved or had input into the preparation of
certain royalty distribution statements and the identify of persons who authorized the
payment of royalties to Plaintiffs. BHP identified the persons with that specific knowledge.
The undersigned agrees that BHP’s response was sufficient.
Based on the foregoing analysis, the Court sees no reason to vacate or modify the
Memorandum Order entered by Magistrate Judge Hornsby, as such order is not clearly
erroneous or contrary to law.
IT IS ORDERED that Magistrate Judge Mark Hornsby’s Memorandum Order of
January 4, 2017 (Record Document 57) be and are hereby AFFIRMED.
THUS DONE AND SIGNED, in Shreveport, Louisiana, this 3rd day of May, 2017.
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