Microsoft Corporation v. Immersion Corporation, No. 2:2007cv00936 - Document 59 (W.D. Wash. 2008)
Court Description: ORDER Granting 38 Microsoft's Motion to Compel, by Judge Ricardo S Martinez.(CL, )
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Microsoft Corporation v. Immersion Corporation Doc. 59 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 8 9 MICROSOFT CORPORATION, 10 Plaintiff, 11 12 CASE NO. C07-936RSM ORDER GRANTING MICROSOFT’S MOTION TO COMPEL v. IMMERSION CORPORATION, 13 Defendant. 14 I. INTRODUCTION 15 16 This matter comes before the Court on “Microsoft’s Motion to Compel Responses to 17 Requests for Production Nos. 3 and 19.” (Dkt. #38). Plaintiff Microsoft Corporation 18 (“Microsoft”) seeks an order from the Court compelling Defendant Immersion Company 19 (“Immersion”) to produce all settlement-related documents, including mediation documents, 20 from an underlying patent lawsuit between Immersion and the Sony Corporation (“Sony”). 21 Specifically, Microsoft argues that: (1) the documents at-issue are highly relevant; (2) they are 22 not protected by any privileges; and (3) even if any privileges applied, they have been waived 23 by Immersion. Immersion maintains that the information Microsoft seeks is irrelevant, and in 24 any event, privileged. Immersion further argues that no waiver of the privilege has occurred. 25 For the reasons set forth below, the Court GRANTS “Microsoft’s Motion to Compel 26 Responses to Requests for Production Nos. 3 and 19.” II. DISCUSSION 27 28 ORDER PAGE - 1 Dockets.Justia.com 1 A. Background1 2 On September 11, 2007, Microsoft issued its first set of Interrogatories and Requests 3 for Production (“RFP”) to Immersion. (Decl. of Mark-Dias, ¶ 8). Immersion timely 4 responded on October 11, 2007. (Id. at ¶ 9). However, Immersion objected and ultimately 5 did not respond to RFP Nos. 3 and 19. Microsoft’s RFP No. 3 specifically provides: Produce all documents and communications relating to the mediation of the Sony Lawsuit with [Immersion], including documents prepared in anticipation of the mediation, submitted to the mediator or sent to Sony. 6 7 8 (Id., Ex. 7). Microsoft’s RFP No. 19 provides: 9 Produce all communications with Sony relating to attempts to settle, resolve or terminate the Sony Lawsuit with Sony, including any mediation, whether successful or not. 10 11 12 (Id.). Immersion specifically responded, among other things, that the documents were not 13 14 relevant, and that the production of such documents were protected by the mediation 15 privilege. (Id.). The parties conducted a Rule 37 conference with respect to this dispute to 16 no avail. (Id. at ¶ 10). Thus, Microsoft now brings the instant motion to compel. 17 B. Relevance 18 At the outset, the Court must determine the relevance of the requested information at 19 issue. Pursuant to Fed. R. Civ. P. 26(b), “[p]arties may obtain discovery regarding any 20 nonprivileged matter that is relevant to any party’s claim or defense.” Id. To be relevant, 21 evidence must have a “tendency to make the existence of any fact that is of consequence to 22 the determination of the action more probable or less probable than it would be without the 23 evidence.” Fed. R. Evid. 401. Information relevant to the subject matter of an action means 24 information that might reasonably assist a party in evaluating a case, preparing for trial, or 25 26 1 The Court has previously discussed the relevant facts that gave rise to this lawsuit in its “Order Denying Microsoft’s Motion to Disqualify.” (Dkt. #54). Accordingly, a detailed discussion of these facts 27 is unnecessary here. 28 ORDER PAGE - 2 1 facilitating settlement. See generally Hickman v. Taylor, 329 U.S. 495, 506-07, 67 S.Ct. 385 2 (1947). Relevance has been construed broadly to encompass any matter that bears on, or that 3 reasonably could lead to other matter that could bear on, any issue that is or may be in the 4 case. Oppenheimer Fund v. Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380 (1978). District 5 courts have a broad range of discretion to determine relevance. Herbert v. Lando, 441 U.S. 6 153, 177, 99 S.Ct. 1635 (1979). 7 Here, the Court finds that the information requested by Microsoft is highly relevant to 8 Microsoft’s breach of contract claim. As both parties are fully aware, they entered into a 9 Sublicense Agreement (“SLA”) wherein Immersion agreed to pay Microsoft certain amounts 10 in the event that Immersion settled its remaining claims with Sony in an underlying patent 11 litigation case. (Pl.’s Am. Compl., ¶ 9). Immersion and Sony eventually reached an 12 agreement, but at the heart of the instant lawsuit is whether this agreement triggered 13 Immersion’s obligations to pay Microsoft under the SLA. Thus, settlement-related documents 14 between Immersion and Sony in the underlying patent litigation are directly relevant to 15 Microsoft’s breach of contract claim, because such communications may potentially show 16 whether Immersion intended to keep its agreement with Sony within or outside the scope of 17 the SLA. Further, to the extent that Immersion argues that this case turns on whether it 18 “elected in its discretion to ‘settle the Sony Lawsuit’” (Dkt. #41 at 11), settlement-related 19 documents are equally relevant to determine the veracity of this statement. 20 Immersion also argues that the SLA and its agreement with Sony are integrated 21 documents that speak for themselves, and therefore any prior documents regarding any 22 unsuccessful attempts to settle are irrelevant. While it is well established under Washington 23 contract law that contracts are interpreted according to the objective manifestation of the 24 parties, see Hearst Communications, Inc. v. Seattle Times Co., 154 Wash. 2d 493, 503, 115 25 P.3d 262 (2005) (citation omitted), Washington courts have held that a trial court may 26 examine extrinsic evidence “for the purpose of aiding in the interpretation of what is in an 27 instrument.” Berg v. Hudesman, 115 Wash. 2d 657, 669, 801 P.2d 222 (1990). As a result, 28 ORDER PAGE - 3 1 the negotiating history of the agreement between Immersion and Sony in the underlying patent 2 litigation may potentially be relevant in interpreting the language of their final agreement. 3 Given the liberal rules regarding discovery, the Court will not preclude Microsoft from 4 having access to information that is potentially germane to its case on relevancy grounds. 5 Whether such information is subsequently admissible is a separate question that the Court will 6 determine when the time arises. See In re Potash Anitrust Litig., 161 F.R.D. 405, 409 (D. 7 Minn. 1995) (“[O]ur analysis at [the discovery stage] is not driven by issues of admissibility, 8 but by fairly minimalistic precepts of relevancy.”). 9 C. Mediation Privilege 10 Having established that the documents at issue are relevant, the Court turns to whether 11 Immersion is justified in precluding the production of these documents based on the mediation 12 privilege. Initially, the Court addresses the respective parties’ arguments regarding 13 which specific mediation privilege applies to the instant motion. Immersion argues that the 14 California mediation privilege, as codified by California Evidence Code § 1119, applies 15 because California has the “most significant relationship” to the underlying events. (Dkt. #41 16 at 6). On the other hand, Microsoft argues that the Federal Rules of Evidence (“Fed. R. 17 Evid.”) govern the instant dispute. To support their argument, Microsoft contends that the 18 underlying mediation between Immersion and Sony was ordered and conducted pursuant to a 19 federal question case, and litigated in federal court. (Dkt. #44 at 5). 20 21 22 23 However, both parties’ arguments in this regard are unpersuasive given the plain language of the Fed. R. Evid. 501. This rule provides in pertinent part: [I]n civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness, person, government, State, or political subdivision thereof shall be determined in accordance with State law. 24 Id. (emphasis added). 25 In other words, a federal court is compelled to apply the state law privilege of the state 26 that supplies the rule of the decision. Therefore where a federal court obtains subject matter 27 jurisdiction by way of diversity of citizenship, privileges provided by state law shall apply. See 28 ORDER PAGE - 4 1 Babasa v. LensCrafters, Inc., 498 F.3d 972, 974 (9th Cir. 2007); Home Indem. Co. v. Lane 2 Powell Moss and Miller, 43 F.3d 1322, 1328 (9th Cir. 1995); see also Samuelson v. Susen, 3 576 F.2d 546, 549 (3d Cir. 1978) (holding that Fed. R. Evid. 501 “requires a district court 4 exercising diversity jurisdiction to apply the law of privilege which would be applied by the 5 courts of the state in which it sits”). Federal common law generally applies only where subject 6 matter jurisdiction is based on a federal question. See, e.g. Northwestern Memorial Hospital 7 v. Ashcroft, 362 F.3d 923, 926 (7th Cir. 2004) (applying federal law of privilege in suit 8 brought under the United States Constitution); see also United States v. Gertner, 873 F.Supp. 9 729, 734 (D.C. Mass. 1995) (applying federal law of privilege in proceeding to enforce IRS 10 subpoena). In the instant case, the parties are properly before the Court based on diversity of 11 12 citizenship.2 Microsoft is asserting a breach of contract claim based on Immersion’s alleged 13 violation of the SLA entered into between the parties. The SLA explicitly provides that it 14 “shall be construed and controlled by the laws of the State of Washington.” (Decl. of Marks- 15 Dias, Ex. 2, SLA ¶ 8(c)). Thus, Washington State law “supplies the rule of decision,” and 16 Washington State’s law on privileges very clearly controls this discovery dispute. 1. RCW 5.60.070 17 Washington’s mediation confidentiality statute, enacted in 1991 and codified by RCW 18 19 5.60.070, provides in pertinent part: If there is a court order to mediate, a written agreement between the parties to mediate, or if mediation is mandated under RCW 7.70.100 [Mandatory mediation of health care claims], then any communication made or materials submitted in, or in connection with, the mediation proceeding . . . are privileged and confidential and are not subject to disclosure in any judicial or administrative proceeding[.] 20 21 22 23 Id. (emphasis added).3 24 25 26 27 2 Microsoft is a Washington corporation, Immersion is a Delaware corporation, and the amount in controversy exceeds $75,000. (Pl.’s Am. Compl., ¶¶ 1-3); 28 U.S.C. § 1332. 3 The statute also contains a list of seven exceptions to the general exclusionary rule barring 28 mediation evidence, none of which apply here. See RCW 5.60.070(1)(a)-(g). ORDER PAGE - 5 1 Because the widespread use of mediation is a relatively new phenomenon, Washington 2 state case law interpreting Washington’s mediation confidentiality statute is minimal at best. 3 Nevertheless, Washington cases that discuss this statute consistently use the rationale behind 4 Washington Evidence Rule (“ER”) 408 in analyzing RCW 5.60.070. See Hoglund v. Meeks, 5 139 Wn.App. 854, 877, 170 P.3d 37 (2007) (“We hold, therefore, consistent with ER 408, 6 that RCW 5.60.070 does not prohibit evidence of [a separate] mediation to prove [an] 7 entitlement of attorney fees in [this] litigation, a purpose separate from the statutorily 8 prohibited purpose of establishing liability in that underlying action.”); Ladiser v. Huff, 2004 9 WL 1057852, at *4 (2004) (citing ER 408 to find that RCW 5.60.070 does not apply where 10 settlement evidence “is offered not to prove the amount of the offer, but for another purpose, 11 such as to prove lack of good faith”). 12 Furthermore, ER 408 provides that “[e]vidence of (1) furnishing or offering to 13 furnish, or (2) accepting or offering or promising to accept a valuable consideration in 14 compromising or attempting to compromise a claim which was disputed as to either validity or 15 amount, is not admissible to prove liability for or invalidity of the claim or its amount. 16 Evidence of conduct or statements made in compromise negotiations is likewise not 17 admissible.” Id. However, ER 408 expressly states that “[t]his rule . . . does not require 18 exclusion when the evidence is offered for another purpose, such as proving bias or prejudice 19 of a witness [or] negating a contention of undue delay.” Washington courts have also 20 recognized that statements made in compromise negotiations may be admissible to prove a 21 lack of good faith. See Matteson v. Ziebarth, 40 Wash. 2d 286, 294, 242 P.2d 1025 (1952). 22 In an analogous situation to the case at bar, a Washington court specifically rejected an 23 argument that RCW 5.60.070 compelled exclusion of mediation evidence on the grounds that 24 ER 408 permitted evidence of compromise and offers to compromise for purposes other than 25 to establish liability. See Sharbono v. Universal Underwriters Ins. Co., 139 Wn.App. 383, 26 418-19, 161 P.3d 406 (2007). In that case, a group of insureds brought a breach of contract 27 28 ORDER PAGE - 6 1 and bad faith action against their insurer for the insurer’s handling of an underlying wrongful 2 death claim brought by the insureds. Id. at 389. In the underlying proceeding, two 3 unsuccessful mediation sessions occurred. Id. at 391. The insurer argued that RCW 5.60.070 4 barred the admissibility of such evidence, but the court disagreed, finding that such evidence 5 was being offered for purposes other than liability. Id. at 419. 6 Similarly, the Court finds that Immersion is not entitled to the mediation privilege in 7 this case under Washington state law because, consistent with ER 408, the information 8 Microsoft seeks has no bearing on liability between Immersion and Sony in their underlying 9 mediation sessions. Additionally, the information Microsoft seeks has no bearing on the 10 validity of the amount that Immersion and Sony ultimately agreed upon to resolve their 11 dispute. Rather, the information Microsoft seeks is very clearly being sought for another 12 purpose: to determine whether the underlying agreement falls within the scope of the SLA 13 which is central to its breach of contract claim. Moreover, as Sharbono has made evident, 14 even communications made with respect to unsuccessful attempts to settle or mediate are 15 within the purview of admissible evidence under ER 408. 16 In any event, it is well established under Washington state case law that “[t]he burden 17 of showing that a privilege applies in any given situation rests entirely upon the party asserting 18 the privilege.” Guillen v. Pierce County, 144 Wn.2d 696, 716, 31 P.3d 628 (2001), rev’d on 19 other grounds, 537 U.S. 129, 123 S.Ct. (2003). Here, Immersion relies heavily on the 20 California mediation privilege to shield itself from producing the requested information at 21 issue. As established above, the California mediation privilege very plainly does not apply. 22 Thus, Immersion has not met its burden. 2. Waiver of Privilege 23 24 Because the Court has determined that the mediation privilege does not apply, it finds 25 it unnecessary to address the parties’ arguments with respect to whether Immersion waived 26 the privilege. III. CONCLUSION 27 28 ORDER PAGE - 7 1 Having reviewed Plaintiff’s motion, Defendant’s response, Plaintiff’s reply, the 2 declarations and exhibits attached thereto, and the remainder of the record, the Court hereby 3 finds and orders: 4 (1) “Microsoft’s Motion to Compel Responses to Requests for Production Nos. 3 and 5 19” (Dkt. #38) is GRANTED. Immersion is directed to respond to Microsoft’s Requests for 6 Production Nos. 3 and 19 no later than twenty-one (21) days from the date of this Order. 7 (2) The Clerk is directed to forward a copy of this Order to all counsel of record. 8 9 DATED this 24 day of March, 2008. 10 A RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER PAGE - 8
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