United States District Court, D. Idaho
HOYT A. FLEMING, Plaintiff,
ESCORT, INC., et al., Defendants.
MEMORANDUM DECISION AND ORDER
B. LYNN WINMILL, Chief District Judge.
The Court has before it two motions to compel and for sanctions filed by plaintiff Fleming. The motions are fully briefed and at issue. For the reasons explained below, the Court will grant the motions to compel but deny the request for sanctions.
Fleming filed this action ( Fleming II ) against Escort and twenty of its distributors - referred to as the Customer Defendants - claiming that the radar detectors they sold infringed Fleming's '038, '653, and '905 patents. This action follows an earlier action ( Fleming I ) in which a jury found that Escort had infringed certain claims of the '038 and '653 patents, and awarded Fleming $750, 000. The Court later increased that award to $1.4 million, a sum that included a sanction against Escort's counsel for vexatious conduct in discovery. The Federal Circuit affirmed those rulings, see Fleming v. Escort, 2014 WL 7332614 (Fed.Cir. Dec. 24, 2014), and the Fleming I case has now been closed.
This action - Fleming II - is referred to as a "customer suit" because it is an action against the manufacturer's customers (as well as the manufacturer) who are allegedly distributing the allegedly infringing devices. The Customer Defendants include companies such as Amazon, Best Buy, and Sears.
During the discovery phase of this action, Fleming asked Escort to turn over any indemnity agreements between itself and its customers, and any product descriptions such as owner's manuals, user guides, and videos. When Escort did not produce the material to which Fleming felt entitled, Fleming filed the two motions to compel now at issue. The Court will consider each in turn, starting with the motion to compel the indemnity agreements.
Motion to Compel Indemnity Agreements
Fleming is asking Escort to produce all indemnity agreements in which Escort agreed to indemnify its customers for their losses if their sales of Escort products were found to be infringing. Escort has refused Fleming's request, claiming that any such agreements, if they exist, are protected by the attorney-client privilege. Fleming responded by filing the motion to compel now before the Court.
The Court begins its analysis by finding that the indemnity agreements constitute "discovery [that] appears reasonably calculated to lead to the discovery of admissible evidence." See Rule 26(b)(1). One of Fleming's claims is that Escort induced the Customer Defendants to infringe Fleming's patents. The indemnity agreements are relevant to this claim because they may have been granted by Escort to induce the Customer Defendants to sell the allegedly infringing products. See MEMC Electronic Materials, Inc. v. Mitsubishi Materials, 420 F.3d 1369, 1378-79 (Fed.Cir. 2005) (stating that indemnity agreement may provide some evidence of an intent to induce infringement).
Escort argues, however, that any indemnity agreements are protected by the attorney-client privilege - more specifically by the joint defense privilege. The Ninth Circuit has long recognized that the joint defense privilege is "an extension of the attorney-client privilege." U.S. v. Gonzalez, 669 F.3d 974, 978 (9th Cir. 2012). The privilege arises out of a joint defense agreement between "persons who share a common interest in litigation" and the privilege is designed to allow them "to communicate with their respective attorneys and with each other to more effectively prosecute or defend their claims." Id. at 978. No written joint defense agreement is required, and it can be inferred "from consultation among clients and counsel allied in common legal cause...." Id. at 979 (summarizing with approval the holding in In re Regents of Univ. of Cal., 101 F.3d 1386, 1389 (Fed.Cir.1996)).
A party claiming the joint defense privilege bears the burden of showing "(1) the communication is made by separate parties in the course of a matter of common [legal] interest; (2) the communication is designed to further that effort; and (3) the privilege has not been waived." Fidelity National Title Insurance Co. v. Castle, 2014 WL 3945590 at *3 (N.D. Cal. Aug. 11, 2014). A joint defense or common defense privilege "protects only those communications that are part of an on-going and joint effort to set up a common defense strategy." Id.
In Gonzalez, the party asserting a joint defense privilege filed the declaration of his counsel stating generally that he and his client had consulted with another defendant and her attorney "for the purpose of preparing a joint defense strategy and... shar[ed]... confidential information." Gonzalez, 669 F.3d at 979. This, along with some similar deposition testimony, was sufficient to infer the existence of a joint defense agreement and the privilege that accompanies that inference. See also Holmes v. Collection Bureau of America Ltd., 2010 WL 143484 (N.D.Cal. Jan. 8, 2010) (finding joint defense privilege where "counsel for both ...