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Ardent Mills, LLC v. Archer-Daniels-Midland Co.

United States District Court, District of Kansas

March 18, 2015

ARDENT MILLS, LLC, Plaintiff,
v.
ARCHER-DANIELS-MIDLAND COMPANY, Defendant.

MEMORANDUM AND ORDER

K. Gary Sebelius U.S. Magistrate Judge

On February 2, 2015, the court granted in full Defendant Archer-Daniels-Midland Company’s (ADM) motion to compel Plaintiff Ardent Mills, LLC[1] to reproduce ADM Exhibit No. 316 after Ardent Mills “clawed back” the document based on its assertion that the document was attorney-client privileged. The court also ordered Ardent Mills to show cause in writing to the undersigned why it should not be taxed with ADM’s reasonable fees and expenses incurred in making its motion, including attorney fees. Because Ardent Mills’ position was substantially justified and other circumstances make an award of fees and expenses unjust, the court finds that Ardent Mills should not be taxed with ADM’s reasonable fees and expenses incurred in making the motion to compel.

I. Background

Ardent Mills is the owner by assignment of rights, title, and interest to United States Patent Nos. 8, 017, 172; 8, 252, 360; and 8, 404, 298 (the patents-in-suit). These patents generally claim a whole wheat flour product with characteristics of white flour. Ardent Mills has alleged that certain ADM products infringe on the patents-in-suit.[2] During discovery, Ardent Mills produced a document consisting of three photographs of notes written on a white board during a meeting that occurred in 2008. Attendees at the meeting included two in-house attorneys, members of the marketing team, a third-party marketing consultant, and others. During the meeting Ardent Mills’ in-house counsel provided legal advice about the scope of the patents and how that could be used in communicating with customers.

During a deposition, ADM’s counsel presented the deponent with the document labeled Exhibit No. 316. Ardent Mills’ counsel stopped the deposition to determine whether Exhibit No. 316 was privileged. When the deposition resumed, counsel stated that after conferring with the deponent, counsel had concluded the document was privileged, and he needed to claw it back under the terms of the Protective Order.

Ardent Mills has continued to assert attorney-client privilege with regards to the document. On November 11, 2014, ADM filed a motion to compel Ardent Mills to reproduce the document.[3] The court granted ADM’s motion, finding that while Ardent Mills had shown that privileged communications had taken place during the 2008 meeting, Ardent Mills had not demonstrated that the attorney-client privilege attached to the document.[4]

II. Expenses under Fed.R.Civ.P. 37(a)(5)

The Federal Rules of Civil Procedure provide that when a motion to compel is granted in full, the court must generally require the party whose conduct necessitated the motion to “pay the movant’s reasonable expenses incurred in making the motion, including attorney’s fees.”[5] But the court must not order this payment if “the opposing party’s nondisclosure, response, or objection was substantially justified[, ] or other circumstances make an award of expenses unjust.”[6] Here, Ardent Mills argues that its objection was substantially justified and other circumstances exist that would make an award of expenses unjust.

A. Substantial Justification

This district has generally held that a party’s position with respect to an objection or response is “substantially justified” within the meaning of Rule 37 if it is “justified to a degree that could satisfy a reasonable person”[7] or if “reasonable people could differ as to the appropriateness” of the objection or response.[8] This court has clarified that “substantial justification does not require a high degree of justification.”[9] Additionally, the court must consider on a case-by-case basis whether the party’s position or objection was substantially justified and whether certain circumstances may make the imposition of sanctions appropriate.[10]

At issue here is whether Ardent Mills was substantially justified under Rule 37(a)(5)(A)(ii) when it “clawed back”-and continued to withhold-ADM Exhibit No. 316 on the grounds that the document was attorney-client privileged. The court finds that Ardent Mills’ objection was substantially justified.

First, Ardent Mills was substantially justified when it clawed back the exhibit. Ardent Mills argues that counsel “had to make an on-the-spot judgment call” regarding whether the document was attorney-client privileged.[11] Ardent Mills asserts that the exhibit contained information from in-house counsel regarding ConAgra’s patents. The court ultimately determined that the exhibit did not contain privileged information.[12] However, because the exhibit at issue was created during a meeting where Ardent Mills’ attorneys disseminated legal advice, the court determines that Ardent Mills’ “on-the-spot” decision to claw back the exhibit was substantially justified.

Second, Ardent Mills was also substantially justified when it continued to withhold the exhibit. Ardent Mills argues that its “position was grounded on sound law and fact such that a reasonable person could determine that Ardent Mills’ objection was the appropriate response.”[13]In particular, Ardent Mills argues that reasonable people could differ as to whether the disputed exhibit was privileged. To support this argument, Ardent Mills cites a number of cases that highlight the “grey area between an attorney providing business advice and legal advice.”[14] The court agrees with Ardent Mills’ assertion that in patent cases, legal advice and business advice are often inextricably interwoven, making it difficult to distinguish between privileged and non-privileged information.[15]

The court in Hercules, Inc. v. Exxon Corp. described the multiple roles a corporate patent attorney serves and the inherent difficulty with making a ...


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