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Acceleration Bay LLC v. Activision Blizzard, Inc.

United States District Court, D. Delaware

February 9, 2018

ACCELERATION BAY LLC, Plaintiff,
v.
ACTIVISION BLIZZARD, INC. Defendant. ACCELERATION BAY LLC, Plaintiff,
v.
ELECTRONIC ARTS INC. Defendant. ACCELERATION BAY LLC, Plaintiff,
v.
TAKE-TWO INTERACTIVE SOFTWARE, INC., ROCKSTAR GAMES, INC., AND 2K SPORTS, INC. Defendants.

          MEMORANDUM ORDER

         Presently before the Court are Plaintiffs objections to Special Master Order No. 13 (No. 16-453, D.I. 361; No. 16-454, D.I. 327, No. 16-455, D.I. 322). The parties have submitted briefing. (D.I. 379; D.I. 394).[1] For the reasons that follow, I overrule Plaintiffs objections (D.I. 379) and adopt the Special Master's Order No. 13 (D.I. 361).

         I. BACKGROUND

         As explained by the Special Master, this Order concerns "emails" and "documents that Plaintiff provided to Hamilton Capital and/or [Hamilton Capital's] counsel, Reed Smith, during their negotiation of a litigation financing agreement in 2014 and 2015." (D.I. 361 at 4). Plaintiff asserts that these communications were provided to Hamilton Capital in "connection with diligence for the funding of this litigation. (D.I. 379 at 2). The communications were exchanged "before any agreement was reached between Plaintiff and Hamilton Capital, and before any litigation was filed." (D.I. 361 at 7).

         II. ANALYSIS

         Defendants seek to exclude these communications on three grounds: the communications are "non-discoverable attorney work product;" Plaintiff and Hamilton Capital "share a common legal interest in the successful enforcement of the asserted patents" such that the communications are subject to attorney-client privilege; and the communications are not relevant. (D.I. 379 at 1-2). The Court reviews the Special Master's order de novo as to factual findings and legal conclusions, and for abuse of discretion as to procedural matters. Fed.R.Civ.P. 53(f).

         a. Work Product Privilege

         The work product doctrine, codified in Federal Rule of Civil Procedure 26(b), provides that "a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative." Fed.R.Civ.P. 26(b)(3). The party asserting work product immunity bears the burden of showing that the sought documents were prepared "in the course of preparation for possible litigation." Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 138 (3d Cir. 2000). If the party claiming work product immunity meets this burden, then the party seeking production may obtain discovery "only upon a showing that the party . . . has a substantial need of the materials in preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means." Id.; Fed.R.Civ.P. 26(b)(3). The test employed by courts is whether "in light of the nature of the document and the factual situation of the case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation." U.S. v. Rockwell Int'l, 897 F.2d 1255, 1265-66 (3d Cir. 1990). A document will be granted protection from disclosure if the court finds that the "primary" purpose behind its creation was to aid in possible future litigation. Id. at 1266.

         Here, Plaintiff has characterized the communications as being created "for the purpose of obtaining funding to assert [the] patents." (D.I. 379 at 3). The communications were exchanged before Hamilton Capital had agreed to fund Plaintiffs litigation, and before Plaintiff filed any litigation. (D.I. 361 at 7; D.I. 380-1, Exh. C).

         The documents were thus prepared with a "primary" purpose of obtaining a loan, as opposed to aiding in possible future litigation. For that reason alone, the communications are not work product.

         Furthermore, if a document sought "is prepared for a nonparty to the litigation, work product protection does not apply, even if the nonparty is a party to closely related litigation." 6 James Wm. Moore et al., Moore's Federal Practice § 26.70 (3d ed. 2015); see also In re Cal. Pub. Utils. Comm 'n, 892 F.2d 778, 781 (9th Cir. 1989). Here, Hamilton Capital is not a party to the litigation. For that separate reason, the communications are not work product.

         I accordingly overrule Plaintiffs objection to the Special Master's Order on the ground that the communications are non-discoverable attorney work product. (D.I. 379 at 1).

         b. Common Interest Privilege

         "The attorney-client privilege" is a common-law privilege that "protects communications between attorneys and clients from compelled disclosure." In re Teleglobe Commc'ns Corp., 493 F.3d 345, 359 (3d Cir. 2007). In order for the privilege to apply, there must be "(1) a communication (2) made between privileged persons (3) in confidence (4) for the purpose of obtaining or providing legal assistance for the client." Id. (quoting Restatement (Third) of the Law Governing Lawyers § 68 (Am. Law. Inst. 2000)). The party asserting the privilege bears the burden of establishing the requisite elements. In re Grand Jury, 705 F.3d 133, 160 (3d Cir. 2012). A communication is only privileged if made in confidence. Teleglobe, 493 F.3d at 361. Therefore, if "persons other than the client, its attorney, or their agents are present, the communication is not made in confidence." Id. Further, "if a client subsequently shares a privileged communication with a third party, then it is no longer confidential, and the privilege ceases to protect it." Id.

         The common interest doctrine is an exception to the general rule that voluntary disclosure to a third party of purportedly privileged information waives the privilege. Leader Techs., Inc. v. Facebook, Inc.,719 F.Supp.2d 373, 376 (D. Del. 2010); see also Corning Inc. v. SRU Biosystems, LLC,223 F.R.D. 189, 190 (D. Del. 2004). The privilege protects "all communications shared within a proper 'community of interest."' Teleglobe, 493 F.3d at 364 (internal citations omitted). To show that there is a proper community of interest, the interests "must be 'identical, not similar, and be legal, not solely commercial.'" Leader Techs., 719 F.Supp.2d at 376 (quoting In re Regents of the Univ. of Cat,101 F.3d 1386, 1390 (Fed. Cir. 1996)). Additionally, to show that the members of the community are "allied in a common legal cause, " the party asserting the privilege bears the burden of showing "that the disclosures would not have been made but for the sake of securing, advancing, or supplying legal representation." See In ...


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