United States District Court, D. Nevada
HANOVER INSURANCE COMPANY, a New Hampshire corporation, Plaintiff,
TERRA SOUTH CORPORATION d/b/a MAD DOG HEAVY EQUIPMENT, a Nevada corporation; THE FIRMANI CORPORATION, a Nevada corporation; ROCK HARD CONTRACTING, INC., a Nevada corporation; AMY T. FIRMANI and; JOHN FIRMANI, Nevada residents both individually and as husband and wife; Does 1 through 100; and Roe Corporations 1 through 100, inclusive, Defendants.
J. YOUCHAH, MAGISTRATE JUDGE.
the Court is Plaintiff's Motion for Protective Order (ECF
No. 47), Defendants' Response to Plaintiff's Motion
for Protective Order (ECF No. 49), Plaintiff's Reply in
Support of its Motion for Protective Order (ECF No. 53),
Plaintiff's Motion for Leave to File Supplemental
Briefing in Support of its Motion for Protective Order (ECF
No. 56), Defendants' Response to Plaintiff's Motion
for Leave to File Supplemental Briefing in Support of its
Motion for Protective Order (ECF No. 58), and Plaintiff's
Reply in Support of its Motion for Leave to File Supplemental
Briefing in Support of its Motion for Protective Order (ECF
No. 59). The Court finds as follows.
briefing, Plaintiff alleges the following: Mad Dog was
awarded a (1) subcontract from a general contractor named
Engineered Structures, Inc., (“ESI”) to build a
Winco Foods store (ECF No. 1 ¶ 17); (2) subcontract from
a general contractor known as McCarthy Building Companies,
Inc. (“McCarthy”) for a project known as the
Indian Springs Collection and Treatment System (Id.
¶ 20); and, (3) subcontract from McCarthy for a project
known as the AWT Membrane (Id. ¶ 23). For each
project, Mad Dog was required to post payment and performance
bonds in an amount equal to the subcontract price and name
the awarding contractor as the obligee (Id.
¶¶ 18, 21, 24). At Mad Dog's request, Hanover
issued payment and performance bonds for all three projects
naming Mad Dog as the bond principal and each awarding
contractor as the obligees. Id. ¶¶ 19, 22,
25. As a condition of inducement for Hanover's issuance
of the bonds, Defendants executed a General Agreement of
Indemnity (“GAI”),  which required Mad Dog to
indemnify Hanover for all losses, costs, and expenses arising
out of the bonds. Id. ¶ 26. Mad Dog defaulted
on all three aforementioned projects for which Hanover issued
payment and performance bonds. Id. ¶¶ 31,
40, 46. After learning Mad Dog failed to pay all amounts
owed, Hanover made payments to those who provided labor or
materials or supplies on the projects. Id.
¶¶ 34, 43, 49.
its default, Mad Dog filed suit against ESI (the “ESI
Litigation”) in the Eighth Judicial District Court of
Clark County, Nevada, alleging that it had not been fully
paid on the Winco project. Id. ¶ 35. In turn,
ESI filed an Answer and Counterclaim, including a cause of
action against Hanover for issuing the Hanover performance
bond. Id. ¶ 36. What happened next is a subject
claims Mad Dog blocked Hanover's settlement offer to ESI,
under which ESI agreed to pay Hanover $100, 000 and dismiss
ESI's claims against Mad Dog and Hanover. ECF No. 47 at
6:16-18. Hanover further contends that Mad Dog convinced the
state trial court, through motion practice, that the GAI did
not confer a right on Hanover to settle on Mad Dog's
behalf. Id. at 13 n.11. Defendants claim Hanover:
(i) surreptitiously negotiated with ESI to settle the case
for much less than Mad Dog's settlement range; (ii) shut
Mad Dog out of settlement discussions once Hanover's
efforts were discovered; and, (iii) filed a Motion to Enforce
Settlement Agreement in an attempt to force Mad Dog's
compliance. ECF No. 14 ¶¶ 23-27. Following a bench
trial, the state trial court determined “Hanover
overstepped its authority in reaching the Settlement
Agreement and Mutual Release with ESI, ” and denied
relief to both Mad Dog and ESI. ECF No. 49-1 at 9:6-7,
now sues all Defendants in this Court to enforce its
contractual indemnification rights and recover: (i) all
losses, costs, and expenses incurred under the GAI, with pre
and post-judgment interest; (ii) an award of Hanover's
attorneys' fees and costs incurred in litigating this
action; and, (iii) additional relief this Court deems just
and equitable. ECF No. 1 at 8:20-9:6. In return, Defendants
filed an Answer and Counterclaim against Hanover asserting
claims for breach of contract, breach of implied covenant of
good faith and fair dealing, breach of fiduciary duty,
accounting, and special damages of attorneys' fees. ECF
No. 14. On September 27, 2019, the Court granted
Plaintiff's Motion for Partial Summary Judgment. ECF No.
issue presently are Defendants' deposition notices
directed at Hanover's attorney of record, Patrick F.
Welch and Scott F. Frerichs (collectively,
“Hanover's Counsel”). ECF No. 47 at 3 n.4.
court may, for good cause, issue an order to protect a party
or person from annoyance, embarrassment, oppression, or undue
burden or expense. ...” Fed.R.Civ.P. 26(c)(1). The
burden of persuasion under Fed.R.Civ.P. 26 is on the party
seeking the protective order. Cipollone v. Liggett Grp.,
Inc., 785 F.2d 1108, 1121 (3d Cir. 1986). “To meet
that burden of persuasion, the party seeking the protective
order must show good cause by demonstrating a particular need
for the protection sought.” Barket v. Clark,
No. 2:12-cv-00393-JCM-GWF, 2013 WL 647507, *2 (D. Nev. Feb.
21, 2013), citing Beckman Indus., Inc., v. Int'l.
Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992). “A
mere showing that the discovery may involve some
inconvenience or expense does not suffice to establish good
cause under Rule 26(c). . . .” U.S. E.E.O.C. v.
Caesars Entertainment, Inc., 237 F.R.D. 428, 432 (D.
Nev. 2006) (internal citation omitted).
Federal Rules of Civil Procedure do not specifically prohibit
the taking of opposing counsel's deposition.”
Shelton v. Am. Motors Corp., 805 F.2d 1323, 1327
(8th Cir. 1986) (internal citation omitted). Although
deposing opposing counsel is not absolutely prohibited, it is
disfavored. Harter v. CPS Sec. (USA), Inc., No.
2:12-cv-00084-MMD-PAL, 2013 WL 129418, at *8 (D. Nev. Jan. 9,
2013) (internal citation omitted). This is because
“allowing the deposition of opposing counsel ‘not
only disrupts the adversarial system and lowers the standards
of the profession, but it also adds to the already burdensome
time and costs of litigation.'” Id.,
citing Shelton, 805 F.2d at 1327. Deposing opposing
counsel also “‘detracts from the quality of
client representation,' and has a “chilling
effect” on attorney-client representations.'”
Id. (internal citation omitted). Citing these
negative consequences, the “Nevada Supreme Court
therefore adopted Shelton's three-factor test
for determining when a party may take the deposition of
opposing counsel.” Id. (internal citation
omitted). In order for depositions of opposing counsel to go
forward, the Shelton standard requires a party to
show that: “(1) no other means exist to obtain the
information than to depose opposing counsel; (2) the
information sought is relevant and nonprivileged; and (3) the
information is crucial to the preparation of the case.”
Id. (internal citations omitted). Consequently, a
party seeking to depose opposing counsel bears a
“difficult burden.” Ditech Fin. LLC v. SFR
Invs. Pool 1, LLC, No. 2:15-cv-476-JCM-VCF, 2016 WL
4370034, at *2 (D. Nev. Aug. 15, 2016). Plaintiff urges the
Court to assess whether Defendants' depositions of
Hanover's Counsel should proceed under
Shelton's heightened standard. ECF No. 47 at
argue that Shelton's heightened standard does
not apply to this case, and instead asks this Court to apply
the Pamida rule. ECF No. 49 at 10:12-12:24. In
Pamida, Inc. v. E.S. Originals, Inc., the Pamida
department store brought an indemnification suit against shoe
manufacturer Dynasty after the store was sued by a
patentholder alleging patent infringement. 281 F.3d 726 (8th
Cir. 2002). Pamida was represented by the same attorneys in
the indemnification suit as it was in the concluded patent
infringement suit. Id. at 728. Dynasty sought to
depose Pamida's attorneys on issues including “what
actions Pamida took to give Dynasty notice of the patent
infringement action . . . and [Pamida's] claim for
indemnity from Dynasty as well as whether the $750, 000 in
attorneys' fees sought by Pamida were reasonably incurred
in defending the patent infringement action.”
Id. at 729. In its analysis, the court in
Pamida distinguished the Shelton test as
one that “was not intended to provide heightened
protection to attorneys who represented a client in a
completed case and then also happened to represent that same
client in a pending case where the information known only by
the attorneys regarding the prior concluded case was
crucial.” Id. at 731. Under the specific facts
provided in Pamida, proposed depositions of opposing
counsel should be evaluated under the ordinary discovery
standards of the Federal Rules of Civil Procedure and any
asserted privileges. Id.
Plaintiff points out, “[t]his District follows the
Shelton standard.” ECF No. 53, citing
Ditech Fin. LLC, 2016 WL 4370034; Couturier v. Am.
Invsco Corp., et al., No. 2:12-cv-01104-APG-NJK, 2013 WL
4499008, at *1 (D. Nev. Aug. 20, 2013); Harter, 2013
WL 129418 at *9; Fernandez v. Penske Truck Leasing Co.,
L.P., 2013 WL 438669, at *2 (D. Nev. Feb. 1, 2013);
Kabins Family Ltd. P'Ship v. Chain Consortium,
No. 2:09-cv-01125-GMN-RJJ, 2012 WL 13048564, at *2 (D. Nev.
Sept. 28, 2012). “District courts in this district and
elsewhere in the Ninth Circuit recognize Shelton as
the leading case on attorney depositions.” Chao v.
Aurora Loan Servs., LLC, No. C 10-3118 SBA (LB), 2012 WL
5988617, at *3 (N.D. Cal. Nov. 26, 2012) (collecting cases).
The Court follows the prevailing trend and applies the
Shelton factors to determine whether the
Defendants' depositions of Hanover's Counsel should
The Shelton Factors Support Not Deposing
explained below, Hanover demonstrates good cause for issuing
a protective order preventing Plaintiff's notices of
Hanover's Counsel's depositions from going forward as
Plaintiff has shown that Defendants seek to depose its
counsel in contravention of the Shelton rule.
Plaintiff's Notices of Defendants' Counsel's
Depositions Should Not Go Forward Because the
Information Sought is Readily Available from Other
state they need to depose Hanover's Counsel, as the only
source of information, with respect to “(i) the
personal acts of Hanover's Counsel before and during the
State Court Case; (ii) the exchange of thousands of emails
between Hanover's Counsel and the Defendants; and[, ]
(iii) the attorneys' fees, and corresponding invoices,
allegedly incurred by Hanover in connection with the bonds at
issue and the State Court Case.” ECF No. 49 at 13:9-13.
However, when consulting the first factor of the
Shelton test, the record in this case
“indicates that the information sought can be . . .
obtained by means other than deposing [opposing
counsel].” Shelton, 805 F.2d at 1327.
cite two cases in which the deposition of opposing counsel
was appropriate because the attorney was a “fact
witness such as an actor or viewer, rather than ‘one
whose role in the transaction is not central to the
dispute.'” ECF No. 49 at 11:19-24 (citing Am.
Cas. Co. v. Krieger, 160 F.R.D. 582, 588 (S.D. Cal.
1995); Johnston Dev. Grp., Inc. v. Carpenters Local Union
No. 1578, 130 F.R.D. 348, 352 (D.N.J. 1990)). The court
in Krieger, however, noted that:
the Johnston court's holding . . . appears to be the
exception. Most courts which have addressed these issues have
held that the taking of opposing counsel's deposition
should be permitted only in limited circumstances, and that,
because of the potential for abuse inherent in deposing an
opponent's attorney, the party seeking the deposition
must demonstrate its propriety and need before the deposition
may go forward. . . . Courts have reached this ...