Rally Manufacturing, Inc. v. Federal-Mogul Corporation
Filing
119
ORDER denying 84 Motion to Compel; denying 84 Motion for In Camera inspection. Signed by Magistrate Judge Edwin G. Torres on 7/21/2011. (EGT)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 10-23791-CIV-MOORE / TORRES
RALLY MANUFACTURING, INC.,
Plaintiff,
vs.
FEDERAL-MOGUL CORPORATION
Defendant.
____________________________________/
ORDER DENYING PLAINTIFF’S MOTION TO COMPEL
This matter is before the Court on Plaintiff Rally Manufacturing, Inc.’s (“Rally”)
Motion to Compel, [D.E. 87] and Defendant Federal-Mogul Corporation’s (“FM”)
Response thereto, [D.E. 104]. Upon consideration of the Motion and Response, the
Court hereby denies Rally’s Motion to Compel.
I. BACKGROUND
This lawsuit stems from Rally’s Complaint for infringement of U.S. Patent No.
6,279,746 (“the ‘746 Patent”) under 35 U.S.C. § 271. [D.E. 1 at ¶ 5]. Rally claims that
as a result of its in-house design efforts, Rally obtained the ‘746 Patent on August 28,
2001 and that FM imports, sells, distributes, and offers for sale packaging for wiper
blades covered by the ‘746 Patent. [D.E. 1 at ¶ 8, ¶17]. In its Answer, FM denies that
the ‘746 Patent is enforceable and states that FM has not infringed any valid claim of
the ‘746 Patent. [D.E. 33]. Additionally, FM has filed a counterclaim alleging that the
‘746 Patent is invalid for failing to meet the conditions of patenability set forth in Title
35 of the United States Code, including without limitation 35 U.S.C. §§ 102, 103, 112,
and 116. [D.E. 33].
In the course of discovery, FM produced document FM00354 on February 9, 2011
in response to Rally’s Request for Production. [D.E. 87 at 8]. Testimony about the
document was taken on April 13, 2011 during the deposition of FM’s 30(b)(6)
representative. [D.E. 87 at 7]. The witness testified about document FM00354 and at
the end of his testimony counsel stated:
MR. ARTZ: I’d like to go on the record that may be a document that’s
protected by the privilege and, if so, we’ll have to get it back.
MR. WHITE: Oh, sure.
MR. ARTZ: I don’t know. I’ll check on that [a privilege] and let you know.
MR. WHITE: Sure.
[D.E. 87 at 7-8]. On April 26, 2011, in accordance with the Protective Order [D.E. 35],
FM requested the return of the document based on inadvertent production and the
attorney-client privilege. Rally promptly returned the document but now moves for an
order compelling its production. Alternatively, Rally requests that the Court conduct
an in camera inspection to determine whether the document is in fact privileged. [D.E.
87 at 2].
II. ANALYSIS
The federal common law of privilege applies to all claims in a federal question
case. See Hancock v. Hobbs, 967 F.2d 462, 467 (11th Cir. 1992). A claim of attorneyclient privilege requires proof of the following elements:
Where legal advice of any kind is sought (2) from a professional legal
advisor in his capacity as such, (3) the communications relating to that
purpose, (4) made in confidence (5) by the client, (6) are at his instance
permanently protected (7) from disclosure by himself or by the legal
advisor, (8) except the protection may be waived.
Provenzano v. Singletary, 3 F. Supp. 2d 1353, 1366 (M.D. Fla. 1997), aff’d, 148 F.3d
1327 (11th Cir. 1998) (quoting Int’l Tel. & Tel. Corp. v. United Tel. Co., 60 F.R.D. 177,
184-85 (M.D. Fla. 1973)). The party asserting the privilege has the burden of proving
the existence of the privilege. United States v. Schaltenbrand, 930 F.2d 1554, 1562
(11th Cir. 1991). The privilege extends to communications from an attorney to his
client, as well as the reverse. Knights Armament Co. v. Optical Sys. Tech., Inc., No.
6:07-cv-1323-Orl-22KRS, 2009 WL 331608 at *2 (M.D. Fla. Feb. 10, 2009) (citing
United States v. Pepper’s Steel & Alloys, Inc., No. 87-1306-CV, 1991 WL 1302864, at
*3 (S.D. Fla. Mar. 19, 1991)).
When a corporation is a client, communications between any corporate
employee, acting within the scope of his corporate duties, and an attorney for the
corporation through which the corporation may obtain legal advice, may be privileged.
Id. at *2 (citing Upjohn Co. v. United States, 449 U.S. 383, 394, 101 S.Ct. 677, 66 L. Ed.
2d 584 (1981)). Additionally, “the protection of the privilege extends only to
communications and not to facts . . . The client cannot be compelled to answer the
question, ‘what did you say or write to the attorney?’ but may not refuse to disclose any
relevant fact within his knowledge merely because he incorporated a statement of such
fact into his communication with his attorney.’” Upjohn Co., 449 U.S. at 395-96
(quoting Philadelphia v. Westinghouse Elec. Corp., 205 F. Supp. 830, 831 (1962)).
In this instance, Rally moves for an order compelling the production of document
FM00354. However, FM argues that document FM00354 is privileged as demonstrated
by the Declaration of MaryAnn Perttunen, former in-house counsel for FM. Ms.
Perttunen’s Declaration establishes the following pertinent information: (1) on January
5, 2010, FM’s legal department received a letter from Mr. Joseph Berenato, the patent
counsel for Rally, referring to the ‘746 Patent; (2) in response, Ms. Perttunen took steps
to investigate the matter and corresponded internally with management persons at
FM; and (3) Document 00354 was one of the responses sent to Ms. Perttunen by one
of the FM persons based on her request during the investigation. [D.E. 104; Ex. B.].
Furthermore, FM explains that Document 00354 “was created in response to [Ms.
Perttunen’s] request for information pertaining to an ongoing legal investigation.”
[D.E. 104 at 4] [emphasis added].
On this record, this Court finds that Document 00354 is protected by the
attorney-client privilege because: (1) FM sought legal advice from in-house counsel; (2)
Ms. Perttunen is a professional legal advisor; (3) Document 00354 is a communication
relating to that purpose; (4) the communication was made in confidence; and (5) the
communication was made by the client, FM. See Provenzano, 3 F. Supp. 2d at 1366
(establishing the elements of the attorney-client privilege).
Consequently, Document 00354 is covered by the attorney-client privilege
because it constitutes a “communication” between a client and an attorney that was
created in response to an ongoing legal investigation. See Philadelphia, 205 F. Supp
at 831 (explaining the difference between a “communication” and a “fact” for the
purpose of the attorney-client privilege); See also Lott v. Seaboard Sys. R.R., Inc., 109
F.R.D. 554, 556 (S.D. Ga. 1985) (stating that “since the questions propounded to Mr.
Hunt sought facts and not what he had communicated to SBD’s attorneys, defendant
had no grounds to assert the privilege.”).
Additionally, the Protective Order entered in this case expressly contemplates
this type of situation where a privileged document is inadvertently produced.
Paragraph 19 of the Protective Order provides:
The inadvertent or mistaken production of Discovery Material subject to
a claim of attorney-client, work product, or other privilege shall not be
deemed a waiver of a claim of privilege, either as to the specific
information disclosed or as to any other information relating thereto or
on the same or related subject matter. A Producing Party that mistakenly
or inadvertently produces Discovery Materials subject to a claim of
attorney-client, work product, or other privilege may, promptly upon
discovery of such disclosure, request the Receiving Party to return the
Discovery Material.
[D.E. 35 at ¶ 19]. Moreover, the Federal Rules of Civil Procedure expressly provide the
following controlling language:
If information produced in discovery is subject to a claim of privilege or
of protection as trial-preparation material, the party making the claim
may notify any party that received the information of the claim and the
basis for it. After being notified, a party must promptly return . . . the
specified information and any copies it has.
Fed. R. Civ. P. 26(b)(5)(B). Accordingly, we find finds that FM’s inadvertent production
of Document 00354 does not constitute a waiver for the purpose of the attorney-client
privilege.
Rally nevertheless seeks production of Document 00354 on the premise that FM
waived the attorney-client privilege for failing to “promptly” request Rally to return the
document, as required by the Protective Order. Rally argues that “[f]or more than two
months, FM made no claim that the document was privileged.” [D.E. 87 at 7]. However,
the facts reveal that FM became aware of the inadvertent production and/or mistake
on April 13, 2011 and formally requested a return of the document on April 26, 2011.
Although the Protective Order does not define “promptly,” a thirteen-day period
between April 13, 2011 and April 26, 2011 is insufficient to constitute a waiver of the
privilege in the modern legal world. See In re Southeast Banking Corp. Securities and
Loan Loss Reserves Litigation, 212 B.R. 386, 394 (S.D. Fla. 1997) (upholding a similar
non-waiver provision of an agreed protective order).
Rally’s final argument is equally unpersuasive. Rally attempts to argue that FM
waived its privilege under the sword and shield doctrine because FM is using
Document 00354 as a sword in its counterclaim by stating that “Rally’s ‘746 Patent is
invalid as being obvious under 35 U.S.C. § 103.” [D.E. 87 at 9]. Rally adds that
“[c]opying is evidence of non-obviousness . . . and that the jury should be allowed to
evaluate that evidence when assessing FM’s validity challenge to the patent.” Id.
Further, Rally states that “[FM] should not be permitted to use the privilege as a
shield when alleging that it did not copy the patented device, while using it as a sword
when alleging that the ‘746 Patent is invalid as being obvious.” Id. However, Rally has
erroneously applied the sword and shield doctrine to the present facts. See GAB Bus.
Serv., Inc. v. Syndicate 627, 809 F.2d 755, 762 (11th Cir. 1987) (stating that “it is the
rule in Florida that a party who bases a claim on matters which would be privilege, the
proof of which will necessitate the introduction of privileged matter into evidence, and
then attempts to raise the privilege so as to thwart discovery, may be deemed to have
waived that privilege . . .”).
Here, FM has not based its counterclaim on a matter which would be privileged
and has not used Document 00354 as a basis for its counterclaim. Furthermore, the
“proof” needed to prove FM’s counterclaim does not “necessitate the introduction” of
Document 00354 into evidence. In other words, FM has not injected the issue by filing
its counterclaim. Rather, it is Rally that has injected the issue of Document 00354 as
a defense by stating that “[c]opying is evidence of non-obviousness.” In sum, FM has
not used Document 00354 as a “sword” in its counterclaim; therefore, the Court finds
no waiver under this doctrine. See, e.g., Tolz v. Geico Gen. Ins. Co., No. 08-80663-CIV,
2010 WL 384745 at *4 (S.D. Fla. Jan. 27, 2010) (holding that the issue injection
doctrine does not apply if the opposing party injects the issue).
The Plaintiff Rally has also suggested in camera review of Document 00354 to
determine whether the document is privileged and whether FM has waived the
privilege through production, coupled with delay and incomplete assertion of privilege.
The Court denies Rally’s request for in camera review based upon our determination
that: (1) the Protective Order is controlling over the waiver issue; (2) the thirteen day
delay in requesting return of the document was not unreasonable; and (3) Ms.
Perttunen’s declaration establishes the required elements of the attorney-client
privilege. Rally has not proffered to us any evidence that undermines the validity of
Ms. Perttunen’s Declaration. Rally may certainly choose to depose those persons
knowledgeable of the underlying facts, which deposition may verify or undermine the
representations in the declaration. On this record, the court’s review of Document
00354 appears unnecessary.
III. CONCLUSION
Accordingly, this Court determines that Document 00354 was properly withheld
from production based on the attorney-client privilege. Therefore, Rally’s Motion to
Compel production of Document 00354 and Rally’s request for an in camera review is
denied.
DONE AND ORDERED in Chambers at Miami, Florida, this 21st day of July,
2011.
/s/ Edwin G. Torres
EDWIN G. TORRES
United States Magistrate Judge
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