FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
February 11, 2014
TENTH CIRCUIT
Elisabeth A. Shumaker
Clerk of Court
STATE OF NEVADA; JOHN
HENDRIX, No. 13-1104
Plaintiffs-Appellees,
and
COMMONWEALTH OF
MASSACHUSETTS;
COMMONWEALTH OF VIRGINIA;
STATE OF CALIFORNIA; STATE
OF DELAWARE; STATE OF
FLORIDA; STATE OF ILLINOIS;
STATE OF INDIANA; STATE OF
NEW MEXICO; STATE OF NEW
YORK; STATE OF TENNESSEE;
THE DISTRICT OF COLUMBIA, ex
rel; UNITED STATES OF AMERICA,
Plaintiffs,
v. D. of Colo.
J-M MANUFACTURING COMPANY, (D.C. No. 1:11-CV-01691-MSK-MJW)
INC.,
Defendant-Appellant,
and
FORMOSA PLASTICS
CORPORATION, U.S.A.,
Defendant.
ORDER AND JUDGMENT *
Before LUCERO, SEYMOUR, and TYMKOVICH, Circuit Judges.
This appeal arises from a collateral proceeding to a False Claims Act action
against J-M Manufacturing (J-M) in federal court in California. During the
course of litigation, the United States arranged to have Microbac Laboratories
conduct tests on J-M pipe to determine whether it would intervene in the action.
The government eventually declined to intervene. J-M subsequently served a
subpoena on Microbac, seeking the test results, which the plaintiffs in the
California case and the United States opposed.
Affirming the order of the magistrate judge to quash the subpoena, the
district court held the test results constitute protected attorney work product under
Rule 26 of the Federal Rules of Civil Procedure for which J-M has not
demonstrated a substantial need. J-M appealed, and, exercising jurisdiction under
28 U.S.C. § 1291, we AFFIRM. 1
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
1
We note the appellees’ observation that “[d]iscovery orders entered
during the course of litigation ordinarily are not ‘final’ under [§ 1291].” In re
Motor Fuel Temperature Sales Practice Litig., 641 F.3d 470, 482 (10th Cir. 2011)
(alterations in original) (quotation omitted). But “[c]ourts have recognized an
exception to the nonfinality of discovery orders where a district court, other than
(continued...)
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J-M Manufacturing is the world’s largest manufacturer of polyvinyl
chloride (PVC) pipe, which it sells to federal, state, and local governments for use
in water and sewer systems. In 2006, a former J-M employee filed under seal a
qui tam complaint pursuant to the False Claims Act, 31 U.S.C. § 3729 et seq., on
behalf of various government entities in federal court in California. Several
states and dozens of municipalities intervened in the action. The complaint
alleged J-M falsely represented that its pipe was made and tested in conformity
with certain industry standards. In November 2013, a federal jury found J-M
liable for defrauding the government purchasers.
This appeal concerns a collateral proceeding in the District of Colorado.
Shortly after the qui tam complaint was filed, the United States began
investigating whether it would intervene in the action. As part of its
investigation, the United States retained Microbac to test samples of J-M pipe at
the company’s Colorado laboratory. The United States and J-M negotiated over
the samples of pipe to be tested and tests to be performed. Although J-M
1
(...continued)
the district court before which the main action is pending, issues an order denying
discovery against a nonparty.” Hooker v. Cont’l Life Ins. Co., 965 F.2d 903, 904–
05 (10th Cir. 1992). We have held that “[t]he key question . . . is whether the
appealing party has any means, other than an immediate appeal, to obtain
appellate review.” Id. at 905. Unlike in Hooker, the order denying discovery in
this case is immediately appealable because “the district court denying discovery
and the district court considering the main action are [not] within the same
circuit.” Id.
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supplied the United States with samples for testing, the J-M pipe samples the
United States submitted to Microbac were different from those provided by J-M.
After Microbac concluded its tests, the United States declined to intervene. J-M
served Microbac with a subpoena, pursuant to Rule 45 of the Federal Rules of
Civil Procedure, seeking the test results. The plaintiffs filed a motion to quash
the subpoena, which the United States joined.
The magistrate judge partially denied the motion to quash. He reasoned
that, because the plaintiffs were pursuing their fraud case on the theory that
“every piece of pipe” J-M manufactured was nonconforming, J-M had a
substantial need for any test results. The plaintiffs filed a motion for
reconsideration, asserting their theory of the case was that, although J-M falsely
represented that all of its pipes were manufactured and tested in conformity with
industry standards, some of the pipes did not so conform. Under this theory, the
plaintiffs would have to show only some of the pipes it purchased from J-M did
not conform to industry standards. The district court in California issued a
“Bifurcation Order” that clarified the plaintiffs were proceeding under such a
theory, which it called a “lottery ticket” theory. Upon reconsideration, the
magistrate judge reversed his previous order and quashed the subpoena. He
concluded that, because a single test’s results would have minimal probative
value under a “lottery ticket” theory, J-M did not have a substantial need for the
Microbac test results.
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J-M appealed to the district court, which overruled J-M’s objections and
affirmed the magistrate judge’s order. Because the test results may reveal
attorney selective processes about which pipes to test or which tests to perform,
the court concluded that the test results qualified as opinion work product, which
our precedent suggests is absolutely privileged. In the alternative, the court held
that, even if the test results constitute only ordinary work product, J-M had not
demonstrated substantial need for them because the plaintiffs were proceeding
under the “lottery ticket” theory in the California case.
We review de novo whether the district court employed the correct legal
standard in resolving a discovery request. Murphy v. Deloitte & Touche Grp. Ins.
Plan, 619 F.3d 1151, 1164 (10th Cir. 2010). If it has employed the correct
standard, we review a district court’s discovery orders for abuse of discretion,
reviewing factual findings for clear error and legal questions de novo. Frontier
Ref., Inc. v. Gorman-Rupp Co., 136 F.3d 695, 699 (10th Cir. 1998). An “abuse of
discretion will be found only where the trial court makes an arbitrary, capricious,
whimsical, or manifestly unreasonable judgment.” FDIC v. Oldenburg, 34 F.3d
1529, 1555 (10th Cir. 1994).
“Ordinarily, a party may not discover documents and tangible things that
are prepared in anticipation of litigation or for trial by or for another party or its
representative (including the other party’s attorney, consultant, surety,
indemnitor, insurer, or agent).” Fed. R. Civ. P. 26(b)(3)(A); see also Oklahoma v.
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Tyson Foods, Inc., 262 F.R.D. 617, 626 (N.D. Okla. 2009) (defining ordinary
work product as “materials generated by attorneys that are not opinion work
product; e.g., witness statements, investigative reports, photographs, diagrams,
and charts prepared in anticipation of litigation or for trial preparation.”). 2 Unlike
opinion work product, ordinary work product may be discoverable if the
requesting party has demonstrated substantial need for the materials and cannot
otherwise obtain them without undue hardship. Fed. R. Civ. P. 26(b)(3)(A)(i),
(ii). A substantial need exists where “the information sought is essential to the
party’s defense, is crucial to the determination of whether the defendant could be
held liable for the acts alleged, or carries great probative value on contested
issues.” Nat’l Cong. for Puerto Rican Rights v. City of New York, 194 F.R.D.
105, 110 (S.D.N.Y. 2000) (internal quotation marks omitted).
The district court did not abuse its discretion in declining to overrule the
magistrate judge’s quashing of the subpoena. 3 J-M argues that the district court
abused its discretion because the court failed to consider new evidence that
2
Opinion work product reveals “the mental impressions, conclusions,
opinions, or legal theories of a party’s attorney or other representative concerning
the litigation.” Fed. R. Civ. P. 26(b)(3)(B). Opinion work product is absolutely
privileged. See In re Qwest Commc’ns Int’l Inc., 450 F.3d 1179, 1186 (10th Cir.
2006).
3
Although the district court also held that the test results qualify as
opinion work product, we need not reach that issue because, regardless of how we
classify the test results, J-M has fallen short of demonstrating substantial need for
them.
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allegedly showed the plaintiffs’ abandonment of the “lottery ticket” theory of
liability. In support of this argument, J-M points to the plaintiffs’ agreement in
the California case to produce all “non-privileged test results” pertaining to the
durability of J-M pipe because of their potential relevance to the conformity or
non-conformity of J-M pipe to industry standards. But this discovery agreement
did not affect the theory of liability that the plaintiffs were pursuing. Conceding
the potential relevance of J-M pipe test results in the context of a “lottery ticket”
theory does not signal abandonment of the theory. Nor does a showing of
“potential relevance” mean that J-M has demonstrated a substantial need for the
test results—J-M must show the test results “carr[y] great probative value on
contested issues.” Nat’l Cong. for Puerto Rican Rights, 194 F.R.D. at 110. J-M
has failed to carry this burden.
J-M also argues that it has a substantial need for the test results because
they contradict the plaintiffs’ allegations that J-M “cherry-picked” pipe samples
for testing. One of the allegations in the complaint is that J-M cherry-picked
PVC pipe samples for testing for the purpose of misrepresenting the quality of its
pipes to government purchasers. Although J-M could conduct its own
independent testing on randomly selected pipes, it asserts that the plaintiffs could
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attack the credibility of any independent testing it arranges because J-M was
involved in the testing process, even if only minimally. 4
Potential attacks on the credibility of independent testing done in
preparation for litigation are not sufficient to show a substantial need for an
opposing party’s test results. If we were to hold otherwise, this justification
could conceivably apply to all tests conducted by parties in anticipation of
litigation and would discourage parties from engaging in independent testing.
Further, even if we could practically enforce this rule, the Microbac test results
would have no probative value on the cherry-picking issue. The cherry-picking
allegations concern J-M’s process of selecting pipe samples for testing as part of
its alleged fraudulent scheme. And because J-M did not select the pipes that
Microbac tested, the test results would reveal nothing about J-M’s pre-discovery
selective process. Favorable test results would reveal only that some random
samples of pipe met industry standards, which is fully consistent with the
plaintiffs’ theory and would not contradict their cherry-picking allegations.
We thus reject J-M’s alternative theory of substantial need. Because J-M
has failed to demonstrate a substantial need for the test results, we AFFIRM the
judgment of the district court. We DENY the motions to supplement the record.
4
At oral argument, J-M contended that the plaintiffs did in fact attack the
credibility of its independent testing at trial in California during cross-
examination.
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ENTERED FOR THE COURT,
Timothy M. Tymkovich
Circuit Judge
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