Peterson v. Avalon Health Care

Filing 36

MEMORANDUM DECISION and ORDER Sustaining Objections to 27 Magistrate Judge's Order. Signed by Judge Dee Benson on 10/6/2016. (blh)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

LACIE PETERSON, an individual,
Plaintiff,

MEMORANDUM DECISION & ORDER
SUSTAINING OBJECTIONS
TO MAGISTRATE JUDGE’S
ORDER [Dkt. No. 27]

vs.

AVALON CARE CENTER – VA PAYSON,
LLC, a Utah Limited Liability Company,

Case No. 2:15-CV-671
Judge Dee Benson

Defendant.

This matter is before the Court on objections filed by defendant Avalon Care Center –
VA Payson, LLC, (“Avalon Payson” or “defendant”) to an order entered by Magistrate Judge
Wells (Dkt. No. 27), addressing discovery motions. (Dkt. No. 28, Def.’s Obj.) Pursuant to
DUCivR 72-3, plaintiff Lacie Peterson responded to defendant’s objections and defendant
Avalon Payson replied. (Dkt. Nos. 30 & 31, respectively.) For the reasons that follow,
defendant’s objections are sustained.
BACKGROUND
In this lawsuit, Plaintiff alleges sexual harassment and retaliation in violation of federal

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and state anti-discrimination laws. More specifically, Plaintiff alleges that while working for
Defendant Avalon, she was sexually harassed by the Maintenance Supervisor, retaliated against,
and placed on administrative leave. Plaintiff further alleges in the First Amended Complaint,
that as a result of an internal investigation, approximately two weeks after she was placed on
administrative leave, Defendant Avalon “reversed their position and unconditionally reinstated
Peterson, announced that [the Maintenance Supervisor] had been fired, expunged Peterson’s
employment record, and enclosed payment for back pay to cover the period of her unjust
suspension.” (Dkt. No. 4, Am. Compl. ¶ 58.) In other words, Plaintiff was unconditionally
invited to return to work with back pay for the work time while on administrative leave. (Id.)
Within a few days of Defendant Avalon’s offer of unconditional reinstatement, Plaintiff
and her attorney, Steve Sumsion, attended a return-to-work meeting between Plaintiff and
Avalon’s human resources representative and in-house counsel. The stated purpose was to
provide an opportunity for Plaintiff to “express her concerns and ask any questions she might
have before returning to work.” (Dkt. No. 28-3, Meeting Report at 1.) Plaintiff’s counsel, Mr.
Sumsion, did most of the talking during the meeting, and at the conclusion of the meeting asked:
“Will you give us until tomorrow at noon to make a decision about Ms. Peterson returning to
work?” (Id. at 4.)
Ultimately, Plaintiff rejected the offer, refused to return to work and was terminated as a
result. Following her termination, Plaintiff filed a charge of discrimination with the Utah Labor
Commission, received a right to sue letter, and filed this lawsuit. In Plaintiff’s First Amended
Complaint she expressly alleges that she made the decision to reject Defendant’s offer of

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unconditional reinstatement and refused to return to work “[o]n the advice of her attorney.”
(Dkt. No. 4, Am. Compl. ¶60.) Defendant Avalon then affirmatively pleaded in its Answer that
Plaintiff failed to mitigate her damages. (Dkt. No. 5, Answer at 9.) Avalon also listed Mr.
Sumsion as a fact witness in its initial disclosures. (Dtk. No. 28-4.)
Because Plaintiff specifically alleged that she relied on counsel when she refused
Defendant Avalon’s offer of reinstatement, and because Plaintiff’s refusal to return to work
resulted in what Defendant claims was a failure to mitigate damages, Defendant sought to depose
both Plaintiff and Plaintiff’s counsel, Mr. Sumsion.
On February 29, 2016, Plaintiff was deposed and asked why she refused Avalon’s offer
of reinstatement.
Q (Avalon’s Counsel): When you first got this offer of unconditional reinstatement, Peter
Sabey said clean slate, same pay, we fired the person you complained about, you have a
new director of maintenance, your first instinct was to say, okay, great I’d like to have
my job back?
A (Ms. Peterson): Only under certain requirements that my attorney could be in contract
with Avalon. Does that make sense? We wanted to draw up a contract with them to
protect me from further harassment from Shauna Kraus.
Q (Avalon’s Counsel): And then upon the advice of your attorney, did you refuse to take
the offer of unconditional reinstatement?
Mr. Worthy: I object to that again if it’s seeking attorney-client communications.
Q (Avalon’s Counsel): I am not seeking attorney-client communications, but this is – I’ll
quote the complaint. On the advice of her attorney, she did not go back to work or accept
the check until such negotiations had occurred in good faith and was terminated as a
result.
So do you agree that the reason you didn’t take the unconditional offer of
reinstatement was because of the advice of your attorney?
A (Ms. Peterson): Well, I don’t know.
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Mr. Worthy: I object because this has also been asked and answered.
Q (Avalon’s Counsel): What don’t you know?
A (Ms. Peterson): What the question is.
Q (Avalon’s Counsel): My question was, is it true – and I am just reading from the
complaint that was filed, is it true that on the advice of your attorney, you did not go back
to work or accept the check until such negotiations occurred in good faith and that you
were terminated as a result?
A (Ms. Peterson): I don’t know how to answer that.
Q: What’s not clear?
A: Well, me and my attorney spoke about it. He wasn’t just telling me what to do, he
was listening to me as well.
Mr. Worthy: I object if his question is seeking attorney-client communications. You
don’t have to tell him about attorney-client communications.
Q (Avalon’s Counsel): You can answer the question. Just is it true or not that – so the
letter we’re looking at, Exhibit 14, is an unconditional reinstatement of Lacie Peterson.
You had a meeting saying you can come back, here’s your back pay, and you, upon the
advice of counsel, decided not to come back.
A (Ms. Peterson): I don’t know. I don’t know how to answer that.
(Dkt. No. 28-2, Lacie Peterson Depo., at 137- 39.)
Because the parties continued to disagree whether the attorney-client privilege on this
subject matter had been waived, Defendant Avalon left the deposition open. (Id. at 152.)
Thereafter, on April 6, 2016, Plaintiff filed a Motion for Protective Order seeking to
shield conversations between Plaintiff and her counsel, Mr. Sumsion, about the reasons she
rejected the unconditional offer of reinstatement and refused to return to work. Specifically,
Plaintiff’s Proposed Protective Order sought to prohibit Defendant Avalon “from seeking details
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regarding private communications that [Plaintiff] had with her attorney, Steven R. Sumsion, as to
whether she should have returned to work after Avalon’s offer of unconditional reinstatement to
her on or about August 29, 2013.” (Dkt. No. 20-2, Protective Order [Proposed].)
Plaintiff did not, however, move to prohibit Avalon from deposing Mr. Sumsion
regarding non-privileged matters, such as the return-to-work meeting, and Mr. Sumsion appears
to have agreed to be deposed on non-privileged topics. (See Id.; Dkt. No. 28-5, E-mail
Exchange Between Sumsion and Castleberry, dated May 3, 2016.) In an e-mail exchange
between counsel, Mr. Sumsion requested to postpone his deposition until after the court ruled on
the Motion for Protective Order to avoid being deposed twice – once about the return-to-work
meeting and again after the court had ruled about the attorney/client communications regarding
why Plaintiff refused to return to work. As a professional courtesy, Avalon agreed to postpone
Mr. Sumsion’s deposition. (Id.)
On June 7, 2016, the magistrate judge granted Plaintiff’s Motion for Protective Order. In
doing so, the magistrate judge concluded that Plaintiff’s conversations with her counsel, Mr.
Sumsion, were protected by the attorney client privilege because neither the at-issue nor the
subject matter waiver doctrines applied, and “further prohibited” Avalon from deposing Mr.
Sumsion for any reason. (Dkt. No. 27, Protective Order at 4.)
Avalon objected to the magistrate judge’s order on the following grounds. First, Avalon
argues that the Protective Order is in error because the scope of the Order exceeds the relief
sought by Plaintiff. Second, Avalon argues the Order erroneously concludes that issues placed
in the lawsuit via the allegations of Plaintiff’s Amended Complaint are immune from question.

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Stated another way, Avalon asserts that it should be permitted to depose Plaintiff’s counsel not
only as to the non-privileged content of the return to work meeting, but also about the advice he
gave to Plaintiff given that Plaintiff inserted the “advice of counsel” as an issue in the lawsuit.
DISCUSSION
Upon objection, this Court reviews an order by a magistrate judge on a non-dispositive
matter to determine whether the decision is “clearly erroneous or contrary to law.” 28 U.S.C.
363(b)(1)(A); see also Fed.R.Civ.P. 72(a) (stating that upon receipt of timely objections, “[t]he
district judge to whom the case is assigned shall consider such objections and shall modify or set
aside any portion of the magistrate judge’s order found to be clearly erroneous or contrary to
law”). A decision is “clearly erroneous” when, “although there is evidence to support it, the
reviewing court on the entire evidence is left with a definite and firm conviction that a mistake
has been committed.” United States v. United States Gypsum Company, 333 U.S. 364, 395
(1948). As stated previously, Avalon objects to the magistrate judge’s blanket ruling
prohibiting Avalon from deposing Mr. Sumsion for any reason whatsoever, and Avalon objects
to the magistrate judge’s ruling that the “at-issue” and subject matter waiver doctrines do not
apply. Having reviewed the record before the court, Avalon’s objections are sustained.
1. The Magistrate Judge Erred by Granting Relief Not Requested by Plaintiff
On the issue of whether Avalon could depose Mr. Sumsion for any purpose – including
inquiry into non-privileged communications such as the return-to-work meeting – the magistrate
judge’s Order does not provide any rationale or explanation. It simply states: “Avalon is further
prohibited from deposing Peterson’s counsel, Mr. Sumsion.” (Dkt. No. 27, Order at 4.)

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Whether Plaintiff’s counsel could be deposed for any purpose was beyond the scope of
the relief requested by Plaintiff in Plaintiff’s motion and Proposed Order. As previously
explained, the Plaintiff’s Proposed Protective Order specifically requested that Avalon be
prohibited “from seeking details regarding private communications that [Plaintiff] had with her
attorney, Steven R. Sumsion, as to whether she should have returned to work after Avalon’s
offer of unconditional reinstatement to her on or about August 29, 2013.” (Plaintiff’s Proposed
Protective Order, Dkt. No. 20-2.)
Notably absent from Plaintiff’s motion and proposed order was any request by Plaintiff to
prohibit Avalon from deposing Mr. Sumsion with regard to any non-private conversations
concerning the right-to-work meeting. Having chosen to participate with Ms. Peterson in the
human resources return-to-work meeting after Avalon offered her an unconditional return to
work, Mr. Sumsion exposed himself to the possibility of becoming a fact witness in this case.
And, as set forth in detail above, Mr. Sumsion appears to have agreed to being deposed on such
non-privileged topics. (Dkt. No. 28-5, Attachments to Def.’s Obj. To Magistrate Order, Email
exchange between Steven Sumsion and David Castleberry, dated May 3, 2016, agreeing to
postponement of deposition on non-privileged information until after ruling on potentially
privileged information.) Moreover, as Avalon points out in their Objection to Magistrate Order,
Plaintiff’s counsel has “noticed” the deposition of Avalon’s corporate counsel, Peter Sabey, who,
like Mr. Sumsion, attended the return-to-work meeting. It seems patently unfair to permit
Plaintiff to depose all of those present at the return-to-work meeting and deny the same to
Avalon.

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Accordingly, the court finds the magistrate judge clearly erred in prohibiting Avalon
from deposing Mr. Sumsion for any reason, where such relief was beyond the scope of the
Plaintiff’s Proposed Order and contrary to the understanding and agreement of the parties.
2.

The magistrate judge erred in concluding that the attorney-client
communications are not “truly ‘at issue’ in the litigation”

In granting Plaintiff’s Motion for Protective Order and concluding that the “at-issue”
waiver did not apply, the magistrate judge explained the reason as follows: “Defendant has failed
to convince the Court that the privileged correspondences are truly ‘at issue’ in the litigation
especially because Plaintiff has agreed not to introduce any evidence regarding advice of counsel
at trial.” (Dkt. No. 27, Order at 3.)
As an initial matter, the court is unaware of any agreement wherein Plaintiff has agreed
to not introduce any evidence regarding the “advice of counsel” at trial. To the contrary,
paragraph 60 of Plaintiff’s First Amended Complaint contains the express allegation: “On the
advice of [Plaintiff’s] attorney, she did not go back to work.” (Dkt. No. 3, ¶60.) Additionally,
Avalon’s attempts to obtain a written stipulation from Plaintiff that she will not refer to the
“advice of counsel” during trial have been unsuccessful to date. (Dkt. No. 28, at 11 n.2.)
It is well-established that a party may waive the attorney-client privilege by placing
attorney client communication at the heart of a case. A direct allegation in a pleading that one
has relied on the advice of counsel suffices to “affirmatively place at issue” the advice of one’s
attorney. See Seneca Ins. Co. v. Western Claims, Inc., 774 F.3d 1272, 1276 (10th Cir. 2014).
Under the at-issue doctrine, otherwise privileged information is discoverable if three elements
are met: “(1) assertion of the privilege was a result of some affirmative act, such as filing suit, by
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the asserting party; (2) through this affirmative act, the asserting party put the protected
information at issue by making it relevant to the case; and (3) application of the privilege would
have denied the opposing party access to information vital to its defense.” Seneca, 774 F.3d
1276.
The court finds that all three elements have been met here. Plaintiff affirmatively put the
advice of her attorney at issue by alleging in the First Amended Complaint that “[o]n the advice
of her attorney, she did not go back to work.” (Dkt. No. 3, ¶60.) As a direct result of the
allegations in the First Amended Complaint, Avalon asserted the defense of failure to mitigate
damages. As such, the reasonableness of Plaintiff’s decision to refuse Avalon’s offer of
unconditional reinstatement is both relevant to the case and vital to Avalon’s mitigation of
damages defense.
Plaintiff’s assertion that the information is not “vital” because it is available from other
sources misses the point, particularly in this case where the magistrate judge did not make such a
finding. Based on the information presently before the court, it appears that only Plaintiff and
her counsel, Mr. Sumsion, have personal knowledge of the substance of Mr. Sumsion’s advice
that Plaintiff should refuse to return to work after the offer of reinstatement. Although other
individuals and employees may have attended the return to work meeting, they do not have
personal knowledge related to Mr. Sumsion’s advice to Plaintiff regarding her decision.
To allow Plaintiff to rely on “advice of counsel” as the basis for her decision to refuse to
return to work, but then exclude the contents of that advice would violate the well-established
principle that attorney-client communications cannot be used both as a sword and a shield.

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Edward J. Imwinkelried, The New Wigmore: Evidentiary Privileges, § 6.12.4 (2014) (noting
thrust of “at issue” doctrine is that party’s privilege cannot be used as both shield and sword).
By affirmatively alleging in the First Amended Complaint that she refused to return to
work “on the advice of her attorney,” and because the reasonableness of plaintiff’s refusal to
return to work is both relevant and vital to this case, Plaintiff has sufficiently placed her
counsel’s “advice” at issue in this litigation. Avalon is therefore entitled to discovery of that
advice in order to determine the reasons Plaintiff refused Avalon’s offer. Absent such evidence,
Avalon will be unable to present a full defense regarding mitigation of damages.
Accordingly, the Court finds the magistrate judge’s conclusion that the “advice of
counsel” was not “truly at issue in the litigation” was contrary to law and clearly erroneous.
It is therefore ordered that Defendant’s Objections are sustained.
DATED this 6th day of October, 2016.

_________________________________
Dee Benson
United States District Judge

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