Wang Laboratories, Inc. v. Toshiba Corp., Civ. A. No. 90-1477-A.

• Decision Date: 09 May 1991
• Docket Number: Civ. A. No. 90-1477-A.
• Citation: 762 F. Supp. 1246
• Court: U.S. District Court — Eastern District of Virginia
• Parties: WANG LABORATORIES, INC., Plaintiff, v. TOSHIBA CORPORATION, et al., Defendants, and Molex Incorporated, Defendant-Intervenor.

762 F. Supp. 1246

WANG LABORATORIES, INC., Plaintiff, v. TOSHIBA CORPORATION, et al., Defendants and Molex Incorporated, Defendant-Intervenor.

Civ. A. No. 90-1477-A.

United States District Court, E.D. Virginia, Alexandria Division.

May 9, 1991.

Thomas B. Newell, Watt, Tieder, Killian & Hoffar, McLean, Va., for plaintiff.

James Joseph Bierbower, Bierbower & Bierbower, Washington, D.C., for defendants.

Howard Leonard Bernstein, Sughrue, Mion, Zinn, Macpeak & Seas, Washington, D.C., for defendant-intervenor.

MEMORANDUM OPINION

ELLIS, District Judge.

This is an effort to disqualify an expert. It is occasioned by unusual circumstances: Both sides in a patent infringement suit, first plaintiff Wang Laboratories, Inc. ("Wang") and then the NEC defendants ("NEC"),¹ apparently engaged the same expert for the same purpose, namely to furnish an opinion on the validity of the patents in issue. Wang moves to disqualify the expert and for leave to conduct discovery aimed at ascertaining what use, if any, the expert made of Wang's putatively confidential information. For the reasons recorded here, the Court grants the disqualification motion, but denies the discovery request.

Facts

Most of the essential facts are uncontroverted. Instead, the parties' disputes focus chiefly on the inferences to be drawn from those facts and their legal significance.

The scenario begins in November 1990 when Thomas Scott, counsel for Wang, telephoned John Balde, a computer consultant,² with the intention of retaining Balde to serve as a Wang consultant in this case. The parties agree that the call confirmed that Balde was familiar with single in line memory module ("SIMM") technology, the subject of the patents in suit. According to Scott, the telephone call also resulted in Wang's retention of Balde and an agreement by Scott to pay Balde for his time. Balde's impression of this telephone conversation is different. He claims no retention occurred because he told Scott he first had to determine the validity of the patents before he would be interested in any arrangement with Wang.

Following the November 14 telephone conversation, Scott sent Balde a letter bearing that date and enclosing various materials he had selected or created. Specifically, the letter enclosed the patents in issue, certain prior art publications, some materials pertinent to the infringement issue, and a lengthy, detailed memorandum Scott prepared concerning the patents' prosecution history. In this letter, Scott asked Balde to review the material "so that we can discuss how best to explain the advantages to a computer designer of using Wang's SIMM memory technology." Scott closed the letter by noting that he wanted to meet with Balde once the latter had reviewed the enclosed material.

The next day Scott sent another letter. This letter, unlike the earlier one, was prominently labeled "CONFIDENTIAL ATTORNEY — WORK PRODUCT." It contained an outline of the potential defenses to Wang's suit as Scott then viewed them. It also focused more sharply the topics on which Wang needed Balde's views. In closing, Scott wrote that "this outline will assist your review of the materials included in my November 14, 1990 letter." Scott avers that he subsequently had several conversations with Balde concerning the technical aspects of the case, conversations in which he claims to have disclosed confidential information and in which he contends he made clear to Balde that the conversations were confidential. Balde does not specifically deny that the further telephone calls took place. He claims, however, that he made no use of the November 15th letter. In his view, the letter was premature; it sought his opinions on specific litigation issues, yet Balde's position, in his own mind, was that he would not agree to be retained until he first determined that the patents were valid. Balde wrote no letter to Scott expressing this view.

In any event, Balde proceeded to investigate the patents in suit, ostensibly by his own means, including consultations with, as he put it, "a few qualified people." Then, on December 10, 1990, Balde called Scott to report his conclusion that the patents were invalid and that he, Balde, was therefore not interested in pursuing the matter as a consultant. Scott requested a report, which Balde sent two days later. Balde's cover letter for the report opened by noting that "as you know, I Balde have read the patents and the Work-Product information on the two Wang SIMM patents...." He closed by thanking Scott for offering to pay his $1,540 invoice for time spent on the task and by noting that he hoped he might be "of more useful service to you for some other issues that might arise." The report itself is detailed and covers three-and-one-half single-spaced typed pages.

Sometime thereafter, NEC contacted and retained Balde. Neither Scott nor anyone on Wang's behalf was advised of this until April 1991, when NEC's counsel advised Wang's counsel that Balde would be called to testify at trial as an NEC expert on the patent validity issues. Wang's disqualification motion followed.

Analysis

Circumstances similar to those at bar are not common. Not surprisingly, therefore, the parties have cited no controlling authority directly on point. See Paul v. Rawlings Sporting Goods Co., 123 F.R.D. 271, 277 (S.D.Ohio 1988) ("There appears to be little case law dealing with the issue of disqualification of expert witnesses"). Even so, existing analogous authority points persuasively to the conclusion that disqualification is required in the circumstances at bar.

Analysis properly begins with an acknowledgment of the inherent power of federal courts to disqualify experts in certain circumstances. This power exists in furtherance of the judicial duty to protect the integrity of the adversary process and to promote public confidence in the fairness and integrity of the legal process. See Paul, 123 F.R.D. at 277-78; Great Lakes Dredge & Dock Co. v. Harnischfeger Corp., 734 F.Supp. 334, 336 (N.D.Ill.1990).

While the existence of the disqualification power is clear, its exercise presents more difficult issues in certain circumstances. To be sure, no one would seriously contend that a court should permit a consultant to serve as one party's expert where it is undisputed that the consultant was previously retained as an expert by the adverse party in the same litigation and had received confidential information from the adverse party pursuant to the earlier retention. This is a clear case for disqualification. See Marvin Lumber & Cedar Co. v. Norton Co., 113 F.R.D. 588 (D.Minn. 1986); Miles v. Farrell, 549 F.Supp. 82 (N.D.Ill.1982). Less clear are those cases where, as here, the parties dispute whether the earlier retention and passage of confidential information occurred. In this event, courts should undertake a two-step inquiry:

First, was it objectively reasonable for the first party who claims to have retained the consultant, in this case Scott on behalf of Wang, to conclude that a confidential relationship existed?

Second, was any confidential or privileged information disclosed by the first party to the consultant?

See Paul, 123 F.R.D. at 278; Great Lakes Dredge & Dock Co., 734 F.Supp. at 337.

Affirmative answers to both inquiries compel disqualification. But disqualification is likely inappropriate if either inquiry yields a negative response. Thus, even if counsel reasonably assumed the existence of a confidential relationship, disqualification does not seem warranted where no privileged or confidential information passed. See Paul, 123 F.R.D. at 279 (expert not disqualified where there was a "lack of communication of any information of either particular significance or which can be readily identified as either attorney work product or within the scope of the attorney client privilege"); see also Nikkal Ind. Ltd. v. Salton, Inc., 689 F.Supp. 187, 190 (S.D.N.Y.1988). Were this not so, lawyers could then disable potentially troublesome experts merely by retaining them, without intending to use them as consultants. Lawyers using this ploy are not seeking expert help with their case; instead, they are attempting only to prevent opposing lawyers from obtaining an expert. This is not a legitimate use of experts, and courts should not countenance it by employing the disqualification sanction in aid of it.

Similarly, disqualification should not occur in the absence of a confidential relationship even though some confidential information may be disclosed. See Estate of George S. Halas, Sr. v. Commissioner, 94 T.C. 570, 577 (1990) (expert not disqualified where no previous confidential relationship existed between an appraiser and the taxpayer). In this event, the disclosure is essentially a waiver of any existing privilege.³ Lawyers bear a burden to make clear to consultants that retention and a confidential relationship are desired and intended. Fairness requires this. Fairness also requires that consultants with doubts about their desire to be retained should express these doubts clearly and unequivocally to the inquiring lawyer and decline to accept any disclosures unless and until the doubts are resolved. In sum, the two-step inquiry...