Monsanto Company v. E.I. Dupont De Nemours and Company et al

Filing 756

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Monsanto's Fifth Motion to Compel [doc. 638] is GRANTED. To the extent Defendants wish to pursue their claims for reformation based on mutual mistake and unilateral mistake coupled with knowing sil ence, they have waived attorney-client privilege with respect to legal advice concerning their stacking rights under the RR license agreements and the subsequent YG license agreement. Defendants shall therefore either voluntarily dismiss these reformation claims or produce to Monsanto all documents bearing on these issues that it previously withheld and identified as privileged on privilege logs. Signed by Honorable E. Richard Webber on 05/17/2011. (BRP)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

MONSANTO COMPANY and
MONSANTO TECHNOLOGY LLC,
Plaintiffs,
vs.
E.I. DUPONT DE NEMOURS AND
COMPANY and PIONEER HI-BRED
INTERNATIONAL, INC.,
Defendants.

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Case No. 4:09CV00686 ERW

MEMORANDUM AND ORDER
This matter comes before the Court on Plaintiffs Monsanto Company and Monsanto
Technology LLC’s (collectively, “Monsanto”) Fifth Motion to Compel [doc. #638]. In its
Motion, Monsanto asserts that Defendants E.I. du Pont de Nemours & Co. and Pioneer Hi-Bred
International, Inc. (collectively, “Defendants”) have waived attorney-client privilege with respect
to all communications concerning Defendants’ understanding of the stacking rights and
restrictions in the license agreements between the parties, specifically the two Roundup Ready®
(“RR”) license agreements at issue in this litigation and the 2007 Yieldgard® (“YG”) license
agreement.
Under the “at-issue” exception to the attorney-client privilege, a party waives the
privilege “by (1) injecting the attorney-client communication into the litigation or (2) injecting an
issue into the litigation, the truthful resolution of which requires an examination of attorneyclient communications.” Princeton Ins. Co. v. Vergano, 883 A.2d 44, 59-60 (Del. Ch. 2005).1

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The parties are in agreement that Delaware law governs the present dispute, as it
concerns Defendants’ state-law counterclaims related to the parties’ license agreements, which

Additionally, “[i]n order to gain access to the privileged information placed ‘at issue,’ . . . the
party requesting the privileged information must be placed at a disadvantage due to the inability
to review the concealed information,” which most commonly is based on “the moving party’s
inability to obtain the concealed information from an alternative source if the privilege is
upheld.” Fitzgerald v. Cantor, 1999 WL 64480, at *2 (Del. Ch. 1999).
In their Second Amended Answer and Counterclaims (“SAAC”), Defendants assert
claims for reformation due to mutual mistake and due to unilateral mistake coupled with
knowing silence. A party seeking reformation on either ground must demonstrate, as one
necessary element of the claim, that it “was mistaken and had a belief that is not in accord with
the facts.” See Cerberus Int’l, Ltd. v. Apollo Mgmt., L.P., 794 A.2d 1141, 1151, 1155 (Del.
2002) (internal quotations and citation omitted). As a result, Delaware courts have concluded
that such a reformation claim places the plaintiff’s subjective understanding of the terms of the
agreement “at issue” and therefore requires a waiver of attorney-client privilege as to legal advice
on that issue. See Fitzgerald, 1999 WL 64480, at *2 (“By making their claim for reformation of
the Partnership Agreement, Defendants have placed ‘at issue’ in this litigation their
understanding, at the time they entered the 1993 amendments to the Partnership Agreement, of
CFI’s rights under the 1993 amendments to the Partnership Agreement to compete with CFLP
and keep the profits from that competition.”). Indeed, the Fitzgerald court expressly concluded
that a reformation claim requires the court to consider all information reasonably bearing on the
reformation plaintiff’s subjective understanding of the disputed matter:
Determining Defendants’ actual understanding of the issues essential to its claim for
reformation of the 1993 amendments to the Partnership Agreement and Defendants’
actual understanding of the issues essential to its claim for reformation of the

contain choice-of-law clauses designating Delaware law.
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Settlement Agreement requires review of all information available to Defendants at
the time they entered the respective agreements that they could have used to reach
their understanding as well as later evidence that reflects their understanding at the
time they entered the respective agreements. Without this information, it will be
impossible for this Court to assess the credibility of Defendants or the reasonableness
of their allegations regarding their understanding of these issues at the time they
entered into [the agreements]. This assessment will be necessary to determine if, in
fact, the Agreements should be reformed.
Id. (emphasis added).
In the context of Defendants’ reformation claims, the alleged mistake concerns whether
the RR agreements prohibited Defendants from stacking their Optimum® GAT® (“OGAT”)
traits with Monsanto’s RR soybean and corn traits. Defendants suggest that they can rely solely
on a Letter of Intent concerning the RR license agreements as evidence of the parties’
understanding with respect to stacking rights, but under Fitzgerald, a necessary aspect of
determining whether Defendants were, in fact, mistaken is assessing what advice they obtained
from counsel about their stacking rights under the RR agreements. See id. As for advice about
stacking under the YG license agreement, the Fitzgerald court made clear that “later evidence”
reflecting a reformation plaintiff’s understanding at the time of an agreement is necessary to
deciding whether an agreement should be reformed, see id., and Defendants have also placed this
advice at issue by asserting, in response to interrogatories from Monsanto, that the negotiations
of the YG license agreement provide further evidence of Defendants’ alleged belief that the RR
agreements did not prohibit stacking. Thus, Defendants’ subjective beliefs about their stacking
rights under the RR and YG license agreements are issues Defendants have injected into this
litigation, “the truthful resolution of which require[] an examination of attorney-client
communications,” Vergano, 883 A.2d at 59-60, and Defendants’ reformation claims therefore

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require a waiver attorney-client privilege with respect to legal advice about their stacking rights
under the RR and YG agreements.2
Accordingly,
IT IS HEREBY ORDERED that Monsanto’s Fifth Motion to Compel [doc. #638] is
GRANTED. To the extent Defendants wish to pursue their claims for reformation based on
mutual mistake and unilateral mistake coupled with knowing silence, they have waived attorneyclient privilege with respect to legal advice concerning their stacking rights under the RR license
agreements and the subsequent YG license agreement. Defendants shall therefore either
voluntarily dismiss these reformation claims or produce to Monsanto all documents bearing on
these issues that it previously withheld and identified as privileged on privilege logs.3
Dated this 17th Day of May, 2011.

________________________________________
E. RICHARD WEBBER
SENIOR UNITED STATES DISTRICT JUDGE

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Monsanto also argues that Defendants have placed their subjective beliefs at issue
through their claim for reformation based on fraudulent misrepresentation, in that one element of
that claim is that “the plaintiff acted or did not act in justifiable reliance on the representation.”
See Albert v. Alex. Brown Mgmt. Servs., Inc., 2005 WL 2130607, at *7 (Del. Ch. 2005). The
Court rejects this argument, because justifiable reliance is judged by an objective standard and
therefore does not require an inquiry into the plaintiff’s actual state of mind. See Norman v.
Paco Pharm. Servs., Inc., 1991 WL 182447, at *2 (Del. Ch. 1991).
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The Court declines to order or permit additional depositions of Defendants’ counsel or
personnel, finding that such depositions would be unnecessarily burdensome at this stage in the
litigation and that the information sought by Monsanto is adequately addressed through the
production of documents identified in Defendants’ privilege logs. The Court also notes that in
this Motion, Monsanto has expressly declined to seek documents or information identified as
attorney work product.
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