BIOTECHNOLOGY VALUE FUND, L.P. et al v. MERCK & CO., INC.

Filing 11

MEMORANDUM OPINION and ORDER that Plaintiff's Motion to compel Merck's compliance with Subpoena Duces Tecum [dkt. no. 1 ] is GRANTED. Merck is directed to produce the requested documents within ten days; that no attorneys' fees or costs are assessed against any party. Signed by Magistrate Judge Douglas E. Arpert on 8/27/2014. (mmh)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
BIOTECHNOLOGY VALUE FUND,
L.P., et al.,

:
:
:
Plaintiffs,
:
:
v.
:
:
CELERA CORPORATION, et al.,
:
:
Defendants.
:
___________________________________ :

Civil Action No. 14-4046 (PGS)

MEMORANDUM OPINION AND
ORDER

This matter comes before the Court on the Motion of Plaintiff Biotechnology Value Fund,
et al. (“Plaintiffs”) to Compel non-party Merck & Co., Inc. (“Merck”) to comply with the
Subpoena Duces Tecum Plaintiffs served on Merck on April 10, 2014 [dkt. no. 1]. Merck has
opposed this Motion [dkt. no. 4] and Plaintiffs have filed a reply [dkt. no. 9]. For the reasons set
forth herein, Plaintiffs’ Motion is GRANTED.
I.

INTRODUCTION
The facts and procedural history of this case are well known to the parties and need not be

recited at length. Briefly, the underlying action concerns allegations of securities fraud related to
a merger between Celera Corporation and Quest Diagnostics Inc. See Plaintiffs’ Br. at p. 1, dkt.
no. 1. Plaintiffs are seeking damages based on alleged material misstatements or omissions
regarding the value of Defendants’ royalty interests in certain drug assets. Id. Specifically,
Plaintiffs are seeking information regarding the drug asset Odanacatib, which was developed by
Merck. Id. In their efforts, Plaintiffs subpoenaed non-party Merck to obtain documents regarding
any evaluation of Odanacatib’s worth. Merck has refused to provide Plaintiffs with any of the

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requested information. Id. In response, Plaintiffs filed the instant Motion to Compel Merck’s
compliance with the Subpoena [dkt. no. 1].
II.

LEGAL STANDARD
Federal Rule of Civil Procedure 45(d)(2)(B)(I) sets forth the procedure by which the Court

may compel compliance with a Subpoena. In pertinent part, the Rule provides, “[a]t any time, on
notice to the commanded person, the serving party may move the court for the district where
compliance is required for an order compelling production or inspection.” It should be noted that
the permissible scope of discovery under Rule 45 is the same as under Rule 26(b). See In re
Rehberger, No. 13-831 (MLC), 2013 U.S. Dist. LEXIS 71453, at *7 (D.N.J. May 21, 2013) (citing
OMS Invs., Inc. v. Lebanon Seaboard Corp., No. 08-2681 (AET), 2008 U.S. Dist. LEXIS 94165,
at * 2 (D.N.J. Nov. 18, 2008)). If the subpoenaing party shows the documents sought to be
relevant, the resisting non-party must “explain why discovery should not be permitted.” Miller v.
Allstate Fire & Cas. Ins. Co., No. 07-260, 2009 U.S. LEXIS 21225, at *4 (W.D. Pa. Mar. 17, 2009)
(citation omitted).
However, the Court’s ability to force compliance with a Subpoena is limited by Rule 45(d),
which provides:
A party or attorney responsible for issuing and serving a subpoena must take
reasonable steps to avoid imposing undue burden or expense on a person subject to
the subpoena. The court for the district where compliance is required must enforce
this duty and impose an appropriate sanction--which may include lost earnings and
reasonable attorney’s fees–on a party or attorney who fails to comply.
Under Rule 45, “courts have significant discretion” to quash or modify a Subpoena where the
discovery sought is irrelevant, or compliance with the subpoena would be “unreasonable and
oppressive.” First Sealord Sur. v. Dunkin & Devries Ins. Agency, 918 F. Supp. 2d 362, 383 (E.D.
Pa. 2013) (citing Fed. R. Civ. P. 45).
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In applying Rules 26 and 45, the Court must balance several competing factors in assessing
the reasonableness of a subpoena: (1) relevance, (2) the need of the party for the documents, (3)
the breadth of the document request, (4) the time period covered by it, (5) the particularity with
which the documents are described, (6) the burden imposed, and (7) the subpoena recipient’s status
as a nonparty to the litigation. See generally Halpin v. Barnegat Bay Dredging Co., Civ. A. No.
10-3245, 2011 WL 2559678, at *12 (D.N.J. June 27, 2011); OMS Invs. v. Lebanon Seaboard
Corp., No. 08-2681, 2008 WL 4952445, at *3 (D.N.J. Nov. 18, 2008).

III.

DISCUSSION
Plaintiffs seek to compel Merck to produce documents that reflect any analysis or valuation

prepared for (or by) Merck concerning Odanacatib. See Pls.’ Br. at p. 1. Plaintiffs maintain that
Defendants’ allegedly false or misleading statements or omissions with respect to valuing their
royalty stake in Odanacatib make Merck’s information valuable, since such an analysis could shed
light on the extent to which Defendants’ valuations of Odanacatib were erroneous. “As
Odanacatib’s primary developer,” Plaintiffs contend, “Merck occupies a unique position to provide
information touching on the drug’s value that Plaintiffs cannot obtain from any other source.” Id.
at 1. Further, Plaintiffs argue that their narrowed document request does not pose the undue burden
which Defendants allege and, moreover, Defendants fail to meet the requirements to show that
Plaintiffs’ request imposes an undue burden upon them. Id. at p. 7. Lastly, to the extent that Merck
is concerned about the disclosure of potentially sensitive information, Plaintiffs state that they are
willing to enter into a Protective Order with the parties containing an “attorney’s eyes only”
provision to accommodate these concerns. Id. at p. 8.
In its Opposition papers, Merck argues that Plaintiffs improperly seek to compel the
production of confidential and proprietary information from Merck, and that it is wholly irrelevant
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and cannot be used by Plaintiffs to support their claims against Defendants. See Merck’s Br. at p.
1. Merck contends that its analysis and valuation of Odanacatib have absolutely no bearing on
what Defendants knew or what actions they should have taken in recommending the sale of Celera
Corporation, since that information was not provided to or available to Defendants at the time. Id.
at p. 5. In support of its argument, Merck cites a recent opinion, In re Garden City Employees’
Retirement System v. Psychiatric Solutions, Inc., Misc. A. No. 13-238, 2014 WL 272088 at *6
(E.D. Pa. Jan. 24, 2014), in which the Court quashed a third-party Subpoena in a securities fraud
class action on relevance grounds. See Merck’s Brief at pp. 5-6. Merck further asserts that
Plaintiffs’ document requests are overbroad and unduly burdensome. Id. at p. 8. Even after
Plaintiffs narrowed their initial requests, Merck asserts that the requested documents encompass
too wide a range. Id. Merck also argues that the production of these documents would be
extremely expensive and that Plaintiffs are attempting to utilize it as an unpaid expert witness. Id.
at p. 9.
In addition, Merck contends that production of documents relating to any analysis or
valuation of Odanacatib would require disclosure of Merck’s proprietary methodology, which a
Protective Order would not address. See Merck’s Br. at p. 9. Merck claims that since its analyses
and valuations would be relied on substantially by Plaintiffs or Defendants, it would be virtually
impossible for the Protective Order to adequately protect Merck’s interests. Id. at p. 10. Merck
instead puts forth that Plaintiffs could easily hire an expert witnesses to develop an analysis of the
likelihood of commercialization of Odanacatib based on the information in Defendants’
possession. Id. Therefore, Merck concludes, Plaintiffs’ Motion to Compel should be denied, and
Merck should be awarded the fees and costs incurred in responding to the Subpoena and Motion.
See Merck’s Br. at p. 11.

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In their reply papers, Plaintiffs contend that Merck’s analysis of Odanacatib is highly
relevant to the underlying case, since its analysis could serve as an important data point to establish
the true value of the drug. See Plaintiff’s Reply at p. 1, dkt. no. 9. For this reason alone, Plaintiffs
argue that any documents relating to Merck’s analyses and valuations fall within the scope of Rule
45. Id. at p. 2. Further, Plaintiffs assert that Merck misquoted its main source of case law, Garden
City, where the subpoenaed documents were found to be irrelevant due to their remoteness in time.
Here, Plaintiffs argue, no such substantial gap in time exists and Merck does not contend otherwise.
Moreover, since the requested information could bear on both Defendants’ liability and Plaintiffs’
damages, Plaintiffs’ request is not overbroad as it is reasonably calculated to discover important
information. Lastly, Plaintiffs argue that the parties in the underlying litigation have no interest in
violating the Stipulated Protective Order governing confidential information elicited in the case.
See Pls.’ Reply at p. 4. Therefore, Plaintiffs maintain that the Motion to Compel should be granted.
IV.

ANALYSIS
The Court finds that Plaintiffs have met their burden and established grounds to compel

Merck to produce the requested documents in compliance with this Subpoena Duces Tecum
pursuant to Rule 45. As an initial matter, the analyses and valuations of Odanacatib by Merck are
relevant to Plaintiffs’ underlying case, since a substantial aspect of the case pertains to Defendants’
assessments of Odanacatib. Specifically, Merck’s analyses and valuations of Odanacatib could
serve as important data points to establish the true value of the drug. This is especially so, since a
central issue in the underlying case is Defendants’ alleged misstatements regarding the values of
their assets. Contrary to Defendants’ argument, the fact that Merck’s valuations of the drug were
not shared with Defendants does not make Plaintiffs’ requests for documents concerning
Odanacatib’s value irrelevant. See Wyeth v. Abbott Labs., Civ. Act. No. 08-230, 2011 WL

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2429318 at *8 (D.N.J. June 13, 2011). Moreover, Merck’s reliance on Garden City is misguided.
Unlike Garden City, the Court finds that the documents requested by Merck are not so remote in
time to be irrelevant. Indeed, this fact is not contested by Merck.
Furthermore, the Court notes that Plaintiffs have considerably narrowed the initial requests
in the Subpoena, from all documents relating to Odanacatib to only those relating to any analysis
or valuation prepared in 2010 or 2011. See Plaintiff’s Br. at pp. 2-3. Accordingly, the Court finds
that Plaintiffs’ narrowed request does not impose an undue burden on Merck, since the request is
tailored to provide Plaintiffs with information that goes directly to the core of the underlying case.
On the other hand, Merck provides only conclusory claims that do not adequately demonstrate any
undue burden it will incur in producing the requested information regarding Odanacatib.
As a final matter, the Court recognizes Merck’s confidentiality concerns. Nonetheless, the
Court finds that these concerns can be addressed by supplementing the Parties’ existing Stipulated
Protective Order with an “Attorneys’ Eyes Only” provision. Merck’s argument that such a
provision is insufficient is unpersuasive.
V.

CONCLUSION AND ORDER
The Court having considered the materials submitted and the arguments of counsel, and

for the reasons set forth above;
IT IS this 27th day of August, 2014
ORDERED that Plaintiff’s Motion to compel Merck’s compliance with Subpoena Duces
Tecum [dkt. no. 1] is GRANTED. Merck is directed to produce the requested documents within
ten (10) days; and it is
FURTHER ORDERED that no attorneys’ fees or costs are assessed against any party.
s/ Douglas E. Arpert____________
DOUGLAS E. ARPERT, U.S.M.J.
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