01 Communique Laboratory, Inc. v. Citrix Systems, Inc.

Filing 513

Memorandum Opinion: Communique's appeal of the magistrate judge's memorandum opinion and order is denied in its entirety. (Related Doc #338 , #339 , #340 , #341 ). Judge Sara Lioi on 1/10/2016. (P,J)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

01 COMMUNIQUE LABORATORY,
INC.,

PLAINTIFF,
vs.
CITRIX SYSTEMS, INC., et al.,

DEFENDANTS.

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CASE NO. 1:06-cv-253

JUDGE SARA LIOI

MEMORANDUM OPINION

Presently pending before the Court is Plaintiff 01 Communique
Laboratory, Inc.’s (“plaintiff” or “Communique”) appeal (Doc No. 339 [“Appeal”]) of
Magistrate Judge Burke’s memorandum opinion and order (Doc. No. 338 [“MOO”])
regarding Communique’s challenge to certain assertions of attorney-client privilege by
defendants Citrix Systems, Inc. and Citrix Online, LLC (collectively “defendants” or
“Citrix”). Citrix has opposed Communique’s appeal (Doc. No. 340 [“Opp’n”]), to which
Communique has replied (Doc. No. 341 [“Reply”]). For the reasons contained herein,
Communique’s appeal is denied.
A. Magistrate Judge Burke’s Memorandum Opinion and Order
Magistrate Judge Burke’s memorandum opinion and order resolves a
discovery dispute raised by Communique alleging that Citrix improperly asserted
attorney client privilege with respect to a license between Citrix and Tridia, Inc.
(“Tridia”) as it pertains to the issue of damages in this case. Specifically, Communique

challenges Citrix’s assertion of privilege during the deposition Citrix’s Rule 30(b)(6)
witness, Robert Feldman (“Feldman”), and with respect to two documents.
Magistrate Judge Burke concluded that Citrix properly asserted the
privilege in the Rule 30(b)(6) deposition and did not waive the privilege. (MOO at
11310.1) With respect to the documents, the magistrate judge found that Citrix properly
asserted the privilege as to Privilege Log Entries Nos. 2 and 98. (MOO at 1312-13.)
Communique does not appeal the magistrate judge’s decision with respect to Privilege
Log Entry No. 2.
B. Standard of Review
This discovery dispute was before Magistrate Judge Burke upon the
referral of this Court. Parties may object to an order issued by a magistrate judge
regarding non-dispositive matters, and a district judge must consider timely objections
“and modify or set aside any part of the order that is clearly erroneous or is contrary to
law.” Fed. R. Civ. P. 72(a); 28 U.S.C. § 636 (b)(1)(A). The “clearly erroneous” standard
applies to the magistrate judge's findings of fact, and the magistrate judge's legal
conclusions are reviewed under the “contrary to law” standard. Gandee v. Glasser, 785 F.
Supp. 684, 686 (S.D. Ohio 1992) (citations omitted).
“In reviewing a magistrate judge's decision to determine whether it is
‘contrary to law,’ a district court is to apply the same standard the Sixth Circuit employs
to review a district court's ruling on an evidentiary question, which is an ‘abuse of

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All references to page numbers are to the page identification numbers generated by the Court’s electronic
filing system.
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discretion’ standard. An abuse of discretion occurs when a court improperly applies the
law or uses an erroneous legal standard.” Phillips v. Philip Morris Cos., Inc., No.
5:10CV1741, 2013 WL 3291516, at *2 (N.D. Ohio June 28, 2013) (some internal
quotation marks omitted) (quoting JGR, Inc. v. Thomasville Furniture Indus., Inc., No.
1:96-CV-01780, 2006 WL 456479, at *1 (N.D. Ohio Feb. 24, 2006) (quoting United
States v. Taplin, 954 F.2d 1256, 1258 (6th Cir. 1992))).
A finding is clearly erroneous “when the reviewing court on the entire
evidence is left with the definite and firm conviction that a mistake has been committed .
. . the test is whether there is evidence in the record to support the lower court's finding,
and whether its construction of the evidence is a reasonable one.” Phillips, 2013 WL
3291516, at *2 (internal quotation marks omitted) (quoting JGR, Inc., 2006 WL 456479,
at *1 (quoting Heights Cmty. Cong. v. Hilltop Realty, Inc., 774 F.2d 135, 140 (6th Cir.
1985))).
C. Communique’s Objections and Analysis
1. Privilege Log Entry No. 98 is Privileged
This document, an email dated November 21, 2006, was originally
produced by Citrix to Communique in connection with discovery related to Citrix’s
license with Tridia for various Tridia patents (the “Citrix-Tridia license”). But Citrix later
“clawed back” the document on the grounds that it was privileged and inadvertently
produced.

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Citrix contends that the document is a confidential communication from
Citrix to its attorney seeking legal advice, while Communique argues that the document
pertains to Citrix’s business/licensing strategy. (MOO at 11311.) The magistrate judge
conducted an in camera review of the document (Doc. No. 334-3 [“Priv. Log. #98”]), and
concluded that it was a communication sent by Citrix, as a client, to its outside legal
counsel for the purpose of seeking legal advice, and therefore privileged, and that it was
inadvertently produced. (MOO at 11311-12.) Communique objects to this ruling, arguing
that the email does not seek legal advice, but merely asks for an estimate of litigations
costs, which is not privileged.2 (Appeal at 11327.).
The Court conducted its own in camera review of Privilege Log Entry No.
98. That review confirms the magistrate judge’s conclusion that within the email at issue,
Citrix seeks legal advice from its counsel regarding litigation strategy for this case.
Moreover, the Court does not find that Magistrate Judge Burke abused her discretion in
concluding that Privilege Log Entry 98 was protected from disclosure in its entirety by
the attorney client privilege. Communique’s appeal with respect to Privilege Log Entry
98 is denied.
2. Feldman’s assertion of privilege was proper
Robert Feldman was deposed by Communique as Citrix’s Rule 30(b)(6)
witness with respect to the Citrix-Tridia license. This license is relied upon, in part, by
Citrix’s damages expert in his opinion regarding reasonable royalties.

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Communique does not appeal the magistrate judge’s conclusion that the production was inadvertent.
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During the Rule 30(b)(6) deposition, Communique inquired whether
Citrix believed that any of its products infringed the Tridia patents, and whether Citrix
believed the Tridia patents were valid. (MOO at 11303-04.) Feldman declined to answer
these questions on the basis that Citrix’s beliefs were inseparable from the legal advice it
received with respect to those issues, therefore, he could not answer without disclosing
attorney-client privileged communications. (MOO at 11304-05.).
Communique argued before Magistrate Judge Burke that the attorneyclient privilege does not protect “beliefs,” and that Feldman should be required to answer
Communique’s questions. (MOO at 11305.) The magistrate judge concluded that a
corporation, as an artificial creature of the law, does not have personal beliefs in the same
way that a natural person does. (MOO at 11306 (citing Upjohn Co. v. U.S., 449 U.S. 383,
389-90 (1981) (a corporation is an artificial creature of the law)).) After examining
Feldman’s deposition testimony in detail, the magistrate judge found that Citrix’s beliefs
regarding infringement and invalidity were protected by privilege. (MOO at 11303-06.).
On appeal, Communique contends that the magistrate judge erred in
concluding that a corporation does not hold personal beliefs the same way that a natural
person does, pointing out that litigants are regularly required to testify regarding their
beliefs, which are not privileged, and the deposition questions at issue were not directed
to the advice of counsel received by Citrix. (Appeal at 11325-26.) But Communique
misses the point. Magistrate Judge Burke did not hold that Feldman properly asserted the
privilege simply because a corporation cannot hold a belief. Rather, the magistrate judge
found that “Citrix’s beliefs on such legal questions [regarding validity and infringement]
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were inseparable from its counsel’s advice because Citrix ‘relies exclusively on the
advice of counsel for such legal determinations.’” (MOO at 11306 (citation to Rule
30(b)(6) deposition omitted).) Communique does not argue on appeal that the magistrate
judge’s finding regarding Citrix’s exclusive reliance on the advice of counsel is clearly
erroneous.
In making her finding, Communique maintains that the magistrate judge
misinterpreted Davis v. PMA Co., Inc., No. CIV-11-CV-359-C, 2012 WL 3933967 (W.D.
Okla. Sept. 7, 2012), and erred by concluding the case was inapposite. (Appeal at 11325
at n. 28.) Davis is an employment termination case in which the deponent was an officer
of the corporation being deposed as a natural person regarding plaintiff’s ethical
complaints. When the deponent was asked about his personal belief as to whether he
should have documented and reported plaintiff’s concerns, the deponent refused to
answer on the basis of privilege. The court in Davis found that the privilege did not apply
because the deponent was not asked whether he had received legal advice regarding his
reporting obligations or the content of that advice. Rather, the question was limited to
whether the deponent “personally believed that the concerns raised by Plaintiff were the
type of complaints that normally should be documented and reported. [The deponent’s]
personal beliefs are not privileged as attorney-client communications or attorney work
product.” Davis, 2012 WL 3922967, at *8. Communique contends that the proper
interpretation of Davis is that “questions limited to a deponent’s beliefs do not implicate
privilege when the questions themselves do not expressly elicit that information.”
(Appeal at 11325, n. 28.).
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The magistrate judge did not err in finding Davis inapposite. In this case,
Feldman was not deposed as a natural person, but as Citrix’s Rule 30(b)(6) witness.
When Feldman testified as Citrix’s Rule 30(b)(6) witness, he was testifying on behalf of
the corporate entity, not individually as an officer or employee of Citrix, as was the case
in Davis. As a witness for the corporation, Feldman was not, and could not be, asked
about his personal beliefs. Moreover, the magistrate judge found that Citrix’s beliefs
regarding the legal issues of infringement and validity were based entirely on the advice
of counsel. Thus, Citrix’s beliefs are one and the same as the advice of counsel,
regardless of whether the Communique’s questions attempted to directly elicit privileged
information.
Communique additionally argues on appeal that Citrix’s assertion of the
privilege regarding its beliefs about infringement and validity with respect to the CitrixTridia license is inconsistent with Citrix’s position in another case before the Federal
Circuit, but this argument is unavailing. In SSL Services, LLC v. Citrix Systems, Inc. 769
F.3d 1073 (Fed. Cir. 2014), Citrix argued that it was entitled to a new trial “because the
court prevented the jury from hearing fact testimony from its Chief Engineer, Marco
Murgia, that . . . Citrix believed in good faith that its products were non-infringing[.]”
SSL Services, 769 F.3d at 1092. But SSL Services is readily distinguishable from this
case. In SSL Services, Citrix sought to advance the personal belief of its chief engineer
regarding the issue of infringement, not the belief of the corporation.

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For all of these reasons, the Court is not left with the definite and firm
conviction that the magistrate judge erred, nor finds that she abused her discretion, in
concluding that Feldman properly asserted the privilege in his Rule 30(b)(6) deposition.
Communique’s appeal in this regard is denied.
3. Citrix did not waive the privilege
Even if Feldman properly asserted the privilege, Communique
alternatively argued before the magistrate judge that Citrix expressly or impliedly waived
its right to do so. The magistrate judge found that there was no express waiver, and
Communique does not appeal that determination. (MOO at 11306-07.).
The magistrate judge also determined that there was no implied waiver of
the privilege. Communique contends on appeal that the magistrate judge applied the
wrong legal standard in reaching this conclusion by applying the implied waiver standard
of Rhone-Poulenc Rorer, Inc., v. Home Indem. Co., 332 F.3d 851 (3d Cir. 1994) instead
of Hearn v. Rhay, 68 F.R.D. 574 (E.D. Wash 1975). (Appeal at 11329-30.) But as
Communique acknowledges in its objections, the magistrate judge performed the implied
waiver analysis under both standards.

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Therefore, Communique’s appeal that the magistrate judge erroneously
applied the Rhone-Poulenc standard over Hearn need not be addressed herein. The Court
will only consider Communique’s contention that the magistrate judge erred in applying
Hearn.3
Under the Hearn standard, a privilege is impliedly waived if:
[The] defendants invoked the privilege in furtherance of an affirmative
defense they asserted for their own benefit; through this affirmative act
they placed the protected information at issue, for the legal advice they
received is germane to the . . . defense they raised; and one result of
asserting the privilege has been to deprive plaintiff of information
necessary to ‘defend’ against defendants' affirmative defense, for the
protected information is also germane to plaintiff's burden of proving
malice or unreasonable disregard of his clearly established constitutional
rights.
Hearn, 68 F.R.D. at 581.
Applying the Hearn analysis, the magistrate judge determined that finding
an implied waiver under that standard was not warranted because Communique received
non-privileged discovery with respect to the Citirx-Tridia license, including (1) the
license agreement, (2) all non-privileged communications regarding the negotiation of the
licenses, and (3) a Rule 30(b)(6) deposition regarding the license. (MOO at 11310.) On
appeal, Communique does not contend that this finding regarding the discovery received

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As is evident from the magistrate judge’s order and the parties’ briefing on Communique’s objections,
there is little federal circuit precedent with respect to implied waiver of attorney-client privilege. Indeed,
neither Rhone-Poulenc nor Hearn is a Federal Circuit case. Afro-Lecon, Inc. v. U.S., 820 F.2d 1198, 1205
(Fed. Cir. 1987) cited the Hearn balancing test for waiver, but did so in the context of Fifth Amendment
privilege, not attorney-client privilege. Rhone-Poulenc criticizes Hearn as among the decisions that rest
privilege waiver decisions on the relevance of the information sought. Rhone-Poulenc, 32 F.3d at 864. In In
re Echostar Commc’ns Corp., 448 F.3d 1294, 1301 (Fed. Cir. 2006) (implied waiver when defendant
asserts advice of counsel with respect to willful infringement claim), the Federal Circuit stated that “we
recognize that when a party defends its actions by disclosing an attorney-client communication, it waives
the attorney-client privilege as to all such communications regarding the same subject matter.” Echostar
cited neither Hearn nor Rhone-Poulenc.
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is clearly erroneous or contrary to law. Rather, Communique contends that the finding is
“undermined” by Citrix’s “admission” that it did not search for all non-privileged
documents regarding the licenses, and by the “vague and inconsistent” testimony of its
30(b)(6) witnesses. (Appeal at 11331.).
First, Communique’s argument that the magistrate judge’s decision is
“undermined” is not a standard or basis under the law upon which to sustain
Communique’s objection to the magistrate judge’s finding that an implied waiver under
Hearn is not warranted. Second, the instant dispute flows out of discovery ordered by the
magistrate judge in December 2014 regarding the Citrix-Tridia license and other licenses.
(MOO at 11299.) The only issue raised by Communique in this dispute is Citrix’s
assertion of privilege as to the Citrix-Tridia license. Communique cannot now raise yet
another and a new dispute regarding Communique’s dissatisfaction with the discovery it
received from Citrix as the basis for objecting to the magistrate judge’s ruling on the
privilege issue.
For these reasons, the Court is not left with a definite and firm conviction
that the magistrate judge erred regarding the non-privileged discovery that Communique
received from Citrix with respect to the Citrix-Tridia license, or that the magistrate judge
abused her discretion in finding that an implied waiver was not warranted under the
Hearn standard.
Accordingly,

Communique’s

appeal

determination regarding implied waiver is denied.

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of

the

magistrate

judge’s

D. Conclusion
For the reasons contained herein, Communique’s appeal of the magistrate
judge’s memorandum opinion and order is denied in its entirety.
IT IS SO ORDERED.

Dated: January 10, 2016
HONORABLE SARA LIOI
UNITED STATES DISTRICT JUDGE

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