What did Talisker say to Vail about the PCMR lawsuit when their CEOs were negotiating the Canyons deal? That's what PCMR is now finding out.
Park City Mountain Resort won a discovery-related ruling last Friday, Feb. 14, that allows it access to certain communications between Vail Resorts CEO Rob Katz and Talisker Land Holdings, LLC CEO Jack Bistricer that occurred during the negotiations leading up to Vail's takeover of operations of Canyons Resort in May 2013. The discovery ruling is part of a lawsuit revolving around the validity of PCMR's renewal of the lease that allows it to operate on Talisker-owned land.
During the discovery period of the lawsuit, PCMR sought access to certain communications between Katz and Bistricer.
Anything relating to the right of first refusal in the PCMR-Talisker lease that is the subject of the lawsuit, or anything related to indemnities, "anything of that nature, we want to see," said Bruce Meyer, a New York-based attorney who represents PCMR in the lawsuit, during oral arguments on Feb. 6.
Meyer said the negotiations between Vail and Talisker were mainly between Katz and Bistricer, and them alone.
"It was essentially the two of them, no lawyers," he said.
Meyer described the discussions as "extremely heated," particularly over the issue of what Vail "can and can't do with respect to settlement [in the PCMR lawsuit]." Katz, he said, "wanted the freedom to do what he wanted," with the PCMR lawsuit "and Bistricer resisted."
"They've produced a lot of documents relating to the negotiation, but they've also withheld a lot," he argued.
The Vail/Talisker side withheld those documents under Utah's "common interest privilege" rule of evidence that "operates as a shield to preclude waiver of the attorney-client privilege when a disclosure of confidential information is made to a third party," according to Judge Ryan Harris' ruling, but only if the two parties have "an identical legal interest."
"The Talisker Parties had legitimate reasons," Harris wrote, "pursuant to a common interest in these limited issues, to want to divulge to Vail some of the privileged information . However, these parties' common interests were relatively narrow, especially compared with their adversarial status as transaction opponents."
In other words, because Talisker and Vail were still in negotiations over the Canyons and had not yet come to an agreement, information Bistricer passed along to Katz about the lawsuit is fair game for PCMR to demand access to, and is not protected by any attorney-client privilege.
In order to rule on whether Talisker and Vail were justified in withholding the documents, they were submitted to the judge for his private review.
"[P]recious few of the documents submitted are actually covered by the common interest extension of the attorney-client privilege in this case," Harris concluded. In particular, he noted that the privilege does not apply to "communications between Vail's CEO and Talisker's CEO, without attorneys present (or copied on the emails) and without referencing legal advice, discussing approaches to settlement strategy from a business perspective."
The judge noted that the no-longer-privileged documents appeared to be "relatively innocuous," but that PCMR now has the right to re-open depositions related to the documents.