Nalco Company v. Baker Hughes Incorporated
MEMORANDUM AND ORDER granting in part and denying in part 256 Motion to Compel. (Signed by Magistrate Judge Dena Hanovice Palermo) Parties notified.(cfelchak, 4)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
NALCO CO., INC.
BAKER HUGHES INC. AND
BAKER PETROLITE CORP.
July 18, 2017
David J. Bradley, Clerk
CIVIL ACTION NO: 4:09-CV-1885
MEMORANDUM AND ORDER
Pending before the Court is Nalco Inc.’s (“Nalco”) motion to compel Baker
Hughes, Inc., and Baker Petrolite Corp. (collectively “Baker”) to produce an email
and testimony that Baker claims is protected under the attorney-client privilege.
ECF No. 256.1 The Court held a hearing on July 12, 2017, and ruled on one issue
Nalco raised, reserving ruling on two other issues. See Order, ECF No. 268.
This is an antitrust case arising from Baker’s allegedly fraudulent conduct in
obtaining a patent from the U.S. Patent and Trademark Office (“PTO”). Nalco
alleges Baker fraudulently obtained the patent and then used it to monopolize the
Judge Hoyt referred all matters in this case for ruling pursuant to 28 U.S.C. § 636(b)(1)(A) and
all potentially dispositive matters for a report and recommendation pursuant to § 636(b)(1)(B).
Order of Referral, ECF No. 259. A magistrate judge has the authority to issue rulings on a nondispositive discovery dispute. See DAC Surgical Partners P.A. v. United Healthcare Servs., Inc.,
No. 4:11-CV-1355, 2014 WL 585753, at *1 (S.D. Tex. Feb. 14, 2014) (Harmon, J.) (recognizing
a magistrate judge’s authority to issue such rulings).
relevant market, to mislead this Court in obtaining a preliminary injunction, and to
prevent Nalco from competing in the market.
The Parties are in a discovery dispute concerning the scope of attorney-client
privilege. Nalco filed a motion to compel after the deposition of Dr. Jerry Weers,
one of the inventors of the Baker patent at issue in this litigation. Nalco asks the
Court to allow it to resume the deposition of Dr. Weers so that it may continue its
examination regarding issues Baker’s counsel instructed him not to answer on the
basis of attorney-client privilege. Nalco seeks to resume Dr. Weers’ deposition to
question him about the March 30-31 email thread and his opinions concerning the
strength or weakness of the patent at issue.2
Attorney-client privilege “exists ‘to encourage full and frank communication
between attorneys and their clients.’” OneBeacon Ins. Co. v. T. Wade Welch &
Assocs., No. H-11-cv-3061, 2013 WL 6002166, at *2 (S.D. Tex. Nov. 12, 2013)
(Miller, J.) (quoting United States v. El Paso Co., 682 F.2d 530, 538 (5th Cir.
1982)). The elements of attorney-client privilege are: “(1) a confidential
communication; (2) made to a lawyer or his subordinate; (3) for the primary
purpose of securing either a legal opinion, legal services, or assistance in a legal
proceeding.” SEC v. Microtune, Inc., 258 F.R.D. 310, 315 (N.D. Tex. 2009) (citing
The Court ruled that Nalco may continue the deposition of Dr. Weers to explore his testimony
on whether he had any input into the decision to sue Nalco and to identify the persons who had
such input. Order, ECF No. 268.
United States v. Robinson, 121 F.3d 971, 974 (5th Cir. 1997)) (federal common
law governs privilege issue when the court has federal question subject-matter
jurisdiction). The party asserting the privilege bears the burden to demonstrate how
each communication satisfies all the elements of the privilege. Id. (citing Hodges,
Grant & Kaufmann v. United States, 768 F.2d 719, 721 (5th Cir. 1985)).
The court narrowly construes the privilege to the bounds necessary to protect
these principles because the “assertion of privileges inhibits the search for truth.”
Id. (quoting Navigant Consulting, Inc. v. Wilkinson, 220 F.R.D. 467, 477 (N.D.
Tex. 2004)). The privilege is limited to the disclosures made to an attorney that are
“necessary to obtain informed legal advice which might not have been made absent
the privilege.” Id. (quoting Fisher v. United States, 425 U.S. 391, 403 (1976)).
Therefore, “the privilege does not protect documents and other communications
simply because they result from an attorney-client relationship.” Id. (citing
Navigant Consulting, 220 F.R.D. at 477) (emphasis added).
This privilege applies in the corporate setting when an employee, on
instructions from a superior, communicates with counsel that which is necessary to
supply the basis for legal advice. Upjohn v. United States, 449 U.S. 383, 394-95
(1981). Communications that reflect counsel’s advice to the corporation do not
lose their privileged status when shared among corporate employees who share
responsibility for the subject matter of the communication. Baptiste v. Cushman &
Wakefield, Inc., No. 3-cv-2102, 2004 WL 330235, at *2 (S.D.N.Y Feb. 20, 2004).
“Management personnel should be able to discuss the legal advice rendered to
them as agents of the corporation.” Weeks v. Samsung Heavy Indus. Co., No. 93cv-4899, 1996 WL 341537, at *4 (N.D. Ill. June 20, 1996).
The privilege presumptively protects from discovery the “specific
communications between client and counsel, not the relevant underlying facts, data
or information.” Advanced Cardiovascular Sys., Inc. v. C.R. Bard, Inc., 144 F.R.D.
372, 374 (N.D. Cal. 1992) (emphasis in original). The privilege does not protect a
client’s knowledge of relevant facts, regardless of whether he learned the facts
from counsel. Baptiste, 2004 WL 330235, at *1.
A. The March 30-31 Email Chain Contains A Privileged Communication
In discovery, Baker produced a March 30-31, 2008, email chain between
two non-lawyer employees of Baker Petrolite, consisting of four emails. The
emails were between Dr. Weers, one of the inventors of the patent at issue, and
Ralph Naverrete, the Business Coordinator. No lawyer was copied on the email.
Resp. Mot. Compel, Ex. 1, ECF. No. 264-3. According to Baker, both Dr. Weers
and Mr. Naverrete share responsibility for the patent at issue. During Dr. Weers’
deposition, Nalco’s counsel questioned him about this email chain. Baker’s
counsel instructed him not to answer certain questions about the email and
ultimately clawed back the email on the basis of attorney-client privilege.
Baker claims that the attorney-client privilege protects the email chain
because the two employees were seeking legal advice and sharing legal advice they
had recently received. Resp. Mot. Compel, p. 4-8, ECF No. 264. Baker has
submitted a proposed redacted version of the email chain. ECF No. 270. The Court
finds that the attorney-client privilege protects one of the redacted sections of the
email, but not the other two.
circumstances. First, communications may be privileged when a corporate client
shares information with non-attorney employees “to relay information requested by
attorneys.” OneBeacon Ins. Co., 2013 WL 6002166, at *3 (quoting SmithKline
Beecham Corp. v. Apotex Corp., 232 F.R.D. 467, 477 (E.D. Pa. 2005)); Adams v.
Gateway, Inc., No. 2:02-CV-106, 2003 WL 23787856, at *11 (D. Utah Dec. 30,
2003) (noting that a document that “reveals the requests and directions of counsel”
Second, communications between non-attorney corporate employees may be
privileged when they were made “for the purpose of securing legal advice.”
Adams, 2003 WL 23787856, at *11; Cuno, Inc. v. Pall Corp, 121 F.R.D. 198, 203
(E.D.N.Y. 1988). “[S]o long as the information is relayed for the purpose of
obtaining legal counsel and it meets the other requirements for maintaining
privilege, then even if an attorney does not author or directly receive the
communication it is still protected.” OneBeacon Ins. Co., 2013 WL 6002166, at *3
(quoting Apotex, 232 F.R.D. at 479).
When the communication involves a document, for the court to find that the
attorney-client privilege applies, the court must inspect the document and find that
the primary purpose of the communication was to secure legal advice. Adams,
2003 WL 23787856, at *11; Cuno, 121 F.R.D. at 203; accord In re Kellogg Brown
& Root, Inc., 756 F.3d 754, 759-60 (D.C. Cir. 2014) (rejecting the sole primary
purpose test and finding that a party can claim the attorney-client privilege when
the “obtaining or providing legal advice [was] a primary purpose of the
communication, meaning one of the significant purposes of the communication”
(emphasis in original)). “For a communication between non-attorney employees to
be held privileged, it must be ‘apparent that the communication from one employee
to another was for the purpose of the second employee transmitting the information
to counsel for advice . . . .” Adams, 2003 WL 23787856, at *11 (A document
between non-attorney employees “must reflect its integration into the legal advice
communication chain to be eligible for attorney-client privilege.”); Cuno, 121
F.R.D. at 203 (same). If not, the privilege is denied. Adams, 2003 WL 23787856,
at *11; Cuno, 121 F.R.D. at 203.
A party can prove that the purpose of a communication was to seek legal
advice by offering evidence that the communication was relayed to an attorney.
See Prowess, Inc. v. RaySearch Labs. AB, No. 11-cv-1357, 2013 WL 1856348, at
*4 (D. Md. Apr. 30, 2013) (“communication may only be attorney-client privileged
if those communications were transmitted to attorneys”). Without this evidence,
the rationale for protecting full and frank communications between attorneys and
their client is lacking. Id.
Baker claims that three of the four emails contain attorney-client privileged
information. The Court will discuss the 7:57 a.m., 12:55 p.m., and 3:38 p.m.,
emails in turn.
1. The attorney-client privilege protects the 7:57 a.m. email
The 7:57 a.m. email reflects that Dr. Weers told Ralph Navarrete about a
specific request he made for legal advice to an attorney regarding the patent. The
attorney-client privilege protects this exchange because, on its face, the email
reflects that Dr. Weers communicated that he sought legal advice from a lawyer.
See Adams, 2003 WL 23787856, at *11. Dr. Weers and Mr. Navarrete, both
members of Baker management, share responsibility for the patent and should be
able to discuss legal advice rendered to them or that they sought as agents of the
corporation. Weeks, 1996 WL 341537, at *4. The Court finds that Baker has
satisfied its burden of proving that this communication is privileged and the
proposed redacted version of this section of the email chain is sufficient.
2. Baker has not met its burden to show that the 12:55 p.m. email is
In the 12:55 p.m. email, Baker seeks to redact a question from Mr. Navarrete
to Dr. Weers about the effect of an expired patent on the enforceability of Baker’s
patent. In the email, Mr. Navarrete does not ask Dr. Weers to forward this question
to counsel or state that that Mr. Navarrete intended to do so. Baker submitted
Mr. Navarrete’s affidavit in support of its position that the communication was
privileged. Mr. Navarrete stated that he responded to Dr. Weers’ email “with a
question I had for counsel concerning the scope of the 943 patent.” Resp. Mot.
Compel, Ex. 3 ¶ 3, ECF No. 264-5.
Nothing in the email chain indicates that the question was to be proposed to
counsel. See, e.g., Cuno, 121 F.R.D. at 203 (the purpose of obtaining legal services
must be present when an attorney is neither the sender nor the recipient of the
communication). Even assuming Mr. Navarrete had such an unexpressed intent,
Baker has not submitted evidence that the substance of this communication was in
fact conveyed to an attorney. See Prowess, Inc., 2013 WL 1856348, at *4. “This
Court will not extend the attorney-client privilege beyond its purpose to cover
communications that do not clearly involve an attorney or the facilitation of legal
services.” See id.
Therefore, Baker has not met its burden that this communication was made
for the purposes of securing legal advice. The Court finds that this email is not
3. Baker has not met its burden to show that the 3:38 p.m. email is
The most difficult analysis occurs in the last of the three emails. In the
3:38 p.m. email, Baker seeks to redact three sentences regarding Dr. Weers’
opinions on the impact of the patent on Nalco’s proposed business practice based
on prior art and the claims. Baker claims that these passages are based on
communications with counsel and consequently are privileged.
The face of the email reflects only that these communications reflect
Dr. Weers’ opinions based on his knowledge of prior art, the claims, and industry
practices. Assuming that the affidavit is sufficient to show that Dr. Weers was
sharing communication he had with counsel about the then-pending patent
application and relay his understanding of the enforceability of the patent based on
those communications with counsel, they would be privileged. 3 See Baptiste, 2004
WL 330235, at *2 (finding privileged an email addressed to another employee that
conveyed information and advice given by counsel); Advanced Cardiovascular,
144 F.R.D. at 375 (recognizing that a patent application necessarily involves
privileged communication between an inventor and the patent attorney). However,
Baker waived its right to claim the privilege when it submitted its proposed
“The attorney-client privilege will be waived if the holder of the privilege
discloses or consents to disclosure of any significant part of the communication to
a third party or stranger to the attorney-client relationship.” Baptiste, 2004 WL
330235, at *2 (citing In re Grand Jury Proceedings, No. 11-cv-189, 2001 WL
Dr. Weers’ affidavit merely says that his communications were “informed by” his
communications with counsel. It does not state that he was actually communicating counsel’s
advice or strategy. It is doubtful that this affidavit is sufficient meet Baker’s burden of
establishing the communications were privileged. See, e.g., Weeks, 1996 WL 341537, at *5
(finding that asserting party had met its burden when the party making the statement declared
that “he received advice from counsel regarding the legal obligations of defendants with respect
to plaintiff . . . [and] summarized that advice and relayed it to his superiors”).
1167497, at *7 (S.D.N.Y. Oct. 3, 2001)). “[T]he party asserting the attorney-client
privilege  has the burden to prove that waiver did not occur.” RLIS, Inc. v. Cerner
Corp., No. 3:12-CV-209, 2014 WL 12599509, at *1 (S.D. Tex. Dec. 24, 2014)
(Costa, J.). Under Federal Rule of Evidence 502(a), when a party makes an
intentional waiver in a federal proceeding, the Court can make undisclosed
communications that concerns the same subject matter available if it ought in
fairness to be considered together. Fed. R. Evid. 502(a); First Am. CoreLogic, Inc.
v. Fiserv, Inc., No. 2:10-CV-132, 2010 WL 4975566, at *3 (E.D. Tex. Dec. 2,
In submitting its proposed redactions to the Court, Baker did not redact the
second sentence of the email; it only redacted the first sentence in the email, which
discusses the impact of the pending-patent application on Nalco, and the third and
fourth sentences, which also discuss whether Nalco can use certain chemicals and
processes in light of the pending-patent application. The second sentence discusses
prior art, the strategy Baker used to distinguish the prior art in the pending
application, and the PTO examiner’s apparent response to that argument. The
second sentence, on its face and in light of the affidavit, appears to convey
information that counsel had previously communicated to Dr. Weers, yet Baker is
willing to disclose this sentence to Nalco, which constitutes a waiver of any
attorney-client privilege. See OneBeacon Ins., 2013 WL 6002166, at *2
(recognizing that the attorney-client privilege only applies if it has not been
waived). The fact that the application was pending and certain information was
publicly available does not negate this disclosure of counsel’s strategy and
counsel’s interpretation of the PTO’s apparent response that was communicated to
Because the other three sentences in the email concern the same subject
matter, but specifically how it relates to Nalco, they should be considered together
with the unredacted second sentence. Baker should not be allowed to pick and
choose which privileged communications to disclose to obtain a tactical advantage
over Nalco. See Fed. R. Evid. 502(a); Milwaukee Elec. Tool Corp., v. Chevron N.
Am. Inc., No. 14-CV-1289, 2017 WL 2929522, at *1 (E.D. Wis. July 10, 2017)
(“The scope of waiver should generally be construed narrowly in patent cases, but
it should also be informed by notions of fairness and a concern with stopping a
party from deriving a tactical advantage through selective disclosure.”).
Therefore, the Court finds that Baker has not met its burden that this email is
B. Dr. Weers’ Opinions on the Strength of the Patent Are Protected
Nalco also seeks to ask Dr. Weers questions regarding his opinion on the
strength of the patent. Nalco pursued this line of questioning based on another
email in which Dr. Weers stated that he thought that Nalco was planning to use
glycolic acid alone despite the fact that the patent included this acid. Dr. Weers
opined that Nalco thought that this was the weakest claim in Baker’s patent. Mot.
Comp., p. 9, ECF 256. Counsel for Nalco asked Dr. Weers whether he thought that
this was the “weakest link in the patent application.” Id. Baker objected and
instructed the witness not to answer. Nalco then asked Dr. Weers about his views
of the strength and weakness of the claims in the patent application. Again, Baker’s
counsel objected and instructed the witness not to answer.
Baker asserts this line of questioning calls for attorney-client privileged
information and again relied on Dr. Weers’ affidavit in support. In his affidavit,
Dr. Weers averred that any opinions he has on the strength or weakness of the
patent claims is based on his discussions with counsel. Resp. to Mot. Comp., ¶ 5,
The patent application process involves a dialogue between attorney and
inventor. Advanced Cardiovascular, 144 F.R.D. at 375. The inventor brings to the
dialogue technical information about the invention, although he may have some
limited knowledge of legal requirements in the patent area. Id. In contrast, the
lawyer brings “an understanding of the criteria used by the PTO in deciding
whether to issue patents and of the legal principles or considerations that come into
play when parties seek to enforce a patent against an alleged infringer or to
challenge a patent's validity.” Id. “The inventor looks to the lawyer to understand
the procedural and substantive legal requirements (e.g., the scope and character of
the duty of disclosure) for issuance of a patent, as well as the criteria the law
recognizes as relevant in enforcement and validity litigation.” Id. at 376-77. The
inventor and the lawyer make judgments and determinations as a team as to what
to include in the patent application and what is material for the required
disclosures; these communications are privileged. Id.
Questions about Dr. Weers’ opinions on the strength or weakness of the
case, in essence seek his opinions as to whether the PTO will grant the patent
application. The Court finds that any opinions Dr. Weers has regarding the strength
or weakness of the claims are based on his discussion with counsel about the patent
process and what is necessary to satisfy the PTO. Therefore, the attorney-client
privilege precludes Nalco from obtaining discovery on this line of questioning. See
id. (denying motion to compel “to the extent that it would reach private
communications between inventor and counsel made in connection with the
preparation of the original patent application or in connection with the
Nalco argues that Baker waived its opportunity to claim that Dr. Weers’
opinion on the strength of the patent is privileged. Mot. Compel, pp. 13-14, ECF
No. 256. Nalco argued at the hearing that Baker waived the privilege when
Dr. Weers testified at the injunction hearing regarding why the invention was
novel. This testimony does not constitute a waiver, because an inventor can
provide his opinion on why an invention is novel without disclosing his
conversations with counsel. See Advanced Cardiovascular, 144 F.R.D. at 377-78
(recognizing that an inventor can provide information about a patent that does not
disclose attorney-client privileged communication). During the hearing, the Court
stated that this opinion was not sufficient to create a waiver and Nalco’s counsel
stated that it would provide other record references to support its argument.
Counsel failed to provide the Court with those references. The Court will not sift
through the lengthy preliminary injunction hearing transcript to find where
Dr. Weers might have provided an opinion that would constitute a waiver. See In
re Keeper of Records (Grand Jury Subpoena Addressed to XYZ Corp.), 348 F.3d
16, 23 (1st Cir. 2003) (evaluating whether a party has waived a privilege “demands
a fastidious sifting of the facts and a careful weighing of the circumstances”);
United States v. Adkinson, 135 F.3d 1363, 1378-80 (11th Cir. 1998) (holding that it
is not the court’s duty to sift through the record for evidence that supports a party’s
During the continuation of the deposition of Dr. Weers, to the extent that it
has not already done so, Nalco can explore Dr. Weers’ knowledge of facts,
including his understanding of the terms of the patent, the existence of prior art,
and how this prior art compares to the patent. Dr. Weers’ knowledge of facts is not
protected, regardless of the source of that knowledge. See id. at 378-79 (granting
“motion to compel to the extent that it asks us to order the inventors to answer
questions about their understanding of terms used in the patent claims”).
The Court GRANTS Nalco’s motion to compel production of the March 3031, 2008, email chain, except for the three sentences contained in Baker’s proposed
redaction to the 7:57 a.m. email. The Court DENIES Nalco’s motion to compel
answers to Dr. Weers’ testimony regarding his opinion of the strength or weakness
of the patent. Nalco is permitted to ask, to the extent it has not already done so,
factual questions regarding Dr. Weers’ knowledge of facts, including his
understanding of the terms of the patent, the existence of prior art, and how this
prior art compares to the patent.
Signed on July 18, 2017, at Houston, Texas.
Dena Hanovice Palermo
United States Magistrate Judge
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