AQUA METALS, INC., et al., Plaintiffs, vs. JOHNSON CONTROLS FIRE PROTECTION, LP f/k/a SIMPLEXGRINNEL LP OR TYCO SIMPLEX GRINNEL LP, et al., Defendants. ----------------------------------- JOHNSON CONTROLS FIRE PROTECTION, LP f/k/a SIMPLEXGRINNEL LP OR TYCO SIMPLEX GRINNEL LP, et al., Third-Party Plaintiff, vs. INDUSTRIAL LOGISTICS SERVICES, INC., Third-Party Defendant Case No. CV21-01891 IN THE SECOND JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA IN AND FOR THE COUNTY OF WASHOE Filed December 04, 2023 Riggs, Tammy M., District Judge ORDER AFFIRMING DISCOVERY COMMISSIONER'S RECOMMENDATION FOR ORDER On December 4, 2023, Discovery Commissioner Wesley Ayres entered a Recommendation for Order on Plaintiffs Aqua Metals and Aqua Metals Reno, Inc. ("Plaintiffs") Motion to Compel Production of Documents. The Commissioner ordered "Defendant [to] produce to Plaintiffs, no later than December 18, 2023, the email from Stephen Hill to Gregory Reynolds dated December 5, 2019, identified on Defendant's privilege log as Log Entry No. 52." (Recommendation, at 12:18-20). On December 18, 2023, Defendant Johnson Controls Fire Protection, LP f/k/a/ SimplexGrinnell LP, or Tyco Simplex Grinnell LLP ("Defendant") filed an Objection to the Recommendation. Plaintiffs proceeded to file an Opposition to the Defendant's Objection on December 22, 2023. Standard of Review The District Court's review of the Commissioner's Recommendation is de novo. NRCP 16.3 (Advisory Committee Notes). "An objecting party may not raise new arguments in support of an objection that could have been raised before the discovery commissioner but were not." Id.; Valley Health Sys., LLC v. Eighth Judicial Dist. Court, 127 Nev. 167, 173, 252 P.3d 676, 680 (2011). Law and Analysis In their Objection to the Commissioner's ruling, Plaintiffs maintain that the Commissioner's reliance on the Nevada Supreme Court decision in Ballard v. Eighth Judicial District Court, 106 Nev. 83, 85, 787 P.2d 406 (1990) (per curium) is misplaced, given the Nevada Supreme Court's later ruling in Mega Mfg., Inc. v. Eighth Jud. Dist. Ct., 130 Nev. 1217, 2014, WL 2527226, at *2 (2014) (unpublished), wherein the court constrained the holding in Ballard to the specific facts of that case. (Obj., 5:12·13). Plaintiffs note that "the court [in Mega] made clear that the question of [whether] an attorney is involved or directs an investigation is not dispositive for deciding whether the fruit of that investigation is work product." (Id. at 5:15·17) (citing Mega, WL 2527226, at *2). The Court agrees that the Commissioner's emphasis on Ballard and Kelios v. Transit Services, LLC v. Eighth Jud. Dist. Ct., 138 Nev. 71, 77, 506 P.3d 1076, 1082 (2022) for the conclusion that the email was not privileged because "[it] did not involve counsel for Defendant, and . . . could not have been providing information to facilitate the rendition of legal advice" (Recommendation, at 7:12-14) does not control the inquiry. The critical inquiry, consistent with NRCP 26(b)(3), is "whether the materials were created in anticipation of litigation or, conversely, in the ordinary course of business, regardless of counsel's presence or involvement." Mega, WL 2527226, at *2. Therefore, a communication is not subject to disclosure if it "can fairly be said to have been prepared or obtained because of the prospect of litigation." Wynn Resorts, Ltd. v. Eighth Jud. Dist. Thus, the Court must consider whether the December 5 email was sent in anticipation of litigation. Defendant emphasizes the fact that the email was between Gregory Reynolds, who is a Senior Manager in Johnson Controls' Litigation and Claims Department, and Stephen Hill of Jensen Hughes, who Defendant "retained for expert consulting services in this litigation." (Obj., 6:5-8). Defendant also argues that by the time the December 5 email was sent, Defendant had been aware of the fire at the TRIC facility and knew Defendant had allegedly failed to suppress the fire, leading Defendant to "reasonably anticipate being haled into litigation." (Id. at 6:8-11). In their Opposition, Plaintiffs reject the contention that litigation was reasonably anticipated at the time the email was sent, given that there was "no suggestion that anyone had accused JCI of wrongdoing or as being otherwise responsible for the fire at the time," (Opp'n., 5:4-5), and that "surely [Defendant] does not anticipate being sued after every fire at a facility" (id. at 5:5-6). Plaintiffs note further that "there could be myriad reasons why [Defendant] - a company that inspects and repairs fire alarms and sprinkler systems - would have communicated with Jensen Hughes on December 5 about a fire involving a system that it had inspected, many of which have nothing to do with any specific anticipated litigation." (Id. at 5:6-11). Plaintiffs then direct the Court's attention to Defendant's assertion in its opposition to Plaintiffs' motion to compel, in which Defendant stated that "[u]pon receipt of the [December 10, 2019 Notice of Loss], [Defendant] - anticipating potential litigation - retained Williams & Connolly, LP .... [who] in turn, retained experts from Jensen Huges to assist in the provisions of legal advice" (Opposition to Motion to Compel, Transaction No. 9739557, at 2); according to Plaintiffs, Defendant has effectively admitted that litigation was not anticipated on December 5, but instead on December 10, following Defendant's receipt of the Notice of Loss document. (Opp'n., 5:17-6:14). Plaintiffs also reject Defendant's reliance on Mr. Reynold's job title (Senior Manager of Defendant's "Litigation and Claims Department) as being indicative of the fact that the email concerned potential litigation, noting that "not every action taken by an employee in a company's 'Claims Department' is done in anticipation of litigation .... [whereas] dealing with 'claims' is by definition an aspect of Mr. Reynold's routine and ordinary business responsibilities." (Id. at 6:20-28). And finally, Plaintiffs note that there is no reason to assume that the December 5 email was sent for a different purpose than the previously disclosed December 4, 2019 email between Mr. Reynolds and Defendant's outside claims administrator (Sedgwick), which was a standard "notice of claim/occurrence." (Id. at 6:27-7:11). In considering counsels' opposing arguments, the Court agrees with Plaintiffs that Defendants have failed to meet their burden of demonstrating that the December 5 email was made in anticipation of litigation. While it is true that Nevada cases interpreting NRCP 26(b)(3) routinely apply the "because of" test, which "asks whether a party prepared or obtained a document because of the prospect of litigation" see, e.g., Keolis Transit Servs., 138 Nev. at 74, 506 P.3d at 1080, it cannot be said on the record before the Court that the December 5 email was not "prepared in the ordinary course of business or that [it] would have been created in essentially similar form irrespective of the litigation" id. While Defendant highlights the fact that the email was sent to Jensen Hughes, who was "retained for expert consulting services in this litigation," there is no reason stated why the Court should affirmatively foreclose the possibility that the email was unrelated to the impending litigation. And further, although "[a] document ... does not lose protection ... merely because it is created in order to assist with a business decision," Mega, WL 2527226, at *2 (quoting United States v. Adlman, 134 F.3d 1194, 1202 (2d Cir.1998)), there is no basis for concluding that the email had any specific connection to the present litigation outside of the fact that latter email communications between Defendant's counsel and Jensen Hughes are presumptively protected by attorney-client privilege. (See Recommendation, at 7:6-9) ("The other six emails involving Jensen Hughes were either to or from Defendant's counsel. In that regard, communications between a client's attorney and the client's representative are protected from disclosure under Nevada's attorney-client privilege, NRS 49.095(1) ...."). In Mega, the Supreme Court declined to compel production where there was no evidence presented to support the inference that "any legal discussion ... occurred ... inspir[ing] [the creation] of the report." Id. Similarly, in the present circumstances, Defendants have not explained why it is reasonable to assume that the December 5 email was inspired by any legal discussion or specifically directed toward preparing for potential litigation. As Plaintiffs point out, there could be a variety of reasons why Jensen Hughes was contacted in the first instance, such as merely to notify the firm of the occurrence or to engage in normal claim-related functions. There is no way for the Court to seriously evaluate the distinction between normal business-related functions and specific litigation-focused communications based solely on the facts in the record. Therefore, the Court AFFIRMS the Commissioner's Recommendation and ORDERS Defendant to produce to Plaintiffs, no later than January 17, 2023, the email from Stephen Hill to Gregory Reynolds dated December 5, 2019, identified on Defendant's privilege log as Log Entry No. 52. IT IS SO ORDERED.