Immersion Corporation v. HTC Corporation et al

Filing 225

MEMORANDUM ORDER Granting in part and Denying in part 182 MOTION to Compel Further Discovery Regarding the Royalty Analysis for the Patents-in-Suit Performed by Stout Risius Ross (see Memorandum Order for further details). Signed by Judge Richard G. Andrews on 8/7/2014. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

IMMERSION CORPORATION,

Plaintiff,
V.

Civil Action No. 12-259-RGA

HTC CORPORATION, HTC AMERICA,
INC.,
Defendants.

MEMORANDUM ORDER

Presently before the Court is the Defendants' Motion to Compel Further Discovery (D.I.
182) of privilege log Entry Nos. 149, 151-54, 174-75, 177, and 180. (D.I. 213). The parties have
fully briefed this issue. (D.I. 182, 188, 189, 192, 202, 203, 213, 217, 221). The Court held a
discovery dispute conference on April 29, 2014. (D.I. 179). For the following reasons, the
Defendants' Motion to Compel is GRANTED IN PART and DENIED IN PART.

I.

Background
On June 10, 2014, this Court ordered the Plaintiff to provide a supplemental privilege log

regarding all documents in its control relating to SRR. 1 (D.I. 200). This Court subsequently
ordered the parties to provide letters detailing the documents sought by the Defendants, and the
Plaintiff's explanation for why each of these documents was privileged. (D.I. 210). The Plaintiff
asserts that the documents sought are either protected by attorney client privilege or attorney work
product. (D.I. 217 at 1-2). Regarding privilege, the Defendants argue that it does not apply as the

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SRR refers to Stout Risius Ross, Inc., the financial consulting firm hired by Immersion's counsel to conduct royalty
and licensing analysis. (D.1. 182 at 3).

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documents' purpose is related to business advice, not legal advice. (D.I. 182 at 3). The Defendants
also argue that work product immunity does not apply for the same reason. (Id.). In addition, the
Defendants argue that subject matter waiver applies to all the documents, regardless of whether
privilege or immunity applies, as during the parties' licensing negotiations the Plaintiff revealed
SRR's conclusions. (D.I. 221 at 2, 3; D.I. 182 at 3).

II.

Legal Standard
a. Attorney-Client Privilege
Pursuant to FED. R. Crv. P. 34(a), a party may serve on another party a request to produce all

relevant and non-privileged documents in the possession, custody, or control of the party served.
When the responding party fails to respond to the request or to produce the documents, the party
making the request may seek a court order to compel disclosure. FED. R. Civ. P. 34(b ).
An exception to the right to compel disclosure is attorney-client privilege, which protects
the communication between an attorney and a client. Wachtel v. Health Net, Inc., 482 F.3d 225, 231
(3d Cir. 2007). In order for it to be privileged, the communication between the attorney and the
client must concern legal assistance or advice. Id. at 231. The Supreme Court, in Upjohn Co. v.

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US., defined the scope of attorney-client privilege to "protect not only the giving of professional
advice to those who can act on it but also the giving of information to the lawyer to enable him to
give sound and informed advice." 449 U.S. 383, 391 (1981). Furthermore, the communication
must be made in confidence, between an attorney and an individual who is or seeks to be a client.
Wachtel, 482 F.3d at 231. When the communication between an attorney and non-legal personnel

primarily relates to business concerns, the communication is not within the scope of
attorney-client privilege. Id. Courts have recognized that "business and legal advice may often be
inextricably interwoven." Hercules, Inc. v. Exxon Corp., 434 F.Supp. 136, 147 (D. Del. 1977). For
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this reason, courts look to the documents' primary purpose to determine whether attorney client
privilege applies. Id. at 14 7.

b. Work Product Immunity
FED. R. CIV. P. 26(b) provides that a party may not obtain discovery regarding any materials
that are prepared in anticipation of litigation by or for another party or its representative. The
work-product doctrine seeks to grant attorneys a degree of privacy in preparing a client's case.
Hickman v. Taylor, 329 U.S. 495, 510-11 (1947). To qualify as work product, the material must

satisfy a three-part test detailed in Rule 26(b)(3 ). The material must be (1) "documents or tangible
things," (2) "prepared in anticipation oflitigation or for trial," (3) "by or for another party or by or
for that other party's representative." FED. R. CIV. P. 26(b)(3).
An exception to the work product doctrine applies when the documents sought are

prepared in the ordinary course of business. Holmes v. Pension Plan ofBethlehem Steel Corp., 213
F.3d 124, 138 (3d Cir. 2000); Fed. R. Civ. P. 26(b)(3). The party asserting work product immunity
bears the burden of showing that the sought documents were prepared "in the course of preparation
for possible litigation." Holmes at 138. If the party claiming work product immunity meets this
burden, then the party seeking production may obtain discovery "only upon a showing that the
party ... has a substantial need of the materials in preparation of the party's case and that the party
is unable without undue hardship to obtain the substantial equivalent of the materials by other
means." Id.; FED. R. CIV. P. 26(b)(3). The test employed by courts is whether "in light of the nature
of the document and the factual situation of the case, the document can fairly be said to have been
prepared or obtained because of the prospect oflitigation." US. v. Rockwell Int 'l, 897 F.2d 1255,
1265-66 (3d Cir. 1990). A document will be granted protection from disclosure ifthe court finds
that the primary purpose behind its creation was to aid in possible future litigation. Id. at 1266.
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III.

Discussion
The Plaintiff has provided the requested documents for in camera review. (D.I. 188, D.I. 203).

The Court has reviewed these documents. Immersion's business is the licensing of patents. All of
the requested documents were created by a financial consultant in aid of Immersion's licensing
program. Accordingly, the Court makes the following findings: 2
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Entry No. 149: This document is an email from Kiersten Garlipp, 3 of SRR, addressed to
the Plaintiff's outside counsel, and provides draft slides created by SRR. Plaintiff claims
this document is protected by attorney-client privilege. (D.I. 217 at 1). The Court finds this
document to be primarily for business purposes as it provides factual information about
licensing/royalty rates, the primary purpose of the Plaintiff's business. There is no
evidence that it was transmitted for the purpose of providing legal advice to Immersion.
Therefore this document is not protected by attorney-client privilege.

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Entry No. 151: This document is an email from Kiersten Garlipp addressed to the
Plaintiff's outside counsel and in-house counsel, and provides draft slides created by SRR.
Plaintiff claims this document is protected by attorney-client privilege. (D.I. 217 at 2). This
document is a different version of Entry No. 149, and is similarly not protected by
attorney-client privilege.

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Entry No. 152: This document is an email from Kiersten Garlipp addressed to the
Plaintiff's outside counsel and in-house counsel, and provides draft slides created by SRR.
Plaintiff claims this document is protected by attorney-client privilege. (D.I. 217 at 2). This

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As the Court finds that attorney client privilege and attorney work product immunity do not apply, it need not
determine the issue of waiver. Therefore, the Court expresses no opinion regarding waiver.
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At the time of the email, Kiersten Garlipp was employed by SRR as a Senior Analyst in Dispute Advisory and
Forensic Services.

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document is a third version of Entry No. 149, and is similarly not protected by
attorney-client privilege.
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Entry No. 153: This document is an email from Kiersten Garlipp addressed to the
Plaintiff's outside counsel and in-house counsel, and draft slides created by SRR. Plaintiff
claims this document is protected by attorney-client privilege. (D.I. 217 at 2). This
document is a fourth version of Entry No. 149, and is similarly not protected by
attorney-client privilege.

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Entry No. 154: This document is an email from Kiersten Garlipp addressed to the
Plaintiff's outside counsel and in-house counsel, and provides draft slides created by SRR.
Plaintiff claims this document is protected by attorney-client privilege. (D.I. 217 at 2). This
document is a fifth version of Entry No. 149, and is similarly not protected by
attorney-client privilege.

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Entry No. 174: This document was prepared by SRR and is a summary of the Plaintiff's
mobile license agreements. Plaintiff claims this document is protected as work product.
(D.I. 217 at 2). While the Court is not convinced that there is an evidentiary basis to
conclude it is protected by work product, the Court also sees no need to produce the
document as it merely factually summarizes license agreements that have already been
produced. Therefore, the Court will not require production of this document.

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Entry No. 175: This document was created by SRR and consists of draft slides that were
incorporated into the draft slides of the document attached to Entry No. 149. Plaintiff
claims this document is protected as work product. (D. I. 21 7 at 2). The Court finds that this
document was created for business purposes (licensing) using the same reasoning applied
to Entry No. 149. It therefore follows that this document is not protected as work product.
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Entry No. 177: This document was created by SRR and consists of draft slides that were
incorporated into the draft slides of the document attached to Entry No. 149. Plaintiff
claims this document is protected as work product. (D.I. 217 at 2). The Court finds that this
document was created for business purposes (licensing) using the same reasoning applied
to Entry No. 149. It therefore follows that this document is not protected as work product.

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Entry No. 180: This document was created by SRR and consists of a table that was
intended to be incorporated into the slides discussed above. Plaintiff claims this document
is protected as work product. (D.I. 217 at 2). The Court finds that this document was
created for business purposes using the same reasoning applied to Entry No. 149. It
therefore follows that this document is not protected as work product.

For the reasons provided above, it is ORDERED that the Defendants' Motion (D.I. 182,
213) is GRANTED IN PART and DENIED IN PART, and the Plaintiff shall produce, consistent
with the Memorandum Order, the following individual documents: Privilege Log Entry Nos. 149,
151-54, 175, 177, and 180.

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It is so ordered this _Ta_ <of August, 2014.
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