Sony Electronics Inc. et al v. Hannstar Display Corp.

Filing 78

ORDER OVERRULING HANNSTAR DISPLAY CORPORATION'S OBJECTIONS TO SPECIAL MASTER'S ORDER RE DISCOVERY - No. 12cv2214 SI 8085 (Illston, Susan) (Filed on 7/24/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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IN RE: TFT-LCD (FLAT PANEL) ANTITRUST
LITIGATION
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No. M 07-1827 SI
MDL No. 1827

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This Order Relates To:

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Sony Electronics, Inc.; Sony Computer
Entertainment America LLC v. HannStar Display
Corp., Case No. 12cv2214 SI
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ORDER OVERRULING HANNSTAR
DISPLAY CORPORATION’S
OBJECTIONS TO SPECIAL MASTER’S
ORDER RE DISCOVERY

United States District Court
For the Northern District of California

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Defendant HannStar Display Corporation has filed a motion to overrule the Special Master’s

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order concerning Sony’s discovery requests. Docket No. 8085. The Court finds, pursuant to Civil Local

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Rule 7-1(b), that this matter is suitable for disposition without oral argument and VACATES the hearing

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currently scheduled for July 26, 2013.

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Having considered the parties’ papers, and for good cause appearing, the Court OVERRULES
HannStar’s objections to the Special Mater’s order and AFFIRMS that order.

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DISCUSSION

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Defendant HannStar seeks to reverse the Special Master’s discovery order dated May 29, 2013,

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relating to documents and information concerning an alleged pre-litigation settlement agreement

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between Sony and HannStar.

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Sony has sued HannStar for breach of the alleged settlement agreement, and the disputed

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discovery relates to allegations in that complaint. The agreement was allegedly reached after the parties

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engaged in mediated discussions “for the purpose of resolving all LCD-related claims . . . without the

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necessity of litigation.” Complaint at ¶ 166. Sony alleges that one month after the parties accepted a

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“Mediator’s Proposal” through which Sony “agreed to release HannStar from [its] LCD-related claims,”

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id. at ¶ 168, HannStar informed Sony that it “would not pay the amount it had agreed to pay . . . and

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repudiated the agreement.” Id. at ¶ 171.

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Sony now seeks discovery from HannStar involving communications relating to the Mediator’s

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Proposal, the parties’ acceptance of the proposal, and HannStar’s refusal to comply with the settlement

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terms. HannStar seeks to avoid the discovery on the basis of various mediation confidentiality

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provisions in the California Evidence Code. Evidence Code § 1119(a) precludes discovery into or

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admission of “evidence of anything said or any admission made for the purpose of, in the course of, or

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pursuant to, a mediation or mediation consultation.”

The rule applies to “writing[s]” and

United States District Court
For the Northern District of California

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“communications.” Cal. Evid. Code § 1119(b) and (c). However, Evidence Code § 1123 creates certain

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exceptions, including one which allows for the admissibility of a “written settlement agreement” when

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“[t]he agreement provides that it is enforceable or binding or words to that effect.” Cal. Evid. Code

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§ 1123(b). Section 1123 does not expressly limit its application to written settlement agreements

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incorporated into a single document.

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HannStar filed a motion before the Special Master, seeking a protective order to excuse it from

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responding to Sony’s First Sets of Requests for Admission, Interrogatories, and Document Requests

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(Docket No. 7814), on the grounds that the parties never entered into a “written settlement agreement.”

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On May 29, 2013, the Special Master issued an Order denying HannStar’s motion, except as to

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Interrogatory No. 5,1 and ordered HannStar to provide “Rule-compliant” responses to Sony’s discovery

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requests. See Docket No. 8021. The Special Master noted that California law permits a contract to be

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comprised of a series of communications, as opposed to a single document, and that a signature, for

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purposes of the Statute of Frauds, can be “printed, stamped or typewritten” or delivered via electronic

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communications. Id. at 4. Accordingly, he concluded that “the issue of whether the mediation

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communications in this case amount to a written, signed settlement agreement requires the development

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of facts surrounding the documents alleged to constitute that agreement.” Docket No. 8021 at 4.

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The motion was granted as to Interrogatory No. 5 without prejudice to Sony’s right to request
it again if the Court determines that the alleged settlement documents are admissible. See Docket No.
8021 at 5-6.
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Specifically, the Special Master found that all of the Requests for Admission were appropriately focused

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on discovering facts that might tend to demonstrate the existence of an enforceable and admissible

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written settlement agreement, and Request for Production No. 1 targets communications that might have

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formed the alleged written agreement. Additionally, the Special Master found that Interrogatories Nos.

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1-4 and 6 are not subject to Evid. C. § 1119 because they do not seek the substance of mediation

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communications. He found that HannStar need not respond to Interrogatory No. 5, which seeks facts

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about why HannStar refused to honor the alleged settlement agreement, since it is not directed at

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whether a written settlement agreement existed for purposes of Evid. C. § 1123(b). Finally the Special

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Master denied HannStar’s motion as to the attorney-client privilege, without prejudice to its right to

United States District Court
For the Northern District of California

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withhold privileged documents, provided it submits a privilege log.

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The Court agrees with the Special Master’s analysis. In its prior Orders denying HannStar’s

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motions to dismiss (Docket Nos. 6571 and 7020), this Court concluded that California’s mediation

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statutes do not preclude Sony from pursuing its breach of contract claims, because Sony adequately

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pled the existence of a “written settlement agreement.” In so concluding, the Court noted that the facts

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Sony alleged, if proven, would demonstrate that the mediator’s proposal “constituted a signed, binding,

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and enforceable agreement.” To determine what may constitute a “written settlement agreement” for

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purposes of § 1123, the Court looks to California contract law, and, as the Special Master noted,

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authority exists to consider separate documents as constituting a single written agreement.2

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Accordingly, the Court finds that Sony’s requests, apart from Interrogatory No. 5, which sought

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evidence of HannStar’s reasons for reneging on the alleged agreement, were proper and were narrowly

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tailored to elicit evidence of a written agreement between the parties. Additionally, the Court affirms

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the Special Master’s denial of HannStar’s motion with respect to the attorney-client privilege. In

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accordance with the federal rules, HannStar may withhold privileged documents, provided it submitted

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a privilege log listing such documents.

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HannStar’s reliance on Ryan v. Garcia, 27 Cal.App. 4th 1006 (1994), is misplaced, as that case
involved an oral agreement, not a dispute over whether separate documents may, together, consist of
a written agreement, as is present here.
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CONCLUSION

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The Court OVERRULES HannStar’s objection, AFFIRMS the Special Master’s Order, and

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ORDERS HannStar to provide “Rule-compliant” responses to Sony’s discovery requests within 10 days

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of this Order.

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IT IS SO ORDERED.

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Dated: July 24, 2013
SUSAN ILLSTON
United States District Judge

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United States District Court
For the Northern District of California

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