Opinion
No. C-00-3508 CW (JCS)
May 30, 2002
Plaintiff and Counter Defendant Akamai Technologies, Inc.'s Motion to Compel [Docket No. 144] and Amended Motion for Sanctions [Docket No. 149] came on for hearing on Friday, May 3, 2002, at 9:30 a.m. For the reasons stated below, both Motions are DENIED.
I. INTRODUCTION
Akamai Technologies and Digital Island are direct competitors in the field of Internet content storage and delivery. Among the claims that each brings against the other in this action are claims of false advertising and unfair competition, under both federal and state law. Akamai's Motion to Compel, as well as its Amended Motion for Sanctions, arise out of Digital Island's provision to Akamai of a legal memorandum authorized by Digital Island's counsel in this matter. That memo, concerning damages, was turned over at a meeting that was convened for the sole purpose of discussing settlement. Akamai argues that by turning over this document, Digital Island waived attorney-client and work product privilege as to: 1) the damages memorandum; 2) communications between Digital Island and its counsel concerning its damages claim; and 3) any documents relating to its damages claim.
II. BACKGROUND
On April 9, 2001, David Judson (in-house counsel for Akamai) and Howard Lasky (in-house counsel for Digital Island) met to discuss settlement of this action and of a separate patent infringement action between Akamai and Digital Island. Declaration of David Judson ("Judson Decl.") at ¶ 2. At that meeting, Mr. Lasky gave Mr. Judson a memorandum ("the Damages Memorandum") written by an attorney at Howard, Rice, Nemerovski, Canady, Falk Rabkin (Digital Island's outside counsel) containing legal authority in support of Digital Island's demand for "very substantial unfair competition damages." Declaration of Howard Lasky ("Lasky Decl.") at ¶ 6; see also Damages Memorandum, Exh. A to Judson Decl. Each page of the Damages Memorandum was stamped "Confidential" and in the Comment section of the fax cover sheet attached to the memorandum the words "CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE" were written in bold print. See Damages Memorandum, Exh. A to Judson Decl.
The accounts of Mr. Lasky and Mr. Judson differ widely with respect to the terms on which the Damages Memorandum was provided. According to Mr. Lasky, he and Mr. Judson "made it clear at the outset of [their] discussions that the exchanges [they] were to engage in were not to be used for any purpose other than settlement." Lasky Decl. at ¶ 5. When Mr. Judson expressed doubt about Digital Island's legal ability to prove unfair competition damages, Mr. Lasky told Mr. Judson that he had a short legal memorandum on the issue, prepared by Digital Island's outside counsel, which he "stated [he] was willing to share with [Judson] solely for the purposes of the settlement [they] were trying to accomplish." Lasky Decl. at ¶ 7. In contrast, Mr. Judson states that Mr. Lasky gave him the memorandum "voluntarily and without any conditions." Judson Decl. at ¶ 2. Mr. Judson states, "[i]ndeed, I thought it was odd that he would just hand the memorandum over to me."
On December 21, 2001, Akamai served its Fourth Request for the Production of Documents on Digital Island ("Fourth Request"). Motion to Compel at 3-4. Included in the Fourth Request were two requests for documents related to damages, Requests 33 and 34. Motion to Compel at 7-8. Request 33 seeks "[a]ll documents comprising, referring, or relating to any communications between you and your counsel regarding your damages claim in this action." Id. Request 34 seeks "[a]ll memoranda, notes or other documents from your attorneys' files relating to your damage claim in this action." Digital Island objected to both requests on the basis of work product and attorney-client privilege. Id. In response, Akamai asserted that it was entitled to documents responsive to these requests because Digital Island had waived its right to assert work product and attorney-client privilege by turning over the Damages Memorandum. See Declaration of Kenneth M. Fitzgerald in Support of Plaintiff and Counterdefendant Akamai Technologies, Inc.'s Motion to Compel Production of Documents and Motion for Sanctions ("Fitzgerald Decl.") at ¶ 3.
Akamai now brings this Motion to Compel and Amended Motion for Sanctions seeking production of the documents responsive to Requests 33 and 34 of the Fourth Request, as well as sanctions under Fed.R.Civ.P. 37(a)(4)(A) on the basis that Digital Island's nondisclosure was not "substantially justified." Akamai asserts that Digital Island has waived attorney-client and work product privilege by voluntarily producing the Damages Memorandum.
In its Opposition, Digital Island makes the following arguments. First, Digital Island asserts that an implied-in-fact contract was created when Mr. Lasky gave the Damages Memorandum to Mr. Judson on the condition that it would be used for settlement purposes only and Mr. Judson did not state that this condition was not acceptable. Digital Island asserts that this contract should be enforced and on that basis, Akamai's motions should be denied. Second, Digital Island argues that even if privilege was waived, the scope of the waiver should be construed narrowly to encompass only the document itself. In support of this argument, Digital Island points to the absence of any "fairness concern" requiring a broader waiver. Digital Island also points to case law holding that in considering questions relating to waiver in the context of settlement negotiations, courts should take into account the important public policy of facilitating settlement. With respect to the work product privilege, Digital Island argues the facts here are not sufficient to justify a finding of waiver — even as to the Damages Memorandum itself — given the near absolute immunity from production for opinion work product. Further, Digital Island asserts, even if the work product privilege is waived as to the Damages Memorandum, that waiver does not give rise to subject matter waiver. Therefore, the only document for which the work product privilege could have been waived is the Damages Memorandum.
At oral argument, the parties waived the right to seek an evidentiary hearing on the question of whether they entered into a contract prohibiting the use of the Damages Memorandum for purposes other than settlement. The parties further stipulated that the Court may make credibility findings on this issue based on the evidence in the record.
IV. ANALYSIS
A. There Was An Enforceable Agreement Between The Parties That Disclosure Would Not Result In Waiver
Akamai asserts that voluntary production of any privileged document results in waiver of the attorney-client and work product privileges, not only as to the document itself but also as to all other documents on the same subject matter. See Motion to Compel at 4-5 (citing to Weil v. Investment/Indicators Research and Management, Inc., 647 F.2d 18, 24 (9th Cir. 1981)). Akamai argues further that this rule applies even if the document was disclosed in the context of settlement negotiations and even if the parties explicitly agreed that the document would be used for settlement purposes only. Motion to Compel at 5-6 (citing to Atari Corp. v. Sega of America, 161 F.R.D. 417, 420 (N.D.Cal. 1994); Khandji v. Keystone Resorts Management, Inc., 140 F.R.D. 697, 700 (D. Co. 1992)). Digital Island, on the other hand, argues that it did not waive the attorney-client or work product privileges because there was an implied contract between Mr. Judson and Mr. Lasky that the Damages Memorandum would be used solely for the purpose of negotiating a settlement. Digital Island's position is correct.
In support of the position that Digital Island waived the attorney-client and work product privileges, Akamai relies on two cases in which courts held that a disclosure made in the context of settlement discussions gave rise to waiver of the attorney-client and/or work product privilege. See Atari v. Sega of America, 161 F.R.D. 417 (N.D.Cal. 1994); Khandji v. Keystone Resorts Management, Inc., 140 F.R.D. 697 (D. Co. 1992). These cases do not support Akamai's position. They merely stand for the proposition that disclosure during settlement negotiations may give rise to waiver, so long as there is not an explicit agreement to the contrary among the parties.
In Atari, Atari alleged that Sega had infringed one of its patents. 161 F.R.D. at 418. The inventor of the patent at issue was David Stubben, a former employee of Atari who was later employed by Sega as an expert witness. Id. Sega videotaped an interview with Stubben in which Stubben stated that the Sega product did not infringe Atari's patent. Id. Sega's counsel gave the videotape to Atari's counsel at a meeting at which settlement was discussed. Id. at 419. Subsequently, Atari sought to subpoena Stubben to produce all documents upon which he relied upon in forming the opinion expressed in the videotape and Sega brought a motion to quash. Id. at 418. Sega opposed the subpoena, asserting attorney-client privilege, work product privilege under Fed.R.Civ.P. 26(b)(3), and privilege under Fed.R.Civ.P. 26(b)(4)(B), which provides protection for non-testifying witnesses. Id. at 419. Sega argued that it had not waived the protections afforded under these doctrines because the videotape was provided in the context of settlement negotiations. Id. at 419.
The Court in Atari disagreed, holding that Sega was required to produce "[a]ll documents relied upon in forming the opinions stated in . . . Stubben's videotaped statement given to Sega representatives . . ." Id. at 420. The court stated that:
Any voluntary disclosure inconsistent with the confidential nature of the work product privilege waives the privilege. . . . Waiver of a privilege may occur by voluntary disclosure to an adverse party during settlement negotiations, despite any agreement between the parties to keep the information confidential.
Id. The Court went on to hold that the disclosure by Sega was the type of disclosure that resulted in waiver of privilege. The court further concluded that the waiver was not limited to the videotape itself but rather, covered all documents that Stubben relied upon in forming the opinions articulated in the videotape. Id.
The Atari's court's language could be read broadly to hold that any disclosure of privileged material made during a settlement conference gives rise to waiver, even if the parties have explicitly agreed that it will not. However, the Court there was not confronted with a situation in which a party, having allegedly entered into an agreement with opposing counsel that there would be no waiver, then sought to avoid the consequences of that agreement. Rather, the court's discussion of the facts in Atari makes clear that its holding was much narrower. In particular, the court in Atari based its holding on its factual determination that the videotape was given to Atari's counsel as "voluntary discovery" notwithstanding the fact that it was provided during a settlement conference. Id. at 419. The court discussed at some length the evidence supporting this conclusion. First, the court noted that although the tape was given to Atari during a meeting to discuss settlement, counsel were actually discussing voluntary discovery when the tape was handed over. Id. The court quoted Sega's counsel as saying the following when he turned over the tape:
There's another point that I want to raise into this question of voluntary discovery and how it will go from here. We have a tape which you may or may not have seen, but it is of Mr. Stubben explaining the reasons why he feels that our games do not use the invention of this patent. If you'd like to see that tape, we'd be happy to show it to you right now.
Id. The court went on to point to the following additional evidence that the videotape was turned over as voluntary discovery: 1) the fact that the videotape contained no markings indicative of Sega's intent to protect the videotape as privileged material; 2) when Atari's counsel asked Sega's counsel whether the videotape was to be part of discovery, Sega's counsel responded in the affirmative; and 3) when Atari's counsel sent a letter to Sega's counsel confirming that the videotape was to be considered part of discovery, Sega's counsel did not object to that understanding in his letter of response. Id. at 419-420.
Akamai also relies heavily on Khandji v. Keystone Resorts Management, Inc., 140 F.R.D. 697 (D. Co. 1992). In that case, the plaintiffs counsel provided a brochure, created in preparation for a settlement conference to assist in settlement discussion, to the defendant's counsel. Id. at 699. Attached to the brochure was a letter stating that defendant's counsel was to make no copies of the brochure and was to return it to the plaintiffs counsel by a certain date. Id. When defendant's counsel received the letter and brochure, he called the plaintiff's counsel and told him that he did not intend to adhere to the conditions set in the letter and that he was going to provide copies of the brochure to his client and insurance carrier. Id. The plaintiff then sought to compel the defendant's counsel to return the brochure. Id. The court denied the plaintiffs motion, holding that work product protection that would otherwise have protected the document from discovery was waived by the plaintiffs voluntary disclosure of the document. Id. at 700.
The Court in Khandji explained its holding as follows:
Because the work product doctrine is intended to protect the integrity of the adversary system, a voluntary disclosure of information to an adversary constitutes a waiver of the privilege. . . . Such a waiver occurs even when disclosure is made during the course of settlement negotiations. The mere fact that opposing parties may have a common interest in settling claims does not neutralize the fact of disclosure, because that common interest always exists between opposing parties in any attempt at settlement. . . .
In addition, a waiver of the privilege occurs despite any agreement between the parties to keep the information confidential. Such an agreement does not alter the fact that the work product doctrine has been breached voluntarily. . . . Such an agreement may, however, constitute an enforceable contract between the parties. . . .
In the present case, Plaintiffs' counsel voluntarily provided the brochure to defense counsel, waiving any potential work product privilege. There was no contract or agreement between the parties regarding conditions on the use of the brochure. In fact, defense counsel specifically informed Plaintiffs' counsel that he did not intend to abide by any limitations on its use. Thus, even if the Court were to find that the brochure is the type of document generally protected by the work product doctrine, it would have to find that any such protection has been waived by the conduct of Plaintiffs' counsel.
Id. (citations omitted) (emphasis added). Thus, the court in Khandji, like the court in Atari, based its holding, in part, on the fact that there was no agreement between the parties that the document would be used for settlement purposes only. Moreover, the Khandji court explicitly recognized that while disclosure to an adverse party ordinarily results in waiver, that result does not apply as between parties that enter into an enforceable contract concerning limitations on use of the document.
Here, the facts are distinguishable on their face from those in Atari and Khandji. In contrast to Atari, there is no suggestion that the Damages Memorandum was produced as voluntary discovery in the context of a broader discussion of discovery in the action. Mr. Judson did not make any effort to confirm that the Damages Memorandum was intended as voluntary discovery, as did Atari's counsel. Nor is there any other evidence that it was intended as such. Mr. Judson also did not make clear to opposing counsel that he did not intend to abide by the condition stated by Mr. Lasky when he gave Mr. Judson the Damages Memorandum, in contrast to the attorney in Khandji.
Rather, the evidence makes clear that there was an implied contract between Digital Island and Akamai governing the terms under which the Damages Memorandum was provided. Mr. Lasky, counsel for Digital Island, has sworn that he and Mr. Judson agreed that all exchanges at their settlement meeting would be used only for settlement purposes. Lasky Decl. at ¶ 5. Mr. Lasky agreed further to give the Damages Memorandum to Mr. Judson for such settlement only purposes. Under this circumstance, Mr. Judson had a duty to speak if he was rescinding his earlier agreement to limit the use of their settlement exchanges. See McAulay v. Jones, 110 C.A.2d 302 (1952) (an implied contract may arise where an offeree who is under a duty to speak fails to do so).
On the other hand, Mr. Judson stated that there was no agreement on the use of the Damages Memorandum at all. Supp. Judson Decl. at ¶ 4. Mr. Lasky's version of events is more credible. The Court finds that Mr. Judson's version of events is not credible. First, the two counsel at the meeting were very sophisticated in-house counsel for significant companies. Indeed, Mr. Lasky was formerly a Howard, Rice attorney. Second, the face of the Damages Memorandum includes explicit and obvious warnings of its privileged and confidential nature. Third, the disclosure took place, all agree, at a meeting just to discuss settlement. It is extremely unlikely that Mr. Lasky "accidentally" waived the privilege in this context — it is much more likely that there was an agreement as he described.
This conclusion is buttressed by the actions of Mr. Judson. Rather than immediately seek to compel the production of documents as a result of the supposed waiver of the privilege, he did nothing for months. It was not until late December, 2001, — eight months later — that Akamai even requested other privileged documents on the subject of the waiver. This delay is consistent with the Court's conclusion that the parties agreed at the time not to use the Damages Memorandum for anything other than settlement purposes. If Akamai thought that it had such a waiver in hand, it is much more likely that they would have asserted it promptly.
Akamai's argument that it waited until settlement discussions were over to assert a waiver — and that this explains the delay — is unavailing. The settlement discussions were over by the end of August, 2001, and no effort was made to assert the purported waiver until late December, 2001. That delay alone suggests that Mr. Judson did not think, in April, that the privilege was waived. Moreover, there is no suggestion that Akamai ever raised the possibility of a waiver while settlement discussions were ongoing.
In making this conclusion, the Court does not mean to imply, and specifically does not find, that Mr. Judson was in any way untruthful in his declarations in this case. To the contrary, there is nothing to suggest or support such a conclusion. However, under the circumstances of this case, it is clear that although Mr. Judson has accurately relayed to the Court his recollection of the events surrounding disclosure of the Damages Memorandum, his recollection is in error.
The Court finds that Mr. Judson' s assertion that no conditions were placed on the use of the Damages Memorandum is not credible. Based on the circumstances, and the sworn statement of Mr. Lasky, the Court finds that there was a contract between the parties that the Damages Memorandum would be used only for settlement purposes.
The Court concludes that the implied contract between Digital Island and Akamai is enforceable. As discussed above, both Atari and Khandji imply that an agreement between the parties that disclosure will not result in waiver as between the contracting parties is enforceable. A number of other courts have, in fact, enforced such agreements. See, e.g., Ames v. Black Entertainment Television, 1998 WL 812051 (S.D.N.Y.) (enforcing agreement made during deposition allowing general counsel to answer certain questions without waiving attorney-client privilege with respect to a communications on same subject matter); Dowd v. Calabrese, 101 F.R.D. 427, 439-440 (D.D.C. 1984) (enforcing stipulation made during deposition that testimony on a particular subject would not give rise to waiver of attorney-client or work product privilege); Eutectic Corp. v. Metco, Inc., 61 F.R.D. 35, 42-43 (E.D.N.Y. 1973) (enforcing provision in protective order executed by the parties providing that no privilege would be waived except where expressed in writing). Therefore, the Court concludes that Akamai may not use the Damages Memorandum for any purpose other than settlement discussions, and may not assert that Digital Island's provision of the Damages Memorandum to Akamai resulted in the waiver of any privilege.
B. Even In The Absence of An Implied Contract, The Waiver Would Not Have Gone Beyond The Damages Memorandum Itself
Akamai cites to In re Chrysler Motors Corp. Overnight Evaluation Program Litigation, 860 F.2d 844 (8th Cir. 1989) in support of its assertion that a privilege is waived by disclosure even if the parties agree to keep information confidential. Akamai's reliance on In re Chrysler is misplaced. That case is distinguishable because the party seeking to compel production of the item at issue — a computer tape that had been provided to opposing counsel in another action — was not a party to the agreement to keep the tape confidential. Id. at 845.
Even if there were no contract limiting use of the Damages Memorandum, the Court finds that the waiver of privilege that would have resulted from Digital Island's provision of that memorandum to Akamai would be limited to the document itself. The Court addresses attorney-client privilege and the work product privilege separately.
1. Attorney-Client Privilege
Where waiver of attorney-client privilege has occurred, the scope of that waiver should be determined with reference to considerations of fairness. See In re Grand Jury Proceedings October 12, 1995, 78 F.3d 251, 255 (6th Cir. 1996); see also Weil v. Investment/Indicators, Research and Management, Inc., 647 F.2d at 25 (holding that although inadvertent disclosure of privileged document resulted in waiver, because there was no showing of prejudice, the scope of the waiver was limited "to communications about the matter actually disclosed"). Thus, for example, where a party has placed the advice of its counsel in issue in its litigation, the waiver of attorney-client privilege that results from disclosure is likely to go beyond the document or testimony whose disclosure gave rise to the waiver. See, e.g., Chevron Corp. v. Pennzoil, 974 F.2d 1156 (9th Cir. 1992).
In its Reply, Akamai asserts that Weil does not support the conclusion that a limited waiver should be found here because Weil was distinguishable from the facts here. Reply at 11. In particular, Akamai asserts that in Weil there was a dispute about whether or not the disclosure at issue was voluntary. Id. (citing to Weil, 647 F.2d at 23, n. 9). Akamai's position has no merit. In Weil, the court noted that there were two disclosures at issue. 647 F.2d at 23. The first was a statement made during a deposition by an officer of the defendant that he had been advised to take certain actions by his attorney. Id. The second was a letter that was disclosed by the defendant to the SEC. Id. The court noted that there was a conflict in the evidence as to whether the letter was disclosed voluntarily. Id. at n. 23. However, the court did not reach the question of whether disclosure of the letter resulted in waiver, relying instead on the deposition testimony, which addressed the same subject matter as the letter. Id. at 25 n. 14. Thus, the dispute as to whether the letter was voluntarily disclosed is not relevant to the court's holding in Weil.
In Chevron, Plaintiff Chevron Corporation sought to enjoin a purchase of Chevron stock by Defendant Pennzoil Corporation on the basis that Pennzoil's disclosure statement was materially misleading. 974 F.2d at 1157. One of the issues in the case was whether it was reasonable for Pennzoil to buy the Chevron stock as an investment only, which was relevant to the broader question of whether or not the disclosure statement was misleading. Id. at 1161-1162. Pennzoil asserted that it believed that it was reasonable to purchase the Chevron stock as an investment based on the advice of its counsel. Id. at 1162. Pennzoil also submitted a declaration by a Pennzoil senior executive, apparently in support of its summary judgment motion, stating that "[i]nsofar as the decision to proceed with an investment in Chevron was based upon tax considerations, it was made in reliance upon the advice of our tax counsel." Id. Chevron asserted that this disclosure concerning an attorney-client communication gave rise to a subject matter waiver, and the court agreed. Id. The Court explained as follows:
The privilege which protects attorney-client communications may not be used both as a sword and a shield. United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991). Where a party raises a claim which in fairness requires disclosure of the protected communication, the privilege may be implicitly waived. . . . [T]o the extent that Pennzoil claims that its tax position is reasonable because it was based on advice of counsel, Pennzoil puts at issue the tax advice it received. In his declaration, Chairman Liedtke stated that insofar as Pennzoil's decision to proceed with the Chevron investment was based on tax considerations, that decision was made based upon the advice of counsel. Penuzoil cannot invoke the attorney-client privilege to deny Chevron access to the very information that Chevron must refute in order to demonstrate that Pennzoil's Schedule 13D is materially misleading.974 F.2d at 1162. However, the court in Chevron declined to find the disclosure at issue justified a broad waiver of attorney-client privilege. Rather, the scope of the waiver was limited to the specific "subsidiary issues" raised by the disclosure. "Pennzoil was not required, as a result of the limited disclosure, to provide Chevron with every document or communication that touched on the more general tax deferral question." Id.
In contrast to cases such as Chevron, where disclosure of privileged communications creates a real possibility of unfairness unless a subject matter waiver is found, where the disclosure does not result in any obvious legal prejudice, courts have declined to find any waiver except as to the particular document or testimony that has already been disclosed. See, e.g., In re von Bulow, 828 F.2d 94, 102 (2d Cir. 1987). In von Bulow, the Defendant, Claus von Bulow, had previously been convicted of, and then, following a successful appeal, acquitted of, attempting to murder his wife. Id. at 96. Following the acquittal, von Bulow and his attorney, Alan Dershowitz, collaborated on a book "chronicl[ing] the events surrounding the first criminal trial, the successful appeal, and von Bulow's ultimate acquittal." Id. at 96. In the subsequent civil action against von Bulow, Plaintiff Martha von Bulow asserted that publication of the book by von Bulow and Dershowitz waived the attorney-client privilege not only as to the communications revealed in the book but also as to all communications on the subjects raised in the book. Id. at 97. The district court agreed but the Second Circuit, exercising its mandamus powers, reversed. Id.
The Court found that the waiver of attorney-client privilege applied only to those communications that were actually disclosed in the book. Id. The court explained its holding as follows:
[T]his rule protecting the party, the fact finder, and the judicial process from selectively disclosed and potentially misleading evidence does not come into play when, as here, the privilege-holder or his attorney has made extrajudicial disclosures, and those disclosures have not subsequently been placed at issue during litigation. In fact, the cases finding, as the district court did here, implied waivers on account of fairness involved material issues raised by a client's assertions during the course of a judicial proceeding. See, e.g., Hunt v. Blackburn, 128 U.S. at 470-71, 9 S.Ct. at 127; Kunglig Jarnvagsstyrelsen v. Dexter Carpenter, Inc., 32 F.2d 195, 201 (2d Cir.), cert. denied, 280 U.S. 579, 50 S.Ct. 32, 74 L.Ed. 629 (1929); Smith v. Alyeska Pipeline Serv. Co., 538 F. Supp. 977, 979 (D.Del. 1982) ("A client . . . may waive the privilege by deliberately injecting into the case the advice which he received from his attorney.") (emphasis added), aff'd, 758 F.2d 668 (Fed. Cir. 1984), cert. denied, 471 U.S. 1066, 105 S.Ct. 2142, 85 L.Ed.2d 499 (1985); United States v. Aronoff, 466 F. Supp. 855, 862 (S.D.N.Y. 1979); International Tel. Tel. Corp. v. United Tel. Co. of Fla., 60 F.R.D. 177, 185-86 (M.D.Fla. 1973) ("[I]f the client or his attorney at his instance takes the stand and testifies to privileged communications in part this is a waiver as to the remainder . . . about the same subject"); Beckette v. State, 355 A.2d 515, 521 (Md.Ct.Spec.App. 1976) (client's decision to call attorney as witness waived attorney-client privilege).
Id. See also Chevron, 974 F.2d at 1162 (citing to von Bulow with approval).
Here, as in von Bulow, the disclosure at issue does not implicate considerations of fairness that require a subject matter waiver that goes beyond the Damages Memorandum. Digital Island has not injected the advice of its counsel into the litigation. Akamai will not have to challenge any assertion that Digital Island is not subject to liability or damages due to its reliance on the Damages Memorandum. Digital Island has simply provided Akamai, in settlement discussions, a very general legal memorandum summarizing case law that Akamai's own counsel could easily have researched themselves. Digital Island's limited disclosure does not prejudice Akamai in any way. On the other hand, were the Court to finding a broad subject matter waiver of attorney-client privilege based on disclosure of the Damages Memorandum, Digital Island would likely suffer extreme prejudice. Such a result would be inconsistent with the case law governing waiver, especially in light of the fact that the disclosure was made to facilitate settlement. See Burlington Industries v. Exxon Corp., 65 F.R.D. 26, 45-46 (D. Md. 1974) (holding that the Court should consider the fact that the disclosure was made in the context of a settlement negotiation in determining the scope of the waiver). Thus, even if the parties had not entered into an agreement limiting the use of the Damages Memorandum, Digital Island would not have waived attorney-client privilege with respect to any document except the Damages Memorandum itself.
2. Work Product Privilege
Akamai asserts that a subject matter waiver may arise under the work product doctrine, just as it may under the attorney-client privilege doctrine. Digital Island, on the other hand, argues vehemently that there is no such thing as a subject matter waiver with respect to work product, citing to Duplan Corp. v. Deering Millikan, Inc., 540 F.2d 1215, 1222 (4th Cir. 1976) (holding that rules governing subject matter waiver with respect to attorney client privilege do not apply to the work product doctrine). The Court finds Akamai's position on this issue unconvincing.
Akamai cites to the following language in Hartford Ins. Co. v. Garvey in support of the proposition that there may be a subject matter waiver of work product protection:
When the disclosure [of work product] is made to the adverse party . . . the distinction between waiver of attorney-client privilege and of work product disappears, as disclosure to the adverse party is inherently inconsistent with the adversary system. Thus, the principles of waiver of attorney-client privilege apply to the analysis of waiver of work product immunity by production [to the adverse party].
Id. at 328. While this broad statement could be read to import into the law governing work product the principles related to subject matter waiver that have been developed in the context of attorney-client privilege, such a reading would be unjustified. The court in Hartford Ins. Co. was addressing only the narrow question of whether work product protection had been waived with respect to a handful of specific documents that were inadvertently produced. The court did not address, or even suggest, that production of these documents might give rise to a subject-matter waiver that went beyond the documents that were actually produced.
However, the Court need not reach the question of whether the work product privilege is subject to the same rules that govern subject matter waiver in the context of attorney-client privilege. Even assuming that it is, there is no fairness consideration that would warrant extending the waiver of work product privilege beyond the Damages Memorandum, for the reasons discussed above.
IV. CONCLUSION
For the reasons stated above, Akamai's Motion To Compel is DENIED. Similarly, Akamai's Amended Motion For Sanctions is DENIED.
IT IS SO ORDERED.