Spectrum Dynamics Medical Limited v. General Electric Company

Background

Defendants General Electric Company, GE Healthcare, Inc., and GE Medical Systems Israel Ltd., collectively referred to as GE, moved to compel Spectrum to produce documents that Spectrum had withheld under the attorney-client privilege. The motion invoked the crime-fraud exception, which can remove attorney-client protection when communications are used to further an attempted or completed crime or fraud.

GE argued that Spectrum had engaged in purposeful misconduct by misleading the court about when it learned of GE’s applications for the patents identified as the “’113” and “’802” patents. According to GE, Spectrum knew about those applications by April 2015, redacted privilege-log entries to conceal when it discovered them, and made misleading or false allegations in its amended complaints to avoid dismissal of its trade-secret misappropriation claims on statute-of-limitations grounds. GE argued that the privileged communications would show what Spectrum knew and when it knew it, and would provide evidence of fraud.

Spectrum pointed to other evidence that it could not and did not know that GE had misused its trade secrets until June 2018. The court stated that it had reviewed a sample of the disputed privileged documents privately to evaluate the motion.

Legal Standard

The attorney-client privilege protects confidential communications between a client and counsel made to obtain or provide legal advice. The privilege is narrowly interpreted because it prevents relevant information from being disclosed in discovery. Under the crime-fraud exception, communications made in furtherance of contemplated or ongoing criminal or fraudulent conduct are not protected.

The party seeking disclosure must show probable cause to believe both that a crime or fraud was attempted or committed and that the privileged communications or attorney work product furthered that conduct.

Court’s Analysis

The court concluded that GE’s motion attempted to re-litigate the substance of its statute-of-limitations argument through a privilege dispute. The documents reviewed by the court did not appear on their face to further a fraud. Instead, they reflected careful consideration of statute-of-limitations issues.

The court acknowledged that GE might have a strong basis to defeat an equitable-tolling argument for at least some of Spectrum’s claims and that GE wanted to know precisely what Spectrum’s counsel had advised about possible statute-of-limitations challenges. But the court held that those points did not justify piercing the privilege because the communications did not appear to further a fraud.

Disposition

The court denied GE’s motion to compel and directed the Clerk to terminate the motion at ECF No. 700. The court expressly stated that its decision did not affect the merits of any statute-of-limitations or equitable-tolling argument in the litigation.