RE Pioneer Hi-Bred International

• Decision Date: 05 February 2001
• Docket Number: Docket No. 661,HI-BRED
• Citation: 238 F.3d 1370
• Parties: (Fed. Cir. 2000) IN RE PIONEERINTERNATIONAL, INC. Miscellaneous
• Court: U.S. Court of Appeals — Federal Circuit

Page 1370

238 F.3d 1370 (Fed. Cir. 2000)

IN RE PIONEER HI-BRED INTERNATIONAL, INC.

Miscellaneous Docket No. 661

United States Court of Appeals for the Federal Circuit

February 5, 2001

On petition for writ of mandamus from the United States District Court for the Eastern District of Missouri Judge Donald J. Stohr.

[Copyrighted Material Omitted]

Andrew Rothschild, Lewis, Rice & Fingersh, L.C., of St. Louis, Missouri, for petitioner, Pioneer Hi-Bred International, Inc. Of counsel on the brief was Brian B. O'Neill, Faegre & Benson LLP, of Minneapolis, Minnesota.

Joseph P. Conran, Husch & Eppenberger, LLC, of St. Louis, Missouri, for respondent, Monsanto Company. On the brief was Richard L. Stanley, Howrey, Simon, Arnold & White LLP, of Houston, Texas.

Before MAYER, Chief Judge, BRYSON and DYK, Circuit Judges.

DYK, Circuit Judge.

ORDER

Pioneer Hi-Bred International, Inc., ("Pioneer") petitions for a writ of mandamus to direct the United States District Court for the Eastern District of Missouri to vacate its orders vitiating Pioneer's attorney-client or work product privilege and requiring Pioneer's in-house counsel to answer questions relating to certain subject matters and produce documents that are no longer protected by privilege. Monsanto Company ("Monsanto") opposes. Pioneer replies.

BACKGROUND

Monsanto sued Pioneer for breach of contract, patent infringement, and misappropriation of trade secrets. Monsanto's complaint asserts that two license agreements between Monsanto and Pioneer, concerning Monsanto's patent for a genetic technology that confers resistance in soybeans and canola to a herbicide, did not survive the merger of Pioneer into Delta Acquisition Sub, Inc., a wholly owned subsidiary of E.I. duPont de Nemours and Company, Inc ("duPont").

Through discovery, Monsanto sought information relating to the merger. Pioneer designated its in-house counsel as its representative, pursuant to Fed. R. Civ. P. 30(b)(6), to answer Monsanto's deposition questions. During the deposition, Monsanto sought information relating to analysis of the financial benefits stemming from the merger, including tax consequences, and information concerning an analysis that was performed regarding the effect of the merger on Pioneer's licenses. Pioneer's in-house counsel invoked the attorney-client privilege in some instances.

Monsanto moved to compel Pioneer's in-house counsel to respond to the deposition questions relying, inter alia, on Pioneer's disclosures in a Securities and Exchange Commission ("SEC") proxy statement. ¹ The district court granted the motion to compel responses to two lines of inquiry. As clarified by a second order these were: (1) "analysis of the financial benefit and tax consequences of the merger to the original Pioneer's shareholders"; and (2) "the original Pioneer's analysis of the merger's ramifications for its existing technology licenses, and discussions between the original Pioneer and duPont, or between the original Pioneer and duPont's counsel, Skadden, Arps, on this issue." The district court stated:

The Court is persuaded by Monsanto's arguments and the authorities cited in support that attorney opinions, and communications between the original Pioneer or the defendant and its counsel, concerning tax and intellectual property implications of the merger were never privileged because their end result was intended to be disclosed to the public and the SEC, and was so disclosed, in the proxy statement the original Pioneer was required to make under federal securities laws. The Court is further persuaded, limited to the facts and circumstances presented in this instance, that, if ever privileged, the protection applying to these opinions and communications has been waived by defendant's disclosure of the opinions to expert witnesses, by the original Pioneer's disclosure of the opinions to duPont during the merger negotiations, and perhaps by defendant's designation of in-house counsel as its Rule 30(b)(6) representative.

On the parties' cross-motions for reconsideration of the court's order, the district court clarified its order in certain respects. The district court noted, inter alia, that its ruling regarding privilege would also apply to documents. The district court ordered Pioneer to produce its in-house counsel for further deposition and to produce "all documents pertinent to these same subject matters which have previously been withheld on a claim of work product or attorney-client privilege" no later than January 19, 2001. On January 18, 2001, this court stayed the district court's order.

DISCUSSION

The remedy of mandamus is available only in extraordinary situations to correct a clear abuse of discretion or usurpation of judicial power. In re Calmar, Inc., 854 F.2d 461, 464, 7 USPQ2d 1713, 1715 (Fed. Cir. 1988). ²

A party seeking a writ bears the burden of proving "that its right to issuance of the writ is clear and indisputable, . . . and that it lacks adequate alternative means to obtain the relief sought." In re Spalding Sports Worldwide, Inc., 203 F.3d 800, 804, 53 USPQ2d 1747, 1750 (Fed. Cir. 2000) (quoting In re Regents of Univ. of Cal., 101 F.3d 1386, 1387, 40 USPQ2d 1784, 1785 (Fed. Cir. 1996)). See also Mallard v. U.S. Dist. Court for the Southern Dist. of Iowa, 490 U.S. 296, 309 (1989); Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 35 (1980). However, a writ of mandamus "may be sought to prevent the wrongful exposure of privileged communications." In re Regents, 101 F.3d at 1387, 40 USPQ2d at 1785.

With respect to the privilege questions, we apply the law of the United States Court of Appeals for the Eighth Circuit. See In re Regents, 101 F.3d at 1390, n.2, 40 USPQ2d at 1787, n.2 ("For procedural matters that are not unique to patent issues, we apply the perceived law of the regional circuit."). ³ The parties are in general agreement that the Eighth Circuit's seminal case on this attorney-client privilege issue is United States v. Cote, 456 F.2d 142 (8th Cir. 1972). In Cote, the Eighth Circuit held that the filing of amended returns by taxpayers communicated, at least in part, the substance of information contained in workpapers given to an attorney by an accountant. Because the information had been communicated to the government, the Eighth Circuit held that the taxpayers "must now disclose the detail underlying the reported data." Id. at 144. The Eighth Circuit stated that because the attorney-client privilege attached to the "substance of a communication" and "not to the particular words used," the taxpayers had "effectively waived the privilege not only to the transmitted data but also as to the details underlying that information." Id. The Eighth Circuit explained that the district court could, in camera, determine whether particular workpapers contained detail of unpublished material which was not part of the data revealed on the tax returns and which would not need to be disclosed. Id. at 145, n. 4. Compare United States v. Workman, 138 F.3d 1261, 1263 (8th Cir. 1998) (regarding evidentiary rulings, the waiver of attorney-client communications "covers any information directly related to that which was actually disclosed").

The Eighth Circuit in Cote apparently followed the theory that the attorney-client privilege had been waived by the disclosure, but noted that some courts have stated that the privilege never attaches because the information is intended to be reported to the government. The district court stated in the present case that the privilege had not attached and alternatively found that it had been waived.

We believe that the district court has misunderstood the scope of attorney-client privilege. A party does not forego the attorney-client privilege with respect to merger negotiations by disclosing the existence of the merger, the negotiations between the parties concerning the merger, or the property rights of the respective parties, and a waiver occurs only when a party relies on or discloses advice of counsel or other privileged information in connection with the merger. See Upjohn Co. v. United States, 449 U.S. 383, 395 (1981) ("The privilege only protects disclosure of communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney."); United States v. El Paso Co., 682 F.2d 530, 538 n.10 (5th Cir. 1982) (stating that public disclosure of certain facts does not destroy attorney-client privilege with respect to attorney-client communications about those facts). Such reliance and disclosure occurred here only in a limited area -- the advice received from Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden, Arps") and Fried, Frank, Harris, Shriver & Jacobson ("Fried, Frank") concerning the tax consequences of the merger. The disclosure of that advice and reliance on that advice waived the attorney-client privilege with respect to all documents which formed the basis for the advice, all documents considered by counsel in rendering that advice, and all reasonably contemporaneous documents reflecting discussions by counsel or others concerning that advice. SeeCote, 456 F.2d at 144. (Such documents apparently may include an analysis of intellectual property rights.) Oral testimony on these specific matters should also be allowed. The disclosure and reliance on tax...