Opinion
NO: MDL 1298, (Rel. to 99-CA-3118).
September 24, 2001
MEMORANDUM AND ORDER
Background
On July 12, 2001, Magistrate Judge Wilkinson issued an order addressing numerous discovery motions brought by various parties in this multi-district litigation proceeding. Minebea has filed objections to four of these rulings. Minebea describes these rulings as follows:
Minebea initially objected to six of the rulings. However, on September 5, 2001, it withdrew its objections to four of those rulings after Magistrate Judge Wilkinson issued his August 15, 2001 order concerning Minebea's motion for reconsideration.
1. That Minebea waived the attorney-client privilege by submitting the declaration of Douglas Hymas;
2. That waiver relating to communications in 1995 was broad enough to encompass documents that were created in 1991 and 1992;
3. That discovery requests related to the uses to which hard disk motors can allegedly be put is not relevant to the issue of patent exhaustion;
4. That discovery requests relating to market information are not relevant to Minebea's antitrust claims . . . .
Minebea's Motion Appealing Magistrate Judge Wilkinson's July 12, 2001 order.
Pursuant to Fed.R.Civ.P. 72(a), I review the magistrate judge's rulings to determine whether they were clearly erroneous or contrary to law.
Discussion
A. The Attorney-Client Privilege
Magistrate Judge Wilkinson has ruled that certain statements contained in an affidavit submitted by Minebea revealed confidential attorney-client communications relating to whether Minebea reasonably relied on alleged representations made by Papst. Minebea had submitted the affidavit of Douglas Hymas, its in-house counsel, as part of its opposition to Papst's motion for summary judgment. The Hymas affidavit contained the following statements concerning communications between Messrs. Hymas and R. Mizukami, Managing Director of Minebea:
Paragraph 9-"Mr. Mizukami told me that I could rely on Papst to properly identify on that appendix the so-called drive patents that were unrelated to Minebea's business."
Paragraph 10-"Mr. Mizukami . . . cautioned me to further curtail my activities in order to achieve a smooth resolution of any outstanding issues."
Paragraph 11-"I raised the issue [with Mr. Mizukami] of reviewing the patents and estimated that the time and cost requirement of an independent review were prohibitive . . . Mr. Mizukami instructed me not to conduct any independent analysis of these patents."
The statements at issue describe conversations between Messrs. Hymas and R. Mizukami, relating to the extent Minebea (a) could rely upon the representations of Papst concerning the identity of the patents with which they were dealing and (b) should conduct its own review of the patents.
Judge Wilkinson also found that the scope of Minebea's waiver of the attorney-client privilege encompassed communications relating to "the subject matter of whether Minebea reasonably relied on alleged misrepresentations made by Papst," including documents that were created as early as 1991. Magistrate Judge Wilkinson's July 12, 2001 Order at 63.
Minebea opposes Judge Wilkinson's findings. Minebea argues that the contested statements in the Hymas affidavit are not privileged because they either were generally deducible or represent communications about business reasons. In the alternative, Minebea argues that any waiver resulting from the Hymas affidavit must be narrowly construed as to specific subject matter and time. In the further alternative, Minebea contends that it was legal error for Judge Wilkinson to conclude that it could not withdraw its reliance on the privileged portions of the Hymas affidavit. I now address each of Minebea's argument in turn.
A. Attorney-Client Privilege-The Hymas Affidavit
Under federal law, the attorney-client privilege may be invoked when there is "(1) a communication between client and counsel, which (2) was intended to be and was in fact kept confidential, and (3) made for the purpose of obtaining or providing legal advice." United States v. Construction Products Research, Inc., 73 F.3d 464, 473 (2d Cir. 1996). The disclosure of "any significant portion of a confidential communication waives the privilege as to the whole." Nguyen v. Excel Corp., 197 F.3d 200, 207 (5th Cir. 1999). A voluntary disclosure of information that is inconsistent with the confidential nature of the attorney-client relationship waives the privilege. Alldread v. City of Grenada, 988 F.2d 1425, 1434 (5th Cir. 1993). A waiver of attorney-client privilege as to a particular communication extends to all other communications relating to the same subject matter. In re Grand Jury Subpoena (Zerendow), 925 F. Supp. 849, 855 (D. Mass. 1995) (citing In re Sealed Case, 877 F.2d 976, 980-81 (D.C. Cir. 1989)).
Minebea argues that the Hymas Affidavit does not reveal privileged attorney-client communications. In support of this argument, Minebea claims that the contested statements in the Hymas affidavit are not privileged because they either were generally deducible or represent communications about business reasons. Minebea is correct that the attorney-client privilege does not attach where the content of the communication was already known or deducible by third parties, see United States v. Buljubasic, 808 F.2d 1260, 1268 (7th Cir. 1987), or where the communication pertains to mere instructions on what services the attorney is to perform, Softview Computer Prods. Corp. v. Haworth Inc., No. 97 Civ. 8815 KMWHBP, 2000 WL 351411, at *10 (S.D.N.Y. Mar. 31, 2001) However, the cases cited by Minebea are distinguishable from the case at bar.
In Buljubasic, the alleged privileged communication was between a criminal defendant and his attorney, and involved a court's grant of immunity. 808 F.2d at 1268. In that case, the court's grant of immunity was a matter of public record at the time of the communication. Id. In the present case, however, the disputed portions of the Hymas affidavit were not a matter of public record. While Minebea has asserted that the communications between Mr. Hymas and Mr. Mizukami were either already known or deducible by Mr. Papst, Minebea offers no support for this conclusion. Therefore, Buljubasic is not applicable to this case.
In Softview Computer Prods. Corp. v. Haworth, Inc., the court held that several disputed documents did not contain confidential information and thus were not protected by the attorney-client privilege. 2000 WL 351411, at *10. Minebea has emphasized one particular document in that case that authorized counsel to file a patent application for Haworth. Id. The court found that this document was not protected by attorney-client privilege because it did not contain confidential information. The disputed portions of the Hymas affidavit are not mere directives from Mr. Mizukami to Mr. Hymas, but are communications between client and counsel regarding Minebea's reliance on Papst. Accordingly,Softview Computer offers no support for Minebea's contention that the disputed portions of the Hymas affidavit are not protected by attorney-client privilege.
Minebea also argues that the disputed communications in the Hymas affidavit are not privileged because they are based on business reasons. Minebea cites SCM Corp. v. Xerox Corp., 70 F.R.D. 508 (D. Ct. 1976), in support of this argument. While the court in SCM Corp. recognized that purely business reasons for making a decision are not privileged, it stated that communications remain within the privilege when business and legal considerations are interwoven. 70 F.R.D. at 517. Minebea argues that Mr. Mizukami's instruction to Mr. Hymas not to conduct any independent analysis of patents, contained in paragraph 11 of the Hymas Affidavit, are not privileged because the instruction was an exercise of business judgment. However, viewed in the context of Minebea's relationship with Papst, Mr. Mizukami's instruction to Mr. Hymas was part of a discussion of Minebea's legal strategy relating to the extent Minebea could rely upon the representations of Papst, and not merely a business decision based on financial considerations. Therefore, Minebea's citation of SCM Corp. is also inapposite.
Upon reviewing the disputed portions of the Hymas Affidavit, I agree with Judge Wilkinson's determination that Minebea has revealed privileged attorney-client statements. The communications between Mr. Hymas and Mr. Mizukami were between counsel and client, outside the presence of a third party, for the purposes of obtaining or providing legal advice relating to the extent Minebea (a) could rely upon the representations of Papst concerning the identity of the patents with which they were dealing and (b) should conduct its own review of the patents.
In the alternative, Minebea argues that it was legal error for Magistrate Judge Wilkinson to conclude that Minebea could not withdraw its reliance on the privileged portions of the Hymas affidavit. The cases cited by Minebea in support of its argument for withdrawal of the Hymas affidavit are inapposite. Minebea has cited cases that involve parties who argued for preservation of the attorney-client privilege prior to production of the privileged documents, and did not take the affirmative step of offering arguably privileged communications to the court in support of its case.
In North River Insurance Co. v. Philadelphia Reinsurance Corp., 797 F. Supp. 363 (D.N.J. 1992), for example, a reinsurer sought to compel discovery of attorney-client documents created in connection with alternative dispute resolution proceedings between the reinsured and insured. The dispute in that case was over withheld documents, and whether they were discoverable because they related to subject matter arguably placed at issue by North River Insurance.
Minebea is correct that the court in Rhone-Poulenc Rorer Inc. v. Home Indemnity Co., 32 F.3d 851 (3d Cir. 1994), stated that "a party does not lose the privilege to protect attorney client communications from disclosure in discovery when his or her state of mind is put into issue." Id. at 864. However, the court also stated that where a client takes anaffirmative step in litigation to place the advice of an attorney at issue, the client opens to examination facts relating to that advice. Id. at 863.
Thus, North River Insurance and Rhone-Poulenc Rorer are clearly distinguishable from the case at bar. The Hymas affidavit, and its disclosure of privileged information, was purposely included in a sworn declaration and used by Minebea in an attempt to defeat Papst's motion for summary judgment. In opposing Papst's motion for summary judgment, Minebea did not merely put its state of mind at issue. Minebea voluntarily submitted Mr. Hymas' statements to this Court in an attempt to defeat Papst's motion. The Hymas affidavit intentionally revealed attorney-client communications and was contained in an affidavit used to support Minebea's position "that (a) it trusted and relied on Papst for identification of drive patents unnecessary to Minebea's business and (b) Minebea's counsel was involved in only a limited capacity" in its negotiations with Papst. See Magistrate Judge Wilkinson's July 12, 2001 Order at 61.
Minebea has not cited any case to support its proposition that a party can retroactively limit the consequences of voluntary disclosure of privileged communications by belatedly disclaiming reliance on it. On the contrary, a party waives the attorney-client privilege "as to subjects discussed in the disclosed communications" by voluntarily revealing some of the communications on the subject and withholding others. Bowne of New York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 485 (S.D.N.Y. 1993). I find that Magistrate Wilkinson correctly rejected Minebea's attempt to retroactively disclaim reliance on the Hymas affidavit.
Minebea argues that even if the Hymas declaration cannot be withdrawn, the scope of the waiver should be narrowly construed under the fairness doctrine. Under this doctrine, Minebea contends that the scope of the waiver should be limited to the specific subjects, and time periods, that are addressed in the waived communication.
The "waiver by implication" doctrine provides that the disclosure of otherwise privileged communications can "waive the privilege not only with respect to the disclosed documents but also as to all other communications made about the same subject between the attorney and the client." Palazzetti Import/Export, Inc. v. Morson, No. 98 CIV 0722, 2000 WL 1015921, at *4 (S.D.N.Y. July 21, 2000) (quoting In re Leslie Fay Cos. Secs. Litig., 161 F.R.D. 274, 282 (S.D.N.Y. 1995)). "The principal consideration animating the rule governing `waiver by implication' is one of fairness." Koster v. Chase Manhattan Bank, No. 81 CIV 5018, 1984 WL 883, at *4 (S.D.N.Y. Sept. 18, 1984). "If the disclosure of privileged communications `may be misleading because only favorable material have been disclosed, waiver is likely to be found for so much of the withheld information as will make the disclosure complete and not misleadingly one-sided.'" Palazzetti Import/Export, Inc., 2000 WL 1015921, at *4 (citing Koster, 1984 WL 883, at *4).
"[I]t would be fundamentally unfair to allow a party to disclose opinions which support its position and to simultaneously conceal those that are unfavorable or adverse to its position." Katz v. AT T, 191 F.R.D. 433, 439 (E.D. Pa. 2000). While the disclosure of a privileged communication does not serve as a wholesale waiver of the attorney client privilege, the waiver does encompass the subject matter of the communication. Id. at 440 (citing Applied Telematics, Inc. v. Sprint Corp., Civ. A. No. 94 CV 4603, 1995 WL 567436, at *3 (E.D. Pa. Sept. 21, 1995)).
The statements contained in the Hymas affidavit relate to the specific subject matter of whether Minebea reasonably relied on alleged representations made by Papst. I agree with Judge Wilkinson's conclusion that while Minebea was not required to waive the attorney-client privilege, it affirmatively chose to do so. Minebea used privileged communications in its opposition to Papst's motion for summary judgment as purported evidence that Minebea reasonably relied solely on Papst, rather than on its own attorneys. After reviewing the documents at issue (Bates-stamped M050503, M073719-21, M073717-18, and M073715), I agree with Magistrate Judge Wilkinson's conclusion that each is within the specific subject matter, and time frame, of whether Minebea reasonably relied on alleged representations made by Papst.
Magistrate Judge Wilkinson ruled that (1) Minebea waived the attorney-client privilege by submitting the affidavit of Douglas Hymas, and (2) that the waiver of privilege connected to communications in 1995 between Mr. Hymas and Mr. Mizukami was broad enough to encompass documents that were created in 1991 and 1992 relating to the same subject matter. I find no clear error in these rulings, nor are they contrary to law. Accordingly, Magistrate Judge Wilkinson's July 12, 2001 rulings are affirmed.
B. Numbers 25, 81 and 82 of Minebea's Second Set of Pre-MDL Document Requests
Minebea objects to the portions of Magistrate Judge Wilkinson's ruling sustaining Papst's objections to Numbers 25, 81 and 82 of Minebea's second set of pre-MDL document requests. According to Minebea, Magistrate Judge Wilkinson erred in ruling "[t]hat discovery requests related to the uses to which hard disk motors can allegedly be put is not relevant to the issue of patent exhaustion" or "relevant to Minebea's antitrust claims . . . However, in reviewing Magistrates Judge Wilkinson's order, I find that Minebea has incorrectly interpreted the basis of the rulings.
Minebea's Motion Appealing Magistrate Judge Wilkinson's July 12, 2001 order, at p. 1, numbers 3 and 4.
Document Request No. 25 requests:
a. All documents or things relating to the uses of hard disk drive spindle motors.
b. All documents or things relating to the uses of hard disk drive spindle motors made or sold by Minebea.
Papst objected to Request No. 25 on the basis that is was "vague and ambiguous." Magistrate Judge Wilkinson agreed that the term "relating to the uses" was vague and ambiguous, and I agree. Even if the uses to which hard disk motors can be put is "relevant to the issue of patent exhaustion," discovery directed to that issue must be clear and intelligible. Neither Papst, Magistrate Judge Wilkinson, nor I can determine what documents or things are being requested, since the concept of "relating to the uses" is vague and ambiguous; Magistrate Judge Wilkinson's ruling on Request No. 25 is affirmed.
Document Request Nos. 81 and 82 request:
81. Any industry reports for the spindle motor and/or hard disk drive industry.
82. Any reports prepared either internally or by consultants regarding the spindle motor and/or hard disk drive industries.
Papst objected to these requests as overly broad, unduly burdensome and not reasonably calculated to lead to the discovery of admissible evidence. However, subject to those objections, Papst agreed to produce responsive documents. Magistrate Judge Wilkinson granted no further relief, on the basis that he was unable to determine why the reports are relevant or otherwise discoverable. Even accepting as accurate Minebea's contention that the documents are relevant to the issue of Papst's market power as an element of Minebea's antitrust claims against Papst, I find that the requests for "industry reports" and "reports," as written, are vague and/or overbroad. For this reason, Magistrate Judge Wilkinson's ruling is affirmed, without further briefing or hearing.
Accordingly,
IT IS ORDERED, that Magistrate Judge Wilkinson's rulings that (1) Minebea waived the attorney-client privilege by submitting the affidavit of Douglas Hymas; (2) that Minebea may not withdraw the privileged communications; and (3) that the waiver was broad enough to encompass the documents created in 1991 and 1992, are AFFIRMED;
IT IS FURTHER ORDERED, that Magistrate Judge Wilkinson's rulings that sustained Papst's objections to Request Nos. 25, 81 and 82 are AFFIRMED.