Recent U.S. Decisions Affecting Licensing
Tuesday, June 28, 2016
Attorney-Client Communications Can Be Privileged and Protected from Production Even When They Contain Discoverable Facts
By John Paul, Brian Kacedon, and Sonja Sahlsten
The attorney-client privilege protects confidential communications regarding legal advice between lawyers and clients from being obtained through litigation discovery procedures, but it generally does not shield the underlying facts from being obtained by depositions and third-party subpoenas. Recently, in Toyo Tire & Rubber Co. v. Atturo Tire Corp., a magistrate judge for the U.S. District Court for the Northern District of Illinois found that emails from Toyo’s outside counsel to a Toyo employee regarding settlement discussions in another litigation were protected by the attorney-client privilege from being produced even though they contained discoverable facts.
Toyo sued 23 respondents for design patent infringement in the International Trade Commission (“the ITC Action”), and ultimately entered settlement agreements with those respondents. Toyo independently sued Atturo Tire for trade dress infringement in district court, and Atturo responded by claiming that Toyo did not have a valid trade dress and that Atturo’s product did not infringe. Atturo also asserted that Toyo’s ITC settlement agreements improperly required the respondents to refrain from manufacturing, selling, distributing, or importing tires from Atturo, even though Atturo was not a respondent and its tire was not the subject of the ITC Action.
In seeking discovery concerning the settlement agreements between Toyo and the respondents, Atturo deposed a Toyo witness with knowledge of the ITC Action, but Atturo was unsatisfied with that witness’ knowledge of the settlement discussions. To understand the settlement discussions and agreements from the ITC Action, Atturo requested that Toyo produce emails from Toyo’s outside counsel to a Toyo employee relating to the settlement discussions. Atturo argued that these emails would include summaries, reports, and memorializations of the oral settlement discussions that occurred between Toyo’s counsel and the ITC Action respondents that might explain how settlement agreements resulting from the ITC Action involved Atturo’s tire. When Toyo refused to produce the emails based on the attorney-client privilege, Atturo moved to compel their production , arguing that the documents were “underlying facts” not protected by the attorney-client privilege.
The Toyo Decision
The magistrate judge first reviewed the requirements for establishing the attorney-client privilege: The general rule is that the privilege applies to confidential communications between attorneys and their clients where legal advice is provided. If the privilege applies, a party may refuse to produce the document to the opposing party during litigation. While the attorney-client privilege provides strong protection, it does have limits. For example, facts themselves are not protected by the privilege, even if they are communicated between an attorney and client. Thus, while the communications between an attorney and client are protected, the underlying facts communicated are discoverable.
The magistrate judge explained the attorney-client privilege rule and the carve-out regarding underlying facts, noting that the underlying facts are not privileged but the communication of facts is protected if the communication between the attorney and client is for the purpose of providing legal advice. The relevant inquiries are whether the documents in question are communications, and, if so, whether they were made for the purposes of obtaining legal advice. The magistrate determined that the emails themselves were communications, not facts, and did provide legal advice. Accordingly, the magistrate judge concluded that the emails were protected by the attorney-client privilege and denied Atturo’s motion to compel Toyo to produce them.
In rejecting Atturo’s arguments, the magistrate judge cautioned against an interpretation of the underlying facts exception that would swallow the attorney-client privilege rule. Most communications between attorneys and clients include a mixture of facts and legal advice. The magistrate noted that it would be impractical to require parties to analyze each communication with its attorneys, determine which portions of each communication contained facts and which portions contained legal opinions, redact the legal opinions, and produce the redacted documents. This would add expense to litigation and would slow discovery to a halt.
Because the communications were privileged, the magistrate emphasized that the correct way to gather the underlying facts would be though depositions. If Atturo was unsatisfied with the witness’ answers in the deposition, Atturo could have sought an order compelling Toyo to produce a more knowledgeable witness. Alternatively, Atturo could have served third-party subpoenas on anyone with knowledge of the ITC Action settlements, including the ITC Action respondents or Toyo’s former outside counsel.
Strategy and Conclusion
This case explores the differing treatment of legal advice, which is protected by the attorney-client privilege, and the underlying facts, which are discoverable. In particular, while the attorney-client privilege protects confidential communications seeking and providing legal advice, even if the communications also include facts, parties may use depositions and third-party subpoenas to discover the facts underlying privileged communications, because the facts themselves are not privileged.
Therefore, as demonstrated in this case, it may be more effective to discover details of settlement negotiations by deposing or subpoenaing a witness with knowledge of the negotiations rather than using document production requests to seek production of attorney-client correspondence memorializing the discussions.
The Toyo Tire v. Atturo Tire decision can be found here.
Editors and Authors
The editors and authors are attorneys at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP.
John Paul - email@example.com
Brian Kacedon - firstname.lastname@example.org
Robert Wells - email@example.com
Robert MacKichan - firstname.lastname@example.org
Sonja W. Sahlsten - email@example.com
This article is for informational purposes and does not constitute legal advice.
The views expressed do not necessarily reflect the views of LES or Finnegan.