In re HIV Antitrust Litigation
Filing
645
ORDER by Judge Edward M. Chen Denying #629 End-Payor Plaintiffs' Motion for Relief from Nondispositive Pretrial Order of Magistrate Judge. (emcsec, COURT STAFF) (Filed on 7/16/2021)
1
2
3
4
UNITED STATES DISTRICT COURT
5
NORTHERN DISTRICT OF CALIFORNIA
6
7
STALEY, et al.,
Plaintiffs,
8
v.
9
10
GILEAD SCIENCES, INC., et al.,
Defendants.
11
United States District Court
Northern District of California
Case No. 19-cv-02573-EMC
ORDER DENYING END-PAYOR
PLAINTIFFS’ MOTION FOR RELIEF
FROM NONDISPOSITIVE PRETRIAL
ORDER OF MAGISTRATE JUDGE
Docket No. 629
12
13
14
Plaintiffs1 have filed a motion seeking relief from Judge Beeler’s discovery orders of May
15
21 and June 14, 2021. See Docket Nos. 590, 623 (orders). In the orders, Judge Beeler found that
16
Janssen had properly asserted the attorney-client privilege as to certain documents (or rather,
17
certain portions of those documents).2 Having considered the parties’ briefs and accompanying
18
submissions, including but not limited to the documents at issue (copies of which were provided
19
by Janssen for in camera review), the Court hereby DENIES Plaintiffs’ motion.3
20
21
22
23
1
24
2
25
26
27
28
“Plaintiffs” as used herein refers to the end-payor plaintiffs only.
After Judge Beeler issued her orders, Janssen withdrew its assertion of privilege as to certain
documents. See Sur-Reply at 2 (identifying Exhibit 7 as well as certain slides from Exhibits 5 and
6). The Court therefore does not consider these documents in assessing the merits of Plaintiffs’
motion.
The Court grants Janssen’s unopposed motion for leave to file a sur-reply as well as Plaintiffs’
unopposed motion for leave to file a sur-sur-reply. See Docket Nos. 641, 643. Although the Court
is allowing these supplemental briefs, it forewarns the parties that it does not expect this to be a
practice in the future.
3
I.
1
2
A.
DISCUSSION
Standard of Review
“Rule 72(a) of the Federal Rules of Civil Procedure allows aggrieved parties to file timely
3
4
objections to rulings of a magistrate judge in nondispositive matters. Such objections are
5
sustained if the magistrate judge's order is ‘found to be clearly erroneous or contrary to law.’” In
6
re McKesson HBOC, Inc. Sec. Litig., No. C-99-20743 RMW, 2005 U.S. Dist. LEXIS 7098, at
7
*20-21 (N.D. Cal. Mar. 31, 2005). “Whether the [attorney-client] privilege applies in light of a
8
given set of facts is a question of law that [the Court] review[s] de novo, but determination of the
9
facts against which the legal question is to be answered is, under Rule 72(a), reviewed for clear
error.” Wartell v. Purdue Univ., No. 1:13-CV-99 RLM-APR, 2014 U.S. Dist. LEXIS 120080, at
11
United States District Court
Northern District of California
10
*19-20 (N.D. Ind. Aug. 28, 2014); see also McKesson, 2005 U.S. Dist. LEXIS 7098, at *21
12
(stating that “[r]ulings on the scope of the attorney-client privilege are reviewed de novo”); cf.
13
Freudeman v. Landing of Canton, No. 5:09 CV 175, 2010 U.S. Dist. LEXIS 72329, at *3 (N.D.
14
Ohio July 19, 2010) (stating that “[t]he ‘clearly erroneous’ standard applies to the magistrate
15
judge's findings of fact, and the magistrate judge's legal conclusions are reviewed under the
16
‘contrary to law’ standard”).
17
B.
18
19
20
21
22
23
24
25
26
Legal Standard
As Judge Beeler correctly noted,
[t]ypically, an eight-part test determines whether information is
covered by the attorney-client privilege:
(1) Where legal advice of any kind is sought (2) from
a professional legal adviser in his capacity as such,
(3) the communications relating to that purpose, (4)
made in confidence (5) by the client, (6) are at his
instance permanently protected (7) from disclosure
by himself or by the legal adviser, (8) unless the
protection be waived.
The party asserting the privilege bears the burden of proving each
essential element.
United States v. Ruehle, 583 F.3d 600, 607-08 (9th Cir. 2009).
27
In their papers, Plaintiffs contend that, although Judge Beeler identified the correct test
28
above, she nevertheless employed an incorrect legal standard because she “assume[d] that any
2
1
advice that originates from a lawyer is legal advice, and therefore privileged.” Reply at 1
2
(emphasis in original). The Court does not agree. Judge Beeler’s orders clearly demonstrate
3
otherwise. See, e.g., Docket No. 623 (Order at 2) (stating that the “privilege does not apply to an
4
attorney’s communications about business matters (as opposed to legal advice)”).
5
C.
Providing Legal Advice for a Business Decision
Plaintiffs maintain that, even if Judge Beeler did not use an incorrect legal standard, her
6
7
legal conclusion that the attorney-client privilege applies is nevertheless incorrect. The documents
8
at issue can be broken down into two categories: (1) Capital Appropriation Requests (“CARs”)
9
(Exhibits 1-3, 9) and (2) slide decks (Exhibits 4-6, 8). The CARs are essentially memoranda
prepared for high-level Janssen decisionmakers, seeking their approval to enter into agreements
11
United States District Court
Northern District of California
10
with Gilead; the slide decks are essentially internal presentations addressing various business
12
matters (e.g., seeking approval of deals with Gilead, discussing business strategies regarding HIV
13
drugs). See Mot. at 3. Janssen has redacted statements in these documents related to patent
14
expiration and loss of exclusivity (“LOE”). According to Plaintiffs, Janssen has failed to establish
15
that the redacted statements were made primarily for a legal purpose, as opposed to a business
16
purpose. They contend: “[The] documents . . . were created to help Janssen evaluate whether
17
certain agreements with . . . Gilead made business sense for Janssen,” and thus “the primary
18
purpose of the redacted communications was business advice.” Mot. at 1 (emphasis in original).
19
The problem with Plaintiffs’ argument is that the attorney-client privilege can still obtain
20
even where a business decision is implicated. Specifically, if an attorney gives a client legal
21
advice on a business decision, that communication is protected by the privilege (assuming, e.g.,
22
that the communication was made in confidence and in his or her capacity as an attorney). See,
23
e.g.:
24
•
United States v. Chen, 99 F.3d 1495, 1501-02 (9th Cir. 1996) (noting that “[a]
25
client is entitled to hire a lawyer, and have his secrets kept, for legal advice
26
regarding the client’s business affairs”).
27
28
•
Calendar Research LLC v. Stubhub, Inc., No. CV 17-4062 SVW (SSx), 2019 U.S.
Dist. LEXIS 237001, at *9 (C.D. Cal. July 25, 2019) (indicating that a party “‘is
3
1
entitled to obtain legal advice on which it later bases its business decisions as well
2
as on its business decisions themselves’”).
3
•
FTC v. Qualcomm Inc., No. 17-CV-00220-LHK, 2018 U.S. Dist. LEXIS 85942, at
4
*15-17 (N.D. Cal. May 22, 2018) (finding that certain ratings were “legal
5
evaluations of the strength of [defendant’s] patents and patent applications[;]
6
[p]rivilege is not defeated merely because the client may in turn utilize that
7
privileged legal advice to make real-world business decisions”).
8
•
Crabtree v. Experian Info. Sols., Inc., No. 1:16-cv-10706, 2017 U.S. Dist. LEXIS
173905, at *6 (N.D. Ill. Oct. 20, 2017) (indicating that, even though “‘solely
9
personal or business advice is not protected by the attorney-client privilege, legal
11
United States District Court
Northern District of California
10
advice relating to business maters clearly is’”).
12
•
High Point Sarl v. Sprint Nextel Corp., No. 09-2269-CM-DJW, 2012 U.S. Dist.
13
LEXIS 8435, at *43 (D. Kan. Jan. 25, 2012) (stating that the privilege protects
14
communications made for the purpose of seeking legal advice regarding business
15
decisions such as “whether to sell a patent, enter into a licensing relationship, or
16
make some other business decision”).
17
•
United States ex rel. Fago v. M&T Mortg. Corp., 238 F.R.D. 3, 11 (D.D.C. 2006)
18
(noting that “personnel decisions may generally be business decisions, [but] that
19
does not mean that M&T could not have sought and obtained legal advice about
20
such decisions”), abrogated on other grounds by Schmidt v. Solis, 272 F.R.D. 1
21
(D.D.C. 2010).
22
•
Rehling v. City of Chi., 207 F.3d 1009, 1019 (7th Cir. 2000) (concluding that
23
district court did not clearly err in finding privilege applicable where attorney gave
24
legal advice on personnel matters; attorney “gave ranking members of the [police
25
department] advice about [plaintiff’s] placement and the City’s obligations under
26
the ADA”).
27
28
•
Compare FTC v. AbbVie, Inc., No. 14-5151, 2015 U.S. Dist. LEXIS 166723, at *30
(E.D. Pa. Dec. 14, 2015) (noting that due diligence “presentations were created for
4
1
business purposes” and, “[t]o the extent that these due diligence documents
2
reference legal issues, this was done to provide context for a business acquisition
3
decision, not to obtain or provide legal advice”) (emphasis added).
4
In the instant case, the Court has reviewed the documents containing the redacted
5
statements along with the Harbour and Hand declarations. (Mr. Harbour is in-house counsel; Ms.
6
Hand is outside counsel.) Although the documents by themselves would not always be enough to
7
show that legal advice was at issue, the documents taken in conjunction with the Harbour and
8
Hand declarations are sufficient to establish that communications were made to provide legal
9
advice on business decisions. See, e.g., Harbour Decl. ¶ 6 (regarding CARs, stating that,
“[a]lthough some of the information may have been publicly available, each redacted section, as a
11
United States District Court
Northern District of California
10
whole, reflects a legal assessment of Janssen’s expectation for the exclusivity provided by Janssen
12
IP involvement in each of the collaborations with Gilead”). To the extent Plaintiffs suggest that
13
information about patent expiration and LOE can never involve legal advice, cf. FTC v. AbbVie,
14
Inc., No. 14-5151, 2016 U.S. Dist. LEXIS 113731, at *31 (E.D. Pa. Aug. 25, 2016) (stating that
15
“AbbVie has not even attempted to explain how Corbin's apparent business advice about
16
AndroGel exclusivity could be construed as legal in nature”), the Court does not agree. As Judge
17
Beeler explained, “the redacted information does not include mere expiry dates based on public
18
information or statute. It contains legal analysis regarding when particular drugs might lose
19
exclusivity, specific factors that might impact the potential exclusivity period, and certain caveats
20
regarding potential extensions and other considerations. This analysis constitutes legal advice and
21
is privileged.” Docket No. 623 (Order at 3).
22
The Court emphasizes that the attorney-client privilege has been shown to be applicable to
23
the redacted statements at issue only. Plaintiffs are not prevented from asking Janssen about the
24
basis of business decisions it made. See SCM Corp. v. Xerox Corp., 70 F.R.D. 508, 517 (D. Conn.
25
1976) (stating that “[l]egal advice should remain protected along with ‘nonlegal considerations’
26
discussed between client and counsel that are relevant to that consultation, but when the ultimate
27
decision then requires the exercise of business judgment and when what were relevant nonlegal
28
considerations incidental to the formulation of legal advice emerge as the business reasons for and
5
1
against a course of action, those business reasons considered among executives are not
2
privileged”).
II.
3
CONCLUSION
4
For the foregoing reasons, Plaintiffs’ motion for relief is denied.
5
This order disposes of Docket Nos. 629, 641, and 643.
6
7
IT IS SO ORDERED.
8
9
Dated: July 16, 2021
10
United States District Court
Northern District of California
11
12
______________________________________
EDWARD M. CHEN
United States District Judge
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?