Freeman Equipment, Inc. v. Caterpillar, Inc.

Filing 40

MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 3/13/2017. Mailed notice. (mgh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

Freeman Equipment, Inc.,
Plaintiff,
v.
Caterpillar, Inc.,
Defendant.

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No. 16 C 9172

MEMORANDUM OPINION AND ORDER
In this patent infringement suit, plaintiff alleges that
defendant Caterpillar manufactures and sells heavy duty tractor
crawlers

incorporating

“final

drive

guard

assemblies”

that

infringe three of plaintiff’s patents. Before me is defendant’s
motion to disqualify plaintiff’s counsel, which I deny for the
following reasons.
I.
Defendant asserts two bases for disqualification: first,
that plaintiff’s counsel, Michael Padden, spoke by telephone to
William

Perry,

a

retired

“Caterpillar’s

internal

procurements,”

without

legal

Caterpillar
practices

disclosing

to

employee,

pertaining
Mr.

Perry

to

about
patent

that

he

represented an entity suing Caterpillar for patent infringement;
and second, that Mr. Padden previously represented Caterpillar

in

a

patent

infringement

litigation.

Defendant

seeks

to

disqualify both Mr. Padden and his law firm from representing
plaintiff in this action.
Defendant’s chief complaint is that Mr. Padden called Mr.
Perry on February 2, 2017, and, without identifying himself or
his client, asked Mr. Perry whether he recalled a conversation
he had had with Ernie Freeman (the owner of Freeman Equipment)
at a tradeshow in 2008. Perry Decl., Exh. 1 to Def.’s Mot. at
¶ 4. Mr. Perry responded that he did not. Id. Mr. Padden also
asked:

1)

whether

Caterpillar

had

any

internal

process

for

evaluating and drafting patent applications, and if so, what
that process was; and 2) about Caterpillar’s inventor disclosure
form, and the incentives Caterpillar uses to encourage employees
to disclose patentable inventions. Id. at ¶¶ 5-6. Finally, Mr.
Padden

allegedly

asked

“if

anyone

at

Caterpillar

would

ever

attempt to falsely represent an idea as their own in order to
obtain

a

patent

or

other

reward.”

Id.

at

¶ 6.

The

Perry

Declaration does not disclose how Mr. Perry responded to these
questions.

It

states

that

the

conversation

lasted

twenty

to

thirty minutes. Id. at ¶ 7.
Plaintiff

disputes

that

Mr.

Padden

failed

to

identify

himself during the call with Mr. Perry. Plaintiff points to Mr.
Padden’s declaration, which states that at the outset of the
call, he introduced himself by name and explained that he was an
2

attorney

representing

plaintiff

in

a

patent

case

against

Caterpillar involving final drive guards. Padden Decl., Exh. 3
to Pl.’s Resp., at ¶ 6. Mr. Padden further states that he asked
Mr. Perry if he would be willing to answer some questions about
Mr. Freeman’s guards, and that Mr. Perry agreed. Id. at ¶ 7. The
Padden

Declaration

goes

on

to

describe

the

nature

of

Mr.

Padden’s questions and of Mr. Perry’s answers. Id. at ¶¶ 8-9.
Mr.

Padden

acknowledges

procedures

for

asking

evaluating

and

Mr.

Perry

patenting

“about
new

the

general

inventions

at

Caterpillar,” and states that he told Mr. Perry he “only wanted
a general outline of the process, not any specific details or
confidential

information.”

affirmatively

that

Mr.

Id.

Perry

at

did

¶ 10.
not

Mr.

“talk

Padden

about

states

any

legal

advice he had seen or received at Caterpillar, or about any
specific internal matter.” Id. at ¶ 11.
Secondarily,
required

based

Caterpillar

“in

defendant
on

Mr.

a

number

argues

Padden’s
of

that

disqualification

is

representation

of

previous

litigations,

including

a

patent

infringement litigation.” Def.’s Mem. at 12. In support of this
argument, defendant attaches Mr. Padden’s notice of appearance
in a case captioned Global Patent Holdings LLC v. Green Bay
Packers, Inc., et al., No. 00 C 4623 (N.D. Ill. 2000), which
identifies
Yashar

Mr.

Decl.,

Padden
Exh.

as

10.

local

counsel

Defendant
3

also

for

Caterpillar.

refers

to

See

another,

unidentified patent infringement suit in which Mr. Padden “was
involved...for Caterpillar,” Def.’s Mem. at 13, but offers no
evidence of that litigation or of Mr. Padden’s role in it.
Mr. Padden, for his part, confirms that he acted as local
counsel for Caterpillar in Global Patent Holdings, a case he
recalls

as

involving

functionality

against

“a
a

patent

wide

on

variety

some
of

type

of

website

businesses.”

Padden

Decl. at ¶ 2. Mr. Padden attaches to his Declaration a copy of
the docket in Global Patent Holdings, which reflects that the
only substantive pleading filed on Caterpillar’s behalf was an
answer and counterclaim, which was filed by Caterpillar’s lead
counsel. Padden Decl., Exh. A at DN 98. Mr. Padden states that
the

case

was

stayed

pending

reexamination

of

the

asserted

patent, and was later dismissed without prejudice by agreement
of all parties in view of the ongoing reexamination proceedings.
Padden Decl. at ¶ 4. Mr. Padden does not recall having been
involved in any substantive analysis of the complaint or of
Caterpillar’s counterclaims, or having access to Caterpillar’s
confidential information. Id. at ¶ 5.
II.
Motions for disqualification are evaluated using a two-step
analysis. First, I consider whether an ethical violation has
occurred. Second, if I find that there has been a violation, I
determine whether disqualification is the appropriate remedy.
4

Guillen v. City of Chicago, 956 F. Supp. 1416, 1421 (N.D. Ill.
1997). The Seventh Circuit has cautioned that disqualification
“is a drastic measure which courts should hesitate to impose
except when absolutely necessary.” Freeman v. Chicago Musical
Instrument Co., 689 F.2d 715, 721 (7th Cir. 1982). The court
emphasized

that

because

disqualification

deprives

a

party

of

representation of its choosing, motions to disqualify “should be
viewed

with

extreme

caution

for

they

can

be

misused

as

techniques of harassment.” Id. at 722. Accordingly, the movant
“bears

a

heavy

burden

of

proving

facts

required

for

disqualification.” Guillen, 956 F. Supp. at 1421.
Defendant argues that Mr. Padden’s phone call to Mr. Perry
violated Rules 4.3 and 4.4 of the Illinois Rules of Professional
Conduct. Rule 4.3 provides:
In dealing on behalf of a client with a person who is
not represented by counsel, a lawyer shall not state
or imply that the lawyer is disinterested. When the
lawyer knows or reasonably should know that the
unrepresented person misunderstands the lawyer’s role
in the matter, the lawyer shall make reasonable
efforts to correct the misunderstanding.
In re Air Crash Disaster Near Roselawn, Indiana on October 31,
1994, 909 F. Supp. 1116, 1123 (N.D. Ill. 1995). On its face, the
Perry Declaration does not suggest that Mr. Padden either stated
or

implied

that

he

was

“disinterested”

in

this

litigation.

Rather, Mr. Perry states that Mr. Padden did not mention the
litigation at all. In defendant’s view, that omission was an
5

ethical breach because Mr. Padden had an affirmative duty to
inform Mr. Perry of the litigation, his role in it, and the fact
that

his

client

is

adverse

to

Mr.

Perry’s

former

employer.

Def.’s Mem. at 3 (citing Brown v. St. Joseph Cty., 148 F.R.D.
246, 254 (N.D. Ind. 1993). But even if I assume that Mr. Perry
indeed failed to provide that information, it is clear that
defendant suffered no harm as a result.
Indeed, the record does not suggest that Mr. Padden sought,
or obtained, any privileged information from Mr. Perry. To the
contrary,

the

evidence

reveals

disclosed

its

practices

that

relating

to

defendant
the

very

has

publicly

topics

it

now

faults Mr. Padden for discussing with Mr. Perry: Caterpillar’s
patent

evaluation

and

application

process

and

its

inventor

incentive program. See Pl.’s Resp., Exh. 1 (Simon Crompton, How
Caterpillar

Protects

Its

IP,

Managing

Intellectual

Property,

(July 16, 2014) (describing the “patent review process” that
takes place “for all new ideas” as part of Caterpillar’s New
Product

Introduction

process));

Exh.

2,

Jacqueline

Bell,

Invention Incentive Programs Get Results: Survey, Law360 (Jan.
28, 2009) (identifying Caterpillar as among 220 companies that
participated
incentive

in

a

programs,

survey
whether

about
there

“how
were

they

structured

significant

their

financial

awards available to inventors, and what types of nonfinancial
recognition the company provided”)).
6

Still,

defendant

insists

that

Mr.

Padden’s

conversation

with Mr. Perry “related to privileged topics.” Reply, at 1. But
“topics” are not privileged; communications are, and only when
all of the requisite conditions are met. See Sandra T.E. v. S.
Berwyn Sch. Dist. 100, 600 F.3d 612, 618 (7th Cir. 2010) (“The
attorney-client

privilege

protects

communications

made

in

confidence by a client and a client’s employees to an attorney,
acting

as

an

attorney,

for

the

purpose

of

obtaining

legal

advice.”); U.S. v. Lawless, 709 F.3d 485, 487 (7th Cir. 1983)
(“The

claim

of

privilege

question-by-question

or

must

be

made

and

document-by-document

sustained
basis;

a

on

a

blanket

claim of privilege is unacceptable.”).1 Defendant does not claim
that Mr. Padden asked Mr. Perry about his communications with
Caterpillar’s attorneys, however, or about documents that would
reflect those communications. Cf. McCook Metals, 192 F.R.D. at
253 (concluding that while “completed forms” filled out during

1

Defendant quibbles with plaintiff’s citation to Seventh Circuit
cases in support of its argument that Mr. Padden did not seek
privileged information in his phone call with Mr. Perry,
asserting that Federal Circuit law controls the question. Reply,
at 4, n.2, citing McCook Metals LLC v. Alcoa, Inc., 192 F.R.D.
242, 251 (N.D. Ill. 2000). It is not clear that defendant is
correct on this point (indeed, the McCook court applied Seventh
Circuit law to decide whether the attorney-client privilege
applied to the documents at issue in that case), but I need not
linger on the question because defendant does not suggest that
the analysis or outcome would be different under Federal Circuit
law.
7

patent

prosecution

are

privileged,

“uncompleted

forms”

are

discoverable).
In defendant’s view, regardless of how Mr. Padden framed
his questions, he was necessarily hoping to elicit privileged
information from Mr. Perry, since defense counsel had previously
told

Mr.

Padden

that

Caterpillar

produced

the

discoverable

material responsive to his requests, and that it was asserting
the attorney-client privilege over “internal patent applications
and documents created in relation to those applications.” Yashar
Decl., Exh. 4 at 3. But again, defendant does not claim that Mr.
Padden asked about “internal patent applications and documents.”
Instead,

he

evaluating

asked
and

about

drafting

Caterpillar’s
patent

“internal

applications.”

process
None

of

for
the

authorities defendant cites supports its assertion of a blanket
privilege covering all information within that topic,2 and it

2

See, e.g., Medline Indus., Inc. v. C.R. Bard, Inc., No. 14 C
3618, 2016 WL 307310, at *3 (N.D. Ill. Jan. 26, 2016) (Kim, MJ.)
(declining to compel drafts of inventor’s declaration on which
she “worked closely” with her attorney); Medicines Co. v. Mylan
Inc., 936 F. Supp. 2d 894, 901 (N.D. Ill. 2013) (declining to
compel
communications
between
attorney
and
client
about
technical information relevant to patentability); E.E.O.C. v.
University of Chicago Med Ctr., No. 11 C 6379, 2012 WL 1329171,
at *4 (N.D. Ill. Apr. 16, 2012) (noting that while “Rule 4.2
does not prevent a plaintiff’s lawyer from contacting former
employees without the consent of the organization’s lawyer,”
former employees may not discuss privileged information);
Bergstrom, Inc. v. Glacier Bay, Inc., No. 08 C 50078, 2010 WL
257253, at *4 (N.D. Ill. Jan. 22, 2010) (declining to compel
answers to requests for admission seeking to learn whether
inventor disclosed specific putative prior art to its counsel);
8

offers no evidence that Mr. Padden’s questions either sought or
elicited any specific, privileged information.
Moreover, the conduct defendant attributes to Mr. Padden
cannot

meaningfully

be

compared

to

that

of

the

attorney

sanctioned in In re Air Crash Disaster Near Roselawn. In that
case, the plaintiffs’ counsel commissioned a questionnaire to be
sent to the defendant’s employees seeking information relevant
to the plaintiffs’ claims. The court examined the questionnaire
and the accompanying cover letter and determined that the letter
not only failed to disclose that the questionnaire “was prepared
at the request of an attorney on behalf of plaintiffs who have
sued the Airline Defendants,” but that it went “to great lengths
to

persuade

character.”

the
909

described

the

suggested

that

F.

recipient
Supp.

at

questionnaire
it

was

of

its

1123.
as

an

endorsed

neutral

For

example,

“independent
by

and

the

FAA,

unbiased

the

letter

survey,”
among

and

other

misleading elements. Id. Even so, the court did not disqualify

McCook Metals L.L.C. v. Alcoa Inc., 192 F.R.D. 242, 251 (N.D.
Ill. 2000) (declining to compel production of “drafts of the
specifications,
claims,
and
other
parts
of
the
patent
application prepared by the attorney”); Thorn v. Sunstrand
Corp., No. 95 C 50099, 1997 WL 627607, at *3 (N.D. Ill. Oct. 10,
1997) (Reinhard, J.) (ex parte communication with defendant’s
former employee did not entail breach of attorney-client
privilege); Breedlove v. Tele-Trip Co., Inc., No. 91 C 5702,
1992 WL 202147, at *2 (N.D. Ill. Aug. 14, 1992) (Leinenweber,
J.) (“no ruling or order is necessary” to prevent plaintiff’s
counsel from exploring privileged communications or matters with
witnesses).
9

plaintiffs’ counsel, or even impose the full range of lesser
sanctions

the

defendants

sought.

Id.

at

1124-25.

For

these

reasons, In re Air Crash Disaster Near Roselawn offers scant
support

for

disqualification

on

the

facts

here.

Indeed,

defendant does not claim that Mr. Padden made any affirmative
misrepresentations. While Mr. Perry states that he “did not know
that the caller was an attorney representing a party adverse to
Caterpillar,”

he

does

not

suggest

that

Mr.

Padden

said

or

implied that he was anyone other than who he was.3
Finally, whatever the merit of defendant’s argument that
“general patent procedures” are not relevant to the claims or
defenses in this action, Reply, at 4, the fact that Mr. Padden
may have discussed irrelevant topics with Mr. Perry certainly
does

not

compel

his

disqualification.

3

Indeed,

defendant’s

In this connection, while I need not and do not pass upon the
credibility of either declarant, I feel compelled to note that
defendant’s account of the phone call is perplexing. Mr. Perry
states that he worked for nearly thirty years in Caterpillar’s
Intellectual Property Department and Legal Services Unit,
including as a patent agent. Perry Decl. at ¶ 2. Defendant adds
that Mr. Perry “routinely worked with counsel during his tenure
and was familiar with the concept of privileged information.”
Reply, at 3. In view of this background, defendant’s suggestion
that Mr. Perry spent twenty to thirty minutes discussing
Caterpillar’s intellectual property with a caller who--so far as
defendant’s evidence reveals--neither identified himself nor
stated the reason for his call, does strain credulity. At a
minimum, it suggests that the conversation was, indeed, about
general, non-privileged matters, as it is difficult to imagine
that someone with Mr. Perry’s background could be duped into
giving up sensitive information about Caterpillar’s intellectual
property to a stranger.
10

argument that Mr. Padden’s questions violated Rule 4.4, which
prohibits lawyers from using “means that have no substantial
purpose

other

than

to

embarrass,

delay,

or

burden

a

third

person, or use methods of obtaining evidence that violate the
legal

rights

of

such

a

person,”

is

unpersuasive

and

is

not

supported by authority.
I now turn briefly to defendant’s argument that Mr. Padden
and his law firm must be disqualified based on Mr. Padden’s past
representation

of

Caterpillar.

This

argument

merits

little

discussion. First, “[a] motion to disqualify should be made with
reasonable promptness after a party discovers the facts which
lead to the motion.” Weeks v. Samsung Heavy Indus. Co., 909 F.
Supp.

582,

584

(N.D.

Ill.

1996)

(quoting

Kafka

v.

Truck

Insurance Exchange, 19 F.3d 383, 386 (7th Cir. 1994)). All agree
that defendant has been aware of Mr. Padden’s involvement in
this case since August of 2016, and that defense counsel has
actively engaged with him as opposing counsel since that time.
Defendant’s

explanation

for

its

almost

six-month

delay

in

seeking disqualification—that Mr. Padden’s conflict of interest
became apparent only after he manifested a “desire to delve into
internal

Caterpillar

legal

procedures”—is

unsupported

by

reasoned analysis and does not withstand scrutiny.
Second,

notwithstanding

defendant’s

lengthy

apologia

for

the “appearance of impropriety” standard, all agree that the
11

analysis ultimately turns on whether defendant has shown that
Mr.

Padden’s

previous

“substantially

related”

representation
to

his

of

is

representation

current

Caterpillar

of

Freeman. See LaSalle Nat. Bank v. Lake County, 703 F.2d 252, 255
(7th Cir. 1983). The first step in this “three-level inquiry”
requires me to “make a factual reconstruction of the scope of
the

prior

legal

determine

representation.”

whether

it

is

Id.

at

“reasonable

256.
to

Then,

must

that

infer

I

the

confidential information allegedly given would have been given
to an attorney representing a client in such matters.” Bobkoski
v. Bd. of Educ. of Cary Cmty. Consol. Sch. Dist. No. 26, McHenry
Cty., Ill., No. 90 C 5737, 1991 WL 61052, at *3 (N.D. Ill. Apr.
12, 1991). Finally, I must decide whether that issue is relevant
to the issues presented in the current litigation.” Id.
Here, I need not proceed past the first step. The only
evidence defendant offers regarding the scope of Mr. Padden’s
previous

representation

of

Caterpillar

is

his

notice

of

appearance in Global Patent Holdings. Neither that document, nor
defendant’s

vague

unspecified

patent

“involved...for

reference
case

in

Caterpillar”

in

its

which
in

memorandum

Mr.

2007,

Padden
allows

to
was

me

to

another,
allegedly
make

a

meaningful “factual reconstruction” of the scope of Mr. Padden’s
prior representation. Indeed, the only glimpse defendant offers
into

these

previous

cases

is
12

its

acknowledgement

that

Caterpillar “was not directly adverse to Freeman” in the latter
case. Def.’s Mem. at 13. Defendant goes on to speculate that the
information

shared

with

Mr.

Padden

in

that

case

“could

have

included information pertaining to Caterpillar’s internal legal
processes

concerning

analyses,

methods

patent
for

procurement,

obtaining

legal

patent

infringement

opinions

regarding

infringement and/or invalidity, as well as a host of other items
pertaining

to

Caterpillar’s

legal

strategies

involving

its

approach to patent infringement suits.” Def.’s Mem. at 13. But
the

fact-based,

“substantially

related”

inquiry

requires

more

than mere speculation about information that might have been
shared in an unidentified case not involving plaintiff.
III.
For the foregoing reasons, defendant’s motion to disqualify
is denied.
ENTER ORDER:

____
Elaine E. Bucklo
United States District Judge
Dated: March 13, 2017

13