Court Opinion

ID: 9382961
Source: CourtListenerOpinion
Date Created: 2023-03-29 14:02:41.521848+00
Date Added: 2024-06-11T17:17:43.048461
License: Public Domain

Cite as 2023 Ark. App. 176
                   ARKANSAS COURT OF APPEALS
                                       DIVISION IV
                                       No. CV-21-371

                                                Opinion Delivered March   29, 2023
 GERALD PEVEY
                                                APPEAL FROM THE BENTON
                                APPELLANT
                                                COUNTY CIRCUIT COURT
                                                [NO. 04CV-19-2135]
 V.
                                                HONORABLE DOUG SCHRANTZ,
 BAY CITIES CONTAINER                           JUDGE
 CORPORATION
                                  APPELLEE AFFIRMED

                             CINDY GRACE THYER, Judge

       Gerald Pevey has filed this interlocutory appeal pursuant to Rule 2(f) of the Arkansas

Rules of Appellate Procedure–Civil from the Benton County Circuit Court’s order requiring

him to respond to the discovery requests of Bay Cities Container Corporation despite his

claims of privilege and work product.1 Because the circuit court did not abuse its discretion,

we affirm.

       1
        Rule 2(f)(1) provides that the Arkansas Supreme Court “may, in its discretion, permit
an appeal from an order denying a motion for a protective order pursuant to Rule of Civil
Procedure 26(c), an order pursuant to Rule of Civil Procedure 37 compelling production of
discovery, or an order denying a motion to quash production of materials pursuant to Rule
45 when the defense to production is any privilege recognized by Arkansas law or the
opinion-work-product protection.” On September 9, 2021, the Arkansas Supreme Court
granted the request to file an interlocutory appeal.
       While the issues in this case may be straightforward, the underlying dispute between

the parties is fairly complex and has been ongoing for almost four years necessitating a

somewhat lengthy recitation of the facts. Bay Cities Container Corporation (Bay Cities) is a

business based in Bentonville, Arkansas, that focuses on retail-packaging and display-design

services for its clients. As part of its business, Bay Cities receives confidential business

information from its clients. In order to safeguard such information, Bay Cities requires its

employees to agree to and abide by its written policies respecting confidential information.

       Gerald Pevey was employed by Bay Cities from July 2014 until March 2019. As part

of his employment, Pevey signed (1) a confidentiality and nonsolicitation agreement and (2)

a trade-secret and confidential-company-information acknowledgement.2 The confidentiality

and nonsolicitation agreements prohibited him from soliciting Bay Cities’ customers or

employees for one year upon the termination of his employment with Bay Cities. It also

prohibited him from removing any confidential information or company property from Bay

Cities’ premises without express written permission; and it required that he promptly return

any confidential information or any other property in his possession upon termination of

the employment relationship. The trade-secret acknowledgment prohibited Pevey from

duplicating, replicating, or communicating any confidential information or trade secrets

without prior written permission and provided a laundry list of items it deemed to be

“confidential and proprietary trade secrets.”

       2
       Pevey signed two separate versions of these agreements during his employment, once
in 2014 and again in 2017.

                                                2
       Pevey left his employment with Bay Cities in March 2019 and immediately began

work for Bay Cities’ competitor, Vanguard Packaging (Vanguard). On March 25, 2019, Bay

Cities’ counsel sent Pevey a cease-and-desist letter claiming that Pevey had been contacting

Bay Cities’ customers on behalf of Vanguard. On April 3, 2019, counsel again sent a letter

to Pevey advising him that Bay Cities had evidence that he had retained certain property

containing proprietary and confidential information belonging to Bay Cities in violation of

his confidentiality agreement. Bay Cities demanded the immediate return of those items

listed in the letter as well as any hard copies of such information in his possession. Bay Cities

also demanded that Pevey completely delete all digital copies of the items and identify any

and all persons with whom he may have shared them. Finally, Bay Cities demanded that

Pevey make available to it any computers or data-storage devices once deletion had occurred

so that Bay Cities could confirm their deletion.

       In response, Pevey’s counsel informed Bay Cities that Pevey had notified a handful

of his work contacts informing them of his departure from Bay Cities and his recent

employment with Vanguard but denied attempting to solicit any of Bay Cities’ customers or

clients. He further denied that any of his communications contained any confidential,

proprietary, or otherwise sensitive information related to Bay Cities.

       As for the alleged confidential and/or proprietary information believed to be in his

possession, Pevey claimed that those items could possibly be located in emails associated with

his Gmail account and on two hard drives he had in his possession. Pevey asserted that the

emails had never been printed or shared in either hard-copy or electronic form with any

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third party. As for the two hard drives, one contained a “backup” of his work computer and

contained Bay Cities’ work-related information. He denied having accessed that hard drive

since his termination and claimed to have placed it in his counsel’s possession. Pevey also

claimed that he did not know what was contained on the other hard drive and was unsure

if it contained Bay Cities’ work-related information. He declared that he was willing to return

any of Bay Cities’ information that may be contained on either hard drive.

       Thereafter, the parties entered into protracted negotiations into the timing, scope,

and breadth of the review of the search for Bay Cities’ information on Pevey’s accounts and

devices. Bay Cities identified multiple personal devices and accounts it wanted to inspect to

determine whether they contained Bay Cities’ information. In addition, Bay Cities claimed

that its inspection of Pevey’s work computer had indicated that data was transferred to the

three USB drives in the last three months.

       Pevey objected to Bay Cities’ access to his personal information and photos as well as

information related to his work at Vanguard. He also objected to the inspections of some of

his personal accounts and further claimed he did not know where other devices identified

by Bay Cities—more specifically, three USB devices—were located.

       On August 23, 2019, Bay Cities filed suit against Pevey alleging breach of contract

and violation of the Computer Fraud and Abuse Act and seeking a permanent injunction

and damages. Pevey answered, generally denying the allegations in the complaint.

       Sometime thereafter, the parties began engaging in discovery. In June 2020, the

parties executed an agreed protective order that divided the protected electronic information

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into two categories: (1) confidential informatoin and (2) highly confidential—attorneys’ eyes

only (AEO) information; and established parameters surrounding the disclosure of each

type. It further provided that such information could not be disclosed to an expert witness

or consultant until the expert or consultant completed a certificate of acknowledgment

subjecting him or her to the jurisdiction of the court and agreeing to be bound by the

protective order.

       As part of its discovery, Bay Cities propounded its first set of interrogatories and

requests for production. Pevey objected, in part, on the basis of attorney work product and

attorney-client privilege. This resulted in Bay Cities’ filing its first motion to compel.

       The parties then drafted a protocol for the forensic imaging and analysis of the

computer-related equipment believed to contain Bay Cities’ electronic files. 3 The protocol

was designed to allow Technology Concepts & Design, Inc. (TCDI), to copy and complete a

forensic analysis of specified personal devices and accounts belonging to Pevey. As part of

the agreed protocol, TCDI would be allowed to analyze Pevey’s personal cell phone and

computing devices but would be prohibited from imaging his Vanguard email. Pevey further

agreed to provide TCDI with the login IDs, passwords, and other information necessary to

access certain identified accounts.

       3
         The parties seemingly settled their protocol issues at a March 2021 hearing; however,
Pevey later objected to the proposed draft submitted by Bay Cities. The court ultimately
overruled Pevey’s objections and entered the proposed order previously submitted by Bay
Cities in April 2021.

                                                5
       While the details of the protocol were being finalized, Bay Cities discovered that Pevey

had hired a forensic examiner to image and copy the devices that contained its confidential

information. On March 23, 2021, Bay Cities sent a letter expressing concerns regarding the

confidential designation of the imaged files from the devices, requesting information about

the imaging work, and seeking confirmation that counsel’s review of those items had been

conducted on an AEO basis. Bay Cities requested that Pevey fully describe the scope and

extent of the copying and review of the designated devices. Pevey did not respond. In a letter

dated March 31, Bay Cities specifically designated the copies of those devices as AEO and

requested confirmation that Pevey had complied with that designation. Counsel also

enclosed a second set of interrogatories and requests for production to determine how the

information was handled.

       On April 12, 2021, Bay Cities filed a second motion to compel, claiming it had yet

to receive confirmation that Pevey was treating the information as AEO information and

that it had not been advised how the information had been handled or to whom it had been

disseminated. Pevey responded to the motion to compel, maintaining that the motion to

compel was unnecessary because the information was governed by the protocol order. He

also asserted that the bulk of the requested information was barred by the attorney-client

privilege, attorney work product, and the non-testifying-expert privilege.

       In addition to his response to the motion to compel, Pevey filed a motion to strike,

or alternatively, a motion for a protective order. Pevey claimed that Bay Cities’ second set of

interrogatories and requests for production had sought information related to his attorneys’

                                              6
legal strategies, including counsel’s work product and information regarding his

consultations with his non-testifying expert witness. In his motion, Pevey noted that Bay

Cities had agreed in an August 31, 2020 letter that it had no issue with him hiring his own

imaging company to conduct an additional independent review.

       That same day, Pevey also filed an acknowledgment of AEO information under the

agreed protective order. In the acknowledgment, Pevey disputed Bay Cities’ right to

information that falls under the attorney-client privilege, the non-testifying-witness privilege,

and attorney work product.

       In response to Pevey’s motion to strike, Bay Cities argued that the non-testifying-

expert privilege did not apply because exceptional circumstances required the production of

the requested information. Bay Cities claimed that the only way Bay Cities can determine

what information was disseminated by Pevey and to whom is by seeking this information

through discovery. Bay Cities also argued that the attorney-client privilege did not apply

because Bay Cities was not seeking confidential communications and because Pevey had

disclosed such information to Vanguard. Finally, Bay Cities argued that attorney-work-

product objection was inapplicable because the work-product designation only protects

documents created by or for counsel and does not protect the facts therein; nor does the

requested information threaten the mental impressions, conclusions, opinions, or legal

theories of Pevey’s attorney. It further argued that, even if the documents were deemed to be

work product, they were still discoverable because Bay Cities has a substantial need for the

                                               7
materials, and it is unable to obtain the substantial equivalent of those materials without

undue hardship.

       Pevey replied, arguing that the information sought had lost any commercial value, if

any such value ever existed; that experts were permitted under the protective order; that Bay

Cities’ counsel had agreed he could retain his own forensic expert, and he had done so; and

that destruction of information was addressed in the protective order. Finally, he denied that

he had provided any of the storage devices to Vanguard.

       A hearing was held on the motions on May 27, 2021. Pevey’s counsel argued that the

protective order did not require any party to notify the other party when information has

been reviewed; nor did it require any party to designate who was reviewing it. In fact, Bay

Cities had even agreed that Pevey could hire his own expert. Pevey argued that it was

counsel’s responsibility to ensure that the protective order was followed, and that if anybody

had access to the information, they were required to sign the acknowledgement form

agreeing to abide by the terms of the protective order. Pevey’s non-testifying expert witness

had done so. Thus, Pevey claimed he had done everything he was required to do under the

protective order.

       Counsel for Bay Cities stated that it only sought to determine why the material was

imaged, how it was imaged, who had access to the information, and where that information

was sent. Counsel agreed that if any of the documents were subject to the attorney-client

privilege, those could be withheld. Bay Cities noted that this information was reviewed and

disseminated prior to the AEO designation and before the protocol order was entered.

                                              8
       After reviewing the evidence and hearing the arguments of counsel, the court denied

Pevey’s motion to strike and granted Bay Cities’ motion to compel, but only to the extent

the information was not covered by attorney-client privilege. First, the court indicated that

because there had been so many conversations between the parties that the court was not

privy to, it was not going to assign any weight or credibility to the comments made in Bay

Cities’ August 31 letter regarding Pevey’s ability to hire his own expert. The court then stated

that it believed the information requested was limited to identifying who had access to the

electronic data and what data had been disseminated. The court noted that the information

in question belonged to Bay Cities and that it was entitled to know who had had access to

that information. With regard to the nontestifying expert, the court excepted

communications between counsel and the expert but ordered disclosure of the other items.

       On June 18, 2021, Pevey requested that the court make factual findings and address

the factors set forth in Rule 26(f) of the Arkansas Rules of Civil Procedure. On July 21, the

court entered its written order denying Pevey’s motion to strike and granting Bay Cities’

motion to compel. The order set forth the following findings pursuant to Rule 26(f):

       In accordance with Ark. R. Civ. P. 26(f), the Court finds that the information and
       production sought by Bay Cities and as directed by the Court in the bullet points
       above, are not privileged or subject to work product or other protections. The
       compelled responses will not cause irreparable injury to Pevey as the information
       requested is not protected from disclosure. The information sought by Bay Cities
       specifically relates to the results of Pevey’s forensic imaging of materials that Pevey
       admitted to copying and admitted to contain Bay Cities’ proprietary information.
       Specifically, Bay Cities is entitled to obtain information on where the files are, who
       has looked at them, when were they accessed, what files were copied, and how the
       files were accessed. Therefore, the Court finds that the requests related to these copies
       and the access to these copies—as limited by the Court’s specific rulings on each

                                               9
       Interrogatory and Request—do not seek privileged information or materials from
       Pevey. Pevey’s conclusory and blanket claim of privilege regarding each of the
       Discovery Requests is not well taken.

       The next day, Pevey moved to vacate and amend the order, arguing that he had not

had the opportunity to comment or object to the provisions of the order before it was filed.

Pevey also requested a stay of the order compelling discovery pending appeal. Both motions

were denied.

       On September 9, 2021, the supreme court granted Pevey’s petition for an

interlocutory appeal of the discovery issues. This appeal followed.

       The appeal here involves Pevey’s objections to Bay Cities’ second set of discovery

requests. The challenged interrogatories, in essence, requested (1) the identities of those

persons or entities that had access to the devices and data at issue; (2) a complete list of all

electronic devices or data-storage units that have stored any of the imaged or transferred files;

(3) a complete list of all imaged files accessed or recovered; (3) the substance, type, and date

of any communication regarding the imaging or review conducted by Pevey or his counsel

and with whom such communication occurred; (4) a description of the files utilized or

accessed by Pevey and/or Vanguard; and (5) whether the review of the documents was

conducted on an AEO basis. The contested requests for production sought production of

copies of everything identified, relied on, and considered in preparing the answers to the

interrogatories; all imaged files recovered during forensic imaging by Pevey or his counsel;

any reports, opinions, summaries, correspondence, letters, emails, or other written

documents of any kind regarding any forensic imaging or accessing conducted by Pevey or

                                               10
his counsel; and all items (including all storage devices) that Pevey identified as having stored

imaged or transferred files recovered during forensic imaging.

       Pevey argues that the foregoing discovery seeks information covered by the non-

testifying-expert privilege, the attorney-client privilege, and the exceptions governing attorney

work product. We disagree and affirm.

                                      I. Standard of Review

       First, Pevey asks this court to utilize a de novo-review standard in analyzing his

arguments on appeal; however, our standard of review in discovery matters is well settled—

we employ an abuse-of-discretion standard. We have consistently held that a circuit court

has broad discretion in matters pertaining to discovery, and the exercise of that discretion

will not be reversed absent an abuse of discretion that is prejudicial to the appealing party.

Gonzales v. Cont’l Cas. Co., 2022 Ark. App. 501, 659 S.W.3d 277; Hardy v. Hardy, 2011 Ark.

82, 380 S.W.3d 354. This court has described abuse of discretion as a high threshold that

requires not only error but a ruling made improvidently, thoughtlessly, or without due

consideration. Gonzales, supra; Rhodes v. Kroger Co., 2019 Ark. 174, 575 S.W.3d 387. Thus,

the circuit court’s order compelling discovery in this case should not be overturned absent

an abuse of discretion.

                                          II. Analysis

                              A. Non-Testifying-Expert Privilege

       For Pevey’s first argument, he asserts a claim involving the non-testifying-expert

privilege. Pevey maintains that the information sought in the foregoing discovery includes

                                               11
not only a detailed roadmap of the trial preparation performed by his non-testifying expert

but also the identity of his non-testifying expert. He asserts that Bay Cities is not entitled to

know either the identity of his non-testifying expert or the scope of his work.

       Here, however, it is important to analyze the discovery requests in relation to the

specific facts of this case. The goal of discovery is to permit a litigant to obtain whatever

information he or she may need to prepare adequately for issues that may develop without

imposing an onerous burden on his adversary. Grand Valley Ridge, LLC v. Metro. Nat’l Bank,

2012 Ark. 121, 388 S.W.3d 24.

       Pevey admittedly has in his possession confidential electronic information and data

that belongs exclusively and solely to Bay Cities. Bay Cities is entitled to know what

happened to that information while in Pevey’s possession. Bay Cities’ discovery requests are

designed to discover who had access to that information; to whom, if anyone, Pevey gave

that information; what information was accessed or disseminated, if any; and when that

information was accessed or disseminated, if at all. Thus, Bay Cities’ discovery requests are

specifically designed to illuminate those facts that go to the central issue in this case.

       Rule 26(b)(4)(B) of the Arkansas Rules of Civil Procedure provides that a party may

discover facts known or opinions held by an expert who has been retained by another party

in anticipation of litigation or preparation for trial, and who is not expected to be called as

a witness at trial, only upon a showing of exceptional circumstances under which it is

impractical for that party to obtain the facts or opinions on the same subject by other means.

                                               12
       Only Pevey and his counsel know for sure what, if anything, and to whom Pevey had

disseminated Bay Cities’ information. Pevey and his counsel admittedly allowed a

nontestifying witness to access that information before the parties entered into an agreed

protective order. This is information and data exclusively under Pevey’s control. The court

allowed Bay Cities to obtain that information but expressly excluded any communications

between Pevey’s counsel and staff and the nontestifying expert. Clearly, the circuit court

exercised its discretion in such a manner as to provide Bay Cities with the necessary

information regarding the basic facts as to who had access to what information while also

preventing Bay Cities from obtaining the non-testifying expert’s analysis of such data. This

was not an abuse of discretion.

       As for disclosure of the identity of the non-testifying expert, courts in some

jurisdictions have held that their versions of Rule 26(b)(4)(B) preclude discovery of the

identities of non-testifying experts unless discovery of their opinions and knowledge of facts

is also warranted. Other courts, however, have allowed discovery of experts’ identities

without a showing of exceptional circumstances. 2 David Newbern, John Watkins & D.P.

Marshall Jr., Arkansas Civil Practice & Procedure § 21:8 (5th ed. 2011) In this case, it appears

that exceptional circumstances exist; Bay Cities is entitled to know who has had access to its

confidential information.

                                  B. Attorney-Client Privilege

       Pevey next argues that the information requested in the second set of discovery is

protected from disclosure by the attorney-client privilege. He claims that the attorney-client

                                              13
privilege extends to counsel’s communications with agents and experts who are retained by

counsel for the purpose of providing legal advice. Because the scope and size of the forensic

review as well as the production of information in this case is a “foreign language” to most

attorneys, he asserts that the nontestifying expert’s assistance was necessary for his attorney

to provide sound legal advice. As such, the work performed by his nontestifying expert

should fall within the attorney-client privilege.

       Pevey fails to acknowledge, however, that the court excepted all communications

between Pevey’s counsel and his nontestifying expert; only the underlying facts regarding the

forensic imaging of the computer data was compelled—that is, which files were accessed,

where the files are, who looked at them, when they were accessed, and how they were

accessed. Thus, no attorney-client privileged communications are involved.

                                 C. Attorney Work Product

       For his last argument, Pevey seems to argue that the timing and identification of the

documents accessed by his counsel and his nontestifying expert constitute work product

entitled to protection from discovery. Bay Cities argues that the court found that it had a

substantial need for the documents in preparation for its case and that Rule 26(b)(3) of the

Arkansas Rules of Civil Procedure allows for the production of work-product information

“upon a showing that the party seeking discovery has substantial need of the materials in the

preparation of his case and that he is unable without undue hardship to obtain the

substantial equivalent of the materials by other means.”

                                               14
       Here, the court specifically found the information requested by Bay Cities was not

obtainable through any other source. As stated before, Bay Cities is entitled to know the

who, what, when, where, and how these confidential documents were accessed. This

information is solely within Pevey’s control. Thus, the only way Bay Cities can obtain that

information is through the discovery process. It should be noted that the circuit court did

not give Bay Cities carte blanche access to that information—it excluded any attorney-

client/non-testifying-expert communications from its directive. Thus, the circuit court did

not abuse its discretion in compelling the production of this information.

       Affirmed.

       ABRAMSON and GLADWIN, JJ., agree.

       Kelley Law Firm, PLLC, by: Glenn E. Kelley and Caroline W. Kelley, for appellant.

       Wright, Lindsey & Jennings LLP, by: N. M. Norton; Gary D. Marts, Jr.; Eric Berger; and

Meredith Lowry, for appellee.

                                              15