SANDOZ INC. v. LANNETT COMPANY, INC.

Filing 82

MEMORANDUM. SIGNED BY HONORABLE GERALD A. MCHUGH ON 7/16/21. 7/16/21 ENTERED AND COPIES E-MAILED.(amas, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
SANDOZ INC.
v.
LANNETT COMPANY, INC.
McHUGH, J.

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CIVIL ACTION NO. 20-3538

MEMORANDUM

July 16, 2021

Defendant Lannett Company, Inc. has filed a motion to compel documents produced as
part of a parallel arbitration proceeding between Plaintiff Sandoz Inc. and Cediprof, Inc. a thirdparty to this litigation. For the reasons below, the Motion will be granted in part and denied in
part.
In its First Request for Production, Lannett sought:
All documents, including, but not limited to, pleadings, briefs, communications,
document productions, expert reports, and other discovery material, that are
submitted, produced, or otherwise tendered by Sandoz in connection with the
Arbitration.
ECF 72-3 at 9.
Sandoz opposes Lannett’s motion to compel all documents responsive to this request,
arguing that Lannett has failed to demonstrate relevance and that disclosure would impair the
confidentiality of the Cediprof-Sandoz arbitration. See Pl.’s Resp. Opp’n Mot. Compel, ECF 75.
A. Confidentiality
Sandoz first claims that Lannett’s motion would violate the terms of the Cediprof-Sandoz
protective order, along with important federal interests regarding the confidentiality of arbitration.
I cannot agree.

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The Cediprof-Sandoz protective order does not bar this Court from granting Lannett’s
motion to compel. The order contains two dispositive clauses:
Nothing contained in this Order, however, will affect or restrict the rights of any
Party with respect to its own documents or information produced in this Arbitration
or to documents publicly filed.
…
Nothing in this Order will prevent any Party from producing any Protected
Discovery Material in its possession in response to a lawful subpoena or other
compulsory process, or if required to produce by law or by any government agency
having jurisdiction, provided that such Party gives written notice to the Producing
Party as soon as reasonably possible.
ECF 75-2, ¶¶ 14, 15.
The Agreement indicates that Sandoz retains all rights with respect to the information that
it produces in the arbitration. Because Lannett solely requests material that Sandoz has tendered
in connection with the arbitration, requiring disclosure of these documents would not violate the
terms of the protective order. See Malibu Consulting Corp. v. Funair Corp., 2007 WL 173668, at
*4 (W.D. Tex. Jan. 18, 2007) (“Certainly, Funair could not breach an agreement between it and
Raytheon by producing its own confidential information in this litigation”). A comprehensive
protective order has also been entered in this case, which will ensure that Sandoz’s materials
remain confidential. See ECF 46.
Furthermore, after weighing Lannett’s interest in discovery against the general federal
interest in protecting the confidentiality of arbitrations, I conclude that the requested discovery is
warranted. Sandoz cites several instances where courts have denied discovery of arbitration
materials. But these cases are distinguishable, as the plaintiffs there sought information from an
earlier arbitration proceeding initiated by a third-party against the same defendant. See, e.g.
Fireman’s Fund Ins. Co. v. Cunningham Lindsey Claims Mgmt., Inc., No. 03-cv-0531, 2005 WL

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1522783, at *4 (E.D.N.Y. June 28, 2005); In re W.R. Grace & Co., 475 B.R. 34, 192 (D. Del.
2012); Pasternak v. Dow Kim, No. 10-cv-5045, 2013 WL 1729564, at *1 (S.D.N.Y. Apr. 22,
2013). In denying discovery, the courts attempted to safeguard the expectations of the original
parties, who lacked notice that the arbitration materials would be used in a subsequent,
unconnected proceeding. This concern is diminished here because Sandoz itself filed suit against
Lannett shortly after it filed a demand for arbitration against Cediprof. Given the close relationship
between this matter and the arbitration, Lannett’s interest in discovery is compelling and outweighs
any institutional concerns about preserving the confidentiality of arbitration proceedings. 1
B. Relevance
“Parties may obtain discovery regarding any nonprivileged matter that is relevant to any
party's claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). 2
Evidence is relevant if its existence simply has “any tendency to make a fact more or less probable
than it would be without the evidence” and “the fact is of consequence in determining the action.”
Fed. R. Evid. 401(a)-(b).
The arbitration materials are certainly relevant to Lannett’s defense against Sandoz’s
tortious interference claim. Sandoz has alleged that Lannett induced Cediprof to devise a
pretextual means of terminating Sandoz’s contract early, in exchange for a payment for $20
million. See Compl. ¶¶ 27, 67, ECF 1. Sandoz’s demand for arbitration against Cediprof mirrors
that position, advancing a claim that Cediprof’s termination of its relationship with Sandoz was
wrongful. Id. ¶ 42. Because these claims are closely related, the documents produced or

Because I hold that the information is discoverable, I need not address the parties’ arguments with
respect to whether confidentiality was waived.

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Sandoz does not argue that proportionality is at issue here. In any case, production would not be
burdensome.
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exchanged during the arbitration could tend to support other reasons why Cediprof sought to
terminate its relationship with Sandoz. I will therefore grant Lannett’s motion with respect to the
materials requested, with the exception that documents pertaining solely to Cediprof’s
counterclaims against Sandoz need not be produced. This ruling extends as well to the depositions
and expert reports in the arbitration, once they are produced.
An appropriate Order follows.
/s/ Gerald Austin McHugh
United States District Judge

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