SARAH NETBURN, Magistrate Judge.
Familiarity with the underlying facts in this patent infringement and breach of contract case is assumed. Via joint letter to the Honorable Gregory H. Woods dated August 15, 2016, both parties in this case objected to designations that were made on their adversaries' privilege logs. (ECF No. 154.) On August 22, 2016, this dispute was referred to me for resolution. (ECF No. 156.) On August 29, 2016, the Court issued an order requiring parties to submit a representative sampling of ten documents for which they are asserting privilege for in camera review. Both parties have submitted such documents and the Court's review follows.
The attorney-client privilege applies only to "(1) a communication between client and counsel that (2) was intended to be and was in fact kept confidential, and (3) was made for the purpose of obtaining or providing legal advice."
Work product immunity, as codified in Rule 26(b)(3) of the Federal Rules of Civil Procedure, "shields materials prepared in anticipation of litigation or for trial . . . ."
In addition to the standard inquiry whether a communication qualifies as protected by the attorney-client privilege or work product doctrine in the first place, both parties' submissions involve issues relating to communications that have been disseminated beyond the attorneyclient relationship, either to other non-attorney employees of the same corporation or employees of another entity under common ownership.
With some exceptions, the attorney-client privilege is automatically waived when a privileged communication is disclosed to a third party or litigation adversary.
A clear exception to third-party waiver concerns communications between clients and non-lawyer agents or contractors of the attorney. Such communications are also privileged when made "for the purpose of obtaining legal advice."
As with other aspects of the attorney-client privilege, the third-party waiver doctrine applies differently in the corporate context. The Supreme Court has pointedly rejected the "control group" test for the attorney-client privilege, which extended only to top executives. In doing so, the Court emphasized that "[t]he attorney's advice will also frequently be more significant to noncontrol group members than to those who officially sanction the advice, and the control group test makes it more difficult to convey full and frank legal advice to the employees who will put into effect the client corporation's policy."
Lower courts have recognized the necessity of corporate employees discussing advice received by one agent of the corporation. "Therefore, although dissemination of privileged information to third parties generally waives attorney-client privilege, the distribution within a corporation of legal advice received from its counsel does not, by itself, vitiate the privilege."
A final exception to third party waiver is the common interest rule. This rule requires a showing that "(1) the party who asserts the rule must share a common legal interest with the party with whom the information was shared and (2) the statements for which protection is sought [must have been] designed to further that interest."
The Court finds that an overly stringent standard requiring a total identity of interest would unduly hamper the purpose of the common interest rule, which is to "protect the confidentiality of communications passing from one party to the attorney for another party where a joint defense effort or strategy has been decided upon and undertaken . . . ."
Entities that are under common ownership must still demonstrate that this rule applies, such as by making a showing that a common attorney was representing both corporate entities or that they otherwise shared a common legal interest.
Applying these principles, the Court conducted an in camera review of the disputed documents and reaches the following conclusions regarding the documents that Plaintiffs seek to maintain as privileged:
Document 130 is the July 31, 2014 Asset Purchase Agreement ("APA") between Uretek (now AU New Haven LLC) and Trelleborg, the two co-plaintiffs in this proceeding. Plaintiffs have produced the APA with the exception of four sub-paragraphs of Section 8.18, entitled "YKK License Agreement." Plaintiffs allege that this section contains attorney-client information regarding this then-anticipated legal action, including, inter alia, information regarding sharing of settlement/judgment proceeds, allocation of decisional authority, and distribution of costs to be incurred.
Plaintiffs argue that this section of the APA falls within the common interest doctrine because the two companies are now co-plaintiffs in the instant proceeding and the redacted APA was made in the course of formulating a common legal strategy with respect to their prosecution of this action. Defendants contend that the Asset Purchase Agreement, which represents the culmination of an arm's length negotiation between the representatives of the two co-plaintiffs, does not constitute legal advice or further a legal strategy; rather, it reflects commercial decisions regarding rights and obligations that are related to litigation and/or settlement. Defendants further note that at the time the agreement was signed, over a year before the commencement of this suit, plaintiffs were represented by separate counsel and possessed different rights with respect to the License Agreement and patent at issue in this case.
After reviewing the document in camera, the Court agrees with Defendants' characterization of the issues. The APA is a commercial agreement negotiated between two parties that memorializes the rights, responsibilities, and obligations of the parties involved in the transaction. The document in question does not primarily refer to a legal strategy vis-à-vis Defendants and simply does not meet the definition of a privileged document. It does not constitute "a communication between client and counsel" and was not made "for the purpose of obtaining or providing legal advice."
Moreover, even if the document were privileged, Uretek and Trelleborg would fail in their invocation of the common interest rule. Only communications made in the course of an ongoing legal enterprise, and intended to further the enterprise, are protected.
Accordingly, the redacted portions of Document 130 are not privileged and should be produced.
Document 257 is an email from Milton Berlinski (CEO and Chairman of the Board) to Stuart Press (President) of Uretek, commenting on a communication that Mr. Press had with representatives of YKK. A prior draft of the communication had been drafted by Attorney Wayne Martino. The communication itself is non-privileged because it has been directly divulged to Defendants.
After in camera review of the document, the Court finds that it does not reference the contents of discussions with Attorney Martino; rather it references a request that Mr. Berlinski, a non-attorney, had made of Mr. Press, also a non-attorney, which was non-legal in nature and did not incorporate Mr. Martino's advice and counsel. Accordingly, the email is subject to neither the attorney-client privilege nor the work product doctrine and should be produced.
Document 296 is an email from Mr. Berlinski to Mr. Press that copies a conversation between Mr. Press and Attorneys Wolf and Coury concerning prosecution of a patent application in Japan. The attorney-client communications refer to legal strategy, and the discussion of such information among senior executives at a corporation represented by counsel is privileged. Accordingly, the document is subject to attorney-client privilege and does not need not be produced.
Document 310 is an email from Mr. Press to Uretek employee Wandaliz Mendez concerning a Uretek patent application in Japan. The email forwards a communication between Attorney Coury and Mr. Press that describes and pertains to said application. The email constitutes a communication between client and counsel that was intended to be and was kept confidential and was made for the purpose of providing legal advice. The privilege is not waived by its forwarding to Wandaliz Mendez, an employee of the company represented by Attorney Coury. Accordingly, the document is subject to attorney-client privilege and does not need not be produced.
Document 178 is an email sent by Mr. Press to Sarah McGuire, a Uretek employee, forwarding a message and attached documents (Documents 179 and 180) relating to an invoice for work done on a Japanese patent sent by Attorney Court's firm to Mr. Press. While the email is a communication between client and counsel, a billing document such as an invoice that does not itself contain legal advice is not privileged, much like a retainer agreement. Accordingly, the documents are not subject to attorney-client privilege and should be produced. The Court does not understand the description of "professional services" in Document 180 to reveal confidential information. If, however, Plaintiffs believe that it does, that may be redacted.
Document 191 is an email from Mr. Press to Mr. Berlinski that forwards a communication between Mr. Press and Attorney Wolf. The attachment in the communication between Mr. Press and Attorney Wolf has already been provided to Plaintiffs. The cover email does not provide any commentary and does not seek to obtain or provide legal advice. Accordingly, the document is not subject to attorney-client privilege and should be produced.
Document 196 is an email from Mr. Press to Mr. Berlinski forwarding a cover email from Attorney Wolf to Mr. Press, with an attachment of Attorney Wolf's summary of a meeting with YKK (Document 197).
While it does not contain substantial information, Document 196 is a direct communication from attorney to client instructing client to view the attachment (Document 197), and is thus privileged. The Court's in camera review finds that Document 197 is also privileged and need not be produced. Numerous sections of the document constitute communications made for the purpose of providing legal advice. While other sections of Document 197 are predominantly factual meeting minutes, the facts that Attorney Wolf chose to note serve as a necessary background to the legal advice provided and indicate which facts he viewed as potentially legally significant. At any rate, as YKK was present at the meeting in question, it should be aware of all matters under discussion at that time.
Document 322 is an email chain between Attorney Coury, Mr. Press, several Uretek employees and Randal Hoder, one of the executors of the Estate of Hal Hoder, the former principal owner of Uretek, discussing the execution of a document pertaining to patents relevant to this case.
The underlying conversations between Attorney Coury and Uretek employees are unquestionably subject to attorney-client privilege protection. Therefore, the question is whether such privilege was waived when the information was shared with Mr. Randal Hoder. It appears clear that had the information been shared with Hal Hoder during his lifetime and tenure as Uretek owner, that information would have remained privileged and not subject to a third-party waiver, either because Hal Hoder would have been viewed as part of the control group of the corporation or via operation of the common interest doctrine. In this case, the privilege belongs to Hal Hoder and the involvement of Randal Hoder as the executor of Hal Hoder's estate does not waive it, as he is acting on Hal Hoder's behalf. Therefore, the document remains privileged and need not be produced.
Document 198 is an email from Attorney Martino, attorney for Uretek to Attorneys Kaye and Attlan, attorneys for Trelleborg, with copy to Mr. Berlinski, concerning a draft joint letter from the two co-plaintiffs to YKK about YKK's license agreement payments. The Court finds that this document, produced approximately 5 months before the filing of the Complaint in this case, constitutes attorney work product created in anticipation of litigation.
The protections accorded to attorney work product are not waived in this case because the document was disclosed to co-plaintiffs' lawyers. The Court finds that at the time the document was created, Uretek and Trelleborg had a sufficient "common interest" to defeat any claim of third-party waiver. Their comments to one another aiming to formulate a joint position on matters pertinent to the dispute at issue in this case were clearly disseminated in the context of a common legal strategy, and as such remain privileged. Accordingly, Document 198 does not need to be produced.
Document 222 is an email chain between Mr. Berlinski, Mr. Press, and Attorneys Martino and Schaefer discussing a draft of the complaint and various issues related thereto. The communications therein clearly constitute communications from attorney to client that contains legal advice and are thus privileged. The documents does not lose its privilege because Mr. Berlinski forwarded it to Mr. Press for his commentary. Accordingly, Document 222 does not need to be produced.
Document 2 is an email from Jack Sasaki, a non-attorney, to 22 recipients, one of whom is Katsu Yumoto, a non-attorney "legal coordinator" who reported to attorney John Castellano. The document includes a reference to needing to request a legal opinion, and refers to a future meeting with YKK's U.S. legal team.
The Court finds that this is a business communication that does not request legal advice from an attorney, provide legal advice, or disseminate legal advice already given by an attorney among non-attorney employees of a corporation. To the degree that legal issues are referenced, the document only states, to a broad audience of non-attorneys, that the relevant department has the intention of requesting legal advice in the future.
As such, the Court finds that Document 2 is not privileged and should be produced.
Document 3 is an email from non-attorney Masahiro Kusayama to 8 non-attorney recipients primarily containing non-privileged business information. Item (6) of the document, however, references the prior advice of attorney John Castellano with regards to whether a certain product can be used in light of a certain patent. The Court's review confirms that such advice is legal and not business in nature.
Plaintiffs argue that Document 3 should nevertheless be revealed because YKK Corporation and its wholly owned subsidiary YKK Corporation of America (YCA) do not share a common legal interest. Because Attorney John Castellano was Chief Legal Counsel of YCA, Plaintiffs contend that any communications he had with YKK Corporation and any communications incorporating his advice forwarded by employees of YKK Corporation would lose their privilege by virtue of having been disseminated to a third party. They further argue that the common interest rule does not apply because (1) only YKK Corporation, and not YCA, admitted that they were party to the License Agreement at issue in this case pursuant to plaintiffs' Requests for Admissions and (2) YCA and other YKK affiliates denied that they were jointly and severally liable for the actions of YKK Corporation. Defendants, for their part, counter that entities under common ownership sharing privileged information are always considered to be a single entity for the purpose of attorney-client privilege. Music Sales, 1999 WL 974025, at *7 (holding that corporations related through ownership or control need not prove common legal interest).
The Court does not adopt the per se standard that Defendants urge; in certain circumstances, commonly owned subsidiaries simply do not have the common purpose in litigation necessary for the invocation of the doctrine. "Privileges should be narrowly construed and expansions cautiously extended."
Nevertheless, in this case, Defendants have amply proven that YKK Corporation and YCA may invoke the common interest doctrine to maintain their communications privileged. According to YCA Chief Legal Counsel James Reed, "the legal department at each member entity works collaboratively with the other members' legal departments . . . [and the individual legal departments] essentially function as a single unified department which provides legal advice to all members of the YKK Group." Reed Decl. ¶ 4, ECF No. 167-1. Indeed, the Court's in camera review of this and other documents confirms that staff of the YKK Corporation regularly request and rely on the legal advice of YCA attorneys, and treat them in all respects as if they were in-house counsel directly employed by the YKK Corporation.
As such, the Court finds that point (6) of Document 3 is subject to attorney-client privilege, and therefore may be redacted. The Court also finds, however, that the rest of the document is unprivileged business information and should be produced to Plaintiffs.
Document 6 is an email from Yuki Abe, a non-attorney member of YKK's legal department, to five other recipients, including Mamoru Usuda, another member of YKK's legal department. The email has an attachment, Document 8, which is a report generated by YKK's legal department in order to advise the President of YKK on the relationship with Uretek. Defendants have represented that Mr. Abe and Mr. Usuda were working in close conjunction with Mr. Castellano to implement the legal strategies in the report. Reed Decl. ¶ 19, ECF No. 167-1.
The Court finds that Document 8 is primarily legal in nature and is protected by attorney-client privilege. Documents generated by non-legal staff under the supervision of an attorney is equally protected to that produced by the attorney himself or herself.
Document 9 is an email from non-attorney Jack Sasaki to Yancy Harada, a non-attorney legal coordinator who reported to Attorney Castellano at YCA. The communication references YKK's strategy as to the use of warning letters.
Though an attorney is neither copied nor referenced in the email, the communication discusses a legal strategy that very likely would have been derived from the advice of an attorney. Accordingly, the top email from Jack Sasaki is privileged and need not be produced. The following emails in Document 9 discuss business matters only and should be produced.
Document 15 is a redlined draft of proposed amendments to an agreement with Uretek that were made by a non-attorney member of the legal department, under the direction of Attorney Castellano. While there is no indication that it was prepared in anticipation of litigation so as to qualify it for protection under the work product doctrine, it was legal advice "communicated" to the client when it was turned over to YKK Corporation's document custodian Yoshimine Kobayashi. As such, it is subject to attorney-client privilege and need not be produced.
The plaintiffs have withdrawn their objection to Defendants' assertion of privilege with respect to this document, and accordingly it need not be produced.
This is a series of emails, certain of which copy James Reed, Chief Legal Counsel at YCA, and others that do not copy Attorney Reed but refer to legal advice given by him or by a Taiwanese attorney.
These documents all concern legal advice and accordingly are subject to attorney-client privilege. As such, they need not be produced.
This document is an email from non-attorney Akinobu Shibata to non-attorney Michael Blunt that copies YCA Chief Legal Counsel Jim Reed. The subject line is marked "Attorney Client priviledge" (sic) and an attorney is copied on the email. The email discusses the position the company should take in a given negotiation, and appears to be informed by prior legal advice given by attorneys. Additionally, it appears directed to put Attorney Reed on notice as to the perspectives that Mr. Shibata and Mr. Blunt have on the issue, and therefore to serve as a basis for additional legal advice. Finally, the email explicitly references a forthcoming meeting with Attorney Reed on the issue under discussion.
Accordingly, Document 119 is privileged and need not be produced.
The plaintiffs have withdrawn their objection to Defendants' assertion of privilege with respect to this document, and accordingly it need not be produced.
In addition to their objections regarding the specific documents provided to the Court for in camera review, Plaintiffs request that Defendants be ordered to produce (1) all documents that merely copy an attorney or member of the legal department and that do not expressly request a legal opinion or expressly respond to a request by an attorney or member of the legal department for information needed to formulate a legal opinion; (2) all documents reflecting business advice as opposed to legal advice; (3) all documents shared between any Defendants and their affiliates where the recipients do not share a common legal interest; and (4) all documents containing nonprivileged information, with privileged communications and marginal privileged notes redacted as appropriate.
On the one hand, Plaintiffs' narrow formulation of the attorney work-privilege as applying only to express requests for or provision of legal advice fails to take into account its protection for "communications among corporate employees that reflect advice rendered by counsel . . . ."
The Court directs the parties to review their privilege logs in accordance with this order and produce additional documents in accordance with its principles. Documents that contain both substantial privileged and non-privileged information must be produced in part, and may not be withheld in their entirety.
Following in camera review of the selected log entries, plaintiffs and defendants are both ordered to produce the documents or portions of documents described in this order as nonprivileged. They are further ordered to review their privilege logs to produce additional documents in accordance with this Order.
To assist the parties in this endeavor, the Court summarizes the Order's principal conclusions as follows: (1) the common interest doctrine protects otherwise privileged communications between Uretek and Trelleborg that were reasonably related to this litigation, such as Document 198, but not documents preceding this "ongoing legal enterprise," such as Document 130; (2) the common interest doctrine protects otherwise privileged communications between counsel at YCA and employees at YKK, despite the fact that YCA and YKK are separate corporate entities; (3) in light of the need for language interpretation within YKK, privilege is not waived by the presence of Japanese non-attorney advisors on Defendants' email chains and extends to legal communications by such non-attorneys that were prepared under the direction or supervision of an attorney; and (4) neither party may withhold entire documents on the ground that a portion of the document is privileged, and must instead redact only the actually privileged information in each document.