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Lynx System Developers, Inc. v. Zebra Enterprise Solutions Corp.

United States District Court, D. Massachusetts

March 28, 2018




         This case involves allegations of trade secret misappropriation, inequitable patent procurement, and various contract and common law claims arising from the parties' past business dealings. The gravamen of the complaint filed by the plaintiffs, Lynx System Developers, Inc. and IsoLynx, LLC (collectively “Lynx”), is that the defendants, Zebra Enterprise Solutions Corp., Zebra Technologies Corp., and ZIH Corp. (collectively “Zebra”), misappropriated Lynx's realtime player tracking technology and excluded Lynx from a subsequent deal with the National Football League (“NFL”) for the use of that technology. Currently pending before the Court is Lynx's motion concerning three email documents that it alleges were improperly redacted by Zebra on the basis of attorney-client privilege.

         I. Introduction

         The dispute stems from an exchange of email discovery in which Zebra produced email documents to Lynx in two digital formats; one of which was keyword searchable, the other not. Lynx eventually noticed three documents within this production that were inadvertently redacted in one of the formats but not the other. This revealed statements that were purportedly subject to the attorney-client privilege. Pursuant to the parties' joint protective order, Lynx notified Zebra of the discrepancy and contested the assertion of privilege. In response, Zebra maintained that the privilege was applicable to these three emails and sought their return. Because the parties' were unable to resolve this matter by agreement, Lynx filed the present Motion to Remove Defendants' Improper Designation of Three Emails as Attorney-Client Privileged (dkt. no. 171).

         The email documents have been identified as Exhibits A, B, and C, (Haan Decl., Exs. A- C (dkt. no. 178)), and submitted to the Court for in camera review. The communications at issue contain sensitive information, so I describe them in only as much detail as necessary to explain the rulings.

         II. The Attorney-Client Privilege

         The purpose of the attorney-client privilege is to encourage “full and frank communication between attorneys and their clients, ” Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); see F.D.I.C. v. Ogden Corp., 202 F.3d 454, 461 (1st Cir. 2000) (citing Upjohn, 449 U.S. at 389), but the privilege is narrowly construed to accomplish that end, United States v. Nixon, 418 U.S. 683, 710 (1974) (“[E]xceptions to the demand for every man's evidence are not lightly created nor expansively construed, for they are in derogation of the search for truth.”); accord In re Keeper of Records (Grand Jury Subpoena Addressed to XYZ Corp.), 348 F.3d 16, 22 (1st Cir. 2003) (“[P]rivilege must be narrowly construed because it comes with substantial costs and stands as an obstacle of sorts to the search for truth.”).[1]

         The attorney-client privilege protects communications that satisfy the following criteria:

(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived.

Cavallaro v. United States, 284 F.3d 236, 245 (1st Cir. 2002) (citing 8 J.H. Wigmore, Evidence § 2292, at 554 (McNaughton rev.1961)). These requirements apply with equal force to in-house attorneys, whose legal advice based on communications with corporate officers is protected, but whose general business advice is not. See Texaco P. R., Inc. v. Dep't of Consumer Affairs, 60 F.3d 867, 884 (1st Cir. 1995); Neelon v. Krueger, No. 12-cv-11198-IT, 2015 WL 4254017, at *4 (D. Mass. July 14, 2015). “Generally, disclosing attorney-client communications to a third party undermines the privilege.” Cavallaro, 284 F.3d at 247 (citations omitted). Even communications that would otherwise be privileged may nevertheless become discoverable upon subsequent disclosure to a third party because it “destroys the confidentiality upon which the privilege is premised.” Lluberes, 663 F.3d at 24 (quoting In re Keeper of Records, 348 F.3d at 22). But there are two qualifications of this general rule that are relevant in the present case.

         The so-called “Kovel doctrine” extends the attorney-client privilege to include communication with a third party that is “necessary, or at least highly useful, for the effective consultation between the client and the lawyer which the privilege is designed to permit.” Cavallaro, 284 F.3d at 247 (quoting United States v. Kovel, 296 F.2d 918, 922 (2d. Cir. 1961)).[2] This doctrine, however, is limited in two important respects. First, the sharing of otherwise privileged information with a third party must be more than “useful” or “convenient” to the legal representation, but rather the third party's participation must be “nearly indispensable or serve some specialized purpose in facilitating the attorney-client communications.” Id. at 249 (quoting Edna Selan Epstein, The Attorney-Client Privilege and the Work-Product Doctrine 187 (4th ed. 2001)). Second, such third party communications must be made “for the purpose of obtaining legal advice from the lawyer.” Id. at 247 (quoting Kovel, 296 F.2d at 922). As noted by the First Circuit, this exception is more likely to apply when the lawyer-as opposed to the client- is the one who hires the third party, but this alone is not dispositive. Cavallaro, 284 F.3d at 248.

         Another potential qualification is the “functional equivalent” doctrine, which provides that certain third-party agents of corporate entities, such as consultants, can be considered the “functional equivalent” of corporate employees by virtue of their close connection to the corporate entity. In re Bieter Co., 16 F.3d 929, 938 (8th Cir. 1994). Categorizing certain third party agents as functionally equivalent to employees, in turn, allows communications between such agents and corporate counsel to fall within the scope of Upjohn, which protects communications between corporate employees and corporate counsel. United States v. Graf, 610 F.3d 1148, 1158-59 (9th Cir. 2010) (adopting the functional equivalent doctrine articulated in Bieter) (citing Upjohn, 449 U.S. at 390-94). In Bieter, where the Eighth Circuit established this doctrine, the court considered that the consultant had a longstanding relationship with the company, interacted with the principals on a daily basis, was intimately involved in the single objective for which the company was created, worked from the company office, was paid a monthly wage, and appeared at public meetings as its sole representative, leading to the court's ultimate conclusion that “[t]here was no principled basis to distinguish [the consultant's] role from that of an employee.” Bieter, 16 F.3d at 934, 938.

         As the party asserting the attorney-client privilege, Zebra bears the burden of establishing not only that the privilege applies to the communications at issue, but also that the privilege has not been waived. In re Keeper of Records, 348 F.3d at 22.

         A. ...

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