Energy Conversion Devices Liquidation Tr. v. Ovonyx, Inc. (In re Energy Conversion Devices, Inc.)

659 B.R. 103

IN RE: ENERGY CONVERSION DEVICES, INC., et al, Debtors.

Energy Conversion Devices Liquidation Trust, Plaintiff, v. Ovonyx, Inc., et al., Defendants.

Case No. 12-43166 (Jointly Administered)¹

Adv. No. 18-4320

United States Bankruptcy Court, E.D. Michigan, Southern Division

Signed April 5, 2024

Eric D. Winston, Emiliano Delgado, Quinn Emanuel Urquhart & Sullivan, LLP, Los Angeles, California; Austin, Texas, Attorneys for Plaintiff.

E. Todd Sable, Robert M. Riley, Honigman LLP, Detroit, Michigan, Attorneys for Plaintiff.

Natalie L. Arbaugh, Katherine A. Preston, Winston & Strawn LLP, Dallas, Texas; Houston, Texas, Attorneys for Defendants Ovonyx, Inc.; Micron Technology, Inc.; and Ovonyx Memory Technology, Inc.

Fred K. Herrmann, William C. Blasses, Kerr, Russell and Weber, PLC, Detroit, Michigan, Attorneys for Defendants Ovonyx, Inc.; Micron Technology, Inc.; and Ovonyx Memory Technology, Inc.

OPINION AND ORDER REGARDING PLAINTIFF'S MOTION TO COMPEL PRODUCTION OF DOCUMENTS

Thomas J. Tucker, United States Bankruptcy Judge

A. Introduction and background

In this adversary proceeding, the Court must decide a dispute between the Plaintiff and the Defendants about certain documents that the Defendants have withheld in discovery, under claims of privilege. The case is before the Court on the Plaintiff's motion entitled "Plaintiff Energy Conversion Devices Liquidation Trust's Motion to Compel Production of Documents Claimed by Defendants as Privileged" (Docket # 677, the "Motion").² The Court held a telephonic hearing on the Motion on December 6, 2023, and then ordered the Defendants to file unredacted copies of the documents in dispute, under seal, so that the Court could conduct an in camera review of the documents.³ The Defendants filed such documents, under seal, on December 13, 2023.⁴ The Court has reviewed the documents, and now will rule on the privilege issues.

The Court has published several prior opinions in this adversary proceeding, two of which described the facts and claims alleged by the Plaintiff in great detail. The Court refers the reader to those two opinions for background on this complex litigation. See Energy Conversion Devices Liquidation Trust v. Ovonyx, Inc. (In re Energy Conversion Devices, Inc.), 621 B.R. 674 (Bankr. E.D. Mich. 2020); Energy Conversion Devices Liquidation Trust v. Ovonyx, Inc. (In re Energy Conversion Devices, Inc.), 654 B.R. 462 (Bankr. E.D. Mich. 2023). A third opinion granted an earlier motion by the Plaintiff to compel discovery, regarding one specific document claimed to be privileged, and is relevant to one part of the present Motion. Energy Conversion Devices Liquidation Trust v. Ovonyx, Inc. (In re Energy Conversion Devices, Inc.), 641 B.R. 349 (Bankr. E.D. Mich. 2022) (the "2022 Opinion").

B. Discussion

1. Defendants' argument that Plaintiff did not meet its "meet and confer" obligations before filing the Motion

The Defendants argue that before the Plaintiff filed the Motion, it failed to meet its obligation to meet and confer with defense counsel about the discovery the Plaintiff seeks. That obligation is set forth in Fed. R. Civ. P. 37(a)(1), which applies in this adversary proceeding under Fed. R. Bankr. P. 7037. That rule states:

(a) Motion for an Order Compelling Disclosure or Discovery.

(1) In General. On notice to other parties and all affected persons, a party may move for an order compelling disclosure or discovery. The motion must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.

Fed. R. Civ. P. 37(a)(1). The Plaintiff's Motion does include a certification of the type required by Rule 37(a)(1),⁵ but the Defendants argue that the certification is inadequate, and that the Plaintiff's "meet and confer" effort before filing the Motion was insufficient.⁶

The "meet and confer" effort made by the Plaintiff before filing the Motion was that after the parties exchanged privilege logs, the Plaintiff's counsel e-mailed a detailed letter to the Defendants' counsel. As the Motion accurately states, the letter "identif[ied] specific deficiencies with the Defendants' logs, [and] request[ed] an explanation for why a claim of privilege had been asserted over various categories of documents."⁷ The letter requested a written response from defense counsel within five days, and a meeting two days later.⁸ Five days after receiving the Plaintiff's letter, the Defendants' counsel responded with an e-mail, stating only that "[w]e're reviewing and will get back to you with a substantive response."⁹ Nine days after that, after hearing nothing further from the Defendants about the matter, the Plaintiff filed the Motion.

The Plaintiff argues that under the circumstances, its pre-filing meet-and-confer effort was sufficient under Civil Rule 37(a)(1). The Defendants disagree, and in their initial response to the Motion asked the Court either to deny the Plaintiff's Motion, or to "defer any hearing until after the [Plaintiff] has satisfied [its meet-and-confer] obligations."¹⁰

The Defendants may be right in their contention that the Plaintiff filed its Motion before making a sufficient effort to resolve or narrow the discovery disputes. But the Court does not need to decide that question, because the Court already has provided an adequate remedy for any violation of Civil Rule 37(a)(1). Instead of denying the Plaintiff's Motion, the Court required the parties to meet and confer about the Motion, before the Court held a hearing on the merits of the Motion.¹¹ That is one of the alternative forms of relief requested by the Defendants. And that process resulted in a substantial narrowing of the discovery dispute.

At this juncture, the Court will not deny the Plaintiff's Motion. It is unclear whether that relief is even available for a violation of Rule 37(a)(1). Rule 37 does not specify denial of a discovery motion as a remedy for a Rule 37(a)(1) violation. Rather, Rule 37(a)(5) provides a different remedy — that rule forbids an award of attorney fees and expenses to a prevailing party on a motion to compel, if "the movant filed the motion before attempting in good faith to obtain the disclosure or discovery without court action." Fed. R. Civ. P. 37(a)(5)(A)(i).¹² As shown by the cases cited by the parties, the courts appear to be divided as to whether a discovery motion may be denied for failure to comply with Rule 37(a)(1). See, e.g., Buskirk v. Wiles, No. 3:15-0353, 2016 WL 7118288, at *2 (S.D.W. Va. Dec. 6, 2016) (citation omitted) (court found a violation of Rule 37(a)(1), but found "that such failure does not result in denial of the Motion to Compel" and court considered the merits of the motion to compel); Frontier-Kemper Constructors, Inc. v. Elk Run Coal Co., Inc., 246 F.R.D. 522, 526 (S.D.W. Va. 2007) ("[T]he [rules] do not provide that failure to meet and confer automatically results in denial of the motion [to compel]. Rather, the sanction for failing to meet and confer is the denial of a request for expenses incurred in making a motion, including attorney's fees" under Fed. R. Civ. P. 37(a)(5)); Williams v. Bd. of Cnty. Comm'rs of Unified Gov't of Wyandotte Cnty. & Kansas City, Kan., 192 F.R.D. 698, 700 (D. Kan. 2000) (court found a failure to meet and confer, but decided merits of discovery motion anyway); Deakin v. Magellan Health, Inc., 340 F.R.D. 424, 445 (D.N.M. 2022) (court denied attorney fees for motion to compel, because of failure to meet and confer, but decided the motion on the merits); but see Compass Bank v. Shamgochian, 287 F.R.D. 397, 400 (S.D. Tex. 2012) (court denied motion to compel without prejudice because of failure to adequately meet and confer); Selley v. Midland Cnty., No. 17-cv-12834, 2018 WL 4145936, at *1 (E.D. Mich. Aug. 30, 2018) (court denied an earlier motion to compel without prejudice, because movant failed to make "adequate efforts to meet and confer").

In any event, in the exercise of its discretion, the Court will not deny the Motion. In this case it is better for the Court to decide Motion on the merits.

2. The merits of the discovery disputes

a. Some applicable legal standards

The Court agrees with the Plaintiff's following summary of the applicable law, which the Defendants do not dispute:

State law governs this privilege dispute. See Fed. R. Evid. 501; Fed. R. Bankr. P. 9017. Here, Idaho, Michigan, and Virginia provide the relevant bodies of law.

"The burden of establishing the existence of the privilege rests with the person asserting it." United States v. Dakota, 197 F.3d 821, 825 (6th Cir. 1999) [(citation omitted)]; see also Mainstay High Yield Corp[.] Bond Fund v. Heartland Indus[.] Partners, L[.]P[.], 263 F.R.D. 478, 480 (E.D. Mich. 2009) (citation and quotation omitted). ["]The [attorney-client] privilege is 'narrowly construed because it reduces the amount of information discoverable during the course of a lawsuit.[']" Ross v. City of Memphis, 423 F.3d 596, 600 (6th Cir. 2005) (quoting United States v. Collis, 128 F.3d 313, 320 (6th Cir. 1997)).

Under Sixth Circuit precedent, there are eight elements of the attorney-client privilege: "(1) [w]here legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his [insistence] permanently protected (7) from disclosure by himself or by the legal adviser, (8) unless the protection is waived." Reed v. Baxter, 134 F.3d 351, 355-56 (6th Cir. 1998) [(citation omitted)].

Idaho, Michigan, and Virginia law are substantially similar. In Idaho, a communication is privileged "where it is not intended to be disclosed to third parties, other than those third parties who are furthering the rendition of professional legal [services] to the client or who are necessary to transmit the confidential information. [I.R.E.

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