United Access Technologies LLC v. AT&T Inc. et al

Filing 243

MEMORANDUM ORDER: IT IS HEREBY ORDERED that AT&T's motion to compel discovery responsive to Categories 2 and 3 is DENIED (See D.I. 191, 192). Signed by Judge Leonard P. Stark on 6/12/20. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICTOF DELAWARE

United Access Technologies, LLC,
Plaintiff,
v.
AT&T Corp., AT&T Services, Inc.,
and SBC Internet Services, Inc.,
Defendants.

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C.A. No. 11-338-LPS

MEMORANDUM ORDER
At Wilmington this 12th day of June, 2020:
Pending before the Court is Defendants AT&T Corp., AT&T Services Inc., and SBC
Internet Services, Inc.’s (collectively, “AT&T”) motion to compel certain litigation
funding-related discovery from Plaintiff United Access Technologies, LLC (“UAT”). (See D.I.
191, 192) On a December 9, 2019 teleconference, the Court ordered UAT to produce for in
camera review disputed documents relating to communications to or from third parties regarding
potential investment by those third parties in UAT’s lawsuits (i.e., Category 2) and
communications to and from third parties relating to “quarterly updates” about UAT’s current
lawsuits (i.e., Category 3). 1 (D.I. 238 at 20-23) AT&T contends this information is not
privileged and should be produced (see D.I. 191 at 3), while UAT responds that production is not
required because litigation funding information is irrelevant, is protected by the work-product

1

AT&T also moved to compel documents reflecting UAT’s expenses in monetizing the
patents-in-suit, interests in the patents-in-suit, and the identity of contributors of money in
exchange for a percentage of UAT’s recovery from its lawsuits (i.e., Category 1). In view of
stipulations and representations made by the parties, the Court declined to order any relief with
respect to this portion of the motion. (D.I. 238 at 20-21)

doctrine, and is privileged (see D.I. 192).
Having now reviewed in camera the documents submitted by UAT that would be
responsive to Categories 2 and 3, and having considered the parties’ various filings (including
undocketed letters 2), IT IS HEREBY ORDERED that, for the reasons stated below, AT&T’s
motion to compel discovery responsive to Categories 2 and 3 is DENIED.
1.

Discoverability of litigation funding materials under Federal Rule of Civil

Procedure 26 is a contested issue on which there is no binding precedent in the Third Circuit.
See In re Valsartan N-Nitrosodimethylamine (NDMA) Contam. Prod. Liab. Lit., 405 F. Supp. 3d
612, 615 (D.N.J. 2019) (collecting cases and agreeing “with the plethora of authority that holds
that discovery directed to a plaintiff’s litigation funding is irrelevant”). Generally, when
confronted with this sort of dispute, close consideration of the subject matter in the disputed
documents (e.g., through in camera review) is a prudent approach. See, e.g., ART+COM
Innovationpool GmbH v. Google, Inc., C.A. 14-217 D.I. 196 (D. Del. Sept. 11, 2015) (finding,
after in camera review, agreements with plaintiff’s litigation financiers were irrelevant). That is
the course the Court has followed here.
2.

Having undertaken this review, the Court has concluded that AT&T has failed to

meet the threshold requirement to show that the litigation funding-related discovery it seeks here
is relevant. See Invensas Corp. v. Renesas Elecs. Corp., 2013 WL 12146531, at *2 (D. Del. May
8, 2013) (“When a party objects to discovery requests, the burden falls on the party seeking the
discovery to show the relevance of the information requested.”) (further citation omitted). In
support of relevance, AT&T points to Acceleration Bay LLC v. Activision Blizzard, Inc., 2018

2

UAT filed letters dated December 26, 2019 and January 31, 2020, while AT&T filed a letter
dated January 23, 2020. These letters are presently not on the docket. The parties should docket
them (with appropriate redactions should they belief redactions are warranted).
2

WL 798731, at *3 (D. Del. Feb. 9, 2018), for the broad proposition that communications with
prospective sources of funding, as well as subsequent litigation updates to eventual funders, are
“relevant to central issues like validity and infringement, valuation, damages, royalty rates, and
whether plaintiff is an operating company.” 3 (See D.I. 191 at 3; see also D.I. 238 at 7) But
Acceleration Bay does not hold (as no case could) that such materials are always relevant,
without any consideration of additional factors.
3.

In the instant case, AT&T merely speculates that the reasons underlying the order

requiring production in Acceleration Bay are also present here. But AT&T fails to articulate how
documents within the scope of Categories 2 and 3 are relevant to the specific claims or defenses
of this case. (See D.I. 238 at 8) (“Obviously, we have not seen these documents, so we don’t
know exactly what they contain, but generally the Acceleration Bay case holds that they are
relevant.”). Simply put, AT&T has not met its burden to show the relevance of the documents it
seeks. See generally Micro Motion, Inc. v. Kane Steel Co., Inc., 894 F.2d 1318, 1326 (Fed. Cir.
1990) (“[R]equested information is not relevant to ‘subject matter involved’ in the pending
action if the inquiry is based on the party’s mere suspicion or speculation . . . . [D]iscovery may
be denied where, in the court’s judgment, the inquiry lies in a speculative area.”).
4.

Further, having reviewed the numerous documents submitted for in camera

review by UAT, the Court finds that they do not appear to be relevant to any issue in this case. 4

3

As UAT correctly observes, the portion of Acceleration Bay relied on by AT&T is not
the express holding of the Court, but rather a quotation from the moving party’s brief. (See D.I.
238 at 14) Moreover, Acceleration Bay involved loans (as opposed to investments) and was a
review of a special master ruling – factors which may (or may not) have been pertinent to the
analysis and outcome there.
4

UAT organized its in camera submission of Category 2 and 3 documents as follows:
Section 1 – individual funder solicitations; Section 2 – communications with individual funders
who declined to do a deal; Section 3 – communications with individual funders who did a deal;
Section 4 – communications with entity funders who declined to do a deal; Section 5 –
3

5.

As AT&T has failed to carry its burden on relevance, the Court need not, and

does not, address the parties’ various additional disputes relating to work-product doctrine,
attorney-client privilege, common interest, parent-child privilege, and spousal privilege.

___________________________________
HONORABLE LEONARD P. STARK
UNITED STATES DISTRICT JUDGE

communications with an entity funder who did a deal; Section 6 – litigation updates provided to
individuals and entities entitled to recover a portion of litigation proceeds; and, Section 7 – a
control and distribution agreement.
4