Elan Microelectronics Corporation v. Apple, Inc.

Filing 306

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)

Exhibit G

Page 1

OAK INDUSTRIES, Plaintiff, v. ZENITH INDUSTRIES, Defendant
No. 86 C 4302
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS, EASTERN DIVISION
1988 U.S. Dist. LEXIS 7985

July 25, 1988, Decided; July 27, 1988, Filed

OPINION BY: [*1] GRADY
OPINION
MEMORANDUM OPINION
JOHN F. GRADY, UNITED STATES DISTRICT
JUDGE
This patent infringement case comes before us on
three motions. Plaintiff Oak Industries ("Oak") moves (1)
for relief from the alleged ethical violations of Michael
Barclay ("Barclay"), one of Zenith's attorneys; (2) for
relief from Barclay's alleged violation of the protective
order imposed in this case; and (3) to compel Zenith to
produce a witness pursuant to Rule 30(b)(6) of the
Federal Rules of Civil Procedure. We deny the ethics
motion, but grant the motion to compel discovery. We
reserve ruling on the protective order motion and all
attorney-client privilege issues, pending further discovery
concerning Barclay's communication with Carl Bradshaw
("Bradshaw"). We turn first to the ethics and protective
order motions and then to the discovery motion.
ETHICS AND PROTECTIVE ORDER MOTIONS
Facts
In May, 1987, Barclay, one of Zenith's attorneys,
contacted Bradshaw, who no longer worked for Oak but
had served as its general counsel from the 1970s until

August 1984. Defendant's Memorandum in Opposition to
Plaintiff's Motion for Violation of Ethics Provision and
Protective Order, Bradshaw Deposition [*2] at 6.
According to Barclay, he contacted Bradshaw in order to
obtain any non-privileged information Bradshaw had
about the Harney patent, one of the patents at issue in this
case. Barclay Declaration at para. 5. Bradshaw agreed to
speak with Barclay and did so on two occasions in 1987.
Id. at para. 7.
In preparation for their conversations, Barclay sent
Bradshaw several documents which he directed
Bradshaw not to copy or disclose. The record does not
reveal what documents Bradshaw actually received.
However, Barclay acknowledges that the materials
included one or more internal Oak memoranda "of which
Bradshaw was a recipient." Id. at para. 11. Barclay claims
that "such memoranda were not designated confidential
under the protective order at the time they were produced
by Oak, and were such that, under Barclay's agreement
with Oak's counsel, [he] was permitted to show such
documents to their recipients such as Mr. Bradshaw." Id.
The record also does not reveal what Barclay and
Bradshaw discussed during their two conversations.
However, Zenith contends that it is "unlikely" that
privileged matters were discussed. Def. Memo. in Opp. at
10.
Oak alleges that Barclay also tried [*3] to contact
several other ex-Oak employees. However, the only
ex-employee (other than Bradshaw) specifically
mentioned in Oak's memoranda is Mr. Leo Jedynak

Page 2
1988 U.S. Dist. LEXIS 7985, *3

("Jedynak"). Barclay admits that he spoke with Jedynak,
but maintains that their conversation did not touch upon
any substantive matters involved in this case. Barclay
Deposition at para. 15-16.
Discussion
The Model Code of Professional Responsibility
prohibits direct contact between an attorney and an
opposing party without the consent of opposing counsel:
(A) During the course of his representation of a
client a lawyer shall not
(1) communicate or cause another to communicate
on the subject of the representation with a party he knows
to be represented by a lawyer on that matter unless he has
the prior consent of the lawyer representing such other
party or is authorized by law to do so . . . .
Model Code of Professional Responsibility DR
7-104 (emphasis added); Ill. Rev. Stat., ch. 110A, Rule
7-104. The new Model Rules of Professional Conduct
also proscribe such contact: 1
In representing a client, a lawyer shall not
communicate about the subject of the representation with
a party the lawyer knows to be [*4] represented by
another lawyer in the matter, unless the lawyer has the
consent of the other lawyer or is authorized by law to do
so.
Model Rules of Professional Conduct Rule 4.2
(emphasis added). In cases such as this, where employees
of a party are involved, the task of identifying the
opposing "party" can be very difficult. The Comment to
Rule 4.2 of the Model Rules attempts to clarify which
employees constitute a "party" for the purposes of the
ethical rules:
In the case of an organization, this Rule prohibits
communications by a lawyer for one party concerning the
matter in representation [1] with persons having a
managerial responsibility on behalf of the organization
and [2] with any other person whose act or omission in
connection with that matter may be imputed to the
organization for purposes of civil or criminal liability or
[3] whose statement may constitute an admission on the
part of the organization.
Id. Comment 2 (emphasis added).

1 We note that the Illinois Supreme Court has
adopted the Model Code of Professional
Responsibility, but not the Model Rules of
Professional Responsibility. However, like other
courts, see In Re Industrial Gas Antitrust, No. 80
C 3479 (N.D. Ill. Jan. 28, 1986) (Getzendanner,
J.), we also look to the Model Rules for their
persuasive value.
[*5] Though somewhat unclear, Clause 2 of the
Comment suggests that a "party" includes former
employees, such as Jedynak and Bradshaw, insofar as
their acts or omissions in connection with the subject
matter of the litigation can be imputed to their employer.
See, e.g., Chancellor v. Boeing, No. 85-6131 (D. Kan.
February 3, 1988); Sperber v. Washington Heights-West
Harlem-Inwood Mental Health Council, No. 82 CIV
7428 (S.D.N.Y. Nov. 21, 1983), vacated and withdrawn
(LEXIS, GenFed library, Dist. file). Some authorities
have nevertheless held that DR 7-104 and Model Rule 4.2
do not apply to contacts with former corporate
employees. See In Re Industrial Gas Litigation, 80 C
3479, Memorandum Op. at 5 (N.D. Ill. January 28, 1986)
(Getzendanner, J.); Illinois State Bar Association Opinion
No. 85-12, 74 Ill. Bar J. 514 (1986); Massachusetts Bar
Association, Formal Opinion No. 82-7, quoted in Amarin
v. Maryland Cup, 116 F.R.D. 36 (D. Mass. 1987); Wright
by Wright v. Group Health Insurance, 103 Wash.2d 192,
691 P.2d 564, 569 (1984); Bobele v. Superior Court of
Los Angeles County, 199 Cal. App. 3d 708, 245 Cal.
Rptr. 144 (2d Dist. 1988) (applying similar, [*6] though
not identical, state disciplinary rule).
We hold that Barclay's contacts with Bradshaw and
Jedynak do not constitute ethical violations. The plain
meaning of the word "party," as used in DR 7-104 and
Model Rule 4.2, does not include persons who are no
longer associated with the employer at the time of the
litigation. The fact that former employees may have
information damaging to the employer has nothing to do
with the question of whether the employee should be
considered an alter ego of the employer. We believe that
expanding the definition of "party" under either DR
7-104 or Model Rule 4.2 to include former employees
would unduly hinder attorneys' ability to conduct
informal discovery in cases with employer
party-opponents. As we see it, requiring the formal
consent of an employer's counsel prior to contacting
former employees will only increase the costs of
litigation and possibly decrease the willingness of former

Page 3
1988 U.S. Dist. LEXIS 7985, *6

employees to provide information.
Our inquiry does not end here. As former general
counsel of Oak, Bradshaw undoubtedly possesses
information subject to the attorney-client privilege.
Therefore, Oak is justifiably concerned that Bradshaw
may have disclosed privileged [*7] information during
his conversations with Barclay. However, we cannot rule
today on whether Bradshaw did in fact disclose
privileged matters because the record does not reveal the
substance of the Barclay-Bradshaw conversations. Oak
may therefore conduct discovery on the subject matter of
Barclay's contacts with Bradshaw.
A similar problem is raised by Oak's motion alleging
violation of the protective order. The record does not
reveal what, if any, documents Bradshaw and Jedynak
received from Barclay. Therefore, Oak may discover
what documents Barclay did in fact send to Bradshaw
and Jedynak.
Zenith argues that the work product doctrine
prohibits discovery of any notes Barclay took during his
conversations with Bradshaw and Jedynak. Rule 26(b)(3),
which codifies the work product privilege, allows:
a party [to] obtain discovery of documents and
tangible things otherwise discoverable under subdivision
(b)(1) of this rule and prepared in anticipation of
litigation or for trial by or for another party or by or for
that other party's representative (including the other
party's attorney, consultant, surety, indemnitor, insurer, or
agent) only upon a showing that the party seeking
discovery [*8] has substantial need of the materials in
the preparation of the party's case and that the party is
unable without due hardship to obtain the substantial
equivalent of the materials by other means. In ordering
discovery of such materials when the required showing
has been made, the court shall protect against disclosure
of the mental impressions, conclusions, opinions, or legal
theories of an attorney or other representative of a party
concerning the litigation.
Rule 26(b)(3). Oak's desire to investigate a possible
breach of the attorney-client privilege or the protective
order certainly constitutes a "substantial need."
Moreover, it is difficult to imagine how Oak could obtain
the "substantial equivalent" of contemporaneous records
of Barclay's conversations from any other source. If
Zenith wishes to excise any passages or notes which
reflect only Barclay's legal theories or ideas, rather than

his summary of the conversations, it should move for an
appropriate protective order, Rule 26(c).
To summarize, we deny Oak's motion for relief from
ethics violations. We reserve ruling on whether Zenith
breached the protective order or whether Bradshaw
disclosed privileged information. Oak [*9] may conduct
discovery on Barclay's contacts with Bradshaw and
Jedynak, and may request production of Barclay's notes.
MOTION TO COMPEL DISCOVERY
Pursuant to Rule 30(b)(6), Oak called for Zenith to
produce a witness to testify regarding:
Any and all statements made, orally or in writing, by
or between Zenith on the one hand, and on the other
hand, any or all of Thompson-CSF, Philips NV, and any
other potential purchaser of Zenith's Consumer
Electronics.
Zenith argues that it need not produce a Rule
30(b)(6) witness because its discussions with potential
buyers of its consumer electronics group are irrelevant to
this case. We agree that discussions unrelated to the
patents at issue in this case are irrelevant. However, any
statements made by Zenith employees concerning the
patents at issue are relevant.
Zenith nevertheless contends that any such relevant
statements are protected by the attorney-client privilege
because they must have been based on "opinion of
counsel." Even assuming that such statements were the
product of Oak's legal counsel and protected by the
attorney-client privilege, Zenith waived the privilege by
disclosing such information to the potential buyers [*10]
of its consumer electronics group. See U.S. v. Lawless,
709 F.2d 485 (7th Cir. 1983) (disclosure may constitute
waiver of privilege).
The so-called "community of interest" exception to
the general rule that disclosure waives the attorney-client
privilege does not apply here. The leading "community of
interest" case is Duplan v. Deering Milliken, 397 F. Supp.
1146 (D.C.C. 1975). 2 In Duplan, the court held that
sharing confidential information with a third party who
has a "common legal interest" does not waive the
attorney-client privilege. "The key consideration is that
the nature of the interest be identical, not similar, and be
legal, not solely commercial." Id. at 1172. The Duplan
court strictly applied this "identical legal interest" test.

Page 4
1988 U.S. Dist. LEXIS 7985, *10

For example, it held that a party could disclose
information to an outsider who owed it a contractual duty
to serve as its patent law advisor. Id. at 1175. However,
the court found that the same party's disclosure of
confidential information to the exclusive licensee of its
patent constituted waiver because the licensee held only a
"commercial" interest, not a legal interest, in the
litigation. Id.
2 The parties have directed us to no Seventh
Circuit cases addressing the "community of
interest" exception. However, in a related
situation, the Seventh Circuit has held that the
sharing of confidential information between
codefendants' attorneys does not waive the
attorney-client privilege. U.S. v. McPartlin, 595
F.2d 1321 (7th Cir.), cert. denied. 444 U.S. 833
(1979).
[*11] It is true that many cases subsequent to
Duplan have interpreted the "community of interest"
exception more liberally. However, of the cases
addressing a party's disclosure of confidential
information during negotiations, almost all have held that
such disclosure waives the privilege. These cases have
held that whatever the common interest shared by parties
at the negotiating table, it is insufficient to warrant
application of the "community of interest" exception. See
Research Institute for Medicine and Chemistry v.
Wisconsin Alumni Research Foundation, 114 F.R.D. 672,
676-77 (W.D. Wis. 1987); Union Carbide v. Dow
Chemical, 619 F. Supp. 1036, 1050 (D. Del. 1985); SCM
v. Xerox. 70 F.R.D. 508, 512-13 (D. Conn. 1976).
Therefore, because Zenith did not share any common
protected interest in this case with the potential buyers of
its consumer electronics group, we hold that the
attorney-client privilege does not protect any disclosures
made during negotiations with those buyers.

We acknowledge that Hewlett-Packard v. Bausch &
Lomb, 115 F.R.D. 308, 4 U.S.P.Q.2d 167 (N.D. Cal.
1987), holds to the contrary on facts very similar to this
case. In Hewlett-Packard, the [*12] patent owner
disclosed its patent attorney's opinion letter during
negotiations with persons interested in purchasing one of
its divisions. Magistrate Brazil held that such disclosure
did not constitute waiver. In a thoughtful opinion,
Magistrate Brazil extended the "community of interest"
exception to potential buyers of one of the patent owner's
divisions. Nevertheless, we choose to follow the weight
of authority and hold that Zenith waived its
attorney-client privilege by disclosing confidential
information to potential purchasers. In light of the
Seventh Circuit's admonition to construe the privilege
narrowly, U.S. v. Lawless, 709 F.2d 485, 487 (7th Cir.
1983), we decline to expand the coverage of the
attorney-client privilege to information which a party
freely shares with other business persons. Such an
expansion -- to all persons with whom the party may
enter or consider entering into a business transaction -would quickly swallow up the general rule that disclosure
waives the attorney-client privilege. Moreover, it would
do little to promote the underlying purpose of the
privilege, that of encouraging open discussions between
clients and their attorneys.
CONCLUSION
[*13] We deny Oak's motion for relief from ethical
violations. We grant Oak's motion to compel discovery.
We reserve ruling on Oak's motion for violation of the
protective order and on all issues of attorney-client
privilege relating to Michael Barclay's discussions with
former Oak employees.
DATED: July 25, 1988