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Nalco Co., Inc. v. Baker Hughes Inc

United States District Court, S.D. Texas, Houston Division

July 18, 2017

NALCO CO., INC. Plaintiff,


          Dena Hanovice Palermo United States Magistrate Judge

         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.

         I. BACKGROUND

         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 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]

         II. ANALYSIS

         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 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. 93-cv-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.

         Communications between employees may be privileged in 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. ...

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