Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_02-cv-01486/USCOURTS-cand-4_02-cv-01486-41/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re: JDS UNIPHASE CORPORATION

SECURITIES LITIGATION

 

This document relates to ALL ACTIONS

 /

No. C-02-1486 CW (EDL)

ORDER GRANTING IN PART AND

DENYING IN PART PLAINTIFF’S

MOTION TO COMPEL 

In February 2005, Lead Plaintiff propounded requests for production of documents seeking,

inter alia, production of minutes from the meetings of Defendant JDSU’s Board of Directors. 

Declaration of Anthony Harwood Ex. 1. In response, Defendant produced redacted minutes, and a

privilege log listing the redacted minutes as protected by the attorney-client privilege and the work

product doctrine. On August 22, 2006, Lead Plaintiff filed a motion to compel production of

unredacted Board minutes, arguing that the minutes are not entitled to work product protection and

even if they are, the protection was waived by disclosure of the minutes to Defendants’ auditing

firm, Ernst & Young. Subsequently, Defendant produced materials withheld on the basis of

attorney-client privilege, so only the work product issue remains with respect to eight sets of

minutes. In response to the Court’s request, Defendant lodged the eight disputed Board minutes for

in camera review prior to the September 26, 2006 hearing. The motion was fully briefed and the

Court held a hearing on September 26, 2006. 

The work product protection may be waived by disclosures to third parties “in a

manner which substantially increases the opportunity for potential adversaries to obtain the

information.” Samuels v. Mitchell, 155 F.R.D. 195, 200 (N.D. Cal. 1994). Courts are split as to

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whether disclosure to an outside auditor constitutes a waiver. Compare, e.g., Medinol v. Boston

Scientific Corp., 214 F.R.D. 113, 116 (S.D. N.Y. 2002) (determining that the work product

protection was waived with respect to litigation committee minutes that were disclosed to outside

auditor because the auditor’s interests were not aligned with the company; “in order for auditors to

properly do their job, they must not share common interests with the company they audit. ‘Good

auditing requires adversarial tension between the auditor and the client.’”) (emphasis in original),

with, e.g., Merrill Lynch & Co. v. Allegheny, 229 F.R.D. 441 (S.D. N.Y. 2004) (determining that the

work product protection was not waived with respect to internal investigative reports of

circumstances surrounding executive theft which were disclosed to an independent auditor; the

relationship between an auditor and client was not the kind of adversarial relationship contemplated

by the work product doctrine); see also Samuels, 155 F.R.D. 195 (determining that the work product

protection was not waived with respect to documents disclosed to outside auditor acting as a

consultant where there was not a substantial danger that the documents would be disclosed to an

adversary, and the company kept all communications with the auditor confidential and took steps to

guarantee that the documents would not be given to an adversary).

While there are good arguments on both sides of the issue, at this time, the Court is more

persuaded by the latter view. At least under the circumstances of this case, the disclosure did not

constitute an automatic waiver of the work product protection. 

The Court nonetheless reviewed the unredacted minutes in camera to see if the material

withheld came within the privilege. The Ninth Circuit has adopted the “because of” litigation test,

rather than the “primary motivation” test, to determine whether a dual purpose document is

protected by the work product doctrine. See In re Grand Jury Subpoena, 357 F.3d 900, 907 (9th Cir.

2004) (adopting “because of” litigation standard for determining whether “dual purpose” documents

are protected by the work product doctrine; “[t]his 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 fairly be said to have been prepared or obtained because of the prospect of

litigation.’”) (quoting 8 Wright & Miller, Federal Practice and Procedure, § 2024 (2d ed. 1994)). 

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This standard does not consider whether litigation was a primary or secondary motive for creation of

a document, but instead considers the totality of the circumstances and affords protection “when it

can fairly be said that the ‘document was created because of anticipated litigation, and would not

have been created in substantially similar form but for the prospect of that litigation.’” Grand Jury

Subpoena, 357 F.3d at 908 (quoting United States v. Aldman, 134 F.3d 1194, 1195 (2d Cir. 1998)). 

Having reviewed the disputed Board minutes in camera, the Court has determined that, under

the “because of” test, the redactions for the work product doctrine in the January 24, 2000, February

4, 2000, March 24, 2000, March 5, 2001, May 1, 2001 and August 22, 2001 minutes, and of the first

paragraph on page one of the April 28, 2000 minutes and of the first paragraph on page three of the

April 3, 2001 minutes are well-taken. 

In a letter dated October 3, 2006, Defendant informed the Court that it withdrew its assertion

of work product protection for paragraph two on page three of the April 3, 2001 minutes as well as

for portions of other minutes relating to the same issue: page one of the March 5, 2001 minutes; page

three of the April 3, 2001 minutes; page two of the May 1, 2001 minutes; and the first two

paragraphs of page five of the August 22, 2001 minutes. Defendant maintains that the second

redacted paragraph on page one and continuing on to page two of the April 28, 2000 minutes reflects

work product. See Supp. Decl. of Michael Phillips at ¶ 2 (stating that the paragraph “relates to the

same potential litigation discussed in the immediately preceding paragraph. Outside litigation

counsel were retained to assist the board with this matter, and those counsel were present at the

April 28, 2000 meeting specifically to advise the board. . . .”). The Court is not convinced that this

paragraph constitutes work product. The minutes themselves are carefully drafted by an attorney

and vetted before being finalized. The paragraph immediately preceding this paragraph specifically

refers to counsel providing legal advice to the board, and that language is conspicuously absent from

this second paragraph. Moreover, the Court declines to open the door to consideration of post hoc

explanations of the work product assertion such as the Phillips declaration. 

Accordingly, Lead Plaintiff’s motion to compel is granted in part and denied in part. In

addition to the redactions for which Defendant has withdrawn its work product designation,

Defendant shall also unredact the second redacted paragraph on page one and continuing on to page

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two of the April 28, 2000 minutes. The remaining redactions are sustained. 

IT IS SO ORDERED.

Dated: October 5, 2006 

ELIZABETH D. LAPORTE

United States Magistrate Judge

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