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Fastship, LLC v. Lockheed Martin Corp.

United States District Court, D. New Jersey

August 27, 2019

FASTSHIP, LLC and LIQUIDATING TRUST OF FASTSHIP, INC., Plaintiffs,
v.
LOCKHEED MARTIN CORPORATION and GIBBS & COX, INC., Defendants.

         FILED UNDER SEAL

          CHRISTOPHER JOHN LEAVELL KLEHR HARRISON HARVEY BRANZBURG LLP, CHERRY HILL, RAYMOND HOWARD LEMISCH, KLEHR HARRISON HARVEY BRANZBURG LLP, PHILADEPHIA, GREGORY M. WILLIAMS RICHARD W. SMITH SCOTT A. FELDER KRYSTAL B. SWENDSBOE WILEY REIN LLP 1776 K STREET N.W. WASINGTON, DONALD E. STOUT FITCH, EVEN, TABIN & FLANNERY LLP Attorneys for Plaintiffs FastShip, LLC and the Liquidating Trust of FastShip Inc.

          MARK SIGMUND LIECHTENSTEIN, CROWELL & MORING LLP, MICHAEL J. SONGER, ASTOR H.L. HEAVEN, CROWELL & MORING LLP, Attorneys for Defendant Lockheed Martin Corporation.

          LIZA M. WALSH, CHRISTOPHER MATTHEW HEMRICK, WALSH PIZZI O'REILLY FALANGA LLP, ONE RIVERFRONT PLAZA, PASQUALE A. RAZZANO, DOUGLAS SHARROTT, JOSH CALABRO, VENABLE LLP Attorneys for Defendant Gibbs & Cox Inc.

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         This case concerns breach of contract and misappropriation of trade secrets claims relating to confidential information shared by Plaintiffs FastShip, LLC and Liquidating Trust of FastShip Inc. (collectively, "FastShip") with Defendants Lockheed Martin Corporation (“LMC") and Gibbs & Cox Inc. (“G&C") when pursuing a contract with the United States Navy ("U.S. Navy"). The parties are engaged in discovery solely on the statute of limitations. Presently before the Court is Defendants' "Appeal of Magistrate Judge Pursuant to Fed.R.Civ.P. 72 and L. Civ. R. 72.1(c)" (the "Rule 72 Motion") and two joint motions to seal. For the reasons discussed herein, the Court will grant in part, and deny in part, Defendants' Rule 72 Motion and will grant the joint motions to seal.

         BACKGROUND

         The Court takes its facts from the parties briefing and the procedural history of the case. Plaintiffs' filed this action on April 28, 2017 alleging one count of misappropriation of trade secrets and one count of breach of contract. After several iterations of complaints and motions to dismiss, the Court denied Defendants' Motions to Dismiss. But, the Court noted that it was most prudent to proceed solely on the statute of limitations question. Defendants thereafter filed their answers and the parties proceeded with discovery focused solely on the statute of limitations issue.

         Accordingly, the statute of limitations issue has become central to this matter at this point in the litigation. As relevant to the issue of privilege considered here, Defendants argue that Plaintiffs filed their claims well past the time prescribed in the statute of limitations. Plaintiffs counter that they did not discover the facts constituting their claims until they received discovery from the U.S. Navy in other litigation in 2016. Apparently, those documents revealed that Defendants disclosed confidential information to third parties. Defendants, receiving a privilege log from Plaintiffs, believe certain privileged communications from years prior may concern the claims asserted here, thus affecting Plaintiffs' discovery defense.

         On October 29, 2018, Defendants alerted Magistrate Judge Karen Williams with a letter memorandum describing the documents they wanted to compel production of and the reasons they thought production was warranted. The documents relate to when Plaintiffs may have discovered that Defendants were improperly using and disclosing confidential data supplied by Plaintiffs and protected by a non-disclosure agreement. Plaintiffs responded on Halloween. Another discovery dispute, which is not relevant to this matter, also arose in early November. Judge Williams scheduled a telephonic conference for mid-November.

         Judge Williams held a telephonic conference with counsel on November 14, 2018. Near the end of the conference, Judge Williams and the parties turned to the privilege issues now before this Court. The transcript reveals the following exchange:

THE COURT: All right. Any other disputes? Any other disputes that I need to address? You have two minutes, then I've got to attend to other matters.
MR. CALABRO: Your Honor, we __ this is Mr. Calabro for Gibbs & Cox. We have a dispute concerning the plaintiff [s'] waiver of privilege, and that's our October 29th letter.
THE COURT: All right. So let me tell you what my answer is because I've read the submissions, and I don't find a waiver. I think the Third __ the Third Circuit is pretty clear on what constitutes a waiver. And on this record, by these submissions, I do not believe the waiver has occurred.
MR. CALABRO: Thank you, Your Honor.
THE COURT: You're welcome. All right.
MR. CALABRO: Your Honor, can we get a written __
THE COURT: You all have a good day. Huh? I'm sorry.
MR. CALABRO: I'm sorry, Your Honor. This is Mr. Calabro again. Can we get a written ruling on that?
THE COURT: Sure.
MR. CALABRO: Thank you.
THE COURT: Order, see transcript. No, I'm kidding. I will __ I will produce something. I will produce - it'll be short, but I will give you something written.
MR. CALABRO: Thank you, Your Honor.
THE COURT: You're welcome. Have a good day.
NIDENTIFIED COUNSEL: Thank you, Your Honor.

(Defs.' Rule 72 Mot., Ex. I 22:16-23:16.)

         Judge Williams issued the order appealed on November 15, 2018 (the "Order") . In the Order Judge Williams expanded upon her oral ruling the day before. Specifically, Judge Williams stated she had reviewed the parties' submissions, found no implicit waiver, and denied Defendants' request to order production of the privileged communications at-issue. Although the Court will discuss the details of this Order as relevant infra, the Court notes that Judge Williams held that Plaintiffs' invocation of the discovery rule did not rely upon advice of counsel. On November 28, 2018, Defendants filed their Rule 72 Motion. The Rule 72 Motion has been fully briefed.

         Upon review of the briefing, the Court determined that the parties appeared to dispute which states' substantive law should be the basis for the Court's ruling on the privilege issues. Unfortunately, the Court found that the parties had not adequately briefed the issue. On June 25, 2019, the Court ordered the parties to submit letter briefs solely on this issue. The parties have done so. Thus, the Rule 72 Motion is ripe for adjudication. The Court also notes that the parties filed joint motions to seal which will also be decided, infra.

         ANALYSIS

         A. Subject ...


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