Berall v. Teleflex Medical Inc.

MEMORANDUM & ORDER Before the Court is Defendant Teleflex Medical Incorporated’s (“Teleflex”) request for a pre-motion conference regarding the production of documents withheld by Plaintiff Dr. Jonathan Berall, M.D., M.P.H., (“Dr. Berall”) and his former attorney Mr. Charles E. Baxley. (See dkt. nos. 307 (“Mot.”)¹; 315 (“Reply”).) Specifically, Teleflex seeks production of (1) the June 1, 2007 Letter of Retention (the “Letter of Retention”) that is referenced in the June 7, 2011 Patent Security Agreement (the “Security Agreement”) between Dr. Berall and Mr. Baxley (see Mot. at 1; Mot. Ex. A) and (2) communications between Dr. Berall and Mr. Baxley regarding the prosecution of the patent-in-suit, U.S. Patent No. 5,827,178 (the “’178 Patent”). (See id. at 1.) Plaintiff and non-party subpoena recipient Mr. Baxley oppose the motion.² (See dkt. no. 310 (“Opp.”).)³ The Court considers the parties’ letter motions as the briefing on Defendant’s motion to compel. In October 2021, former defendant Verathon Inc. (“Verathon”) initiated two miscellaneous actions against Mr. Baxley in this Court (Verathon Inc. v. Baxley, Case No. 1:21-mc-794 (LAP) and Verathon Inc. v. Baxley, Case No. 1:21-mc-774 (LAP)), and filed motions pursuant to Federal Rules of Civil Procedure 37 and 45 to compel Mr. Baxley to comply with Verathon’s third-party subpoena issued in the instant matter,⁴ which was subsequently transferred as to Verathon and is presently pending in the Western District of Washington, captioned, Berall v. Verathon Inc., Case No. 2:21-cv-944-RSM. (See dkt. no. 3 in [21-mc-774].) Verathon seeks to compel Mr. Baxley to produce the same documents that Dr. Berall has withheld in this instant dispute. (See dkt. nos. 6 (“Verathon Mot.”) in [21-mc-794]; 13 (“Verathon Reply”) in [21-mc-794]; 4 in [21-mc-774]; 7 in [21-mc-774].) Mr. Baxley opposes the motion. (See dkt. no. 11 [in 21-mc-794] (“Verathon Opp.”).)⁵ To conserve judicial resources, the Court will address Verathon’s motions in this Order. The Court refers to its prior orders for the facts and procedural history of the case. (See, e.g., dkt. no. 334 at 2-4.) For the reasons set forth below, Defendant’s request to compel production from Dr. Berall of the Letter of Retention is GRANTED to the extent that Dr. Berall possesses the Letter of Retention.⁶ Defendant’s request to compel production of Dr. Berall’s communications with Mr. Baxley regarding the ’178 Patent’s prosecution, including reexamination, is GRANTED. Verathon’s request to compel production from Mr. Baxley of the Letter of Retention and communications between Mr. Baxley and Dr. Berall regarding the ’178 Patent’s prosecution is GRANTED. I. DISCUSSION a. Teleflex’s Motion Against Dr. Berall i. The Letter of Retention Teleflex argues that Dr. Berall improperly withholds the Letter of Retention based on the attorney-client privilege because (1) the Security Agreement relies on the Letter of Retention to describe the scope of Dr. Berall and Mr. Baxley’s respective rights in the ’178 Patent and (2) “[d]epending on the scope and nature of the conferred interest, Baxley may be a part owner of the patent or a necessary party to the case.” (See Mot. at 1-2.) Dr. Berall argues that the Letter of Retention is irrelevant because the letter “does not assign Baxley any ownership interest in the ’178 Patent.” (Opp. at 1.) Rather, Dr. Berall argues that the Letter of Retention created “a contingency arrangement [between Dr. Berall and Mr. Baxley], amounting to 10 percent of any future royalties resulting from licenses to the ’178 patent.” (Id.) The Court agrees with Teleflex. It is well established that evidence is relevant if “it has any tendency to make a fact more or less probable than it would be without the evidence.” See Fed. R. Evid. 401. “[E]vidence need not be conclusive in order to be relevant. An incremental effect…is sufficient.” Doe v. N.Y.C. Dep’t of Soc. Servs., 649 F.2d 134, 147 (2d Cir. 1981). Dr. Berall’s dispute regarding whether Mr. Baxley possesses an ownership interest in the ’178 Patent highlights the relevancy of the Letter of Retention. Indeed, the Letter of Retention is relevant to address inconsistencies in Mr. Baxley’s statements regarding his ownership interest in the ’178 Patent, including his sworn declaration to the United States Patent & Trademark Office (the “USPTO”) on June 24, 2011, stating, that he “believes that Dr. Berall is the sole owner of [the '178 Patent].” (Opp. at 2.) While the Court recognizes that Mr. Baxley secured his claim to 10 percent of any future royalties from the ’178 Patent in the Security Agreement, the Court is unpersuaded by Plaintiff’s argument that an unforeclosed security interest on a patent is irrelevant to a patentee’s standing to bring suit when Teleflex and Dr. Berall dispute the relevance of the Letter of Retention, not the Security Agreement. (See Opp. at 2.) Nor is the Court persuaded that the Letter of Retention is privileged. The Court of Appeals has consistently held that information concerning a client’s identity and the payment of legal fees is not privileged, absent special circumstances. See, e.g., Lefcourt v. United States, 125 F.3d 79, 86 (2d Cir. 1997); Vingelli v. United States, 992 F.2d 449, 454 (2d Cir. 1993); United States v. Goldberger & Dubin, P.C., 935 F.2d 501, 505 (2d Cir. 1991); In re Two Grand Jury Subpoenae Duces Tecum, 793 F.2d 69, 71-72 (2d Cir. 1986); In re Shargel, 742 F.2d 61, 62 (2d Cir. 1984). Dr. Berall’s attempt to draw a distinction between a “retainer agreement” and a “client identity and fee agreement” fails, as Dr. Berall has not shown that the provisions referring to the Letter of Retention referenced by the Security Agreement are necessary to obtain legal advice. Dr. Berall argues that the “Retention Letter discloses the client’s motives and the nature of the services, and is thus privileged” (Opp. at 2); however, these conclusory statements do not show that the Letter of Retention relayed legal advice. See, e.g., Vingelli, 992 F.2d at 454 (“[T]he attorney-client privilege only protects confidential communications made for the purpose of obtaining legal advice.”); In re Shargel, 742 F.2d at 62 (2d Cir. 1984) (noting that the attorney-client privilege “encompass[es] only those confidential communications necessary to obtain informed legal advice”). The Court agrees with Teleflex that the facts of Varbero v. Belesis, No. 20-cv-2538 (LJL), 2020 WL 7043503 (S.D.N.Y. Dec. 1, 2020) are distinguishable. (See Reply at 2.) Mr. Baxley is not Dr. Berall’s current counsel, the Letter of Retention is particularly relevant to determine Dr. Berall and Mr. Baxley’s respective rights in the ’178 Patent, and taking Dr. Berall’s statements as true, Mr. Baxley is the only person who possesses the Letter of Retention. (See id.) Thus, the Court concludes that Dr. Berall has failed to demonstrate the special circumstances necessary to justify disturbing the otherwise well-settled rule that information concerning a client’s retention letter is generally not protected by the attorneyclient privilege. Accordingly, Teleflex’s motion to compel Dr. Berall to produce the Letter of Retention is GRANTED to the extent that it is within his possession, custody, or control.⁷ ii. The Prosecution Documents The parties do not dispute that Dr. Berall waived the attorney-client privilege over communications with Mr. Baxley regarding the conception and actual reduction to practice of the ’178 Patent based on communications that Dr. Berall provided to the USPTO during the ’178 Patent’s reexamination.⁸ (See Mot. at 3; Opp. at 3.) Dr. Berall argues that no further disclosure is required because Mr. Baxley “is not withholding other documents containing facts related to conception and actual reduction to practice.” (Opp. at 3.) The instant dispute, however, concerns the scope of Dr. Berall’s waiver: did Dr. Berall waive privilege over all communications with Mr. Baxley regarding the ’178 Patent’s prosecution or just communications with Mr. Baxley regarding the ’178 Patent’s conception and actual reduction to practice? Teleflex argues that Dr. Berall waived privilege over all communications with Mr. Baxley regarding the ’178 Patent’s prosecution because Dr. Berall placed his communications with Mr. Baxley “at issue” in the litigation when he submitted those communications during the USPTO’s ’178 Patent reexamination proceedings.⁹ Teleflex argues that subject matter waiver applies because the disclosed communications discuss “not only conception and reduction to practice” but also “diligence, patentability, validity, scope of the prior art, and claim scope” of the ’178 Patent. (Reply at 2.) Dr. Berall maintains that the scope of any waiver is limited to communications with Mr. Baxley regarding the ’178 Patent’s conception and reduction to practice because he inadvertently submitted the privileged communications “randomly in the midst of appeal briefs filed on Oct. 9 and 12, 2012.” (Opp. at 3.) Dr. Berall argues that because he inadvertently disclosed the privileged communications, he did not place the communications “at issue” in this litigation, precluding subject matter waiver. (Id.) The Court first analyzes whether Dr. Berall placed privileged communications and documents regarding the ’178 Patent’s prosecution “at issue” in the litigation; then, the Court determines whether Dr. Berall’s submission of the privileged communications and documents was inadvertent disclosure. “At issue” waiver of the attorney-client privilege occurs “where a party affirmatively places the subject matter of its own privileged communication at issue in litigation, so that invasion of the privilege is required to determine the validity of a claim or defense of the party asserting the privilege, and application of the privilege would deprive the adversary of vital information.” Windsor Sec., LLC v. Arent Fox LLP, 273 F. Supp. 3d 512, 518 (S.D.N.Y. 2017) (citation omitted). “Courts will find that privileged/protected communications were put at issue where ‘[i]t would be unfair for a party who has asserted facts that place privileged communications at issue to deprive the opposing party of the means to test those factual assertions through discovery of those communications.’” Sparrow Fund Mgmt. LP v. MiMedx Grp., Inc., No. 18-cv-4921 (PGG) (KHP), 2021 WL 1930294, at *2 (S.D.N.Y. May 13, 2021) (citing Windsor Sec., LLC, 273 F. Supp. 3d at 518). Unlike in Windsor Sec., LLC where the court did not find an “at issue” waiver because the party’s need to determine attorneys’ fees was distinct from the instant dispute, this is a patent infringement suit where one of the parties’ primary disputes is the validity of the ’178 Patent. (See Mot. at 3 n.6; 213