Opinion ID: 565168
Heading Depth: 2
Heading Rank: 2

Heading: The Procedural Weave

Text: 13 Shortstop filed the instant lawsuit in Texas state court alleging, inter alia, that Rally's' Arkansas lawsuit was filed in bad faith and constituted tortious interference with the Copeland-Shortstop agreement. 2 14 Rally's removed the action to federal district court on August 11, 1989. Rally's promptly moved the court to dismiss the complaint. Shortstop amended the complaint, and Rally's again moved to dismiss. Once the motion was fully briefed, the court took the motion under advisement and by order dated May 7, 1990, denied the motion. Simultaneously, the district court set the case on the trial calendar commencing September 24, 1990, with a discovery cut-off deadline of August 13, 1990. The court admonished the parties that Motions to Compel, Motions for Protective Order, and similar motions were discouraged. 15 The parties proceeded with discovery, which had already been underway since early in the case. On June 28, 1990, before the discovery cut-off, Rally's moved for summary judgment averring the absence of a genuine dispute of material facts. Specifically, Rally's contended that it was privileged as a matter of law to file the Arkansas lawsuit and that therefore, the Arkansas lawsuit could not form the basis of a tortious interference cause of action. In Rally's' view, the filing of a lawsuit, whether in bad faith or otherwise, was absolutely privileged. Rally's also maintained that Shortstop's cause of action necessarily would fail because the evidence in the record did not establish the requisite elements of tortious interference, namely, the existence of a contract between Copeland and Shortstop, willful and intentional interference by Rally's, proximate causation, and damages. Shortstop filed a timely response to the merits of Rally's' motion for summary judgment, but indicated in a footnote to its memorandum that several depositions were still pending. 16 Meanwhile, the parties were unable to resolve a discovery dispute: Shortstop sought from Rally's and its trade-dress lawyers disclosure of information concerning the Arkansas lawsuit in order to establish Rally's' bad faith in proceeding with that lawsuit. Rally's had refused to provide that information, invoking the attorney-client privilege and the attorney work-product doctrine. Left with no choice but to seek court intervention, Rally's moved the court on July 23, 1990 to quash and for a protective order; in turn, Shortstop moved to compel the discovery. All of the discovery motions were referred by the district court judge to a United States magistrate judge for resolution. The magistrate judge granted Shortstop's motion to compel on August 10, three days before the discovery cut-off, and ordered the discovery to proceed. 17 By August 13, the discovery cut-off date, Shortstop had not completed the necessary discovery, so Shortstop filed an amended motion to extend discovery. 3 Four days later, Shortstop moved the district court again to extend the discovery deadline and also requested permission to file a supplemental brief in opposition to Rally's' motion for summary judgment. Shortstop alerted the district court to the proceedings before the magistrate judge, indicating that it expected to obtain, through the additional discovery, attorney-client evidence undermining Rally's' claimed privilege to file the Arkansas lawsuit. On the same day, Rally's filed an appeal to the district court from the magistrate judge's discovery order and asked the court to stay discovery pending the appeal. 4 18 The court never ruled on these discovery matters. Instead, on August 23, the court filed its memorandum opinion and order on Rally's' motion for summary judgment. Without making reference to the pending discovery matters, the district court found that there was no dispute as to any material issues of fact regarding Rally's' privilege to file the Arkansas lawsuit (which allegedly interfered with the Copeland-Shortstop deal). The district court studied with great care the relevant body of Texas law and held that the privilege that Rally's was asserting was qualified, not absolute as Rally's contended. The court interpreted the privilege as being qualified by a good faith limitation: a lawsuit is privileged only if it asserts a colorable claim or if the party filing the lawsuit has a good faith belief that it asserts a colorable claim. The court concluded that the record amply supported Rally's' assertion of the qualified privilege; in the court's view, there was no evidence in the record contradicting Rally's' evidence that it filed the Arkansas lawsuit believing in good faith that it was asserting a colorable claim. 5 Although the privilege was a complete defense to the tortious interference claim, the district court nevertheless denied the motion for summary judgment. The court concluded that there were genuine disputes as to the facts germane to the elements of Shortstop's tortious interference claim precluding summary judgment. On Rally's' motion for reconsideration, however, the court entered summary judgment, apparently recognizing that its holding that Rally's held a qualified privilege as a matter of law vitiated Shortstop's interference claim in its entirety. 19 Shortstop appeals, permanently pressing its argument that the district court misinterpreted Texas law on the issue of privilege to tortiously interfere with a contract. Shortstop maintains that the privilege is qualified by the limitation that the allegedly tortious lawsuit be filed in good faith, which according to Shortstop means without malicious motive. In Shortstop's view, even if the party filing the lawsuit has a good faith belief that the claim asserted is colorable, the party may not file the lawsuit for the sole purpose of interfering with another's contract. In addition, Shortstop avers that even if the district court correctly interpreted the privilege under Texas law, there existed on the record before the court disputed issues of material fact as to Rally's' alleged good faith in filing the Arkansas lawsuit. Finally, Shortstop argues that the court erred by failing to permit the additional discovery which the magistrate judge had ordered; according to Shortstop, the discovery could have elicited evidence undermining Rally's' privilege.