Cont'l Circuits LLC v. Intel Corp.

• Citation: 435 F.Supp.3d 1014
• Decision Date: 27 January 2020
• Docket Number: No. CV16-02026-PHX-DGC,CV16-02026-PHX-DGC
• Parties: CONTINENTAL CIRCUITS LLC, Plaintiff, v. INTEL CORPORATION, et al., Defendants.
• Court: U.S. District Court — District of Arizona

435 F.Supp.3d 1014

CONTINENTAL CIRCUITS LLC, Plaintiff,

v.INTEL CORPORATION, et al., Defendants.

No. CV16-02026-PHX-DGC

United States District Court, D. Arizona.

Signed January 27, 2020

Bailey Alexandra Blaies, Pro Hac Vice, Bradley W. Caldwell, Pro Hac Vice, Daniel R. Pearson, Pro Hac Vice, Jason D. Cassady, Pro Hac Vice, John Austin Curry, Pro Hac Vice, Justin T. Nemunaitis, Robert Seth Reich, Jr., Warren J. McCarty, III, Caldwell Cassady & Curry PC, Dallas, TX, Joseph A. Schenk, Aiken Schenk Hawkins & Ricciardi PC, Phoenix, AZ, for Plaintiff.

Aaron H. Matz, Chad Steven Campbell, Tyler Reese Bowen, Perkins Coie LLP, Phoenix, AZ, Bradley Michael Baglien, Pro Hac Vice, Claire M. Specht, Pro Hac Vice, Joseph J. Mueller, Pro Hac Vice, Kevin S. Prussia, Pro Hac Vice, Richard W. O'Neill, Pro Hac Vice, Sarah R. Frazier, Pro Hac Vice, Sarah Beigbeder Petty, Pro Hac Vice, Shirley X. Li Cantin, Pro Hac Vice, William F. Lee, Pro Hac Vice, Wilmer Cutler Pickering Hale & Dorr LLP, Boston, MA, Jason Choy, Pro Hac Vice, Wilmer Cutler Pickering Hale & Dorr LLP, Los Angeles, CA, Joseph F. Haag, Pro Hac Vice, Wilmer Cutler Pickering Hale & Dorr LLP, Palo Alto, CA, Nina Tallon, Pro Hac Vice, Rachel Weiner Cohen, Wilmer Cutler Pickering Hale & Dorr LLP, Washington, DC, for Defendants.

ORDER

David G. Campbell, Senior United States District Judge

Defendants have filed a motion to compel the disclosure of information related to litigation funding agreements in this case. The Court held a conference call with the parties on December 4, 2019 (Doc. 334), and the issues have now been briefed by the parties (Docs. 344, 349, 360). The Court will grant in part and deny in part Defendants' request.¹

I. Background.

Plaintiff alleges that Defendants' products infringe several patents Plaintiff owns related to manufactured circuit boards. Plaintiff does not manufacture the products addressed in its patents or license its patents to others. Plaintiff has no business operations other than owning the patents and asserting claims for their infringement.

Defendants' motion seeks production of what Defendants describe as "three narrowly-tailored categories of documents and information relating to [Plaintiff's] third-party litigation funding" – (1) any final litigation funding agreements between Plaintiff and any third-party funders; (2) the identities of all persons or entities (other than counsel) with a fiscal interest in the outcome of the litigation; and (3) the identities of any potential litigation funders who declined to provide funding after being approached by Plaintiff or its founder, Peter Trzyna. Doc. 344 at 2.² The Court will confine its analysis to these three requests. The first request seeks the production of specific documents – litigation funding agreements. The second and third requests seek information rather than documents. Plaintiff resists disclosure on the basis of the work product doctrine. Plaintiff does not argue that the discovery is barred by the attorney-client privilege. Because the work product doctrine applies differently to documents than to intangible information, the Court will address the first request separately from the second and third requests. Before doing so, however, the Court will address the parties' relevancy arguments.

II. Relevancy.

A party may obtain discovery regarding any nonprivileged matter that is relevant to any claim or defense and proportional to the needs of the case. Fed. R. Civ. P. 26(b)(1). Relevant information need not be admissible at trial to be discoverable. Id.

Plaintiff contends that the requested documents and information are not relevant to any claim or defense in this case. Defendants disagree, arguing that the documents and information are relevant to refute any David vs. Goliath narrative at trial, to evaluate the value of the patents at issue and any damages claimed by Plaintiff, to address bias and prejudice of witnesses who may appear a trial, and to identify any jurors who may have a relationship with a litigation funder. Doc. 344 at 4-6.

Relevancy in civil litigation is a relatively low bar. Under Rule 401 of the Federal Rules of Evidence, information having "any tendency" to make a fact in dispute "more or less probable" is relevant. Fed. R. Evid. 401. And courts "generally recognize that relevancy for purposes of discovery is broader than relevancy for purposes of trial." In re Bard IVC Filters Prod. Liab. Litig. , 317 F.R.D. 562, 566 (D. Ariz. 2016).

With the exception of Defendants' third request, the Court has little difficulty concluding that the requested documents and information are relevant. They concern Plaintiff's financial resources and could be used to refute any David vs. Goliath narrative at trial. Plaintiff claims that any such narrative is speculative, but Defendants are entitled to conduct discovery that may refute potential trial themes, and Defendants note that at least some evidence suggests that such a narrative will be asserted in this case. Doc. 363 at 8 (sealed document).

Plaintiff argues that the information and documents are not relevant to the value of the patents because Defendants can conduct factual discovery concerning the patents and Plaintiff will produce expert evidence on damages. Doc. 349 at 6. But the fact that some information bears on the value of the patents does not render irrelevant other information that could shed additional light on their value. Litigation funding agreements in a case such as this likely contain financial information related to the value of the litigation, and therefore to the value of the allegedly infringed patents, that will not be included in, or may contradict, the expert's report.

And to the extent persons affiliated with Plaintiff may receive substantial compensation through the litigation, that fact bears on their credibility. The identity of litigation funders who have a stake in the litigation will also help identify jurors, if any, who have a relationship with such funders.

Of course, the fact that information is relevant for purposes of discovery does not eliminate work product protection. Most information covered by the work product doctrine is relevant — often highly relevant — but it is protected nonetheless. Nor does the relevancy of the information mean that it will be admissible at trial. Admissibility will be addressed later in this litigation. For purposes of this motion, however, the Court does not accept Plaintiff's argument that Defendants' first and second requests are irrelevant.

The Court reaches a different conclusion on Defendants' third request for the identities of any potential litigation funders who declined to provide funding after being approached by Plaintiff or its founder, Peter Trzyna. The identifies of such persons or entities, if they exist, have nothing to do with the actual financial interests or resources in this litigation, the potential bias of witnesses, or possible disqualification of jurors. Defendants might contend that communications with these persons or entities could bear on the value of the patents, but such an assertion is entirely speculative. The Court agrees that "potential litigation funding is a side issue at best." Space Data Corp. v. Google LLC , No. 16-CV-03260 BLF, 2018 WL 3054797, at *1 N.D. Cal. June 11, 2018 (emphasis in original). The Court concludes that the information sought in Defendants' third request is not relevant and not discoverable under Rule 26. The Court will not address the third request further, and will turn to the parties' work product arguments with respect to the first and second requests.

III. First Request – Production of Litigation Funding Agreements.

Under the work product doctrine codified in Rule 26 of the Federal Rules of Civil Procedure, Defendants generally may not obtain discovery of "documents and tangible things that are prepared in anticipation of litigation or for trial by and for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent)." Fed. R. Civ. P. 26(b)(3)(A). This protection may be overcome, however, if Defendants show that they have a "substantial need for the materials" and cannot "obtain their substantial equivalent by other means." Id. Even if Defendants make this showing, they cannot obtain core work product — information revealing "the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation." Fed. R. Civ. P. 26(b)(3)(B).

A. Are the Funding Agreements Work Product?

Plaintiffs have submitted several litigation-funding-related agreements to the Court for in camera review. The Court has reviewed each of the agreements. The Court does not consider the fact that the agreements exist to be protected information under the work product doctrine. That fact constitutes intangible information that does not reveal the mental impressions or strategies of the attorneys, as discussed more fully in part IV of this order.

Defendants initially argued that funding agreements do not qualify for work product protection because they were not created "for use" in litigation. Doc. 344 at 8. Defendants now agree, however, that the Ninth Circuit has adopted the broader "because of" standard. Doc. 360 at 2. As the Ninth Circuit explained:

[W]e join a growing number of our sister circuits in employing the formulation of the "because of" standard articulated in the Wright & Miller Federal Practice treatise. This formulation states that a document should be deemed prepared "in anticipation of litigation" and thus eligible for work product protection under Rule 26(b)(3) if "in light of the nature of the document and the factual situation in the particular case, the document can be fairly said to have been prepared or obtained because of the prospect of litigation."

In re Grand Jury Subpoena (Mark Torf/Torf Envtl. Mgmt.) , 357 F.3d 900, 907 (9th Cir. 2004) (quoting Charles Alan Wright, Arthur R....