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SCVNGR, Inc. v. Dailygobble, Inc.

United States District Court, E.D. Texas, Tyler Division

September 6, 2017

SCVNGR, INC.,
v.
DAILYGOBBLE, INC.,

          ORDER

          K. NICOLE MITCHELL, UNITED STATES MAGISTRATE JUDGE

         Before the Court is Plaintiff SCVNGR, Inc. d/b/a LevelUp's (“LevelUp”) Motion to Compel Discovery and for Sanctions. Doc. No. 140. Defendant DailyGobble, Inc. d/b/a Relevant (“Relevant”) filed a response. Doc. No. 143. Then, LevelUp filed a Reply, Doc. No. 144, and Relevant filed a Sur-Reply, Doc. No. 151. For the reasons below, the Motion is GRANTED IN PART and DENIED IN PART.

         BACKGROUND

         On May 26, 2015, Plaintiff filed suit against Relevant for infringement of U.S. Patent No. 8, 639, 619 (“the '619 Patent”). On January 14, 2016, LevelUp accepted a Rule 68 Offer of Judgment, which provided that Claims 1-2, 4-10, and 12-14 of the '619 Patent were infringed by Relevant and included a cease and desist preventing Relevant from continuing to infringe the '619 Patent. LevelUp now alleges that Relevant is violating this injunction and Relevant continues to infringe the '619 Patent in violation of the Court's Order. The Court ordered discovery to determine LevelUp's post-judgment allegations.

         APPLICABLE LAW

         Under the Federal Rules of Civil Procedure, “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense. . . .” Fed.R.Civ.P. 26(b)(1). “Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Id. “Courts construe discovery rules liberally to serve the purposes of discovery: providing the parties with information essential to the proper litigation of all relevant facts, eliminating surprise, and promoting settlement.” Ferko v. Nat'l Ass'n for Stock Car Auto Racing, Inc., 218 F.R.D. 125, 132 (E.D. Tex. 2003) (citing Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)).

         ANALYSIS

         LevelUp filed a motion to compel and for sanctions regarding Relevant's failure to produce a group of emails. Relevant responds that it has properly withheld the emails. Therefore, Relevant argues the motion to compel and for sanctions should be denied. The Court will address the motion to compel and the motion for sanctions below.

         Motion to Compel

         LevelUp seeks the production of twenty-four emails between Relevant, Relevant's counsel, and Le Pain Quotidien, Inc. (“LPQ”). Relevant contends that these emails are protected by attorney-client privilege because the privilege extends to third party communications under the common interest exception. Doc. No. 143. Level Up responds that the common interest exception does not apply to this case because LPQ and Relevant are not potential co-defendants.

         A party asserting attorney-client privilege must prove:

(1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made is (a) a member of a bar of a court, or his subordinate, and (b) in connection with this communication is acting as a lawyer; (3) the communication related to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services (iii) or assistance in some legal proceeding, and (d) not for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.

Ferko, 218 F.R.D. at 133-34. However, “[d]isclosure of privileged information by an attorney to actual or potential co-defendants, or to their counsel, in the course of a joint defense does not constitute a waiver of the attorney-client privilege.” In re Santa Fe, 272 F.3d 705, 712 (5th Cir. 2001) (citing In re LTC Securities Litigation, 89 F.R.D. 595 (N.D. Tex. 1981)); accord Aiken v. Tex. Farm Bureau Mut. Ins. Co., 151 F.R.D. 621, 624-25 (E.D. Tex. 1993) (the common interest exception is also known as the joint defense privilege and protects communication that is intended to “facilitate representation” or “the rendition of legal services.”); Autobytek, Inc. v. Dealix, Corp., 455 F.Supp. 569 (E.D. Tex. 2006) (privilege extends to third party communications “regarding common legal issues that were intended to facilitate representation in possible subsequent patent infringement litigation.”). A potential co-defendant means that “there is a palpable threat of litigation at the time of the communication, rather than a mere awareness that one's questionable conduct might someday result in litigation.” Id.

         After conducting an in camera review, the emails were not made in the course of a joint defense, to facilitate joint representation, or to discuss a common legal interest. See In re Santa Fe, 272 F.3d at 712; Aiken, 151 F.R.D. at 624-25. The emails focus on the status of the underlying proceeding, rather than preparation of a joint defense or to facilitate representation. Additionally, while LPQ may have hoped Relevant would prevail because a loss for Relevant could impact LPQ's business, “[a] shared rooting interest in the ‘successful outcome of ...


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