Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-00798/USCOURTS-cand-4_15-cv-00798-125/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1964 Racketeering (RICO) Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LOOP AI LABS INC,

Plaintiff,

v.

ANNA GATTI, et al.,

Defendants.

Case No. 15-cv-00798-HSG (DMR)

SECOND SUPPLEMENTAL ORDER RE 

ALMAWAVE USA, INC.'S MOTION TO 

QUASH AND/OR FOR PROTECTIVE 

ORDER

Re: Dkt. No. 168

I. BACKGROUND

On September 29, 2016, the court issued an order granting in part Almawave USA, Inc.’s 

(“Almawave’s”) motion to quash Plaintiff Loop AI Labs Inc.’s subpoena to third party Orrick, 

Herrington & Sutcliffe (“Orrick”). [Docket No. 901.] Plaintiff’s subpoena sought the production 

of documents related to Orrick’s former representation of Defendants Almawave, Almaviva 

S.p.A., and Almawave S.r.l. (together, the “Almawave Defendants”). The court conducted in 

camera review of approximately 4000 pages of responsive documents for which the Almawave 

Defendants claimed privilege. See id.

On October 13, 2016, Plaintiff moved for relief from the September 29, 2016 order. 

[Docket No. 909 (Mot. for Relief).] Plaintiff argued in part that the court erred because the 

Almawave Defendants’ production of the Orrick materials included documents in Italian for which 

they did not provide English translations for the court’s review. Id. at 2-3. On November 4, 2016, 

the court issued an order in which it explained that in reviewing the documents in camera, it 

considered the most recently sent email in each email string to determine whether the entire string 

was protected by the attorney-client privilege. [Docket No. 936 at 1-2 (citations omitted).] Upon 

review, the court determined that it had mistakenly treated certain Italian-language emails as 

falling within email strings, even though they were actually the most recent emails in the string. 

Case 4:15-cv-00798-HSG Document 969 Filed 01/11/17 Page 1 of 7
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Id. Therefore, in order to complete its review and properly assess the attorney-client privilege, the 

court ordered the Almawave Defendants to re-lodge all Italian-language documents for in camera 

review, along with certified English translations.

Additionally, the court noted that some versions of earlier emails within an email string 

were illegible, even though it appeared that they existed elsewhere in the production in legible 

form. The court ordered the Almawave Defendants to provide a system that the court could use to 

verify that it was able to review all documents. Id. at 3. On November 11, 2016, the Almawave 

Defendants made a supplemental submission regarding the illegible emails (Docket No. 945), then

lodged the certified English translations of all Italian-language documents on November 21, 2016.

II. DISCUSSION

A. Illegible Emails

The documents originally submitted for in camera review contain yellow highlighting to 

indicate portions to be redacted on the basis of privilege. According to the Almawave Defendants, 

the yellow highlighting causes some of the documents to become illegible. [Docket No. 945 

(Letter to Court).] They explained that removing the highlighting renders all of the documents 

legible. Id. The Almawave Defendants lodged a CD-ROM containing two folders. The first 

contains copies of the highlighted documents originally submitted to the court. The second 

contains the same documents with the highlighting removed. The individual files in the two 

folders bear the same control number so that the court can compare the highlighted versions of the 

documents to the non-highlighted versions. Id.

The court has reviewed the documents submitted on the CD-ROM. It is satisfied that the 

Almawave Defendants provided the court with fully legible copies of all of the documents in its 

production.

B. Italian-Language Emails

As noted, the Almawave Defendants lodged certified translations of all Italian-language 

documents that were part of the court’s in camera review. The court has reviewed each of the 

translations and Defendants’ proposed redactions thereof and supplements its September 29, 2016 

order as follows:

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Document CTRL000073619 is an April 23, 2014 email. Defendants seek to redact the 

subject line of the email. While the body of the email contains “confidential communications 

between attorneys and clients . . . made for the purpose of giving legal advice,” see United States 

v. Richey, 632 F.3d 559, 566 (9th Cir. 2011 (citation omitted), the subject line of the email does 

not. The subject line is therefore not protected by the attorney-client privilege. The Almawave 

Defendants must produce the original and English-language versions of this document to Plaintiff 

with the email’s subject line unredacted.

Document CTRL000075723 is a December 2, 2014 email with attachments. Defendants 

seek to partially redact the body of the email and certain attachments, including document 

CTRL000075725, entitled “Almawave USA – Budget FY 2015 – presentazione per CDA”

(translated as “Almawave USA Budget FY 2014-2015 Presentation to the BoD”). While the email 

to which CTRL000075725 is attached (CTRL000075723) contains attorney-client privileged 

communications, it does not refer to, discuss, or provide any information at all about the 

attachment “Almawave USA – Budget FY 2015 – presentazione per CDA.” Accordingly, the 

court finds that Defendants have not met their burden to establish that document CTRL000075725 

is protected by the attorney-client privilege. Defendants must produce the unredacted original and 

English-language versions of this document to Plaintiff.

The court concludes that all other documents contain attorney-client privileged 

communications that are appropriately redacted.

C. Plaintiff’s Remaining Objections

Plaintiff makes two additional arguments in its motion for relief: (1) Almawave lacked

standing to move to quash the Orrick subpoena, and (2) the Almawave Defendants waived the 

attorney-client privilege. Plaintiff raised these identical arguments in a December 28, 2015 

motion for relief. [Compare Docket No. 177 at 5-7 and Docket No. 346 at 1-3 with Docket No. 

909 at 3-5.] Judge Gilliam denied Plaintiff’s December 28, 2015 motion for relief in its entirety 

on January 15, 2016. [Docket No. 387.] This alone is reason to reject Plaintiff’s rehashed 

arguments. However, the court will address these arguments on the merits in order to aid Judge 

Gilliam’s review. 

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1. Almawave’s Standing to Move to Quash the Orrick Subpoena 

Plaintiff argues that Almawave never established a privileged relationship with Orrick,

lacked the ability to assert privilege on behalf of Almaviva S.p.A. and Almawave S.r.l., and 

therefore did not have standing to move to quash the Orrick subpoena. This argument is without 

merit. Almawave submitted the declaration of Valeria Sandei, the Chairman and President of 

Almawave USA and CEO of Almawave S.r.l., in which she stated that Almawave S.r.l. formally 

engaged Orrick to assist in setting up a United States subsidiary. [Docket No. 168-1 (Sandei 

Decl., Aug. 10, 2015) at ¶ 2.] After the establishment of Almawave USA, Sandei states that 

“Orrick served as counsel to both Almawave S.r.l. as well as to Almawave USA, providing legal 

advice to each company.” Id. at ¶ 4. Given this undisputed evidence, Almawave could reasonably 

have believed that Orrick was acting as its attorney during the relevant period, even if Orrick was 

never formally retained to represent that entity. See Westinghouse Elec. Corp. v. Kerr-McGee 

Corp., 580 F.2d 1311, 1317 (7th Cir. 1978) (the attorney-client relationship “is not dependent 

upon the payment of fees nor . . . upon the execution of a formal contract”); United States v. 

Montgomery, 990 F.2d 1264, 3 (9th Cir. 1993) (“When deciding what constitutes seeking legal 

advice from an attorney, we examine whether the potential client reasonably believes that he is 

consulting an attorney as an attorney and manifests an intention to seek professional legal advice, 

although actual employment does not result.”).

1

 

Almawave also asserts that Almaviva S.p.A. and Almawave S.r.l. did not move to quash 

the Orrick subpoena “only because [Plaintiff] refused to stipulate that their bringing a motion 

would not result in their forfeiting their pending challenge to personal jurisdiction.” [Docket No. 

189 at 4.] Plaintiff does not dispute this assertion. In light of these circumstances, the court finds 

that Almawave USA had standing to assert privilege as to the Orrick documents.

2. Waiver of Attorney-Client Privilege

Plaintiff also argues that the Almawave Defendants waived the privilege through voluntary 

 

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Plaintiff also argued that Almawave USA appeared to be a “non-functioning entity” and thus 

unable to invoke attorney-client privilege, and repeats this argument in its motion for relief from 

the September 29, 2016 order. Pl.’s Opp’n at 8; Mot. for Relief at 3-4. Plaintiff did not submit 

any evidence to support this assertion. 

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disclosure about the scope of then-Orrick attorney Peter Sternberg’s work, as well as his purported 

lack of knowledge about Gatti’s employment with Plaintiff. [Docket No. 177 at 23-24; Docket 

No. 909 at 4-5.] Specifically, Sternberg stated in a declaration that “while [he was] at Orrick, he 

did not advise anyone about implications arising from Anna Gatti’s employment with Loop AI 

because he was not aware of Ms. Gatti’s employment with Loop AI at that time.” [Docket No. 

178-6 p. 10 (Corrected Objections and Responses of Venable LLP to Subpoena Duces Tecum 

Served by Loop AI Labs Inc.).] According to Plaintiff, this statement resulted in a broad waiver 

of the attorney-client privilege that entitles Plaintiff to examine all of the Almawave Defendants’ 

confidential communications with its attorneys to verify the truth of Sternberg’s declaration. 

Plaintiff cites no authority to support its extraordinary position that an attorney’s description of the 

scope of his work, and the knowledge (or lack thereof) that informed that work, somehow results 

in waiver of all privileged communications. Sternberg’s statement did not waive the attorneyclient privilege between Orrick and the Almawave Defendants.

At the December 10, 2015 hearing, the undersigned ruled that Plaintiff was not entitled to 

privileged Orrick documents for the purpose of “double-checking” the truthfulness of Sternberg’s 

statement. Hr’g Tr. at 71. The court noted that, through the process of in camera privilege review, 

it would have the opportunity to examine the Orrick documents to determine whether they 

contradicted Sternberg’s representation about his knowledge of Gatti’s employment with Loop. 

Id. at 71-72. In the course of its review, the court did not find any communications that 

contradicted Sternberg’s statement. Nothing in the documents reviewed in camera by the court 

indicates that Sternberg gave his client advice about the “implications arising from Anna Gatti’s 

employment” with Loop. Plaintiff now suggests that document CTRL000074053, an email 

between Valeria Sandei and Mario Pepe that was provided to Sternberg, “shows that Mr. 

Sternberg and Orrick were told in writing that Ms. Gatti was working as the CEO of Loop AI.” 

[Docket No. 909 at 4.] This materially misrepresents the email’s contents.

2 While the email 

 

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In its motion for relief, Plaintiff cites an English translation of this document previously filed at 

Docket No. 285-7. 

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mentions Gatti’s “work as CEO” of a “startup,” neither the English nor the Italian version contains 

any mention of “Loop AI Labs Inc.” or any variation of Plaintiff’s name.3

Plaintiff took the position that it is “entitled to the Orrick documents” and that the 

documents are “material” to its claims, apparently believing that they contain smoking gun 

evidence of the Almawave Defendants’ wrongdoing. [See, e.g., Docket No. 947 at 12.] Plaintiff

never supported this position with evidence. Nevertheless, the court undertook an enormously 

time-consuming in camera review in order to ensure that Plaintiff obtained all of the documents to 

which it is entitled. The court concludes that Plaintiff’s speculation about the contents of the 

Orrick documents is completely baseless. 

D. Plaintiff’s Request for Sanctions

Finally, in a related filing, Plaintiff asks the court to sanction the Almawave Defendants 

for their conduct regarding the Orrick documents. [Docket No. 947 (Pl.’s Nov. 14, 2016 Opp’n to 

Almawave Defendants’ Mot. to Modify the Court’s Nov. 4, 2016 Order).] Plaintiff argues, among 

other things, that the Almawave Defendants and their counsel should be sanctioned for counsel’s 

misconduct in submitting Italian-language documents for in camera review and not providing the 

court with English translations at the outset. It also argues that defense counsel should be 

sanctioned for what it describes as his “false” statement that he personally reviewed all of the 

Orrick documents and confirmed that they were attorney-client privileged communications, even 

though he is not fluent in Italian. Id. at 11, 15.

Although defense counsel exhibited behavior that was far from model with respect to the 

Orrick documents, the court declines to entertain sanctions. The parties’ lamentable conduct in 

discovery has included a wearying war of “gotcha” sanctions motions. Bad behavior, while never 

acceptable, does not always warrant an award of sanctions. For example, the court recently 

declined to award sanctions to the Almawave Defendants for Plaintiff’s unexplained failure to 

 

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Plaintiff also argues that the Almawave Defendants implicitly waived the attorney-client 

privilege based on their repeated assertions that they reasonably believed that their hiring of Anna 

Gatti was lawful, citing United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991). [Docket 

No. 177 at 19-22.] At the December 10, 2015 hearing, the court addressed the inapplicability of 

Bilzerian in this case, where the Almawave Defendants have not raised an advice of counsel 

defense. See Hr’g Tr. at 71.

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comply with a court order regarding the depositions of its witnesses, but noted that the outcome 

“does not condone” Plaintiff’s conduct. [See Docket No. 965 at 3-4.] So too here. The court does 

not excuse defense counsel’s actions. But sanctions are not warranted.

III. CONCLUSION

Within three court days of the date of this order, Defendants shall produce to Plaintiff the 

original and English-language versions of CTRL000073619 with the email’s subject line 

unredacted, along with the unredacted original and English-language versions of 

CTRL000075723.

IT IS SO ORDERED.

Dated: January 11, 2017

______________________________________

Donna M. Ryu

United States Magistrate Judge

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORN

I

A

IT IS SO ORDERED

Judge Donna M. Ryu

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