American Family Life Assurance Company of Columbus v. Intervoice Inc

Filing 46

ORDER construing 38 letter as a Motion to Compel and granting the same. Ordered by Judge Hugh Lawson on 7/28/2010. (nbp)

American Family Life Assurance Company of Columbus v. Intervoice Inc

Doc. 46

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION AMERICAN FAMILY LIFE ASSURANCE COMPANY OF C O LU M B U S , Plaintiff, : : : : : : : : :
: : : :

Civil Action No. 4:08-cv-167 (HL)

v. INTERVOICE, INC., Defendant. _______________________________

ORDER B e fo re the Court is a discovery dispute (Doc. 38). The Court construes the d i s p ute as a motion to compel the production of documents filed by Plaintiff A m e ri c a n Family Life Assurance Company of Columbus ("Aflac"). For the following re a s o ns , Aflac's motion is granted. I. B AC K G R O U N D T hi s breach of contract and fraud case was brought by Aflac against D e fe nd a nt Intervoice, Inc. ("Intervoice"). In 2001, Aflac agreed to purchase an i nte ra c ti v e voice response ("IVR") system from Intervoice. The purchase agreement c o nta i ne d a provision which required Intervoice to indemnify, hold harmless, and d e fe nd Aflac against any claim of patent infringement. (Compl. Ex. A ¶ 6). Ronald A. Katz Technology Licensing, L.P. ("RAKTL") holds patents for IVR p r o d uc ts . RAKTL communicated to Aflac that it believed Aflac's IVR system

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infringed against RAKTL's patents.

Pursuant to their agreement, Aflac asked

Inte rv o i c e to defend, hold harmless, and indemnify Aflac against RAKTL's claims. In response to Aflac's request, Intervoice affirmed its contractual obligation to i nd e m ni fy , hold harmless, and defend Aflac against claims of patent infringement. Inte rv o i c e , however, did not believe that this contractual obligation had been tri g g e re d by RAKTL's actions. Aflac's complaint alleges that Intervoice's refusal to defend Aflac against R A K T L 's patent infringement claims constituted a breach of the purchase agreement (C o m p l . ¶ 53). It also asserts that Intervoice committed fraud because it never i nte nd e d to honor its promise to indemnify, hold harmless, and defend Aflac against c l a i m s of patent infringement (Compl. ¶¶ 42, 44). According to Aflac, the fraud i nd uc e d Aflac to enter into the agreement (Compl. ¶ 44). D uri ng discovery Intervoice produced documents provided by Intervoice to the S e c uri ti e s Exchange Commission ("SEC") for public filing. Intervoice also produced a letter it sent to one of its customers, Cal-Fed, and a letter Intervoice's legal counsel s e nt to Cal-Fed. W i thi n the SEC filings was the following language: [Intervoice] has received opinions from its outside patent counsel that certain p ro d uc ts and applications offered by [Intervoice] do not infringe certain c l a i m s of the RAKTL patents. [Intervoice] has also received opinions from i ts outside counsel that certain claims under the RAKTL patent portfolio are i nv a l i d . Furthermore, based on the reviews by outside counsel, [Intervoice] i s not aware of any claims under the RAKTL portfolio that are infringed by

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[Intervoice's] products.1

T he Cal-Fed customer letters stated that "[Intervoice] has, in fact, received o p i ni o ns from its outside counsel that certain claims under the [RAKTL] patent p o r tfo l i o are invalid. Further, [Intervoice] has received opinions from its outside p a te nt counsel that certain products and applications offered by [Intervoice] do not i nfri ng e certain claims of the [RAKTL] patents."2 A fl a c contends that the opinions of outside counsel are discoverable because Inte rv o i c e disclosed the conclusion of the opinions to the public, via the SEC, and to Cal-Fed. In its privilege log, Intervoice identified six documents containing the o p i ni o ns . The parties do not dispute that the opinions are protected by the attorney c l i e nt privilege. The issue is whether Intervoice has waived the privilege, rendering the opinions discoverable. The Court heard oral argument on the motion on July 20, 2010. Intervoice has fi l e d six documents containing the opinions to the Court for in camera review. Having read the opinions and considered the arguments of the parties, the Court fi nd s that the opinions are discoverable and orders Intervoice to produce the d o c um e nts containing them.

SEC form 10-K for the years 2000, 2001, and 2002, and SEC form 10-Q for 2001. The forms were presented to the Court during the hearing on the motion.
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The customer letters were presented to the Court during the hearing on the 3

motion.

II.

AN AL Y S IS A. G e n e r a l Principles of Privilege Law

R u l e 501 of the Federal Rules of Evidence provides that in diversity cases, i s s ue s concerning the attorney client privilege shall be determined in accordance w i th state law. Fed.R.Evid. 501 ("[I]n civil actions and proceedings, with respect to a n element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness [or] person shall be determined in accordance with state l a w .") In this case, Georgia privilege law applies, but federal privilege law will be c o ns i d e re d by the Court as persuasive authority.3 T he attorney client privilege is intended to protect the attorney client r e l a ti o ns hi p by protecting communications between clients and attorneys. McKesson HBOC, Inc. v. Adler, 562 S.E.2d 809, 813 (Ga. Ct. App. 2002). The p ri v i l e g e is not absolute; it may be waived. Cox v. Adm'r U.S. Steel & Carnegie, 17 F .3 d 1386, 1417 (11th Cir. 1994). The privilege belongs to the client and it is the c l i e nt that must waive the privilege. W a l d ri p v. Head, 532 S.E.2d 380, 386 (Ga. 2 0 0 0 ). The party who defends a discovery request on the basis of privilege has the b urd e n of establishing that the privilege has not been waived. In re Keepr of

The Court applies Georgia law because the case was brought in a federal court in Georgia and because whether the attorney client privilege applies to the documents at issue is relevant to Aflac's fraud claim. In an earlier ruling, the Court found that Georgia law applies to Aflac's fraud claim. It will therefore apply Georgia privilege law to determine whether the documents at issue are discoverable. Also, it will refer to decisions of federal courts applying federal common law because decisions of federal courts are persuasive authority. McKesson, 562 S.E.2d at 81 n. 4. 4

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Records, 348 F.3d 16, 22 (1st Cir. 2003). There are many types of waiver; two are at issue in this case. First, a party m a y waive privilege is if "it injects into the case an issue that in fairness requires an e xa m i na ti o n of otherwise protected communications." Cox, 17 F.3d at 1422. The w a i v e r is called the subject matter waiver. Id. As described by the Sixth Circuit Court o f Appeals, a waiver occurs when "the pleading places at issue the subject matter o f a privileged communication in such a way that the party holding the privilege will b e forced to draw upon the privileged material at trial in order to prevail." In re Lott, 4 2 4 F.3d 446, 453 (6th Cir. 2005). In other words, "[t]o waive the attorney client

p ri v i l e g e by voluntarily injecting an issue in the case, a defendant must do more than m e re l y deny a plaintiff's allegations. The holder must inject a new factual or legal i s s ue into the case." Mohawk Indus., Inc. v. Interface, Inc., 2008 W L 5210386, * 8 (N .D . Ga. Sept. 29 2008) (citation omitted); Rhone-Poulenc Rorer Inc. v. Home Ind e m . Co., 32 F.3d 851, 863 (3d Cir.1994) (waiver occurs when the privilege holder "a s s e rts a claim or defense, and attempts to prove that claim or defense by d i s c l o s i ng or describing an attorney-client communication."). The Court of Appeals fo r the Federal Circuit has explained that when the privilege is waived pursuant to the subject matter waiver, then the waiver extends "to all such communications re g a rd i ng the same subject matter." In re EchoStar Commc'n Corp., 448 F.3d 1294, 1 3 0 1 (Fed. Cir. 2006). S e c o nd , a party may waive the privilege is if it voluntarily discloses the 5

privileged communication. Mohawk Indus., 2008 W L 5210386, at * 9; Bedford, K i rs c hne r & Venker, P.C. v. Goodman, 399 S.E.2d 723, 724 (Ga. Ct. App. 1990). "[A]t the point where attorney-client communications are no longer confidential, i.e., w he re there has been a disclosure of a privileged communication, there is no j us ti fi c a ti o n for retaining the privilege." In re Mentor Corp. ObTape Transobturator S l i ng Prod. Liab. Litig., 632 F. Supp. 2d 1370, 1380 (M.D. Ga. 2009) (citation o m i tte d ). If a significant portion of a confidential communication is disclosed, then the p ri v i l e g e is waived as to the whole communication. Nguyen v. Excel Corp., 197 F.3d 2 0 0 , 208 (5th Cir. 1999). According to the Second Circuit, if there has been a d i s c l o s ure of privileged material to a third party outside a judicial proceeding "letting the cat out of the bag, so to speak," then there is a waiver of the matters actually re v e a l e d . In re von Bulow, 828 F.2d 94, 103 (2d Cir. 1987). Further, although this matter involves Georgia privilege law, Federal Rules of E v i d e nc e Rule 502 speaks to the two types of waiver. "The Rule provides that a v o l unta ry disclosure . . . to a federal office or agency, if a waiver, generally results i n a waiver only of the communication or information disclosed; a subject matter w a i v e r . . . is reserved for those unusual situations in which fairness requires a furthe r disclosure of related, protected information . . . ." Fed. R. Evid. 502 Adv. C o m m . Note., Expl. Note (Revised 11/28/2007). B. W h e th e r Intervoice Waived the Attorney Client Privilege

A fl a c contends that Intervoice has waived the attorney client privilege because 6

Intervoice disclosed the conclusion of the opinions in public SEC forms and in its C a l -F e d letters. Aflac wishes to examine the opinions because they may contain re l e v a nt discovery material. The opinions may show whether Intervoice, at the time i t entered into its agreement with Aflac, intended to perform its contractual obligation to defend, hold harmless, and indemnify Aflac against patent infringement claims. Inte rv o i c e states the opinions are irrelevant because it has not relied upon the o p i n i o n s as a defense to Aflac's claims. Further, it claims that the opinions are o p i ni o n work product, and under the work product doctrine, they are not discoverable e v e n if there has been some disclosure of confidential information. T he Court finds that Intervoice has waived the attorney client privilege as to the opinions because it let the cat out of the bag by disclosing a portion of the p ri v i l e g e d opinions to third parties. The disclosure was significant because the heart o f the communication, the conclusion, was disclosed. The remainder of the

o p i ni o ns , the basis for the conclusion, are directly connected to the disclosure and the re fo re are now discoverable. "W he n otherwise privileged communications are d i s c l o s e d to a third party, the disclosure destroys the confidentiality upon which the p ri v i l e g e is premised." In re Keeper, 348 F.3d at 22. Moreover, the legal opinions m a y lead to the discovery of relevant information, mainly whether Intervoice knew tha t its products were susceptible to patent violations. See Fed. R. Evid. R. 26(b)(1) (s ta ti ng that the scope of discovery extends to relevant matter and matter that "a p p e a rs reasonably calculated to lead to the discovery of admissible evidence."). 7

The first type of waiver, the subject matter waiver, is inapplicable. Intervoice ha s not placed the opinions into issue by referencing them during the course of this l i ti g a ti o n. See Taylor v. Nix, 451 F. Supp. 2d 1351, 1354 (N.D. Ga. 2006) (finding tha t the subject matter waiver inapplicable because the defendant did not inject any i s s ue by referencing the legal documents). To the Court's knowledge, neither has Inte rv o i c e placed into issue any defense that would require the Court in fairness to a l l o w Aflac to review the privileged opinions or other privileged communications re l a te d to the opinions. Even so, the opinions are discoverable because Intervoice w a i v e d the privilege by disclosing the conclusion of the opinions to third parties. R ul e 502 also permits the disclosure of the opinions in their entirety. There i s no indication that Intervoice did not intend to disclose the conclusion of the o p i ni o ns to a government agency, the SEC. Since the disclosure was intentional, R ul e 502 provides that the remainder of the opinions are discoverable. The Court i s unaware of communications aside from the opinions that would require the Court to determine that they, in fairness, ought to be disclosed as part of a subject matter w a i v e r. The Court disagrees with Intervoice's assertion that the opinions are not d i s c o v e ra b l e because they are opinion work product. As explained by the Court of A p p e a l s for the Federal Circuit, "documents that embody a communication between the attorney and client . . . such as a traditional opinion letter" constitute work p ro d uc t. In re EchoStar, 448 F.3d at 1302. These communications, however, are 8

waivable, for example, when a party places part of the communication in issue. Id. In contrast, documents that contain an attorney's mental impressions, but were not c o m m uni c a te d to a client, are not subject to waiver. Id. (explaining that while a client m a y waive the immunity for work product contained in opinion letters communicated to the client, the "client does not waive his attorney's own analysis and debate over w ha t advice will be given."). Here, there is no question that the opinions were communicated by outside c o uns e l to Intervoice. At the moment the opinions were communicated to Intervoice, the y became subject to waiver. Intervoice waived the attorney client privilege as to the opinions because it disclosed the conclusion of the opinions to third parties, the S E C and Cal-Fed. As a result of Intervoice's actions, the remainder of the opinions a re discoverable. III. C O N C L U S IO N F o r the explained reasons, Aflac's motion (Doc. 38) is granted. Intervoice is o rd e re d to produce to Aflac the six opinions on or before August 6, 2010. If

Inte rv o i c e believes that any portion of the opinions should be not be disclosed then Inte rv o i c e must file a motion to redact or for a protective order. S O ORDERED, this the 28 th day of July, 2010. s / Hugh Lawson HUGH LAWSON, SENIOR JUDGE lm c

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