Nitsch v. Dreamworks Animation SKG Inc. et al

Filing 248

ORDER DENYING MOTION TO COMPEL. Signed by Judge Paul S. Grewal on March 30, 2016, re 213 . (psglc1S, COURT STAFF) (Filed on 3/30/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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IN RE ANIMATION WORKERS
ANTITRUST LITIGATION

Case No. 5:14-cv-04062-LHK

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ORDER DENYING MOTION TO
COMPEL

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(Re: Docket No. 213)

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United States District Court
Northern District of California

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Last week, the court ordered Defendant Pixar to submit for in camera review various

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documents involving former Pixar Executive Vice President and General Counsel Lois Scali. 1

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Pixar has asserted that these documents are subject to the attorney-client privilege.2

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Notwithstanding that assertion, and after considering evidence from Pixar supporting that

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assertion,3 the court held that Plaintiffs had shown there was “a reasonable, good-faith belief that

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review of the privileged documents may reveal evidence to establish the claim that the crime fraud

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exception applies.”4 The exception applies where (1) the client was engaged in or planning a

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criminal or fraudulent scheme when it sought the advice of counsel to further the scheme and (2)

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the attorney-client communications for which production is sought are “sufficiently related to” and

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See Docket No. 236.

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See Docket No. 221 at 16.

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See In re Napster Inc. Copyright Litig., 479 F.3d 1078, 1093 (9th Cir. 2007).

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Id. (quoting In re Grand Jury Investigation, 810 F.3d 1068, 1073 (9th Cir. 1992)); see Docket
No. 236 at 4-5.
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were made in furtherance of the intended, or present, continuing illegality.5

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In compliance with the court’s order, Pixar submitted the documents at issue.6 Together

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with a document index,7 Pixar also submitted a declaration from outside counsel explaining the

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organization of the documents and providing context to assist the court in its review.8
While Plaintiffs initially sought in camera review of the documents, what they ultimately

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seek is the documents’ production. Production, as compared to mere in camera review, carries a

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higher burden of proof than merely a “reasonable, good-faith belief.” In civil cases such as this

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one, that burden is preponderance of the evidence,9 or whether “it is more likely than not that the

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party resisting the disclosures sought or used legal advice to commit or to try to commit a crime or

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fraud.”10 Having read each and every document submitted, the court holds that Plaintiffs’ burden,

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United States District Court
Northern District of California

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at least as to the first part of the applicable test, is not yet met.
Plaintiffs contend that the criminal or fraudulent scheme here was an unlawful conspiracy

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to restrain competition for labor, in violation of Section 1 of the Sherman Act.11 15 U.S.C. § 1

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provides that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in

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restraint of trade or commerce among the several States, or with foreign nations, is declared to be

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illegal.” As the court explained earlier, while the Ninth Circuit has yet to consider the question,

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every other circuit that has done so has concluded that the crime fraud exception can apply in the

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context of a civil antitrust suit.12 It also is true, as Plaintiffs note, that the Department of Justice

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In re Napster Inc. Copyright Litig., 479 F.3d at 1090.

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See Docket No. 243.

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See Docket No. 243-1.

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See Docket No. 244-4.

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See In re Napster, 479 F.3d at 1094-95.

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Laser Indus. v. Reliant Techs., 167 F.R.D. 417, 441 (N.D. Cal. 1996).

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See Docket No. 213 at 18-21.

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See Docket No. 236 at 3 n.12; see also Rambus, Inc. v. Infineon Techs. AG, 222 F.R.D. 280, 288
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investigated and sued Pixar for a Section 1 violation on these same facts.13 But that case was

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settled without any admission by Pixar or adjudication of any violation of law.14
A bigger problem is that, beyond highlighting the “gentleman’s agreement” that it

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challenges in this case, Plaintiffs offer insufficient case law to establish their theory that this

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agreement might qualify as an illegal “restraint of trade.”15 As for evidence in support of their

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theory, Plaintiffs principally rely on the DOJ’s conclusions—which again, were never admitted or

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established.16 While enough to meet the lower threshold to trigger in camera review in

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conjunction with the materials cited in the court’s prior order,17 these conclusions are not enough

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to meet the higher standard of proof by preponderance of the evidence. Plaintiffs also point to
their own allegations in their complaint and the presiding judge’s ruling on Defendants’ motion to

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United States District Court
Northern District of California

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dismiss.18 But given the court’s obligation to “accept[] as true Plaintiffs’ factual allegations” and

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“make[] all reasonable inferences in favor of Plaintiffs” when deciding a motion to dismiss,19 the

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court’s ruling on the sufficiency of those allegations is irrelevant for purposes of establishing the

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crime-fraud exception applies.
Critically, nothing in the documents reviewed moves Plaintiffs closer to the goal line. Put

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another way, these documents do not establish a Section 1 violation by a preponderance of the

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(E.D. Va. 2004) (collecting cases applying exception beyond the confines of crime and fraud).

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See Docket No. 213 at 18-19.

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See Docket No. 221 at 2.

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Cf. Mistretta v. United States, 488 U.S. 361, 417 (1989) (Scalia, J., dissenting) (observing that
“a certain degree of discretion, and thus lawmaking, inheres” in construing what constitutes a
“restraint of trade” under the Sherman Act).
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See Docket No. 213 at 18-19; Docket No. 221 at 2.

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See Docket No. 245 at 5 n.17.

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See Docket No. 213 at 19.

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Docket No. 147 at 35 n.14.

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evidence any more than the materials previously considered. This does not mean that Plaintiffs

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are out of luck on the underlying claim—that is a question for a finder of fact on a complete

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record. It does mean that, on the record assembled and presented to the undersigned, Plaintiffs

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have not persuaded the undersigned that a per se violation is more likely than not. No production

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is warranted.

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SO ORDERED.

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Dated: March 30, 2016
_________________________________
PAUL S. GREWAL
United States Magistrate Judge

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United States District Court
Northern District of California

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Case No. 5:14-cv-04062-LHK
ORDER DENYING MOTION TO COMPEL