Opinion
No. 2D21-2223
07-01-2022
Stephen S. BURKHART, M.D., and Burkhart Resource Limited Partnership, Appellants, v. ARTHREX, INC., Appellee.
Marie A. Borland and Dennis P. Waggoner of Hill, Ward & Henderson, P.A., Tampa; Chris W. Altenbernd of Banker Lopez Gassler P.A., Tampa; and John C. O'Quinn of Kirkland & Ellis LLP, Washington, District of Columbia, for Appellants. Marshall P. Bender and Jason Hunter Korn of Dentons Cohen & Grigsby P.C., Naples; and Douglas L. Sawyer, Geoffrey A. Vance, and Mark T. Smith of Perkins Coie LLP, Chicago, Illinois, for Appellee.
Marie A. Borland and Dennis P. Waggoner of Hill, Ward & Henderson, P.A., Tampa; Chris W. Altenbernd of Banker Lopez Gassler P.A., Tampa; and John C. O'Quinn of Kirkland & Ellis LLP, Washington, District of Columbia, for Appellants.
Marshall P. Bender and Jason Hunter Korn of Dentons Cohen & Grigsby P.C., Naples; and Douglas L. Sawyer, Geoffrey A. Vance, and Mark T. Smith of Perkins Coie LLP, Chicago, Illinois, for Appellee.
ATKINSON, Judge.
Inventor Stephen S. Burkhart, M.D., and his entity, Burkhart Resource Limited Partnership (collectively, Dr. Burkhart), sued medical device company Arthrex, Inc., alleging that Arthrex breached the parties’ 2008 royalty agreement by failing to pay the amounts due to him under the agreement. Arthrex filed a counterclaim asserting that Dr. Burkhart breached the parties’ 2013 royalty agreement based upon what it alleged to be Dr. Burkhart's misrepresentation that the assigned patents did not infringe on the intellectual property rights of any third parties and his failure to indemnify Arthrex from the losses it suffered as a result of third-party patent-infringement claims. Dr. Burkhart appeals from the order entered by the trial court that disqualified his counsel, directed the return of certain communications produced in response to Arthrex's request for production, and barred Dr. Burkhart from utilizing those communications during the litigation. Because these communications are not covered by the attorney-client privilege, we reverse the trial court's order.
I. Background
In 2008, Arthrex and Dr. Burkhart entered into a royalty agreement. Under the agreement, Dr. Burkhart assigned all rights, title, and interest in certain identified products, as well as enhancements to those products, in exchange for a quarterly royalty payment. And Arthrex was responsible for the preparation of all applications for these "royalty bearing products." The royalty agreement also contained a mutual confidentiality provision whereby they agreed to "maintain in strict confidence all Confidential Information and not disclose it to any third party" and to "use, at a minimum, reasonable care to protect the Confidential Information." They further agreed "not [to] use any Confidential Information except as permitted by this Agreement or may be necessary to perform obligations under this Agreement."
After the parties’ efforts to amicably resolve the disputes failed, Dr. Burkhart filed suit against Arthrex. During the course of discovery, Arthrex requested that Dr. Burkhart produce, among other things, "[a]ll communications exchanged between [Dr. Burkhart] and Arthrex during the period 2008 to the present" as well as "[a]ll documents which refer, regard, reflect or relate to Dr. Burkhart's disclosure of inventions or designs to Arthrex."
In response, Dr. Burkhart, through his trial attorneys, produced responsive documents in his possession, including communications exchanged between Dr. Burkhart and counsel for Arthrex over the course of years. Arthrex initially identified thirty documents as privileged. After Dr. Burkhart moved the court to rule on those objections, Arthrex filed a motion in which it identified as privileged an additional 161 documents. In that motion, Arthrex sought to preclude Burkhart from using those documents and to disqualify Dr. Burkhart's attorneys who had reviewed those documents. In a supplemental log, Arthrex subsequently claimed that 1,576 documents were privileged.
Without conducting an in-camera inspection of the documents, the trial court declared them privileged and barred Dr. Burkhart from using the documents either in discovery or at trial. It also disqualified Dr. Burkhart's trial counsel based upon the firm's review and production of the "privileged" documents. Dr. Burkhart appeals these rulings.
II. Jurisdiction
Orders that "grant or deny a motion to disqualify counsel" are appealable nonfinal orders. See Fla. R. App. P. 9.130(a)(3)(E). Because the disqualification ruling was dependent upon the trial court's determination that the documents were privileged, we must review that finding as part of our review of the nonfinal order of disqualification over which we have interlocutory jurisdiction. However, the portion of the order that precludes Dr. Burkhart from using the documents in discovery or at trial is not appealable. See Wyndham Vacation Resorts, Inc. v. Timeshares Direct, Inc. , 123 So. 3d 1149, 1151 n.4 (Fla. 5th DCA 2012) ("[W]e do not have jurisdiction to review by non-final appeal, that part of the summary final judgment that dismissed Wyndham's claim for FDUTPA damages. The procedural limitations imposed by the rules do not permit review of ‘tag along’ orders contained within reviewable non-final orders." (citation omitted)); Consultants & Designers v. Brown , 677 So. 2d 915, 917 (Fla. 1st DCA 1996) ("[C]ourts have repeatedly rejected the contention that they possess jurisdiction to review rulings on other issues merely because they are included in an order that rules on one of the specific issues listed in rule 9.130(3)."). Rulings "not enumerated in [r]ule 9.130 must await review at the end of the case, unless they meet the standard for certiorari or another extraordinary writ." RD & G Leasing, Inc. v. Stebnicki , 626 So. 2d 1002, 1003 (Fla. 3d DCA 1993). The portion of the order that merely denies discovery is not reviewable by certiorari because there is no irreparable injury. See Katz v. Riemer , 305 So. 3d 663, 666 (Fla. 3d DCA 2020) ("Irreparable injury can rarely be shown where discovery is denied, as any error is generally reviewable on appeal."); see also State Farm Mut. Auto. Ins. v. Peters , 611 So. 2d 597, 598 (Fla. 2d DCA 1993) ("Ordinarily, certiorari is not available to review an interlocutory order denying discovery because the harm from such orders can be rectified on appeal." (citing Esman v. Bd. of Regents , 425 So. 2d 156, 157 (Fla. 1st DCA 1983) )); Riano v. Heritage Corp. of S. Fla. , 665 So. 2d 1142, 1144 (Fla. 3d DCA 1996) ("In the rare cases where certiorari is granted, the petitioner has met the heavy burden of demonstrating irreparable injury by showing that without an order compelling discovery, information critical to the case would never be known and would not be available to the appellate court for review."). And the portion of the order that precludes Dr. Burkhart from utilizing the "privileged" documents at trial is, as would be a motion in limine, similarly unreviewable. See Patterson v. Whitehead , 360 So. 2d 1136, 1136 (Fla. 1st DCA 1978) ("Though prospective evidentiary rulings are often convenient and desirable, they may not ordinarily be reviewed immediately by proceedings in the nature of common law certiorari.").
III. Privilege and Disqualification
As a basis for its motion to disqualify opposing counsel, Arthrex sought to characterize Dr. Burkhart and his lawyers’ use of documented communications on which Dr. Burkhart was the sender or the intentionally listed recipient as a violation of attorney-client privilege. Dr. Burkhart had these communications in his possession and produced them as responsive to discovery requests propounded by Arthrex, who itself (or its counsel) was a listed sender or recipient of the communications. The documents were not protected by the attorney-client privilege under the circumstances of this case, and there is no evidence to indicate that Dr. Burkhart or his attorneys intended to—much less did—violate attorney-client privilege. As such, the motion seeking and the order imposing disqualification of Dr. Burkhart's counsel were bereft of support.
Section 90.502, Florida Statutes (2021), governs the attorney-client privilege and confers a privilege on a client "to refuse to disclose, and to prevent any other person from disclosing, the contents of confidential communications when such other person learned of the communications because they were made in the rendition of legal services to the client." See § 90.502(2). Those "confidential communications" of which a client has a right to prevent disclosure are defined as "communication[s] between lawyer and client" that are "not intended to be disclosed to third persons." § 90.502(1)(c). Because Arthrex intended the communications to be disclosed to Dr. Burkhart and his attorneys—third parties to the relationship between Arthrex and its lawyers—the communications are not "confidential communications" and are not protected by the attorney-client privilege. Cf. Jenney v. Airdata Wiman, Inc. , 846 So. 2d 664, 667 (Fla. 2d DCA 2003) (denying in part petition for certiorari challenging order compelling production of documents in an attorney's possession because they were not "confidential communications").
Arthrex argues that communications with its attorneys in which Dr. Burkhart was a participant satisfy the requirements for attorney-client privilege, relying on language in the lawyer-client privilege statute providing that a communication can still be deemed confidential even if the communication was intended to be disclosed to third parties "to whom disclosure is in furtherance of the rendition of legal services to the client" and to "[t]hose reasonably necessary for the transmission of the communication." See § 90.502(1)(c). However, that provision does not apply to the communications at issue because they were not disclosed to Dr. Burkhart in furtherance of the rendering of legal services to Arthrex; rather, Dr. Burkhart was a participant in the communications as part of discussions between Arthrex and Dr. Burkhart that also included the participation of their respective legal counsel.
The documents deemed to be covered by Arthrex's attorney-client privilege against disclosure by Dr. Burkhart were actually Dr. Burkhart's documents—they were not Arthrex's private conversations with its lawyers that had been "disclos[ed]" to Dr. Burkhart or that he had "learned of," see § 90.502(1), (2), or to which Dr. Burkhart had been made privy only as an employee or consultant in order to effectuate the provision of legal services to Arthrex. Of all the documents over which Arthrex successfully sought to extend its attorney-client privilege, Dr. Burkhart had either authored the communication and sent it to Arthrex or Arthrex (or its counsel) had authored the communication and sent it to Dr. Burkhart (and sometimes to Dr. Burkhart's counsel). This characterization is confirmed by Arthrex's own description of the documents in their answer brief, in which it avers that "[e]very document at issue involves an Arthrex lawyer and Dr. Burkhart, as an inventor, communicating to support Arthrex's undisputed ‘sole and exclusive’ right to prosecute patent applications." And the language of Arthrex's pertinent discovery requests—to which these communications were responsive—underscores that Dr. Burkhart had come into rightful possession of all of these documents because he either sent the communications or received them from Arthrex: "All communications exchanged between you [Dr. Burkhart] and Arthrex ...."; "All documents which refer, regard, reflect or relate to Dr. Burkhart's disclosure of inventions or designs to Arthrex "; "All documents which refer, regard or relate to any requests Dr. Burkhart made to Arthrex to be added as a named inventor on a patent or patent application, as well as any documents reflecting any responses to those requests "; "All documents which refer, regard, reflect or relate to any communications that any of the Burkhart Parties sent to or received from [Arthrex's counsel] that refers, regards or otherwise relates to Arthrex." (Emphasis added.)
In its answer brief, Arthrex recounts that it "found its privileged documents in [Dr. Burkhart's] production." That is because Dr. Burkhart was a part of all of the communications in the first place. Arthrex sought—and the trial court granted—an attorney-client privilege against Dr. Burkhart disclosing communications he had made and communications Arthrex had intentionally sent him . In other words, the communications were in Dr. Burkhart's possession because Arthrex wanted him to have them or they had originated from him. This is not a typical scenario of an inadvertent disclosure to a third party of an attorney-client communication to which that third party should not have been privy—or should only have been privy for a circumscribed purpose that served the attorney-client relationship. Rather, Arthrex has advanced a novel application of the attorney-client privilege to impose on a third-party recipient , whose receipt of the communications was not inadvertent, the duty to protect the sender's attorney-client communications that it willingly conveyed to the recipient as part of a mutually beneficial exchange of information related to an endeavor in which both the sender and recipient were arms-length participants. But the fact that the parties to that exchange of information sometimes included their lawyers in the conversation does not transform the records of the parties’ discussions into attorney-client communications enjoying a privilege that one participant can exert over the other. Cf. Jenney , 846 So. 2d at 667 ("The fact that Jenney may have given a copy of the employment agreement to the attorney negotiating the retirement agreement does not convert the nonprivileged employment agreement into a privileged document. Here, the employment agreement was not privileged in Jenney's hands. Therefore, it is not privileged in his former attorney's hands." (citations omitted)).
These are not communications between an attorney and a client that were inadvertently disclosed to a third party; these were communications with a third party. They were not communications between Arthrex and its attorney to which Dr. Burkhart might have been privy either incidentally or accidentally, nor even by design on the basis that disclosure to him was "reasonably necessary for the transmission of the communication" or "in furtherance of the rendition of legal services to" Arthrex. See § 90.502(1)(c) ; cf. Coulter v. State Farm Mut. Auto. Ins. , No. 4:12cv577-WS/CAS, 2013 WL 12102888, at *3 (N.D. Fla. June 20, 2013) (concluding that possession of attorney-client communications by third parties was " ‘reasonably necessary’ to transmit [the] communications to or from Plaintiff and her counsel ... because ‘after the accident [Plaintiff] was unconscious, heavily medicated, undergoing various surgeries or procedures, or otherwise incapable of making rational decisions given her condition [and] did not have regular access to email or a fax machine’ ").
These were communications from Arthrex to Dr. Burkhart on which Arthrex's counsel was copied; communications from Dr. Burkhart to Arthrex on which Arthrex's counsel was copied; or communications to and from Dr. Burkhart and Arthrex's counsel. They were not "confidential" communications that were "not intended to be disclosed to third persons." See § 90.502(1)(c). These were conversations between Arthrex and its lawyers and Dr. Burkhart and his lawyers. And these were not "communication[s] between lawyer and client" intended only "to be disclosed to third persons ... to whom disclosure is in furtherance of the rendition of legal services to the client." See § 90.502(1)(c). Rather, these were communications among a group of individuals that included Dr. Burkhart and Arthrex and their respective attorneys. Dr. Burkhart does not fall into the category of "[t]hose to whom disclosure is in furtherance of the rendition of legal services to the client," see § 90.502(1)(c) 1, because Arthrex did not disclose the communications to Dr. Burkhart at all; rather, Dr. Burkhart was a part of the communications from the time of their creation.
Arthrex contends that the relationship between Dr. Burkhart and Arthrex was tantamount to an employer-employee relationship, citing in support Shell Oil Co. v. Par Four Partnership , 638 So. 2d 1050, 1050–51 (Fla. 5th DCA 1994), and Hershey Co. v. Cadiz , No. 05-60999, 2006 WL 8431510 (S.D. Fla. Aug. 24, 2006). But reliance on Shell Oil , Hershey , and similar cases is misplaced because Dr. Burkhart's relationship with Arthrex is not that of an employee or a consultant or any type of agent. Cf., e.g. , United States v. Advanced Pain Mgmt. & Spine Specialists of Cape Coral & Fort Myers , No. 2:17-cv-272-FtM-29MRM, 2018 WL 4381192, at *9 (M.D. Fla. June 28, 2018) (explaining circumstances under which an independent contractor may "be considered the functional equivalent of an employee"). He is a collaborator with Arthrex in their mutual endeavor to patent, produce, and sell medical devices pursuant to a written, arms-length agreement. Indeed, the agreement itself belies any notion that there was an employer-employee or principal-agent relationship between Arthrex and Dr. Burkhart: "Nothing in this Agreement will be construed to create a partnership, joint venture, principal-agent, or employer-employee relationship, and nothing herein will be deemed to authorize any person to act for, represent, or bind any party except as specifically set out herein."
Arthrex's reliance on the confidentiality agreement to establish that the communications were attorney-client privileged further reveals the frailty of its privilege argument. Such reliance tends to undermine the existence of attorney-client privilege because the confidentiality agreement presumes that Dr. Burkhart has an equal interest in the confidentiality of the information and the prohibited disclosure is to third parties—not each respective party's legal counsel. The confidentiality provision might very well protect the communications at issue in this appeal from disclosure to strangers to the royalty agreement, but it does not prevent the parties to that agreement from sharing them with their own attorneys.
Yet, Arthrex argues that the communications with its lawyers to which Dr. Burkhart was privy were privileged in part because Dr. Burkhart had entered into the confidentiality agreement. But the confidentiality agreement was to protect information to which Dr. Burkhart was privy against disclosure to third parties . See Shvartser v. Lekser , 270 F. Supp. 3d 96, 98 (D.D.C. 2017) ("As a general rule, ‘confidentiality agreements will not stand as a barrier to discovery between two parties in litigation.’ " (quoting Saini v. Int'l Game Tech. , 434 F. Supp. 2d 913, 922 (D. Nev. 2006) )); see also In re Grand Jury Subpoena Dated Dec. 17, 1996 , 148 F.3d 487, 492 (5th Cir. 1998) (" ‘Confidential’ does not necessarily mean ‘privileged.’ ").
The confidentiality agreement presumes that Dr. Burkhart and Arthrex would be privy to the same information that they mutually agreed to keep confidential from disclosure to others: "The parties acknowledge that in connection with the performance of this Agreement, each party will receive certain confidential or proprietary technical and business information" and "[e]ach party will ... hold and maintain in strict confidence all Confidential Information and not disclose it to any third party." Use of the confidentiality provision to prevent Dr. Burkhart from divulging the information to his own lawyer or from relying on it in litigation over the very agreement that contains the provision defies common sense—as does the notion that the confidentiality provision provides support for the independent establishment of an attorney-client privilege that only Arthrex can enjoy and which it could exert against Dr. Burkhart. Arthrex contends that "[w]hen [Dr. Burkhart's trial counsel] received privileged communications between Arthrex's patent lawyers and Dr. Burkhart, they should have stopped reading the documents, alerted Arthrex that Dr. Burkhart had given them privileged material, and allowed Arthrex an opportunity to assert and protect its privilege." Because the communications were not privileged, it is not necessary to further explain why the attorneys’ failure to do so did not support their disqualification or to elaborate on any of the other reasons why Arthrex's argument in favor of opposing counsel's disqualification was meritless.
By this opinion, this court does not intend to suggest that no arrangement between an inventor and a patent owner could ever give rise to a privilege between the owner and its counsel that could be exerted against the inventor's disclosure of attorney-client communications. As it relates to the communications at issue in this appeal, however, the parties’ arrangement in this case did not give rise to a privilege that could be asserted by Arthrex against Dr. Burkhart in the manner that it attempted, much less one that supports the disqualification of Dr. Burkhart's lawyers. Because the trial court erred by disqualifying Dr. Burkhart's trial counsel, we reverse.
Reversed and remanded.
VILLANTI and BLACK, JJ., Concur.