Tech Pharmacy Services, LLC v. Alixa Rx LLC et al
MEMORANDUM OPINION AND ORDER re 191 SEALED MOTION Motion For Relief Arising From Discovery Abuses During the Deposition of Defendants' Opinion Counsel David B. Walker filed by Tech Pharmacy Services, LLC. Tech Pharmacy Motion for Relief Arisingfrom Discovery Abuses Under Federal Rules of Civil Procedure 30(d)(2) (Dkt. #191) isGRANTED IN PART and DENIED IN PART.Signed by Judge Amos L. Mazzant, III on 8/11/17. (cm, )
United States District Court
EASTERN DISTRICT OF TEXAS
TECH PHARMACY SERVICES, LLC
ALIXA RX LLC, GOLDEN GATE
NATIONAL SENIOR CARE LLC d/b/a
GOLDEN LIVINGCENTERS, FILLMORE
CAPITAL PARTNERS, LLC, FILLMORE
STRATEGIC INVESTORS, LLC, and
Civil Action No. 4:15-CV-766
MEMORANDUM OPINION AND ORDER
Pending before the Court is Tech Pharmacy Services, LLC’s (“Tech Pharmacy”) Motion
for Relief Arising from Discovery Abuses Under Federal Rules of Civil Procedure 30(d)(2) (Dkt.
#191). After considering the relevant pleadings, the Court grants in part and denies in part Tech
Tech Pharmacy accuses Defendants of willful patent infringement of the five patents-insuit, all of which relate to the same technology. Defendants contest Tech Pharmacy’s willful
infringement claims by asserting an advice-of-counsel defense. In April 2012, Defendants
commissioned an opinion letter from David Walker (“Walker”), a partner with Barceló, Harrison
& Walker, LLP (the “Opinion Letter”). Walker’s Opinion Letter provided a non-infringement
analysis of Defendants’ accused technology as it related to the “dispense the loaded and
packaged one of the plurality of individual patient dosing packages into a separate and
removable container” limitation recited in United States Patent No. 7,698,019 (the “’019
On February 13, 2017, Tech Pharmacy deposed Walker about the opinions expressed in
During the deposition, Tech Pharmacy contends that counsel for Defendants
repeatedly and improperly interrupted to prevent Walker’s testimony based on attorney–client
and work–product privilege. Tech Pharmacy claims Defendants waived privilege with respect to
the subject matter of Walker’s Opinion Letter, and thus Tech Pharmacy had the right to ask
questions, receive answers, and receive documents related to this subject matter.
On March 15, 2017, Tech Pharmacy filed the present motion for relief related to
discovery abuse that occurred during Walker’s deposition (Dkt. #191). On March 24, 2017,
Defendants filed a response (Dkt. #203). On March 29, 2017, Tech Pharmacy filed a reply (Dkt.
#212). On April 3, 2017, Defendants filed a sur-reply (Dkt. #224).
The Federal Rules of Civil Procedure require that “examination and cross-examination of
a deponent proceed as they would at trial under the Federal Rules of Evidence.” Fed. R. Civ. P.
30(c)(1). Objections to deposition questions “must be noted on the record, but the examination
still proceeds; the testimony is taken subject to any objection.” Fed. R. Civ. P. 30(c)(2). The
Rules prohibit instructing the witness not to answer except “when necessary to preserve a
privilege, to enforce a limitation ordered by the court, or to present a motion under Rule
30(d)(3).” Id. Under Local Rule CV-30, “[o]bjections to questions during the oral deposition
are limited to ‘Objection, leading’ and ‘Objection, form.’” L.R. CV-30.
Federal Rule 30(d)(2) grants the Court authority to sanction “a person who impedes,
delays, or frustrates the fair examination of the deponent.” Fed. R. Civ. P. 30(d)(2).
Federal Circuit law governs, rather than the law of the regional circuit, when a case
involves “the extent to which a party waives its attorney–client privilege and work–product
immunity when it asserts the advice-of-counsel defense in response to a charge of willful patent
infringement.” EchoStar, 448 F.3d at 1298. Federal Circuit law also governs discovery disputes
over “materials relat[ing] to an issue of substantive patent law.” Advanced Cardiovascular Sys.
v. Medtronic, Inc., 265 F.3d 1294, 1307 (Fed. Cir. 2001).
“Questions of privilege and
discoverability that arise from assertion of the advice-of-counsel defense necessarily involve
issues of substantive patent law.” EchoStar, 448 F.3d at 1298.
Tech Pharmacy states that Defendants’ reliance on the advice-of-counsel defense
precludes an assertion of attorney–client and work–product privileges related to opinion
counsel’s advice. Tech Pharmacy further states that under Autobytel, a defendant’s assertion of
the advice-of-counsel defense waives privilege for both attorney–client communications and
communicated work product regarding the subject matter of the opinion. Autobytel, Inc. v.
Dealix Corp., 455 F. Supp. 2d 569, 572 (E.D. Tex. 2006) (citing In re EchoStar Commc’ns
Corp., 448 F.3d 1294, 1302–03 (Fed. Cir. 2006)). Tech Pharmacy relies on EchoStar’s waiver
standard. In EchoStar, the Federal Circuit defined waiver of both attorney–client privilege and
work–product privilege broadly, holding that it extends to all communications relating to the
same subject matter. EchoStar, 448 F.3d at 1299. This waiver includes “not only any letters,
memorandum, conversation, or the like between the attorney and his or her client, but also
includes, when appropriate, any documents referencing a communication between attorney and
client.” Id. at 1304. Thus, Tech Pharmacy contends Defendants denied it access to Walker’s
testimony regarding the subject matter of the Opinion Letter. Tech Pharmacy points to four
types questions of which it was entitled to ask Walker: (1) questions about attorney–client
communications relating to the Opinion Letter; (2) questions about the Opinion Letter itself; (3)
questions about what Walker used to form his opinion; and (4) questions about the validity and
enforceability of the patents mentioned in the Opinion Letter.
Defendants respond that the scope of Tech Pharmacy’s questioning and the waiver of
privilege should be limited to the same subject matter of the advice rendered in the Opinion
Letter. Walker opined that Defendants’ technology does not meet one limitation of one asserted
patent. Due to the limited subject matter of the Opinion Letter, Defendants maintain that waiver
and any related discovery should be similarly limited. Defendants contend Tech Pharmacy’s
questions during Walker’s deposition were impermissibly broad and sought disclosure of
information that Defendants did not waive and thus remained protected.
In determining the limits of privilege waiver and associated discovery under the adviceof-counsel defense, the Court must analyze attorney–client privilege and the work–product
doctrine separately because waiver of one does not necessarily waive the other. EchoStar,
448 F.3d at 1300.
For the attorney–client privilege waiver, the Federal Circuit held in EchoStar 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. Id. at
1301. As recognized in Autobytel, the “same subject matter” provision of this holding limits the
scope of the waiver to the same subject matter of the underlying opinion. 455 F. Supp. 2d at
574–75. The court found that waiver excluded: (1) any communication that merely references a
patent or is generated contemporaneous with the opinion letter; (2) any patent defenses not
addressed in the opinion letter; and (3) any patents or alternative infringement opinions not
expressed in the opinion letter. Id.
Here, Defendants asserted the advice-of-counsel defense and thereby waived attorney–
client communications related to the same subject matter as the Opinion Letter. Tech Pharmacy
argues that the deposition questions in dispute related to the same subject matter.
Pharmacy asked about a conversation Walker had with Huan Nguyen, an employee of Alixa who
conducted intensive due diligence of Tech Pharmacy’s technology during his prior job with
Walgreens and who Walker expressly footnoted as a source of information in the Opinion Letter
(Dkt. # 203, Exhibit D at 203:24–204:9, 205:3–10). Walker testified that Mr. Nguyen was the
only person he remembered speaking to about the technical aspects of his patent opinion, and
this discussion was lengthy (Dkt. # 203, Exhibit D at 86:12–24, 106:13–15; 114:5–23). Defense
counsel would not allow Tech Pharmacy to ask Walker about his conversations with Mr. Nguyen
or about the Opinion Letter itself. This was improper. Walker’s Opinion Letter was a noninfringement analysis of Alixa’s technology as it related to one claim limitation in the ’019
Patent. While Defendants contend the Opinion Letter was limited in scope, the Federal Circuit’s
broad definition of attorney–client privilege waiver includes all subject matter discussed in the
Opinion Letter, including the letter itself. Since Walker expressly mentioned speaking with Mr.
Nguyen in his Opinion Letter, questions about Walker’s conversations with Mr. Nguyen were
communications relating to the same subject matter as the Opinion Letter. Thus, Tech Pharmacy
was entitled to Walker’s testimony about his conversations with Mr. Nguyen regarding Alixa’s
technology and about the content of the Opinion Letter itself.
Defense counsel also blocked questions concerning Walker’s conversations with any
other Defendant or Defendants’ chief executive Ronald Silva about the technology that the
Opinion Letter expressly analyzes. The Opinion Letter indicates that Walker’s opinion relied on
a thorough review of the Proposed Alixa Products based on information provided by Alixa
(including, but not limited to, thorough conferences with Huan Nguyen)” (Dkt. #191, Exhibit 1
at GLC-00076156). Tech Pharmacy may question Walker about the information provided by
Alixa and receive such information. Walker’s use of “but not limited to” allows Tech Pharmacy
to ask questions about whether Walker conversed with any other Defendant or Mr. Silva about
the same subject matter that the Opinion Letter purports to analyze.
The work–product waiver is even narrower than the attorney–client privilege waiver.
EchoStar, 448 F.3d at 1302. The Federal Circuit stated “documents analyzing the law, facts, trial
strategy, and so forth that reflect the attorney’s mental impressions but were not given to the
client” are not discoverable. Id. at 1303. The court determined, “It is what the alleged infringer
knew or believed, and by contradistinction not what other items counsel may have prepared but
did not communicate to the client, that informs the court of an infringer’s willfulness.” Id. In
arriving at this conclusion, the court commented, “By asserting the advice-of-counsel defense to
a charge of willful infringement, the accused infringer and his or her attorney do not give their
opponent unfettered discretion to rummage through all of their files and pillage all of their
litigation strategies.” Id.
In its reply brief, Tech Pharmacy asserts the Opinion Letter should not be subject to work–product privilege. Tech
Pharmacy argues the Opinion Letter was not prepared in anticipation of litigation (Dkt. #213 at pp. 2–3). In contrast
to the attorney–client privilege, the work–product doctrine, or work–product immunity as it is also called, can
protect “documents and tangible things” prepared in anticipation of litigation that are both non-privileged and
relevant. Fed. R. Civ. P. 26(b)(3). Tech Pharmacy raised this argument for the first time in its reply. Consequently,
the Court will not consider it. Z-Tel Commc’ns, Inc. v. SBC Commc’ns, Inc., 331 F. Supp. 2d 513, 539 (E.D. Tex.
2004) (“It is a basic tenet of civil procedure that reply briefing may only respond to the allegations raised in the
Tech Pharmacy asked Walker whether he searched or told Defendants that he searched
for other patents or patent applications as part of rendering his opinion (Dkt. #191 at p. 7).
Walker refused answer at defense counsel’s instruction. Tech Pharmacy then asked whether
Walker was aware of any other Tech Pharmacy patents or patent applications besides the ’019
Patent and the ’004 Patent (Dkt. #191 at p. 7). Walker again refused to answer. Tech Pharmacy
argues Walker’s answer to these questions are relevant to Defendants’ state of mind regarding
their alleged infringement of Tech Pharmacy’s patents.
The Court finds that some of Tech Pharmacy’s questioning exceeds Defendants’ waiver
of both attorney–client privilege and work–product privilege. The Opinion Letter does not
indicate that Walker searched for other patents or patent applications or that he communicated
such searches to Defendants.
Thus, questions that seek information Walker considered in
forming his Opinion Letter, which he did not disclose to Defendants, remains protected by work–
product privilege. Such questions do not relate to what Defendants knew or believed at the time
of the alleged infringement.
As stated previously, waiver of attorney–client privilege does not extend to other patents
or alternative infringement opinions not addressed in the Opinion Letter. Autobytel, 455 F.
Supp. 2d at 575. However, the Opinion Letter specifically references the ’004 Patent two times,
noting that the file history of the ’004 Patent was considered (Dkt. # 191, Exhibit 1 at GLC00076156–57). The Opinion Letter’s mention of the ’004 Patent brings it into scope and subject
matter of the opinion. Tech Pharmacy was entitled to question Walker about his analysis of the
’004 Patent as it related to the ’019 Patent and the creation of the Opinion Letter. Any question
about Walker’s general opinion of the ’004 Patent and infringement is covered by work–product
Defendants also instructed Walker not to answer questions about validity and
enforceability of the patents mentioned in the Opinion Letter. The Court finds that Walker’s
opinion is limited to the subject of non-infringement of the ’019 Patent. The fact that the
Opinion Letter was titled “Opinion Regarding Validity, Scope, and Enforceability of U.S. Patent
No. 7,698,019” does not itself increase the scope of Walker’s opinion. Tech Pharmacy has not
shown any section of the Opinion Letter in which Walker opines about validity and
enforceability (Dkt. #191, Exhibit D at 224:7–13).
Questions about Walker’s mental
impressions regarding validity and enforceability of the’019 Patent are outside the scope of the
Opinion Letter, are uncommunicated work–product, and remain privileged. See Autobytel, 455
F. Supp. 2d at 575 (“The Court is not persuaded that EchoStar mandates waiver as to
unenforceability, validity, and non-infringement when an advice-of-counsel defense of noninfringement only is asserted.”).
Tech Pharmacy asks the Court to issue sanctions against Defendants to remedy
Defendants’ intentional bad faith misconduct during the February 13, 2017 deposition.
Pharmacy asks that the Court to prohibit Defendants from offering Walker at trial or providing
counter-designators in opposition to a dispositive motion and grant an adverse inference for
those questions Walker wrongfully refused to answer on Defendants’ counsel’s wrongful advice.
In addition, Tech Pharmacy asks for reasonably attorneys’ fees and costs associated with this
motion and the expense of conducting the first deposition and any other tasks Tech Pharmacy
may need to undertake to remediate Defendants’ misconduct. Lastly, Tech Pharmacy asks the
Court to order Defendants to produce Walker’s notes that first appeared on any privilege log six
weeks after they were supposed to have been identified, so the Court can determine whether the
documents contained non-privileged information to which Tech Pharmacy is entitled (Dkt. #191
at p. 14).
The Court retains the right to sanction “a person who impedes, delays, or frustrates the
fair examination of the deponent.” Fed. R. Civ. P. 30(d)(2). To impose sanctions against a
party, a court must make a specific finding that the party acted in bad faith. Toon v. Wackenhut
Corr. Corp., 250 F.3d 950, 952 (5th Cir. 2001) (citing Goldin v. Bartholow, 166 F.3d 710, 722
(5th Cir. 1999)). Here, the actions of defense counsel during Walker’s deposition impeded the
Under the advice-of-counsel defense, Defendants waived assertions of
attorney–client privilege and work–product privilege related to the subject matter of the Opinion
Letter. Defense counsel prevented Tech Pharmacy from receiving responses of which it was
entitled. Despite defense counsel’s improper objections, the Court does not find them to be in
bad faith. Thus, absent a showing of bad faith, sanctions are unwarranted.
As a remedy for Defendants’ conduct, the Court will allow Tech Pharmacy to conduct
another deposition of Walker at the expense of Defendants. The parties are encouraged to
confirm a date for Walker’s second deposition in a timely manner, considering the closeness of
Accordingly, it is therefore ORDERED that Tech Pharmacy Motion for Relief Arising
from Discovery Abuses Under Federal Rules of Civil Procedure 30(d)(2) (Dkt. #191) is
GRANTED IN PART and DENIED IN PART.
SIGNED this 11th day of August, 2017.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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