Cormack v. United States
Filed: July 18, 2014 (2014)
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Rule of Law:
A party has 'control' over documents held by a non-party corporate affiliate for discovery purposes if the party has the practical ability to obtain them, which can be established by showing the two entities collaborated extensively on the transaction at issue. Inadvertent disclosure of a work-product protected document does not constitute a waiver if the producing party took reasonable steps to prevent disclosure and acted promptly to rectify the error.
Facts:
- Cameron Lanning Cormack was granted United States Patent No. 7,781,693, titled 'Method and System for Sorting Incoming Mail.'
- The United States Postal Service contracted with Northrop Grumman Systems Corporation ('Systems') for the manufacture and delivery of Flats Sequencing Systems (FSS), a mail sorting device.
- Pursuant to the contract, Systems manufactured and delivered 102 FSS machines, which the Postal Service continued to use.
- Systems jointly developed the FSS machine with Solystic, S.A.S. ('Solystic'), a wholly owned but indirect French subsidiary of their common parent corporation, Northrop Grumman Corporation.
- In its proposal to the Postal Service, Systems acknowledged that Solystic had designed a large portion of the FSS system and would develop key components for it.
- Systems, through a subsidiary, entered into a technology transfer and license agreement with Solystic related to the FSS project.
- During discovery, Systems produced an internal e-mail dated approximately one month after the complaint was filed, sent from an employee to another employee designated as working in the Law Department.
- The e-mail's subject line read 'Some Information for FSS Patent Infringement' and contained information about the physical location of certain documents.
Procedural Posture:
- Cameron Lanning Cormack filed a complaint in the U.S. Court of Federal Claims against the United States under 28 U.S.C. § 1498, alleging patent infringement by the U.S. Postal Service.
- The court granted the government's unopposed motion to notify Northrop Grumman Systems Corporation as an interested party pursuant to RCFC 14(b).
- Northrop Grumman Systems filed a motion to intervene as a defendant-intervenor, which the court granted.
- During discovery, Cormack filed a motion to compel discovery responses from Northrop Grumman Systems pursuant to RCFC 37.
- In briefing related to the motion to compel, Cormack attached an inadvertently produced e-mail as an exhibit to his opposition brief.
- Northrop Grumman Systems filed an emergency motion to strike Cormack's brief and to 'claw back' the e-mail, asserting it was protected by attorney-client privilege and the work-product doctrine.
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Issue:
Does a party have 'control' over documents held by a non-party, foreign corporate affiliate for discovery purposes under RCFC 34 when the two entities, as sister corporations, collaborated extensively on the development and manufacture of the product at issue in the litigation? Additionally, is an inadvertently produced internal email protected by attorney-client privilege or work-product doctrine, and was any such protection waived?
Opinions:
Majority - Lettow, Judge
The court addressed two main issues. First, regarding the claw-back request, the court held that the inadvertently produced e-mail was NOT protected by attorney-client privilege because it merely conveyed the physical location of documents and was not a communication made for the purpose of obtaining legal advice. However, the e-mail WAS protected by the work-product doctrine because it was prepared in anticipation of litigation and revealed the mental processes of in-house counsel concerning the case. The court found this protection was not waived under Fed.R.Evid. 502(b) because: (1) the disclosure was inadvertent given the production of over one million documents; (2) Systems took reasonable steps to prevent disclosure by using screening software; and (3) Systems acted promptly to rectify the error by notifying opposing counsel within hours of discovery. Second, regarding the motion to compel, the court held that Systems has 'control' over documents held by Solystic for discovery purposes. The court rejected Systems's argument that an 'alter ego' relationship was required, instead applying a 'practical ability' test considering: (1) the corporate structure; (2) the non-party's connection to the transaction; and (3) the degree the non-party will benefit from the outcome. The extensive collaboration between Systems and Solystic—evidenced by joint development work, technology transfer agreements, and Solystic's critical role in the FSS project—established that Systems had the practical ability to obtain Solystic's documents.
Analysis:
This decision clarifies two important areas of discovery law. First, it distinguishes between attorney-client privilege and work-product protection: an email to in-house counsel is not automatically privileged—it must be for the purpose of obtaining legal advice. However, documents prepared in anticipation of litigation that reveal attorney mental processes are protected as work product. Second, the decision establishes the 'practical ability' test for determining 'control' over documents held by non-party corporate affiliates. Extensive, documented collaboration on the subject matter of the litigation can be sufficient to compel discovery, without requiring proof of an 'alter ego' relationship or direct ownership. This broadens the scope of discovery against complex corporate structures where information is distributed among related entities. The opinion also provides practical guidance on Fed. R. Evid. 502(b) waiver rules in large-scale e-discovery, confirming that a flawed but reasonable screening process does not automatically waive protection if the producing party is diligent in correcting errors.
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