in Re Rsr Corporation and Quemetco Metals Limited, Inc., 475 S.W.3d 775

Background

RSR sued Inppamet in Texas alleging contract breach and trade-secret misappropriation arising from a 2003 licensing agreement; Inppamet countersued in Chile. BMAJ (Chilean counsel) and U.S. counsel Bickel & Brewer represented RSR.
Hernan Sobarzo was Inppamet’s finance manager (Apr 2007–Apr 2010), had access to financial records and communications with Inppamet lawyers, and signed a confidentiality obligation to Inppamet.
After resigning in 2010, Sobarzo took ~2.3 GB of Inppamet emails and documents. He met repeatedly with BMAJ and Bickel & Brewer (at least 19 meetings, ~150+ hours), provided analysis and spreadsheets alleging underpayment, and was later retained as a consultant by BMAJ/Bickel & Brewer for compensation.
Sobarzo later recanted in an affidavit. Inppamet moved to disqualify Bickel & Brewer, alleging review/use of privileged/confidential materials; a special master denied disqualification but ordered destruction of one spreadsheet; the trial court then disqualified Bickel & Brewer relying on In re American Home Products.
RSR sought mandamus; the Texas Supreme Court reviewed whether American Home Products’ screening presumption applies to a former-employee fact witness like Sobarzo, or whether the Meador multifactor test governs.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether American Home Products presumption applies to a former-employee fact witness who provided documents and consulting to opposing counsel	American Home Products should not apply because Sobarzo was a fact witness (finance manager) whose role existed independent of litigation; Meador governs	American Home Products should apply because Sobarzo had extensive contact with counsel, was paid, and likely accessed privileged materials, creating a presumption of shared confidences	American Home Products does not apply to fact witnesses whose duties were not primarily litigation-related and who were not supervised by lawyers; Meador factors should control
Whether the trial court abused its discretion by disqualifying Bickel & Brewer under American Home Products	Disqualification under American Home Products was improper because that precedent addresses side-switching paralegals/legal assistants, not fact witnesses	Trial court properly applied a bright-line presumption of shared confidences given the extent of contact and consulting relationship	Court held the trial court abused its discretion by applying American Home Products and conditionally granted mandamus relief; it did not decide Meador’s ultimate application on the facts because the trial court had not applied those factors
Whether facts like high compensation, confidentiality agreement, and frequent meetings require a different rule than Meador	These facts are relevant to Meador (e.g., whether counsel should have known material was privileged or reviewed it) but do not trigger American Home Products presumptions	Such facts demonstrate a genuine threat of disclosure and justify applying American Home Products presumptions	Court held those facts inform Meador’s factors but do not by themselves transform a fact witness into a paralegal/legal assistant subject to the American Home Products presumption

Key Cases Cited

In re American Home Products Corp., 985 S.W.2d 68 (Tex. 1998) (presumptions requiring screening/disqualification when a law firm hires an opposing side’s paralegal/legal assistant)
In re Meador, 968 S.W.2d 346 (Tex. 1998) (multifactor balancing test for attorneys who receive an opponent’s privileged materials outside normal discovery)
In re Columbia Valley Healthcare Sys., L.P., 320 S.W.3d 819 (Tex. 2010) (applied American Home Products screening rule to a nonlawyer with litigation-related duties and emphasized institutionalized screening)
In re Bell Helicopter Textron, Inc., 87 S.W.3d 139 (Tex. App.—Fort Worth 2002) (disapproved here: applied American Home Products to a former engineer/consultant who had worked with employer’s counsel)