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In re Niaspan Antitrust Litigation

United States District Court, E.D. Pennsylvania

August 24, 2017



          DuBois, J.


         This multi district litigation concerns what has come to be known as a "pay-for-delay, " or "reverse payment, " settlement-a practice in which a brand-name drug manufacturer brings a patent-infringement action against a generic drug manufacturer and then compensates the generic drug manufacturer for its agreement to refrain from entering the market with a competing generic version of the brand-name drug until a specified date. In this case, two putative classes-the Direct-Purchaser Plaintiffs ("DPPs") and the End-Payor Plaintiffs ("EPPs")-aver that the brand-name manufacturer of Niaspan, Kos Pharmaceuticals, Inc. ("Kos"), entered into anticompetitive settlement agreements in March of 2005 with the generic manufacturer of that drug, Barr Pharmaceuticals, Inc. ("Barr"), in order to terminate patent-infringement litigation brought by Kos against Barr in the United States District Court for the Southern District of New York. Kos was later acquired by defendant Abb Vie Inc. ("Abb Vie"), and Barr was later acquired by defendant Teva Pharmaceuticals, Inc. ("Teva").

         The DPPs, on behalf of both putative classes, now move to compel the defendants to produce certain documents that defendants claim as privileged. By agreement, the parties have selected 32 documents[1] as a representative sample. The Court agreed to examine the selected documents in camera and rule on the validity of defendants' privilege claims, and directed the parties to attempt to resolve plaintiffs' challenges to other entries in defendants' privilege logs without the need for Court intervention based on the guidance provided by such rulings.


         Federal Rule of Civil Procedure 26(b)(1) provides that "[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense." Two privileges are relevant for purposes of this Motion-the attorney-client privilege and the work-product doctrine.

         The attorney-client privilege "protects from disclosure confidential communications made between attorneys and clients for the purpose of obtaining or providing legal assistance to the client." In re Grand Jury Subpoena, 745 F.3d 681, 687 (3d Cir. 2014). The attorney-client privilege attaches to "(1) a communication (2) made between privileged persons (3) in confidence (4) for the purpose of obtaining or providing legal assistance for the client." In re Chevron Corporation, 650 F.3d 276, 289 (3d Cir. 2011) (internal quotations omitted). "[T]he privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice." In re Processed Egg Prod. Antitrust Litig., 278 F.R.D. 112, 117 (E.D. Pa. 2011). However, "[b]ecause the attorney-client privilege obstructs the truth-finding process, it is construed narrowly. The privilege protects only those disclosures-necessary to obtain informed legal advice-which might not have been made absent the privilege." Westinghouse Elec. Corp. v. Republic of Philippines, 951 F.2d 1414, 1423-24 (3d Cir. 1991) (internal citations omitted). Recognizing that lawyers sometimes provide purely business advice, courts have held that the privilege applies only where the communication was made "the express purpose of securing legal not business advice." Fed. Trade Comm 'n v. Abbvie, Inc. ("AbbVie I"), No. CV 14-5151, 2015 WL 8623076, at *10 (E.D. Pa. Dec. 14, 2015) (citingdrawer v. RaymondCorp., No. CIV. 90-5026, 1992 WL 122856, at *1 (E.D. Pa. May 29, 1992).

         "Communications between attorney and client are not privileged if made in the presence of or communicated to third parties." Barr Marine Products, Co. v. Borg-Warner Corp., 84 F.R.D. 631, 634 (E.D. Pa. 1979). Further, "[d]isclosing a communication to a third party unquestionably waives the privilege." In re Teleglobe Commc 'ns Corp., 493 F.3d 345, 361 (3d Cir. 2007), as amended (Oct. 12, 2007). There numerous exceptions and nuances to this general rule, four of which are relevant in this case.

         First, "intra corporate distribution of legal advice received from counsel does not vitiate the privilege . . . ." Baltimore Scrap Corp. v. David J. Joseph Co., No. L-96-827, 1996 WL 72078, at *6 (D. Md. Nov. 20, 1996). This exception stems from the "recognition that since the decision-making power over the corporate client may be diffused among several employees, the dissemination of confidential communications to such persons does not defeat the privilege." Id. (internal quotations omitted).

         Second, disclosures made to a third-party consultant do not constitute a waiver when the disclosure is "necessary for the client to obtain informed legal advice" or if the disclosure is made "to an 'agent' assisting the attorney in giving legal advice to the client." Westinghouse, 951 F.2d at 1424. Consultants are generally treated similarly to employees for purposes of the waiver analysis. King Drug Co. of Florence v. Cephalon, Inc., No. 2:06-CV-1797, 2013 WL 4836752, at *6 (E.D. Pa. Sept. 11, 2013).

         Third, when privileged documents or communications are disclosed inadvertently, there is no waiver if "the holder of the privilege took reasonable steps to rectify the error." Alers v. City of Philadelphia, No. 08-4745, 2011 WL 6000602, at *2 (E.D. Pa. Nov. 29, 2011). District Courts in the Third Circuit consider the following five factors in determining whether such disclosures are inadvertent:

(1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) any delay and measures taken to rectify the disclosure; and (5) whether the overriding interests of justice would or would not be serviced by relieving the party of its errors.

Ciba-Geigy Corp. v. Sandoz Ltd, 916 F.Supp. 404, 411 (D.N.J. 1995); Rotelli v. 7-UpBottling Co. of Philadelphia, No. CIV. A. 93-6957, 1995 WL 234171, at *2 (E.D. Pa. Apr. 19, 1995).

         Fourth, "the community-of-interest privilege allows attorneys representing different clients with similar legal interests to share information without having to disclose it to others." Teleglobe, 493 F.3d at 364. "[M]embers of the community of interest must share at least a substantially similar legal interest." Id. at 365. Although the doctrine was conceived with litigation in mind, it "comes into play when clients with separate attorneys share otherwise privileged information in order to coordinate [any] legal activities, " and it applies "even in purely transactional contexts." Id. at 359, 364.

         The second relevant privilege at issue in this case is the work-product doctrine. A party may claim as privileged any documents that contain attorney work product-"tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent)." Fed.R.Civ.P. 26(b)(3). "[A] document satisfies Rule 26(b)(3) where in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation." Martin v. Bally's Park Place Hotel & Casino, 983 F.2d 1252, 1258 (3d Cir. 1993). In contrast to the attorney-client privilege, which is waived whenever a communication is disclosed to a third party, "a disclosure to a third party does not necessarily waive the protection of the work-product doctrine" unless the third party is an adversary. Westinghouse, 951 F.2d at 1428. As the party claiming work-product privilege in this case, defendants have the burden of establishing that the privilege applies. Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 138 (3d Cir. 2000).


         a. Abb Vie's Privilege Log Entries

         The DPPs selected 14 entries from AbbVie's privilege log for in camera review, and Abb Vie selected an additional five entries. The Court addresses each of these documents in turn, categorizing them where possible.

         i. Properly Withheld Documents

         The Court first concludes that sixteen of the documents at issue were properly withheld in their entirety: Abb Vie privilege log entries 427, 434, 581, 595, 596, 612, 624, 635, 645, 658, 1572, 2145, 2155, 4054, 4055, and 4398. The Court addresses each such document in turn.

         Abb Vie privilege log entries 434, 595, 596, 624, and 4398 were properly withheld under the attorney-client privilege because those entries consist of communications in which attorneys request or are provided with information for the purpose of providing legal advice. Entry number 434 is an email chain between Kos's outside counsel, Kos's in-house counsel, and Kos executives, in which the lawyers request input and specific information from the executives to assist them in drafting a declaration to attach to a legal filing. Entry number 595 consists of a string of emails: first, Kos's outside counsel sent a draft settlement agreement to Kos's then-general counsel Andrew Koven; second, Koven forwarded the draft to three Kos executives and requested their input; and finally, the three executives responded with their comments. Similarly, entry number 596 consists of an email from Kos's Chief Financial Officer Chris Kiritsy to Koven providing comments on a draft settlement agreement. Entry number 624 is an email string between Kos's Vice President for Marketing Aaron Berg, Kos's outside counsel, and Kos's general counsel, in which Berg provided detailed statistics and information regarding the potential of marketing Niaspan to women's health professionals. Koven asserted that the information was shared so that outside counsel, White & Case, could provide legal advice with respect to a co-promotion agreement relating to that marketing that was part of the ongoing settlement negotiations. See Abb Vie Defs' Resp. to Mot. to Compel ("Abb Vie Resp."), Ex. 2, Decl. of Andrew Koven ("Koven Decl.") at ΒΆΒΆ 10-11. And entry number 4398 is an email chain between Kos's outside counsel and Kiritsy, in which outside counsel requests information from Kiritsy to assist ...

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