GS CLEANTECH CORPORATION v. IROQUOIS BIO-ENERGY COMPANY, LLC
Filing
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ORDER granting in part and denying in part CleanTech's 3 Motion to Quash (see Order). Signed by Magistrate Judge Debra McVicker Lynch on 7/23/2013. (SWM)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
IN RE: METHOD OF PROCESSING
ETHANOL BYPRODUCTS AND
RELATED SUBSYSTEMS ('858)
PATENT LITIGATION
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Master Case: 1:10-ml-02181-LJM-DML
Related Case: 1:13-mc-00058-LJM-DML
Order on Motion to Quash in Related Case
On June 3, 2013, the District of Connecticut transferred to this court a
motion to quash a deposition and documents subpoena served on CleanTech counsel
Charles O’Brien by defendant Iroquois Bio-Energy Company, LLC in this
multidistrict patent litigation. The motion has been fully briefed under Related
Case 1:13-mc-00058-LJM-DML.
Introduction
Five United States patents-in-suit are at issue in this multidistrict patent
litigation, and GS CleanTech Corporation (“CleanTech”) is the owner by assignment
of all of them. David Cantrell and David Winsness are the inventors, either singly
or together, for all of the patents-in-suit. The patents are: U.S. Patent No.
7,601,858; U.S. Patent No. 8,008,516; U.S. Patent No. 8,008,517; U.S. Patent No.
8,283,484; and U.S. patent No. 8,168,037. The first four claim priority to
CleanTech’s first patent application, which was filed on August 17, 2004, as a
provisional application.
This MDL includes numerous lawsuits in which CleanTech (usually the
plaintiff in the lawsuits) alleges that the defendants1 are liable for infringement of
some or all of the patents-in-suit. Among the defenses to infringement raised by
the defendants is that CleanTech (by its assignors or other representatives) engaged
in inequitable conduct in the prosecution of one or more of the patents of a nature
that invalidates the patent(s) or makes them unenforceable against the defendants.
Briefly stated, the defendants assert that CleanTech made false or misleading
disclosures to the United States Patent and Trademark Office (“PTO”) or omitted
material information with respect to the inventors’ interactions in 2003 and 2004
with a company called Agri-Energy. The defendants maintain that Mr. O’Brien, one
of CleanTech’s litigation counsel in these cases, has information relevant to this
defense because he participated in the decisions about what to disclose to the PTO
and when to disclose it, and because he drafted certain of those disclosures.
CleanTech argues that the court should not permit his deposition or require
production of the requested documents, primarily based on its position that the
defendants have had appropriate discovery on these matters and that their
inequitable conduct defense is a non-starter.
To determine the propriety of the discovery the defendants seek, the court
must examine the contours of the inequitable conduct defense—both to address
CleanTech’s argument that the defense fails on the basis of facts already developed
and to identify whether discovery from CleanTech’s counsel is relevant. In its 2011
1
For simplicity, though not technically accurate, the court will refer to CleanTech as the
plaintiff and the defendants collectively as the alleged infringers in all the cases in the MDL.
2
decision in Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir.
2011), the Federal Circuit Court of Appeals opined that the common law inequitable
conduct defense had become overused, abused, improperly expanded, and “an
absolute plague.” Therasense announced new and tougher standards to govern the
defense.
The inequitable conduct defense, which must be shown by clear and
convincing evidence, requires proof that “the patentee acted with the specific intent
to deceive the PTO.” Id. at 1290. When the defense focuses on nondisclosure—as it
does at least in part here—there must be clear and convincing evidence that the
patentee “made a deliberate decision to withhold a known material reference.” Id.
(emphasis in original). Intent and materiality are separate elements and,
generally, the defense is limited to cases where the alleged misconduct resulted “in
the unfair benefit of receiving an unwarranted claim.” Id. at 1292. Thus, “but-for”
materiality of the withheld information must nearly always be shown: the alleged
infringer must show that if the PTO had been aware of the withheld information, it
would not have allowed a claim. Id. at 1291-92. Only where there is “affirmative
egregious misconduct,” is proof of but-for materiality not necessary. In that
circumstance, the patentee’s egregious acts to deceive the PTO serve as a proxy for
materiality because “a patentee is unlikely to go to great lengths to deceive the PTO
with a falsehood unless it believes that the falsehood will affect issuance of the
patent.” Id. at 1292.
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As noted above, the inequitable conduct defense in this case centers on the
inventors’ interactions in 2003 and 2004 with a company called Agri-Energy. Peter
Hagerty, one of CleanTech’s patent counsel, has testified that another attorney at
his firm, Charles O’Brien, participated in the drafting of, and decision-making
regarding, disclosures to the PTO about the inventors’ interactions with AgriEnergy. Mr. O’Brien has appeared as litigation counsel for CleanTech in this MDL,
and Mr. Hagerty’s testimony reveals that Mr. O’Brien was involved in submissions
to the PTO made during this litigation. The defendants assert that documents in
Mr. O’Brien’s possession or control and testimony from him are reasonably
necessary to prove inequitable conduct.
CleanTech (and Mr. O’Brien) contend that the defendants have been afforded
sufficiently wide-ranging discovery to support their theory of inequitable conduct
(documents discovery from the patentees and inventors, except for those for which
privileges were asserted, depositions of the two inventors, and depositions of two
lawyers who were, successively, lead patent prosecution counsel for the patents-insuit). CleanTech argues that the evidence demonstrates that the defendants
cannot prove, or even come close to proving, the elements of the defense required by
Therasense, and that it would be wasteful and unfair to permit the defendants to
depose and obtain documents from Mr. O’Brien, one of their litigation counsel.
As explained below, the court finds that the defendants have demonstrated
that information they seek from Mr. O’Brien is relevant and cannot be, or has not
been, obtained from another source. It also determines that discovery related to the
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defense cannot be foreclosed on the basis of the evidence already developed. But the
court also finds that the document requests directed to Mr. O’Brien are overbroad
and must be narrowed. In addition, though the parties briefly allude to privilege
issues that will inevitably arise, none has briefed the attorney-client privilege and
work product issues that they can reasonably anticipate in connection with Mr.
O’Brien’s document production and deposition testimony. The court will require the
parties to do so in short order so that the court will be in a position to rule on these
issues as they arise.
Analysis
I.
Interactions with Agri-Energy2
As noted above, the '858 patent family (consisting of the '858, '516, '517, and
'484 patents) claim priority to a provisional patent application filed on August 17,
2004. Under the patent laws, generally, if a patent application is filed more than
one year after an offer of sale of the invention, then the invention is deemed to have
entered the public domain and is not entitled to patent protection. See 35 U.S.C.
§ 102(b). One of the inventors, David F. Cantrell, wrote a letter he dated July 31,
2003, to a representative of Agri-Energy “offer[ing] a No-Risk trial ‘Oil Recovery
System,’” at the end of which Agri-Energy would either purchase the system for
$423,000 or return it to the company with which Mr. Cantrell was affiliated at the
The background described in this section is based primarily on facts the
defendants say they intend to prove at trial. These are not factual findings by the
court.
2
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time, Vortex Dehydration Technology, LLC. See Dep. Ex. 104, Master Dkt. 193-2 at
pp. 5-6.
According to the court’s understanding, CleanTech made three disclosures to
the PTO regarding interactions with Agri-Energy: a disclosure in June 2009
concerning feasibility testing in May 2004; a Supplemental Response in November
2010 that included the First Cantrell Declaration; and the Second Cantrell
Declaration in July 2012.
Feasibility Testing
In June 2009, after it learned from the PTO that the '858 patent would be
issued on June 23, 2009, CleanTech filed a Request for Continued Examination.
One stated purpose of the RCE was to inform the PTO that in May 2004, “feasibility
testing of a process and system for recovering oil from thin stillage was performed. .
. .” Although this disclosure did not name Agri-Energy, the reference to testing in
May 2004 was to testing at Agri-Energy’s facility. See Hagerty Dep. Trans. at pp.
146-151, Misc. Dkt. 11-29.
CleanTech did not disclose, however, testing involving Agri-Energy that
occurred in the June/July 2003 period, nor did it disclose the existence of diagrams
or drawings of the oil recovery system that apparently were prepared in this same
period.
November 2010 Disclosure and First Cantrell Declaration
On November 9, 2010, CleanTech submitted to the PTO a Supplemental
Response to augment an Information Disclosure Statement dated November 8,
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2010. Those submissions disclosed information about a letter dated July 31, 2003,
from inventor David Cantrell to Jay Summers of Agri-Energy (“Letter”) and about
Mr. Cantrell’s interactions with Agri-Energy. The Supplemental Response was
submitted after CleanTech had received a notice of allowance for the '516 patent but
had requested the PTO to reopen its prosecution of that patent for the submittal of
additional information, including the Supplemental Response. Hagerty Dep. Trans.
at pp. 170-171.
The Supplemental Response consists of the Declaration of David F. Cantrell
(the “First Cantrell Declaration”) and a summary of the testimony provided in that
declaration. Mr. Cantrell swore in that declaration that although he dated the
letter July 31, 2003, the first time he delivered the July 31 Letter was on August 18,
2003 (on the 365th day of the one year on-sale bar), when he hand-delivered the
Letter in a face-to-face meeting with Agri-Energy’s representatives at Agri-Energy’s
facility in Minnesota. The declaration goes to great lengths to document Mr.
Cantrell’s activities on August 17, 18, and 19, 2003 (with copies of airline and hotel
receipts), apparently in an effort to quell any doubt that Mr. Cantrell’s “hand
delivery of the Letter at this meeting on August 18, 2003 was the first time that the
Letter was shown to Agri-Energy.” First Cantrell Declaration, ¶ 11. The
Supplemental Response also states that the Letter is not material because “the
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Letter was not delivered to Agri-Energy prior to August 17, 2003”—thus, not
delivered within the one year on-sale bar. Supp. Response at p. 3.3
Mr. Cantrell’s deposition was taken in this litigation in September 2011.
During questioning, he was confronted with an email sent by him on August 1,
2003, to Mr. Summers and Mr. Gerald Winter of Agri-Energy, Mr. Winsness (his coinventor), and Mr. Mark Lauderbaugh (a person who was assisting Mr. Cantrell
with marketing), to which was attached the July 31 Letter. CleanTech’s counsel,
who was also defending Mr. Cantrell’s deposition, instructed Mr. Cantrell not to
answer any questions about the document because the document had not been
Earlier in 2010—on July 27, 2010—one of CleanTech’s litigation counsel had
written to counsel for Agri-Energy requesting that Agri-Energy provide a statement
regarding its interactions with Mr. Cantrell during 2003 and 2004, including
confirmation that (a) the system offered by Mr. Cantrell in July 2003 was
experimental and confidential, (b) no drawings or diagrams of the system were
provided, and (c) no specific method for recovering corn oil was described, except
that the system included a disc stack centrifuge. The July 2010 letter also stated
that Agri-Energy’s provision of this statement would not result in any liability and
would resolve any issues that CleanTech has with Agri-Energy. See Iroquois Brief,
Misc. Dkt. 11 at pp. 10-11. The hoped-for statement from Agri-Energy was not
provided and its principal, Jay Summers, now states that he did not provide such a
statement because it would have been untrue. Id. The statements in this letter
that CleanTech wanted Agri-Energy to confirm are similar to CleanTech’s position
in the context of the present motion and in this litigation generally that the July 31,
2003 Letter cannot, in any event, be construed as an offer of sale. The court has not
endeavored to determine whether CleanTech can show as a matter of law that the
inventors’ interactions with Agri-Energy, including the July 31, 2003 Letter, do not
satisfy the on-sale bar. A motion directed to that issue has not been filed or briefed.
But it appears that in November 2010 when CleanTech filed the Supplemental
Response with the PTO, it was concerned that the July 31 Letter could be construed
as evidence of the making of an offer of sale within one year, which is why the First
Cantrell Declaration contains such detailed support for Mr. Cantrell’s statement
that he did not deliver the Letter until August 18, 2003.
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produced before the deposition.4 The deposition was then concluded for the day and
was not reconvened for many months because of health issues asserted by Mr.
Cantrell. When Mr. Cantrell’s deposition was resumed in April 2012, Mr. Cantrell
stated that he questioned the legitimacy of the email because he could not recall
having sent it, and that he believed his credit card receipts provided a better time
line of his interactions with Agri-Energy. Cantrell April 2012 Dep. Trans. at pp.
294-297, Misc. Dkt. 11-15.
July 2010 Second Cantrell Declaration
CleanTech waited until July 2010 (about nine months after Mr. Cantrell’s
first deposition) to tell the PTO of the existence of the August 1 email.5 CleanTech’s
disclosure was a four paragraph declaration by Mr. Cantrell (the “Second Cantrell
Declaration”), which states in relevant part:
1. Attached is an e-mail sent from my e-mail account on August 1, 2003 to
Jay Sommers of Agri-Energy, LLC and copied to Mark Lauderbaugh of
Trident Corporation, Gerald Winter of Agri-Energy, LLC and David
Winsness, co-inventor of the present application (“the August 1st email”),
which attached a version of a letter dated July 31, 2003 (the “July 31
Letter”).
2. At the time that I signed a Declaration dated November 5, 2010 that was
submitted to the United States Patent and Trademark Office in the
Based on a public statement made by defendant ICM and perhaps based on
other information, CleanTech’s counsel suspected that the defendants intended to
spring new documents on Mr. Cantrell without having yet produced them as they
were required to do. The court previously addressed the defendants’ failure timely
to produce the August 1 email and the inappropriate instruction to Mr. Cantrell by
CleanTech counsel not to answer questions. See Master Dkt. 204.
4
In addition to the timing issues pertinent to this order, that wait is
inconsistent with CleanTech’s suggestion that the defendants’ failure timely to
produce the August 1 email materially affected CleanTech’s ability to make
disclosures to the PTO regarding the inventors’ interactions with Agri-Energy.
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following related cases: App. Serial Nos. 12/559,136, which issued into US
Patent 8,008,517 and 11/241,231, which issued into US Patent 8,008,516,
I did not recall the August 1st email.
3. The July 31 Letter attached to the August 1 email was unsigned.
Misc. Dkt. 13-5.
The defendants view the timing and content of the Second Cantrell
Declaration as part of a deliberate plan to obfuscate the materiality of the August 1
email. CleanTech was aware of the August 1 email no later than Mr. Cantrell’s
September 2011 deposition, which was taken during CleanTech’s prosecution of the
'484 Patent. The '516 and '517 patents had issued in August 2011, before the
deposition. Just before Mr. Cantrell’s deposition, CleanTech had received the PTO’s
first office action on the application that led to the '484 Patent. It responded to that
office action on February 10, 2012, but did not then inform the PTO about the
August 1 email (or about other interactions between the inventors and Agri-Energy
during June and July of 2003). Hagerty Dep. Trans. at pp. 201-202. In April 2012,
CleanTech received a notice of allowance for the '484 patent. Id. at p. 203.
Sometime thereafter, it filed a petition to withdraw the application from issuance
and a request for continued examination, presumably for the purpose—at least in
part—of providing the August 1 email to the PTO. Id. at pp. 203-204.
When the defendants asked patent prosecution counsel Peter Hagerty in his
deposition to explain why he chose not to tell the PTO about the August 1 email
during active prosecution of the '484 Patent or in CleanTech’s response to the first
office action, he refused to answer the question based on instructions from
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CleanTech’s litigation counsel (who represented Mr. Hagerty at his deposition) not
to reveal Mr. Hagerty’s “impression or strategies.” Id. at p. 202.
According to Mr. Hagerty, the Second Cantrell Declaration was written by
Mr. O’Brien, whom he described as having prepared or having helped to prepare the
declaration with some input from Mr. Hagerty and “involvement” by Mr. Cantrell.
Id. at 205. Mr. Hagerty also testified that Mr. O’Brien had played a lead role in
drafting the First Cantrell Declaration. Id. at p. 173. In addition, Mr. Hagerty
consulted with and relied on Mr. O’Brien to assist him in making decisions about
the prosecution of the patents and to provide him with information from the
litigation that should be filed with the PTO. Id. at pp. 31-32. Mr. Hagerty also
testified that he disclosed to the PTO all documents that he received concerning the
inventors’ interactions with Agri-Energy. Id. at p. 117. Thus, to the extent that
information and documents regarding Agri-Energy were not disclosed to the PTO,
one reasonably may infer that the decisions regarding their disclosure were made
by members of the litigation team, including Mr. O’Brien. Further, based on Mr.
Hagerty’s testimony regarding Mr. O’Brien’s role in the drafting of both Cantrell
Declarations, one also may infer (on the present record) that he played a lead role in
deciding the timing and contents of disclosures to the PTO regarding Agri-Energy.
That includes not only disclosure of the May 2004 testing and the two Cantrell
Declarations, but also decisions regarding the disclosure of testing that occurred,
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and diagrams or drawings that were prepared, in or around June and July 2003,
that apparently also are related to Agri-Energy.6
II.
The defendants are entitled to additional discovery surrounding the
decision-making regarding the Agri-Energy disclosures to the PTO.
The court is persuaded that the evidence, or inferences that may reasonably
be drawn from the evidence, surrounding CleanTech’s and the inventors’ disclosures
and omissions from disclosure to the PTO regarding Agri-Energy justify additional
discovery. The court rejects CleanTech’s arguments that discovery should be denied
because the July 31 Letter as a matter of law cannot be deemed material or because
CleanTech’s submission of the Second Cantrell Declaration cured, as a matter of
law, any deceptive effect of the First Cantrell Declaration. The court determines
instead that the defendants should be permitted additional discovery to pursue
their theory of a deliberate plan to deceive the PTO regarding the significance of
contacts with Agri-Energy.
The court finds that because of Mr. O’Brien’s participation in the prosecution
of the patents through his apparent roles in providing information to Mr. Hagerty,
drafting the Cantrell declarations, his testimony regarding disclosures (or nondisclosures) of the inventors’ various interactions with Agri-Energy, and the testing
and diagrams from the June/July 2003 period, is relevant to the defendants’ proof of
the inequitable conduct defense.
It is at least the defendants’ theory that the June/July 2003 testing and
diagrams help to prove that the July 31 Letter properly should be understood as an
offer for sale within the one-year on-sale bar.
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In fact, the heightened standards of Therasense make inquiry into counsel’s
and client’s patent prosecution decisions—and the knowledge base underlying
them—a natural avenue of discovery. Indeed, that sort of inquiry will often be
unavoidable when the accused infringer must supply clear and convincing evidence
of specific intent to deceive or of a deliberate decision to withhold material
information. For example, in a post-Therasense decision, the Federal Circuit, in
evaluating the evidence regarding inequitable conduct, described testimony by
patent prosecution counsel regarding the reasons he did not disclose a reference
that he knew about and which could be considered material. The court commented
that there was nothing in the record indicating that a deliberate decision was made
to withhold the reference, such as a letter from patent prosecution counsel to the
client regarding the subject reference. 1st Media, LLC v. Electronic Arts, Inc., 694
F.3d 1367, 1375 (Fed. Cir. 2012). The court also noted that the accused infringers
admitted at oral argument that they had taken full discovery on the inequitable
conduct defense and had informed the court that the record was complete. Id. at
1377. See also General Elec. Co. v. Mitsubishi Heavy Industries, Ltd., 2013 WL
2338345 at *5 (N.D. Tex. May 28, 2013) (district court found that the assertion of
the attorney-client privilege prevented it from fully judging the inequitable conduct
defense, and noted the belief that the court’s hands “are tied by the Federal
Circuit’s post-Therasense precedent, and without more conclusive documentation of
a deliberate conspiracy, there can be no finding of inequitable conduct”); Medicines
Co. v. Mylan, Inc., 2013 WL 1283480 (N.D. Ill. March 19, 2013) (ruling that under
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principles of express and implied waiver, defendants were entitled to documents
and testimony relating to decisions not to disclose issue to PTO). The court does not
see why information disclosed (or not disclosed) to the PTO becomes irrelevant
when it is supplied or edited by litigation counsel.
The court’s citations to these cases is not intended to express its views on the
extent to which the attorney-client privilege or the work product doctrine may or
may not limit the production of documents by Mr. O’Brien or questions he may be
required to answer in his deposition. The parties’ briefing of the present motion
does not effectively assist the court in determining those issues. The court will
require the parties to submit supplemental briefing regarding the application of the
attorney-client privilege and work product doctrine, including specifically whether
the work product doctrine may be invoked to shield discovery of “impressions or
strategies” in decision-making regarding disclosures to the PTO in the patent
prosecution context.7 In this vein, the court expects the parties to address the effect
of Mr. O’Brien’s dual role in participating in disclosures and the decisions regarding
disclosures to the PTO and in his acting as litigation counsel—a dual role chosen by
Mr. O’Brien or his client. The parties are directed to file briefs simultaneously
regarding the privilege and work product issues no later than August 6, 2013. Each
may file a response to the other side’s brief by August 13, 2013.
The court notes here that Mr. Hagerty refused to answer questions about his
decision-making or strategies in connection with disclosures to the PTO about AgriEnergy. See Hagerty Dep. Trans. at pp.116 and 202. The parties have not yet
addressed whether or how the work product doctrine has application in the context
of patent prosecution.
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III.
Any inquiries must be limited to disclosures regarding Agri-Energy
and decision-making regarding them.
Testimony by Mr. O’Brien and any documents that he must produce will be
limited to those reasonably necessary for the defendants fairly to explore decisionmaking regarding the disclosures or omissions from disclosure to the PTO regarding
the inventors’ interactions with Agri-Energy in 2003 and 2004, including their
connection to the 2003 testing and diagrams or drawings prepared or existing at
that time. The court finds that the documents described in the subpoena to Mr.
O’Brien are far more broad than reasonably necessary. For example, the court will
not require Mr. O’Brien to produce all documents relating to prosecution of the
patents-in-suit, or all documents relating to communications with Applicants
regarding the patents-in-suit, or all documents relating to Agri-Energy, or all
documents relating to efforts to obtain information from Agri-Energy in 2010, or
drafts of the First or Second Cantrell Declarations. The court does not, by this list,
approve of the other categories of documents described in the subpoena. Instead,
the court will require the defendants to substantially revise and limit their
document requests, and will require the defendants to demonstrate how and why
each limited request is reasonably necessary to a fair understanding of Mr.
O’Brien’s participation in and decision-making regarding disclosures or omissions
from disclosure to the PTO regarding Agri-Energy. The defendants must submit to
the court their revised document requests, and a brief demonstrating the necessity
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of those requests, simultaneously with their opening brief on the attorney-client and
work product issues.8
Conclusion
For the foregoing reasons, the court GRANTS in PART and DENIES in PART
CleanTech’s motion to quash the deposition subpoena served on attorney Charles
O’Brien. The court permits the defendants to take Mr. O’Brien’s deposition and to
seek documents from him, but limited to Mr. O’Brien’s participation in and
knowledge regarding decision-making about disclosures or omissions from
disclosure to the PTO about the inventors’ interactions with Agri-Energy in 2003
and 2004, including testing and diagrams and drawings conducted or prepared in
2003. The plaintiff and defendants (collectively) must file by August 6, 2013,
supplemental briefs addressing the application of the attorney-client privilege and
the work product doctrine, and they each may file a response brief by August 13,
2013. In addition, the defendants (collectively) must file by August 6, 2013, their
proposed revised document requests along with a brief demonstrating the
reasonable necessity of those requests. The plaintiff may file a response brief by
August 13, 2013. The court will then determine the categories of documents that
The court is aware that the defendants have also served a documents and
deposition subpoena on attorney Michael Rye. The parties have advised the court
that a motion to quash the subpoena has been filed in the District of Connecticut,
and that District may transfer the motion to this court. A transfer has not yet
occurred. The court anticipates that a decision regarding the propriety of a
deposition of Mr. Rye may depend on the information Mr. O’Brien provides in
discovery.
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must either be produced or scheduled on a privilege log in advance of Mr. O’Brien’s
deposition.
So ORDERED.
07/23/2013
Date: ____________________
____________________________________
Debra McVicker Lynch
United States Magistrate Judge
Southern District of Indiana
Distribution:
All ECF-registered counsel of record via email generated by the court’s ECF system
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