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Federal Trade Commission v. Boehringer Ingelheim Pharmaceuticals

September 27, 2012


The opinion of the court was delivered by: John M. Facciola United States Magistrate Judge


This matter was assigned to me for all purposes. Pending before me now is the Petition of the Federal Trade Commission for an Order Enforcing a Subpoena Duces Tecum [#1].*fn1 The Federal Trade Commission ("FTC") seeks an order from this Court declaring that the documents requested in its subpoena duces tecum are not privileged under the attorney-client privilege or the work product doctrine, as claimed by respondents, Boehringer Ingelheim Pharmaceuticals, Inc. ("BIPI"), and requiring the respondent to turn over the documents within 10 days of this order. In light of the record before me and for the reasons stated herein, plaintiff FTC's petition will be denied as to certain categories of documents as set forth below. For all others, BIPI will be ordered to redact privileged material and disclose the rest, if it has not already done so.


The subpoena filed by the FTC is part of an investigation into a settlement agreement in a separate, prior lawsuit between BIPI and a generic drug manufacturer, Barr Laboratories. Memorandum in Support of Petition of the Federal Trade Commission for an Order Enforcing a Subpoena Duces Tecum [#1-4] at 1-2. The investigation, in short, is looking into allegations that BIPI and Barr engaged in unfair trade practices. Id.

BIPI manufactures two brand-name drugs, Aggrenox and Mirapex. Id. at 4. Barr developed generic versions of these drugs and received FDA approval to market the generic versions, leading to litigation by BIPI alleging patent infringement. See Boehringer Ingelheim Inter. gmbH v. Barr Labs., 562 F. Supp. 2d 619, 622 (D. Del. 2008), rev'd Boehringer Ingelheim Intgern, gmbH v. Barr Labs., Inc., 592 F.3d 1340 (Fed. Cir. 2010). This action was consolidated with an action these plaintiffs later brought against Mylan Laboratories ("Mylan) seeking to enforce their rights in the Mirapex patents against Mylan. See [#1-4] at 4.

Marla S. Persky is Senior Vice President, General Counsel, and Secretary of Boehringer Ingelheim USA Corporation, Boehringer Ingelheim Corporation and BIPI. She attempted to settle the lawsuit pertaining to the Mirapex litigation, but the case proceeded to trial in the District of Delaware, where the court held that the Mirapex patents were invalid. Boehringer Ingelheim Inter. gmbH, 562 F. Supp. 2d at 640 (D. Del. 2008). Persky's clients pursued appeal in the Federal Circuit. Boehringer Ingelheim Intgern, gmbH., 592 F.3d at 1340. On January 25, 2010, the Federal Circuit reversed the lower court and remanded the case to the district court. Id.

In 2008, however, Barr and BIPI settled their disputes as to Aggrenox and Mirapex, and submitted the settlement to the FTC and Department of Justice, as required by law. [#1-4] at 5. The review of the settlement by the FTC led to the subpoena at issue here. The FTC opened a formal investigation in January 2009 to determine whether, via the settlement, the two parties had engaged in unfair methods of competition with respect to the sale of the two drugs and their generic counterparts. Id. The agreement provided that Barr could begin to market its generic versions only near the expiration of BIPI's patent, and that Barr would help promote BIPI's product until it entered the market. Id. This arrangement prompted the concern of the FTC that Barr agreed to delay marketing the generic versions of Aggrenox and Mirapex so as to allow BIPI to reap the sole profits, and in exchange, BIPI would "kick back" a portion of those profits to Barr. Id.

Shortly after the FTC investigation began, a subpoena was issued to BIPI, but BIPI did not comply with the deadline for production. [#1-4] at 5-6. Pursuant to Sections 9 and 16 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 49, 56,*fn2 on October 23, 2009, the FTC filed this petition seeking enforcement of the subpoena. [#1]. Specifically, the FTC requested that the Court order BIPI to comply with the subpoena and turn over all relevant documents concerning the litigation between BIPI and Barr; sales, profits, and marketing of the brand-name drugs; the settlement agreement; co-marketing with Barr and other firms; the marketing of the generic substitutes by Barr; and analyst reports on the drugs. Id. at 5. Between December 2009 and May 2010, there were disputes regarding the scope and adequacy of BIPI's search efforts. In May 2010, however, BIPI formally certified that it had fully complied with the FTC subpoena. See Status Memorandum Advising the Court of New Developments [#15] at 2.

The following month the FTC filed a status memorandum stating that BIPI's "limited custodial-based search did not locate all responsive materials." Federal Trade Commission's Status Memorandum Advising the Court of New Developments [#17]. The FTC also objects to BIPI's withholding of roughly 25% of its produced documents under claims of work product and attorney-client privilege. Id.

During a March 8, 2011 status conference, I directed the parties to meet and confer on a sample set of documents to be presented to me for in camera review. I have reviewed BIPI's privilege log as well as the sampling of documents, which were created by BIPI in the period between the District Court decision on June 26, 2008 and the settlement achieved on August 11, 2008.

The sample was chosen as representative of the 631 documents BIPI claims are privileged. The FTC, which has not seen the documents, insists that they are not protected, either because: 1) they are typical business forecasts not done by lawyers, and therefore not work product, or 2) the documents contain no confidential communications between client and attorney and do not qualify as protected by the attorney-client privilege. Status Report of the Federal Trade Commission [#41] at 1-2. Alternatively, the FTC argues that, even if the documents are privileged, the privilege is overridden by the FTC's substantial need for these documents in order to conclude its law enforcement investigation. Id. at 3.

Finally, the FTC claims that BIPI's eventual response to the subpoena was legally inadequate. Id. at 12-14. The FTC alleges that BIPI failed to preserve its electronic records and, as a result, responsive emails exist only on server back-up tapes, which BIPI refuses to search. Id. As a result, the FTC claims BIPI "has not conducted sufficient electronic searches of certain network folders, and instead relies on a custodian-based self-selection search process that the evidence indicates did not uncover many responsive documents." Id.

Therefore, two issues remain: 1) whether the documents claimed by BIPI to be protected under a privilege are, in fact, privileged; and 2) whether the scope and adequacy of BIPI's search is sufficient. I will address the former issue in this Memorandum Opinion. The latter will be addressed in a separate, forthcoming opinion.


A.Application of the Federal Rules of Civil Procedure

Under the common law, on a petition to enforce an administrative subpoena, the court's role is limited to evaluating whether the subpoena is for a lawful purpose, whether the documents requested are relevant to that purpose, and whether the demand is reasonable. See FTC v. Texaco, Inc., 555 F.2d 862, 872 (D.C. Cir. 1997) (en banc) (citing Endicott Johnson v. Perkins, 317 U.S. 501, 509 (1943) and Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 209 (1946)) (cert. denied, 431 U.S. 974 (1977)). When the subpoenaed party is not challenging enforcement of the subpoena itself, but rather objecting to the disclosure of specific documents under a claim of privilege, the principles of the attorney-client privilege and the protection of work product privilege, derived from the common law and Rule 26(b)(3)(A) of the Federal Rules of Civil Procedure, apply. See, e.g., U.S. v. Cal. Rural Legal Assistance, Inc., 824 F. Supp. 2d 31, 43-44 (D.D.C. 2011) (noting that enforcement of an administrative subpoena from a government agency may be limited by the federal attorney-client and work product privileges, rather than state privileges or ad hoc determinations). "The nature of a subpoena enforcement proceeding, under common sense and precedents in this circuit and elsewhere, thus rests soundly in federal law, and federal law of privilege governs any restrictions on the subpoena's scope." Linde Thomson Langworthy Kohn & Van Dyke, P.C. v. Resolution Trust Corp., 5 F.3d 1508, 1513 (D.C. Cir. 1993).

In general, the Federal Rules of Civil Procedure apply to "proceedings to compel . . . the production of documents through a subpoena issued by a United States . . . agency under federal statute." Fed. R. Civ. P. 81(a)(5). The work product doctrine set forth in Rule 26 therefore applies to a subpoena issued by a federal investigative agency prior to the contemplation of actual litigation. That rule prevents against disclosure of "documents and tangible things prepared in anticipation of litigation or for trial by another party or its representative." Fed. R. Civ. P. 26(b)(3)(A).

Accordingly, I will address the FTC's claims and BIPI's assertion of privilege under the standards of Rule ...

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