Cesca Therapeutics, Inc. v. SynGen, Inc., et al.

Filing 111

ORDER signed by Magistrate Judge Kendall J. Newman on 1/9/2017 GRANTING 106 Motion to Compel. (Washington, S)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 CESCA THERAPEUTICS, INC., 12 13 14 15 No. 2:14-cv-2085-TLN-KJN Plaintiff, ORDER v. SYNGEN, INC., et al., Defendants. 16 17 On January 5, 2017, this case was before the undersigned to address defendants SynGen, 18 Inc.’s, PHC Medical, Inc.’s, and Philip Coelho’s (collectively “defendants”) motion to compel 19 plaintiff Cesca Therapeutics, Inc. (“plaintiff”) to produce two documents that plaintiff 20 inadvertently produced and clawed back pursuant to the terms of the stipulated protective order 21 filed in this action on November 24, 2015, and re-produced to defendants in redacted form. (ECF 22 No. 106.) Specifically, defendants seek to compel plaintiff to produce: (1) a memorandum from 23 Ken Harris, plaintiff’s president, to Robin Stracy, plaintiff’s interim CEO, and Dr. Mahendra Rao, 24 a member of plaintiff’s board of directors, dated November 3, 2014 (the “Memo”); and (2) a set 25 of minutes for a meeting of the board of directors of Thermogenesis Corp., plaintiff’s corporate 26 predecessor in interest, dated July 30 and 31, 2009 (the “Meeting Minutes”). At the hearing and 27 in the parties’ joint statement, plaintiff claimed that the redacted sections of both documents are 28 protected from production pursuant to the attorney-client privilege, while defendants argued that 1 1 such a privilege does not apply. Attorneys Michael Friedland and Lauren Katzenellenbogen 2 appeared on behalf of plaintiff. Attorneys Matan Shacham and Eric MacMichael appeared on 3 behalf of defendants. 4 Based on the parties’ motions and joint statements regarding these discovery disputes, 5 other relevant filings, and oral argument, and for the reasons discussed below and on the record 6 during the hearing, IT IS HEREBY ORDERED that: 7 8 9 1. Defendants’ motion to compel (ECF No. 106) is GRANTED: a. With regard to the Memo, the court finds that plaintiff has not met its burden of proof in demonstrating that the contested portion of that document is 10 protected from disclosure by the attorney-client privilege. See In re Grand 11 Jury Investigation, 974 F.2d 1068, 1070 (9th Cir. 1992) (“The party asserting 12 the attorney-client privilege has the burden of proving that the privilege applies 13 to a given set of documents or communications.”). Much of the passage the 14 parties contest in the Memo consists of factual disclosures regarding this 15 action, which do not qualify for protection under the attorney-client privilege. 16 Upjohn Co. v. United States, 449 U.S. 383, 395 (1981) (“The [attorney-client] 17 privilege only protects disclosure of communications; it does not protect 18 disclosure of the underlying facts by those who communicated with the 19 attorney[.]”). Moreover, to the extent this passage arguably contains attorney- 20 client communications, either the Memo itself or defendants’ filings in support 21 of their motion demonstrate that the content of those communications that 22 plaintiff seeks to protect, i.e., the legal conclusions its counsel drew, were 23 relayed to defendants’ counsel by letters from plaintiff’s counsel around the 24 same time as the date of the Memo. (See Declaration of Eric MacMichael, 25 Exhibits 3, 5, 6.) Therefore, to the extent plaintiff could claim an attorney- 26 client privilege in those communications, that privilege was waived by 27 plaintiff’s disclosures to defendants. Accordingly, within 14 days of the date 28 of this order, plaintiff shall produce to defendants a copy of the Memo without 2 1 redactions to the portions of that document that are in dispute. 2 b. With regard to the Meeting Minutes, the court similarly finds that plaintiff fails 3 to establish that the contested portion of that document is entitled to protection 4 under the attorney-client privilege. First, with regard to the first portion of the 5 contested passage discussed at the hearing,1 the court finds that plaintiff has 6 failed to show that the discussion referred to in that portion was between 7 plaintiff’s board members and plaintiff’s counsel for the purpose of obtaining 8 legal advice, or that counsel provided legal advice to the board during that 9 discussion. See In re Grand Jury Subpoenas (Hirsch), 803 F.2d 493, 496 (9th 10 Cir. 1986) ((“The attorney-client privilege protects confidential disclosures 11 made by a client to an attorney in order to obtain legal advice.”); In re Fischel, 12 557 F.2d 209, 211 (9th Cir. 1977) (attorney-client privilege protects attorney’s 13 response or advice to client disclosures made to that attorney in seeking legal 14 advice). Moreover, nothing in the passage itself suggests that the board’s 15 decision to waive any conflicts of interest was made in confidence in order to 16 obtain legal advice from the counsel present at that meeting. Nor does that 17 passage reveal any legal advice counsel may have provided to the board. To 18 the contrary, the second portion of the contested passage makes it clear that 19 that decision to waive the company’s conflicts of interest was made as part of 20 the board’s larger business plan with regard to how the company was to 21 address its relationship with defendant Coelho moving forward. The 22 disclosure of that decision in such a context is insufficient to show that the 23 contested portion of the Meeting Minutes is entitled to protection under the 24 attorney-client privilege. See Brinckerhoff v. Town of Paradise, 2011 WL 25 2926936, at *3 (E.D. Cal. July 15, 2011) (denying attorney-client privilege 26 protection for minutes of a board meeting at which counsel was present and 27 28 1 This portion of the passage begins with the phrase “After further discussion,” and ends with the word “Company.” 3 1 involved, but where legal advice was not the predominant purpose of the 2 communications reflected in those minutes); N. Pacifica, LLC v. City of 3 Pacifica, 274 F. Supp. 2d 1118, 1127 (N.D. Cal. 2003) (quoting Marten v. 4 Yellow Freight System, Inc., 1998 WL 13244, at *7 (D. Kan. Jan. 6, 1998) 5 (noting that “‘[l]egal advice must predominate for the communication to be 6 protected’” under the attorney-client privilege and that, “[w]hen the legal 7 advice ‘is merely incidental to business advice,’ the privilege does not apply”). 8 Accordingly, within 14 days of the date of this order, plaintiff shall also 9 produce to defendants a copy of the Meeting Minutes without redactions to the portion of that document that is in dispute. 2 10 c. The parties’ requests to seal various documents submitted in relation to the 11 12 present motion (ECF Nos. 107, 108) are DENIED.3 The parties’ purpose 13 behind those requests is to seal from public view the information contained in 14 the contested parts of the documents defendants seek to compel through their 15 motion based on plaintiff’s contention that that information is protected from 16 disclosure under the attorney-client privilege. However, that information is not 17 subject to the attorney-client privilege for the reasons discussed above. 18 Furthermore, after having conducted an in camera review of the two 19 20 21 22 23 24 25 2 Although at the hearing the court inquired whether it was possible to parse certain passages in the redacted portion, for the reasons set forth herein the court ultimately concludes that the entire passage is not privileged. Moreover, despite the court exploring such possibilities, the court shares counsels’ concern raised during the hearing that parsing the contested passages in the documents at issue could potentially lead to future disputes with regard to other documents and whether the attorney-client privilege applies to small subsections or even parts of sentences in those documents. The court cautions the parties that future discovery disputes in this action based on such hairsplitting will not be looked upon favorably absent a clear showing that it is necessary to preserve such a privilege. 3 26 27 28 Specifically, the parties seek to seal the following documents: (1) the Memo described above; (2) the Meeting Minutes described above; (3) the parties’ joint statement with regard to defendants’ present motion to compel; (4) the Declaration of Ali S. Razai in support of plaintiff’s opposition to defendants’ motion to compel; and (5) the Declaration of Eric MacMichael in support of defendants’ motion to compel. 4 1 documents at issue in full and the parties’ other filings they seek to seal, the 2 court concludes that the contents of these documents do not meet the 3 requirements for such a request. Accordingly, any documents the parties have 4 submitted with the court with regard to the present motion to compel shall be 5 filed in the public record for this action to the extent they have not already 6 been filed in such a manner. 7 8 IT IS SO ORDERED. Dated: January 9, 2017 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5

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