Court Opinion

ID: 9945822
Source: CourtListenerOpinion
Date Created: 2024-02-28 17:04:06.589751+00
Date Added: 2024-06-11T14:22:15.403011
License: Public Domain

IN THE

            Court of Appeals of Indiana
                  Goalsetter Systems, Inc. d/b/a Escalade Sports,
                                               Appellant
                                                                                   FILED
                                                                              Feb 28 2024, 9:11 am

                                                                                   CLERK
                                                    v.                         Indiana Supreme Court
                                                                                  Court of Appeals
                                                                                    and Tax Court

                               Estate of Nolan Gerwels, et al.,
                                                Appellee

                                          February 28, 2024
                                     Court of Appeals Case No.
                                           23A-CT-1896
                            Appeal from the St. Joseph Circuit Court
                             The Honorable John E. Broden, Judge
                                       Trial Court Cause No.
                                        71C01-1807-CT-340

                                  Opinion by Judge Bailey
                                Judges Crone and Pyle concur.

Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024   Page 1 of 16
      Bailey, Judge.

      Case Summary
[1]   In a products liability and wrongful death action brought by the Estate of Nolan

      Gerwels (“the Estate”) against Goalsetter Systems, Inc. d/b/a Escalade Sports

      (“Goalsetter”) and other defendants, this Court has accepted a discretionary

      interlocutory appeal challenging the grant of the Estate’s motion to compel

      Goalsetter to produce documents, including some exchanged between

      Goalsetter and the United States Consumer Product Safety Commission (“the

      CPSC”). We affirm.

      Issues
[2]   Goalsetter presents the following issues for review:

              I.       Whether the trial court abused its discretion in denying
                       Goalsetter’s request for a protective order and compelling
                       the production of documents that the CPSC had refused to
                       produce in response to the Estate’s Freedom of
                       Information Act, 5 U.S.C. § 552, (“FOIA”) request; and

              II.      Whether the trial court abused its discretion by failing to
                       adequately protect Goalsetter’s work product.

      Facts and Procedural History
[3]   Fourteen-year-old Nolan Gerwels was killed on June 22, 2018, when a

      basketball goal detached from the wall of an in-home gymnasium and fell on

      Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024          Page 2 of 16
      him. Gerwels’ parents opened an estate, and on July 17, the parents,

      individually, and the Estate filed a complaint against Dick’s Sporting Goods,

      the seller, Goalsetter, the manufacturer, and other defendants who had engaged

      in residential construction and equipment installation services.

[4]   On November 28, 2018, the parties entered into a Stipulated Protective Order

      to “govern the production and handling of any protected information in this

      action.” (Appellee’s App. Vol. II, pg. 3.) Pursuant to the order, a party who

      produced protected information could designate it as “confidential” and a non-

      party would receive a copy of designated information only after agreeing to be

      bound by specific confidentiality terms. See id. The Estate requested discovery

      materials from Goalsetter and received materials that included communications

      from the CPSC to Goalsetter. Specifically, in response to Goalsetter’s self-

      reporting to the CPSC of Gerwels’ death, CPSC had stated in writing that it

      was taking no action at that time.

[5]   In January of 2022, Goalsetter and the Estate’s attorney each reported to the

      CPSC that there had been an adverse incident in Utah involving a Goalsetter

      basketball goal. Eventually, four separate incidents were reported. On October

      27, 2022, the CPSC announced that Goalsetter had issued a recall of Goalsetter

      wall-mounted basketball goals, identifying the hazard as: “The basketball goal

      can detach from the wall and fall to the ground posing a serious impact injury

      hazard and risk of death.” (Id. at 25.)

      Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024   Page 3 of 16
[6]   The Estate’s attorney issued a FOIA request to the CPSC seeking, among other

      things, consumer reports of injuries from Goalsetter wall mount products, all

      records in the CPSC files, and correspondence between the CPSC and Escalade

      Sports after June 22, 2018. (Exhibit A.) The FOIA request was denied on

      February 2, 2023. In part, the denial letter provided that the CPSC Office of

      Compliance “has determined that disclosing these records would cause an

      articulable harm to the current investigation while the recall is still in

      monitoring status.” (Exhibit A.)

[7]   The Estate requested supplemental discovery from Goalsetter, who provided

      some responsive materials and objected to the production of others. In

      pertinent part, Goalsetter asserted that materials provided by Goalsetter to the

      CPSC are protected by a privilege of self-critical analysis1 and cannot be

      released to the Estate under the FOIA. Goalsetter also claimed that documents

      exchanged between it and a governmental entity are privileged trade secrets,

      confidential, and not subject to discovery under the Consumer Product Safety

      Act, 15 U.S.C. § 2055 (“the CPSA”).

[8]   On February 24, 2023, the Estate filed a motion to compel Goalsetter to

      produce discovery materials in response to the Estate’s first, second, third, and

      1
       The Consumer Products Safety Act requires that manufacturers, distributors, and retailers report to the
      CPSC defects in goods that would create a substantial hazard. 15 U.S.C. § 2064. Reports made in
      accordance with that requirement are sometimes referred to as self-critical analysis reports. See Scroggins v.
      Uniden Corp. of America, 506 N.E.2d 83, 84 (Ind. Ct. App. 1987), trans. denied.

      Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024                               Page 4 of 16
      fourth requests for production.2 The Estate sought discovery materials inclusive

      of: correspondence between Goalsetter and the CPSC; communications

      between Goalsetter and consumers; and communications between Goalsetter

      and other persons such as independent contractors or inspectors. Other

      requests concerned research and development and test reports related to such

      things as dynamic load, static load, and engineering stress.

[9]   Goalsetter filed a response and, regarding post-recall supplementation,

      Goalsetter objected “to any and all requests that seek information that may

      have been exchanged with the CPSC, prepared in anticipation or coordination

      with the CPSC, may otherwise be related to any investigation by the CPSC or

      to any recall, or may have been completed as part of communications and

      negotiations with any governmental entity, including the CPSC.” (Appellant’s

      App. Vol. III, pg. 76.) Goalsetter claimed that such documents are privileged

      trade secrets under the CPSA and the FOIA, attorney work product, and

      “protected by the privilege of self-critical analysis.” Id. Finally, Goalsetter

      asserted that the release of such information would be harmful to the CPSC

      investigation and enforcement. Goalsetter sought a corresponding protective

      order “that discovery related to any CPSC reporting, investigation, research,

      testing, training, or recall, including any internal communication and

      2
        Specifically sought were materials in response to items 20, 21, 22, 26, 27, and 40 of the first request for
      production; items 9, 16, and 22 of the second request; item 2 of the third request; and items 1 through 27 of
      the fourth request.

      Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024                              Page 5 of 16
       communications with the CPSC and any documents exchanged, should be

       protected from discovery.”3 (Appellant’s App. Vol. III, pg. 127.)

[10]   The trial court conducted a hearing on March 28, 2023, at which argument of

       counsel was heard. Goalsetter advised the trial court that the CPSC had

       opened a new investigation in 2022 and had denied the Estate’s FOIA request.

       On that basis, Goalsetter argued that “all from 2022 forward” constituted its

       “work product” and confidential materials “pursuant to CPSC guideline.” (Tr.

       Vol. II, pg. 35.) The parties also presented arguments with regard to Indiana’s

       non-recognition of a self-critical analysis privilege. The Estate argued that

       Scroggins v. Uniden Corp. of America, 506 N.E.2d 83, 86 (Ind. Ct. App. 1987),

       trans. denied, is controlling authority while Goalsetter argued that Scroggins was

       wrongly decided. The Estate argued that Goalsetter was at fault for failing to

       maintain a log of claimed work product items while Goalsetter deemed the

       Estate at fault for failure to pursue the administrative remedy of an appeal after

       the FOIA denial.

[11]   On April 26, the trial court issued an order granting the motion to compel

       “subject to the limitations and restrictions set out in this Order.” (Appealed

       Order at 6.) The limitations are described in the order as follows:

       3
        In particular, the requested protective order involved: items 20, 21, 22, 26, and 40 of the first request for
       production; items 9 and 16 of the second request; item 2 of the third request; and items 7, 8, 10, 15, 16, 17,
       and 18 of the fourth request.

       Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024                               Page 6 of 16
        First, any and all discovery that is promulgated from Defendant
        to Plaintiffs as a result of this discovery request shall be properly
        marked and denoted as emanating from this particular discovery
        request; Second, the terms and condition[s] of the Court’s
        November 28, 2018 Protective Order shall apply to discovery
        promulgated as a result of the granting of this Motion to Compel;
        Third, no discovery materials or references to these discovery
        materials may be used in subsequent motions or hearings in this
        cause without the parties having first sought leave of court to use
        such discovery materials and if such leave is granted, the
        materials shall be locked [sic] as confidential; and Fourth, in
        Granting this Motion to Compel, the Court is reserving ruling on
        materials that Defendant asserts are subject to the attorney-client
        privilege.

(Id. at 4.) The order disclosed the trial court’s reasoning in considering the

denial of the FOIA request non-dispositive:

        this Court does want to emphasize that it has no interest in
        jeopardizing or undermining the important work of the
        Consumer Product Safety Commission. However, the Court
        does note that the CPSC’s admonition or warning about the
        threat that the potential disclosure of information related to this
        case could have on the CPSC’s ongoing investigation came in
        response to a FOIA request initiated by Plaintiffs’ counsel. Any
        information disclosed pursuant to a FOIA request is without
        limits and may be published and disseminated to the world.
        However, that is not what is happening as a result of this Court’s
        Order granting Plaintiffs’ Motion to Compel. The Court believes
        it has placed stringent limitations on the dissemination of
        discovery materials promulgated from Defendant to Plaintiffs to
        ensure that the information is not publicly disclosed.

(Id. at 5.)

Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024       Page 7 of 16
[12]   On May 9, Goalsetter requested that the trial court certify its April 26 order for

       interlocutory appeal4 and issue a stay pending appeal. On June 30, the trial

       court conducted a hearing on Goalsetter’s pending motions. At that hearing,

       the court advised the parties that it had reviewed the CPSC letter denying the

       FOIA request. The trial court characterized the communication as a “form

       letter” responding to a request the granting of which could have resulted in “the

       information [being] disseminated worldwide.” (Tr. Vol. II, pg. 51.) Goalsetter

       argued that an interlocutory appeal was necessary to permit the Appellate Court

       to “address whether [the trial court] can produce that which the federal agency

       has decided cannot be produced.” (Id. at 58.)

[13]   On July 21, the trial court certified its discovery order for interlocutory appeal

       and granted Goalsetter’s motion for a stay. Pursuant to Appellate Rule

       14(B)(2), this Court accepted jurisdiction of the appeal on September 15, 2023.

       Discussion and Decision
       Motion to Compel Production
[14]   Pursuant to Indiana Trial Rule 26(B), the scope of discovery is, in general:

                Parties may obtain discovery regarding any matter, not
                privileged, which is relevant to the subject-matter involved in the
                pending action, whether it relates to the claim or defense of the
                party seeking discovery or the claim or defense of any other

       4
        Indiana Appellate Rule 14(B)(1) provides that “[t]he trial court, in its discretion, upon motion by a party,
       may certify an interlocutory order to allow an immediate appeal.”

       Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024                              Page 8 of 16
               party, including the existence, description, nature, custody,
               condition and location of any books, documents, or other
               tangible things and the identity and location of persons having
               knowledge of any discoverable matter.

[15]   Although the information available through discovery is broad, it is not all-

       inclusive. Richey v. Chappell, 594 N.E.2d 443, 445 (Ind. 1992). Rule 26(B)(1)

       requires that the information sought must be relevant, admissible, or reasonably

       calculated to lead to the discovery of admissible evidence, and not privileged.

       Id. Additionally, the Rule permits discovery of documents or tangible items

       prepared “in anticipation of litigation” only upon a showing that the party

       seeking discovery has a substantial need for the materials and is unable, without

       undue hardship, to obtain the substantial equivalent by other means. Id. Even

       with such a showing of hardship, however, the party seeking discovery is not

       “entitled to the mental impressions, conclusions, opinions, or legal theories of

       an attorney or other representative of the party concerning the litigation.” Id.

       “Our discovery rules are designed ‘to allow liberal discovery with a minimum

       of court involvement in the discovery process.’” Id. (citing Chustak v. No. Ind.

       Pub. Serv. Co. (1972), 259 Ind. 390, 395, 288 N.E.2d 149, 152-3).

[16]   “Discovery matters are fact-sensitive, and therefore, the ruling of the trial court

       is cloaked in a strong presumption of correctness on appeal.” Wright v. Mount

       Auburn Daycare/Preschool, 831 N.E.2d 158, 162 (Ind. Ct. App. 2005), trans.

       denied. We will review a decision of the trial court regarding discovery matters

       only for an abuse of discretion. Id. An abuse of discretion occurs when the

       decision is clearly against the logic and effect of the facts and circumstances

       Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024     Page 9 of 16
       before the court or when the trial court misinterprets or misapplies the law. Id.

       In general, we will not reverse a discovery order unless there has been a

       showing of prejudice. Id.

[17]   Goalsetter has sought protection of documents in its “CPSC file and documents

       and communications exchanged with the CPSC and Goalsetter.” Appellant’s

       Brief at 20. According to Goalsetter:

                The production of documents in a case where the CPSC has
                expressly stated doing so subject to FOIA would cause an
                “articulable harm” to its investigation, would, logically by
                extension, cause the same harm to Goalsetter’s recall. Whether
                that is considered a “privilege” created by federal law, or renders
                such documents confidential pursuant to statue and common
                law, the end result should be that such documents are not
                discoverable.

       Id. at 21. According to Goalsetter, the trial court has “substituted its judgment”

       for that of the CPSC, and “the Trial Court first should have considered federal

       law on the public availability of certain documents and the tests applied by the

       agency and federal courts in determining if CPSC materials are subject to civil

       discovery requests in related litigation.” Id. at 17, 22. Goalsetter does not

       claim that CPSC criteria for public disclosure of information under the FOIA

       directly governs discovery in state court litigation.5 Rather, Goalsetter contends

       5
         Goalsetter has conceded that “the CPSA does not automatically apply to civil discovery,” but asserts that
       “there are times and circumstances when the interests of the CPSC and objections to discovery align, and
       credence should be given to both.” Reply Brief at 14.

       Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024                           Page 10 of 16
       that a federal agency action has somehow created a discovery privilege in this

       matter. We disagree.

[18]   It is well-settled that: “[a] grant of privilege and the scope of that privilege are

       policy choices of the Legislature.” State v. Int’l Bus. Machines Corp., 964 N.E.2d

       206, 210 (Ind. 2012). Although our legislature could have chosen to enact a

       discovery privilege corresponding to a FOIA determination, it has not done so.

[19]   In Scroggins v. Uniden Corp. of America, 506 N.E.2d 83 (Ind. Ct. App. 1987),

       trans. denied, the Court addressed the issue of whether Indiana courts should

       create a common law discovery privilege, when neither federal nor state statutes

       recognized such a privilege. Scroggins had brought a products liability action

       claiming that Uniden’s cordless telephone caused him to suffer a loss of hearing

       when it rang in his ear, and Scroggins sought discovery of communication

       between Uniden and the CPSC. See id. Uniden objected and sought a

       protective order on the basis that any communication between it and the CPSC

       was privileged and not subject to discovery. More specifically, Uniden argued

       that “failure to protect the self-critical analysis will deter open reporting and

       frustrate the strong federal interest.” Id. at 84.

[20]   The Uniden Court recognized that privileges are statutory in nature and that it is

       within the power of the legislature to create them, observing that “[m]ost

       privileges were unknown at common law and are particularly disfavored.” Id.

       at 86. In directing the trial court to grant discovery of the requested documents,

       Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024      Page 11 of 16
accompanied by appropriate protective orders to prevent unnecessary

publication of matters discovered, the Court stated:

        While the cases which apply the privilege denying discovery of a
        self-critical analysis make recitals to the effect that such privilege
        is necessary for open reporting and the success of the program,
        this recital is never explained nor demonstrated. It is a bald
        assumption. It occurs to us that if a manufacturer files a self-
        critical analysis which demonstrates that it was marketing a
        hazardous product, the CPSC would instantly order it to cease
        and desist. If the CPSC did not order it to desist, one may
        assume either that the hazard was not apparent, or that the CPSC
        was not doing its duty. Additionally, a manufacturer could not,
        with any justice, file a self-critical analysis reflecting the
        dangerous propensity of an article, knowingly continue to market
        the article, and then claim a privilege. We believe that a
        responsible manufacturer who discovered a dangerous article and
        filed a self-critical analysis reflecting the danger, would cease
        distribution of it, or at least be ordered to cease and desist by the
        CPSC. An irresponsible manufacturer would misrepresent the
        hazard in the first place. In essence, we are wholly unpersuaded
        that the privilege would appreciably aid the program. In any
        event it is a legislative matter for either Congress or our
        legislature. Neither body has created such a privilege, though
        they have demonstrated they know how. It is not the prerogative
        of this court to create one.

        Uniden argues that any discovery matter is addressed to the
        sound discretion of the trial court, and its ruling will not be
        disturbed absent a showing of abuse of discretion. We agree.
        However, here, the trial court denied discovery specifically on the
        basis of a privilege which we have held does not exist.

Id. Goalsetter argues that Scroggins is inapplicable because Goalsetter “is not

relying on the self-critical analysis doctrine to which Scroggins was limited.”
Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024       Page 12 of 16
       Appellant’s Brief at 27. Goalsetter also suggests, in a cursory manner, that

       Scroggins was wrongly decided.

[21]   Our review of Scroggins reveals that the opinion addressed the statutory nature

       of privileges in general. In relying upon Scroggins, the trial court was not

       required to limit its application to self-critical analysis reports. See also Terre

       Haute Regional Hospital, Inc. v. Trueblood, 600 N.E.2d 1358, 1360 (Ind. 1992)

       (“Indiana generally recognizes that privileges are statutory in nature and that it

       is within the power of the legislature to create them.”) Indeed, this Court has

       held that a trial court erred in relying upon “a rationale for applying a privilege

       in a particular situation” in the absence of a statute. Hulett v. State, 552 N.E.2d

       47, 48 (Ind. Ct. App. 1990), trans. denied.

[22]   The trial court was not empowered to create a common law privilege that

       materials withheld in a FOIA request are non-discoverable due to a federal

       interest. Goalsetter has not shown that the trial court misapplied the law or

       otherwise abused its discretion.

       Work Product
[23]   Goalsetter asserts that the trial court’s order “failed to address whether work

       product protection exists for materials prepared as part of Goalsetter’s

       engagement with the CPSC.” Appellant’s Brief at 29. To the contrary, the

       order provides in part:

               The Court is reserving ruling on materials that Defendant asserts
               are subject to the attorney-client privilege. This Court is very

       Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024        Page 13 of 16
               sensitive to documents and matters that may be protected by the
               attorney-client privilege. Based on the record before the Court at
               present, the Court does not agree with Plaintiffs that Defendant
               has waived the attorney-client privilege. However, “blanket
               claims of discovery privilege are not favored by Indiana courts.”
               Howard v. Dravet, 813 N.E.2d 1217 (Ind. Ct. App. 2004). Thus,
               documents that Defendant maintains are protected by the
               attorney-client privilege are to be further sequestered by the
               Defendant and Defendant shall articulate sufficient information
               to Plaintiffs’ counsel describing the nature and extend [sic] of the
               attorney-client privilege asserted and further hearing thereon may
               be held.

       (Appealed Order at 4.)

[24]   Work product is that which a party or the party’s representative prepares, or

       that which is prepared for the party or party’s representative, in anticipation of

       litigation or for trial. Ind. Trial Rule 26(B)(3). Goalsetter had presented to the

       trial court no log or accounting of specific work product documents, but rather

       it argued that everything in the files of independent counsel retained after the

       product recall was privileged work product. The trial court did not reject the

       blanket claim of privilege outright, but instead provided for sequestration of

       documents and permitted Goalsetter to request a hearing in the future to meet

       its burden of showing that some or all of the requested documents are work

       product. See Burr v. United Farm Bur. Mut. Ins. Co., 560 N.E.2d 1250, 1254 (Ind.

       Ct. App. 1990) (“The threshold determination in any case involving an

       assertion of the work-product privilege is whether the materials sought to be

       protected from disclosure were in fact prepared in anticipation of litigation.”) It

       is the party asserting the privilege who must establish that the materials were
       Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024     Page 14 of 16
       prepared in anticipation of litigation rather than in the normal course of

       business. TP Orthodontics, Inc. v. Kesling, 15 N.E.3d 985, 995 (Ind. 2014). The

       trial court’s discovery order, which anticipates further development of

       Goalsetter’s factual claims of work product, if necessary, does not amount to an

       abuse of discretion.

       Conclusion
[25]   Goalsetter possesses no privilege preventing disclosure in a state court discovery

       dispute based upon a federal agency refusal of disclosure in an FOIA context.

       The discovery order at issue is carefully crafted to limit dissemination of

       materials and permit further review of claimed work product materials.

       Goalsetter has not shown that the trial court abused its discretion in compelling

       the production of documents and denying Goalsetter’s motion for a protective

       order.

[26]   Affirmed.

       Crone, J., and Pyle, J., concur.

       ATTORNEYS FOR APPELLANT
       Renee J. Mortimer
       Scott B. Cockrum
       Jessica L. Mullen
       Corban J. Cavanaugh
       Lewis Brisbois Bisgaard & Smith LLP
       Highland, Indiana

       Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024     Page 15 of 16
ATTORNEYS FOR APPELLEE ESTATE OF NOLAN GERWELS
Charles P. Rice
Patrick D. Murphy
Murphy Rice
Mishawaka, Indiana

ATTORNEY FOR APPELLEE DICK’S SPORTING GOODS, INC.
Jennifer Kalas
Hinshaw & Culbertson LLP
Schererville, Indiana

Court of Appeals of Indiana | Opinion 23A-CT-1896 | February 28, 2024   Page 16 of 16