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Textron Financial Corp. v. Gallegos

United States District Court, S.D. California

August 5, 2016

TEXTRON FINANCIAL CORPORATION, Plaintiff,
v.
MICHAEL S. GALLEGOS, Defendant.

          ORDER DENYING DEFENDANT’S MOTION FOR PROTECTIVE ORDER RE JENNIFER GAGHEN [ECF NO. 66]

          DAVID H. BARTICK United States Magistrate Judge

         On May 17, 2016, Judgment Debtor, Michael S. Gallegos (“Gallegos”) filed a motion for protective order regarding the deposition of Jennifer Gaghen. (ECF No. 66.) On July 5, 2016, Judgment Creditor, SPE LO Holdings (“SPE LO”), assignee of Textron Financial Corporation (“Textron”), filed an opposition. (ECF No. 78.) Gallegos did not file a reply. Having considered the parties’ submissions, the Court hereby DENIES Gallegos’ motion as set forth below.

         I. BACKGROUND

         On November 30, 2010, Textron obtained a judgment against Gallegos in the amount of $21, 921, 165.45 in the United States District Court for the District of Rhode Island. (ECF No. 1.) On April 11, 2011, Textron registered the judgment in this Court. (Id.) Thereafter, Textron was only able to collect $10, 484.99 on the judgment. (ECF No. 56.)

         On May 2, 2016, SPE LO served a deposition subpoena on Jennifer L. Gaghen (“Gaghen”). (ECF No. 66-2 at 5-8.) For the last 15 years Gaghen has been Gallegos’ personal attorney and the corporate counsel for a number of Gallegos-related entities. (ECF No. 66-3 at ¶ 2.) SPE LO seeks to depose Gaghen on several topics, including the legal entities Gallegos created and his relationship with each one, facts about the sale of Pacific Pearl Hotels (“PPH”) for $100 in March 2015, and the identity of other assets or income streams owned by Gallegos. (ECF No. 76 at 5.)

         On May 17, 2016, Gallegos filed the instant Motion for Protective Order requesting the Court prohibit the deposition of Gaghen from going forward. (ECF No. 66.) Gallegos argues SPE LO has not demonstrated the propriety or need for Gaghen’s deposition, and that the information SPE LO seeks is protected by the attorney-client privilege or work product doctrine.

         On June 2, 2016, the Court temporarily stayed the deposition of Gaghen pending resolution of this motion. (ECF No. 77.)

         II. DISCUSSION

         The Federal Rules of Civil Procedure authorize the court, upon a showing of good cause, to issue a protective order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense. Fed.R.Civ.P. 26(c)(1). The party seeking a protective order bears the burden of establishing good cause. Rivera v. NIBCO, Inc., 384 F.3d 822, 827 (9th Cir. 2004). “‘Good cause’ is established where it is specifically demonstrated that disclosure will cause a ‘specific prejudice or harm.’” Id. (citing Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1211 (9th Cir. 2002)). “Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.” Id. (citing Phillips, 307 F.3d at 1211-12).

         Neither the Federal Rules of Civil Procedure, nor the Federal Rules of Evidence prohibit the taking of attorney depositions. In fact, Federal Rule of Civil Procedure 30(a) provides that a party may depose “any person.” Fed.R.Civ.P. 30(a). However, courts have recognized that depositions of an opposing party’s trial counsel can have a negative impact on the litigation process, and are therefore discouraged as a means of discovery. Shelton v. Am. Motors Corp., 805 F.2d 1323, 1327 (8th Cir. 1987).

         In Shelton v. American Motor Corp., the Eighth Circuit set out a three-part test for determining when it is appropriate to depose opposing counsel. Shelton, 805 F.2d at 1327. The Ninth Circuit has not addressed whether Shelton provides the proper framework for determining when an attorney deposition is proper. However, Shelton is generally considered the leading authority, and has been adopted in this district. See Am. Cas. Co. of Reading, Pa. v. Krieger, 160 F.R.D. 582, 585-89 (S.D. Cal. 1995).

         In Shelton, the Court explained that permitting depositions of opposing counsel “not only disrupts the adversarial system and lowers the standards of the profession, but it also adds to the already burdensome time and costs of litigation.” Shelton, 805 F.2d at 1327. The Shelton Court also noted that allowing such depositions could permit opposing counsel to glean privileged information about the opponent’s litigation strategy. Id. Yet, Shelton recognized that under certain circumstances, the taking of opposing counsel’s deposition would be warranted. Id. Therefore, Shelton held the party seeking to take the deposition of opposing counsel must show that: “(1) no other means exist to obtain the information than to depose opposing counsel; (2) the information sought is relevant and nonprivileged; and (3) the information is crucial to the preparation of the case.” Id. See also Krieger, 160 F.R.D. at 588 (stating there are circumstances “under which the deposition of a party’s attorney will be both necessary and appropriate, for example, where the attorney is a fact witness, such as an ‘actor or a viewer’”).

         However, the Shelton test is not necessarily applicable in a situation where the attorney sought to be deposed is not litigation counsel in the pending case. In Pamida, Inc. v. E.S. Originals, Inc., 281 F.3d 726 (2002), the Eighth Circuit explained:

The Shelton test was intend[ed] to protect against the ills of deposing opposing counsel in a pending case which could potentially lead to the disclosure of the attorney’s litigation strategy. Because this abuse of the discovery process had become an ever increasing practice, this Court erected the Shelton test as a barrier to protect trial attorneys from these depositions. But Shelton was not intended to provide heightened protection to attorneys who represented a client in a completed case and then also happened to represent that same client in a pending case where the information known only by the attorneys regarding the prior concluded case was crucial. In such circumstances, the protection Shelton ...

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