Green Tree Servicing LLC v. SFR Investments Pool1, LLC et al

Filing 73

AMENDED ORDER. IT IS HEREBY ORDERED 65 Motion for a Protection Order is GRANTED. Signed by Magistrate Judge Cam Ferenbach on 8/9/2016. (Copies have been distributed pursuant to the NEF - TR)

UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA
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DITECH FINANCIAL LLC F/K/A GREEN
TREE SERVICING, LLC,

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Case No. 2:15–cv–476–JCM–VCF

Plaintiff,

AMENDED ORDER

vs.
MOTION FOR PROTECTIVE ORDER (ECF NO. 65)
SFR INVESSTMENTS POOL 1, LLC;
ELKHORN COMMUNITY ASSOCIATION,

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Defendants.
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Before the court are SFR’s motion for a protective order (ECF No. 65), Ditech’s response (ECF
No. 66), and SFR’s reply (ECF No. 67). For the reasons stated below, the SFR’s motion is granted.
I. Background
The parties are familiar with the factual background of this action. This court will limit its
discussion to the relevant procedural background.

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On or about June 14, 2016, Ditech’s process server served Attorney David Rosenberg with a
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subpoena and deposition notice. (ECF No. 65-1) Rosenberg is SFR’s in-house counsel. SFR represents
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that Ditech has repeatedly attempted to serve Rosenberg with a deposition subpoena, but this is the first
time that the company has been successful. (ECF No. 65)

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Ditech believes that Rosenberg’s duties at SFR went beyond those of an ordinary in-house

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counsel and he was involved in SFR’s day-to-day operations. (ECF No. 66) Ditech wishes to ask

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Rosenberg questions about SFR’s management and operations. (Id.) SFR contends that Ditech has not

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made the required showing that would allow it to take the deposition of opposing counsel. (ECF No. 65)

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Accordingly, it has moved for a protective order to prevent Ditech from taking Rosenberg’s deposition.

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II. Discussion

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Shelton Applies to this Motion
Ditech argues that Shelton v. American Motors Corp., 805 F.2d 1323 (8th Cir. 1986), does not

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prevent it from deposing opposing counsel in this action. (ECF No. 66) Ditech wishes to ask Rosenberg

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questions about his involvement SFR’s management and operations rather than his role in this litigation.

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(Id.) Ditech does not cite to a Ninth Circuit or District of Nevada case that has held Shelton is

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inapplicable when a party wishes to depose opposing in-house counsel about corporate operations. (Id.)

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On the contrary, courts in this district have held that Shelton applies when a party seeks to depose

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opposing in-house counsel. Harter v. CPS Sec. (USA), Inc., No. 2:12-cv-84-MMD-PAL, 2013 WL
129418 at* 7 (D.Nev. Jan. 9, 2013). This court applies Shelton to SFR’s motion.

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Ditech relies on Pamida v. E.S. Originals, Inc., 281 F.3d 726 (8th Cir. 2002), to support its
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argument. (ECF No. 66) In Pamida, the plaintiff had settled a patent infringement action and sued her
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insurance company for indemnification. Id. at 728. The plaintiff used the same law firm in the patent
action and the indemnification action. Id. During discovery, defense counsel sought to depose attorneys

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from the plaintiff’s law firm. Id. at 729. The deposition notice stated that the defendant wished to know

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information about the reasonableness of plaintiff’s attorney’s fees in the patent action. Id. The Eighth

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Circuit held that Shelton did not bar defense counsel from deposing plaintiff’s attorney about a “prior

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concluded case” for which they had unique knowledge. Id. at 730.

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Ditech does not plan to ask Rosenberg about a “prior concluded case.” (ECF No. 66) The
company seeks information about the factual background of this action. As Rosenberg would not be
testifying about a “prior concluded case,” Pamida does not preclude this court from applying Shelton.

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2.

Under Shelton, Ditech Has Not Shown That it Should be Allowed to Depose Rosenberg

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Under certain circumstances, a party may take opposing counsel’s deposition. Shelton, 805 F.2d

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at 1327. Those circumstances are limited “to where the party seeking to take the deposition has shown

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that (1) no other means exist to obtain the information than to depose opposing counsel; (2) the

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information sought is relevant and nonprivileged; and (3) the information is crucial to the preparation of

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the case.” Id.

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“This difficult burden impose by Shelton was intended to guard against the ‘harassing practice of

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deposing opposing counsel … that does nothing for the administration of justice but rather prolongs and

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increases the costs of litigation, demeans the profession, and constitutes an abuse of the discovery
process.’” Pamida, 281 F.3d at 729-30 (quoting Shelton v. American Motors Corp., 805 F.2d 1323 (8th

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Cir. 1986)).
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i.

Ditech Can Obtain Information About SFR’s Management and Operations From

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Other Sources
Under the first Shelton factor, the company was required to show that it had no other means to
obtain information about SFR’s management and operations. It has not made this showing.
In support of its opposition, Ditech attached a declarations from former SFR employee, Adam

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Bailey (ECF No. 66-1) and the deposition testimony of former SFR employee Robert Diamond. (ECF

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No. 66-2) Bailey and Diamond allege that Rosenberg was intimately involved with SFR’s day-to-day

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operations. The two former employees also identified SFR employees Chris Hardin and Howard Kim as

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individuals who would have knowledge about SFR’s management and operations. (ECF No. 66 at 7)
Ditech does not explain why it cannot depose these four individuals in order to learn about SFR’s

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management and operations. It is likely that Ditech can obtain information about SFR’s management
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and operations from these sources and will not need to depose Rosenberg.
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Ditech complains that SFR’s Rule 30(b)(6) witness, Paulina Kelso, simply repeats publically
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available information about SFR’s management and operations. (ECF No. 66 at 6) Kelso’s alleged

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inadequacy as a Rule 30(b)(6) witness does not mean that Ditech cannot obtain the desired information

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from other sources. As demonstrated in its response, Ditech has identified at least four potential sources

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for this information.

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ii.

Rosenberg Likely has Relevant, But Privileged Information

Ditech asserts that Rosenberg’s information is relevant because it will help determine if SFR was
a bona fide purchaser of the instant property. (ECF No. 66). Rosenberg’s information may be relevant,
it is very likely that such information would also be privileged. See Primere Digital Access, Inc. v.
Central Telephone Co., 360 F.Supp. 2d 1168, 1175 (D.Nev. 2005) (holding that communications

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between in-house counsel and other employees were protected by the attorney-client privilege under
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Nevada and federal law). Although the facts on which these communications are based are not
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privileged, Wardleigh v. District Court, 891 P.2d 1180, 1183 (Nev. 1995), Ditech has not identified
what specific information it wants and why that information would not be covered by the privilege.

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Instead it summarily asserts that the underlying facts are not privileged and that Rosenberg can freely

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claim the privilege at his deposition. (ECF No. 66) This conclusory argument does not satisfy the

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second Shelton factor.

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iii.

Information About SFR’s Management and Operations is Not Crucial to Trial
Preparation

Ditech represents that Rosenberg’s information is crucial to its defense that SFR was not a bona
fide purchaser of the foreclosed property. (ECF No. 66) This information may be relevant to Ditech’s

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defense, but the company has not shown it is crucial. Ditech has not cited to any authority that describes
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when relevant information becomes crucial. (Id.) And the terms “relevant” and “crucial” cannot be
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synonymous. To hold otherwise would be to render the third Shelton factor redundant. See Shelton, 805
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F.2d at 1327 (a party seeking to depose opposing counsel must, among other requirements, show that the

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information is “relevant” and “crucial”). Thus for information to be crucial, it must have some greater

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importance to the action than merely being relevant. See id. The information Ditech seeks may be

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relevant, the company has not demonstrated that the information is crucial.

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3.

This Court’s Decision Does Not Rest on the Inclusion of a Rosenberg Family Photograph with

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the Deposition Subpoena

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SFR represents, and Ditech does not refute, that Rosenberg’s deposition subpoena was

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accompanied by a photograph of a Rosenberg family photograph. (ECF No. 65) This photograph was
allegedly on the cover a personal photo album that had been placed on an interior bookshelf in the

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Rosenberg home. (Id.) The photo would not have been accessible unless an individual was inside
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Rosenberg’s home. (Id.) SFR speculates that Ditech instructed its process server to break into
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Rosenberg’s home to take a photograph of this photograph. (Id.) Ditech denies these allegations and
offers several alternative explanations for how its process server came to have a photo of a photo of the

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Rosenberg family. (ECF No. 66) SFR’s speculation about the photo, even if true, would not provide a

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basis for the protection granted in this order.

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ACCORDINGLY,

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IT IS HEREBY ORDERED that SFR’s motion for a protection order (ECF No. 65) is GRANTED.

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IT IS SO ORDERED.

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DATED this 9th day of August, 2016.

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_________________________
CAM FERENBACH
UNITED STATES MAGISTRATE JUDGE

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