Opinion ID: 1360675
Heading Depth: 1
Heading Rank: 3

Heading: The Policy Manual

Text: Nexsen Pruet argues that the trial court erred in concluding that Bland and Richter's conduct with respect to the policy manual was not a material breach of the settlement agreement and did not warrant any relief. We agree. Our analysis on this issue must take a rather unusual direction, because as a starting point, Bland and Richter seem to agree that they violated the protective order and the settlement agreement by failing to see that all confidential materials produced by Nexsen Pruet were returned to the firm or destroyed and by using the policy manual in subsequent litigation as a deposition exhibit. Bland and Richter instead argue (1) that Nexsen Pruet waived the right to enforce this provision of the protective order and settlement agreement; (2) that Nexsen Pruet suffered no harm due to Bland and Richter's continued possession of the policy manual; and (3) that because the policy manual was sought as discovery in the Robertson litigation, Bland and Richter should be held harmless for their technical breach. After taking these arguments in turn, we find that none of them are persuasive. Bland and Richter hinge their waiver argument on the conduct of Nexsen Pruet's attorney in the Robertson litigation. Bland and Richter allege that they informed Nexsen Pruet's attorney that they were in possession of documents which were the subject of a protective order, that the attorney gave Bland and Richter assurances that Nexsen Pruet would not seek enforcement of the protective order and settlement agreement, and that Bland and Richter were induced by [Nexsen Pruet's] inactivity to use the policy manual in the Robertson deposition. But the evidence in the record belies this characterization. Although the record supports Bland and Richter's assertion that they advised Nexsen Pruet's attorney that they were in possession of the policy manual, there is no evidence that Bland and Richter offered this advisement as any sort of cautious notice that they were in possession of documents covered under a protective order, nor is there evidence Bland and Richter were seeking any advice as to how to proceed and honor that protective order. The record instead reflects that Bland and Richter attempted to use the continued possession of the policy manual as leverage in discovery, and this is exhibited by the dialogue between the parties where Bland and Richter matter-of-factly assert that they know that [additional] documents exist[,] that they have the entire [Nexsen Pruet] manual[,] that they obtained [the policy manual] from the Myrick case[,] and that they intend to use the policy manual in the upcoming deposition of Nexsen Pruet's corporate designee for discovery. This bold course of conduct, characterized by the advertisement that they intended to use the materials in discovery, does not evidence a cautious approach to discovery cognizant of the trial court's previous pronouncements regarding how to treat confidential materials. We therefore are not persuaded by Bland and Richter's attempts to characterize their conduct in this manner. Bland and Richter's argument regarding waiver is further undercut by the response they received after first advising Nexsen Pruet's attorney of their continued possession of the policy manual. Specifically, Nexsen Pruet's attorney responded [p]lease describe those documents and I will discuss with [Nexsen Pruet]. I understand that there is a protective order in place in Myrick and agree that this description/identification will not violate that order. No term or provision of the protective order is being waived or modified. [2] This is strong evidence cutting against Bland and Richter's waiver argument, and in light of the settlement agreement's requirement that all waivers be executed in writing, as well as the court-entered protective order, which no single party could waive, we find that there are simply too many hurdles for Bland and Richter's waiver argument to overcome. The trial court did not address the issue of waiver but instead focused on the fact that Nexsen Pruet eventually produced the policy manual during discovery in the Robertson case without a protective order being issued. The trial court also noted that Nexsen Pruet had not demonstrated how it has been harmed by Bland and Richter's continued possession of the policy manual. In our view, these facts are not instructive. The mootness argument based on the production of the policy manual in the Robertson litigation presumes too much. While it is true that there is not currently a protective order in place in the Robertson litigation, that litigation is ongoing and the record reflects that at one time, Bland and Richter agreed to enter into a protective order similar to the one entered into in Myrick. Although it might have been possible to raise a ripeness question in this appeal given the possibility that the Robertson litigation might ultimately conclude without an order or agreement requiring the return or destruction of all Nexsen Pruet's internal documents, neither party addressed this issue and we express no opinion on it. We instead focus on the fact that the circumstances in this case involve the retention of documents in direct violation of a court order and that for no apparent reason, the court system was not asked to make a preliminary call regarding the retention of the policy manual until after the manual had been used in subsequent litigation. The notion that Nexsen Pruet has an interest in seeing that Bland and Richter do not forever retain copies of internal Nexsen Pruet documents is quite reasonable. For this reason, the fact that the Court might order Bland and Richter to destroy some copies of the policy manual but allow the continued possession of other copies of the same document is not at all inconsistent. This sheds light on an underlying problem of Bland and Richter's argument, which is that at bottom, their position seems to be that subsequent events can render it acceptable for a party to unilaterally decide to violate the terms of a court order. It is undisputed that the protective order required the return of all confidential documents disclosed in discovery. Accordingly, the trial court's characterization of Bland and Richter's action in notifying Nexsen Pruet's counsel commendably and immediately after discovering the policy manual, whether correct or incorrect, is irrelevant. Bland and Richter did not return the policy manual after discovering it, and they in fact made the policy manual part of the record in a separate piece of litigation. For this reason, it is clear that Bland and Richter breached the terms of the protective order and the settlement agreement. Although we find that they proceeded improperly, Bland and Richter do not bear all of the fault in this situation, because as Bland and Richter point out, this dispute originated with what they felt was Nexsen Pruet's incomplete and misleading production of documents during discovery. But although Nexsen Pruet ultimately stipulated that it should have supplied the complete policy manual with its initial discovery responses, there is no information in this record indicating that Nexsen Pruet intended to be misleading or give incomplete information in discovery when it produced a different set of documents in the Robertson litigation as it did in the Myrick litigation. Again, we recognize that the record evidences confusion about certain documents which might have been outdated and for non-attorney use, and it further appears that in handling the Robertson case, Nexsen Pruet engaged in-house and outside counsel who had no knowledge of the intricacies of the Myrick litigation. The confusion related to the discovery provided in the two sets of litigation seems more a case of the left and right hands' failure to communicate as opposed to an act of calculated deception. If there were evidence of such an act, our analysis might indeed be different. We therefore hold that the trial court erred in finding that Bland and Richter's possession of the policy manual did not violate the protective order, breach the settlement agreement, and did not warrant the grant of any relief. We specifically hold that the retention of the policy manual and the introduction of that manual in the Robertson litigation violated both the protective order and the settlement agreement, and we order that all copies of the policy manual which were improperly held following the conclusion of the Myrick litigation be returned to Nexsen Pruet within ten days of the issuance of the remittitur in this case. This matter is remanded to the trial court for a determination of attorneys' fees to be awarded to Nexsen Pruet under the settlement agreement, and Bland and Richter are ordered to provide the trial court with affidavits attesting to the return of all improperly retained copies of the policy manual when that return is completed. [3]