corpcounsel.com | September 19, 2017

Court: No to 's Assertion of Privilege on Pre-Litigation Investigation

Eric M. Fishman and Ross M. Bagley

You are defending a recently acquired company in a litiga- tion. As part of pre-acquisition diligence, and prior to the liti- gation commencing, executives from your client and the company that acquired it shared analysis of facts relevant to the litigation. Now that the acquisition is com- plete, to what extent can these communications be protected by the attorney-client privilege, The Waymo driverless car is displayed during a event, Tuesday, Dec. 13, 2016, the work product doctrine or the in . The self-driving car project that Google started seven years ago has common-interest exception to grown into a company called Waymo. The new identity announced Tuesday marks another step in an effort to revolutionize the way people get around. Instead of waiver? A recent decision from ­driving themselves, people will be chauffeured in robot-controlled vehicles if Waymo, the Northern District of automakers and ride-hailing service Uber realize their vision within the next few years. Photo: Eric Risberg/AP strongly signals that companies engaged in pre-merger diligence asserted state and federal trade Uber. As part of Uber’s diligence should use great care in sharing secret claims against Uber alleg- before completing its acquisi- information relating to potential ing that one of its engineers, tion of Ottomotto, the two com- litigations, as it may be very dif- , appropri- panies agreed that an outside ficult to preclude disclosure down ated Waymo’s trade secrets relat- forensic expert would conduct the road. In Waymo v. Uber Technologies, ing to driverless car technology an investigation of whether cur- 3:17-cv-00939, plaintiff and and formed his own company, rent Ottomotto employees who Google affiliate Waymo have Ottomotto, which he then sold to had come from Waymo, ­including September 19, 2017

Levandowski himself, had mis- were protected­ by the common- attorney-client privilege – the appropriated any of Waymo’s interest doctrine, reasoning that disclosure of a protected com- intellectual property. The inves- because the common-interest munication to a third party does tigator’s report was completed doctrine is actually an anti-waiver not waive work product protec- and circulated to Uber, Ottomotto exception, it only applies when tion unless the disclosure also and counsel for the investigated an initially protected attorney- increases the likelihood that an Ottomotto employees. client communication is shared adversary will obtain the com- In the subsequent trade secret with a third party. In Waymo, the munication—Ottomotto and litigation, Uber asserted work information that Levandowski pro- Levandowski were adverse to product and attorney-client privi- vided to the investigator was never Uber in the potential acquisition lege over the report. Waymo, subject to the attorney-client priv- so that Uber’s disclosure of the unsurprisingly, moved to compel ilege in the first place. report had waived any potential its production. The court also found that Uber work product protection. Finally, The magistrate judge for the had waived any work product the magistrate judge found that Northern District of California protection, which shields docu- even if the investigator’s verba- rejected Uber’s assertion of ments from discovery that are tim interviews with Levandowski the privilege over communi- prepared by a party or his rep- within the report were pro- cations between Ottomotto resentative in anticipation of liti- tected as “fact work product,” and Uber prior to the acquisi- gation. The court rejected Uber’s Waymo had shown a substan- tion, finding that the at the time argument that Uber, Levandowski tial need justifying their produc- the report was circulated Uber and Ottomotto had requisitioned tion: Levandowski was accused and Ottomotto were on oppo- the investigator’s report as part of absconding from Waymo to site sides of a transaction and of a joint legal effort to defend Ottomotto with numerous con- were therefore adverse, despite a potential lawsuit by Waymo, fidential documents containing the acquisition’s eventual con- finding instead that Uber would trade secrets and had refused to summation. The court explained: only have such an interest after testify or provide any disclosure “Two clients represented by sep- it had committed to acquir- on Fifth Amendment grounds. arate counsel do not create an ing Ottomotto. The evidence On June 21, District Judge attorney-client relationship by reflected Uber’s purpose in retain- overruled jointly retaining an agent.” The ing the investigator was to evalu- Levandowski’s, Ottomotto’s and court also rejected an argument ate the acquisition, not to defend Uber’s objections to the magis- by Uber and Levandowski that against a claim by Waymo. trate judge’s opinion. First, Judge communications among them, The court found that although Alsup reiterated that because Ottomotto, and the investigator, the work product doctrine Levandowski was not repre- as Uber’s and Ottomotto’s agent, is not as easily waived as the sented by counsel for Ottomotto September 19, 2017

or Uber, he had no attorney-client purchase of a business, dis- estate developers and real estate connection with the investiga- tinguishing Hewlett-Packard­ v. investment trusts (REITs). Ross tor and his communications to Bausch & Lomb, 115 F.R.D. 308 M. Bagley is a member of Pryor the investigator were not pro- (N.D.Cal. 1987) which had ques- Cashman’s Litigation, Intellectual tected by the privilege: “Uber’s tioned whether parties negotiat- Property, Media & Entertainment, carefully-worded objection sug- ing a merger were adverse as a Digital Media and Real Estate gests the remarkable proposition practical matter. Groups. Litigating such diverse that information communicated The lesson of this case is clear: matters as commercial disputes, in confidence by anyone to [the corporate clients contemplating real estate and patent matters and investigator] for the purpose of an acquisition or merger should federal criminal cases, Ross rep- enabling Uber and Ottomotto to be advised that communications resents plaintiffs and defendants obtain legal advice [from their with potential targets may be dis- in trial and appellate courts. His respective law firms] should be coverable in litigation. If sensitive clients include music publishers, covered by the attorney-client information must be exchanged, record labels, performers, television privilege. That suggestion has no it should only be done pursu- and film studios, patent holders basis in law.” Judge Alsup affirmed ant to a confidentiality or joint- and New York City landlords and the magistrate judge’s reason- defense agreement and the bases tenants. ing that Uber had not identified for its protection from discovery a pre-existing communication should be express at the outset. protected by the attorney-client As Uber has learned the hard way, privilege so the common interest anything less puts such commu- exception to waiver had no appli- nications at risk of disclosure. cation; for the common-interest exception to apply “the [investiga- Eric M. Fishman is a partner in tor’s] interview [of Levandowski] Pryor Cashman’s litigation group. must still, as an initial matter, With a strong foundation in com- qualify for the attorney-client plex business litigation, Fishman privilege.” represents domestic and foreign Further with respect to the publicly and privately held com- work product doctrine, Judge panies, as well as executives and Alsup endorsed a line of cases other individuals. He has worked holding that common-interest on a number of significant cases protection does not extend to for technology companies, record Reprinted with permission from the September 19, 2017 edition communications made in con- companies, high-profile entertain- of Corporate Counsel © 2017 ALM Media Properties, LLC. This article appears online only. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257- nection with the prospective ers, court-appointed trustees, real 3382 or [email protected]. # 016-09-17-03