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Snider v. L-3 Communications Vertex Aerospace, L.L.C.

United States Court of Appeals, Fifth Circuit

December 31, 2019

COURTNEY PAINE SNIDER, Plaintiff-Counter Defendant-Appellee, Cross-Appellant,
v.
L-3 COMMUNICATIONS VERTEX AEROSPACE, L.L.C., Defendant-Counter Claimant-Appellant, Cross-Appellee
v.
WOMBLE CARLYLE SANDRIDGE & RICE, L.L.P.; CHARLES A. EDWARDS, individually and as employee, member, partner, shareholder, and/or officer of Womble Carlyle, Counter Defendants-Appellees.

          Appeals from the United States District Court for the Southern District of Mississippi.

          Before OWEN, Chief Judge, and JOLLY and STEWART, Circuit Judges.

          OWEN, CHIEF JUDGE.

         This suit was initiated when Courtney Paine Snider filed a complaint under Title VII of the Equal Rights Act of 1964 (Title VII)[1] against L-3 Communications Vertex Aerospace, L.L.C. (L-3). L-3 asserted counterclaims against Paine Snider.[2] It also brought into the suit and asserted claims against Womble Carlyle Sandridge & Rice, L.L.P. (Womble), and Charles A. Edwards. L-3 appeals a summary judgment in favor of Paine Snider, Womble, and Edwards. Paine Snider cross-appeals an order dismissing her Title VII claims. We reverse and remand in part and otherwise affirm the district court's judgment.

         I

         Paine Snider, an attorney, was Deputy General Counsel of L-3 and worked from its office in Mississippi. L-3 retained the Womble firm, located in North Carolina, as outside counsel from 2000-2009, and the firm represented L-3 in a variety of legal matters. Edwards, a partner in that firm and its Labor and Employment Practice Group Coordinator until 2007, provided legal services to L-3 for a period of time, but the record reflects that L-3 ceased utilizing his services by September of 2005. Prior to that time, Paine Snider and Edwards had worked together representing L-3 regarding various employment-related matters. L-3's General Counsel and Paine Snider's immediate supervisor was Steve Sinquefield. He told Paine Snider in 2006 that L-3 would no longer permit Edwards to perform its legal work.

         Paine Snider believed as early as 2004 that she had been a victim of gender discrimination by L-3. We will confine the background facts, however, to those pertinent to the issues in this appeal. Email exchanges between Edwards and Paine Snider reflect that from 2005 to 2007, they discussed discrimination and related claims that Paine Snider had against L-3, and in an email sent to Paine Snider at her L-3 email address in June 2006, Edwards gave her legal advice as to when statutes of limitation would run on various claims.

         Later in 2006, another L-3 employee, Janice Wolf, who reported directly to Paine Snider, submitted an internal ethics complaint alleging gender discrimination. L-3 suspected that Paine Snider had given legal advice to Wolf and otherwise assisted her in pursuing her grievances. L-3 was concerned that, in doing so, Paine Snider had violated her ethical obligations to L-3 as its legal counsel. L-3 engaged two outside law firms to investigate, and they submitted a written report to L-3 in December 2006. The report concluded that Paine Snider "likely committed multiple sins of omission in her duty of loyalty." It further reported that Paine Snider had made "derogatory statements" to L-3 officers about Steve Sinquefield; had told those officers that Sinquefield "was threatened by her ability and afraid she wanted his job"; and had "herself state[d] that she [could] no longer work with Sinquefield and . . . readily criticiz[ed] him to others within the Company." Furthermore, the report stated that she had "failed to avail herself of any of the avenues for formal complaint through HR or the ethics function." The report recommended in mid-December 2006 that L-3 consider terminating Paine Snider's employment.

         During L-3's investigation of Wolf's internal complaint, Paine Snider asserted that she had also been the victim of gender discrimination and harassment, and she requested L-3 to conduct an internal investigation in January 2007. Though she subsequently withdrew that request, L-3 nevertheless initiated an internal investigation in January 2007 regarding Paine Snider's allegations and at the conclusion of that investigation the following month, reported its findings to Paine Snider. Paine Snider asked for further investigation, claiming that she had additional information, and she asked that a third party be engaged to consider the matter. L-3 brought in Jim Slavin, a consultant on business and ethics conduct, whose office was in New York, to assist L-3's ethics officer.

         At that time, the Womble firm represented L-3 in certain matters, though Edwards, still a partner at Womble, had done no work for L-3 since September of 2005. Nevertheless, Edwards had extensive personal contact with Paine Snider throughout 2006 and through May 2007. Without notifying or consulting L-3, he assisted Paine Snider in the spring of 2007 in preparing a lengthy written document for submission to Slavin describing Paine Snider's complaints of discrimination, harassment and retaliation, and identifying Steve Sinquefield as the primary offender. Edwards then directly contacted Slavin via email in early May 2007. He sought a meeting with Slavin in New York on May 15, 2007 to resolve Paine Snider's issues with L-3's officers. L-3 immediately called Edwards and his firm, asserting that they had a conflict of interest and that Edwards could not represent Paine Snider. Edwards's contact with Paine Snider about her claims against L-3 largely came to an end after L-3's parent company's general counsel, Kathleen Karelis, confronted Edwards and then expressed to Womble her dismay and concerns regarding Edwards's conduct.

         Paine Snider filed her first complaint against L-3 with the EEOC a few months later, in August 2007, alleging harassment, gender discrimination, and retaliation for her internal ethics complaints. The EEOC complaint was essentially drawn from the internal complaint that Edwards was instrumental in preparing. By August 2008, Paine Snider, whose place of employment with L-3 was in Mississippi, had remained unlicensed to practice law in that state. Her failure to become a member of the Mississippi bar had long been a point of contention with L-3. It had asked her to sit for the July 2008 Mississippi bar examination. When L-3 learned she had not done so, it placed Paine Snider on an unpaid leave of absence in August 2008.

         While Paine Snider was on leave, L-3 eliminated 26 positions in the company due to an economic downturn. Paine Snider's position was one of them. Her employment was terminated on February 6, 2009. As these events unfolded, Paine Snider amended her EEOC complaint three times, alleging continued retaliation. In August 2009, the EEOC informed Paine Snider that it was "unable to conclude" that L-3 had violated employment law, and it notified her that she had the right to sue L-3 within 90 days.

         Paine Snider filed suit against L-3 in November 2009. She brought discrimination, harassment, and retaliation claims. Two years later, L-3 subpoenaed documents from the Womble firm and Janice Wolf, which they produced in November 2011 and March 2012, respectively.

         L-3 alleges that from these documents, it first learned that Edwards had committed legal malpractice and breached his and his firm's fiduciary duties by advising and assisting Paine Snider in pursuing her discrimination claims against L-3 and by advising Janice Wolf regarding the discrimination claims she had pursued. L-3 filed a counterclaim against Paine Snider and also added claims against Womble and Edwards in February 2012. Several months later, in September 2012, Edwards's wife, Judy Edwards, filed suit against Paine Snider in a North Carolina state court seeking damages for alienation of affection. L-3 asserts that it obtained additional information about Edwards's breach of fiduciary duty and breach of the standards of care as a result of discovery in that North Carolina litigation.

         Edwards left Womble two months after L-3 brought that firm and Edwards into the present litigation. Edwards died in September 2015. No suggestion of death has been filed, however.

         The district court ultimately dismissed all of Paine Snider's claims as a sanction and granted summary judgment denying relief on all of L-3's claims, concluding they were barred by the statute of limitations. These appeals ensued.

         II

         Among the issues L-3 raises are two procedural ones. It complains that the district court sua sponte converted a motion to dismiss into a summary judgment motion and that the district court erred in denying L-3's motion for discovery under Rule 56(d).

         The Womble firm filed a motion to dismiss, asserting lack of subject matter jurisdiction, improper joinder, and that the statute of limitations barred all of L-3's claims. Both parties submitted documents outside the pleadings regarding the statute of limitations issue, and Womble argued that its motion to dismiss should be treated as a motion for summary judgment. The district court ordered the parties to file motions for summary judgment and scheduled a hearing to occur eleven days thereafter.

         The district court did not improperly convert Womble's Rule 12(b)(6) motion into a Rule 56 motion. Federal Rule of Civil Procedure 12(d) provides that "[i]f, on a motion under Rule 12(b)(6)[, ] matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56."[3] This court has also said that "it is appropriate to treat [hybrid motions] as [motions] for summary judgment" when the motion's success depends on matters outside the pleadings.[4] L-3 and Womble presented extensive documentation outside the pleadings, and the court did not exclude that evidence. The district court followed an appropriate course.

         The district court gave L-3 sufficient notice that Womble's motion to dismiss would be treated as a summary judgment motion. We have said that when a district court converts a Rule 12(b)(6) motion into a motion for summary judgment, the court must comply strictly with Rule 56's notice requirements.[5] Rule 56 requires that courts give parties "notice and a reasonable time to respond."[6] Interpreting this requirement, we have said that parties must have ten days to submit additional evidence once they are put on "fair notice" that a "court could properly treat [a Rule 12(b)(6)] motion as one for summary judgment."[7] Parties are on fair notice as soon as they know a district court has accepted matters outside the pleadings for consideration on a Rule 12(b)(6) motion.[8] Although "giv[ing] express notice" that the court might convert the motion to dismiss is "the better practice," the "failure to give such notice does not require reversal."[9]

         The district court gave express notice, though L-3 was arguably on fair notice as early as May 30, 2013, when L-3 submitted extensive matters to support its opposition to Womble's motion to dismiss. L-3 received actual notice at the March 17, 2016 hearing when Womble argued for conversion of its motion to dismiss into a summary judgment proceeding, L-3 responded to those arguments, and the district court expressed interest in conversion. The district court then gave L-3 eleven days to file a motion for summary judgment, held a summary judgment-specific hearing, and did not rule on the summary judgment motion until October 17, 2016. L-3 received more than the ten-day notice that our precedent requires.

         L-3 asserts that the district court "ignored" its request for additional discovery and that the summary judgment must be reversed. L-3 filed a response in opposition to Womble's motion to dismiss and motion for summary judgment asking the court to defer ruling on Womble's motion and to allow discovery pursuant to Rule 56(d). When the district court ruled on Womble's motion for summary judgment, the court did not explicitly reference L-3's Rule 56(d) arguments.

         When a district court enters a final judgment, it has implicitly denied any outstanding motions, even if the court does not explicitly deny a particular motion.[10] We have held that a court does not abuse its discretion by entering summary judgment without expressly ruling on a pending Rule 56(d) motion.[11]The district court here held that "by granting [the Womble firm's] motion for summary judgment, this court has resolved all the disputes in this cause" and dismissed the litigation entirely. Under our precedent, the district court implicitly denied L-3's Rule 56(d) motion when it so ruled.

         L-3 cites an unpublished opinion, Galaxy Tire, Inc. v. Terwilliger.[12] But in Galaxy Tire, we reversed because a Rule 56(d) motion was pending and there was evidence that the district court unintentionally overlooked that pending motion.[13] There is no such evidence in the present case. In fact, the district court ruled on L-3's first request for discovery at the March 17, 2016 hearing. When L-3's counsel learned that the district court might convert Womble's motion, she said that "if the court is going to consider it as . . . a Rule 56 motion . . . what we need is discovery." L-3 then added that it needed discovery regarding Womble's knowledge in connection with the statute-of-limitations issue. The district court was unconvinced and ruled that it was "not going to allow discovery." In any event, the district court implicitly denied the Rule 56(d) motion when the court granted summary judgment.

         III

         The central issue in L-3's appeal is whether the district court erred in holding that all of its claims are barred by the statute of limitations. L-3 asserted four causes of action against Womble, Edwards, and Paine Snider, which were (1) breach of fiduciary duties, (2) civil conspiracy, (3) unjust enrichment, and (4) conversion. L-3 also asserted a negligent retention and supervision claim against Womble. L-3 argues that these claims arise out of differing factual circumstances that it categorizes as (1) "the legal assistance Edwards provided to" Paine Snider, (2) "the legal assistance that Edwards provided to Wolf," (3) Womble's "failure to disclose . . . the legal assistance Edwards provided to [Paine Snider] and Wolf when [Womble] discovered it," and (4) Paine Snider's "misappropriation of confidential client documents."

         L-3 concedes that each of its causes of action is governed by the same Mississippi three-year statute of limitations, Miss. Code § 15-1-49.[14] But L-3 asserts that there are factual disputes regarding the discovery rule, the fraudulent concealment doctrine, and the continuing tort doctrine that preclude summary judgment. We conclude that the district court's grant of summary judgment on the statute-of-limitations issue should be affirmed as to all claims except those regarding assistance that Edwards provided to Wolf and Paine Snider's alleged misappropriation of confidential documents.

         A

         L-3 filed its counterclaim against Paine Snider and claims against Womble and Edwards in February 2012. Three years prior would be February 2009. Under Mississippi law, "the discovery rule [i]s the proper test for deciding when the statute of limitations for a legal malpractice action begins to run."[15] The Mississippi Supreme Court has explained:

The discovery rule is applied when the facts indicate that "it is unrealistic to expect a layman to perceive the injury at the time of the wrongful act." In [Smith v. Sneed, 638 So.2d 1252, 1255-56 (Miss. 1994)], the Court found that the discovery rule applies when it would be impractical to require a layperson to have discovered the malpractice at the time it happened. This is because requiring a layperson to ascertain legal malpractice at the time it occurs would necessitate the retention of a second attorney to review the work of the first.[16]

         In-house attorneys for L-3 and its affiliates were directly responsible for investigating Edwards's, the Womble firm's, and Paine Snider's respective conflicts of interest and for investigating the relationship between Edwards and Paine Snider.

         Even when ascertaining legal malpractice involves only laypersons, "[t]he question of whether a statute of limitations is tolled by the discovery rule often turns on the factual determination of 'what the plaintiff knew and when.'"[17] The Mississippi Supreme Court has explained that often, the facts are such that the court, not a jury, decides the issue: "Occasionally the question of whether the suit is barred by the statute of limitations is a question of fact for the jury; however, as with other putative fact questions, the question may be taken away from the jury if reasonable minds could not differ as to the conclusion."[18] The Mississippi Supreme Court has held that "[a]n individual may not take shelter in the 'discovery rule' when reasonable minds could not differ that the plaintiff possessed sufficient information to bring a claim."[19]

         In the present case, the district court concluded that L-3 knew or should have known of its claims against the Womble firm, Edwards, and Paine Snider by May 2007. We agree as to all claims, except those involving Edwards's assistance to Wolf and those involving Paine Snider's alleged misappropriation of confidential documents.

         Paine Snider's co-worker, Janice Wolf, filed an internal complaint in 2006 after a meeting among Paine Snider, Wolf, and Steve Sinquefield. In-house counsel at L-3's parent company stated in an interview investigating Wolf's allegations that "[i]t appears [Paine Snider] is advising [Janice Wolf], which is a terminable offense. Steve Sinquefield has contracted with an outside law firm specializing in legal ethics to investigate this." The Whitten Report, dated December 12, 2006, was a product of the resulting investigation. Among many other conclusions, it reported that "[Paine Snider] has repeatedly participated in inappropriate email correspondence with her co-workers. L-3 provided copies of approximately 1375 emails to or from[, among others, Courtney Paine Snider, ] Charlie Edwards[, and] Janice Wolf."

         The Whitten Report clearly reflects that by at least December 2006, L-3 had access to emails on its server between Paine Snider and Edwards, had in fact accessed them, and had provided at least some of them to outside counsel. The Whitten Report was sent on December 13, 2006, to Kathleen Karelis, the general counsel for L-3's parent company. At this point in time, Edwards had not performed legal work for L-3 for more than a year, and from L-3's standpoint, there was no business reason for any contact between him and Paine Snider during 2006 and beyond.

         Shortly after it received the Whitten report, L-3 initiated an internal review of Paine Snider's assertion that she had suffered harassment, discrimination, and retaliation. L-3 involved Jim Slavin in assessing Paine Snider's ongoing internal complaints. In April 2007, Edwards assisted Paine Snider in drafting a lengthy written document that was presented to Slavin detailing Paine Snider's allegations against officers at L-3. Edwards's participation in pursuing these claims was evidenced in emails on L-3's server between Edwards and Paine Snider, and between Paine Snider's L-3 and AOL accounts. The subject line of an email from Edwards to Paine Snider with Edwards's edits of what Paine Snider had initially sent to him was "Private and Confidential. For your eyes only."

         On May 3, 2007, a Thursday, Edwards directly contacted Slavin on behalf of Paine Snider via email. That email was remarkable for many reasons. It opened by saying, "Mr. Slavin, I am a good [friend] of Courtney Paine [Snider] and have represented L-3 Vertex and its predecessors in a number of significant matters." It stated that Edwards was "one of the Company's regular outside counsel," even though Edwards and in-house counsel at L-3 knew that Edwards no longer performed work for L-3 at the insistence of L-3's general counsel Steve Sinquefield. Edwards's email advised Slavin that Edwards had "personal knowledge that someone other than [Paine Snider] has had access to her business emails." Edwards also said that he knew of L-3's and Slavin's assurances to Paine Snider that her email was not being monitored. Edwards then issued a veiled threat to Slavin regarding the monitoring of email in saying "[a]fter all, retaliation is also against both the law and Company policy." In the email to Slavin, Edwards suggested that he and Slavin meet and also involve "corporate-level representatives" and Kathleen Karelis, the new general counsel for the corporate parent, "to get all this behind us. In my view, we are all on the same 'side[.]'" Edwards continued, "I hasten to add that there is no desire on Courtney's part, or on mine, to create embarrassment or personal difficulty for anyone; instead, Courtney simply hopes for a solution which will enable her to eliminate enormous stress and insecurity from her life, and that would seem to be equally in L-3's best interests." Edwards offered to meet with Slavin in New York on May 15, explaining that "Courtney would be unable to attend because her own commitments on Company legal matters render her unavailable early that week and are likely to prevent her attendance at the Legal Department meeting in Miami as well."

         Within minutes of receiving Edwards's email, Slavin forwarded it to Kathleen Karelis. Slavin advised Karelis: "Attached is an email from an attorney who suggests that he could represent Courtney in resolving the issues. I have not nor do I plan to reply unless you tell me to do so." The next day, Friday, May 4, 2007, Karelis attempted to call Edwards, but he was not at his office. The following Monday, May 7, 2007, Edwards emailed Karelis to say "[s]orry I missed your call Friday" and said he was now available to talk to her. Karelis called Edwards that day. Following that conversation, Edwards wrote two more emails to Karelis that same day. The first was succinct. He thanked Karelis "for your expression of the Company's position in this regard," and then he said, "I will not be involved in this situation from this point forward." In the second email, sent in the afternoon with the reference line "our conversation," Edwards told Karelis, "I respect, but disagree with, your position." Edwards said that he "could never represent either the Company nor Courtney were there to be some adversary proceeding due to my being a fact witness as to some aspects of this situation." He expressed his view that L-3 should not "forc[e]" Paine Snider to divulge "confidential and privileged information to an outsider or a government agency." Edwards then asserted, "I do not believe there are any material matters ongoing in which I or my Firm are representing or advising L-3 in any manner," but he assured Karelis that "I will continue to reject any engagement which would compromise my ethical position as your former counsel." He stated, "I remain willing to assist you in reaching a resolution, and continue to extend my offer to participate to the extent you see fit." He then detailed Paine Snider's travel plans on "legal matters for" L-3 over the next three weeks, indicating his detailed knowledge about Paine Snider's activities and plans. Edwards adamantly expressed his belief in Paine Snider's fidelity to her employer and then closed the email by asserting that Karelis had not "been provided most of the pertinent facts" and "urg[ing her] to inquire deeply into the situation," noting that "it would be very unfortunate if actions were taken or decisions made without such an objective assessment."

         The following day, May 8, 2007, email exchanges occurred between Karelis and Paine Snider. Karelis said, "[a]s to Charles Edwards, he and his Firm, represent L-3. Unquestionably, he has a conflict of interest and, therefore, cannot represent you against the Company." Karelis told Paine Snider that she was willing to talk with her, but "[i]f you do not want to have a telephone conversation with me, then I suggest you consider engaging a lawyer that does not have a conflict of interest to represent you. I would be happy to talk with any such attorney that you engage."

         Paine Snider responded promptly that day, asserting that "Charles Edwards was not representing me against L-3. He was hoping to further L-3's interest in trying to resolve an untenable situation to the benefit of all concerned." Paine Snider told Karelis, "[w]hen I first approached [Edwards] with this, he deeply considered the potential for conflict before we went into detailed discussions. He is a good friend and I would never have put him in a position that would compromise his professionalism. He found that our interest[s] were congruent, not divergent." Yet, Edwards did not discuss with L-3 the potential, if not actual, conflict of interest before he discussed with Paine Snider her claims against L-3. L-3 was never consulted as to whether its interests and those of Paine Snider were "congruent." Without seeking a waiver of actual or potential conflict from L-3, Edwards undertook to assist Paine Snider in asserting claims against L-3 officers, including Steve Sinquefield, who had effectively terminated the association of Edwards as outside counsel by late 2005.

         The same day that Karelis and Paine Snider corresponded in these emails, May 8, 2007, Karelis called Elizabeth Quick, an attorney at Womble. In Quick's words, Karelis expressed "L-3's unhappiness with [Womble] attorney Charlie [Edwards's] involvement with L-3 in-house counsel Courtney Paine [Snider] and her complaints of employment discrimination against another L-3 in-house counsel." Karelis "also informed [Quick] that Edwards and [Paine Snider] have a very 'personal relationship' and [that] they have exchanged a number of emails." Quick recounted that Karelis said that she was going to "forward . . . one or more of [Edwards's] emails," and that same day, L-3 sent four emails regarding Edwards to Quick. They were Edwards's May 3, 2007 email to Slavin, and Edwards's three emails on May 7, 2007 to Karelis. Quick "immediately contacted [Womble's] General Counsel William 'Bill' C. Raper and informed him of this matter since [she] believed it might involve a claim being made against Edwards [or Womble]."

         Bill Raper attempted to contact Karelis and her assistant Belinda Logan at the headquarters of L-3's parent company the next day, on May 9, 2007. He sent an email to Logan the following day recounting that both she and Karelis were out when Raper called about "our lawyer [C]harlie [E]dwards." Raper said, "[I] have just begun looking into the situation. [A]s soon as I have had an opportunity to review our IT material, [I] will likely want to talk with you or [Ms. Karelis]. [I]n the meantime, feel free to contact me. [I] look forward to talking with you."

         Six days later, on May 16, 2007, Raper emailed both Karelis and Logan saying, "[I] left a telephone message for you today, as [I] understand that you will be out of the office for the rest of the week. [I] have looked into the issue you raised regarding my partner[, Charlie Edwards], and I am ready to discuss [it] with you if you wish. [Mr. Edwards] will have no further involvement with L-3 or its personnel." No one from L-3 returned Raper's call, responded to his email, or requested information as to what the Womble firm's "IT material" revealed.

         Three months later, in August 2007, Paine Snider filed a complaint with the EEOC alleging L-3 had engaged in harassment, gender discrimination, and retaliation for her internal ethics complaints. L-3 retained the Phelps Dunbar law firm, which filed with the EEOC a lengthy, detailed response to Paine Snider's charges. Included in the Phelps Dunbar EEOC response was an account of the contact between Paine Snider and Slavin in early 2007. ...


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