Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

King Drug Co. of Florence, Inc. v. Cephalon, Inc.

United States District Court, Third Circuit

September 11, 2013

KING DRUG COMPANY OF FLORENCE, INC. et al., Plaintiffs,
v.
CEPHALON, INC., et al., Defendants. FEDERAL TRADE COMMISSION, Plaintiff,
v.
CEPHALON, INC., Defendant.

MEMORANDUM OPINION

Mitchell S. Goldberg, J.

Presently before the Court is a motion to compel the production of documents filed by the Federal Trade Commission (“FTC”) and joined by Direct Purchasers of a modafinil product, Provigil, manufactured by Defendant, Cephalon, Inc. (“Cephalon”). Plaintiffs seek an order requiring Cephalon to produce documents requested during discovery which have either been withheld or redacted based upon attorney-client privilege.

The documents in question fall into three categories: (1) minutes from meetings of the Cephalon Board of Directors in January and May 2006; (2) documents shared with or created by a business consulting company, Clarion Healthcare Consulting, LLC, in connection with work it performed for Cephalon; and (3) documents created by non-attorney employees at Cephalon related to the settlement of certain patent infringement lawsuits. For the reasons that follow, we find that the documents at issue were properly redacted or withheld.

I. Background

A more detailed recitation of the facts surrounding this litigation can be found in the Court’s prior Opinion. (See Memo. Op., Mar. 29, 2010, Doc. No. 58.) The FTC’s principal allegation is that agreements entered into by Cephalon in conjunction with its settlement of a patent infringement suit related to its modafinil drug, Provigil, against four generic drug manufacturers, violated antitrust laws. These agreements were entered into in 2005 and 2006, and included substantial payments to the generic companies, which, according to the FTC, were made in exchange for the generics’ promise to stay off of the modafinil market. Since the litigation began, the Court has held two separate trials regarding the patents covering Provigil, and, just last term, the United States Supreme Court clarified the standard that district courts should apply in assessing the legality of agreements like those at issue here (commonly called “Reverse Payment” settlements). See Federal Trade Comm’n v. Actavis, 133 S.Ct. 2223 (2013). This litigation is now in its final stages of discovery.

The discovery dispute presently before the Court has narrowed substantially since the FTC filed its motion, and concerns fifty four documents, which the parties have divided into the three categories identified above. (See Aug. 8, 2013 Hrng., FTC Ex. A.)

The first category consists of redactions to minutes and memoranda from meetings of the Cephalon board of directors in January and May 2006. With regard to the January 2006 board of directors meeting, Cephalon has redacted a portion of a written “Executive Summary” distributed by its President, Frank Baldino, Jr., as well as portions of minutes from certain meetings of a Special Committee tasked with overseeing the Provigil litigation on behalf of the board. (Zakreski Aff., Resp. Ex. 7, ¶¶ 16-20.) According to Cephalon, in the redacted portion of the Executive Summary, Dr. Baldino discusses legal advice he received from in-house counsel regarding ongoing settlement discussions in the Provigil patent litigation. (Id., ¶¶ 17-18.) Similarly, Cephalon asserts that Baldino relayed the same information to the Special Committee.

With regard to documents from Cephalon’s May 2006 board of directors meeting, only one redaction is at issue. The minutes contain a paragraph that describes statements by Cephalon’s general counsel, John Osborn, regarding the terms of the settlement agreements. Cephalon asserts that this paragraph also contains legal advice from Mr. Osborn regarding intellectual property and regulatory matters implicated by the terms of the agreements. (Id., ¶¶ 19-20.)

The second category, which consists of thirty seven documents, are communications between Cephalon and a third-party consulting firm, Clarion Healthcare, LLC (“Clarion”). Clarion was hired by Cephalon in 2005 to assist its employees in developing a plan to maximize the commercial success of Cephalon’s modafinil products, which included Provigil, and two other drugs that had yet to reach the market, Sparlon and Nuvigil. (Hrubiec Aff., Resp. Ex. 8, ¶ 7.) Clarion’s consultants and a group of Cephalon employees from various departments were referred to as the Business Strategy Team (“BST”). Clarion’s role on the BST was to provide expertise related to the evaluation of modafinil commercial opportunities, and the intellectual property and regulatory risks associated with different business strategies. (Brookes Aff., Resp. Ex. 9, ¶ 5; Mot. Ex. 25, p. 1.)

In this role, Clarion worked closely with the BST, and had office space at Cephalon. Clarion’s consultants had daily contact with members of the BST, and provided managerial and strategic support, as well as assistance on presentations to Cephalon’s senior management. (Id., ¶¶ 8-9.) Additionally, Clarion was often required to consult with Cephalon’s attorneys on intellectual property and regulatory issues, and entered into a confidentiality agreement in connection with its consultant role. (Brookes Aff., ¶¶ 5-7.) According to Cephalon, the documents shared with Clarion that it redacted or withheld contain either legal advice, information that Cephalon’s attorneys requested from the BST, or requests by the BST for legal advice from Cephalon’s attorneys. (See Hrubiec Aff., ¶¶ 8-30.)

The final category consists of fifteen documents which were drafted by Cephalon non-attorney employees and executives. These documents were circulated to both in-house attorneys and non-attorney employees at Cephalon. According to affidavits submitted by Cephalon’s associate general counsel, Randall Zakreski, and former in-house counsel, Robert Hrubiec, many of these documents were created and sent to them at their request, in order to allow them to more ably provide Cephalon with legal advice on intellectual property issues regarding Provigil and the ongoing patent litigation. (Zakreski Aff., Resp. Ex. 7, ¶¶ 21-28; Hrubiec Aff., Resp. Ex. 8, ¶¶ 31, 33-4, 37, 41.) Hrubiec and Zakreski state that the other documents in this category are requests by employees for legal advice, their responses to those requests, or documents related to litigation strategy in the Provigil patent litigation. (Hrubiec Aff., ¶¶ 33, 35-6, 38, 40.)

After Cephalon withheld these documents, the FTC filed the motion to compel presently at issue. An evidentiary hearing and oral argument was held on August 8, 2013, during which the Court ordered that the documents be produced for an in camera review in order to determine which, if any, of the documents are subject to attorney-client privilege.

II. Legal Standard

In order “to encourage full and frank communication, ” the attorney-client privilege protects communications between attorneys and clients from compelled disclosure. Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). The privilege applies to any statement that is “(1) a communication (2) made between privileged persons (3) in confidence (4) for the purpose of obtaining or providing legal assistance for the client.” Restatement (Third) of the Law Governing Lawyers § 68 (2000). “‘Privileged persons’ include the client, the attorney(s), and any of their agents that help facilitate attorney-client communications or the legal representation.” In re Teleglobe Comm. Corp., 493 F.3d 345, 360 (3d Cir. 2007) (quoting id., § 70). “The privilege extends to verbal statements, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.