Cleveland v. Ludwig Institute for Cancer Research Ltd

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 DON CLEVELAND, et al., Case No.: 19-cv-02141-JM (JLB)

12 Plaintiffs, ORDER GRANTING IN PART AND 13 v. DENYING IN PART PLAINTIFFS’/COUNTER- 14 LUDWIG INSTITUTE FOR CANCER DEFENDANTS’ MOTION TO RESEARCH LTD, et al., 15 COMPEL Defendants. 16 [ECF No. 58] 17 AND RELATED COUNTERCLAIM. 18 19 20 21 Before the Court is a motion to compel filed by Plaintiffs/Counter-Defendants 22 Don Cleveland, Arshad Desai, Frank Furnari, Richard Kolodner, Paul Mischel, 23 Karen Oegema, and Bing Ren (collectively “Plaintiffs”). (ECF No. 58.) 24 Defendants/Counter-Claimants Ludwig Institute for Cancer Research Ltd. (“Ludwig”), Chi 25 Van Dang (“Dang”), Edward A. McDermott, Jr. (“McDermott”), and John L. Notter 26 (collectively “Defendants”) oppose. (ECF No. 62.) Plaintiffs were given leave to file a 27 reply, which they did. (ECF No. 77.) For the reasons set forth below, the Court GRANTS 28 IN PART and DENIES IN PART the motion to compel. 1 I. BACKGROUND 2 Plaintiffs are internationally acclaimed cancer research scientists and physicians. 3 (Second Amended Complaint (“SAC”), ECF No. 26 ¶ 1.) Ludwig is an international 4 nonprofit organization dedicated to finding a cure for cancer that operates multiple cancer 5 research branches. (Id. ¶¶ 1, 142.) In 1991, Ludwig entered into an “Affiliation 6 Agreement” (“the AA”) with the University of California at San Diego (“UCSD”) to 7 establish a San Diego Branch (“the Branch”). (Id. ¶ 51.) Ludwig agreed to conduct 8 “active” and “continuous” medical research to “discover, develop, or verify knowledge 9 related to causes, diagnoses, treatment, prevention and control of cancer.” (Id. ¶ 53.) 10 Ludwig also agreed to “bear the costs directly related to conducting the research program.” 11 (Id. ¶ 62.) The term of the AA is coterminous with a lease agreement for research facilities 12 between Ludwig and UCSD, which allows Ludwig to terminate the lease no earlier than 13 December 31, 2023. (Id. ¶¶ 4, 16, 56.) In addition to leasing its facilities to Ludwig, UCSD 14 agreed to: (1) grant privileges for the practice of medicine at its hospital to qualified 15 members of the medical staff at the Branch; (2) grant “academic recognition and titles” to 16 qualified Ludwig employees; and (3) make full time equivalency positions available for 17 Ludwig employees. (Id. ¶ 154.) 18 Between 1996 and 2016, Ludwig hired Plaintiffs to work at the Branch. (Id. ¶¶ 26– 19 32.) In 2018, Ludwig announced that it would “cease funding the Branch and otherwise 20 halt the ‘continuous active conduct of medical research’ at the Branch.” (Id. ¶ 15.) 21 Effective January 1, 2020, Ludwig “terminated all funding for Plaintiffs’ laboratories.” (Id. 22 ¶ 18.) However, “Ludwig continues to fund at least part of the rent due [to UCSD] and it 23 continues to pay the Plaintiffs’ own salaries and benefits, but nothing more.” (Id.) As a 24 result, Plaintiffs’ “[l]aboratories and ongoing translational research programs have ceased 25 or substantially curtailed ongoing research projects, except to the extent that they have 26 access to outside grants.” (Id.) 27 Plaintiffs filed their initial Complaint on November 7, 2019. (ECF No. 1.) On 28 July 8, 2020, Plaintiffs filed the SAC, which contains claims against Ludwig for: (1) breach 1 of the AA; (2) breach of Plaintiffs’ Intellectual Property (“IP”) agreements; (3) breach of 2 Plaintiffs’ lab contracts; (4) breach of the implied covenant of good faith and fair dealing; 3 (5) promissory estoppel under the AA; (5) declaratory relief; and (6) false light. (Id. ¶¶ 4 145–70, 182–303.) Plaintiffs also bring a claim against all Defendants for defamation per 5 se. (Id. ¶¶ 171–81.) On November 25, 2020, the Honorable Jeffrey T. Miller dismissed 6 Plaintiffs’ claims for breach of the AA and breach of Plaintiffs’ IP agreements. (ECF No. 7 32 at 28.) He also dismissed Plaintiffs’ declaratory relief claim with respect to Plaintiffs’ 8 claims based on the AA and IP agreements, and their claim for breach of the implied 9 covenant in the AA and lab contracts. (Id.) 10 Accordingly, the following claims remain at issue in this case: (1) Plaintiffs’ claims 11 against Ludwig for (a) breach of their lab contracts (SAC ¶¶ 217–303), (b) promissory 12 estoppel under the AA (id. ¶¶ 209–16), (c) breach of the implied covenant in their IP 13 agreements (id. ¶¶ 195–205), (d) declaratory relief regarding the length of Plaintiffs’ terms 14 of employment (id. at 54:6-18), and (e) false light (id. ¶¶ 182–85); and (2) Plaintiffs’ claim 15 against all Defendants for defamation per se (id. ¶¶ 171–81). 16 Here, Plaintiffs move to compel the production of documents responsive to 17 Plaintiffs’ Requests for Production (“RFP”) 138 and 139, and the production of minutes 18 relating to the cutting of the budget for the Branch for 2020–21. (ECF No. 58.) Defendants 19 oppose. (ECF No. 62.) 20 II. LEGAL STANDARD 21 Federal Rule of Civil Procedure 26 provides that parties: 22 may obtain discovery regarding any nonprivileged matter that is relevant to 23 any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in 24 controversy, the parties’ relative access to the information, the parties’ 25 resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. 26 27 Fed. R. Civ. P. 26(b)(1). The December 2015 amendment to Rule 26 reinforced the 28 proportionality factors for defining the scope of discovery and, thus, under Rule 26, 1 relevancy alone is not sufficient to obtain discovery. See Fed. R. Civ. P. 26(b)(1) advisory 2 committee’s note to 2015 amendment. Discovery must also be proportional to the needs 3 of the case. Doherty v. Comenity Capital Bank, No. 16cv1321-H-BGS, 2017 WL 1885677, 4 at *2 (S.D. Cal. May 9, 2017) (citing Mora v. Zeta Interactive Corp., No. 1:16-cv-00198- 5 DAD-SAB, 2017 WL 1187710, at *3 (E.D. Cal. Feb. 10, 2017)). Rule 26 requires that 6 courts “limit the frequency or extent of discovery otherwise allowed by these rules or by 7 local rule if it determines that . . . the proposed discovery is outside the scope permitted by 8 Rule 26(b)(1).” Fed. R. Civ. P. 26(b)(2)(C)(iii). 9 The relevance standard is commonly recognized as one that is necessarily broad in 10 scope in order “to encompass any matter that bears on, or that reasonably could lead to 11 other matter that could bear on, any issue that is or may be in the case.” Doherty, 2017 12 WL 1885677, at *2 (quoting Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 13 (1978)). Regardless of its broad nature, however, relevancy is not without “ultimate and 14 necessary boundaries.” Id. (quoting Hickman v. Taylor, 329 U.S. 495, 501 (1947)). 15 Accordingly, district courts have broad discretion to determine relevancy for discovery 16 purposes. Id. (citing Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002)). 17 III. DISCUSSION 18 A. Requests for Production 138 and 139 19 1. RFPs and Responses 20 Plaintiffs’ RFP 138 states: 21 138. All DOCUMENTS that refer or relate to the BRANCH qualifying as a 22 domestic institution with the National Institutes of Health. 23 BRANCH means and refers to the San Diego Branch of the Ludwig Institute for Cancer Research, which Ludwig historically operated on the campus of 24 the University of California at San Diego since the fall of 1991 in premises 25 leased from The Regents of the University of California, acting on behalf of the University of California, San Diego, in conjunction with the UCSD 26 Medical Center. 27 (ECF No. 58 at 11.) 28 /// 1 Defendants responded to RFP 138 as follows: 2 The Institute incorporates the forgoing responses and also objects to this 3 Request on the grounds that it is overbroad, unduly burdensome, and seeking 4 production of documents that are neither relevant to any claim or defense nor proportional to the needs of the case. The Institute also objects to this Request 5 to the extent that it seeks information subject to the attorney-client privilege, 6 the attorney work product doctrine, or any other applicable privilege or protection. 7 8 (Id.) 9 Plaintiffs’ RFP 139 states: 10 139. All DOCUMENTS that refer or relate to LUDWIG’S cost-sharing 11 obligations with respect to grants from National Institutes of Health relating to any of the PLAINTIFFS. 12 13 (Id.) 14 Defendants initially responded to Plaintiffs’ RFP 139 as follows: 15 The Institute incorporates the forgoing responses and also objects to this Request on the grounds that it is overbroad, unduly burdensome, and seeking 16 production of documents that are neither relevant to any claim or defense nor 17 proportional to the needs of the case. The Institute also objects to this Request to the extent that it seeks information subject to the attorney-client privilege, 18 the attorney work product doctrine, or any other applicable privilege or 19 protection. 20 (Id.) After meet and confer efforts, Defendants subsequently stated that Ludwig will 21 consider producing a small set of “accounting” documents. 22 2. Parties’ Arguments 23 Plaintiffs contend that their claims arise, in part, from Ludwig’s refusal to fund the 24 cost of their research, as allegedly required by their lab contracts and the AA, and their 25 requests for documents relating to the National Institutes of Health (“NIH”) are directly 26 relevant to disproving Ludwig’s denial of this obligation. (ECF No. 58 at 3–8.) 27 Specifically, Plaintiffs assert that the requested documents are relevant to their claims for 28 breach of their lab contracts. (Id. at 5.) Plaintiffs further contend that Ludwig likely made 1 representations to the NIH about its funding commitments to Plaintiffs, and those 2 communications and Ludwig’s accounting thereof, are relevant to disproving Ludwig’s 3 assertion that it never had an obligation to fund Plaintiffs’ research as Plaintiffs assert in 4 this case. (Id. at 3–4, 7–8.) 5 In response, Defendants argue that the documents Plaintiffs seek are not relevant to 6 any claim and would be unduly burdensome to identify and produce. (ECF No. 62 at 2.) 7 Defendants contend that the “domestic institution requirement has nothing to do with any 8 ‘obligation to fund Plaintiffs’ research,’ and communications regarding that requirement 9 can neither disprove nor prove such an obligation.” (Id. at 4.) Defendants further point 10 out that the AA and IP agreements say nothing about NIH cost-sharing obligations and 11 Plaintiffs’ lab contracts do not mention the NIH. (Id. at 5.) Defendants assert that 12 Plaintiffs’ claims are based on an alleged failure of Defendants to fully fund Plaintiffs’ 13 “core budgets” which do not include overhead from grants. (Id.) And Defendants point 14 out that Plaintiffs have not alleged that Ludwig has failed to rebate any overheard or that 15 Ludwig failed to meet any obligations to the NIH. (Id. at 5–6.) 16 In reply, Plaintiffs aver that Defendants have conflated the concepts of cost-sharing 17 and overhead rebate. (ECF No. 77 at 2.) Plaintiffs acknowledge that Defendants alleged 18 failure to meet their obligations to fund Plaintiffs “core budget” under their lab contracts 19 is separate from their overhead rebate obligation but assert that this does not render 20 Plaintiffs’ discovery requests irrelevant. (Id. at 2–3) Plaintiffs urge that their requests go 21 to Defendants’ “cost-sharing” obligations. (Id. at 3.) 22 3. Relevant Allegations in the SAC 23 a. Breach of Lab Contracts 24 In their SAC, Plaintiffs allege that Ludwig breached their respective lab contracts by 25 not providing them with sufficient funding. (SAC ¶¶ 217–303.) Attached to the SAC are 26 seven letters from Ludwig, drafted between 1993 and 2015, offering employment to each 27 Plaintiff individually. (ECF Nos. 26-8 to 26-14.) Five of the letters contain an offer to 28 provide “a core budget each year” for “laboratory support.” The letters to Drs. Oegema, 1 Ren, and Desai offer between $250,000 and $300,000. (ECF Nos. 26-9 to 26-11.) The 2 letters to Dr. Mischel and Dr. Furnari offer “up to” $600,000 and $650,700, respectively. 3 (ECF Nos. 26-8, 26-14.) The letters state that “laboratory support” includes “your 4 salary/benefits, salaries/benefits of others in your group, supplies, travel, and so on.” (See, 5 e.g., ECF No. 26-8 at 3.) The remaining two letters to Dr. Cleveland and Dr. Kolodner 6 offer “core support” in an “expected” amount of $325,000 and $600,000, respectively, 7 “[a]ssuming a constant budget.” (ECF Nos. 26-12, 26-13.) 8 Plaintiffs allege that these offers were accepted in writing thereby forming binding 9 bilateral contracts. (SAC ¶¶ 220, 232, 244, 256, 268, 281, 294.) Additionally, with respect 10 to the offers to Drs. Mischel, Kolodner, and Cleveland, Plaintiffs allege that “[a]t or about 11 the same time” as the offers were accepted, Ludwig “assured” them that the amount of the 12 “core” budget would be “sufficient” for them to conduct “ongoing translational research” 13 and “continuous active research.” (Id. ¶¶ 222, 272, 285.) Plaintiffs allege that Ludwig 14 breached its obligation to provide a “core” budget to each Plaintiff by “limiting the amount 15 it funded to [the respective Plaintiff’s] own salary and benefits, but refusing to provide 16 funds for salaries/benefits of others performing services in [their labs], supplies, travel and 17 other expenses of operating [their labs].” (Id. ¶¶ 228, 239, 251, 263, 276, 289, 301.) In 18 other words, Plaintiffs allege Ludwig breached their respective lab contracts because (1) 19 Ludwig is not paying for anything other than their own salaries and benefits, and/or (2) 20 Ludwig is not providing funding that is “sufficient” for “ongoing translational research” 21 and “continuous active research.” (See ECF No. 32 at 15.) 22 b. NIH 23 Plaintiffs allege that their lab contracts advised them “that they would ‘be expected 24 to successfully apply for external grants’ that would be ‘managed and accounted by the 25 Branch.’” (SAC ¶ 75; see also ECF Nos. 26-8 to 26-11, 26-14.) Certain contracts entered 26 by Plaintiffs also provide that they are to receive a return/rebate of a “proportion” or 27 “variable percentage” of overhead costs from federal grants administered by the Branch. 28 (See ECF Nos. 26-8 to 26-11, 26-14.) Plaintiffs allege that they assisted Ludwig in 1 submitting grant applications to the NIH. (SAC ¶¶ 6, 129.) Plaintiffs further allege that 2 Ludwig, in its capacity as the grant administrator, has submitted numerous grant 3 applications to the NIH resulting in tens of millions of dollars in grant money for research 4 at the Branch. (Id. ¶ 130.) Plaintiffs allege that “much” of the funding for their research 5 programs comes from the NIH as well as other granting agencies and foundations. (Id. ¶ 6 19.) 7 Plaintiffs allege the Branch is obligated to fund specific costs under its NIH grants 8 in connection with Ludwig’s performance of the AA. (Id. ¶ 124.) Plaintiffs allege that 9 “[a]s a condition of receiving these NIH grants, Ludwig . . . represented to the NIH that it 10 would adequately support ongoing cancer research at the Branch during the entire term of 11 such grants, including, without limitation, by being responsible for payment of all of 12 Ludwig’s cost sharing obligations undertaken by negotiation with NIH and/or specifically 13 detailed in submitted grant applications.” (Id. ¶ 6.) 14 In applying for NIH grants “in their capacity as the Principal Investigator,” Plaintiffs 15 allege they “relied upon representations by Ludwig that it would meet its cost-sharing 16 obligations to the NIH by continuing to support ongoing research at the Branch[.]” (Id. ¶ 17 130.) For example, Plaintiffs allege that “Ludwig submitted two grant applications for 18 more than $5 million in the aggregate for projects in Plaintiff Kolodner’s lab expressly 19 extending into 2022 that included numerous representations by Ludwig about the 20 ‘resources’ that Ludwig would make available to support the project, including equipment, 21 lab space, lab facilities and administrative support.” (Id.) Plaintiffs allege that “Ludwig’s 22 abrupt cessation of research funding for the Branch makes the Branch unable to fulfill its 23 financial obligations under the NIH grants and also places a cloud over Plaintiffs’ future 24 NIH funding.” (Id.) 25 Plaintiffs further allege: 26 As a foreign institution, Ludwig is not legally permitted to recover 27 “indirect costs” (including costs paid by the grantor to the grantee to cover facilities, administrative costs, etc.) from NIH in the same manner as a 28 1 qualify the Branch as a “domestic institution” before it could receive grants from the NIH that allowed for indirect cost recovery. In a letter from 2 PricewaterhouseCoopers LLP (“PWC”) to McDermott, PWC expressly 3 advised McDermott that “indirect and direct cost recoveries from the federal government must not directly or indirectly subsidize the foreign parent or 4 branches. Therefore, neither indirect nor direct cost recoveries can be used to 5 reduce or offset the [Ludwig] budget or [Ludwig] cash disbursements (i.e., periodical fund transfers from Zurich to the San Diego Branch cannot be 6 reduced by cash available due to indirect cost recoveries).” In addition, 7 Ludwig represented to the NIH that the Branch Director would be “resident” in San Diego. 8 Ludwig’s refusal to fund the costs of research at the Branch effectively 9 forces the Branch to use federal government grant money to pay what are 10 contractually Ludwig’s portion of the costs under the [AA] and thereby, “directly or indirectly subsidizes the foreign parent or branches.” 11 Ludwig has failed to make full disclosure of these facts to the NIH and 12 otherwise has made misleading representations to the NIH to hide the true 13 facts of its wrongful refusal to fund costs of research as it is obligated to do under the [AA]. 14 (Id. ¶¶ 124–26.) 15 Plaintiffs further allege that Ludwig violated the conditions for its receipt of NIH 16 funds by, inter alia, making material misrepresentations and/or omissions in the Branch’s 17 2018 audit, and by appointing a Branch Director who was not a “resident” in San Diego, 18 which was a material precondition for Ludwig to be deemed a “domestic institution.” (Id. 19 ¶¶ 128, 133.) Plaintiffs allege that Ludwig also began asserting improper direct control in 20 early 2020 over the Branch in violation of the conditions for Ludwig’s receipt of NIH 21 grants. (Id. ¶ 134.) 22 4. Analysis 23 Based on the foregoing, the Court agrees with Defendants that RFP 138, which 24 requests all documents relating to the Branch qualifying as a domestic institution with the 25 NIH, is overbroad and seeks information that is not relevant to Plaintiffs’ claims. Plaintiffs 26 contend the requested documents are directly relevant to disproving Ludwig’s denial of its 27 obligation to fund Plaintiffs’ research as alleged. In that regard, Plaintiffs contend that 28 1 Ludwig made representations to the NIH about its funding commitments to Plaintiffs in 2 seeking to qualify as a domestic institution. The Court finds that any such representations 3 are relevant to Plaintiffs’ claims, even if the NIH is not explicitly mentioned in Plaintiffs’ 4 lab contracts or the AA. However, this is a smaller set of documents than those requested 5 in RFP 138. Accordingly, the Court finds that Defendants must only produce documents 6 “that refer or relate to the BRANCH qualifying as a domestic institution with the [NIH]” 7 to the extent they contain or reflect representations by Ludwig about its funding obligations 8 to Plaintiffs pursuant to their lab contracts and/or the AA.1 9 The Court finds RFP 139 to be similarly overbroad. With respect to this RFP, 10 Plaintiffs similarly contend that Ludwig, in seeking grants, made representations to the 11 NIH about its funding commitments to Plaintiffs, and these representations and the 12 accounting thereof are relevant to disproving Ludwig’s denial of its obligation to fund 13 Plaintiffs’ research as alleged. As set forth in the analysis with respect to RFP 138, 14 Plaintiffs have established relevance only as to representations made by Ludwig about its 15 funding obligations to Plaintiffs. Therefore, the Court finds that Defendants must only 16 produce all documents containing or reflecting representations by Ludwig about its cost- 17 sharing obligations to any of the Plaintiffs with respect to grants from the NIH. 18 With these modifications, the Court finds the requests to be proportional to the needs 19 of the case and not overly burdensome. 20 B. Minutes of the June 24, 2019 Meeting of Ludwig’s Board of Directors 21 1. Parties’ Arguments 22 Plaintiffs also move to compel the production of an unredacted version of the 23 minutes from the June 24, 2019 meeting of Ludwig’s Board of Directors (the “Minutes”), 24 25 26 1 As Defendants note, Ludwig’s alleged promise under the AA to fully fund 27 continuous, active medical research at UCSD for the term of the AA is the basis for Plaintiffs’ promissory estoppel claim. (See ECF No. 62 at 5; see also ECF No. 32 at 19– 28 1 which discusses the cutting of the Branch budget for 2020–21. (ECF No. 58 at 4, 8–10.) 2 Plaintiffs challenge Defendants’ claim of work product protection as to the redacted portion 3 of the Minutes “wherein the decision to cut the (already reduced) budget to Plaintiffs’ 4 laboratories at the San Diego Branch was made.” (Id. at 4.) The redacted portion was 5 entitled “To review and approve the San Diego Branch budget for the years 2020 and 6 2021.” (Id. at 8.) Plaintiffs contend that the Minutes were “created in the ordinary course 7 of business and serv[ed] a business purpose” and are therefore not entitled to work product 8 protection. (Id. at 4, 9–10.) 9 Defendants contend Plaintiffs’ motion should be denied with respect to the Minutes 10 because the “redacted text reflects a discussion about Plaintiffs’ legal claims regarding the 11 San Diego Branch budget and Defendants’ mediation strategy prepared in anticipation of 12 litigation.” (ECF No. 62 at 7.) Defendants contend that the portion of the Minutes at issue 13 is “quintessential work product.” (Id. at 8.) 14 2. Legal Standard 15 The work-product doctrine, codified in Federal Rule of Civil Procedure 26(b)(3), is 16 a “qualified” privilege that protects “from discovery documents and tangible things 17 prepared by a party or his representative in anticipation of litigation.” Admiral Ins. Co. v. 18 U.S. Dist. Ct., 881 F.2d 1486, 1494 (9th Cir. 1989) (citing Fed. R. Civ. P. 26(b)(3)); see 19 also United States v. Nobles, 422 U.S. 225, 237–38 (1975). “At its core, the work-product 20 doctrine shelters the mental processes of the attorney, providing a privileged area within 21 which he can analyze and prepare his client’s case,” and protects both “material prepared 22 by agents for the attorney as well as those prepared by the attorney himself.” Nobles, 422 23 U.S. at 238–39. The primary purpose of the work-product rule is to “prevent exploitation 24 of a party’s efforts in preparing for litigation.” Admiral Ins. Co., 881 F.2d at 1494. 25 Documents covered by the work product doctrine may only be ordered produced upon an 26 adverse party’s demonstration of “substantial need [for] the materials” and “undue hardship 27 [in obtaining] the substantial equivalent of the materials by other means.” Fed. R. Civ. P. 28 26(b)(3). 1 In order to qualify for protection against discovery under Rule 26(b)(3), “documents 2 must have two characteristics: (1) they must be prepared in anticipation of litigation or for 3 trial, and (2) they must be prepared by or for another party or by or for that other party’s 4 representative.” In re Grand Jury Subpoena (Mark Torf/Torf Env’t Mgmt.), 357 F.3d 900, 5 907 (9th Cir. 2004) (quoting In re Cal. Pub. Utils. Comm’n, 892 F.2d 778, 780–81 (9th 6 Cir. 1989)) (internal quotation marks and citations omitted). A document is deemed 7 “prepared in anticipation of litigation . . . if in light of the nature of the document and the 8 factual situation in the particular case, the document can be fairly said to have been 9 prepared or obtained because of the prospect of litigation.” Id. (citation and internal 10 quotation marks omitted). 11 To determine whether a document was prepared in anticipation of litigation, courts 12 require evidence of “[t]he circumstances surrounding the document’s preparation,” 13 including “the nature of the document and the factual situation of the particular case.” Id. 14 at 908 (emphasis in original) (citation omitted). The party claiming work product 15 protection has the burden of proving the applicability of the doctrine. A. Farber & 16 Partners, Inc. v. Garber, 234 F.R.D. 186, 192 (C.D. Cal. 2006). 17 3. Relevant Allegations in the SAC 18 In their SAC, Plaintiffs allege that McDermott and Dang announced on May 4, 2018 19 that Ludwig would be closing the Branch in the next four to five years and would provide 20 some minimal funding to enable a transition period. (SAC ¶ 90.) Plaintiffs further allege 21 that in July 2018, Ludwig set out the reduced research budget it was prepared to provide 22 the Branch over the next five years. (Id. ¶¶ 101–02.) The proposed research budget 23 “tapered” Ludwig’s annual financial commitment from $12 million in 2019 to $4.5 million 24 in 2023. (Id. ¶ 103.) Plaintiffs allege that at a meeting on February 12, 2019, Ludwig 25 stated that the reduced funding was contingent upon each of the Plaintiffs executing and 26 complying with a Transition Agreement and Release. (Id. at ¶¶ 104–09.) Plaintiffs allege 27 they declined to sign the Transition Agreement and Release by the April 1, 2019 deadline 28 1 and “continued to advise Ludwig that it was breaching its contractual obligations and 2 violating its own policies.” (Id. ¶¶ 113–15, 128; see also ECF No. 1 ¶ 57.) 3 Plaintiffs allege that Ludwig retaliated in June 2019 by cutting the budget for the 4 Branch even further for the years 2020 and 2021. (Id. ¶¶ 120, 128.) On June 26, 2019, 5 Ludwig stated in a letter to the Branch that Ludwig’s Board of Directors had approved a 6 budget of $6.5 million for 2020 and $6.3 million for 2021. (Id. ¶ 128; see also ECF No. 7 58-1 at 4.) Plaintiffs allege that the retaliatory budget cuts render it impossible for Plaintiffs 8 to continue to operate their laboratories. (Id. ¶ 121.) 9 4. Analysis 10 Defendants lodged the single unredacted page of the Minutes for in camera review. 11 The single page does not identify the attendees at the Board meeting or the preparer of the 12 Minutes, and Defendants do not identify such persons in their opposition. They simply 13 state that “[i]t is undisputed that the minute entry in question was created by or for the 14 Defendants.” (ECF No. 62 at 8 n4.) Plaintiffs, who appear to know the attendees, represent 15 that no attorneys for Defendants were present at the meeting, but a representative of 16 Ludwig’s outside auditor (KPMG Ltd.) was present. (See ECF No. 58 at 9–10.) However, 17 Plaintiffs do not contend that the Minutes were prepared by or for anyone other than 18 Defendants. Thus, for purposes of this motion, the Court finds that Defendants have 19 established that the Minutes were prepared by or for them. 20 Defendants contend that the redacted portion of the Minutes was prepared in 21 anticipation of litigation, which they claim to have reasonably anticipated by at least 22 June 2019, because Plaintiffs had already taken steps signaling the prospect of imminent 23 litigation. (ECF No. 62 at 8.) Specifically, Defendants identify the following steps taken 24 by Plaintiffs: “(1) sending Defendants an early draft of Plaintiffs’ later-filed complaint,2 25 (2) issuing a litigation hold notice, and (3) requesting formal mediation based on their 26 27 2 Plaintiffs initiated this litigation by filing a complaint on November 7, 2019. 28 1 claims, which was set for October 29, 2019.” (Id. at 8.) Defendants claim that in response, 2 they “(1) engaged outside counsel for representation in this dispute, (2) exchanged letters 3 with Plaintiffs’ counsel regarding Plaintiffs’ claims, (3) provided updates to the Board on 4 Plaintiffs’ claims and the prospect of litigation, (4) instituted a litigation hold, and (5) 5 reviewed an early draft of Plaintiffs’ later-filed complaint.” (Id. at 8–9.) 6 Plaintiffs argue that the Minutes must have been prepared in the ordinary course of 7 business for a business purpose because Ludwig regularly prepared Board minutes in the 8 ordinary course of business for business purposes and produced copies of regular Board 9 minutes going back to 2014. (ECF No. 58 at 9.) However, the fact that Board minutes 10 were regularly created in the ordinary course of business does not preclude a discussion 11 arising at some point during a Board meeting which may be protected by the work-product 12 doctrine, even if attorneys are not present, where litigation has been reasonably anticipated. 13 See, e.g., Orthopaedic Hosp. v. DJO Glob., Inc., No. 3:19-CV-00970-JLS (AHG), 2020 14 WL 7625123, at *2 (S.D. Cal. Dec. 22, 2020) (“[T]the Court is cognizant of the fact that 15 discussions in board meetings may be intertwined with discussions of legal advice rendered 16 by counsel (who may or may not be present at the meeting)[.])”); Newmark Realty Cap., 17 Inc. v. BGC Partners, Inc., No. 16-CV-01702-BLF-SVK, 2018 WL 2357742, at *3 (N.D. 18 Cal. May 24, 2018) (“The Court finds it plausible that privileged and work product 19 information may have been discussed at Plaintiff’s board meetings [even if the board 20 minutes indicate that no attorneys were present at the meetings].”); In re JDS Uniphase 21 Corp. Sec. Litig., No. C-02-1486 CW (EDL), 2006 WL 2850049, at *1–3 (N.D. Cal. Oct. 22 5, 2006) (finding redactions based on the work product doctrine “well-taken” after in 23 camera review of disputed Board minutes). 24 Plaintiffs do not contend that Defendants had no reason to anticipate litigation at the 25 time of the June 24, 2019 Board meeting. Instead, Plaintiffs dispute Defendants’ 26 contention that the redacted portion of the Minutes is “actually a discussion of mediation 27 strategy” because the budget cuts reflected in the June 26, 2019 letter sent to Plaintiffs are 28 “not discussed anywhere else in [the] Minutes.” (Id. at 8–9.) Plaintiffs note that 1 Defendants “produced a Memorandum dated in May 2019 from Defendants McDermott 2 and Dang to the Ludwig Board that, in general terms, urged the Board to promptly cut the 3 Branch budget as a consequence for Plaintiffs not agreeing to the budget initially identified 4 by Ludwig.” (Id. at 9.) Plaintiffs, who admittedly have not seen the redacted portion of 5 the Minutes (id. at 9), argue that even if the Minutes had a “dual purpose,” they are subject 6 to production. (ECF No. 58 at 10.) 7 Upon review of the Minutes submitted for in camera review, the Court finds that 8 given the nature of the document and the factual situation, most of the redacted text was 9 prepared in anticipation of litigation by or for Defendants. As represented, the text largely 10 “reflects a discussion about Plaintiffs’ legal claims regarding the San Diego Branch budget 11 and Defendants’ mediation strategy.” (See ECF No. 62 at 7.) However, the Court finds 12 that the second-to-last sentence of the redacted Minutes, beginning with “The Board 13 unanimously RESOLVES,” shall be unredacted. The language does not reflect Plaintiffs’ 14 legal claims and mediation strategy. Moreover, the contents were disclosed, nearly 15 verbatim, in the June 26, 2019 letter sent to the Branch (ECF No. 58-1 at 4), and therefore 16 any work product protection of that portion has been waived. See United States v. Sanmina 17 Corp., 968 F.3d 1107, 1121 (9th Cir. 2020) (holding that disclosure of work product to an 18 adversary in litigation waives the protection).3 19 /// 20 21 22 3 The Court does not find any waiver based on the fact Ludwig’s auditor was 23 present at the Board meeting. “[D]isclosure of work product to a third party does not waive the protection unless such disclosure is made to an adversary in litigation or ‘has 24 substantially increased the opportunities for potential adversaries to obtain the 25 information.’” Sanmina Corp., 968 F.3d at 1121 (citation omitted). Plaintiffs admit that the auditor present was Ludwig’s own outside auditor and does not suggest that the auditor 26 was adversarial to Ludwig in any way. See id. at 1122 (“As [United States v. Deloitte LLP, 27 610 F.3d 129 (D.C. Cir. 2010)] and other courts have held, a taxpayer’s disclosure of its attorney work product to an independent auditor does not constitute disclosure to an 28 1 |}IV. CONCLUSION 2 Based on the foregoing, Plaintiffs’ motion to compel is GRANTED IN PART and 3 || DENIED IN PART. Defendants shall produce documents in response to Plaintiffs’ RFPs 4 and 139, as modified above, no later than September 30, 2021. Defendants shall also 5 ||produce a newly redacted version of the Minutes, as discussed above, no later than 6 || September 10, 2021. 7 IT IS SO ORDERED. 8 Dated: September 1, 2021 -

n. Jill L. Burkhardt 10 ited States Magistrate Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28