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Case 3:07-cv-02769-JL

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HARVEY SISKIND LLP D. PETER HARVEY (SBN 55712) e-mail: pharvey@harveysiskind.com SETH I. APPEL (SBN 233421) e-mail: sappel@harveysiskind.com Four Embarcadero Center, 39th Floor San Francisco, California 94111 Telephone: (415) 354-0100 Facsimile: (415) 391-7124 Attorneys for Defendants and Counterclaimants SEOK KI KIM and STV ASIA, LTD.

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION FRANK NEMIROFSKY, Plaintiff, Case No.: C 07-2769 JL OPPOSITION BRIEF OF DEFENDANTS AND COUNTERCLAIMANTS CONCERNING ATTORNEY-CLIENT PRIVILEGE AND PLAINTIFF'S PROPOSED DEPOSITION OF DEBORAH BAILEYWELLS Date: October 31, 2007 Time: 9:30 a.m. The Honorable James Larson Courtroom F, 15th Floor SEOK KI KIM and STV ASIA, LTD., a British Virgin Islands corporation, Counterclaimants, v. FRANK NEMIROFSKY, Counterdefendant.

14 v. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SEOK KI KIM; STV ASIA, LTD., a British Virgin Islands corporation; and DOES 1 through 20, inclusive, Defendants.

DEFENDANTS'/COUNTERCLAIMANTS' OPPOSITION BRIEF RE ATTORNEY-CLIENT PRIVILEGE AND BAILEY-WELLS DEPOSITION

Case No.: C 07-2769 JL

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TABLE OF CONTENTS Page The Parties' Relationships are Clear: STV Asia was Ms. Bailey-Wells's Client, and Nemirofsky was its Director and Agent ....................................................................... 1 Nemirofsky was Not a Separate Client of Ms. Bailey-Wells.............................................. 2 That STV Asia's Former Counsel May Have Relevant Information Does Not Mean It is Discoverable ...................................................................................... 3 All Relevant Communications Were Made During the Course of STV Asia's Professional Relationship with Ms. Bailey-Wells........................................... 3 The Attorney-Client Privilege Would Serve Little Purpose if Privileged Information Could be Used Against Clients in Future Litigation ..................... 5 Privileged Communications are Not "At Issue" ................................................................. 5

2.

4.

CONCLUSION ............................................................................................................................... 6

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TABLE OF AUTHORITIES Page(s) Cases 2,022 Ranch v. Superior Court 113 Cal. App. 4th 1377 (2003) ..................................................................................................... 4 Carehouse Convalescent Hospital v. Superior Court 143 Cal. App. 4th 1558, 1562 (2006) ........................................................................................... 1 City and County of San Francisco v. Superior Court 37 Cal. 2d 227, 235 (1951) ....................................................................................................... 3, 5 Holm v. Superior Court 42 Cal. 2d 500 (1942) ................................................................................................................... 4 Hooser v. Superior Court 84 Cal. App. 4th 997, 1003 (2000) ............................................................................................... 4 Mitchell v. Superior Court 37 Cal. 3d 591, 600 (1984) ........................................................................................................... 3 Montebello Rose Co. v. Agricultural Labor Relations Board 119 Cal. App. 3d 1 (1981)............................................................................................................. 4 People v. Canfield 12 Cal. 3d 699, 705 (1974) ........................................................................................................... 3 Southern California Gas Company v. Public Utilities Commission 50 Cal. 3d 31, 37 (1990) ............................................................................................................... 3 Watt Industries, Inc. v. Superior Court 115 Cal. App. 3d 802 (1981)......................................................................................................... 4

Statutes California Evidence Code 962 ...................................................................................................... 2 Miscellaneous Wegner, et al. California Practice Guide: Civil Trials and Evidence (The Rutter Group 2007).............. 4

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Plaintiff and Counterdefendant Frank Nemirofsky ("Nemirofsky") proposes to take the deposition of Defendant STV Asia's former lead trial counsel Deborah Bailey-Wells. As noted in Defendants' opening brief, depositions of opposing counsel are "presumptively improper, severely restricted, and require `extremely' good cause--a high standard." Carehouse Convalescent Hospital v. Superior Court, 143 Cal. App. 4th 1558, 1562 (2006). In response to the Court's order, Nemirofsky identified nineteen separate categories of information about which he wishes to question Ms. Bailey-Wells. But Nemirofsky does not address any of these nineteen categories in his opening brief. He seemingly realizes that many involve information squarely within the protection of the attorney-client privilege. Instead, he asserts several general reasons why he believes he is entitled to question STV Asia's former counsel without restriction. None of his rationalizations justifies setting aside the privilege. Certainly none of them comes close to establishing the "extremely good cause" required by California law. 1. The Parties' Relationships are Clear: STV Asia was Ms. Bailey-Wells's Client, and Nemirofsky was its Director and Agent. Nemirofsky's principal argument is that STV Asia has not demonstrated that the attorneyclient privilege applies here because Nemirofsky's and STV Asia's relationship is "unsubstantiated," and "it is still unclear as to how Defendants are defining Mr. Nemirofsky's role and relationship with STV Asia, and thus Ms. Bailey-Wells." [Pl.'s Brief, 5:16, 25-27] This argument is unfounded. Nemirofsky's own papers make it plain that he served as STV Asia's director and agent at all relevant times. Nemirofsky acknowledges that Ms. Bailey-Wells and her firm were counsel to STV Asia in the PRN Litigation. [Pl.'s Brief, 3:3-5] He also acknowledges that "both Mr. Nemirofsky and Mr. Kim were directors of STV Asia, Ltd. at certain times during the pendency of the PRN Litigation." [Pl.'s Brief, 3:12-13] But Nemirofsky maintains that the beginning and end points of his service as a director are uncertain. [Pl.'s Brief, 6:1-13] They are not. STV Asia's resolution naming Nemirofsky a director, signed by Kim and Nemirofsky, is attached to Dr. Kim's declaration. [Kim Decl., Ex. A] This document is dated July 1, 2005, several months before Kim and Nemirofsky first met with Ms. Bailey-Wells. [Kim Decl., 7]
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1

On July 31, 2006, Nemirofsky was removed as director of STV Asia. [Kim Decl., 6] At that time, however, he continued to serve as STV Asia's agent for purposes of the PRN Litigation. Nemirofsky himself admits in his brief that even if he was removed as director midway through the PRN Litigation, "his role in the PRN Litigation was unaltered despite the absence of a director title." [Pl.'s Brief, 6:3-5] Moreover, Nemirofsky has declared under penalty of perjury that he continued to serve as a director of STV Asia through the mediation settling the PRN Litigation in May 2007. [Appel Decl., Ex. A (Nemirofsky Decl. in Supp. of Pl.'s Ex Parte App. to Extend TPO, 4:27 ("As of the date of the mediation, I held the position of a director of STV Asia.")] Nemirofsky cannot reasonably deny that he continued to serve as STV Asia's agent through May 2007 when he believed he was still STV Asia's director through May 2007. 2. Nemirofsky was Not a Separate Client of Ms. Bailey-Wells. After asserting, contrary to the evidence and his own admissions, that his relationship with STV Asia during the PRN Litigation was uncertain, Nemirofsky contends that the joint client exception to the attorney-client privilege may apply. [Pl.'s Brief, 6:19-26] Here, he is truly grasping at straws. The joint client exception applies "where two or more clients have retained or consulted a lawyer upon a matter of common interest." Cal. Evid. Code 962. Whatever relationship

Nemirofsky had with STV Asia during the PRN Litigation, he certainly met with Ms. Bailey-Wells only on STV Asia's behalf. Not even Nemirofsky claims that he met Ms. Bailey-Wells on his own behalf as a separate client. This fact is readily apparent from STV Asia's pleadings and all other filings in the PRN Litigation. There was only one plaintiff, and that was STV Asia. Nemirofsky was not a party in the PRN Litigation.1

While Dr. Kim may have occasionally referred to Nemirofsky as his "partner," this casual reference does not make him a stranger to the PRN Litigation who simply happened to be present in Dr. Kim's conferences with Ms. Bailey-Wells. [See Pl.'s Brief, 7:1-3] Kim and Nemirofsky were engaged in a common endeavor--assisting STV Asia in the PRN Litigation--and in that sense they were partners. Dr. Kim's casual reference likewise does not convert Nemirofsky into a separate client of Ms. BaileyWells.
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3.

That STV Asia's Former Counsel May Have Relevant Information Does Not Mean It is Discoverable. Nemirofsky offers his suspicion that "Ms. Bailey-Wells is believed to possess information

which is relevant to Mr. Nemirofsky's role in the PRN Litigation." [Pl.'s Brief, 3:18-19] That Ms. Bailey-Wells may possess relevant information is not determinative. Although exercise of the privilege may occasionally result in the suppression of relevant evidence, the Legislature of this state has determined that these concerns are outweighed by the importance of preserving confidentiality in the attorney-client relationship. Mitchell v. Superior Court, 37 Cal. 3d 591, 600 (1984).

9 This view has been expressed repeatedly by the California Supreme Court. See People v. 10 Canfield, 12 Cal. 3d 699, 705 (1974); City and County of San Francisco v. Superior Court, 37 Cal. 11 2d 227, 235 (1951) ("The privilege is given on grounds of public policy in the belief that the benefits 12 derived therefrom justify the risk that unjust decisions may sometimes result from the suppression of 13 relevant evidence.") 14 obstacles for the party seeking the privileged information," but this is not a ground for setting it aside. 15 16 4. 17 18 19 20 21 22 23 24 25 26 27 28
2

It has recognized that application of the privilege "may very well create

Southern California Gas Company v. Public Utilities Commission, 50 Cal. 3d 31, 37 (1990).2 All Relevant Communications Were Made During the Course of STV Asia's Professional Relationship with Ms. Bailey-Wells. Nemirofsky states that Ms. Bailey-Wells can be deposed concerning certain issues because "[f]or the communication to be privileged where a corporate entity is the client, `the dominant purpose must be for the transmittal to an attorney `in the course of professional employment.'" [Pl.'s Brief, 7:13-15] As discussed in Defendants' opening brief, all relevant communications were in the

As noted in Defendants' opening brief, some of the proposed categories of questioning are clearly irrelevant. Nemirofsky contends that Defendants' relevance concerns are improper. [Pl.'s Brief, 2:13-16] In this context, however, relevancy and the attorney-client privilege are intertwined. Nemirofsky cannot possibly justify taking the deposition of STV Asia's former counsel if the only possible areas of questioning that are not covered by the attorney-client privilege are not relevant. During the parties' meet and confer, Defendants' counsel repeatedly asked Nemirofsky's counsel to explain the relevance of several categories of information. Nemirofsky's counsel refused. In its brief, Nemirofsky continues to dodge this issue.
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course of the professional relationship.3 Kim and Nemirofsky, in their capacities as representatives of STV Asia, had several meetings with Ms. Bailey-Wells and other Kirkpatrick & Lockhart attorneys during the PRN Litigation. These meetings covered the entire subject matter of the case, including the strengths and weaknesses of STV Asia's patent infringement claims, case strategy, achievable damages, the Markman hearing to determine proper construction of the patent claims, and settlement opportunities. [Kim Decl., 8] Kim and Nemirofsky never met with Ms. Bailey-Wells or other Kirkpatrick & Lockhart attorneys to discuss matters unrelated to the PRN litigation. [Id.] Nemirofsky's reliance on the "dominant purpose" test is misplaced. Courts apply this test where an attorney also serves another role (e.g., mediator, investigator), and the parties dispute which role the attorney was serving when he or she received the communication. See Wegner, et al., California Practice Guide: Civil Trials and Evidence, 8:2041.1 at 8E-55-8E-56 (The Rutter Group 2007). For instance, in Montebello Rose Co. v. Agricultural Labor Relations Board, 119 Cal. App. 3d 1 (1981), a party's attorney, Jory, also served as a labor negotiator. The court held that the party's communications were not privileged to the extent that they were made to Jory as labor negotiator (rather than Jory as attorney). See id., at 31-32. Other examples include 2,022 Ranch v. Superior Court, 113 Cal. App. 4th 1377 (2003) (attorney as claims adjuster) and Watt Industries, Inc. v. Superior Court, 115 Cal. App. 3d 802 (1981) (attorney as business agent).4 If Ms. Bailey-Wells was acting as something other than STV Asia's attorney during these meetings, in what capacity did she act? Nemirofsky does not venture a guess.

"The attorney-client privilege applies to all confidential communications made to an attorney during preliminary discussions of the prospective professional employment, as well as those made during the course of any professional relationship resulting from such discussions." Hooser v. Superior Court, 84 Cal. App. 4th 997, 1003 (2000).
4

3

In Holm v. Superior Court, 42 Cal. 2d 500 (1942), the one case cited by Nemirofsky in this section, the court held that most of the documents at issue were covered by the privilege. See id., at 508-509. The only document that was not covered was plaintiff's statement to a city claims investigator. See id., at 507-508.
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5.

The Attorney-Client Privilege Would Serve Little Purpose if Privileged Information Could be Used Against Clients in Future Litigation. Nemirofsky next argues that there is no reason for the Court to apply the attorney-client

privilege here because "any communication about which Ms. Bailey-Wells may testify does not constitute disclosure" since Nemirofsky provided or was privy to the communications. [Pl.'s Brief, 7:27-28] This argument, which Nemirofsky does not support with any authority, ignores the policies underlying the attorney-client privilege. In short, the privilege exists to promote the full disclosure of information between attorneys and clients. Adequate legal representation in the ascertainment and enforcement of rights or the prosecution or defense of litigation compels a full disclosure of the facts by the client to his attorney. "Unless he makes known to the lawyer all the facts, the advice which follows will be useless, if not misleading; the lawsuit will be conducted along improper lines, the trial will be full of surprises, much useless litigation may result. . . . [U]nless the client knows that his lawyer cannot be compelled to reveal what is told him, the client will suppress what he thinks to be unfavorable facts." . . . . Given the privilege, a client may make such a disclosure without fear that his attorney may be forced to reveal the information confided to him. The absence of the privilege would convert the attorney habitually and inevitably into a mere informer for the benefit of the opponent. City and County of San Francisco, 37 Cal. 2d at 235. These concerns about adequate legal

17 representation and the suppression of unfavorable facts exist regardless of whether the privileged 18 communications are disclosed to the public at large. 19 6. 20 Finally, Nemirofsky half-heartedly argues that Defendants have waived the attorney-client 21 with regard to certain communications with Ms. Bailey-Wells by placing them "at issue." On the 22 23 24 25 26 27 28 As noted in Defendants' opening brief, as this litigation continues, it is possible that certain issues will prove pertinent to STV Asia's defenses. If so, STV Asia may be inclined to waive the attorneyclient privilege with regard to these issues and allow a limited deposition of Ms. Bailey-Wells at a later time.
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5

Privileged Communications are Not "At Issue."

contrary, any such communications are not as issue at this time.5

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CONCLUSION For the reasons stated above and in Defendants' opening brief, the Court should enter a protective order prohibiting Nemirofsky from deposing Deborah Bailey-Wells. Respectfully submitted, HARVEY SISKIND LLP

By:

/s/ Seth I. Appel

Attorneys for Defendants and Counterclaimants SEOK KI KIM and STV ASIA, LTD.

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