Barba et al v. Shire US, Inc. et al
ORDER concerning in camera review of privileged documents and requiring supplemental briefing on the crime-fraud exception. Signed by Magistrate Judge Jonathan Goodman on 5/20/2015. (tr00)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 13‐21158‐CIV‐LENARD/GOODMAN
MONICA BARBA, et al.,
SHIRE US, INC., et al.,
ORDER CONCERNING IN CAMERA REVIEW OF PRIVILEGED
DOCUMENTS AND REQUIRING SUPPLEMENTAL
BRIEFING ON THE CRIME‐FRAUD EXCEPTION
This Cause is before the Undersigned on the parties’ discovery disputes raised in
filings by Plaintiffs [ECF No. 182] and Defendant Shire US, Inc. (“Shire”) [ECF No. 183].
The Court initially scheduled [ECF No. 180] a discovery hearing for April 8, 2015, but
the parties subsequently notified the Court of a resolution to their discovery issues.
Accordingly, the April 8, 2015 hearing was cancelled. [ECF No. 184]. As part of their
resolution though, the parties agreed to an in camera review by the Undersigned of
twenty documents concerning privilege issues, for which the Court established
guidelines. [Id.]. On April 17, 2015, Plaintiffs submitted a memorandum of law
concerning the privilege issues [ECF Nos. 187; 189], and Shire filed a response on April
24, 2015 [ECF Nos. 192; 194].
At the outset, the Undersigned notes that the attorney‐client privilege “is a
narrow exception to the fundamental principle that the public is entitled to every man’s
evidence. . . . Questions concerning the validity and scope of this narrow privilege must
be resolved on a case‐by‐case basis.” In re Grand Jury Investigation No. 83‐30557, 575 F.
Supp. 777, 778 (N.D. Ga. 1983) (citing Garner v. Wolfinbarger, 430 F.2d 1093, 1100 (5th Cir.
1970), cert denied, 401 U.S. 974 (1971); Upjohn v. United States, 449 U.S. 383, 396‐97 (1981))
(internal citations omitted). Accordingly, having reviewed the documents provided by
Shire [ECF Nos. 185‐2; 185‐3; 185‐4],1 Plaintiffs’ memorandum and Shire’s response, the
Undersigned makes the following document‐by‐document determinations as to Shire’s
claims of privilege: 2
1. SHIREBAR2219307‐308/Doc. ID 885729:
Plaintiffs may be correct that statements from Shire’s in‐house counsel, Scott
Applebaum, on the simple status of negotiations are not privileged, Shire has properly
redacted Applebaum’s opinions and analysis concerning negotiations, as those portions
In addition to filing the documents under seal on the CM/ECF system, Shire also
provided a courtesy copy of the documents to Chambers per the Court’s instructions
[ECF No. 184].
The Court applies the Bates numbers provided by the parties to identify each
document. The Undersigned will address the documents in the order that the parties
provided them, however, for seven of the documents, Plaintiffs have provided a single
brief [ECF No. 189, pp. 3‐10], objecting to the privilege designation on the basis of the
crime‐fraud exception. The Court will address those documents in a separate section
below requiring supplemental briefing on several specific questions.
2. Doc. ID 210461:
Privilege overruled. There is nothing in the document ‐‐ a
handwritten note authored by a non‐attorney, labeled in the privilege log as “Undated .
. . Handwritten Notes” ‐‐ indicating privilege except for an attorney’s email address
jotted down. Shire cannot even say for sure the exact circumstances of the note, offering
in their response that it was “used for or taken from a call with Shire’s outside counsel.”
[ECF No. 192, p. 3 (emphasis supplied)]. This is insufficient to convince the
Undersigned of privilege. Shire must produce the document by May 27, 2015.
3. SHIREBAR2162266‐267/Doc. ID 263224‐225: Privilege overruled in part. While
the Court accepts Shire’s position that scripts prepared by or with the advice of counsel
may be attorney work product, see Becker v. E.I. Du Pont de Nemours & Co., No. 87‐cv‐
6866, 1988 U.S. Dist. LEXIS 4940 (E.D. Pa. May 25, 1988), close review of the document
at issue here finds only one specific reference to the advice of counsel. Shire states
broadly that the non‐attorney negotiator who prepared this script for use in
negotiations was advised by counsel, but nothing more is offered to substantiate this.
In Becker, which Shire cites to for the proposition that scripts prepared under the
advice of an attorney may be privileged, the court closely scrutinized portions of the
script at issue and determined that only select portions of it were closely related to the
mental impressions of counsel ‐‐ i.e. attorney work product ‐‐ and were therefore
privileged, however, the remainder of the script was deemed not privileged. Id., at *5‐6.
Accordingly, upon review of this script for use in negotiations, the Undersigned finds
that the small selection (in the second to last standalone paragraph on the second page)
that refers directly to the advice of counsel shall be deemed privileged and may be
redacted, but the remainder of the document shall be turned over to Plaintiffs
unredacted by May 27, 2015.
4. SHIREBAR2219504‐506/Doc. ID 947720:
Privilege sustained. Plaintiffs’
argument mirrors the argument regarding number 1 above. Upon review, the Court
concludes that the redacted communication involving in‐house counsel reflects the
opinions and analysis of counsel (as well as the question of a non‐attorney seeking
advice of counsel), not merely the status of negotiations.
5. SHIREBAR2219271/Doc. ID 263197‐199:
Privilege sustained. The redacted
portion of this document is a page from a presentation by Shire’s outside counsel
outlining potential litigation outcomes, which is clearly protected by the privilege. The
page also features handwritten notes by a non‐attorney Shire employee that are directly
derived from the privileged communication of counsel, and so should also be protected
8.3 Doc. ID 262859‐860:
Privilege sustained. Plaintiffs
document itself is subject to their crime‐fraud exception argument, which is addressed
below, but also contend that, at minimum, the handwritten notes of a non‐attorney
The numbering here skips to number 8 from 5 because, as noted above, the
claims of privilege as to certain documents are objected to by Plaintiffs in a single brief
on the crime‐fraud exception. This also occurs below when the numbering skips from
12 to 16.
Shire employee on the document are not subject to privilege because they do not reflect
or contain legal advice. As Shire states, these notes are derived from the document itself
‐‐ a document that Plaintiffs concede is privileged, except for the crime‐fraud exception
‐‐ and are reflective of questions and advice sought by the non‐attorney. So, as far as the
document itself is protected by privilege, so are the handwritten notes based upon it.
9. Doc. ID 335254‐255:
Privilege sustained. Plaintiffs
argument from number 8 above. The Undersigned’s review of the document reveals
that, aside from stray marks on the corners of the pages, it does not appear that there
are handwritten notes of a non‐attorney to be considered non‐privileged
communications (which Plaintiffs argued in number 8), so that argument is not under
consideration here. The crime‐fraud exception argument is addressed below.
10. Doc. ID 263229:
Privilege sustained. Shire asserts privilege based on these
handwritten notes being recorded by a non‐attorney at a board meeting featuring
specific legal advice from outside counsel, while Plaintiffs assert that the Court should
not just blindly accept the representation that this reflects advice from counsel if it is not
specifically noted as such. Upon review, it is readily apparent that these notes
specifically document legal repercussions of potential company actions, and, as such,
the Undersigned accepts these notes as reflecting legal advice of outside counsel, as
11. Doc. ID 272611‐614:
Privilege sustained. Shire asserts privilege over these
handwritten notes by a non‐attorney on the basis that they reflect the legal advice of in‐
house counsel presented at a meeting. Plaintiffs assert a similar argument as was
presented for number 10 above. Upon review, it is readily apparent that the document
notes in‐house counsel’s presence at this meeting and predominantly outlines litigation
timelines and potential outcomes. In addition, the notes themselves say “priviledged
(sic)/conf’d.” As such, the Undersigned accepts these notes as reflecting the
communication of legal advice to Shire.
12. Doc. ID 263230‐232:
Privilege sustained. Plaintiffs incorporate the same
argument for this as they asserted for number 11 above. While the Undersigned notes
that this document is not “handwritten notes,” as Shire refers to it [ECF NO. 192, p. 5], it
is readily apparent that this document is entirely focused on potential litigation
outcomes and settlement strategies, while featuring in‐house counsel’s name at the very
beginning. Therefore, the Undersigned accepts the assertion that this document reflects
the communication of legal advice from Shire’s in‐house counsel.
Privilege overruled in large part.
In this string of emails, Shire asserts that a non‐attorney employee solicits and
receives legal advice from the Shire legal team. However, review of the document
reveals no such advice was solicited, nor was any given. In fact, no attorneys are even
carbon copied in the email chain for four out of the six emails. And in the emails in
which counsel are copied, no communication is directed at them with regard to legal
advice or concerns. Accordingly, Shire’s assertion of privilege over large swaths of this
email chain should be overruled. However, the Court will permit Shire to keep the third
full paragraph on the second page of this document (beginning with “3) Proposed . . . ”)
redacted, as it specifically invokes legal advice that had been communicated to Shire
employees from counsel. The remainder of the document however shall be unredacted
and produced to Plaintiffs by May 27, 2015.
Privilege overruled in part. Similar to the
string of emails in number 16 above, the Undersigned finds that much of what Shire has
redacted as privileged is not protected. First, the initial three emails in the sting do not
allude specifically to any legal advice, nor are any attorneys copied in the
communications. Accordingly, the list in the very first email (found on page labeled
“CIT021308”) should be unredacted and produced. Large swaths of text throughout the
remainder of the email chain have been inappropriately redacted as well. While there
are counsel who are carbon copied on much of the communications, only one email is
drafted by an attorney ‐‐ and considering the contents of it, including specific allusions
to advice from outside counsel ‐‐ and only one other email contains specific references
to the advice of outside counsel. These specific portions ‐‐ the first full paragraph on the
page labeled “CIT021307” (beginning with “3) Proposed . . . “) and the contents of the
email drafted by in‐house counsel James Harrington that runs from the bottom of the
page labeled “CIT021305” to the top of the page labeled “CIT021306” ‐‐ may remain
redacted, while the rest of the email chain shall be produced to Plaintiffs in unredacted
form by May 27, 2015.
The parties briefing refers to a document attached to the email chain that was
initially not presented to the Court for review. The Undersigned issued an Order [ECF
No. 195] requiring the parties to either submit that attached document or to notify the
Court that there was no such document. The Court received the document from Shire’s
counsel on May 12, 2015, which is labeled “CIT021317‐324.”
Plaintiffs argue that the attached “Citizens Petition” document is not privileged
under the “draft document” rule, which they say was applied in a similar case, FTC v.
Reckitt Benckiser Pharms., Inc., No. 3:14mc5, Dkt. Nos. 42‐43 (E.D. Va. Mar. 10, 2015). The
Undersigned’s review of that case however does not find support for Plaintiffs’
position. In that case, a court in the Eastern District of Virginia stated the Fourth
Circuit’s view that “the attorney‐client privilege with respect to confidential
communications does not apply to published documents and the underlying details
and data if, at the time the communication was made, the client intended that the
document was to be made public.” Id. at p. 15.
While Plaintiffs may be entitled to the draft of a document that was ready to
publish, it is clear from the email exchange that this document is attached to a
document which was still under consideration and in the drafting process. The specific
email that the document is attached to is from a non‐attorney and addressed directly to
two attorneys (one in‐house counsel and one outside counsel) while copying two more
(in‐house counsel). Further, the communication in that email calls the attached
document the “latest version” and notes that the parties involved in the email will talk
about the contents of the document at a later date. From the Undersigned’s perspective,
this is a clear indication that the document is not ready to publish and therefore is not
subject to the “draft document rule,” as Plaintiffs argue (if the Undersigned agreed that
the rule was even applicable in this Circuit). Accordingly, CIT021317‐324 should remain
protected by privilege.
Privilege sustained. Plaintiffs ask the Court to
evaluate whether the section of the email addressed to “Jim H” ‐‐ in‐house counsel,
James Harrington ‐‐ is seeking out his advice in a legal capacity or in his corporate
capacity. Review of the redacted text indicates that the advice sought is legal in nature,
so that section of the email should remain redacted.
Not mentioned in the parties’ briefing is a document attached to the email, which
is wholly redacted. Because Plaintiffs have not contested the status of this document, it
too shall remain privileged.
Privilege overruled in part. This
email chain features a redacted email that is identical to one from numbers 16 and 17
above. As was found there, certain text must be unredacted. On the page labeled
“CIT011218,” Shire must unredact and produce by May 27, 2015, three paragraphs
under the heading “1) Scientific Rationale and 2) Interdependencies with Concerta,” as
these paragraphs neither seek nor express any legal advice of counsel. The remaining
paragraphs in that email shall remain redacted.
On the page labeled “CIT011217,” Shire has redacted one paragraph that it
claims reflects legal advice. Review of this paragraph reveals that it does appear to
reflect legal advice, as it recounts the outcome of a meeting with the legal team
concerning the current status of the preparation of the “Citizen’s Petition” and a plan
forward. The Undersigned determines that this sufficiently reflects legal advice and
should remain protected by privilege.
The email attachments (CIT011220‐223) are properly redacted as protected by
privilege. The attachments are timelines of the preparation of the Citizen’s Petitions and
extensively reflect the timing of legal work and legal consultations. Accordingly, this
should remain protected by privilege.
Privilege sustained. Plaintiffs assert the same
argument as in number 17 with regard to the email attachment, claiming that the “draft
document rule” eliminates any protection from privilege. Just as the Undersigned noted
above, even if that rule were applicable in this Circuit, this document is still protected
by privilege because it is clear from the text of the email seeking review and comments
that it is still in the drafting phase and not yet ready for publication. Accordingly, Shire’s
assertions of privilege are sustained.
Crime‐Fraud Exception: Request for Supplemental Briefing
Upon in camera inspection of the documents with the following Bates numbers,
the Undersigned sustains Shire’s claim of attorney‐client privilege: Doc. ID 262448‐462;
Doc. ID 0029768‐69; Doc. ID 262859‐860; Doc. ID 335254‐255; Doc. ID 319749‐768; Doc.
ID 262411‐425; Doc. ID 262847‐848.
Plaintiffs, however, assert that despite the existence of attorney‐client privilege,
the documents are subject to the “crime‐fraud exception” to the privilege, arguing: (1)
that Shire engaged in a “reverse payment scheme;” (2) that this ‘scheme’ violated
antitrust law, constituting a fraud; and (3) that this ‘scheme’ was furthered with the
advice of counsel. Accordingly, Plaintiffs argue that the advice counsel provided
concerning the alleged reverse payment scheme ‐‐ including documentation of advice
concerning litigation, negotiation and, ultimately, settlement with two generic drug
producers ‐‐ constitutes an exception to privilege and thus requires Shire and its counsel
to relinquish all documents under that category.
The core of Plaintiffs’ argument for the application of the crime‐fraud exception
mirrors their substantive claims in this lawsuit; specifically, that Shire engaged in anti‐
competitive behavior to maintain its monopoly over prices of certain prescription
drugs. Thus, the ultimate determination as to whether the crime‐fraud exception should
apply seemingly requires the resolution of the very same factual and legal issues that
have not yet been decided by a jury and/or the presiding District Court judge.
In essence, Plaintiffs’ argument for the application of the crime‐fraud exception is
a veiled, preliminary summary judgment motion. Plaintiffs have boiled down a core
portion of their substantive claims to just under seven pages of briefing.4 And while
Plaintiffs have presented the Court with significant documentation of the alleged
“scheme” and citations to several cases outlining the parameters of the crime‐fraud
exception,5 a core issue is not addressed in the supplied briefing.
It is a highly‐technical, legal and factual determination as to whether Shire
committed fraud/engaged in anti‐competitive behavior through the use of a reverse
payments scheme. To determine if there is a reasonable basis to suspect the privilege
holder committed fraud, this Court would be making a judgment on the very same
Plaintiffs have attached more than 800 pages of exhibits to their briefing on the
crime‐fraud exception. Plaintiffs have taken significant liberties with the Undersigned’s
Order [ECF No. 184] allowing them to submit a memorandum of law on the privilege
issues that was to “be no longer than ten double‐spaced pages, excluding signature
block and certificate of service.” The Undersigned will not strike the exhibits, however,
Plaintiffs should note that the Court’s agreement to review 20 documents in camera for
privilege issues was not an invitation to submit 30 additional documents of varying
length ‐‐ from 2 to 101 pages each ‐‐ for the Court to make such a judgment. Further, the
Court’s request for supplemental briefing described below is similarly not such an
While Plaintiffs have presented ample case law indicating that the crime‐fraud
exception is an argument that a court can consider, the precedent that Plaintiffs have
presented is underwhelming as to whether the Court should consider and actually apply
the exception in this specific context, since it is very much a case‐by‐case determination.
case‐dispositive subject matter that the District Court and/or a jury will be addressing in
the final disposition of the case itself. Accordingly, the Undersigned ORDERS that the
parties shall, by May 27, 2015, supply supplemental briefing of no more than ten
double‐spaced pages, excluding signature block and certificate of service, addressing
the following questions:
Does Plaintiffs’ argument that the crime‐fraud exception applies in this
case require the very same factual and legal determinations as Plaintiffs’ core claims in
the complaint? For instance, to apply the crime‐fraud exception, would the
Undersigned necessarily need to resolve the legal question as to whether reverse
payment schemes were illegal under Eleventh Circuit case law at the time Shire entered
into settlements with Barr and Impax/Teva? If the Undersigned determined that reverse
payment schemes were, in fact, illegal in the Eleventh Circuit at that time, then would
the Undersigned also need to make the specific factual finding that Shire’s actions
constituted violations of the Sherman Act, thus, in essence, finding Plaintiffs have met
their burden for judgment in the case as a whole on all or some of their claims?
What specific standard of proof must Plaintiffs meet to establish that a
crime and/or fraud occurred in this case to implicate the exception to privilege?
What effect would this Court’s determination that the crime‐fraud
exception applies ‐‐ thus, finding that Shire, as privilege‐holder, engaged in fraudulent,
anti‐competitive behavior ‐‐ have on the District Court’s disposition of the case
generally? Would such a determination by a magistrate judge infringe on the authority
of the District Court to make that finding itself? For instance, what impact would a
finding by this Court on the legal issue of whether reverse payment schemes were
illegal under Eleventh Circuit case law at the time Shire entered into settlements have
on a potential ruling at the summary judgment stage by the District Court judge as to
that same issue?
Is there case law where a court has applied the crime‐fraud exception
when its application required the court to make case‐determinative rulings on the
merits of the claims in that very case? Are there cases where a court has declined to
apply the exception for that reason or on similar grounds?
Pursuant to the Court’s in camera review, Shire shall produce to Plaintiffs the
specific unredacted documents ordered above by May 27, 2015. By that same date, at
5:00 PM, both parties shall submit the supplemental briefing ordered above. The Court
declines to impose attorneys’ fees on any party concerning this review because both
sides prevailed on some issues.
DONE AND ORDERED in Chambers, in Miami, Florida, May 20, 2015.
Copies furnished to:
Honorable Joan A. Lenard
All Counsel of Record
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?