World Healthcare Systems, Inc. v. Surgical Services, Inc.

Filing 190

MEMORANDUM AND ORDER that WHS may admit the disputed spreadsheet into evidence. However, this ruling does not serve as a limitation on the parties' ability to object to the scope of the testimony regarding the disputed spreadsheet. Signed by District Judge Curtis L Collier on 8/9/11. (JGK, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT CHATTANOOGA
WORLD HEALTHCARE SYSTEMS, INC.
Plaintiff/Counter-Defendant,
v.
SSI SURGICAL SERVICES, INC.
Defendant/Counter-Plaintiff/
Third-Party Plaintiff
v.
PACESETTER SBIC FUND, INC., f/k/a
POWER EQUITIES, INC.,
Third-Party Defendant

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

No. 1:10-cv-00060
Chief Judge Curtis L. Collier

MEMORANDUM & ORDER
During the second day of trial in this matter, Plaintiff World Healthcare Systems, Inc.
(“WHS”) moved to introduce into evidence a spreadsheet (the “disputed spreadsheet”) previously
stricken from the record in this Court’s previous order (Court File No. 158). Defendant SSI Surgical
Services, Inc. (“SSI”) objects to the introduction of this spreadsheet relying on this Court’s previous
order and privilege doctrines (Court File Nos. 173, 183). WHS, in turn, argues the spreadsheet does
not contain privileged or confidential information and is not protected as attorney work-product
(Court File No. 179). In the alternative, WHS argues the spreadsheet should be admitted pursuant
to Federal Rule of Evidence 502 (id.). The Court instructed WHS and SSI to brief the issue, and
they have done so (Court File Nos. 173, 179, 183). The Court now rules that the disputed
spreadsheet may be properly admitted into evidence pursuant to Fed. R. Evid. 502.

I.

BACKGROUND
On July 14, 2011, during the course of trial, SSI called Pamela Bishop (“Bishop”) to testify

regarding the amount of commissions involved in this case. During SSI’s direct examination, SSI
introduced into evidence a spreadsheet (“Exhibit 10 ”), which, according to SSI, represents the
amount of commissions it owes to WHS pursuant to the Letter Agreement. According to Bishop,
she created Exhibit 10, at the direction of former SSI President, Todd Riddell (“Riddell”). Based
on Bishop’s testimony and the time frame in which Riddell worked at SSI, the Court finds Exhibit
10 was likely created in 2009.
On cross examination, counsel for WHS attempted to question Bishop regarding the disputed
spreadsheet, which was also created by Bishop in 2009 or 2010. The disputed spreadsheet was the
subject of this Court previous order, whereby the Court excluded it from the record (Court File No.
259). The parties now dispute whether the disputed spreadsheet may be admitted during trial.

II.

LAW-OF-THE-CASE DOCTRINE DOES NOT APPLY
SSI first argues the disputed spreadsheet should not be admitted into evidence because this

Court has already ruled that the disputed spreadsheet is “privileged,” and such ruling is now the lawof-the-case (Court File No. 173). The law-of-the-case doctrine provides that “when a court decides
upon a rule of law, that decision should continue to govern the same issues in subsequent stages in
the same case.” Scott v. Churchill, 377 F.3d 565, 569-70 (6th Cir. 2004) (quoting Arizona v.
California, 460 U.S. 605, 618 (1983)). The doctrine “is directed to a court’s common sense and is
not an inexorable command.” United States v. Rayborn, 495 F.3d 328, 337 (6th Cir. 2007) (internal
citations an d quotations omitted). There are three exceptional circumstances under which a court

2

should reconsider a previously decided issue: “(1) where substantially different evidence is raised
on subsequent trial; (2) where a subsequent contrary view of the law is decided by the controlling
party; or (3) where a decision is clearly erroneous and would work a manifest injustice.” Id.
(quoting Westside Mothers v. Olszewski, 454 F.3d 532, 538 (6th Cir. 2006).
Previously, this Court considered SSI’s motion to strike the affidavit of Todd Riddell
(“Riddell”) from the record and to impose sanctions on WHS’s counsel, Curtis Bowe (Court File
No. 125). As a part of its motion, SSI asked this Court to exclude from the record the same disputed
which WHS now seeks to admit into evidence. This spreadsheet was compiled by Bishop, SSI’s
controller, and it details information about commissions earned from specifically identified hospitals
(id.). In the Court’s accompanying memorandum, the Court held the spreadsheet contained
“proprietary and confidential information,” and its disclosure was a “violation of [Riddell’s]
confidentiality agreement” (Court File No. 158 at 8). The Court also found any conversations
between Riddell and SSI’s (or Teleflex’s) legal counsel regarding the commissions listed in the
spreadsheet “would have presumably been subject to the attorney-client privilege” (id.).
SSI now argues, pursuant to that prior holding, WHS is barred by the law-of-the-case
doctrine from introducing the disputed spreadsheet into evidence. Unfortunately, SSI overstates this
Court’s ruling in its trial brief. While the Court did state Riddell “disclosed information that was
the result of attorney work-product or may have reflected attorney-client privilege communications”
(Court File No. 158 at 8), the Court did not make a specific finding that the disputed spreadsheet
itself is privileged. Rather, the Court made findings relating to Riddell’s conversations with legal
counsel about the information contained in the disputed spreadsheet and findings regarding Riddell’s
confidentiality agreement. Specifically, the Court found the disputed spreadsheet should not have
been disclosed through the testimony or affidavit of Riddell who is bound by a confidentiality
3

agreement.
Accordingly, the Court finds the law-of-the-case doctrine does not apply in this instance.
SSI fails to identify how admitting the disputed spreadsheet through the testimony of Bishop, SSI’s
controller, undermines the Court’s previous decision.

III.

DISPUTED SPREADSHEET IS PRIVILEGED
SSI next argues, notwithstanding the Court’s prior ruling, the disputed spreadsheet is

privileged (Court File No. 173).1 The Court agrees the disputed spreadsheet is work product and
is therefore privileged.
A.

Work Product Doctrine

The work product doctrine, as codified in part by Fed. R. Civ. P. 26(b)(3), “protects from
discovery documents and tangible things prepared in anticipation of litigation by or for a party or
by or for that party’s representative.” United States v. Roxworthy, 457 F.3d 590, 593 (6th Cir.
2006). In order for a court to determine whether a document has been prepared “in anticipation of
litigation,” the Court should ask: “(1) whether that document was prepared ‘because of’ a party’s
subjective anticipation of litigation, as contrasted with ordinary business purpose; and (2) whether
that subjective anticipation was objectively reasonable.” In re Professionals Direct Ins. co., 578
F.3d 432, 439 (6th Cir. 2009). The party claiming the protection bears the burden of showing “that
the anticipated litigation was the ‘driving force behind the preparation of each requested
document.’” Id.

1

In its response, WHS argues the information contained in the disputed spreadsheet is not
confidential under Tennessee law. However, this Court has already ruled disclosure of the disputed
spreadsheet by Riddell may have been a violation of Riddell’s confidentiality agreement.
4

Here, SSI relies on the affidavit of Lisa Thompson (“Thompson”), Assistant General Counsel
for Teleflex, Inc., SSI’s former parent company (Court File No. 127). In her affidavit, Thompson
explains “in [her] capacity as assistant general counsel . . . [she] was involved in the creation of [the
disputed] spreadsheet. The [disputed] spreadsheet was prepared as a direct result of the ongoing
dispute with WHS in anticipation of litigation” (Court File No. 127 at 3). The Court finds this
affidavit is sufficient for SSI to meets its burden that the disputed spreadsheet was prepared “because
of” the prospect of litigation. See Biegas v. Quickway Carriers, Inc., 573 F.3d 365, 381-82 (6th Cir.
2009); see also Roxworthy, 457 F.3d at 596 (“Where an undisputed affidavit . . . specific and
detailed to indicate that the documents were prepared in anticipation of litigation or trial, then the
party claiming work product protection has met its burden”) (internal citations and quotations
omitted).
B.

Attorney-Client Privilege

“The attorney-client privilege protects from disclosure confidential communications between
a lawyer and his client in matters that relate to the legal interests of society and the client.” Ross v.
City of Memphis, 423 F.3d 596, 600 (6th Cir. 2005). There privilege is defined as follows: “(1)
[w]here legal advice of any kind is sought (2) from a professional legal adviser in his capacity as
such (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6)
are at [the client’s] instance permanently protected (7) from disclosure by himself or by the legal
adviser, (8) unless the protection is waived.” Reed v. Baxter, 134 F.3d 351, 355-56 (6th Cir. 1998).
As this Court previously stated, to the extent SSI’s employees sought legal advice regarding the
content of the disputed spreadsheet or engaged in conversations with counsel about information
contained therein, such conversations are privileged unless the privilege was waived.

5

IV.

SUBJECT MATTER WAIVER APPLIES
Although this Court finds the disputed spreadsheet is privileged, WHS argues the Federal

Rules of Evidence and the Federal Rules of Civil Procedure allow it to overcome any privilege
(Court File No. 179). In contrast, SSI contends no applicable exception applies (Court File No.
183).
A.

Federal Rule of Evidence 502

Rule 502 of the Federal Rules of Evidence provides in pertinent part:
When [a] disclosure is made in a Federal proceeding . . . and waives the attorneyclient privilege or work-product protection, the waiver extends to an undisclosed
communication or information in a Federal or State proceeding only if: (1) the
waiver is intentional; (2) the disclosed and undisclosed communications or
information concern the same subject matter; and (3) they ought in fairness to be
considered together.
1.

Exhibit 10 is Privileged

SSI argues Fed. R. Evid. 502 does not apply because Exhibit 10 is not a privileged document.
Indeed Rule 502 is only triggered if SSI waived the attorney-client privilege or work-product
doctrine when it introduced into evidence Exhibit 10.
“The [work-product] doctrine’s rationale, as originally articulated, was to permit an attorney
to ‘assemble information, sift what he considers to be the relevant from the irrelevant facts, prepare
his legal theories and plan his strategy without undue and needless interference . . . to promote
justice and to protect [his] clients’ interests.” Roxworthy, 457 F.3d at 593 (quoting Hickman v.
Taylor, 329 U.S. 495, 511 (1947)). However, as evolved, the work-product doctrine now not only
protects documents prepared by an attorney, but it also protects documents prepared for an attorney
in anticipation of litigation. Id.
Here, according to testimony, Exhibit 10, like the disputed spreadsheet, was also prepared

6

by Bishop at the direction of Riddell in 2009 or 2010. SSI argues that unlike the disputed
spreadsheet, however, Exhibit 10 was produced “for the purpose of determining how much in
commissions SSI owed at the time pursuant to the Letter Agreement, and SSI subsequently used it
as a basis for filing a motion to pay the amount it owed into the Court” (Court File No. 183 at 4).
In contrast, the disputed spreadsheet was “prepared at the request of counsel after WHS made a
demand for commissions based upon revenues generated at the CHI hospital” (id.).
Nonetheless, the Court finds from the evidence presented and from the parties’ trial briefs,
neither Exhibit 10 nor the disputed spreadsheet would have been prepared but for the prospect of
litigation with WHS. In other words, even though Exhibit 10 was prepared by SSI’s finance
department so SSI could pay WHS or PEI through the Court, the “driving force” behind creating the
document was the anticipation of litigation. See re Professionals Direct Ins. Co., 578 F.3d at 439.
2.

Disputed Spreadsheet and Exhibit 10 Contain Same Subject-Matter

Having determined Exhibit 10 is privileged, and it being clear SSI intentionally disclosed
Exhibit 10, the next question is whether the two documents contain the same subject matter. The
Court finds they do. By SSI’s own admission, the disputed spreadsheet relates to “WHS’s position
that it was entitled to commission payments on all CHI hospitals from 2005 to the present” (Court
File No. 183 at 6). In comparison, Exhibit 10 lists the amount of spreadsheets SSI believes in owes
WHS in light of its interpretation of the Letter Agreement.
3.

Disputed Spreadsheet should be Admitted in the Interest of Fairness

According to the Explanatory Note, Subdivision (a) of Fed. R. Evid. 502, Rule 502 serves
in “those unusual situations in which fairness requires a further disclosure of related, protected
information, in order to prevent a selective and misleading presentation of evidence to the
disadvantage of the adversary.” From the Court’s view, presentation of both documents allows the
7

jury to better understand both sides of the argument. “Litigants[,] [like SSI,] cannot hide behind the
privilege if they are relying upon privileged communications to make their case . . . [P]rivilege
cannot at once be used as a shield and a sword.” In re Lott, 424 F.3d 446, 454 (6th Cir. 2005)
(internal citations omitted).

V.

CONCLUSION
For the above-stated reasons, WHS may admit the disputed spreadsheet into evidence

pursuant to Fed. R. Evid. 502. However, this ruling does not serve as a limitation on the parties’
ability to object to the scope of the testimony regarding the disputed spreadsheet.

SO ORDERED.
ENTER:

/s/
CURTIS L. COLLIER
CHIEF UNITED STATES DISTRICT JUDGE

8