Court Opinion

ID: 4568601
Source: CourtListenerOpinion
Date Created: 2020-09-22 23:06:41.485+00
Date Added: 2024-06-11T13:28:11.132488
License: Public Domain

RENDERED: AUGUST 28, 2020; 10:00 A.M.
                      NOT TO BE PUBLISHED

               Commonwealth of Kentucky
                        Court of Appeals

                          NO. 2019-CA-000700-MR

PRISMA CAPITAL PARTNERS, LP; PACIFIC
ALTERNATIVE ASSET MANAGEMENT
COMPANY, LLC; AND GRAHMN N. MORGAN                            APPELLANTS

               APPEAL FROM FRANKLIN CIRCUIT COURT
v.             HONORABLE THOMAS D. WINGATE, JUDGE
                       ACTION NO. 18-CI-01243

KENTUCKY RETIREMENT SYSTEMS                                      APPELLEE

                              OPINION
                      REVERSING AND REMANDING

                                ** ** ** ** **

BEFORE: CALDWELL, JONES, AND TAYLOR, JUDGES.

JONES, JUDGE: Appellants Prisma Capital Partners, LP (“Prisma”), Pacific

Alternative Asset Management Company, LLC (“PAAMCO”), and Grahmn N.

Morgan (collectively with Prisma and PAAMCO, “Appellants”) submitted three

requests to Appellee Kentucky Retirement Systems (“KRS”) pursuant to
Kentucky’s Open Records Act, KRS1 61.870, et seq. (the “Open Records Act”).

The requests sought access to records related to KRS’s decision to endorse

litigation claims advanced in Mayberry, et al. v. KKR & Co., L.P., et al., Franklin

Circuit Court Case No. 17-CI-01348. KRS refused to disclose certain documents

created by the Mayberry Plaintiffs’ attorneys, asserting that they were exempt from

disclosure under KRS 61.878(1)(i) and (j) as “preliminary documents” and were

additionally protected by the work product doctrine, among other civil litigation

limitations. At the time the documents were produced, KRS and the Mayberry

Plaintiffs were adversarial parties and KRS’s Joint Notice had not yet been

proffered.

                The Office of the Attorney General (“OAG”) initially ruled that the

documents were not exempted from disclosure as preliminary, concluding that the

withheld documents had forfeited their preliminary status upon being incorporated

into KRS’s Public Notice endorsing the Mayberry Plaintiffs’ claims. However, on

appeal, the Franklin Circuit Court held that the documents were protected from

disclosure under the work product doctrine. The circuit court found that the

documents had been created at the direction of KRS. Having reviewed the record

in conjunction with all applicable legal authority, we cannot agree that the work

product doctrine applies. The attorneys who created the documents worked for the

1
    Kentucky Revised Statutes.
                                           -2-
Mayberry Plaintiffs, not KRS; likewise, there was no agreement in place between

KRS and the Mayberry Plaintiffs’ counsel at the time the documents were created

or shared that would make the documents KRS’s work product. Any privilege was

waived when the Mayberry Plaintiffs’ counsel voluntarily shared the documents

with KRS. Accordingly, having reviewed the record in conjunction with all

applicable legal authority, we REVERSE and REMAND the Franklin Circuit

Court’s order for reasons more fully explained below.

                                 I.   BACKGROUND

             This appeal arises from a series of requests made by the Appellants to

Appellee KRS under Kentucky’s Open Records Act, KRS 61.870, et seq. In

response to the requests, KRS withheld two sets of records as attorney work

product, which are ultimately at issue in this appeal: (1) a nine-page string of

emails dated from March 20-26, 2018, between KRS, a state agency, and the

Mayberry Plaintiffs’ private counsel; and (2) a 110-page document entitled

“Overview of Pending Litigation” prepared by the Mayberry Plaintiffs’ attorneys

and shared with KRS on March 27, 2018. Division I of the Franklin Circuit Court

conducted an in camera review of the subject documents, at which time it

concluded that the records constituted KRS attorney work product. In doing so,

the circuit court remarked that the withheld records were “something else” and “I

don’t know if they’re work product, I don’t know if they’re common interest, but I

                                         -3-
can understand why perhaps they [KRS] don’t want you to see them.” V.R.2

4/10/19; 10:31:17.

                Underlying this appeal is Mayberry, et al. v. KKR & Co. L.P., et al.,

Civil Action No. 17-CI-01348 (“Mayberry”), a “derivative” lawsuit in which eight

individual members of KRS-administered retirement plans represented by

contingency-fee counsel purported to advance their claim “on behalf of” KRS.

The Mayberry Plaintiffs originally sued current and former trustees and officers of

KRS, as well as certain outside advisors and investment managers, including

Appellants PAAMCO and Prisma, for leading KRS to enter into three “fund-of

funds” hedge-fund investments. The Plaintiffs alleged that these investments were

unsuitable, underperformed relative to the stock market, and increased KRS’s

unfunded pension liabilities. The Plaintiffs did not provide KRS with advance

notice that they were filing suit, nor did they obtain legal authorization to bring

claims on behalf of KRS. Rather, they opted to sue KRS as a nominal defendant,

contending that KRS’s Board of Trustees was conflicted and incapable of

evaluating whether KRS should assert the claim independently.

                The Mayberry Defendants, Prisma and PAAMCO among them,

sought dismissal of the case on February 23, 2018, claiming that the Mayberry

Plaintiffs, having not been denied any benefits under their respective plans, lacked

2
    Video record.
                                           -4-
standing to bring their claim. With the motions to dismiss pending, the circuit

court asked KRS what its stance was relative to the lawsuit. This prompted a

series of emailed interactions between KRS and the Mayberry Plaintiffs’ counsel

spanning March 20-26, 2018. At the time of these emails, KRS was not

represented by the Mayberry Plaintiffs’ counsel.

              Records available to this Court show that the Mayberry Plaintiffs’

counsel and consultants then met with KRS’s legal counsel at KRS’s offices on

March 27, 2018. At the time, there was no joint agreement between KRS and the

Mayberry Plaintiffs, and the parties were still adversarial. While the substance of

that meeting has not been disclosed, KRS admitted before the Attorney General

that “[the Mayberry] Plaintiffs’ counsel presented the [Overview of Pending

Litigation] in confidence to KRS’s counsel and special litigation committee”

during that meeting. R.3 at 619, 622.

              The Appellants subsequently sent an Open Records Act request to

KRS on April 2, 2018, seeking “any and all documents or correspondence” from

the Mayberry Plaintiffs or their counsel to KRS “consisting of, or relating to,

demands, requests and/or authorizations to pursue any or all of the claims that are

asserted or could be asserted in the Action.” R. at 71-72. On April 17, 2018, KRS

3
    Record.
                                         -5-
responded to the request and asserted simply that the documents being sought were

“preliminary documents” exempt from inspection under KRS 61.878(1)(i) and (j).

             Two days after KRS’s refusal, the Mayberry Plaintiffs and “Nominal

Defendant” KRS filed a Joint Notice with the circuit court indicating that KRS had

created a special litigation committee of its board to investigate and consider the

claims asserted in the Mayberry action. According to the Joint Notice, KRS “will

not pursue the claims asserted by [the Mayberry] Plaintiffs” but the claims “appear

to have merit,” and KRS “believes that it is in the best interests of KRS for [the

Mayberry] Plaintiffs to continue their pursuit of these claims on a derivative basis

on KRS’s behalf.” R. at 340-45. The Joint Notice did not disclose any basis for

KRS’s decision.

             As a result of this Joint Notice, the Appellants resubmitted their first

request to KRS on April 30, 2018. On the same day, they sent a second request to

KRS for the production of documents and communications related to the Joint

Notice, including communications with the Mayberry Plaintiffs and their counsel

and any information that KRS and its special litigation committee relied upon in

reaching its decision to endorse the Mayberry Plaintiffs’ claims on behalf of KRS.

                                         -6-
                KRS responded to both requests on May 31, 2018, producing some of

the documents requested4 and providing three reasons for withholding the

remainder. First, KRS asserted that the communications between KRS, KRS’s

attorneys, the Mayberry Plaintiffs, and the Mayberry Plaintiffs’ attorneys were

protected by the common interest privilege of KRE5 503(b)(3). Second, it stated

that any communications related to settlement were exempt from disclosure under

KRE 408. KRS’s third and final proffered reason was that the requested

documents were outside the scope of discovery under CR6 26.02.

                On October 1, 2018, the Appellants sought review of the denial of

their request by the OAG, to which KRS responded on October 9, 2018. The OAG

requested that KRS submit copies of the withheld records for an in camera review

of the documents on October 10, 2018, and provide a detailed statement describing

the withheld documents and the specific applicable exemptions for each. KRS

refused to comply with the OAG’s request for unredacted copies of the documents

but did identify the two sets of documents it was withholding: (1) the March email

4
  It was at this time that KRS produced the attendance list for the March 27, 2018, meeting at
KRS’s offices between the Mayberry Plaintiffs’ counsel and consultants and KRS’s counsel and
representatives.
5
    Kentucky Rules of Evidence.
6
    Kentucky Rules of Civil Procedure.
                                             -7-
correspondence between KRS and the Mayberry Plaintiffs’ private counsel; and (2)

the Overview of Pending Litigation packet.

             On December 14, 2018, the OAG ruled in favor of the Appellants,

finding that “KRS violated the Open Records Act in failing to satisfy its burden of

proof concerning responsive records withheld by refusing to provide copies of the

disputed records to the Attorney General for in camera review per KRS

61.880(2)(c).” R. at 326-28. The OAG further provided that KRS could not

withhold the documents as preliminary as that preliminary status had been forfeited

upon being adopted by KRS as a basis for a final action. The OAG deemed the

Joint Notice to be a final action and stated that “the withheld records were the basis

for KRS delegating its KRS 61.645(2)(a) authority to ‘sue or be sued’ to the

Plaintiffs.” 18-ORD-231.

             KRS then appealed the OAG’s opinion to the Franklin Circuit Court,

where both KRS and the Appellants filed motions for summary judgment. See

KRS 61.880(5). In its motion, KRS asked the circuit court to determine whether

the Open Records Act requires an agency to release what it considers to be

confidential, privileged, and preliminary communications regarding ongoing

litigation. Per agreement between the parties, KRS tendered the documents in

question to the circuit court for an in camera review. On April 10, 2019, the court

conducted the review and found the documents to be protected by the attorney

                                         -8-
work product doctrine found in CR 26.02(3)(a), allowing KRS to withhold the

documents in question.

             Five days later, the circuit court reversed the Attorney General and

granted KRS summary judgment in an April 15, 2019, opinion and order. The

circuit court premised its judgment upon the attorney work product privilege

provided in CR 26.02(3)(a) and incorporated into the Open Records Act through

KRS 61.878(1), which states in part, “the court shall protect against disclosure of

the mental impressions, conclusions, opinions, or legal theories of an attorney or

other representative of a party concerning the litigation.” CR 26.02(3)(a). The

circuit court stated that it must “protect KRS’s interest in allowing the agency the

full ability for its attorneys to work on its behalf without being compelled to

consistently disclose what would otherwise be plainly protected by the attorney

work product doctrine if a state agency was not the party that the opposition was

seeking disclosure from.” R. at 1157. The circuit court further provided:

             [T]he Court agrees with previous holdings of the OAG
             that the attorney work product privilege applies to the
             exceptions to the Open Records Act. . . .

             To properly determine if the documents are attorney
             work product, the Court must ascertain whether the
             documents were “prepared in anticipation of litigation or
             for trial by or for another party. Duffy v. Wilson, 289
S.W.3d 555, 559 (Ky. 2009) (quoting CR 26.02(3)(a)).
             In Duffy, the Kentucky Supreme Court held that “[a]
             document need not be created by a party’s attorney to be
             work product[,]” and “[t]he policy of protecting
                                         -9-
            counsel’s work product prior to litigation applies with
            equal force to the work product of the party’s other
            representatives, including private investigators.” Id.
            (internal quotation marks and citation omitted).
            However, the protection afforded by the attorney work
            product doctrine can be overridden when the requesting
            party “has a ‘substantial need’ of the document and is
            unable to obtain the ‘substantial equivalent’ without
            ‘undue hardship.’” Id. (quoting Transit Authority of
            River City v. Vinson, 703 S.W.2d 482, 486 (Ky. Ct. App.
            1985)).

            . . . [T]he Court disagrees with Defendants that through
            the April 19, 2018, Joint Notice, KRS voluntarily
            disclosed the documents. However, KRS has
            demonstrated that the documents were prepared by or at
            the direction of KRS’s attorneys in anticipation of
            litigation. A plain viewing of the documents makes clear
            that the documents are attorney work product as the
            documents are trial strategy for the ongoing Mayberry
            litigation. Additionally, the Mayberry litigation was
            pending when the emails were exchanged, and the
            Litigation Packet was clearly prepared in anticipation of
            litigation at the direction of KRS’s attorneys.

R. at 1156-58. The court further found that the Defendants had failed to

demonstrate “substantial need” and “undue hardship” if unable to inspect the

documents. Id. Because the court found that the documents were not subject to

disclosure under the Open Records Act as attorney work product, it declined to

address the parties’ additional arguments regarding common interest privilege

under KRE 503, settlement communications privilege under KRE 408, and the

preliminary document exception under KRS 61.878(1)(i) and (j). This appeal

followed.
                                       -10-
             Most recently, while this appeal was pending before us, the Kentucky

Supreme Court held that the Mayberry Plaintiffs lacked constitutional standing to

maintain suit against the eleven KRS trustees and officers and against the third

parties who did business with KRS, including the actuarial and investment

advisors, hedge-fund sellers, and their executives; as a result, the Supreme Court

remanded the case to the circuit court with directions to dismiss the Mayberry

Plaintiffs’ complaint in its entirety. See Overstreet v. Mayberry, 603 S.W.3d 244

(Ky. 2020). While the Overstreet opinion may have the practical effect of ending

the present dispute in the sense that Appellants may no longer have a need or

desire for the requested documents, it does not technically moot this appeal

because the Open Records Act action KRS filed in circuit court is a separate,

original action that exists apart from the Mayberry action.

                           II.   STANDARD OF REVIEW

             The circuit court is not bound by the prior OAG opinion, nor is it

limited to the OAG’s evidentiary record. KRS 61.882(3). The burden of proof in

an Open Records Act circuit court action is on the agency seeking to withhold the

records being sought. Com., Cabinet for Health and Family Servs. v. Lexington H-

L Servs., Inc., 382 S.W.3d 875, 883 (Ky. App. 2012). On appeal, we review a

circuit court’s factual findings concerning a state agency’s withholding of

requested documents for clear error and matters concerning the construction of the

                                        -11-
Open Records Act de novo. Cmty. Fin. Servs. Bank v. Stamper, 586 S.W.3d 737,

741 (Ky. 2019); Commonwealth v. Chestnut, 250 S.W.3d 655, 660 (Ky. 2008).

                                 III.   ANALYSIS

             The Open Records Act, KRS 61.871, states in pertinent part:

             [T]hat the basic policy of [the Open Records Act] is that
             free and open examination of public records is in the
             public interest and the exceptions provided for by KRS
             61.878 or otherwise provided by law shall be strictly
             construed, even though such examination may cause
             inconvenience or embarrassment to public officials or
             others.

             Under Kentucky’s Open Records Act, “records that are open are open

to ‘any person’ for any purpose.” Kentucky New Era, Inc. v. City of Hopkinsville,

415 S.W.3d 76, 85-86 (Ky. 2013) (quoting KRS 61.872(1)). While there are

exceptions to disclosure of some public information, they are strictly construed,

and the burden is upon the agency to identify “the specific exception authorizing

the withholding of the record and a brief explanation of how the exception applies

to the record withheld.” KRS 61.880(1); see KRS 61.871. Generally, “[t]he

statute demonstrates a general bias favoring disclosure.” Hardin Cty. Schools v.

Foster, 40 S.W.3d 865, 868 (Ky. 2001) (citing Kentucky Bd. of Exam’rs of

Psychologists and Div. of Occupations and Professions, Dep’t for Admin. v.

Courier-Journal, 826 S.W.2d 324 (Ky. 1992)).

                                        -12-
             The Kentucky Supreme Court laid out the analysis for determining

whether requested documents ought to be disclosed:

             In evaluating an open records request, the test is as
             follows. If the requested materials are not specifically
             excluded from disclosure (under KRS 61.878(l)(a)-(n), or
             other applicable statutes), then the public agency must
             provide the materials. If one of the fourteen exemptions
             applies, then the public agency should deny the request.
             However, a court of competent jurisdiction, upon request,
             can nevertheless grant disclosure of any document the
             agency refused to produce, with one qualification: if the
             document “pertain[s] to civil litigation” the court cannot
             order disclosure “beyond that which is provided by the
             Rules of Civil Procedure governing pretrial discovery.”

Dep’t of Revenue, Fin. & Admin. Cabinet v. Wyrick, 323 S.W.3d 710, 714 (Ky.

2010) (footnote omitted). The Wyrick Court held that a circuit court must first

consider whether an open records exception applies before determining whether a

civil litigation limitation applies to exclude the material in question. Id. In the

present case, the circuit court erred in failing to apply the Wyrick test and instead

considered whether the work product doctrine applied before evaluating any Open

Records Act exemptions. However, because our review is de novo, we will

address both the preliminary documents exemption and the work product doctrine.

   a) Open Records Exemptions

             KRS asserts that the withheld records should also be exempted under

the “preliminary” exemptions of KRS 61.878(1)(i) and (j), which exempt “drafts,

notes, [and] correspondence with private individuals . . . .” Under the Open
                                         -13-
Records Act, documents of a “an internal, preliminary and investigatory” nature

are protected unless they are incorporated, either explicitly or implicitly, into a

final action. Univ. of Kentucky v. Lexington H-L Servs., Inc., 579 S.W.3d 858, 863

(Ky. App. 2018), review denied (Aug. 21, 2019). The preliminary documents

exemptions under the Open Records Act “are intended to protect the integrity of

the agency’s internal decision-making by encouraging the free exchange of

opinions and recommendations. They have thus ‘been interpreted to authorize

nondisclosure of preliminary reports and memoranda containing the opinions,

observations, and recommendations of personnel within an agency.’” 02-ORD-

199 (emphasis added).

             Although Kentucky’s courts have not yet dealt with the issue of

whether preliminary documents must be produced internally by an agency, there

have been several opinions of the Attorney General that have addressed the issue.

While opinions of the Attorney General are not binding, we consider them “highly

persuasive.” Palmer v. Driggers, 60 S.W.3d 591, 596 (Ky. App. 2001) (quoting

York v. Com., 815 S.W.2d 415, 417 (Ky. App. 1991)). In a 2017 decision, the

OAG opined upon the legality of the City of Taylorsville withholding responses to

ethics complaints as preliminary. The City argued that the records in question

were “preliminary drafts of responses in regard to an ethics complaint

                                         -14-
investigation, [sic] and are exempt under KRS 61.878(1)(j).” 17-ORD-092.

However, the OAG disagreed, stating:

             KRS 61.878(1)(j) exempts “preliminary
             recommendations, and preliminary memoranda in which
             opinions are expressed or policies formulated or
             recommended.” The responses to the ethics complaint
             sent by city commissioners are not preliminary
             recommendations or memoranda of the City; they are the
             final responses of the targets of the complaints. As such,
             they are not preliminary.
Id. (emphasis added).

             KRS has continued to rely on the sentiment that allowing Prisma to

inspect the withheld records would set a dangerous precedent jeopardizing the

integrity of agencies’ internal decision-making processes. Indeed, it premised a

large portion of its argument on this front on the idea that the withheld documents

reflect KRS’s internal decision-making process. We fail to see how the records at

issue – emails between opposing parties to the Mayberry action and an overview

document drafted by the Mayberry Plaintiffs’ counsel – are internal to KRS. KRS

acknowledges that the records were not created by KRS but rather the Mayberry

Plaintiffs’ counsel. KRS admits that the Mayberry Plaintiffs’ counsel is not its

own counsel. Additionally, the documents were not created at KRS’s direction. A

review of the documents makes clear that they were created by counsel for the

Mayberry Plaintiffs’ benefit. Accordingly, the withheld documents cannot be

deemed internal to KRS, and we need not address any issues regarding final action.
                                        -15-
We conclude that the withheld documents do not qualify as preliminary documents

and therefore proceed to the second step of the Wyrick test.

   b) Work Product

             According to the attorney work product doctrine, “the court ‘shall

protect against disclosure of the mental impressions, conclusions, opinions, or legal

theories of an attorney or other representative of a party concerning the litigation.’”

Hiatt v. Clark, 194 S.W.3d 324, 329 (Ky. 2006) (quoting CR 26.02(3)(a)). The

work product doctrine was first established in Hickman v. Taylor, 329 U.S. 495, 67
S. Ct. 385, 91 L. Ed. 451 (1947), as a tool to grant attorneys some “free[dom] from

unnecessary intrusion by opposing parties and counsel.” Vinson, 703 S.W.2d at

486. Our Court has previously recognized that this doctrine has been incorporated

into the exemptions of the Open Records Act so that “the explicit provisions of

KRS 61.878 protect the documents containing these privileged communications

from compulsory disclosure.” Hahn v. Univ. of Louisville, 80 S.W.3d 771, 776

(Ky. App. 2001).

             Under CR 26.02, a two-step analysis is necessary to determine if

particular documents are discoverable: (1) the court must determine whether the

document was prepared in anticipation of litigation by a party or its representative

and is therefore subject to privilege; and (2) if the court deems the document to be

work product, it must determine whether the requesting party has a “substantial

                                         -16-
need” of the document and cannot obtain the substantial equivalent without undue

hardship. Duffy, 289 S.W.3d at 558. Significantly, “[t]he policy of protecting

counsel’s work product prior to litigation applies with equal force to the work

product of the party’s other representatives, including private investigators.” Id. at

559. Therefore, a document must not necessarily be created by the withholding

party’s attorney to be work product, although it must be created by a related

representative.

             Here, litigation was clearly not just impending, but ongoing. The

March emails were sent and received, and the litigation packet was prepared and

presented during the course of the Mayberry litigation. Because the documents

pertain to the Mayberry action, they were unquestionably created “in anticipation

of litigation.” See CR 26.02(3)(a).

             However, we cannot say that these documents were created by KRS’s

counsel or by its representative. It would be incredible to construe this rule in

favor of withholding documents exchanged between adversarial parties amidst

litigation. Indeed, the work product doctrine was meant to protect parties from

being forced to “hand over the result of his work to an opponent.” Vinson, 703
S.W.2d at 486. The Mayberry Plaintiffs named KRS as a nominal defendant, and

KRS declined to align with them and pursue the claims created by the Mayberry

case. KRS openly admitted that the Mayberry Plaintiffs’ contingency-fee counsel

                                         -17-
are not counsel for KRS, providing in its Joint Notice that the Mayberry Plaintiffs

performed “legal and investigatory work” in connection with the Mayberry action

“without any compensation or assistance from KRS . . . .” R. at 752. Moreover,

there is nothing in the record to suggest that the Mayberry Plaintiffs’ counsel was

acting as KRS’s representative. No precedent exists to support the position that

work product created by one party and turned over to its opponent can be the work

product of the adverse party.

             The circuit court stated that, contrary to the Appellants’ argument,

“the Mayberry litigation was pending when the emails were exchanged, and the

Litigation Packet was clearly prepared in anticipation of litigation at the direction

of KRS’s attorneys.” R. at 1157-58. Upon thorough examination of the record,

however, we conclude that the record is entirely devoid of any evidence that such

materials were prepared at the direction of KRS’s attorneys or necessarily for its

benefit. A review of the documents contradicts this notion. The documents were

clearly created by the Mayberry Plaintiffs’ counsel for their benefit and not at

KRS’s direction. Therefore, we find that the withheld documents fail to qualify as

KRS’s work product upon the first step of analysis under CR 26.02.

   c) Common Interest and Settlement Privileges

             In the alternative, KRS contends that the withheld records are

protected by both the common interest privilege of KRE 503(b)(3) and the

                                         -18-
settlement privilege of KRE 408. The common interest privilege extends attorney-

client privilege to situations involving “representatives of the client,

representatives of the attorney, and between lawyers on matters of common

interest.” TRIAL HANDBOOK FOR KY. LAW. § 28:2 (2019 ed.). Under KRE

503(b)(3):

             A client has a privilege to refuse to disclose and to
             prevent any other person from disclosing a confidential
             communication made for the purpose of facilitating the
             rendition of professional legal services to the client:

             ...

             By the client or a representative of the client or the
             client’s lawyer or a representative of the lawyer to a
             lawyer or a representative of a lawyer representing
             another party in a pending action and concerning a matter
             of common interest therein[.]

The Kentucky Supreme Court expounded upon KRE 503(b), providing that “[f]or

the privilege to attach, the statement must be a confidential communication made

to facilitate the client in his/her legal dilemma and made between two of the four

parties listed in the rule: the client, the client’s representatives, the lawyer, or the

lawyer’s representatives.” Haney v. Yates, 40 S.W.3d 352, 354 (Ky. 2000).

             Because of the scarcity of Kentucky case law on the common interest

privilege, KRS cites to a number of other jurisdictions in presenting its argument

for asserting the privilege. However, in our review of federal case law, we note

that the common interest doctrine does in fact take into consideration the
                                          -19-
adversarial nature of the parties communicating and the timing of their

communications.

             There are three situations in which the common interest exception is

deemed to apply: (1) “a single attorney representing multiple clients in the same

matter”; (2) multiple parties, although represented by separate counsel, share the

same defense; and (3) two or more clients share a common legal interest and share

legal advice regarding that interest regardless of whether a lawsuit is actually

pending or will ever be pending. Broessel v. Triad Guar. Ins. Corp., 238 F.R.D.
215, 219-20 (W.D. Ky. 2006). There must be more than a “commercial, rooting

interest” between parties to amount to a common legal interest. In re Simplexity,

LLC, 584 B.R. 495, 499 (Bankr. D. Del. 2018). “So long as transferor and

transferee [of information] anticipate litigation against a common adversary on the

same issue or issues, they have strong common interests in sharing the fruit of the

trial preparation efforts.” United States v. American Tel. & Tel. Co., 642 F.2d
1285, 1299 (D.C. Cir. 1980) (emphasis added). “[T]he common interest rule is

concerned with the relationship between the transferor and the transferee at the

time that the confidential information is disclosed.” In re United Mine Workers of

Am. Employee Ben. Plans Litig., 159 F.R.D. 307, 314 (D.D.C. 1994) (emphasis

added).

                                         -20-
              It is unquestionable that the withheld communications did not occur

within any of these confines. Neither the Mayberry Plaintiffs nor their

contingency-fee legal counsel can “facilitat[e] the rendition of professional legal

services to” KRS, ruling out the first option.7 Instead, KRS contends that it falls

under the third category, claiming a common legal and financial interest with the

Mayberry Plaintiffs in what effectually amounts to the Plaintiffs’ hypothetical

financial recovery. However, at the time the withheld communications occurred,

KRS and the Mayberry Plaintiffs could not have had the same legal interest. KRS

has maintained its position that it was adverse to the Mayberry Plaintiffs prior to

the April 19, 2018, Joint Notice, thereby confirming that they were in fact adverse

parties at the time the withheld records were created and shared with KRS in

March 2018. It was only on April 19, 2018, that KRS stated in the Joint Notice

that it “believes that it is in the best interests of [KRS] for [the Mayberry] Plaintiffs

to continue their pursuit of these claims on a derivative basis on [KRS’s] behalf.”

R. at 80-81. KRS and the Mayberry Plaintiffs did not have a common interest at

the time of their communications, as they were adversarial parties and shared

nothing more than a “rooting interest” in the Mayberry Plaintiffs’ potential award.

7
  The Commonwealth of Kentucky has adopted the Model Procurement Code as codified by
KRS 45A, which “appl[ies] to every expenditure of public funds by this Commonwealth and
every payment by contingency fee under any contract or like business agreement[.]” KRS
45A.020(1). The Mayberry Plaintiffs’ legal counsel is contingency-fee-based representation and
therefore cannot possibly represent KRS on the same terms as well without violating KRS 45A.
We will not construe such a representation arrangement on behalf of KRS.
                                             -21-
              Moreover, KRS confirms that adversarial posture, relying on it to

additionally invoke a settlement privilege over the withheld records under KRE

408.

              There are three types of evidence excluded by KRE 408:
              (1) offers to compromise disputes; (2) settlements of
              disputes; and (3) statements of fact made or conduct
              occurring during the course of settlement negotiations.
              There are also two basic requirements prerequisite to any
              invocation of the KRE 408 rule of exclusion. First, the
              rule requires the existence of a dispute as to the validity
              or amount of a specific claim. Second, the rule requires
              an effort to settle the dispute by agreement to avoid
              extending the rule of exclusion to casual conversation or
              statements made for some other purpose than settlement.

Norton Healthcare, Inc. v. Deng, 487 S.W.3d 846, 854 (Ky. 2016) (footnotes

omitted). Aside from alleging that the withheld documents amount to

communications between “significantly disagreeing parties,” KRS has offered no

further argument as to why these documents are settlement communications. We

have carefully reviewed the documents. There is not even a hint of settlement

within those documents. We therefore hold that neither the settlement privilege

nor the common interest privilege protects the withheld documents from

disclosure.

   d) Attorneys’ Fees

              Finally, the Appellants claim that they are entitled to attorneys’ fees

under KRS 61.882. Under KRS 61.882,

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              [a]ny person who prevails against any agency in any
              action in the courts regarding a violation of KRS 61.870
              to 61.884 may, upon a finding that the records were
              willfully withheld in violation of KRS 61.870 to 61.884,
              be awarded costs, including reasonable attorney’s fees,
              incurred in connection with the legal action.

KRS 61.882(5) (emphasis added).

              While KRS’s failure to comply with the Open Records Act must

surely have been frustrating for the Appellants, its withholding of the documents

was not willful. In order to award the Appellants attorneys’ fees, proof must be

offered “showing that the agency’s actions were [willful] or that the failure

damaged [the Appellants] in any way.” Lang v. Sapp, 71 S.W.3d 133, 135 (Ky.

App. 2002).

              Here, there is no evidence that KRS acted in anything but good faith.

In its first response to the Appellants’ open records request, KRS explained that it

withheld documents due to their “preliminary” nature under KRS 61.878(1)(i) and

(j). In response to the Appellants’ second request, KRS produced some nonexempt

records and provided an additional explanation for withholding the remainder.

Although the parties disagree as to the exemption status of the documents, it

cannot be said that KRS willfully withheld the documents. See Bowling v.

Lexington-Fayette Urban Cty. Gov’t, 172 S.W.3d 333, 343 (Ky. 2005) (“A public

agency’s mere refusal to furnish records based on a good faith claim of a statutory

                                        -23-
exemption, which is later determined to be incorrect, is insufficient to establish a

willful violation of the Act.”).

                                   IV. CONCLUSION

             In light of the foregoing, we reverse the circuit court’s judgment and

remand this matter for further proceedings including production of the documents.

             ALL CONCUR.

 BRIEFS FOR APPELLANTS:                    BRIEF FOR APPELLEE:

 Barbara B. Edelman                        Paul C. Harnice
 Grahmn N. Morgan                          Louisville, Kentucky
 John M. Spires
 Lexington, Kentucky                       Christopher E. Schaefer
                                           Louisville, Kentucky
 AMICUS CURIAE BRIEF FOR
 KENTUCKY OPEN GOVERNMENT Sarah J. Bishop
 COALITION, INC.:         Louisville, Kentucky

 Amye Bensenhaver                          Andrew T. Hagerman
 Frankfort, Kentucky                       Louisville, Kentucky

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