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AgroFresh Inc. v. Essentiv LLC

United States District Court, D. Delaware

October 4, 2019

AGROFRESH INC., Plaintiff,
v.
ESSENTIV LLC, DECCO U.S. POSTHARVEST, INC., CEREXAGRI, INC. d/b/a DECCO POST-HARVEST, and UPL, LTD., Defendants.

          MEMORANDUM ORDER

          The Honorable Maryellen Noreika United-States District Judge

         At Wilmington this 4th day of October 2019:

         On December 11, 2018, Magistrate Judge Fallon issued a Memorandum Order (“the Order”) (D.I. 340) granting Plaintiff AgroFresh Inc.'s (“AgroFresh”) Motion to Compel the Production of Certain Categories of Documents (D.I. 180). On December 26, 2018, Defendant Decco U.S. Post-Harvest Inc. (“Decco”) filed objections to the Order. (D.I. 369). On January 9, 2019, AgroFresh responded to Decco's objections. (D.I. 383). For the reasons set forth below, Decco's objections are SUSTAINED and the Order is REVERSED. AgroFresh's Motion to Compel the Production of Certain Categories of Documents (D.I. 180) is DENIED.

         I. LEGAL STANDARD

         Objections to a Magistrate Judge's ruling on a non-dispositive motion are subject to a “clearly erroneous and contrary to law” standard of review, pursuant to 28 U.S.C. § 636(b)(1)(A) and Federal Rule of Civil Procedure 72(a). Under a “clearly erroneous” standard, the Court will only set aside findings when it is “left with the definite and firm conviction that a mistake has been committed.” Green v. Fornario, 486 F.3d 100, 104 (3d Cir. 2007) (internal quotation marks omitted). A Magistrate Judge's order is contrary to law only “when the magistrate judge has misinterpreted or misapplied the applicable law.” Doe v. Hartford Life & Accident Ins., Co., 237 F.R.D. 545, 548 (D.N.J. 2006); see also Eisai Co., Ltd. v. Teva Pharm. USA, Inc., 629 F.Supp.2d 416, 424 (D.N.J. 2009) (“[A] magistrate judge's decision typically is entitled to deference . . . [while] a magistrate judge's legal conclusions on a non-dispositive motion will be reviewed de novo . . . .” (internal quotation marks omitted)).

         A magistrate judge's finding regarding the existence of the common interest privilege is reviewed for clear error. Leader Techs., Inc. v. Facebook, Inc., 719 F.Supp.2d 373, 376 (D. Del. 2010). Thus, the Court “must accept the factual determination of the fact finder unless that determination ‘either (1) is completely devoid of minimum evidentiary support displaying some hue of credibility, or (2) bears no rational relationship to the supportive evidentiary data.'” Haines v. Liggett Grp. Inc., 975 F.2d 81, 92 (3d Cir. 1992) (quoting Kraznov v. Dinan, 465 F.2d 1298, 1302 (3d Cir. 1972)).

         II. DISCUSSION

         Decco objects to the Order on two grounds. (D.I. 369 at 2). First, Decco asserts that “the Order erred in concluding that [Decco and MirTech, Inc. (“MirTech”)] did not have a common interest privilege until the formation” of the parties' joint venture on June 30, 2016. (Id.). Second, Decco contends that the Order, “[b]ased on its conclusion that the common-interest doctrine only applied to communications on or after June 30, 2016, ” erred in determining “that certain documents at issue are not privileged.” (Id.). For the reasons discussed below, the Court finds that the Order's determinations regarding the date of the existence of the parties' common legal interest as well as the applicability of the common interest privilege to certain categories of documents predating June 30, 2016 were clearly erroneous.

         A. The Order Clearly Erred in Determining That Decco and MirTech Did Not Share a Common Legal Interest Prior to June 30, 2016

         Although the Order determined that Decco met its burden to establish a common legal interest between itself and MirTech as of June 30, 2016, the date the parties signed an LLC agreement which created a joint venture between them (see D.I. 340 ¶ 20), it found that the “common interest doctrine does not apply, and the privilege is waived, with respect to communications made before the execution of the LLC agreement on June 30, 2016.” (Id. ¶ 23). The Order went on to explain that the parties' November 30, 2014 Letter of Intent “does not establish a common legal interest between Decco and MirTech because it represents the parties' tentative negotiations prior to the consummation of a binding agreement nearly two years later.” (Id.). Decco objects to the Order's finding and contends that, as of the November 30, 2014 Letter of Intent, Decco and MirTech “shared common legal interests in three aspects: (1) procuring intellectual property, (2) conducting due diligence to avoid patent infringement by obtaining an opinion of counsel, and (3) exploiting patented technology through a potential joint venture.” (D.I. 369 at 2). The Court agrees and finds that the Order's determination that Decco and MirTech did not share a common legal interest as of the November 30, 2014 Letter of Intent is clearly erroneous.

         “The common interest doctrine is an exception to the general rule that the attorney-client privilege is waived following the disclosure of privileged materials to a third party.” Leader Techs., 719 F.Supp.2d at 376 (citing Union Carbide Corp. v. Dow Chem. Co., 619 F.Supp. 1036, 1047 (D. Del. 1985)). The doctrine protects communications between clients and attorneys “‘allied in a common legal cause' . . . because it is reasonable to expect that parties pursuing common legal interests intended resultant disclosures to be ‘insulated from exposure beyond the confines of the group.'” Id. (quoting In re Regents of Univ. of Cal., 101 F.3d 1386, 1389 (Fed. Cir. 1996)). To “give sufficient force to a subsequent claim to the privilege, ” the party claiming the privilege must show “that the disclosures would not have been made but for the sake of securing, advancing, or supplying legal representation.” Regents of Univ. of Cal., 101 F.3d at 1389 (quoting In re Grand Jury Supoena Duces Tecum, 406 F.Supp. 381, 385 (S.D.N.Y. 1975)). Moreover, the parties' shared common interest must “be identical, not similar, and be legal, not solely commercial.” Union Carbide, 619 F.Supp. at 1049 (quoting Dunlap Corp. v. Deering Milliken, Inc., 397 F.Supp. 1146, 1147 (D.S.C. 1974)) (quotation marks omitted).

         Here, a review of Decco and MirTech's November 30, 2014 Letter of Intent informs the Court that the Order's determination regarding the date Decco and MirTech established a shared a legal interest was clearly erroneous, given that the determination “bears no rational relationship to the supportive evidentiary data.” See Haines, 975 F.2d at 92 (addressing the meaning of “clear error”). Although the Order did not err in determining that the June 30, 2016 joint venture agreement created a shared legal interest between Decco and MirTech, it ignored the language of the Letter of Intent which created shared legal interests between the parties, separate and apart from the joint venture. (See generally D.I. 181, Ex. 6). The Letter of Intent recites that the parties' “relationship will be conducted in three phrases.” (Id., Ex. 6 § 1). Phase 1, which began when the parties executed the Letter of Intent, details the parties' agreement regarding MirTech's responsibility for prosecuting patents and patent applications as well as Decco's responsibility to “obtain written legal opinions for the ‘Right to Practice' of MirTech patents and patent applications.” (Id.). These responsibilities represent protectible, shared legal interests between Decco and MirTech. See, e.g., Intellectual Ventures I LLC v. Altera Corp., No. 10-1065 (LPS), 2013 WL 12322005, at *5-6 (D. Del. July 25, 2013) (noting that the parties had a shared legal interest in “acquiring patents”); Block Drug Co. v. Sedona Labs., Inc., No. 06-350 (SLR) (MPT), 2007 WL 1183828, at * 2 (D. Del. Apr. 19, 2007) (concluding that the parties shared a common legal interest “on the issue of obtaining an opinion of counsel”).

         Moreover, in coming to its decision, the Order relied on its determination that the Letter of Intent was not a formal agreement, noting that:

courts have declined to apply the common interest privilege to communications made prior to the consummation of a formal agreement, concluding that the application of the common interest doctrine “becomes questionable . . . when, as here, the two parties are negotiating a joint venture. They are still competitors, perhaps more so than partners, and do not share an interest ...

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