Lit Alerts—August 2021

Deposition Admissibility: Fifth Circuit Holds that Witness Unavailability Is Assessed Based on Residence and Actual Trial Location

Last month, the US Court of Appeals for the Fifth Circuit held that deposition testimony was properly admitted at trial because the witness lived more than 100 miles from the location of the trial, even though he lived within 100 miles of the division that governed the lawsuit. In Spectrum Association Management of Texas, L.L.C. v. Lifetime HOA Management, L.L.C., No. 20-50604 (5th Cir. July 13, 2021), the San Antonio Division of the US District Court for the Western District of Texas governed the trial proceedings, but the Waco Division hosted the trial. The objectors argued that the witness, a San Antonio resident, was available as a trial witness because he lived within 100 miles of the San Antonio Division. The Fifth Circuit disagreed, holding that “unavailability” under Federal Rule of Civil Procedure 32(a)(4)(B) is assessed based on the witness’ location relative to the place of the trial, and therefore the deposition testimony was properly admitted.

Under Rule 32(a)(4)(B), a party may use deposition testimony “for any purpose,” including as evidence at trial, if the witness resides “more than 100 miles from the place of hearing or trial or is outside the United States.” The Fifth Circuit reasoned that “measuring distance from the borders of the district rather than from the courthouse would provide a variable standard of convenience dependent on the size of the district, the location of the trial, and the location of the witness.” The objectors argued that they were prejudiced by the trial having been relocated to Waco because they had “purposefully and strategically declined to cross-examine” the witness at his deposition. The Fifth Circuit found the objectors had sufficient notice that the trial would be held in Waco and could have sought to redepose the witness.

Intellectual Property: Insurer Must Defend Cabinetmaker Accused of Misuse of Certification Mark

The US District Court for the Eastern District of Washington granted summary judgment this month for AAA Cabinets & Millworks, Inc., ruling that its insurer, Amco Insurance Company, must defend it in a federal trademark infringement suit involving AAA Cabinet’s alleged misuse of a federally registered certification mark.

In the underlying litigation, Kitchen Cabinet Manufacturers Association (KCMA) sued AAA Cabinets for trademark infringement, counterfeiting, and unfair competition, alleging AAA had made unauthorized uses of KCMA’s certification mark. Under federal trademark law, a certification mark is a type of trademark that shows consumers that particular goods or their providers have met certain standards. AAA Cabinet’s insurance policy covered advertising injuries, including injuries arising from “[i]nfringing upon another’s copyright, trade dress, or slogan in your ‘advertisement.’” It otherwise excluded all claims “arising out of the infringement of copyright, patent, trademark, trade dress or other intellectual property rights.”

The district court concluded that the underlying litigation involved an alleged advertising injury not covered by any policy exclusion. It explained that exclusions to insurance contracts are construed against the insurer. Moreover, the court reasoned that the duty to defend arises whenever “a complaint . . . construed liberally, alleges facts which could, if proven, impose liability . . . within the policy’s coverage.” Based on these standards, the court held that the underlying complaint conceivably alleged an advertising injury because, among other things, KCMA’s certification mark may constitute a slogan.

Attorney-Client Privilege: Fifth Circuit Vacates Discovery Rulings on Crime-Fraud Exception

In a writ of mandamus brought by the Boeing Company (Boeing), the Fifth Circuit partially overturned a privilege ruling by the US District Court for the Eastern District of Texas. Boeing challenged the district court’s ruling, in a fraud lawsuit alleging concealed design defects in 737 MAX 8 aircrafts, that fifty-three Boeing documents were discoverable because they were not protected by the attorney-client privilege or were subject to the crime-fraud exception.

The Fifth Circuit first affirmed the district court’s ruling that Boeing’s conclusory assertion that nineteen documents contained advice from counsel did not suffice to support the privilege designation.

The Fifth Circuit disagreed with the district court about the remaining thirty-four documents. The district court had found these documents discoverable under the crime-fraud exception, which applies to otherwise privileged documents that are used to further continuing or future criminal or fraudulent activity. The Court of Appeals reversed the district court’s finding of a prima facie case of fraud based on a temporal nexus between the contested documents and the fraudulent activity. Temporal proximity, alone, is insufficient to trigger the crime-fraud exception.

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.