Hicks et al v. Milton et al

Filing 48

MEMORANDUM DECISION AND ORDER denying 38 Defendants' Motion to Compel Production of Text Messages. Signed by Magistrate Judge Daphne A. Oberg on 6/4/24. (dle)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
MEMORANDUM DECISION AND
ORDER DENYING DEFENDANTS’
MOTION TO COMPEL PRODUCTION
OF TEXT MESSAGES
(DOC. NO. 38)

PETER HICKS; HICKS, LLC; and
WASATCH HICKS, LLC,
Plaintiffs,
v.

Case No. 2:24-mc-00176

TREVOR R. MILTON; M&M RESIDUAL,
LLC; and T&M RESIDUAL, LLC,

District Judge Howard C. Nielson, Jr.

Defendants.

Magistrate Judge Daphne A. Oberg

The lawsuit underlying this motion to compel arises from Defendants’ purchase
of real property, known as Wasatch Creeks Ranch, from Plaintiffs. 1 Plaintiffs allege
Defendant Trevor Milton made material misrepresentations to induce them to sell the
property in exchange for stock options in Nikola Corporation, an entity Mr. Milton
founded. 2 Plaintiffs allege the value of these options plummeted shortly after the sale,
when Mr. Milton’s misrepresentations regarding Nikola’s business and technical
achievements became public. 3
This specific matter was transferred to this district from the Southern District of
New York, where a subpoena dispute related to the underlying Utah lawsuit is being

See Compl. ¶ 1, Hicks et al. v. Milton et al., No. 2:22-cv-00166 (D. Utah Mar. 14,
2022).

1

2

See id. ¶¶ 1–2.

3

See id. ¶ 1.

1

heard. 4 That court transferred this privilege log dispute “to avoid the risk of inconsistent
privilege determinations.” 5 All involved parties also consented to the transfer of this
privilege log dispute. 6
At issue is Defendants’ motion to compel nonparty Lucas Hicks to produce
thirteen text messages Lucas7 withheld on the basis of attorney-client privilege when
responding to Defendants’ document subpoena. 8 Defendants argue the messages are
not privileged and, alternatively, the court should review them in camera to assess
privilege. 9 In response, Plaintiffs contend 10 Lucas properly withheld the messages
under the attorney-client privilege and as protected work product. 11 Because Plaintiffs
have adequately asserted attorney-client privilege and Defendants have failed to raise a

4

(See Order, Doc. No. 34.)

5

(Id.)

6

(Id.)

Because two of the individuals involved in this dispute—Peter Hicks and Lucas
Hicks—share the same last name, the court refers to each by first name, for clarity.

7

8

(See Mot. to Compel. Produc. of Text Messages (“Mot.”), Doc. No. 38.)

9

(Id. at 1–2.)

Though Lucas (a nonparty) withheld production, both Lucas and Plaintiffs contend the
privilege is held by Plaintiff Hicks, LLC. (See Letter from Lucas Hicks to Magistrate
Judge Daphne A. Oberg, Doc. No. 45.) Accordingly, counsel for Plaintiff Hicks, LLC—
rather than counsel for Lucas—is litigating this issue. (See id.)
10

11

(Resp. to Defs.’ Mot. to Compel Produc. of Text Messages (“Opp’n”), Doc. No. 44.)

2

legitimate issue as to the application of the privilege asserted, in camera review is
unjustified and Defendants’ motion is denied.
LEGAL STANDARDS
Attorney-client privilege protects confidential communications between an
attorney and client made in order to obtain legal assistance from the attorney. 12 In
limited circumstances, the privilege may extend beyond communications between
attorneys and their clients; for instance, communications between corporate employees
for the purpose of obtaining legal advice may also be privileged. 13 Attorney-client
privilege also applies to corporate entities and, generally, the authority to assert the
privilege rests with a corporation’s management. 14 The party invoking privilege must
show the privilege applies. 15
BACKGROUND
Defendants served a document subpoena on Lucas. Lucas responded by
producing sixty-seven pages of text messages between Lucas and his father, Plaintiff

In re Grand Jury Procs., 616 F.3d 1172, 1182 (10th Cir. 2010) (internal quotation
marks omitted); see also Brennan Ctr. for Just. at N.Y. Univ. Sch. of L. v. U.S. Dep’t of
Just., 697 F.3d 184, 207 (2nd Cir. 2012) (same). The court cites Tenth and Second
Circuit law for reasons that will be explained below.
12

See, e.g., Compass Prods. Int’l LLC v. Charter Commc’ns, Inc., No. 18-CV-12296,
2020 U.S. Dist. LEXIS 111195, at *7 (S.D.N.Y. June 24, 2020) (unpublished); Brigham
Young Univ. v. Pfizer, Inc., No. 2:06-cv-890, 2011 U.S. Dist. LEXIS 76317, at *10–13
(D. Utah July 14, 2011) (unpublished); Williams v. Sprint/United Mgmt. Co., 238 F.R.D.
633, 638–39 (D. Kan. 2006) (collecting cases in support of the rule that “the attorneyclient privilege extends to communications made within a corporation if those
communications are made for the purpose of securing legal advice”).
13

14

Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343, 348–49 (1985).

In re Grand Jury Procs., 616 F.3d at 1883; United States v. Mejia, 655 F.3d 126, 132
(2d Cir. 2011).

15

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Peter Hicks. 16 Lucas withheld thirteen text messages pursuant to attorney-client
privilege, on the basis that they conveyed advice of counsel or reflected the intent to
seek legal advice. 17
Defendants advance two arguments in support of their position that the text
messages are not privileged. First, Defendants argue Lucas cannot assert attorneyclient privilege because he is not the client associated with the text messages. 18
Second, Defendants contend attorney-client privilege cannot apply because an attorney
did not send or receive the texts. 19
In response, Plaintiffs argue Lucas is asserting the privilege on behalf of Hicks,
LLC, of which Lucas is a member. 20 Plaintiffs also contend it is immaterial that an
attorney did not send or receive the communications because attorney-client privilege

16

(Mot. 2, Doc. No. 38.)

17

(Id. at 3.)

18

(Mot. 5–6, Doc. No. 38.)

19

(Id. at 6–8.)

(Opp’n 5, Doc. No. 44.) The parties dispute Lucas’s relationship to Hicks, LLC—
Defendants argue Lucas is not a member or manager of Hicks, LLC, and Plaintiffs
argue Lucas owns a five percent interest in the LLC. (See Mot. 3–4, Doc. No. 38; Opp’n
4, Doc. No. 44; Ex. B to Opp’n, Second Amend. to Am. and Restated Operating
Agreement of Hicks, LLC, Doc. No. 44-1.)
20

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applies to communications about legal advice between LLC members. 21
As explained below, Plaintiffs have adequately asserted attorney-client privilege
applies to the communications.
ANALYSIS
As an initial matter, without explanation, both parties cite to Second Circuit
cases, rather than Tenth Circuit cases. A court within the Second Circuit (the Southern
District of New York), transferred this matter to this district, and “when one district court
transfers a case to another, the norm is that the transferee court applies its own Circuit’s
cases on the meaning of federal law.”22 Under this approach, Tenth Circuit case law
should govern. Although courts sometimes diverge from this general rule if the
circumstances require it, 23 neither party explained why a departure from this approach
is warranted here. This is immaterial in this case, as Plaintiffs have adequately
asserted attorney-client privilege under both circuits’ approaches.
I.

Whether Lucas has the right to assert the privilege
Defendants first argue Lucas cannot assert attorney-client privilege because he

is not the client associated with the communications. 24 Noting attorney-client privilege

21

(Opp’n 6–7, Doc. No. 44.)

Sanofi-Aventis U.S., LLC v. Mylan, Inc., 44 F.4th 959, 980 (10th Cir. 2022); see also
Menowitz v. Brown, 991 F.2d 36, 40 (2d Cir. 1993) (“[A] transferee federal court should
apply its interpretations of federal law, not the construction of federal law of the
transferor circuit.”).

22

See, e.g., Olcott v. Del. Flood Co., 76 F.3d 1538, 1546 (10th Cir. 1996) (applying
transferor court's law because "the unique language and purpose" of the statute at issue
suggested Congressional intent to apply transferor law).
23

24

(Mot. 5–6, Doc. No. 38.)

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belongs to the client, Defendants contend that only Hicks, LLC can assert privilege. 25
Defendants cite a case from the Western District of New York in support of their
argument that only a corporation’s management may assert a corporation’s attorneyclient privilege. 26 Citing publicly available information, Defendants contend Lucas is not
a member of Hicks, LLC, let alone a corporate manager able to assert attorney-client
privilege on behalf of the corporation, making his privilege claim improper. 27
In response, Plaintiffs argue Lucas is asserting the privilege on behalf of Hicks,
LLC, of which Lucas is a member. 28 Plaintiffs submitted a 2018 operating agreement
showing Lucas owns a half percent profit interest in Hicks, LLC. 29 Plaintiffs contend that
to assert attorney-privilege on behalf of a corporation, the person receiving the
communication need only be “in a position to act or rely on the legal advice contained in
the communication.” 30 Plaintiffs claim Lucas can assert attorney-client privilege on

25

(Id.)

(Id. at 5 (citing MacKenzie-Childs LLC v. MacKenzie-Childs, 262 F.R.D. 241, 248
(W.D.N.Y. 2009).)

26

27

(Id.)

28

(Opp’n 5–6, Doc. No. 44.)

(See Ex. B to Opp’n, Second Amend. to Am. and Restated Operating Agreement of
Hicks, LLC, Doc. No. 44-1.) Peter owns the remaining interests in the LLC and is the
LLC’s manager. (See id.)

29

(Opp’n 6, Doc. No. 44 (quoting Compass Prods. Int’l, 2020 U.S. Dist. LEXIS 111195,
at *7).)

30

6

behalf of the LLC because he is in a position to act on the legal advice, as a member of
the LLC. 31
Both parties focus heavily on whether Lucas himself may assert the privilege on
behalf of Hicks, LLC (the client as to the communications). But Hicks, LLC and its
manager, Peter, also argue the communications are privileged. 32 Even if Lucas could
not assert the privilege, Hicks, LLC and Peter have appeared in this matter, and both
assert the privilege on behalf of the LLC. Where the LLC and its undisputed manager
are properly asserting attorney-client privilege on behalf of the LLC, Defendants’
argument about whether Lucas can assert the privilege fails.
II.

Whether communications between Lucas and Peter are privileged
Defendants next argue the text messages between Lucas and Peter cannot be

privileged because an attorney did not send or receive them, and they do not otherwise
reflect advice by counsel. 33 Defendants contend texts between nonlawyers can only be
privileged if they reflect legal counsel’s advice to the corporation—and involve only
employees in a position to act on that advice or whose responsibilities include the

31

(Id.)

(See generally id.) As stated above, Hicks, LLC and Peter—not Lucas—are the
parties arguing the communications are privileged.
32

33

(See Mot. 6, Doc. No. 38.)

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subject matter of the advice. 34 They maintain Lucas could not rely on any advice
discussed or sought in the communications because he has no role in the LLC. 35
Defendants note that, according to the privilege log, Lucas withheld messages
either conveying the advice of counsel or reflecting the intent to seek legal advice. 36
But Defendants argue the factual context of the messages suggests they neither convey
the advice of counsel nor the intent to seek that advice. 37 And, in any event,
Defendants indicate they can find no legal support for Lucas’s position that a
communication reflecting or conveying a mere intent to seek or receive the advice of
counsel is privileged. 38
Plaintiffs offer two arguments in response. First, Plaintiffs argue it is irrelevant
that an attorney did not send or receive the communications because the attorney-client
privilege protects communications about an LLC’s legal issues made between its two
sole members. 39 Second, Plaintiffs cite two cases (one from a district court in the
Second Circuit and one from a district court in the Tenth Circuit) supporting the
application of the attorney-client privilege to communications expressing an intent to

(Id. (citing Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437,
442 (S.D.N.Y. 1995), and Compass Prods. Int’l, 2020 U.S. Dist. LEXIS 111195, at *7).)
34

35

(Id. at 7.)

36

(Id. at 3, 6–7.)

37

(Id. at 7–8.)

38

(Id. at 6–7.)

39

(Opp’n 6–7, Doc. No. 44.)

8

seek advice of counsel. 40
A.

Legal Authority Supports Lucas’s Claim of Privilege

Defendants’ legal arguments fail. First, Defendants’ contention that the
messages cannot be privileged unless they specifically convey advice of counsel is
incorrect. The standard is whether the communications were made for the purposes of
obtaining legal advice. 41 Plaintiffs assert the communications furthered that purpose
and, as explained below, Defendants provide no legitimate reason to doubt this.
Defendants’ argument that a communication cannot be privileged if it relates to
planned conversations with counsel fails on similar grounds. Legal authority supports
the notion that such communications may be privileged. 42 This makes sense: the
purpose of the attorney-client privilege is “to encourage full and frank communication
between attorneys and their clients and thereby promote broader public interests in the
observance of law and administration of justice.” 43 Peter and Lucas, as the sole

(Id. at 7 (citing Compass Prods. Int’l, 2020 U.S. Dist. LEXIS 111195, at *7, and
Brigham Young Univ., 2011 U.S. Dist. LEXIS 76317, at *10–13).)
40

See, e.g., Compass Prods. Int’l, 2020 U.S. Dist. LEXIS 111195, at *7 (finding
privileged communications regarding a planned discussion with lawyers made between
nonlawyer employees); Brigham Young Univ., 2011 U.S. Dist. LEXIS 76317, at *10–13
(finding privileged communications regarding a corporation’s potential legal issues
made between nonlawyer employees because “the essential elements of the
privilege . . . do not require an attorney to have either authored or received the
document at issue in order to maintain the privilege”); Williams, 238 F.R.D. at 638–39
(collecting cases in support of the rule that “the attorney-client privilege extends to
communications made within a corporation if those communications are made for the
purpose of securing legal advice”).
41

See Compass Prods. Int’l, 2020 U.S. Dist. LEXIS 111195, at *7; Brigham Young
Univ., 2011 U.S. Dist. LEXIS 76317, at *10–13.
42

43

Upjohn Co. v. United States, 449 U.S. 383, 389 (1981).

9

members of the LLC, 44 must be able to discuss topics about which they need to seek
legal advice, without waiving privilege.
Finally, Defendants have not raised any genuine dispute as to whether Lucas
could act on legal advice given to the LLC. Defendants acknowledge the attorney-client
privilege protects communications between employees who are in a position to act or
rely on the legal advice sought. 45 Relying on the incorrect premise that Lucas was not a
member of the LLC, Defendants argue he could not act on legal advice relating to the
LLC. 46 But Plaintiffs submitted evidence showing Lucas is a member of the LLC, 47 and
Defendants provide no reason to doubt that evidence. Although Lucas owns a minority
interest, he and Peter are the only members of the LLC, leaving both in a position to act
or rely on legal advice relating to the LLC. 48 Accordingly, Lucas properly withheld the

As noted above, Plaintiffs submitted a 2018 operating agreement showing Lucas and
Peter are the sole members of the LLC. (See Ex. B to Opp’n, Second Amend. to Am.
and Restated Operating Agreement of Hicks, LLC, Doc. No. 44-1.) Defendants provide
no reason to doubt the authenticity of this document.
44

(Mot. 6, Doc. No. 38 (citing Compass Prods. Int’l, 2020 U.S. Dist. LEXIS 111195, at
*7)); see also Brigham Young Univ., 2011 U.S. Dist. LEXIS 76317, at *10–13 (noting the
privilege protects “communications involving corporate officers and agents . . . who will
act on the legal advice”).

45

46

(Mot. 7, Doc. No. 38.)

(See Ex. B to Opp’n, Second Amend. to Am. and Restated Operating Agreement of
Hicks, LLC, Doc. No. 44-1.)
47

Cf. JA Apparel Corp v. Abboud, No. 07 Civ. 7787, 2008 U.S. Dist. LEXIS 1825, at *8
(S.D.N.Y. Jan. 10, 2008) (unpublished) (noting disclosure of legal advice to a “low-level
employee to whom the legal advice . . . would have had no significance” may waive
privilege, because such employee would not be in a position to act or rely on the legal
advice). Lucas is a member of the LLC. Defendants have not presented evidence
showing he is a low-level employee lacking knowledge about the legal issues discussed
in the communications.
48

10

messages which he asserts either convey legal advice or reflect an intent to seek it.
B.

Nothing in the Context of the Messages Casts Doubt on the
Privilege Claims

Since communications between nonlawyer corporate members conveying the
advice of counsel or an intent to seek such advice are protected by attorney-client
privilege, the only issue remaining is whether the text messages actually convey what
Plaintiffs say they do. Defendants try to cast doubt on the privilege designations by
arguing the context of the messages suggests they do not actually reflect an intent to
seek legal advice. 49 For example, Defendants note one of the messages “has Lucas
saying, ‘Will call you soon.’ Peter replies ‘Ok.’ The next text is redacted, and then
Lucas says, ‘Yes. Call me.’” 50 Defendants argue this does not “support that Peter is
conveying intent to seek advice of counsel.” 51 But none of Defendants’ arguments as to
context are sufficient to raise a genuine dispute as to the accuracy of Plaintiffs’
descriptions of the communications. These arguments constitute speculation, not a
showing sufficient to create a legitimate issue as to the application of the privilege
asserted.
For these same reasons, in camera review of the messages is unwarranted.
“There is no basis for the Court to conduct an in camera review in situations wherein the
privilege log at issue provides sufficient description of the documents withheld, the
requesting party hasn’t shown that the documents aren’t privileged, and the underlying

49

(See Mot. 8, Doc. No. 38.)

50

(Id.)

51

(Id.)

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dispute comes down to whether the privileges apply.”52 Because the privilege log
sufficiently supports Lucas’s withholding of the messages as privileged, and in camera
review of the messages is unjustified, the court need not address Plaintiffs’ argument
that the messages are protected as attorney work product.
CONCLUSION
Where Hicks, LLC has properly invoked attorney-client privilege, and provided
sufficient information to support the application of the privilege, Defendants’ motion to
compel production 53 is denied.
DATED this 4th day of June, 2024.
BY THE COURT:
______________________________
Daphne A. Oberg
United States Magistrate Judge

Deffenbaugh Indus. v. Unified Gov’t of Wyandotte Cnty., No. 20-2204, 2021 U.S. Dist.
LEXIS 79243, at *8–9 (D. Kan. Apr. 26, 2021) (unpublished) (internal quotation marks
omitted omitted).
52

(Doc. No. 38.) The original motion giving rise to this privilege dispute is Defendants’
Motion to Compel Compliance with Subpoena, which was filed in the Southern District
of New York. The Southern District of New York partially resolved that motion and
transferred only the privilege issue to this court. This court then ordered Defendants to
refile their motion, addressing only the privilege issue. (See Doc. No. 37.) Defendants
refiled their motion as Doc. No. 38, which is the motion this order resolves. Defendants’
original motion, (Doc. No. 1), is therefore denied as moot. Finally, because this order
resolves the only active dispute under this case number (2:24-mc-00176), the clerk’s
office is directed to close the case.
53

12