Valeo Schalter und Sensoren GmbH v. NVIDIA Corporation

Background

Valeo alleged that, in early 2021, its employee Mohammad Moniruzzaman downloaded more than 27,000 source-code files and other confidential materials concerning Valeo’s parking-assistance technology. Mr. Moniruzzaman later joined NVIDIA, which was developing competing parking-assistance technology. After the conduct was discovered, Germany began a criminal investigation, and Valeo brought civil proceedings against NVIDIA there involving copyright and trade-secret claims.

NVIDIA conducted an internal investigation and searched its systems for Valeo files. NVIDIA also provided a source-code repository to an independent expert appointed by the German court. The expert found no evidence that NVIDIA’s code included Valeo code. NVIDIA later filed affidavits in Germany describing its searches, the people involved, witness interviews, search methods, locations searched, and results. The affidavits included statements from NVIDIA’s in-house counsel Stephen Chandler and Azadeh Morrison.

Valeo later sued NVIDIA in this court under the federal Defend Trade Secrets Act and the California Uniform Trade Secrets Act. In its defenses and discovery responses, NVIDIA stated that its investigation found no Valeo code and no evidence that Mr. Moniruzzaman disclosed Valeo code or trade secrets to NVIDIA employees. Valeo served a document request seeking materials sufficient to show NVIDIA’s investigation, including its date and outcome. NVIDIA produced no documents responsive to that request and asserted attorney-client privilege and attorney work-product protection over more than 3,000 documents listed on its privilege log.

Legal Standards

Because the action involved federal-question jurisdiction, the court applied federal common law to privilege issues. Attorney-client privilege protects confidential communications between attorneys and clients made for the purpose of giving or obtaining legal advice. The attorney work-product doctrine generally protects documents and tangible things prepared for litigation or trial, including materials reflecting an attorney’s or representative’s preparation of a case.

These protections can be waived. Work-product protection may be waived by voluntarily disclosing protected material to an adversary or by placing the work product at issue. Attorney-client privilege may be waived by disclosing privileged communications or by asserting a claim or defense that depends on them. Fact work product generally receives less protection than opinion work product, which includes an attorney’s mental impressions, conclusions, opinions, and legal theories.

Court’s Analysis

The court did not decide the dispute based on individual entries in NVIDIA’s privilege log because the parties had not briefed particular entries. It nevertheless addressed the scope of the claimed protections based on the record.

The court held that NVIDIA expressly waived work-product protection for the information disclosed in Mr. Chandler’s and Ms. Morrison’s affidavits filed in Germany. The court found that NVIDIA had chosen to rely on affidavits from its in-house attorneys and had not shown that the German court required attorney affidavits. The affidavits disclosed investigation details, including the investigation’s nature and extent, witness identities, witness-interview contents, communications with witnesses, and efforts to search for and collect Valeo materials. NVIDIA also relied on those affidavits in defending Valeo’s claims in this action, making its in-house counsel fact witnesses.

The court also held that NVIDIA had implicitly waived work-product protection for the same matters by relying on the nature and quality of the investigation conducted by its in-house counsel. However, the court rejected Valeo’s argument that the waiver automatically extended to opinion work product. The court found that descriptions of the investigation as extensive or similar characterizations did not necessarily disclose counsel’s opinions. NVIDIA’s statements that the investigation found no copies of Valeo code and no evidence of disclosure were treated as factual conclusions or contentions, not necessarily as attorney advice or opinions.

Accordingly, if NVIDIA withheld documents responsive to Valeo’s investigation request based on work-product protection, it could not withhold factual information comparable to the disclosures in the German affidavits. If fact work product was intertwined with opinion work product, NVIDIA had to produce the factual portions and could redact the opinion portions.

The court separately held that NVIDIA had expressly waived attorney-client privilege for the communications between Mr. Chandler and NVIDIA employees whose contents were disclosed in Mr. Chandler’s German affidavit. NVIDIA could not withhold those communications on privilege grounds, and the court ordered that they be produced in their entirety. The court did not find an implied waiver covering all attorney advice or opinions. It noted that further disclosure might be required if NVIDIA’s subjective beliefs about the investigation’s reliability were informed by attorney advice and those beliefs became critical to defenses such as good faith.

The court also reminded NVIDIA that a communication is not privileged merely because an attorney was copied, and that underlying nonprivileged records do not become privileged merely because they were attached to, linked with, or included in a communication seeking legal advice.

Disposition

The court granted in part and denied in part Valeo’s motion to compel. NVIDIA may not withhold factual investigation information responsive to the request when that information is comparable to what NVIDIA disclosed in the German affidavits, although it may redact opinion work product. NVIDIA must produce in full the communications between Mr. Chandler and NVIDIA employees described in his affidavit. The parties were ordered to confer about the remaining privilege-log entries and file a status report by January 21, 2025, addressing NVIDIA’s compliance and any unresolved disputes.