Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_15-cv-01092/USCOURTS-azd-2_15-cv-01092-2/pdf.json

Nature of Suit Code: 240
Nature of Suit: Torts to Land
Cause of Action: 28:1391 Personal Injury

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Alonzo Valenzuela, et al., 

Plaintiffs, 

v. 

Union Pacific Railroad Company, et al., 

Defendants. 

No. CV-15-01092-PHX-DGC

ORDER 

 Plaintiffs assert that six documents produced by Defendants Union Pacific and 

Kinder Morgan in this litigation are not privileged and should be available as evidence. 

Following a telephone conference, the Court directed the parties to submit the documents 

for in camera review and to provide the Court with memoranda on the issue. Doc. 190. 

The Court has reviewed the documents and memoranda (Docs. 213, 215, 217, 225), and 

holds that the privilege applies and has not been waived. 

 The six documents reviewed in camera are referred to by the parties as Exhibits A 

through F. Exhibits A, B, C, and D are memoranda written by in-house attorney Roy 

Jerome between 1966 and 1976, and were addressed to officers or employees of Union 

Pacific’s and Kinder Morgan’s predecessor corporations. Doc. 215 at 3.1

 Mr. Jerome 

was employed as a lawyer by Southern Pacific Company, the former parent of Union 

Pacific’s and Kinder Morgan’s predecessors. Exhibit E is a 1976 internal memorandum 

 

1

 Citations are to page numbers attached at the top of each page by the Court’s CMECF system, not to original page numbers at the bottom of each page. 

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written to several individuals, including Mr. Jerome. Exhibit F is a 1957 document 

written by Engineering Management, Inc. (“EMI”) that discusses legal advice provided 

by Paul DeFord, an in-house attorney employed by Southern Pacific Company. Doc. 217 

at 3-4. Union Pacific asserts the attorney-client privilege with respect to Exhibits A-C, 

and Kinder Morgan asserts the privilege with respect to Exhibits D-F. Doc. 213 at 2. 

 At the parties’ request, the Court previously entered a stipulated order which 

provides that “[t]he production of any privileged or otherwise protected or exempted 

Information shall not be deemed a waiver or impairment of any claim of privilege or 

protection, including, but not limited to, the attorney-client privilege or the protection 

afforded to work product materials, or the subject matter thereof, as to the produced 

Information, or any other Information.” Doc. 110 at 2. As a result, Plaintiffs do not 

contend that the production of Exhibits A-F waived the attorney-client privilege. They 

instead argue that the documents are not privileged in the first instance, that subject 

matter waiver has occurred through the production and use of related documents, and that 

Defendants waived the privilege by taking certain positions in this case and by failing to 

make timely objections when the documents were used in a deposition. Doc. 213. 

 Plaintiffs cite Arizona privilege law in support of their arguments. Id. at 2. 

Kinder Morgan argues that California law applies. Doc. 217 at 2-3. Union Pacific cites 

both Arizona and California law. Doc. 215. All parties cite Federal Rule of Evidence 

502. The Court need not engage in a choice-of-law analysis because Rule 502 resolves 

most of the issues and, where state law is relevant, the result would be the same under 

Arizona and California law. 

A. Are the Documents Privileged?

 Plaintiffs make only cursory arguments that Exhibits A-F are not privileged. 

Doc. 213 at 4. They assert that the documents do not provide legal advice based on 

confidential information, but Exhibits A-E are written either by or to an attorney, Exhibit 

F recounts the advice of an attorney, and the significance of all six documents, in 

Plaintiffs’ view, is their legal advice – their statements about the legal status of the 

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railroad’s ownership interest in the railroad right-of-way. Plaintiffs contend that the 

privilege does not extend to both Union Pacific and Kinder Morgan, but do not dispute 

Defendants’ assertion that they were sister corporations at the time of the 

communications, owned by a single corporate parent. Nor do Plaintiffs dispute that the 

attorneys involved were employed by the parent. Finally, Plaintiffs contend that Exhibit 

F was written by EMI, an unrelated third-party, but do not dispute that EMI was retained 

by Kinder Morgan’s predecessor as its right-of-way agent. Both Arizona and California 

law include agents within the corporate attorney-client privilege. See A.R.S. § 12-

2234(B) (corporate privilege includes agents); Nemirofsky v. Seok Ki Kim, 523 F. Supp. 

2d 998, 1002 (N.D. Cal. 2007), as amended (Nov. 24, 2007) (privilege “includes 

communications with the entity’s agent, at least where the agent is acting within the 

scope of his agency.”). 

 Union Pacific and Kinder Morgan provided detailed responses to Plaintiffs’ 

arguments on this issue, and the Court afforded Plaintiffs an opportunity to reply, but the 

reply said nothing more about this issue. Doc. 225. The Court finds that Exhibits A-F 

satisfy the requirements for privileged attorney-client communications. 

B. Subject Matter Waiver under Rule 502. 

 Plaintiffs argue that Defendants waived the attorney-client privilege with respect 

to Exhibits A-F by disclosing three other letters or memoranda – Exhibits G, H, and I – 

which address the same subject matter (the status of the railroad’s right-of-way title) and 

were written by Defendants’ in-house lawyers. Although Plaintiffs initially suggested 

that the waiver occurred when Exhibits G-I were used in related California litigation 

referred to by the parties as the Rent Action, Plaintiffs narrowed their position in their 

reply, asserting that the Court need not consider the Rent Action. Plaintiffs instead claim 

that Defendants waived the privilege by failing to object to Plaintiffs’ use of Exhibits G-I 

in this litigation, both in Plaintiffs’ complaint and in depositions. Doc. 225 at 4. 

 Plaintiffs assert an argument for subject-matter waiver – that Defendants’ waiver 

of the privilege with respect to Exhibits G-I constitutes a waiver of the privileged for 

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other documents addressing the same subject matter (Exhibits A-F). In support, Plaintiffs 

rely on Federal Rule of Evidence 502(a): 

When the disclosure is made in a federal proceeding . . . and waives the 

attorney-client 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. 

Fed. R. Evid. 502(a). 

 The Advisory Committee Note to Rule 502(a) explains the intent of this rule, 

particularly when privileged information “ought in fairness” to be disclosed. It explains 

that the rule does not establish a general rule of subject matter waiver. To the contrary, 

the Note states that voluntary disclosure of a privileged communication, 

if a waiver, generally results in a waiver only of the communication or 

information disclosed; a subject matter waiver (of either privilege or work 

product) is reserved for 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. 

Fed. R. Evid. 502(a) advisory committee note (11/28/2007). As if for emphasis, the Note 

adds: “Thus, subject matter waiver is limited to situations in which a party intentionally 

puts protected information into the litigation in a selective, misleading and unfair 

manner.” Id. As one court has explained, Rule 502(a) “abolishes the dreaded subjectmatter waiver, i.e., that any disclosure of privileged matter worked a forfeiture of any 

other privileged information that pertained to the same subject matter.” Trustees of Elec. 

Workers Local No. 26 Pension Trust Fund v. Trust Fund Advisors, Inc., 266 F.R.D. 1, 11 

(D.D.C. 2010). 

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 Union Pacific has shown that Exhibits G, H, and I were introduced as evidence in 

the Rent Action over its objection, were used against it in that case, and will not be used 

by Union Pacific in this case. Doc. 215 at 8-10. Kinder Morgan also states that it does 

not intend to use Exhibits G-I in this case. Doc. 217 at 6. Given these facts, the Court 

cannot conclude that Defendants are “intentionally put[ting] protected information into 

[this] litigation in a selective, misleading and unfair manner” as required by the Advisory 

Committee Note. Thus, even if the Court were to find that the documents were disclosed 

voluntarily in this litigation – a conclusion that is not obvious given that they were 

admitted in the Rent Action over Union Pacific’s objection and, according to Plaintiffs, 

are now available in the public record – Plaintiffs cannot satisfy the Rule 502(a)(3) 

requirement that disclosure of Exhibits A-F “ought in fairness” to be required. As 

another judge of this Court has noted, a party’s avowal that it does not intend to use a 

privileged communication in litigation eliminates the need for subject matter waiver 

under Rule 502 because “the party asserting the privilege is not selectively and 

misleadingly presenting the disclosed materials as evidence.” Gateway Deliveries, LLC 

v. Mattress Liquidators, Inc., 2016 WL 232427, at *3 (D. Ariz. Jan. 20, 2016). 

 Union Pacific does intend to use Exhibit K, which consists of title cards created by 

Union Pacific attorneys to reflect sources of title for individual track segments. Plaintiffs 

argue that the cards were created by in-house attorneys, that they contain attorney-client 

communications, and that Union Pacific’s use of the cards creates the unfairness Rule 

502(a) is intended to prevent. The Court is not persuaded. The cards relate to specific 

properties and appear to show the parcel number, the source of the railroad’s interest in 

the property (deeds, patents, statutes), whether the title is in fee, limited, or an easement, 

other relevant information such as mineral reservations, and a column for “remarks,” 

which often includes information such as termination dates. Each card appears to be 

signed and dated by an attorney. 

 The existence of the attorney-client privilege usually must be established by the 

party asserting it. S. Union Co. v. Sw. Gas Corp., 205 F.R.D. 542, 551 (D. Ariz. 2002). 

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In this instance, the normal roles are reversed. Plaintiffs claim that the title cards are 

privileged, while Defendants claim the opposite. Plaintiffs, therefore, bear the burden of 

showing that the privilege applies. 

 Plaintiffs have not carried this burden. The cards are not labelled as privileged, 

are not addressed to anyone, and appear to be an information-tracking system. Plaintiffs 

provide no evidence that the cards were created or maintained in confidence. Deposition 

testimony provided by Union Pacific states simply that the cards were maintained in the 

“real estate file room.” Doc. 215-1 at 34. 

 Plaintiffs quote deposition testimony stating that the cards contain “a very rough 

opinion as to the nature of title associated with the parcel” (Doc. 225 at 6-7), but cite no 

authority to show that documents created by attorneys for a tracking system constitute 

privileged communications. Such documents may be attorney work product if litigation 

is anticipated, Fed. R. Civ. P. 26(b)(3), but Plaintiffs do not suggest that the cards were 

created in anticipation of litigation. 

 On this record, Plaintiffs have not shown that the cards contain privileged 

information being used selectively by Defendants. The Court therefore cannot conclude 

that Defendants are “intentionally put[ting] protected information into the litigation in a 

selective, misleading and unfair manner.” Fed. R. Evid. 502(a) advisory committee note 

(11/28/2007). Plaintiffs may raise this issue again if they develop other evidence. 

C. Waiver by Litigation Conduct. 

 The attorney-client privilege may be waived through a party’s litigation actions. 

Chevron Corp. v. Pennzoil Co., 974 F.2d 1156 (9th Cir. 1992) (citing United States v. 

Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991)). The test for such waiver is threepronged. First, a party must assert the privilege as an affirmative act in the litigation. 

Second, through the affirmative act, the party must put privileged information at issue. 

Third, the Court must find that allowing the privilege to stand would deny the opposing 

party access to information vital to its case. Arizona Dream Act Coal. v. Brewer, No. 

CV-12-02546-PHX-DGC, 2014 WL 171923, at *1 (D. Ariz. Jan. 15, 2014). 

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 Plaintiffs claim that Defendants have waived the attorney-client privilege for 

Exhibits A-F by asserting that their easement practices are lawful. Specifically, Plaintiffs 

cite an affirmative defense asserted by Union Pacific which states that “conduct alleged 

in the Complaint conformed with all state and federal statutes, regulations, and other law 

based upon the state of knowledge at all relevant times alleged in the Complaint.” 

Doc. 115 at 24. Plaintiffs claim that this puts in issue Union Pacific’s knowledge of legal 

matters during the relevant times periods, and note that Kinder Morgan has adopted the 

same defense by incorporation. 

 It is well-established that a holder of the privilege cannot claim that legal advice 

from his or her attorney justifies his or her action while simultaneously shielding that 

advice from disclosure. Chevron, 974 F.2d at 1163; In re Cnty. of Erie, 546 F.3d 222, 

228 (2d Cir. 2008); Sedco Int’l S.A. v. Cory, 683 F.2d 1201, 1206 (8th Cir. 1982). But if 

the privilege holder merely asserts that his conduct was lawful and makes no claim that 

he or she relied on counsel’s advice, privileged information is not necessarily placed in 

issue. 

 The most analogous case in this circuit appears to be United States v. Amlani, 169 

F.3d 1189 (9th Cir. 1999), in which the defendant argued on appeal that the prosecutor’s 

disparaging comments about his lawyer caused him to fire his lawyer and settle for less 

effective counsel. The government sought discovery of the defendant’s conversations 

with his lawyer to determine whether the alleged disparagement had in fact caused him to 

change counsel, and the defendant asserted the attorney-client privilege in response. The 

Ninth Circuit held that the defendant’s claim – that his lawyer was fired only because of 

statements made by the prosecutor – sufficiently interjected his communications with the 

lawyer into the case to constitute waiver of the privilege. Id. at 1195. 

 Other cases have taken a variety approaches on this issue. At one end of the 

spectrum, the Eastern District of Washington in Hearn v. Rhay, 68 F.R.D. 574 (E.D. 

Wash. 1975), took a broad view of waiver. In Hearn, prison officials in a civil rights 

case asserted the defense of qualified immunity. Id. at 574. The defendants never 

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claimed advice of counsel as a defense to their actions, but the district court noted that for 

qualified immunity to apply, the defendants must have acted in good faith. Id. The 

plaintiff sought disclosure of the legal advice rendered to the defendants by the state’s 

attorney “insofar as such advice related to plaintiff’s confinement and tends to prove 

defendants’ bad faith.” Id. at 578. The district court held that the defendants’ assertion 

of the immunity defense was an affirmative act and, because “the legal advice they 

received is germane to the qualified immunity defense they raised,” the first two prongs 

of the waiver test were met. Id. at 581. The district court justified its holding by noting 

that “the content of defendants’ communications with their attorney is inextricably 

merged with the elements of plaintiff’s case and defendants’ affirmative defense. These 

communications are not incidental to the case; they inhere in the controversy itself, and to 

deny access to them would preclude the court from a fair and just determination of the 

issues.” Id. at 582. 

 Other courts disagree with the broad scope of waiver applied in Hearn. See, e.g.,

In re Cnty. of Erie, 546 F.3d at 229. The Third Circuit, for example, reviewed the 

holding in Hearn and similar cases and characterized them as extending “waiver of the 

privilege to cases in which the client’s state of mind may be in issue in the litigation,” 

rather than limiting waiver to situations where a party affirmatively asserts that advice of 

counsel justified his or her actions. Rhone-Poulenc Rorer Inc. v. Home Indem. Co., 32 

F.3d 851, 864 (3d Cir. 1994). The Third Circuit noted that cases such as Hearn “rest on a 

conclusion that the information sought is relevant and should in fairness be disclosed.” 

Id. But “[r]elevance is not the standard for determining whether or not evidence should 

be protected from disclosure as privileged.” Id.; see also Erie, 546 F.3d at 229. The 

Third Circuit held that even if a privilege holder’s state of mind is at issue, the privilege 

still applies. Other courts have also held that “a party must rely on privileged advice 

from his counsel” in order to waive the privilege, rather than merely make the evidence 

relevant. Erie, 546 F.3d at 229 (emphasis in original). 

 The Court finds the reasoning in Rhone-Poulenc and Erie truer to the intent and 

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nature of the attorney-client privilege than Hearn. Waiver requires that a party put the 

advice of counsel at issue, either by asserting that it relied on that advice or, as in Amlani, 

placing the attorney-client communications squarely in the case. Defendants have not 

done so. They do not claim that they should prevail in this case because they relied on 

advice of counsel. Nor do Plaintiff’s claims lend themselves to such a defense. Plaintiffs 

sue for trespass, quiet title, ejectment, inverse condemnation, unjust enrichment, recovery 

of rents, and an accounting. Doc. 75 at 18-28. These claims will turn on whether 

Defendants had title to the property they occupied, not whether they reasonably believed 

so based on the advice of counsel. 

 This is not a bad faith case like State Farm Mut. Auto. Ins. Co. v. Lee, 13 P.3d 

1169 (Ariz. 2000), cited by Plaintiffs, where the reasonableness of the party’s state of 

mind is the question. The defendant in Lee “alleged that its actions were objectively and 

subjectively reasonable and in good faith based on its evaluation of the law – an 

evaluation that included advice of counsel.” Id. at 1175. Defendants make no similar 

assertion here, and the Court cannot conclude that they have asserted the privilege as an 

affirmative act in this litigation and thereby put privileged information at issue. Amlani, 

169 F.3d at 1195. 

D. Timeliness of Objections. 

 Plaintiffs claim that Defendants waived the privilege with respect to Exhibits A, B, 

D, and E by failing to make timely objections after the exhibits were used in depositions 

in this case. Doc. 213 at 12-13. 

 Exhibits A and B were marked during the morning session of the Ryan Dahl 

deposition on October 19, 2016. Doc. 213, Ex. L. Mr. Dahl responded to questions 

about both exhibits. Immediately after lunch, counsel for Kinder Morgan stated on the 

record that he had determined that the exhibits were privileged, that he objected to further 

questions on the exhibits and would instruct the witness not to answer such questions, 

and that he would raise the issue with the Court. Id. at 81-83. Counsel for Union Pacific, 

which was participating by phone, did not have copies of the exhibits when they were 

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introduced in the deposition. When counsel located copies later that day, he sent an 

email objecting to their use and invoking the procedures of the Court’s protective order. 

Doc. 215-1 at 10. His email is time-stamped 2:36 p.m. Id. 

 Exhibits D and E were marked during the afternoon of Mr. Dahl’s deposition. 

Counsel for Kinder Morgan stated on the record that he could not determine whether the 

exhibits were privileged, and reserved any privilege objections. Id. at 109, 116-17. 

Counsel for Plaintiffs responded: “If you want to raise an objection later, that’s fine.” Id. 

at 117. Kinder Morgan later asserted that the exhibits were privilege. Doc. 217 at 11. 

 Plaintiffs cite three cases where waiver resulted from a party’s failure to timely 

object to the use of privileged information. Doc. 213 at 12. In the first case, Luna 

Gaming-San Diego, LLC v. Dorsey & Whitney, LLP, No. 06CV2804 BTM (WM), 2010 

WL 275083 (S.D. Cal. Jan. 13, 2010), the memo in question was used in a deposition 

without objection, used in another deposition two months later without objection, and 

used in a summary judgment motion without objection. Id. at *5-6. The court found that 

any privilege claim for the memo had been waived, and cited cases where delays of 

between six days and two months had resulted in waiver. Id. at *5. In the second case, 

SurfCast, Inc. v. Microsoft Corp., No. 2:12-CV-333-JAW, 2013 WL 4039413 (D. Me. 

Aug. 7, 2013), the producing party failed to object when an obviously privileged 

document was marked and discussed at a deposition, and did not raise an objection to the 

questioning until five days later. Id. at *1, 4-5. In the third case, Jacob v. Duane Reade, 

Inc., No. 11 CIV. 0160 JMO THK, 2012 WL 651536 (S.D.N.Y. Feb. 28, 2012), the 

producing party did not object until two months after the deposition where the privileged 

document was used. Id. at *5. The court noted that other cases had found waivers from 

delays of one month and four months. Id. at *6. 

 In contrast to these cases, the delay on which Plaintiffs rely with respect to 

Exhibits A and B was a matter of hours. Objections were made while the deposition was 

still underway. With respect to Exhibits D and E, a reservation of the privilege objection 

was immediately lodged and Plaintiffs’ counsel stated that a later objection would be 

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fine. Given these facts, the Court cannot conclude that Defendants delayed unreasonably 

in raising their privilege objections. Other cases have held that objections made during a 

deposition, even if after some questioning on privileged documents, do not waive the 

privilege. See Datel Holdings Ltd. v. Microsoft Corp., No. C-09-05535 EDL, 2011 WL 

866993, at *5 (N.D. Cal. Mar. 11, 2011) (“As soon as Defendant obtained the entire text 

of the emails while the deposition was still ongoing, Defendant interrupted the deposition 

to put its privilege assertion on the record. Then, within a few days, Defendant reviewed 

its entire production to identify other documents affected by the glitch. These steps 

constitute a prompt and immediate response to the inadvertent production.”). 

 Rule 502 states that waiver does not occur if “the holder promptly took reasonable 

steps to rectify the error.” Fed. R. Evid. 502(b)(3). The Court concludes that this 

requirement was satisfied by Defendants’ same-day actions to assert the privilege. 

 Dated this 21st day of December, 2016. 

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