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WO

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Sun Sky Hospitality LLC, 

Plaintiff, 

v. 

United States Department of Agriculture, 

Defendant. 

No. CV-18-00094-TUC-RM

ORDER 

 Pending before the Court is a Motion to Intervene filed by non-party First Citizens 

Bank & Trust Company d/b/a First Citizens Bank (“First Citizens”). (Doc. 19.) Plaintiff 

Sun Sky Hospitality, LLC (“Plaintiff” or “Sun Sky”) filed a Response in opposition (Doc. 

20), and First Citizens filed a Reply (Doc. 21). 

I. Background 

 In 2010, First Citizens’ predecessor-in-interest loaned Plaintiff $3.737 million, 

with the United States Department of Agriculture (“USDA”) guaranteeing 80% of the 

loan principal and applicable interest under its Business and Industry Guaranteed Loan 

Program. (Doc. 19 at 3.)1

 In an underlying state-court proceeding, First Citizens alleges 

that Sun Sky defaulted on the USDA-backed loan. (Id. at 4.) Plaintiff has asserted 

frustration-of-purpose and failure-to-mitigate defenses in the state-court proceeding. (Id.) 

 On February 21, 2018, Plaintiff filed the above-captioned lawsuit pursuant to the 

Administrative Procedure Act and the Declaratory Judgment Act, seeking to depose 

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 Record citations refer to the page numbers generated by the Court’s electronic filing system. 
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USDA employee Gary Mack under state-court subpoena and to compel production of 

documents in the USDA’s possession. (See Doc. 1.) Plaintiff and Defendant have been 

engaged in efforts to resolve, without Court involvement, the issue that precipitated this 

case and a companion case, United States v. Sun Sky Hospitality LLC, MC 18-00002-RM. 

As a result of those efforts, Plaintiff conducted a deposition of Mr. Mack on June 13, 

2018, and Plaintiff and Defendant agreed to a second, limited deposition if necessary 

after Defendant produced additional documents to Plaintiff. (Doc. 14 at 1-2; see also

Doc. 20-1 at 4-5.) 

 On September 11, 2018, Plaintiff and Defendant notified chambers of a discovery 

dispute concerning documents that Defendant had withheld from production on the 

grounds that they may be privileged. (See Doc. 16.) On September 18, 2018, the Court 

ordered Defendant to submit the relevant documents to the Court for in camera review. 

(Id.) The Court further ordered Defendant to serve a copy of its Order on counsel 

representing First Citizens in the underlying state litigation. (Id.) Defendant complied 

with both orders. (Docs. 17, 18.) The documents submitted for in camera review are: 

1. An April 29, 2011 engagement letter from attorney Margaret Gillespie of May 

Potenza Baran & Gillespie, P.C. to First Citizens; 

2. An August 28, 2013 document titled “Proposed Action” from Margaret Gillespie 

to First Citizens, which sets forth legal opinions and is marked “attorney-client 

privileged”; and 

3. A September 8, 2015 confidential mediation memorandum from May Potenza 

Baran & Gillespie, P.C. 

 On September 21, 2018, First Citizens filed the pending Motion to Intervene. 

(Doc. 19.) First Citizens seeks to intervene for the limited purpose of (1) addressing 

Defendant’s potential disclosure of information and documents that First Citizens asserts 

are privileged, (2) addressing this Court’s in camera review of the information and 

documents, and (3) seeking a protective order to preclude improper disclosure of the 

information and documents. (Id. at 1.) 
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 II. Motion to Intervene 

 A. Legal Standard 

 Under Rule 24(a)(2) of the Federal Rules of Civil Procedure, “the court must 

permit anyone to intervene who,” on timely motion, “claims an interest relating to the 

property or transaction that is the subject of the action, and is so situated that disposing of 

the action may as a practical matter impair or impede the movant’s ability to protect its 

interest, unless existing parties adequately represent that interest.” Fed. R. Civ. P. 

24(a)(2). When analyzing a motion to intervene under Rule 24(a)(2), the Court must 

determine (1) whether the motion is timely; (2) whether the movant has “a ‘significantly 

protectable’ interest relating to the property or transaction which is the subject of the 

action”; (3) whether the movant is “so situated that the disposition of the action may as a 

practical matter impair or impede its ability to protect that interest”; and (4) whether the 

movant’s interest is “inadequately represented by the parties to the action.” Wilderness 

Soc’y v. U.S. Forest Serv., 630 F.3d 1173, 1177 (9th Cir. 2011) (en banc) (internal 

quotation omitted). 

 Under Rule 24(b)(1)(B), on timely motion, the court has discretion to permit 

anyone to intervene who “has a claim or defense that shares with the main action a 

common question of law or fact.” Fed. R. Civ. P. 24(b)(1)(B). When analyzing a motion 

for permissive intervention under Rule 24(b), the Court must determine (1) whether there 

is “an independent ground for jurisdiction”; (2) whether the motion is timely; and (3) 

whether there exists “a common question of law and fact between the movant’s claim or 

defense and the main action.” Freedom from Religion Found., Inc. v. Geithner, 644 F.3d 

836, 843 (9th Cir. 2011). “In exercising its discretion over permissive intervention, the 

court must consider whether the intervention will unduly delay or prejudice the 

adjudication of the original parties’ rights.” Fed. R. Civ. P. 24(b)(3). 

 B. Discussion 

 First Citizens asserts that the three documents that have been submitted to the 

Court for in camera review are protected by the attorney-client privilege and the work-
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product doctrine, and that intervention is necessary to allow First Citizens to adequately 

protect its significant interest in the non-disclosure of the documents. (Doc. 19 at 6-9.) 

First Citizens argues that it satisfies both the test for intervention as of right under Rule 

24(a) as well as the test for permissive intervention under Rule 24(b). (Doc. 19 at 8-11.) 

 Plaintiff argues that First Citizens’ Motion to Intervene should be denied as 

untimely. (Doc. 20 at 1, 9.) Plaintiff also argues that First Citizens has no protectable 

interest because it waived privilege. (Id. at 1, 5-8.) 

 The Court finds that First Citizens satisfies the test for intervention of right under 

Rule 24(a)(2).2

 First Citizens asserts that the documents submitted to this Court for in 

camera review are protected by the attorney-client privilege and the work-product 

doctrine. (Doc. 19 at 7.) If so, First Citizens has a significantly protectable interest in the 

non-disclosure of the documents.3

 Denying First Citizens’ Motion to Intervene would 

impair or impede First Citizens’ ability to protect that interest. As First Citizens is the 

holder of the asserted privilege, First Citizens’ interest in the non-disclosure of those 

documents is not adequately represented by the current parties to this action. 

 Plaintiff argues that First Citizens’ Motion to Intervene is untimely. (Doc. 20 at 1, 

9.) In analyzing the timeliness of a motion to intervene, the Court evaluates three factors: 

(1) the stage of the proceeding; (2) prejudice to other parties; and (3) the reason for and 

length of the delay. This proceeding is still at an early stage; Defendant has not yet filed 

a responsive pleading, no scheduling order has issued, and First Citizens moved to 

intervene before the Court had resolved the dispute concerning whether the documents 

submitted for in camera review are privileged. Allowing First Citizens to intervene for 

the limited purpose of arguing that the documents at issue are privileged would not 

prejudice Plaintiff or Defendant and would not delay these proceedings. First Citizens 

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 Because the Court finds that intervention of right is appropriate under Rule 24(a)(2), it does not address the propriety of permissive intervention under Rule 24(b). 3

 As noted above, Plaintiff argues that First Citizens has no significantly protectable interest justifying intervention as of right under Rule 24(a)(2) because it waived 

privilege. (Doc. 20 at 1, 5-8.) However, the Court finds that First Citizens’ assertion of 

privilege is sufficient to give First Citizens a right to intervene for the limited purpose of arguing privilege. Furthermore, as discussed below, the Court finds that First Citizens 

did not waive privilege. 
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filed its Motion to Intervene only ten days after the parties notified the Court of the 

dispute concerning the documents and the very next day after Defendant submitted the 

documents at issue for in camera review. The Court finds that First Citizens’ Motion to 

Intervene is timely. 

 The Court will grant First Citizens’ Motion to Intervene pursuant to Rule 24(a)(2) 

and will allow First Citizens to intervene for the limited purpose of arguing that the 

documents submitted for in camera review are privileged. 

III. Discovery Dispute 

 First Citizens’ Motion to Intervene, Plaintiff’s Response, and First Citizens’ Reply 

all address the issue of whether the documents submitted for in camera review are 

privileged. The Court finds that the issue has been adequately briefed and that further 

briefing would not assist the Court in resolution of the issue. 

 A. Legal Standard 

 “The attorney-client privilege is the oldest of the privileges for confidential 

communications known to the common law.” Upjohn Co. v. United States, 449 U.S. 383, 

389 (1981). It “protects confidential disclosures made by a client to an attorney in order 

to obtain legal advice, as well as an attorney’s advice in response to such disclosures.” In 

re Grand Jury Investigation, 974 F.2d 1068, 1070 (9th Cir. 1992) (internal quotation and 

citation omitted). It “applies to communications between lawyers and their clients when 

the lawyers act in a counseling and planning role, as well as when lawyers represent their 

clients in litigation.” United States v. Chen, 99 F.3d 1495, 1501 (9th Cir. 1996). “The 

party asserting the attorney-client privilege has the burden of proving that the privilege 

applies to a given set of documents or communications.” In re Grand Jury Investigation, 

974 F.2d at 1070.4

 “The work-product doctrine protects ‘from discovery documents and tangible 

things prepared by a party or his representative in anticipation of litigation.” United 

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 “[D]isclosure of allegedly privileged materials to the district court for purposes of determining the merits of a claim of privilege does not have the legal effect of terminating the privilege.” United States v. Zolin, 491 U.S. 554, 568 (1989). 
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States v. Richey, 632 F.3d 559, 567 (9th Cir. 2011). “To qualify for work-product 

protection, documents must: (1) be prepared in anticipation of litigation or for trial and 

(2) be prepared by or for another party or by or for that other party’s representative.” Id.

(internal quotation omitted). A court may order discovery of work-product materials if 

they “are otherwise discoverable under Rule 26(b)(1)” and the party seeking discovery 

“shows that it has substantial need for the materials to prepare its case and cannot, 

without undue hardship, obtain their substantial equivalent by other means.” Fed. R. Civ. 

P. 26(b)(3)(A)(i)-(ii). “If the court orders discovery” of such work-product materials, 

however, “it must protect against disclosure of 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). 

 The voluntary disclosure of privileged communications ordinarily constitutes 

waiver of the privilege. Richey, 632 F.3d at 566. However, under the “joint defense” 

doctrine, also known as the “common interest” doctrine, the confidentiality of 

communications between a party and the attorney for another party may be protected by 

the attorney-client privilege if “a joint defense effort or strategy has been decided upon 

and undertaken by the parties and their respective counsel.” United States v. Gonzalez, 

669 F.3d 974, 978 (9th Cir. 2012) (internal quotation omitted). “Whether the jointly 

interested persons are defendants or plaintiffs, and whether the litigation or potential 

litigation is civil or criminal, the rationale for the joint defense rule remains unchanged: 

persons who share a common interest in litigation should be able to communicate with 

their respective attorneys and with each other to more effectively prosecute or defend 

their claims.” Id. (quoting In re Grand Jury Subpoenas, 902 F.2d 244, 249 (4th Cir. 

1990)). The common interest doctrine may be invoked where attorneys have exchanged 

“confidential communications from clients who are or potentially may be codefendants or 

have common interests in litigation,” id. at 979, if it is reasonable to infer that the 

disclosures were “intended to be insulated from exposure beyond the confines of the 

group,” In re Grand Jury Subpoena Duces Tecum, 406 F. Supp. 381, 386 (S.D.N.Y. 
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1975). 

 B. Discussion 

 The Court has reviewed the documents at issue. The Court finds that the 

document dated April 29, 2011 is protected by the attorney-client privilege; that the 

document dated August 28, 2013 is protected by both the attorney-client privilege and the 

work-product doctrine; and that the document dated September 5, 2015 is protected by 

the work-product doctrine. Because the common-interest doctrine applies, First Citizens 

did not waive privilege by disclosing the documents to the USDA. Nor did First 

Citizen’s waiver of the attorney-client privilege for other documents result in waiver of 

the privilege for the documents at issue here. (See Doc. 20 at 6; Doc. 20-1 at 30.) 

Plaintiff has neither shown a substantial need for the work-product materials nor shown 

that it “cannot, without undue hardship, obtain their substantial equivalent by other 

means.” See Fed. R. Civ. P. 26(b)(3)(A)(i)-(ii). 

 Accordingly, 

 IT IS ORDERED that First Citizens’ Motion to Intervene (Doc. 19) is granted

for the limited purpose of allowing First Citizens to argue that the documents submitted 

for in camera review are privileged. 

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 IT IS FURTHER ORDERED that the following documents are privileged and, 

accordingly, Defendant shall not produce them to Plaintiff: 

1. The April 29, 2011 engagement letter from attorney Margaret Gillespie of May 

Potenza Baran & Gillespie, P.C. to First Citizens; 

2. The August 28, 2013 document titled “Proposed Action” from Margaret Gillespie 

to First Citizens; and 

3. The September 8, 2015 confidential mediation memorandum from May Potenza 

Baran & Gillespie, P.C. 

 Dated this 25th day of October, 2018.