`
`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
`
`IN RE PAPST LICENSING GMBH & CO.
`KG LITIGATION
`
`This Document Relates To:
`Casio v. Papst, 06-1751
`
`Misc. Action No. 07-493 (RMC);
`MDL Docket No. 1880
`
`MEMORANDUM OPINION DENYING PAPST’S OBJECTIONS TO MAGISTRATE
`JUDGE’S MAY 31, 2007 ORDER
`
`Papst Licensing GMBH & Co. KG (“Papst”) objects to the May 31, 2007 order of the
`
`Magistrate Judge requiring Papst to respond to the initial discovery propounded by Casio America
`
`Inc., formerly known as Casio, Inc., (“Casio USA”) — without objections concerning attorney client
`
`privilege, consulting expert privilege, attorney work product protections, objections based on
`
`confidentiality, and objections based on relevance — due to Papst’s failure to comply with the
`
`district court’s order requiring Papst to respond to Casio USA’s initial discovery requests. As
`
`explained below, the objections will be denied.
`
`I. FACTS
`
`Papst’s objections arise from the earlier stages of this case before it was approved as
`
`Multi-District Litigation (“MDL”) and transferred to the undersigned. Casio USA filed its complaint
`
`against Papst on October 16, 2007. Papst filed an answer and counterclaim, adding Casio Computer
`
`Company, Ltd. (“Casio Japan”) as a defendant on January 2, 2007. The district court to whom the
`
`-1-
`
`Canon Exhibit 1202
`Page 1
`
`LG Exhibit 1202, Page 1
`LG Electronics, Inc. v. Papst Licensing
`
`
`
`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 2 of 10
`
`case was assigned set an initial scheduling conference for February 1, 2007, and then postponed the
`
`conference until March 20, 2007.
`
`Under the Local Rules, parties are required to hold a Rule 26(f) conference twenty-
`
`one days before the initial scheduling conference. See LCvR 16.2; see also Fed. R. Civ. P. 26(f).
`
`The Local Rule provides that a party may move to extend the deadline for holding a Rule 26(f)
`
`conference if a defendant has not been served or appeared in the case. Papst did not move to extend
`
`the deadline for the Rule 26(f) conference despite the fact that it had not then served Casio Japan.
`
`Counsel for Papst and counsel for Casio USA conducted a telephone conference on
`
`March 2, 2007. Casio USA understood and intended this teleconference to be the Rule 26(f)
`
`conference; all required topics were discussed. Papst takes the position that the March 2, 2007,
`
`teleconference was not a proper Rule 26(f) conference because Papst had not yet served Casio Japan.
`
`As a result, Casio Japan was not represented during the phone call.1
`
`On March 6, 2007, Papst filed a motion to continue the initial scheduling conference.
`
`Casio USA opposed the motion, challenging Papst’s statement that it would take up to four months
`
`to serve Casio Japan under the Hague Convention, but also noting that if the Judge granted the
`
`motion, Casio USA requested that discovery continue. Casio Am., Inc. v. Papst Licensing GMBH
`
`& Co. KG, No. 06-1751, Casio’s Resp. Dkt. #13 at 2. Casio USA explained:
`
`It is black letter law that once a 26(f) conference takes place,
`discovery can begin. This is applicable whether or not all parties
`have been served. Casio [USA] and Papst have had their Rule 26(f)
`conference, and pursuant to Rule 26, discovery should begin.
`
`Id. Casio USA also explained that it already had served interrogatories and document requests on
`
` Papst served Casio Japan through the Hague Convention on March 13, 2007. Thereafter,
`1
`counsel for Casio USA began joint representation of Casio USA and Casio Japan.
`
`-2-
`
`Canon Exhibit 1202
`Page 2
`
`LG Exhibit 1202, Page 2
`LG Electronics, Inc. v. Papst Licensing
`
`
`
`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 3 of 10
`
`Papst on March 2, 2007, after it completed its Rule 26(f) conference with Papst. Id. at 3. In its
`
`Reply, Papst first argued that the March 2, 2007 telephone call did “not satisfy Local Rule 16.3(a)
`
`because not all Defendants participated.” See id., Papst’s Reply Dkt. #14 at 2. Second, Papst
`2
`
`contended that “[p]roceeding with a discovery plan now, when Casio Japan has not yet been served
`
`and counsel for Casio U.S. will not and apparently cannot speak for Casio U.S. [sic], will waste the
`
`time and resources of the Court and parties.” Id. Papst’s third argument was that Casio U.S. was
`
`“attempting to gain tactical advantage in discovery by claiming to have conducted a good faith Rule
`
`26(f) conference on March 2, and immediately thereafter serving written discovery on Papst
`
`Licensing, when the phone call was missing the critical Defendant’s counsel.” Id.
`
`With this completely briefed argument before it, in a Minute Entry Order dated March
`
`13, 2007, the Court entered its “Order granting the Motions to Continue; the Initial Scheduling
`
`Conference is hereby continued until May 14, 2007, at 10:15 a.m.; no further continuances will be
`
`granted; discovery between Plaintiff and Defendant is to proceed.” Casio Am., Inc. v. Papst
`
`Licensing GMBH & Co. KG, No. 06-1751, Minute Order filed Mar. 13, 2007 (emphasis added).
`
`Papst alleges that it believed that the court’s order that discovery was “to proceed”
`
`meant that all three parties, Casio USA, Casio Japan, and Papst, should proceed with a Rule 26(f)
`
`conference before Papst was required to respond to the Casio USA interrogatories and document
`
`requests. Casio USA understood the Minute Order to mean that the time for response to its
`
` Papst particularly complained that “[e]ven simple questions such as Casio Japan’s
`2
`electronic data and e-mail systems went unanswered.” Id. This Court has subsequently stricken all
`of Papst’s initial discovery requests to Casio USA as overbroad, unduly burdensome, not likely to
`lead to the discovery of relevant evidence, and propounded in bad faith, including its highly complex
`“simple questions” concerning information technology for each and every Casio company around
`the world. See First Order Regarding Casio/Papst Discovery Dkt. #77.
`
`-3-
`
`Canon Exhibit 1202
`Page 3
`
`LG Exhibit 1202, Page 3
`LG Electronics, Inc. v. Papst Licensing
`
`
`
`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 4 of 10
`
`discovery requests began to run on March 2 when Casio USA served them upon Papst and that
`
`Papst’s responses therefore were due on April 2, 2007. As is clear from its own argument to the
`
`Court, counsel for Papst acknowledged that they had received the Casio USA discovery requests on
`
`March 2, 2007. Despite the direct Order of the Court, and its clear knowledge of the outstanding
`
`discovery, Papst failed to respond by April 2.
`
`On April 20, 2007, Casio USA moved to compel responses, and Papst opposed. The
`
`district court referred the motion to compel to the Magistrate Judge. The Magistrate Judge heard oral
`
`argument on May 31, 2007, and granted Casio USA’s motion to compel from the bench, noting:
`
`[T]he court reviewed the motion, the opposition and the reply . . . .
`Having done so, the Court will grant the motion, largely for the
`reasons offered by the Movant, both orally and in writing.
`
`More specifically, the Court finds that what Papst urges upon the
`Court is a novel way of counting the number of days in which a party
`must serve responses to written discovery requests. The Court uses
`the term, quote, “novel,” close quote, because there is simply no
`authority which supports this method of calculating the deadline.
`
`The rules make plain when it is that a party is to serve responses to
`written discovery requests. There was no motion for enlargement of
`time filed by Papst. Papst did not seek any clarification of the due
`date in the meet and confer report that counsel, along with opposing
`counsel, filed in this matter, and appears to have unilaterally taken the
`position that because Papst was displeased with the manner in which
`the Rule 26(f) meeting or conference was conducted that the
`responses to the written discovery requests would be withheld.
`
`Tr. of May 31,2007 hearing at 25. She ordered “that complete responses — that is without
`
`objections, which have been waived by the failure to respond in a timely fashion — be served within
`
`10 calendar days of today’s date.” Id. at 27 (emphasis added). As a sanction, the Magistrate Judge
`
`also imposed on Papst the costs to Casio USA, including reasonable attorney’s fees, of moving to
`
`-4-
`
`Canon Exhibit 1202
`Page 4
`
`LG Exhibit 1202, Page 4
`LG Electronics, Inc. v. Papst Licensing
`
`
`
`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 5 of 10
`
`compel. Id.
`
`On June 6, 2007, Papst filed a Request for Clarification, seeking clarification whether
`
`Papst was deemed to have waived the attorney client privilege, consulting expert privilege, attorney
`
`work product protections, objections based on confidentiality, and objections based on relevance.
`
`Casio, No. 06-1751, Dkt. #35. On June 7, 2007, Casio USA filed a response maintaining that all
`
`privileges had been waived, but agreeing to maintain the confidentiality of documents produced. Id.,
`
`Dkt. #37. On June 27, 2007, the Magistrate Judge summarily denied the Request for Clarification
`
`“for the reasons offered by [Casio].” Id., June 27, 2007 Minute Order.
`
`Prior to the Magistrate Judge’s ruling on June 27, Papst had timely filed before the
`
`district court its objections to and motion to reconsider the Magistrate Judge’s May 31, 2007 order.
`
`Casio, No. 06-1751, Dkt. #43, filed 6/14/07. Papst refiled that same motion, without change or
`
`update, in this MDL. See Papst’s Objections to and Mot. to Reconsider the Magistrate Judge’s May
`
`31, 2007 Order Dkt. #43. Casio USA then responded. See Casio’s Resp. Dkt.#49. Papst replied,
`
`see Papst’s Reply Dkt. #44, and Casio USA supplemented its response, see Casio’s Supp. Resp. Dkt.
`
`#63.
`
`II. LEGAL STANDARDS
`
`Papst objects to the Magistrate Judge’s Order under Local Civil Rule 72.2(b). Papst’s
`
`Objections Dkt. #43 at 1 (citing LCvR 72.2(b) (“any party may file written objections to a magistrate
`
`judge's ruling . . . within 10 days after being served with the order”)). Under Local Rule 72.2(c),
`
`“Upon consideration of objections filed in accordance with this Rule, a district judge may modify
`
`or set aside any portion of a magistrate judge's order under this Rule found to be clearly erroneous
`
`or contrary to law.” LCvR 72.2(c) (emphasis added). The comment to Rule 72.2 indicates, “The
`
`-5-
`
`Canon Exhibit 1202
`Page 5
`
`LG Exhibit 1202, Page 5
`LG Electronics, Inc. v. Papst Licensing
`
`
`
`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 6 of 10
`
`Rule is intended to make clear that objections to the Magistrate Judge’s proposed findings and
`
`recommendations should not be called motions for reconsideration and are to be directed to the
`
`district judge.” Thus, even though Papst titled its motion as “objections to and motion to
`
`reconsider,” the Court treats the pleading as objections to the Magistrate Judge’s order and not as
`
`a motion to reconsider.
`
`III. ANALYSIS
`
`Before addressing the merits of the parties’ positions, the Court describes the nature
`
`of the parties and this litigation to put this matter in context. Casio USA sells digital cameras in the
`
`United States. Papst is a German company that produces no products; it acquires patents on products
`
`or methods allegedly invented by others and then searches the world for patents it might challenge
`
`for infringement. At one of the first status conferences of the MDL, when the Court queried whether
`
`this was old-fashioned “claim-jumping,” counsel for Papst readily agreed that it had been called
`
`worse. Of course, this is a perfectly lawful and respectable business. But it underscores that the
`
`business of Papst is litigation, not invention or production. Litigation is the business model whereby
`
`Papst, when successful, achieves royalty payments from others. As is clear from this record, the
`
`threat of litigation alone often achieves royalty payments. Papst is not represented by counsel from
`
`Germany who may be unfamiliar with the federal rules. Its U.S. counsel are from Chicago and
`
`regularly represent Papst in patent litigation across the country. These counsel are highly
`
`experienced in U.S. patent law and in district court litigation.
`
`With these considerations in mind, we turn to the instant matter. Papst objects to the
`
`Magistrate Judge’s ruling that it waived all objections based on attorney client privilege, consulting
`
`expert privilege, protection under the work product doctrine, and relevance and that Papst is liable
`
`-6-
`
`Canon Exhibit 1202
`Page 6
`
`LG Exhibit 1202, Page 6
`LG Electronics, Inc. v. Papst Licensing
`
`
`
`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 7 of 10
`
`for monetary damages. Papst asserts that waiver is too harsh because Papst’s conduct grew out of
`
`a misunderstanding of the court order for discovery “to proceed.”
`
`This claim of “misunderstanding” cannot be credited. Casio USA had indicated
`
`specifically that it would not object to rescheduling the initial scheduling conference as long as
`
`discovery were not delayed, that Papst and Casio USA had held a Rule 26(f) conference, that Casio
`
`USA had served discovery requests on Papst, and that discovery between Casio USA and Papst
`
`should be allowed to proceed. Papst did not contest that the parties had had a teleconference that
`
`covered all subjects required by Rule 26(f) and acknowledged that it had received Casio USA’s
`
`discovery requests on March 2, 2007; instead, it challenged the sufficiency of the teleconference;
`
`argued that time would be wasted by discovery against Casio USA without Casio Japan in the suit;
`
`and claimed that Casio USA was merely seeking strategic advantage. The district court granted
`
`Papst’s motion to continue the initial scheduling conference to allow Papst time to serve Casio
`
`Japan. But the Court also ordered, succinctly and precisely, that “discovery between Plaintiff and
`
`Defendant is to proceed.” When the Court ordered discovery “to proceed,” it was clearly ruling on
`
`that aspect of the motion in Casio’s favor and rejecting Papst’s arguments. The time for serving
`
`responses to written discovery requests was clear under the rules, but Papst never filed a motion for
`
`an enlargement of time. In briefing here, Counsel for Papst do not address their failure to seek an
`
`enlargement. Nor did Papst seek clarification of the deadline for its discovery responses in the meet
`
`and confer report or in any other pleading. Counsel for Papst do not address their failure to seek any
`
`clarification of the deadline for its discovery responses. In the face of a direct Order of the Court,
`
`Papst simply withheld its responses.
`
`Papst argues that the sanction of waiver of privileges is unduly harsh. “As a general
`
`-7-
`
`Canon Exhibit 1202
`Page 7
`
`LG Exhibit 1202, Page 7
`LG Electronics, Inc. v. Papst Licensing
`
`
`
`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 8 of 10
`
`rule, when a party fails to object timely to discovery requests, such objections are waived.” See, e.g.,
`
`United Steelworkers of Am., AFL-CIO v. IVACO, Inc., 2003 U.S. Dist. LEXIS 10008, at *13 (N.D.
`
`Ga. Jan. 13, 2002); Marx v. Kelly, Hart & Hallman, P.C., 929 F.2d 8, 12 (1st Cir. 1991); In re
`
`United States, 864 F.2d 1153, 1156 (5th Cir. 1989). However, “waiver of privilege is a serious
`
`sanction most suitable for cases of unjustified delay, inexcusable conduct, and bad faith.” United
`
`States v. British Am. Tobacco, 387 F.3d 884, 891 (D.C. Cir. 2004). “[M]inor procedural violations,
`
`good faith attempts at compliance, and other mitigating circumstances will militate against finding
`
`waiver.” United Steelworkers of Am., 2003 U.S. Dist. LEXIS10008, at *13.
`
`The Court finds that waiver of privileges is not too harsh a sanction under the
`
`circumstances presented here. Papst’s failure to respond to Casio USA’s discovery requests, as
`
`directly ordered, was entirely unjustified and inexcusable and smacks of bad faith. How difficult is
`
`it to understand a district court order that discovery is “to proceed”? Were there any doubt, Papst
`
`might have inquired. It did nothing. It merely delayed — a delay that continues, in part, to this day.3
`
`It may be a successful business model, when the “business” of a business is litigation, to interpose
`
`delay at any possible opportunity. Delay costs money to opponents and may, in the end, cause an
`
`opponent to settle a case. Ultimately, Papst offers no good reason why its experienced counsel
`
`should be allowed, without sanction, to ignore totally a court order on which they had been heard
`
`fully.
`
`Accordingly, Papst is required to respond to Casio USA’s initial discovery requests
`
`without objection based on attorney client privilege, consulting expert privilege, or attorney work
`
` As of April 24, 2008, Papst still had not responded sufficiently to Casio’s discovery
`3
`requests. See First Order Regarding Casio/Papst Discovery Dkt. #77 (ordering Papst to respond to
`Casio’s interrogatories). Thus, the delay in question was not a matter of weeks, but more than a year.
`
`-8-
`
`Canon Exhibit 1202
`Page 8
`
`LG Exhibit 1202, Page 8
`LG Electronics, Inc. v. Papst Licensing
`
`
`
`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 9 of 10
`
`product. Casio has agreed, and there is now a Protective Order entered by the Court, that will shield
`
`Papst’s confidential documents from public display.
`
`Papst further points out that is it not clear whether the Magistrate Judge ordered
`
`objections as to relevance be waived. She ordered “that complete responses — that is without
`
`objections, which have been waived by the failure to respond in a timely fashion — be served within
`
`10 calendar days of today’s date.” Tr. of May 31, 2007 hearing at 27. The Magistrate Judge did not
`
`order that relevance objections be waived because “concluding that [irrelevance] is invariably
`
`waived whenever it is not timely asserted would lead to absurd results.” Byrd v. Reno, No. 96-2375,
`
`1998 U.S. Dist. Lexis 11855, at *15 (D.D.C. Feb. 12, 1998).
`
`[P]arties in discovery hardly need an inducement to ask the most
`outrageous questions possible in the hope than an untimely response
`would permit them to get indirectly what they knew they could not
`get directly. Accepting the proposition that a federal court must order
`an interrogatory answered no matter how irrelevant the information
`it seeks mocks the true purpose of the Federal Rules of Civil
`Procedure as stated in Rule 1 that the rules be “construed and
`administered
`to secure
`the
`just, speedy, and
`inexpensive
`determination of every action.”
`
`Id. Because waiver of a relevance objection would lead to absurd results, the Court finds that the
`
`Magistrate Judge could not have so intended. Accordingly, relevance objections have not been
`
`waived.
`
`Finally, Papst argues that the sanction requiring it to pay Casio USA’s costs and
`
`attorney’s fees is unjust. Again, Papst contends that it was merely mistaken regarding its
`
`interpretation of the district court’s order for discovery “to proceed.” As explained above, this
`
`contention by Papst’s experienced counsel is not credible. The sanction shall remain in place.
`
`-9-
`
`Canon Exhibit 1202
`Page 9
`
`LG Exhibit 1202, Page 9
`LG Electronics, Inc. v. Papst Licensing
`
`
`
`Case 1:07-mc-00493-RMC Document 82 Filed 05/06/08 Page 10 of 10
`
`IV. CONCLUSION
`
`For the foregoing reasons, the Court finds that the May 31, 2007 order of the
`
`Magistrate Judge was not clearly erroneous or contrary to law. The Court will deny Papst’s
`
`Objections to and Motion to Reconsider Portions of Magistrate Judge Robinson’s May 31, 2007
`
`Order [Dkt. #43]. The Magistrate Judge’s May 31, 2007 order in the underlying case, No. 06-1751,
`
`will be affirmed. A memorializing order accompanies this Memorandum Opinion.
`
`Dated: May 6, 2008
`
` /s/
`ROSEMARY M. COLLYER
`United States District Judge
`
`-10-
`
`Canon Exhibit 1202
`Page 10
`
`LG Exhibit 1202, Page 10
`LG Electronics, Inc. v. Papst Licensing