In re HIV Antitrust Litigation

Filing 1255

Discovery Order. In the attached order, the court addresses the discovery dispute in the letter brief at ECF No. 1243. (lblc4, COURT STAFF) (Filed on 7/29/2022)

Case 3:19-cv-02573-EMC Document 1255 Filed 07/29/22 Page 1 of 7

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United States District Court
Northern District of California

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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San Francisco Division

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PETER STALEY, et al.,

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Plaintiffs,
DISCOVERY ORDER

v.

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Case No. 19-cv-02573-EMC (LB)

Re: ECF No. 1243

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GILEAD SCIENCES, INC., et al.,
Defendants.

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INTRODUCTION

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The parties dispute whether the individual health-plan plaintiffs may provide information

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marked confidential under the Supplemental Protective Order (ECF No. 484) to Stephen R. Auten

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so that he may present reply expert testimony.1 Defendant Teva Pharmaceuticals USA, Inc. seeks

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to bar the individual health-plan plaintiffs from (1) providing Teva’s confidential information to

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Mr. Auten or (2) using him as an expert, based on his work for Teva in a different matter (i.e., the

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Actavis Tax Matter).2 The issue is whether Mr. Auten’s past work for Teva presents a conflict that

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Joint Disc. Ltr. – ECF No. 1243 at 1–2 (The individual health-plan plaintiffs include Humana Inc.,
Blue Cross and Blue Shield of Florida, Inc. (d/b/a Florida Blue) and Health Options, Inc. (d/b/a Florida
Blue HMO), Centene Corporation, Blue Cross and Blue Shield of South Carolina and BlueChoice
HealthPlan of South Carolina, Inc., Triple-S Salud, Inc., Kaiser Foundation Health Plan, Inc., and Blue
Cross and Blue Shield of Kansas City). Citations refer to material in the Electronic Case File (ECF);
pinpoint citations are to the ECF-generated page numbers at the top of documents.
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Id. at 4.

ORDER – No. 19-cv-02573-EMC (LB)

Case 3:19-cv-02573-EMC Document 1255 Filed 07/29/22 Page 2 of 7

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should disqualify him from working for Teva’s adversaries in this case under the general rules of

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expert disqualification or under Mr. Auten’s agreement with Teva in the Actavis Tax Matter.
Because Mr. Auten received confidential information from Teva in the Actavis Tax Matter that

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is relevant to this matter and Teva’s agreement with Mr. Auten provides only that it will not seek

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disqualification in matters involving “patent litigation or patent consultation,” he is disqualified

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from serving as an expert for the plaintiffs in this case on issues that go beyond the strengths or

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weaknesses of patents.
STATEMENT

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Teva hired Mr. Auten to serve as an expert witness “in connection with several cases pending . . .

United States District Court
Northern District of California

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concerning the proper tax treatment for generic manufacturers’ defense costs in Hatch-Waxman

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patent litigation.”3 For example, Mr. Auten served as an expert for Teva in Actavis Laboratories FL,

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Inc. v. United States, and his expert report was used to support Teva’s motion for summary judgment in

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that case. App. to Pl.’s Mot. for Summ. J., Actavis Laboratories, FL, Inc. v. United States, No. 1:19-cv-

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00798-RTH (Fed. Cl. Apr. 1, 2021), ECF No. 31-2 at 7–101.

According to Teva, Mr. Auten’s expert work for Teva related to the tax treatment of defense

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costs in Hatch-Waxman patent litigation and whether “the regulatory review by the FDA of a

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Paragraph IV ANDA and any patent infringement suit brought by the branded drug manufacturer

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[Hatch-Waxman litigation] are intertwined processes.”4 While working for Teva, “Mr. Auten

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reviewed, and cited as material considered in his report, the deposition transcript of Colman Ragan,

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Vice President and General Counsel at Teva for North America IP Litigation, which was designated

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confidential in that litigation.”5

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The individual health-plan plaintiffs refer to this matter as the Actavis Tax Matter because it

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involved the 2008–2009 tax years for Watson Pharmaceuticals Inc. (Teva acquired Watson’s

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successor (Actavis) in 2016).6 Teva, however, points out that because the Actavis Tax Matter

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Id. at 4 (emphasis omitted).

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Id.

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Id. at 5.

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Id. at 3.

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ORDER – No. 19-cv-02573-EMC (LB)

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relates to an argument that generally applies to the tax treatment of Teva’s Hatch-Waxman

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defenses, including its defenses in the underlying patent litigations here, Mr. Auten’s consultation is

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not strictly limited to Watson’s tax burden for 2008 and 2009.7
Teva’s agreement with Mr. Auten for the Actavis Tax Matter includes a limited conflict waiver

United States District Court
Northern District of California

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providing that “neither Teva nor its affiliates will seek to disqualify [Mr. Auten or his firm] from

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representing any other entity or individual in patent litigation or patent consultation adverse to

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Teva or its affiliates . . . based on the present engagement.”8

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In this case, the individual health plan plaintiffs have identified Mr. Auten as a potential expert

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on “the development and approval of pharmaceutical products.”9 Teva argues that the scope of Mr.

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Auten’s potential opinions in this case falls outside of the waiver it agreed to with Mr. Auten.10

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Specifically, Teva argues that Mr. Auten’s potential opinions exceed the waiver because they

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could go beyond opining on the strength or merits of patents and would, therefore, constitute more

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than “patent litigation or patent consultation.”11 The plaintiffs counter that they specifically

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disclosed that Mr. Auten’s potential opinion may “relate[] to the development of regulatory and

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product development issues” only because “the protective order only requires expert disclosures to

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the extent they may opine on these limited issues.”12 Nonetheless, the plaintiffs have not agreed to

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limit Mr. Auten’s opinion to the merits of the subject patents.13

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ANALYSIS

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“Federal courts have the inherent power to disqualify expert witnesses to protect the integrity

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of the adversary process, protect privileges that otherwise may be breached, and promote public

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Id. at 4.

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Id. at 2.

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Id. at 5 (emphasis omitted).

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Id.

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Id.

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Id. at 2.

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Id. at 5.

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ORDER – No. 19-cv-02573-EMC (LB)

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confidence in the legal system.” Hewlett–Packard Co. v. EMC Corp., 330 F. Supp. 2d 1087, 1092

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(N.D. Cal. 2004). “There is no bright-line rule for expert disqualification.” Kane v. Chobani, Inc.,

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No. 12-cv-02425-LHK, 2013 WL 3991107, at *5 (N.D. Cal. Aug. 2, 2013) (cleaned up). “Rather,

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courts balance the policy objectives that favor disqualification — ensuring fairness and preventing

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conflicts of interest — against policies militating against disqualification, including guaranteeing

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that parties have access to witnesses who possess specialized knowledge and allowing witnesses to

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pursue their professional callings.” Id. The party seeking disqualification has the burden to

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establish that disqualification is warranted under this standard. Hewlett–Packard, 330 F. Supp. 2d

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at 1092. In any case, “disqualification is a drastic measure that courts should impose only

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Northern District of California

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hesitantly, reluctantly, and rarely.” Id. at 1092.

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Though there is no bright-line rule, courts in this district generally disqualify experts based on

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“a prior relationship with an adversary if (1) the adversary had a confidential relationship with the

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expert and (2) the adversary disclosed confidential information to the expert that is relevant to the

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current litigation.” In re Xyrem (Sodium Oxybate) Antitrust Litig., No. 20-md-02966-RS, 2022 WL

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393208, at *2 (N.D. Cal. Feb. 9, 2022) (cleaned up).

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To determine whether a confidential relationship existed, the focus “is not on whether the

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expert was retained per se but whether there was a relationship that would permit the litigant

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reasonably to expect that any communications would be maintained in confidence.” Hewlett-

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Packard, 330 F. Supp. 2d at 1093. Factors include (1) the existence of a formal confidentiality

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agreement, (2) whether the expert was retained, (3) the number of meetings between counsel and

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the expert, (4) whether work product was discussed or provided to the expert, (5) whether the

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expert was paid, (6) whether the expert was asked to maintain confidentiality, and (7) whether the

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expert’s ideas were derived from work done under the direction of the retaining party. Id.

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“Confidential information essentially is information of either particular significance or [that]

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which can be readily identified as either attorney work product or within the scope of the attorney-

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client privilege.” Id. at 1094 (cleaned up). Confidential information includes, for example,

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litigation strategy and views concerning the strengths and weaknesses of a party’s position. Id.;

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see also Kane, 2013 WL 3991107, at *6 (“Such information concerning litigation strategy and
ORDER – No. 19-cv-02573-EMC (LB)

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United States District Court
Northern District of California

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anticipated defenses falls squarely within the realm of disclosed confidential information that

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requires expert disqualification.”).

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For example, in Xyrem, the court disqualified two expert witnesses that the plaintiffs in that

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reverse-payment case retained based on the experts’ prior work for the defendant, Hikma, in patent

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litigation that involved the same patents at issue in the reverse-payment case. 2022 WL 393208, at

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*4–6. The experts had received confidential information from Hikma’s lawyers concerning the

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strength of the underlying patent litigation, and the court held that “[t]hose thoughts [were]

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relevant to the present litigation.” Id. at *5.

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Similarly, in Packet Intel. LLC v. Juniper Networks Inc., the court disqualified the plaintiff’s

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claim-construction expert in a patent case based on the expert’s prior work for the defendant in a

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different matter. No. 19-cv-04741-WHO, 2020 WL 4001460, at *1–2, *6 (N.D. Cal. July 15,

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2020). The expert’s previous work for the defendant involved litigation with a third party but the

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same products and patents. Id. at *1.
Here, Teva had a confidential relationship with Mr. Auten. Teva retained Mr. Auten “in

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connection with several cases pending . . . concerning the proper tax treatment for generic

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manufacturers’ defense costs in Hatch-Waxman patent litigation.”14 Mr. Auten also received

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confidential information.

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For instance, Mr. Auten received a “deposition transcript of Colman Ragan, an in-house

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attorney for Teva” that, according to Teva, was over 170 pages long and marked confidential.15

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While some of the transcript has been disclosed on the public docket in the Actavis Tax Matter,

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the majority remains confidential.16 Mr. Auten confirmed that he reviewed the deposition

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transcript. App. to Pl.’s Mot. for Summ. J., Actavis Laboratories, FL, Inc. v. United States, No.

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1:19-cv-00798-RTH (Fed. Cl. Apr. 1, 2021), ECF No. 31-2 at 30.

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Id. at 4 (emphasis omitted).

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Id. at 3, 6.

Id. at 6 (“[O]nly twenty pages of Mr. Ragan’s substantive question-and-response appears in the
public record.”).
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ORDER – No. 19-cv-02573-EMC (LB)

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Regarding the relevancy of the confidential material Mr. Auten received in the Actavis Tax

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Northern District of California

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Matter to this matter, Mr. Ragan’s deposition testimony included information about Teva’s

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“strategies for settling Hatch-Waxman litigation and answers to questions about reverse payment

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antitrust litigation.”17 Furthermore, Mr. Auten’s own deposition testimony in the Actavis Tax

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Matter included responses to questions about whether reverse-payment settlements have been used

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to resolve Hatch-Waxman litigation. App. to Pl.’s Mot. for Summ. J., Actavis Laboratories, FL,

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Inc. v. United States, No. 1:19-cv-00798-RTH (Fed. Cl. Apr. 1, 2021), ECF No. 31-2 at 896–97.

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Accordingly, it is apparent that the confidential information Mr. Auten received in the course of

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his work for Teva has at least some relevance to this case.

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Concerning fairness, Teva states that it first objected to the plaintiffs’ retention of Mr. Auten

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more than a month ago on June 8, 2022.18 The plaintiffs do not dispute this point. Therefore, the

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plaintiffs’ claim that they will be prejudiced because there are only three weeks left for reply

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reports does not militate against disqualification.
Finally, although Teva’s agreement specifically provides that Teva will not seek to disqualify

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Mr. Auten “from representing any other entity or individual in patent litigation or patent

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consultation adverse to Teva or its affiliates,” the plaintiffs are asking Mr. Auten to opine on

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issues that go beyond “patent litigation or patent consultation.”19 The term “patent litigation or

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patent consultation” plainly refers to matters involving the strength or weakness of patents. The

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plaintiffs, however, are seeking to have Mr. Auten opine on issues “related to the development of

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regulatory and product development issues.”20 This is broader than patent litigation or

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consultation. Even if the plaintiffs’ disclosure of Mr. Auten’s potential testimony was driven by

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the disclosure requirements in the protective order, that does not change the fact that his potential

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testimony could exceed “patent litigation or patent consultation.” Thus, Teva’s limited

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Id. at 5.

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Id. at 6.

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Id. at 2.

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Id.

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ORDER – No. 19-cv-02573-EMC (LB)

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disqualification waiver does not apply to the work the plaintiffs are asking Mr. Auten to perform

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in this case.

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CONCLUSION

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To the extent the plaintiffs plan to rely on Mr. Auten to provide expert testimony that goes

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beyond the strength or weakness of patents, he is disqualified and may not receive information

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marked confidential under the Supplemental Protective Order.

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This disposes of ECF No. 1243.

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IT IS SO ORDERED.

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Dated: July 29, 2022
______________________________________
LAUREL BEELER
United States Magistrate Judge

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United States District Court
Northern District of California

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ORDER – No. 19-cv-02573-EMC (LB)

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