Williams v. BHI Energy I Power Services LLC

Background

Marilyn Williams sued BHI Energy I Power Services LLC in an employment-discrimination lawsuit. The opinion states that Williams was employed by BHI and was working for one of BHI’s clients, Xcel Energy, when she was randomly selected for a drug test. The test was positive for THC. Williams alleges that BHI fired her without giving her an opportunity to explain herself or appeal the test results, in violation of the Minnesota Drug and Alcohol Testing in the Workplace Act. She also alleges that the result was caused by weight-loss hemp tea that falsely claimed to be free of THC.

Williams separately sued the tea distributor, Total Life Changes LLC, for consumer fraud, unlawful trade practices, and false advertising. She entered into a settlement agreement with that distributor containing a confidentiality provision.

The Two Discovery Disputes

Williams asked BHI to produce written communications between BHI or its counsel and Xcel or Xcel’s counsel concerning a declaration from an Xcel executive, James Connor. Williams alleged that BHI told Connor what to say in the declaration. BHI produced the declaration but resisted producing the related communications.

BHI asked Williams to produce her settlement agreement with Total Life Changes. After a hearing, United States Magistrate Judge David T. Schultz granted BHI’s motion to compel in part and ordered Williams to provide the agreement to his chambers for private review. After reviewing it, he determined that the agreement was relevant and discoverable and ordered production subject to confidentiality protections. He also granted Williams’s motion to compel the written communications with Xcel.

Both parties objected to Judge Schultz’s orders. Judge Menendez reviewed the objections under the standard for non-dispositive magistrate-judge orders: she could modify or set aside an order only if it was clearly erroneous or contrary to law.

Settlement Agreement

Judge Menendez affirmed the order requiring Williams to produce the settlement agreement. At the discovery stage, relevance is interpreted broadly, and the requesting party must make only a threshold showing of relevance. BHI argued that the agreement’s releases, terms, and claims could provide information about the valuation of Williams’s emotional-distress damages. Although Judge Schultz had described that argument as possibly “a bit of a stretch,” Judge Menendez held that his determination was not clearly erroneous or contrary to law after his private review of the agreement.

Williams argued that the collateral-source doctrine made the amount she received from the distributor irrelevant to her damages claims. Judge Menendez explained that discoverability is broader than trial admissibility. She therefore affirmed the production order but stated that neither her order nor Judge Schultz’s order decided whether the settlement agreement would be admissible as evidence.

The court also denied Williams’s alternative requests to require Judge Schultz to explain the agreement’s relevance or to require redaction of the settlement amount. It found that the confidentiality protections imposed by Judge Schultz were sufficient.

Communications With Xcel

Judge Menendez affirmed the order requiring BHI to produce the written communications with Xcel. First, she rejected BHI’s argument that Judge Schultz improperly concluded that BHI had abandoned its work-product claim. The hearing transcript showed that Judge Schultz asked whether BHI was pursuing attorney-client privilege through the common-interest doctrine but no longer asserting work-product protection, and BHI’s attorney answered yes.

Second, Judge Menendez upheld Judge Schultz’s conclusion that the common-interest doctrine did not protect the communications. That doctrine can prevent waiver of attorney-client privilege when privileged information is shared with a third party that has a common interest. Judge Schultz concluded that BHI and Xcel did not share the required common legal interest.

Judge Menendez noted that courts within the district disagreed about whether the common interest may be factual or strategic or must be legal. She did not decide that broader question. Instead, she held that Judge Schultz’s ruling was not clearly erroneous or contrary to law. The deadline to add parties had passed, and Williams had expressly disclaimed any intent to add Xcel as a party. The court also held that Judge Schultz did not clearly err by rejecting BHI’s claimed shared interest in staffing competent, trustworthy, and successful employees as insufficient for the doctrine.

Disposition

The court affirmed Judge Schultz’s order granting Williams’s motion to compel and overruled BHI’s objections. It also affirmed Judge Schultz’s order granting BHI’s motion to compel and overruled Williams’s objections.