Safety Braking Corporation et al v. Six Flags Inc. et al

Filing 408

MEMORANDUM ORDER re discovery issues: IT IS HEREBY ORDERED as follows -- 1. The First Objections (D.I. 274) are OVERRULED. 2. Magistrate Judge Thynge's April 18, 2012 Order (D.I. 282 Ex. A) is AFFIRMED. 3. The Second Objections (D.I. 315) are OVERRULED. 4. Magistrate Judge Thynge's August 22, 2012 Memorandum Order (D.I. 312) is AFFIRMED. Signed by Judge Leonard P. Stark on 2/7/14. (ntl)

IN THE UNITED STATES DISTRICT COURT

I

FOR THE DISTRICT OF DELAWARE
Magnetar Technologies Corp., and
G&T Conveyor Co.,
Plaintiffs,

v.

Civ. No. 07-127-LPS-MPT

Six Flags Theme Parks Inc., et al.,
Defendants.

j

MEMORANDUM ORDER 1

WHEREAS, on April 18, 2012, Magistrate Judge Mary Pat Thynge held a teleconference
with counsel to address certain discovery issues involving assertions of attorney-client privilege
and work product immunity relating to documents produced by third-party Acacia Research
Corporation ("Acacia"), the parent of former plaintiff Safety Braking Corporation ("SBC"), in
response to a subpoena in another case (see Transcript of April 18, 2012 hearing (D.I. 282 Ex. A
and, hereinafter, "April 18th Tr." and/or "April18, 2012 Order"); see also D.I. 268, 269, 271,
272,273,277,278)!
1

The Court writes primarily for the parties, who are thoroughly familiar with the
background and disputes in this case.
2

The materials at issue included various documents produced by Acacia in certain
California litigation, including the "Zelley memorandum." In March 2012, Defendants in the
instant action had issued a subpoena ad testificandum to Geoffrey Zelley, an associate attorney at
Connolly Bove Lodge & Hutz LLP ("CBLH"), the law firm that formerly represented Plaintiffs
in this matter, including former plaintiff SBC. One purpose of deposing Mr. Zelley was to ask
him about a memo he had prepared while representing Plaintiffs, i.e., the "Zelley memorandum."
As Judge Thynge summarized in her August 22,2012 Memorandum Order:
On April 18, 2012, this court addressed issues of attorney-client

I

i

I

I
I

WHEREAS, Plaintiffs G&T Conveyor Co. ("G&T") and Magnetar Technologies Corp.
("Magnetar"), as well as CBLH, timely objected to Judge Thynge's April18, 2012 Order ("First
Objections") (D.I. 274);
WHEREAS, by their First Objections, Plaintiffs contended that Mr. Zelley's deposition
should not go forward due to the risk of a waiver of attorney client privilege and attorney work
product, that the Zelley memorandum and other assertedly privileged documents should be
returned, and that Defendants should not be able to further use such documents (see id.; see also

l
I

D.I. 296, 297, 298);
WHEREAS, Defendants responded to the First Objections, urging the affirmance of
Judge Thynge's decision and requesting that the deposition of Mr. Zelley proceed (see D.I. 276;

see also D.I. 303);
t
I

l

I

l
I
!

I
1

l
l

WHEREAS, Defendants thereafter filed a motion to compel the production of certain
privilege and work product protection with respect to the Zelley
memorandum and the proposed Zelley deposition. The court ruled
the factual part of the Zelley memorandum was discoverable, but
the impressions of counsel contained in the document were not. In
addition to an attorney-client privilege analysis, the court
considered the work product protection and looked at when the
memorandum was produced and to whom. Since Zelley produced
the memorandum to counsel, although there could be a waiver of
attorney-client privilege, it did not also mean waiver of the work
product doctrine occurred. Noting the attorney-client privilege is
the client's privilege and the work product immunity is only
invoked by the attorney, the court concluded waiver of the
attorney-client privilege did not necessarily waive the work product
immunity. The court also noted there may be a joint representation
argument on the behalf of Acacia, Magnetar and G&T. Finally, the
court allowed the deposition to move forward, but limited it to
what Zelley remembered from his interviews with BAE engineers.
(D .I. 312 at 6-7 (footnotes omitted))
2

disputed documents and portions of documents subject to Plaintiffs claims of attorney-client
privilege and work product protection, and therein requested that Plaintiffs' and CBLH's
objections to such production be overruled (the "Motion to Compel") (D.I. 279; see also D.I.
280, 291, 303);
WHEREAS, Plaintiffs and CBLH objected to the Motion to Compel (D.I. 281, 283; see

also D.I. 282, 284, 285, 286, 287, 288, 292, 293, 296, 297, 298), requesting that the Court deny
the motion;
WHEREAS, on August 22,2012, Judge Thynge issued a Memorandum Order granting in
part and denying in part the Motion to Compel (see D.I. 312 at 37-40);
WHEREAS, Plaintiffs timely objected to the August 22,2012 Memorandum Order
("Second Objections") (D.I. 315);
WHEREAS, by their Second Objections, Plaintiffs objected to that part of the ruling
concerning the destruction of documents, and the resulting sanction imposed therein, 3 i.e.,
although Judge Thynge found no bad faith by Plaintiffs in connection with the destruction of
certain documents, nonetheless she ordered that, as a sanction, some documents containing
privileged attorney-client communications should be produced (see id. at 1, 4-5);
WHEREAS, Plaintiffs specifically contend Judge Thynge erred: (1) "in finding that
Magnetar had control of any of the documents in question;" (2) "in finding that G&T had control
over the documents sent by [BAE Automated Systems, Inc. ("BAE")] to BAE's Denver law firm
in 1997 or 1998, years prior to G&T's purchase of some of BAE's assets;" (3) "in imposing a

3

Plaintiffs note their objections also overlap with their objections to Judge Thynge's April
18, 2012 Order. (See D.I. 315 at 1)

3

i

I

j

1

1

I

sanction even though there was no finding that anyone intended to suppress evidence;" (4) "in

I

failing to consider that the defendants have not been prejudiced because they say the evidence
available to them supports their view that a summary judgment of invalidity ofthe [U.S. Patent
No. 5,277,125] is warranted;" and (5) "in ignoring unrebutted evidence that the document
custodians did not destroy evidence believed to be relevant to litigation, and in fact gathered
evidence relevant to this litigation" (id. at 9-1 0);
WHEREAS, Plaintiffs further assert that, even if Judge Thynge was correct, "the only
relief warranted by the cases cited in the [August 22, 2012] Order would have been the
production of litigation hold letters" (id. at 10);
WHEREAS, Defendants responded to Plaintiffs' Second Objections, urging the
affirmance of the Magistrate Judge's rulings and contending that "there is abundant evidence to
support Magistrate Thynge's finding of spoliation," and that the "sanction imposed was neither
clearly erroneous nor contrary to law" (D.I. 321 at 2);
WHEREAS, "[p]ursuant to 28 U.S.C. § 636(b)(1)(A) and Federal Rule of Civil
Procedure 72(a), non-dispositive pre-trial rulings made by Magistrate Judges on referred matters
should only be set aside if clearly erroneous or contrary to law." Leader Techs., Inc. v.
Facebook, Inc., 719 F. Supp. 2d. 373,375 (D. Del. 2010). A Magistrate Judge's finding is

clearly erroneous if it "(1) is completely devoid of minimum evidentiary support displaying some
hue of credibility, or (2) bears no rational relationship to the supportive evidentiary data." /d.
(citing Haines v. Liggett Group, Inc., 975 F.2d 81, 92 (3d Cir. 1992)).
WHEREAS, the Court has considered the Magistrate Judge Thynge's rulings and
objections and related pleadings and responses thereto;

I

I
l

l

J

4

NOW THEREFORE, IT IS HEREBY ORDERED that:
1.
2.

Magistrate Judge Thynge's April18, 2012 Order (D.I. 282 Ex. A) is AFFIRMED.

3.

l

The First Objections (D.I. 274) are OVERRULED.

The Second Objections (D.I. 315) are OVERRULED.

4.

Magistrate Judge Thynge's August 22, 2012 Memorandum Order (D.I. 312) is

AFFIRMED.
5.

The Magistrate Judge's April2012 ruling, which followed a teleconference lasting

more than 90 minutes, and her August 2012 written decision, which runs to 40 pages, are
comprehensive and well-reasoned. Judge Thynge reached her decisions only after giving all
sides ample opportunity to present their positions, and she thoroughly addressed their competing
contentions. Hence, most of the points raised by the parties do not require further discussion.
6.

The Court concludes that Judge Thynge's findings were neither clearly erroneous

nor contrary to law.
a.

For example, in relation to the April2012 decision, the Court agrees with

Defendants that Judge Thynge "properly considered Defendants' substantial need for the
information contained in the Zelley Memo and permitted the deposition to go forward on that
basis," and further that she "properly reasoned that Plaintiffs' spoliation of evidence and other
litigation misconduct have created a substantial need for the information contained in the Zelley
Memo- information that is no longer available to the Defendants by any other means." (D.I. 276
at 7, 12)
b.

In her August decision, Judge Thynge found that the subject documents

"were clearly under the control of G&T at the time of their destruction. Although the instant

I

I

l

l

5

matter does not involve the typical intentional withholding of the documents as is routinely
involved for an inference, G&T's control of the documents and the potential prejudice to
defendants, makes an inference a possible sanction for spoliation." (D.I. 312 at 35) Judge
Thynge further found that hundreds of boxes of documents were lost, potentially including
"documents [that] could have aided [Defendants] on the issue of invalidity ofthe '125 patent."

(Id at 34) Judge Thynge thoughtfully exercised her discretion in concluding that "[a]lthough the
absence of evidence of bad faith spoliation does not warrant dismissal or entering an unfavorable
judgment, the lack of reasonable preservation measures and prejudice weighs in favor of a lesser
sanction." (Id.) She ultimately held that "[d]ue to the extensive number of documents destroyed,
the potential prejudice their destruction may have caused ... and the occurrence of the
destruction after the start of litigation, the spoliation here is a serious matter worthy of sanction."

(Id.; see also D.I. 321 at 10 (Defendants arguing, "[b]efore imposing an appropriate sanction,
[Judge Thynge] properly considered G&T's fault, the prejudice to the defendants, and the
availability of other, lesser sanctions"))
7.

The Court concludes that Judge Thynge properly considered and balanced the

need to discover potentially relevant evidence in light of the concerns and conduct of all relevant

l

parties. The challenged decisions are not clearly erroneous nor based on an error of law, nor is
there any basis for concluding that Judge Thynge abused her discretion in any manner.

February 7, 2014
Wilmington, Delaware

I

l,
]

l

j

l

6