Elan Microelectronics Corporation v. Apple, Inc.
Declaration of Derek C. Walter in Support of Apple's Reply to Elan's Opposition to Motion to Compel filed byApple, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K)(Mehta, Sonal) (Filed on 6/21/2011)
HONEYWELL, INC., Plaintiff, v. MINOLTA CAMERA CO., LTD., et al.,
Civil Action No. 87-4847
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
1990 U.S. Dist. LEXIS 5954
May 15, 1990, Decided and Filed
[*1] NOT FOR PUBLICATION
SUBSEQUENT HISTORY: Later proceeding at
Honeywell, Inc. v. Minolta Camera Co., 1991 U.S. Dist.
LEXIS 4222 (D.N.J., Apr. 5, 1991)
PRIOR HISTORY: Honeywell, Inc. v. Minolta Camera
Co., 1988 U.S. Dist. LEXIS 6379 (D.N.J., June 27, 1988)
Magistrate's orders reversed in part.
Defendant's motion to dismiss claims granted.
COUNSEL: ROBERT T. EDELL, ESQ., ALAN W.
KOWALCHYK, ESQ., Merchant, Gould, Smith, Edell,
Welter & Schmidt, Minneapolis, Minnesota, -and- JOHN
N. BAIN, ESQ., Carella, Byrne, Bain & Gilfillian,
Roseland, New Jersey, (Attorneys for Plaintiff).
JOSEPH J. FLEISCHMAN, ESQ., WILLIAM W.
ROBERTSON, ESQ., Hannoch Weisman, Roseland,
New Jersey, -and- FREDERICK C. MICHAUD, ESQ.,
Burns, Doane, Swecker & Mathis, Alexandria, Virginia,
(Attorneys for Defendants).
OPINION BY: WOLIN
Alfred M. Wolin, United States District Judge.
Before the Court plaintiff Honeywell, Inc.
("Honeywell") appeals from an order of the Magistrate
and defendant Minolta Camera Co., Ltd. ("Minolta")
moves to dismiss counts three through six of Honeywell's
Second Amended Complaint. Honeywell appeals the
Order of Magistrate Haneke filed December 6, 1989
which denied plaintiff's application for reconsideration of
the Order of the Magistrate filed August 22, 1989 ("the
August Order"). The August Order denied Honeywell's
telephone motion of August 8, 1989 to compel the
deposition testimony of Kazuo Kessoku ("Kessoku"), an
employee of defendant Minolta, over defendants'
objections on the basis of the attorney-client privilege and
work [*2] product doctrine. Minolta moves to dismiss
counts three through six of Honeywell's Second
Amended Complaint for failure to state a claim for which
relief can be granted. In the alternative, Minolta moves to
dismiss count five for failure to plead fraud with
particularity pursuant to Fed. R. Civ. P. 9(b). First, the
Court will consider Honeywell's appeal from the
Magistrate's order, and then, the Court will consider
Minolta's motion to dismiss.
I. THE APPEAL OF THE MAGISTRATE'S ORDER
Honeywell's appeal concerns on-going depositions
which are being conducted in Japan. During the taking of
the deposition of Kessoku, he was directed not to answer
certain questions pursuant to the attorney-client privilege
and the work product doctrine. It is undisputed that
1990 U.S. Dist. LEXIS 5954, *2
Kessoku is not admitted to the bar of Japan or any other
country and is not a registered patent agent of Japan or
any other country.
Honeywell moved by telephone application from
Japan for an order compelling Kessoku to answer the line
of questioning and to compel Minolta to produce certain
documents requested in connection with the questioning
of Kessoku. After the telephone conference, the
Magistrate [*3] permitted the filing of additional and
supplemental briefs. The Magistrate's Order of August
22, 1989 denied the application of Honeywell on the
ground that Kessoku was the "functional equivalent" of
an attorney under the rationale of Renfield Corp. v. E.
Remy Martin & Co., S.A., 98 F.R.D. 442 (D. Del. 1982),
and was entitled to assert the attorney-client privilege and
work product doctrine. Honeywell appealed that decision
to this Court. This Court remanded the issue back to the
Magistrate for reconsideration in light of the submission
by Honeywell of the affidavit of Berthold Goldman
which had been filed in the Renfield case. The Magistrate
denied the motion on reconsideration. The instant appeal
A magistrate's adjudication of a non-dispositive
motion will be set aside only if the order is found to be
clearly erroneous or contrary to law. Cipollone v. Liggett
Group, Inc., 785 F.2d 1108, 1113 (3d Cir. 1986), cert.
denied, 484 U.S. 976, 108 S. Ct. 487, (1987) (citing 28
U.S.C. § 636 (b)(1)(A)); see Fed. R. Civ. P. 72 (a);
General Rule 40 D(4) of the U.S. Dist. Ct. for the Dist. of
N.J. This Court will determine that a finding is [*4]
clearly erroneous "when although there is evidence to
support it, the reviewing court on the entire evidence is
left with the definite and firm conviction that a mistake
has been committed." United States v. Gypsum Co., 333
U.S. 364, 395, 68 S. Ct. 525, 542 (1948). The
Magistrate's order may also be reversed if it is found that
his determination was contrary to law. The Magistrate
has delegated authority pursuant to 28 U.S.C. § 636
(b)(1) to exercise wide discretion in fashioning
appropriate discovery orders. Several courts have also
held that a magistrate's determination in a discovery
dispute is entitled to great deference and reversible only
for an abuse of discretion. See Environmental Tectonics
v. W.S. Kirkpatrick & Co., 659 F. Supp. 1381, 1399
(D.N.J. 1987) (citing cases), aff'd in part. rev'd in part,
847 F.2d 1052 (3d Cir. 1988), aff'd 110 S. Ct. 701
(1990); see also, Schroeder v. Boeing Commercial
Airplane Co., 123 F.R.D. 166 (D.N.J. 1988).
Honeywell contends that the Magistrate's decision to
deny the motion to compel must be reversed as contrary
to law. At oral argument both Honeywell and Minolta
agreed that the taking of this deposition in Japan is
governed [*5] by United States law. See Defendants'
Memorandum in Opposition to Motion to Reverse, p. 13.
Honeywell asserts that it was error for the Magistrate to
be "persuaded" by the rationale of the Renfield case.
Specifically, Honeywell contends that Renfield is
contrary to the law of the Third Circuit and to prior
district court opinions in this district. Honeywell
contends that Renfield is contrary to the policy
underlying the attorney-client privilege and the work
product doctrine. Honeywell also submits that the
Magistrate's failure to rule on the issue of the work
product doctrine was clearly erroneous in that it will lead
to duplicitous litigation. Minolta argues that the
Magistrate's decision conforms to applicable law and that
the Magistrate's determination that Kessoku is, in fact, a
de facto attorney is supported by sufficient evidence. The
Court finds that the issue to be decided is whether the
Magistrate's determination that Kessoku could assert the
attorney-client privilege and work product doctrines as a
de facto attorney is clearly erroneous or contrary to law.
Privileges asserted in federal court are "governed by
the principles of common law as they may be interpreted
[*6] by the courts of the United States in light of reason
and experience. However, in civil actions and
proceedings, with respect to an element of a claim or
defense as to which State law supplies the rule of
decision, the privilege . . . shall be determined in
accordance with State law." Fed. R. Evid. 501. The
validity of a privilege is to be determined on a
case-by-case basis. Unjohn Co. v. U.S., 449 U.S. 383,
396-97, 101 S. Ct. 677, 686 (1981). The Third Circuit has
held that "the applicability of a privilege is a factual
question" and the determination of "the scope of a
privilege is a question of law." Matter of Bevill, Bresler
& Schulman Asset Management Corp., 805 F.2d 120,
124 (3d Cir. 1986), citing to United States v. Liebman,
742 F.2d 807, 809 (3d Cir. 1984). The determination as
to whether Kessoku may assert either the attorney-client
privilege or the work product doctrine in refusing to
answer questions at his deposition depends on the
determination of his status as a de facto attorney.
1990 U.S. Dist. LEXIS 5954, *6
The Magistrate found that Kessoku was the
functional equivalent of an attorney under the rationale of
Renfield Corp. v. E. Remy Martin & Co., S.A., 98 F.R.D.
442 (D. Del. 1982), [*7] and was, therefore, entitled to
assert the attorney-client privilege and work product
doctrine. The Renfield court expanded the attorney-client
privilege to encompass employees of a french corporation
who acted in the capacity of "in-house" counsel, although
the employees were not members of the organized french
bar. The court discussed only the factual circumstances of
the case before it and cited no authority for this expansion
of the privilege. The specific holding of Renfield has not
been adopted by the Third Circuit, nor has the functional
equivalence rationale been applied as a general
Minolta cites Vernitron Medical Products, Inc. v.
Baxter Laboratories. Inc, et al., 186 U.S.P.Q. 324 (D.N.J.
1975), for the proposition that a functional equivalence
test, similar to the one employed by the court in Renfield,
has been applied in this district. Vernitron Medical
Products was an earlier case which dealt with the
application of the attorney-client privilege to
communications between a client and a patent agent
registered to practice in front of the U.S. Patent Office. In
the area of patent law, registered patent agents have been
made a specific exception [*8] to the general rule that an
attorney must be involved for the assertion of an
attorney-client privilege. See e.g. Sperry v. State of
Florida, 373 U.S. 379, 83 S. Ct. 1322 (1963). There is no
indication that this specialized exception was intended to
be applied in a general fashion.
The Third Circuit was guided by the requirements of
United States v. United Shoe Machinery Corp., 89 F.
Supp. 357, 358-59 (D. Mass 1950) 1 in its application of
the attorney-client privilege in In Re Grand Jury
Investigations, 599 F.2d 1224, 1233 (3d Cir. 1979). This
Court has failed to find any case which indicates that the
Third Circuit has since altered its approach to the
application of the attorney-client privilege. Therefore, the
Court finds that the Magistrate's application of the
rationale of Renfield was contrary to the law of this
Circuit and must be reversed.
1 The "oft-quoted" passage of that case provides
The privilege applies only if (1) the asserted
holder of the privilege is or sought to become a
client; (2) the person to whom the communication
was made (a) is a member of the bar of a court, or
his subordinate and (b) in connection with this
communication is acting as a lawyer; (3) the
communication relates to a fact of which the
attorney was informed (a) by his client (b) without
the presence of strangers (c) for the purpose of
securing primarily either (i) an opinion on law or
(ii) legal services or (iii) assistance in some legal
proceeding, and not (d) for the purpose of
committing a crime or tort; and (4) the privilege
has been (a) claimed and (b) not waived by the
[*9] Next, the Court must examine whether the
Magistrate's factual determination that Kessoku was the
functional equivalent of an attorney was clearly
erroneous. The Court has thoroughly reviewed all of the
submissions of the parties, including the affidavits
submitted which attest to Kessoku's duties, background
and training, the voluminous affidavits submitted which
explain Japanese law on the subject, and the factual
circumstances of the Renfield decision. The Court notes
that Kessoku has never been licensed to practice law in
any country and has never been registered as a patent
agent in Japan or in the United States. Kessoku has a
Bachelor's of Science degree and, over the years, has
attended various seminars, lectures and classes
concerning legal and patent issues. The Court finds this is
insufficient factual support for the finding that Kessoku is
a de facto attorney. On the entire evidence, the Court "is
left with the definite and firm conviction that a mistake
has been committed." Therefore, the Court finds that the
Magistrate's determination as to Kessoku status as a de
facto attorney for the purposes of the applying the
attorney-client privilege and the work product doctrine
[*10] is clearly erroneous and must be reversed. 2
2 In their exhibits and at oral argument, Minolta
raised the issue that this Court, under the
principles of comity, ought to apply Japanese law
to provide Kessoku with a privilege which would
prevent the discovery at issue. This Court has
considered Minolta's arguments, as well as the
exhibits of the parties, and finds that no sovereign
interest of Japan is implicated in this action where
depositions have been conducted in Japan merely
as a courtesy to Minolta. Also, the Court notes
that the affidavits of the parties explaining
Japanese law on the subject of privileges conflict
with each other and do not provide a proper basis
1990 U.S. Dist. LEXIS 5954, *10
from which this Court could determine any
In the August Order, the Magistrate ordered that:
"Honeywell's application for an Order compelling the
witness, Kazuo Kessoku, to answer questions over
objections on the basis of the attorney-client privilege and
the work product doctrine (to the extent it is proper to
claim the application [*11] of the work product doctrine
based upon a finding that the witness is the functional
equivalent of in-house counsel for Minolta Camera Co.,
Ltd.) is hereby denied[.]"
Therefore, the appeal of the denial of reconsideration of
that order places the issue of the applicability of the work
product doctrine before the Court. "The work-product
doctrine . . . protects from discovery materials prepared
or collected by an attorney in the course of preparation
for possible litigation.'" In Re Grand Jury Investigation,
599 F.2d at 1228, quoting Hickman v. Taylor, 329 U.S.
495, 505, 67 S. Ct. 385, 391 (1947). The Magistrate
applied the work product doctrine based on his finding
that Kessoku was a de facto attorney. Therefore, for the
reasons expressed above, the determination in the August
Order concerning the work product doctrine must also be
II. THE MOTION TO DISMISS CERTAIN COUNTS
Pursuant to Fed. R. Civ. P. 12(b)(6), Minolta moves
to dismiss counts three through six of the Second
Amended Complaint for failure to state a claim upon
which relief can be granted. In the alternative, Minolta
moves to dismiss count five of the Second Amended
Complaint [*12] for failure to plead fraud with the
requisite particularity pursuant to Fed. R. Civ. P. 9(b).
Honeywell originally sued Minolta for patent
infringement, contending that certain of defendants'
multifunction cameras infringe Honeywell's patent claims
on a camera and certain focus detecting apparatuses.
Honeywell's Second Amended Complaint added five
counts against Minolta. Count two alleges a cause of
action for breach of contract. Counts three through six
allege causes of action which sound in tort. 3 Minolta
contends that, as a matter of law, a tort claim may only be
asserted, in conjunction with a contract claim, if a party
breaches a duty which he owes to another independently
of the contract. Accordingly, Minolta asserts that
Honeywell's tort claims are not based on separate and
alternative legal theories, but are claims which overlap
with and restate Honeywell's contract and infringement
claims. In the alternative, Minolta asks this Court to
dismiss count five, which alleges fraud, for failing to
sufficiently plead the circumstances of the alleged fraud.
Honeywell opposes both of these motions. Honeywell
contends that its tort counts are separate and independent
causes of action, [*13] irrespective of any contract
claims alleged, and also contends that it has plead count
five with sufficient particularity to pass Rule 9(b) muster.
Count three alleges misappropriation of
confidential information, count four alleges
breach of fiduciary duty and obligation of good
faith and fair dealing, count five alleges fraud, and
count six alleges conversion.
To determine the sufficiency of pleadings under a
Rule 12(b)(6) standard, the Court must take the
allegations of the complaint as true, view them liberally
and give plaintiff the benefit of all inferences fairly
drawn. Wilson v. Rackmill, 878 F.2d 772, 775 (3d Cir.
1989). The complaint will not be dismissed unless
plaintiff can prove no set of facts entitling him to relief.
Id.; Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99,
The Court's inquiry is two-fold. First, the Court must
determine the substantive law under which the
sufficiency of Honeywell's tort counts must be measured.
Second, the Court must [*14] determine whether, in fact,
Honeywell's counts may be asserted as a matter of law.
The substantive law of the three jurisdictions which have
a connection with this action are all in agreement that a
plaintiff can only assert tort claims if those claims exist
separately and independently from alleged contract
claims in the same action. See Spring Motors
Distributors, Inc. v. Ford Motor Co., 98 N.J. 555, 581-82
(1985); Wild v. Rarig, 234 N.W.2d 775, 789-90 (Minn.
1975), cert. denied 424 U.S. 902 (1976); Covert v. Allen
Group, Inc., 597 F. Supp. 1268, 1269-70 (D. Colo. 1984)
(applying Colorado law). 4 Honeywell has attempted to
persuade this Court that the rule should be otherwise by
citing the law of jurisdictions which have no connection
with the matter at bar. Although the Court recognizes that
some jurisdictions allow tort damages to be collected for
contract actions in general, this is not the majority rule,
nor is it the rule of the jurisdictions which have an
1990 U.S. Dist. LEXIS 5954, *14
interest in this matter. See Noye v. Hoffman-La Roche
Inc., 238 N.J. Super. 430, 434-36 (App. Div. 1990) (and
cases cited therein). The Court will judge the sufficiency
of plaintiff's tort counts by the [*15] similar standard
adopted by the three interested jurisdictions. Therefore,
Honeywell's tort claims must be separate and independent
from its contract claim in order for those claims to
withstand the instant motion to dismiss pursuant to Rule
New Jersey is the forum state and is the
headquarters of the American corporate
defendant. Minnesota is where the plaintiff is
headquartered. Colorado is where the Honeywell
group apparently developed the confidential
information at issue in this litigation.
Honeywell's second count alleges that pursuant to
the "TCL Agreement" between Honeywell and Minolta
Camera Co. Ltd., Honeywell disclosed confidential,
proprietary design information which was to be used in
conjunction with a component manufactured by
Honeywell to Minolta for the purpose of Minolta
developing, manufacturing, and marketing an autofocus,
single-lens-reflex camera using the Honeywell
component. Honeywell alleges that Minolta breached this
agreement and caused an, as yet, unspecified amount of
damages. [*16] Honeywell's third count alleges that
Minolta willfully and intentionally misappropriated the
information which, pursuant to the TCL Agreement, was
intended to remain confidential. The TCL Agreement
specifies what information received is considered to be
confidential and the conditions under which the
information must remain confidential. The fourth count
alleges that Minolta breached both its fiduciary duty and
its obligation of good faith and fair dealing embodied in
the TCL Agreement. The fifth count alleges that Minolta
"secretly and fraudulently obtained and utilized
Honeywell's confidential proprietary design information
in the development of [Minolta's] own autofocus
component while at the same time directly and impliedly
representing to Honeywell that [Minolta] would use the
Honeywell confidential proprietary design information
for the design, manufacture, use and sale of autofocus
photographic equipment in fulfillment of its T.C.L.
AGREEMENT with Honeywell." Second Amended
Complaint, para. 46. Honeywell's sixth count alleges that
Minolta's use of the confidential information for its own
purposes constituted a conversion of the information, in
that Honeywell did not receive [*17] "fair, reasonable,
and sufficient compensation."
Complaint, para. 53.
After reviewing the entire Second Amended
Complaint, the Court finds that Honeywell has failed to
allege a separate and independent tort duty which has
been breached by Minolta in any of its counts alleging
causes of action in tort. Counts three through six all
attempt to take elements of Honeywell's cause of action
for breach of contract and plead those elements as
separate tort actions. All of the duties which Minolta has
allegedly breached are derived from the TCL Agreement.
That agreement governs the rights and obligations of the
parties in this instance. Therefore, the Court will grant
Minolta's motion to dismiss counts three through six
because Honeywell has failed to allege the breach of a
duty independent of the contract involved in this action.
The dismissal will be without prejudice. Because of the
Court's disposition of the Rule 12(b)(6) motion, Minolta s
alternative motion pursuant to Rule 9(b) will be
dismissed without prejudice.
I. For the reasons stated above, the Court finds that
the provision of the Magistrate's August Order appealed
from is clearly erroneous [*18] and contrary to law.
Therefore, the Court will reverse the determination of the
Magistrate and order that Kessoku may not assert either
the attorney-client privilege or the work product doctrine
in refusing to respond to the questions which were put to
him at his depositions in Japan.
II. Also, for the reasons previously stated, the Court
will grant Minolta's motion pursuant to Rule 12(b)(6) and
dismiss counts three through six of the Second Amended
Complaint without prejudice. Minolta's alternative
motion pursuant to Rule 9(b) will be dismissed without
An appropriate order is attached.
For the reasons stated in the accompanying Opinion
of the Court,
It is on this 15th day of May, 1990;
ORDERED that the Magistrate's Orders filed
December 6, 1989 and August 22, 1989 are reversed in
part; and it is further
1990 U.S. Dist. LEXIS 5954, *18
ORDERED that Kazuo Kessoku may not assert either the
attorney-client privilege or the work product doctrine in
his response to the questions which were put to him at his
depositions in Japan; and it is further
ORDERED that Minolta's motion pursuant to Rule
12(b)(6) is granted; and it is further
ORDERED that counts three through six of the
Second Amended [*19] Complaint are dismissed without
prejudice; and it is further
ORDERED that Minolta's alternative motion
pursuant to Rule 9(b) is dismissed without prejudice.
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