22 Clark County Bar Association – COMMUNIQUÉ – June/July 2018

IntroductionFor a variety of reasons, it is not unusual for an attorney

to consider designating a client, whether an individual or an employee of a corporate client, as a non-retained, testifying expert. Doing so in state court litigation, however, poses the risk of having to disclose information that is otherwise pro-tected by the attorney-client privilege, where the litigation is in the state court. Typically, under the Nevada discovery rules, all communications between a retained expert and the attorneys are discoverable. To what extent, if any, does that apply to non-retained experts? The issue is unresolved under Nevada law, but a recent Supreme Court of Nevada decision may offer some clues. Additionally, the proposed changes to the Nevada Rules of Civil Procedure will, if ad-opted, most likely make the analytical framework used by the federal courts to decide this issue far more relevant and applicable to state court cases.

Types of experts

Expert witnesses fall into one of two categories: retained experts and non-retained experts. NRCP 16.1 does not use those terms, but rather classifies those who are offering ex-pert testimony into two groups, those that must prepare comprehensive written reports (sometimes referred to in the caselaw as “reporting experts”) and those who do not (some-times referred to as “non-reporting experts”).

Experts who must prepare reports are those who are “retained or specially employed to provide expert testimony in the case or whose duties as an employee of the party reg-ularly involve giving expert testimony.” NRCP 16.1(a)(2)(B) (first paragraph). These types of experts are required to pre-pare a written report that contains (i) a complete statement of all opinions to be expressed and the basis and reasons for the opinion; (ii) the data or other information considered by the witness in forming the opinions; (iii) any exhibits to be used as a summary of or support for the opinions; (iv) the qualifications of the witness, including a list of all publica-tions authored by the witness within the preceding 10 years; (v) the compensation to be paid for the study and testimo-ny; (vi) and a listing of any other cases in which the witness has testified as an expert at trial or by deposition within the preceding four years. Id. While the federal rules have pro-tected some communications between counsel and experts since 2010 (see FRCP 26(b)(4)), in state court, there is gen-erally no dispute that communications between a testifying, retained expert and counsel must be produced and are not shielded by either the work product doctrine or the attor-ney-client privilege. Aaron Gruber and David Bones, Ne-vada Civil Practice Manual § 16.06[2] (2016); In re Christus Spohn Hosp. v. Kleberg, 22 S.W.3d 434, 441-44 (Tex. 2007) (reviewing cases and concluding that the general rule is that everything considered by an expert, including attorney-cli-ent privileged material, is subject to discovery).

Designating Your Employee as a Non-Retained Expert – Are You Waiving the Attorney-Client Privilege?By John M. Naylor, Esq.

CLE Article #2

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Privilege continued on page 24

Experts who do not have to produce reports include any witness providing expert testimony who does not meet the definition in the first paragraph of the rule. NRCP 16.1(a)(2)(B) (second paragraph). While these expert witnesses, traditionally called non-retained experts or non-reporting experts, do not have to produce a written report, there are still some disclosure requirements. Id.

Whether those disclosure requirements include materi-als that would normally be covered by the attorney-client privilege is an unsettled issue under Nevada law. Typically, this issue arises when a corporate entity designates one of its employees as a non-retained, expert witness. This can arise for various reasons, e.g., the client wants to save money or the witness is well suited to provide expert testimony due to his knowledge of the industry or facts.

The problem is particularly acute when the witness has participated in conversations or meetings with the attor-neys to discuss the merits of claims or defenses, and discuss overall legal strategy. For example, what happens when the president of the company is offering expert testimony? Does that open the door to disclosure of all discussions that the president has had with attorneys regarding the lawsuit?

24 Clark County Bar Association – COMMUNIQUÉ – June/July 2018

The case for disclosure centers on the NRCP 16.1(a)(2)(B)’s requirement that a

retained expert witness must produce a report disclosing

“the data or other information considered by the witness in forming the opinions.”

The case for disclosureThe case for disclosure centers on the NRCP 16.1(a)(2)

(B)’s requirement that a retained expert witness must pro-duce a report disclosing “the data or other information con-sidered by the witness in forming the opinions.” Courts take a broad view of “considered,” generally holding that it is ev-erything that the expert saw or talked to anyone about, regardless of whether it ulti-mately impacted the opinion that they rendered. Wright, Miller & Cane, 8 Fed. Prac. & Proc. Civ. § 2016.5 (3d ed. 2014) (citing Elm Grove Coal Co. v. Director, O.W.C.P., 480 F.3d 278 (4th Cir. 2007) and numerous other authorities). The source of this rule is that courts generally consider it important for a party to find out how an expert arrived at their opinion. Residential Constructors, LLC v. Ace Prop. & Cas. Ins. Co., Case No. 2:05-cv-01318-BES-GWF, 2006 WL 3149362, at *15 (D. Nev. Nov. 1, 2006).

Thus, the case could be made that designation of an em-ployee waives the attorney-client privilege with respect to anything that the witness saw or heard during discussions or strategy sessions with the attorneys. Given the broad ap-proach to what a witness may have “considered,” i.e., any-thing that they saw regardless of whether it impacted their opinions, it would be hard to find anything that was protect-ed. Protecting information would require a party to prove that it was not “considered,” which would be an extremely difficult task.

The case for non-disclosureThe case for non-disclosure centers on the strict lan-

guage of NRCP 16.1. The first paragraph of subsection (a)(2)(B), relating to retained experts, specifies that they must prepare a report that identifies everything that they consid-ered. The second paragraph, which lists the required disclo-sures for non-retained experts, does not specifically include the language requiring the disclosure of “the data or other information considered by the witness in forming the opin-ions…” Thus, the intent of the drafters of the rule was to treat retained and non-retained experts differently with re-spect to this point. Requiring non-retained experts to make disclosures would essentially be adding the word “consid-ered” to the rule, which a court may not do under the tra-

ditional rules of statutory construction. Berkson v. LePome, 126 Nev. 492, 502, 245 P.3d 560, 567 (2010) (courts may not read absent language into unambiguous statute).

Additionally, the plain language of NRCP 16.1 does not expressly create a waiver of the attorney-client privilege. NRS 49.385(1) states that the attorney-client privilege is waived if the holder (in this case the client) “voluntarily discloses

or consents to disclosure of any significant part of the matter.” Generally, a “waiver requires the intentional relin-quishment of a known right,” which essentially means that the waiver must be a volun-tary and express act. Nevada Yellow Cab Corp. v. Dist. Ct., 123 Nev. 44, 49, 152 P.3d 737, 740 (2007). Thus, courts have held that the waiver of an im-portant right such as the at-torney-client privilege “must be a voluntary and know-ing act done with sufficient awareness of the relevant cir-

cumstances and likely consequences.” Roberts v. Superior Court, 508 P.2d 309, 317 (Cal. 1973).

Thus, the argument is that nothing in NRCP 16.1 ex-pressly requires the disclosure of attorney-client privileged materials with respect to non-retained experts, and a court cannot read such a requirement into the plain language of the rule. Without a specific waiver, attorney-client informa-tion remains protected even if considered by the witness.

The potential impact of Wynn ResortsThe Supreme Court’s decision in Wynn Resorts, Limited

v. Eighth Judicial Dist. Ct., 133 Nev. Ad. Op. 52, 399 P.3d 334 (July 27, 2017) offers some clues as to how the issue might be resolved. In Wynn Resorts, the Supreme Court of Neva-da looked at the issue of whether attorney-client privileged material must be disclosed when a party asserts the business judgment rule as a defense. The Board of Wynn Resorts had,

Privilege continued from page 23

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Privilege continued on page 26

over time, developed concerns about the suitability of one of its members, Kazuo Okada. Based on those concerns, the Board forced the redemption of Okada’s stock. Okada sued, and one of the Board’s defenses was the business judgment rule. Prior to making its decision, the Board commissioned the Freeh Group to investigate the activities of Okada and prepare a written report of its finding. Based on that report and the advice of two law firms, the Board made its decision to remove Okada.

Okada moved to compel the production of documents relating to the advice that the law firms had rendered. The district court granted the motion, and the Board filed a writ petition on the issue. The Supreme Court reversed that deci-sion, reasoning that the business judgment rule prevented a court from looking into the substantive reasons for the deci-sion at issue, holding that “[w]e agree that it is the existence of legal advice that is material to the question of whether the board acted with due care, not the substance of that ad-vice.” Wynn Resorts, 133 Nev. Ad. Op. 52 at *18, 399 P.3d at 345 (citing In re Comverge, Inc., Shareholders Litig., No. 7368-VCP, 2013 WL 1455827, at *4 (Del. Ch. April 10, 2013)) (internal quotations removed).

The Supreme Court also looked at the issue of waiver and determined that nothing in the plain language of the business judgment rule, codified at NRS 78.138(2)-(3), indi-cated that there was a waiver of the attorney-client privi-

lege. While the Supreme Court has previously held that the attorney-client privilege must be strictly construed, it was not willing to read a waiver into the business judgment rule. Whitehead v. Nevada Comm’n on Judicial Discipline, 110 Nev. 380, 415, 873 P.2d 946, 968 (1994). This would seem to suggest that NRCP 16.1 should be similarly construed, i.e., the rule does not contain an express waiver, and therefore, attorney-client privileged material should be protected with respect to non-testifying experts.

The Supreme Court noted, however, that the “at-issue doctrine” can result in a waiver. The at-issue doctrine holds that the attorney-client privilege is waived if a party places “at-issue the subject matter of privileged material” or “seeks an advantage in litigation by revealing part of a privileged communication.” Wardleigh v. Second Judicial Dist. Ct., 111 Nev. 345, 354, 891 P.2d 1180, 1186 (1995) (emphasis added). In other words, a party waives the attorney-client privilege by expressly or impliedly introducing his or her attorney’s advice into the case. Bertelsen v. Allstate Ins. Co., 796 N.W.2d 685, 703 (S.D. 2011). The Supreme Court recognized that the waiver was narrow and applied if the substance of one priv-ileged document is disclosed. Wynn Resorts, 133 Nev. Ad. Op. 52 at 20, 399 P.3d at 345 (citing Texaco Puerto Rico, Inc. v. Dep’t of Consumer Affairs, 60 F.3d 867, 883-84 (1st Cir. 1995)); Wardleigh, 111 Nev. at 354-55, 891 P.2d at 1186.

26 Clark County Bar Association – COMMUNIQUÉ – June/July 2018

John M. Naylor has been licensed for 30 years and is a cofounder of Naylor & Braster, a Las Vegas law firm specializing in business litigation. Prior to founding the firm, he was a partner at Lionel Sawyer & Collins. Between 1995 and 1999, he was a judge advocate in the U.S. Air Force. Contact John at 702-420-7000.

Privilege continued from page 25Using Wynn Resorts as an analytical framework, it

would seem that designating an employee as a non-testify-ing expert does not automatically result in a waiver of priv-ilege. Wynn Resorts suggests that absent an express statuto-ry or rule-based waiver, the privilege still applies in these situations. Depending on the nature of the testimony, how-ever, the at-issue waiver may apply. It is worth noting that in Wynn Resorts, the Supreme Court held merely because a party asserts that it acted in good faith or denies acting in bad faith does not auto-matically implicate attorney advice and therefore does not result in the automatic waiver of the privilege. Wynn Resorts, 133 Nev. Ad. Op. 52 at *19, 399 P.3d at 345. Thus, the holding suggests that designating an employee as a non-retained expert, while not automati-cally resulting in a waiver, could result in one if the witness directly implicates attorney advice.

In any case, Wynn Resorts only offers clues and does not fully resolve the issue. Therefore, counsel should exercise caution when designating a client or client representative as a non-retained expert.

The potential impact of the proposed rule changes

In 2017, the Supreme Court created the Nevada Rules of Civil Procedure Committee to review possible changes to the rules. ADKT 0522. The proposed changes under consid-eration as of May 2018 cover certain aspects of NRCP 16.1, but do not address the issue of whether non-retained experts must disclose attorney-client privileged material.

Other proposed changes, however, bring NRCP 26 in line with FRCP 26. These proposed changes offer some clarification as to what must be disclosed when designating an expert, and they make consideration of federal case law, such as United States v. Sierra Pacific Indus., Case No. Civ. S-09-2445-KJM-EFB, 2011 WL 2119078 at *2 (E.D. Cal. May 26, 2011), more important to those practicing in state court.

Therefore, counsel should exercise caution when designating a client or

client representative as a non-retained expert.

Prior to the 2010 amendment of FRCP 26, federal courts generally agreed that this requirement to disclose all things considered by the witness included matters that would nor-mally be protected by the attorney-client privilege. See, e.g., Ecuadorian Plaintiffs v. Chevron Corp., 619 F.3d 373, 378 (5th Cir. 2010), holding that designation of a witnesses as a testifying expert waives any privileges. This changed with

the 2010 amendments. For example, Sierra Pacific recog-nized that the 2010 amend-ment to FRCP 26 “explicitly protects communications be-tween a party’s attorney and reporting experts,” but did not do the same for non-re-tained experts. Sierra Pacific at *5. (citing 2010 Advisory Committee Note to FRCP 26).

Sierra Pacific’s focus was on a scenario that can crop up quite frequently, and that is the employee who is both a fact witness and a designated non-retained expert. While Sierra Pacific recognized that the 2010 amendment did not expressly protect non-retained experts, it also noted that the new rule did not abrogate any existing protections such as a federal common law attor-ney-client privilege. Id. at *7. The court went on to find that there was no blanket, bright-line rule that could be applied to all non-retained experts. Id. at *9 and *10. Instead, the court determined that each situation must be individually reviewed, looking at factors such as the extent to which the witness was a “hybrid fact and expert opinion” witness. Id. at *10.

ConclusionIf adopted as proposed, the changes to NRCP 26 will go

a long way to help clarify the extent to which designating an employee as a non-reporting expert affects the attorney-cli-ent privilege. While Nevada courts regularly look to federal cases for interpreting the Nevada Rules of Civil Procedure, this has been one area where they are of little help. Adop-tion of the proposed rule changes will most likely change that, and therefore, counsel will need to be familiar with the analytical framework of the federal case law.

27June/July 2018 – COMMUNIQUÉ – Clark County Bar Association

CCBA CLE Article #2 Test & Order Form

1. An employee of a corporate defendant in a lawsuit may potentially qualify as an expert witness.

True False

2. NRCP 16.1 uses the term “non-retained expert.” True False

3. The following need not be disclosed with respect to a non-retained expert:

A. The subject matter upon which the witness is expected to testify.

B. A list of all matters considered when forming the expert opinions.

C. A list of all publications authored by the witness. D. B and C.

4. A retained expert must author a written report that contains:

A. A list of all of their authored articles regardless of when they were published.

B. The data or other information considered by the witness when forming the opinions.

C. A list of all testimony regardless of when it was given.

D. A fee schedule.

5. The changes to NRCP 26 currently being considered by the Nevada Rules of Civil Procedure Committee address certain aspects of expert testimony.

True False

Take the test

Designating Your Employee as a Non-Retained Expert – Are You Waiving the Attorney-Client Privilege?

Offers 1 Ethics CLE CreditPlease select the choice that best answers each of the following questions.

6. Courts generally hold that a retained expert considered something if they saw it, read it, or heard it, regardless of whether the information ultimately impacted his or her expert opinion.

True False

7. The attorney-client privilege protects from disclosure material that a retained expert considered when forming his or her opinion.

True False

8. All conversations between an attorney and a retained expert are generally considered to be subject to disclosure, even if those conversations contain information that is subject to the attorney-client privilege.

True False

9. Under NRS 47.385(1), the attorney-client privilege is waived if a client voluntarily discloses or consents to disclosure of any significant part of the matter.

True False

10. Nothing in the Business Judgment Rule statute, NRS 78.138(2)-(3), expressly states a waiver of the attorney-client privilege.

True False

CLE Test 2 continued on page 28

Three easy steps to CLE credit for only $451. Read the article—see pages 22-26.2. Take the test—answer the test questions on pages 27-28. Each question has only one correct answer.3. Send in your order—completed test along form(s) and $45 processing fee to Clark County Bar Association to receive

your declaration verifying attendance.

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28 Clark County Bar Association – COMMUNIQUÉ – June/July 2018

CLE Test continued from page 27

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11. NRCP 16.1(a)(2)(B), as currently drafted, does not create an express waiver of the attorney-client privilege with respect to non-retained experts.

True False

12. A party may waive the attorney-client privilege by placing the subject matter of the protected material at issue in the litigation.

True False

13. A party asserting that it acted in good faith as an affirmative defense automatically places the advice that they received from their attorney at issue in the case.

True False

14. Designating an employee as a non-retained expert automatically renders the content of all conversations that employee had with the company’s lawyers discoverable.

True False

15. Courts generally construe the attorney-client privilege narrowly.

True False

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