Leda Dunn Wettre, U.S. magistrate judge for the District of New Jersey/photo by Carmen Natale

A former patent attorney for L'Oreal USA has been dealt a discovery setback in his legal battle with the company over an alleged patent application quota system.

Steven Trzaska's application to compel production of a chain of email messages discussing his case was denied Monday by U.S. Magistrate Judge Leda Dunn Wettre of the District of New Jersey.

Trzaska filed the suit in 2015, claiming he and his fellow patent lawyers were told in 2014 that they faced dismissal if they did not meet the quota of 40 patent applications filed annually.

In seeking discovery of the emails, Trzaska claimed that attorney-client privilege did not apply to the messages between Thomas Sarakatsannis, general counsel of L'Oreal USA, and Jean-Francois Pahin, CFO of the research and innovation division at L'Oreal's parent company in France, because they work for separate business entities.

But Wettre said members of a corporate family are joint clients, and it made no difference whether their in-house counsel worked for the parent company or a subsidiary. "[T]he fact that the attorney and client do not work for the same L'Oreal entity is of no moment," Wettre wrote in a decision Monday.

Trzaska sought production of three messages that were exchanged between Sarakatsannis and Pahin in November 2014, or, in the alternative, an in camera review of the messages. In response to a request from Wettre for additional information about the emails, beyond the notations in L'Oreal's privilege logs, lawyers for L'Oreal and its U.S. subsidiary said Sarakatsannis and Pahin discussed severance negotiations with Trzaska and potential legal claims and risks that might arise if his employment were terminated. The emails included in the subject line a note that Sarakatsannis and Pahin intend their communications to be attorney-client privileged.

"Beyond the fact that Mr. Sarakatsannis' job as in-house counsel is to advise members of the L'Oreal corporate family on business and legal matters within his purview, he and Mr. Pahin manifested their understanding of their attorney-client relationship by marking the subject line of the three e-mails 'Attorney-Client Privileged,'" Wettre wrote.

In addition, there were no other participants in the emails, and neither defendant has otherwise disclosed their content, Wettre said. Also, their counsel proffered that the emails contain legal advice from Sarakatsannis to Pahin following Trzaska's threat of legal action against L'Oreal USA and L'Oreal S.A., Wettre said.

"Plainly, the attorney-client privilege applies," she said.

Wettre also rejected Trzaska's assertion that an in camera review of the emails was warranted because they might be business communications, and not legal communications. The timing of the creation of the emails—shortly after Trzaska threatened legal action against L'Oreal USA and L'Oreal S.A.—"is telling, and plaintiff has not put forth any cause to doubt defense counsels' representations that the information contained therein was conveyed for a primarily legal purpose," Wettre wrote.

Trzaska claims in his suit that after he told Pahin that he and the company's other patent attorneys were not willing to file low-quality patents merely to meet a quota, Trzaska was notified that the company would give him 15 weeks' severance pay if he would resign. He declined, and the offer was later raised to 40 weeks of severance pay, the suit claimed. When he declined to resign a second time, he was terminated, the suit claimed.

A lawyer for Trzaska said L'Oreal's exposure in the case is "heavy" because Trzaska, 52 when he filed the suit, earned roughly $400,000 per year and could have reasonably looked forward to another 15 years of work.

In November 2015, U.S. District Judge Susan Wigenton dismissed the case, finding its allegations that L'Oreal's policies caused staff attorneys to violate the Rules of Professional Conduct were not an adequate basis for a whistleblower suit. But the U.S. Court of Appeals for the Third Circuit reinstated the case in July 2017, ruling that an employer's threat that would result in the disregard of obligatory professional standards violates a public policy mandate under the whistleblower law.

Harold Goodman of Raynes Lawn Hehmeyer in Philadelphia, representing Trzaska, and Rosemary Alito of K&L Gates in Newark, representing L'Oreal USA, did not return calls about the ruling.

Eric Savage of Littler Mendelson in Newark, representing parent company L'Oreal S.A., declined to comment on the ruling.