MatrixCare Inc. v. Netsmart Technologies, Inc.

Background

The court had previously ruled on MatrixCare’s motion to compel discovery from Netsmart. MatrixCare sought documents and information exchanged between Plum and Netsmart. Netsmart argued that the materials were protected by the common-interest privilege, which can protect communications shared by parties cooperating on a legal matter.

In its earlier order, the court held that the privilege applied only to documents and information shared after litigation began between Plum and MatrixCare and before that litigation was resolved. The court ordered Netsmart to produce other materials.

Request for Reconsideration

Netsmart asked for permission to file a motion for reconsideration. It argued that the court should not have decided when the common-interest privilege began because the privilege issue concerned only forensic images, which the parties agreed were created after the privilege attached. Netsmart also argued that Plum, rather than MatrixCare, sued MatrixCare and that an affidavit showed the privilege began about three weeks before Plum filed suit.

Under District of Minnesota Local Rule 7.1(j), permission to seek reconsideration requires compelling circumstances. Reconsideration is generally used to correct a clear legal error or address newly discovered evidence.

Court’s Analysis

The court corrected its earlier order to state that the common-interest privilege attached on the day Plum sued MatrixCare. It concluded that this correction did not change the legal analysis: the start of litigation between Plum and MatrixCare determined when the privilege applied.

The court rejected Netsmart’s argument that it should not have decided the privilege’s time limits. MatrixCare had argued that the privilege was limited in time and asked the court to reject Netsmart’s reliance on the doctrine for discovery requests beyond those involving forensic images. The court therefore concluded that it was appropriate to address when the privilege began and ended and whether it applied to other discovery requests.

The court also rejected reliance on the affidavit as a compelling reason for reconsideration. It noted that Netsmart filed the affidavit one day before the hearing and had not previously argued that the affidavit established a different starting date for the privilege. The court concluded that Netsmart could not raise that argument for the first time in a request to seek reconsideration.

Disposition

The court amended its May 12, 2020 order. The motion to compel production of documents and information shared between Plum and Netsmart was granted as to materials shared before litigation began between Plum and MatrixCare and after the settlement agreement between Plum and MatrixCare was finalized.

The court denied Netsmart’s request to file a motion for reconsideration. It stated that all prior consistent orders remained in effect and warned that failure to comply could result in appropriate remedies or sanctions, including costs, fines, attorney fees, evidentiary limitations, striking pleadings, dismissal with prejudice, or default judgment.