Federal Trade Commission v. Reckitt Benckiser Pharmaceuticals, Inc.
Filing
104
MEMORANDUM OPINION. See Opinion for details. Signed by District Judge Robert E. Payne on 08/01/2016. (ccol, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division
FEDERAL TRADE COMMISSION,
Petitioner,
V.
Misc.
INDIVIOR,
No.
3:14mc5
INC.,
Respondent.
MEMORANDUM OPINION
This
matter
is
before
the
Court
on
the
REPORT AND RECOMMENDATIONS OF SPECIAL MASTER
the
SUPPLEMENT
SPECIAL
MASTER
"Special
SECOND
(Docket
Master's
FEDERAL
TRADE
RECOMMENDATION
("MOTION
INTERIM
No.
COMMISISON'S
OR,
INC.'S
INTERIM
SUPPLEMENT
IN
THE
CORRECTED
REPORT
THERETO
RECOMMENDATION").
73)
Report").
TO ADOPT/PRODUCE")
INDIVIOR,
SECOND
TO
AND
REPORT
MOTION
AND
before
TO
ADOPT
ALTERNATIVE,
(Docket
No.
OBJECTIONS
TO
74)
(Docket
No.
83)
71)
RECOMMENDATIONS
referred
the
Court
SPECIAL
ORDER
and
the
AS
to
is
and
OF
as
the
MASTER'S
PRODUCTION
RESPONDENT
TO THE SPECIAL
RECOMMENDATIONS,
INTERIM
(Docket No.
(collectively
Also
SECOND
WELL
MASTER'S
AS
("OBJECTIONS
THE
AND
BACKGROUND
The
Federal
Trade
Investigative
Demand
Pharmaceuticals,
Inc.
Commission
(''FTC")
("CID")
to
("Reckitt").
an
ORDER entered
Indivior,
of
Inc.
During
the
on
May
23,
2016
Benckiser
course
Inc.
Civil
of
and,
(Docket
these
pursuant
No.
100),
was substituted as the party respondent in place
Reckitt.
briefing
herein
a
Reckitt
proceedings Reckitt was acquired by Indivior,
to
issued
However,
herein
because
refer
to
the
the
documents
respondent
and
as
most
of
Reckitt,
the
that
appellation will be retained.
Pursuant
Reckitt
had
to
the
engaged
CID,
in
the
unfair
respect to its branded drug,
TRADE
DEMAND
COMMISSION
(Docket
FOR
No.
AN
2)
FTC
methods
Suboxone.
ORDER
("FTC
sought
of
determine
whether
competition
with
PETITION OF THE FEDERAL
ENFORCING
Initial
to
CIVIL
Petition").
INVESTIGATIVE
The
conduct
under investigation was particularized as follows:
investigating whether Reckitt abused public
regulatory processes,
including
filing
a
citizen petition with the U.S. Food and Drug
Administration ("FDA") and negotiating with
competing
manufacturers,
to
maintain
its
monopoly
in the market
for
Suboxone,
an
opioid
addiction
treatment
distributed
through prescription, rather than by clinicbased methods.
FTC Initial
produced
Petition,
almost
p.
600,000
1.
In
response
documents,
but
to
the
withheld
CID,
Reckitt
approximately
24,000 documents on the ground of attorney-client privilege.^
The
FTC took the view that
certain types
of documents were not
privileged and sought production of those documents.
IN
SUPPORT
ORDER
OF
ENFORCING
24).
The
Fourth
OF
THE
therein
Reckitt
documents
FEDERAL
INVESTIGATIVE
contended
Circuit,
documents
Fourth
CIVIL
FTC
privileged,
the
PETITION
were
COMMISSION
(Docket
under
improperly
not
sought
Circuit
DEMAND
that,
was
that
TRADE
by
the
FTC
that,
"if
a
client
at
fell
MEMORANDUM
the
FOR
Nos.
23
and
law
of
the
withholding,
all
privileged
within
the
communicates
AN
as
because
rule
of
the
information
to
his attorney with the understanding that the information will be
revealed
to
underlying
others,
the
data
the privilege."
(4th Cir.
871,
875
information,
which was
to
United States v.
1994)
be
as
took
well
as
published'
Under Seal,
(quoting United States v.
(4th Cir.
Reckitt
that
^the
will
33
details
not
enjoy
F.3d 342,
Under Seal,
748
354
F,2d
1984).
the
view
that
decisions
of
other
circuits
counsel a different result and that the cases relied upon by the
FTC
have
decision
been
in
overruled,
In re:
sub
silento,
Grand Jury Subpoena,
by
the
341
Fourth
F.3d
331
Circuit's
(4th Cir.
2003).
^ At
the
early
stages
of
this
litigation,
the
number
of
privileged documents was asserted to be approximately 20,000,
but subsequently the number has been reduced to approximately
24,000.
By Memorandum Opinion issued on March 10,
42)
by
(^^March 10 Opinion"),
Reckitt
applied
and
in
the
(1)
2015
(Docket No.
the Court rejected the arguments made
held
that
production
the
rules
of documents
of
privilege
herein would be
to
as
be
set
forth under appropriate law of the Fourth Circuit;
(2)
Reckitt to identify and produce all documents that,
by virtue of
the
rulings
review
by
in
a
the
Memorandum
Special
Master;
Master would review the
with
appropriate
43) .
the
Opinion,
and
(3)
required
ordered
remaining documents
Fourth Circuit
decisions.
in
required
no
further
a
Special
that
camera in accord
(ORDER,
Docket
No.
After affording the parties an opportunity for input into
selection
review
of
of
the
a
Special
remaining
appointed a
Special Master
was
with
tasked
documents
make a
as
Master
the
to
accomplish
privileged
(Docket No.
responsibility
required by the
the
documents,
48) .
document
the
The Special Master
to
review
the
law of
Court
the
privileged
Fourth Circuit
and
to
Report and Recommendation respecting the results of that
review.
After
evidentiary
documents,
reflecting
documents.
consulting
hearing,
fully
and
with
receiving
the
parties,
briefing
and
holding
an
reviewing
the
the Special Master issued the Special Master's Report
the
results
of
Those documents
the
were
in
camera
review
selected by Reckitt,
instruction of the Special Master,
as documents
of
3,704
upon the
related to the
preparation of
the
are
conununications
follow
certain
up
public
citizen's
relations
petition
and other
between
documents
Reckitt
and
concerning
petition and the withdrawal of Suboxone tablets
and documents
the
relating
manufacturers
to
of
the
negotiations
generic
documents
competing
the
the
FDA
and
citizen's
from the market
between
drugs
that
to
Reckitt
and
establish
a
Joint Risk Evaluation and Mitigation Strategy (the "shared REMS"
documents)
for
the
1,695
documents.
Those
documents
were
selected to be reviewed first by the Special Master because they
are the focus
of the
FTC's
Initial
Petition.
The Special Master made rulings on the privilege claims of
the 3,704 documents and those recommendations are set out in the
Second
Master's
Report
Special Master's
Report
particular
note
and
its
attachments.
contained certain
respecting
the
nature
privilege log prepared by Reckitt.
First,
source
findings
and
If
privilege
log
documents
is
with
that
reliability
They are:
the privilege log is not a
of evidence describing the
documents.
Further,
the
reliable
withheld
condition
regard
similar
to
to
the
of
the
remaining
that
for
the
documents reviewed in this report,
i t is
foreseeable that the review process will be
time consuming and costly, an outcome the
parties presumably wish to avoid.
Second,
of
the presence of a
^outliers'
topics
did
purportedly
^Citizen's
folders
that
is
Petition'
troublesome.
significant number
not
relate
captured
and
The
in
^Shared
to
the
the
REMS'
overinclusion
are
of
the
of
the
of
documents
'Shared
in
REMS'
the
^Citizen's
electronic
Petition'
folders
and
invites
the
obvious
question:
was
there
equallysignificant
under-inclusion?
This
issue
must be addressed prior to the review of
additional
documents.
Third, many documents fail to evidence any
privileged
communications;
some
contain
substantial
non-privileged
material
along
with privileged communications.
If the nonprivileged portion of the first tranche of
3,704 documents
is representative of the
remaining documents populating the privilege
log, then a significant number of documents
continues to be withheld without any basis.
In addition,
the Special Master made a
certain documents
(Appendix 1)
with
redactions
or
listed
that
without
in
Appendix
the
parties
directed;
the
review
Special Master's
required
to
redactions
as
indicated;
withheld
items
from
on
that
the
production
Appendix
3
to
and
documents
the
FTC;
report
as
to
Report.
After
the
parties
complied with
the Special Master recommended that Reckitt be
produce
certain
parties
be
be produced to the FTC by Reckitt
and that the parties identify any clerical errors in
the instructions,
made
2
recommendation that
the
all
extent
clerical
respecting
the
documents
listed
indicated.
corrections
request
The
on
Special
following
for
Appendix
the
3
with
Master
also
advices
identification
of
of
the
clerical
errors.
Thereafter,
the
FTC
filed
its
MOTION
TO
ADOPT/PRODUCE
wherein the FTC agreed with the Special Master's recommendations
and
argued
for
Alternatively,
adoption
the
of
the
Special
Master's
Report.
FTC urged that Reckitt should be ordered to
produce all the requested documents because the Special Master's
Report established that the privilege
log does not sufficiently
support the claims of privilege.
Reckitt
filed
Nos.78 and 83)
ADOPT/PRODUCE
its
OBJECTIONS
AND
RECOMMENDATIONS
(Docket
as well as its opposition to the FTC's MOTION TO
(Docket No.
87) .
In particular,
Reckitt advised
that it was "willing to accept the Special Master's report and
recommendations
Second
2.
to
as
to
Interim Report
Also,
the
3,704
documents
and Recommendations"
Reckitt advised that it was
preserve
its
Special Master
assertion
that
the
addressed
(Docket
in
83),
No.
the
p.
filing objections merely
legal
test
applied
(pursuant to the decision of the Court)
by
the
was not
the proper test to be applied.
Reckitt also made a suggestion for further proceedings.
begin, Reckitt advised that,
in Step 1,
remaining
documents
in
.
the
19,000
recommendation
believes
the
.
.
Special
using
Master
light
same
would
To
it would "categorize the
of
the
Special
standards
apply
with
that
any
Master's
[Reckitt]
redactions
intended to be consistent with the redactions recommended by the
Special Master with respect to the initial documents."
Reckitt
advised that it had begun this process, and that the process was
expected to be completed in approximately 45 days.
Next,
would
Reckitt proposed that,
review
documents
legal
in
rule
[Reckitt]
course
Reckitt's
order
as
the
estimates
to the
Thirdly,
to
in Step 3,
"proposed
confirm
Special
would
Special
in Step 2,
treatment
that
Master
take
it
of
these
accords
would
another
Master's
the Special Master
to
apply
two
the
it,
a
months,
19,000
Court's
process
subject
availability during
that
the Special Master would issue a
of
time."
Report and
Recommendation as to the remaining 19,000 documents.
In
that
support
of
these
recommendations,
Reckitt
represented
it:
expects
that
it
will
be
position after the Special
recommendations
on
the
in
a
similar
Master issues
second
set
of
documents as [Reckitt] is now with respect
to
the
first
set,
i.e.
that
[Reckitt]
disagrees with the legal rule underlying the
Special Master's
recommendations
but will
not
dispute
the
recommendations.
If
[Reckitt's] expectation is correct, i t would
therefore not object to the Special Master's
second
also
the
set
of
withdraw
first
recommendations
the
set
of
present
and
it
objections
documents
that
are
would
as
to
filed
for preservation purposes,
(Docket No.
83, p. 11)
(emphasis added).
the objections articulated by Reckitt,
The FTC disagreed with
but did not object to the
Reckitt proposal for reviewing the remaining documents.
The
Court
determined
to
allow
Reckitt
to
proceed
as
proposed in Step 1 while the Court reviewed the FTC's MOTION TO
ADOPT/PRODUCE
and
considered the
8
FTC's
alternative
request
for
relief.
On June 22,
2016,
counsel for Reckitt advised that Step
1 of its process has been completed.
DISCUSSION
Resolution of Reckitt's objections to the Special Master's
Report proceeds from the
fundamental
premise that the objection
must identify with specificity that part of the Special Master's
Report
the
to which
objection
objection is
that
is
taken and must
made.
Only
if
clearly articulate
those
requisites
are
satisfied can there be meaningful review by the district court.
Those fundamental precepts are of a special importance where,
here,
the
review
of
Special
more
Master
than
has
3,700
conducted
documents
documents that must be produced,
a
has
made
findings
document-by-document
and
has
specified
the
many of which must be redacted
in part before being produced and where,
Master
as
respecting
as
the
here,
the
individual
Special
documents
that are the subject of the Special Master's Report.
In
Reckitt
reality,
Reckitt
challenges
the
has
made
legal
but
standard
two
applied
Master in making the privileged review.
challenge
is
simply
a
re-argument
previously advanced by Reckitt
Court)
objections.
by
However,
of
the
First,
the
Special
in fact,
legal
that
position
{and previously rejected by the
respecting the applicable law that controls the issues of
privilege
presented
here
as
those
principles
were
set
forth
fully in the March 10 Opinion.
A review of the Special Master's
Report reflects that the Special Master faithfully and carefully
applied
the
conducting
objection
charter
principles
the
to
set
the
fact
in
of
review
forth
these
some
that
required him to
the
do
is
the
March
3,700
Special
10
documents.
Master
simply a
Opinion
way of
did
in
An
what
his
re-arguing the
matters as to which Reckitt did not prevail in the motion that
was resolved by the March 10 Opinion and its implementing Order.
Second,
Reckitt
raised
SM_03676 and SM_00156.
objections
Reckitt
says
to
that
two
documents:
these documents
"representative examples" of the point that i t makes.
where,
as here,
many of which have some redactions,
objections cannot be presented by exemplar.
be
presented
Special
having
Master
failed
However,
the Special Master has made individual findings
as to individual documents,
must
are
specifically
as
to
to
do
each
to
the
document
that,
has
waived
Instead,
judgments
objections
made
individually.
all
by
the
Reckitt,
objections
to
the
judgments made by the Special Master except as to SM_03676 and
SM_00156.
And,
Special
intent
To those objections, we now turn.
as
Master
to
83,
p.
those
8) .
documents,
erred because
publish,
communicated,
No.
to
as
rather
As
to
these
than
the
he
FTC
the
Reckitt
based
the
documents,
objects
determination
based on
communication
the
itself."
correctly explained,
10
that
of
the
an
"facts
(Docket
both documents
involved
email
Petition,
and
Applying the
recommended
and,
strings,
the
test
that
other
relating
related
to
to
the
the
documents
be
the
produced
in
sets
Citizen
negotiation.
Special Master
redacted
form,
allowed some messages in the string to remain
withheld while requiring disclosure of others.
correctly
2012
REMS
established by the Court,
both
in so doing,
one
forth
the
rule
that
the
Further,
the FTC
confidentiality
of
attorney-client communications as respecting drafts of documents
that are published does not depend on the subjective intent of
the client with respect to each isolated communication.
Rather,
the
to
question
is
whether
the
communication
relates
the
preparation of a document that the client in fact does intend to
publish,
Seal,
as
shown by
748 F.2d 871,
the
875
record.
(4th Cir.
See
1984).
United
States
v.
Under
The appropriate manner
for testing that question "must look to the services which the
attorney has been employed to provide and to determine if those
services would reasonably be expected to entail the publication
of the
client's
communications."
Id.
As to both documents, SM_003676 and SM_00156, the record is
clear beyond question that the services rendered by the two law
firms
involved
and
negotiating
the
REMS
(preparing and
with
matters)
filing the 2012 Citizen Petition
Reckitt's
would
generic
reasonably
be
competitors
expected
publication of the client's communications.
11
to
In fact,
respecting
entail
the
the record
indicates that Reckitt agreed with that proposition at the May
8, 2015 evidentiary hearing (Docket No.
Reckitt's
argument
overlooks
63 at 26-27, 34, 36).
two
other
essential
points.
First,
it ignores the settled principle in this circuit that an
intent
to disclose
the data" therein.
and n.
7.
Master
Thus,
erred
a
document
includes
United States v.
the
"details
Under Seal,
underlying
748 F.2d at 875
the contention made by Reckitt that the Special
in
looking
for
an
intent
to
publish
the
facts
communicated rather than the intent to publish the communication
itself
is
occurs,
of
error.
is
it
nature
in
impermissible
the
Secondly,
to
attorneys'
where
attempt
publication
to
re-characterize
In
re
the
Grand
Jury
Proceedings,
Thursday's Special Grand Jury September Term,
1991,
33 F.3d 342,
355
(4th Cir.
services.
actually
1994).
In sum, the specific objections made by Reckitt are without
merit
and are overruled.
Special
Accordingly,
his
and having
Master's
Report
and
recommendation
Special Master's
Report
will be adopted
reviewed the
in
and all
detail,
objections
the
by
Reckitt will be overruled.
That
said,
production
outstanding
and what
and
remaining for
identified
there
to
waiting
remains
do
about
review
resolution is
difficulties
the
and
question
the
by
the
19, 000
the
when
Master.
contention of the
in
to
documents
Special
inadequacies
12
of
the
order
that
are
Also,
FTC that
the
privilege
log
constitute
Reckitt.
a
waiver
as
to
all
privileged
claims
by
Those questions will be resolved as set forth below.
Having
reviewed
the
MOTION
OBJECTIONS AND RECOMMENDATIONS,
TO
ADOPT/PRODUCE
as well
Report, the Court is of the view that,
as
suggested
by
Reckitt,
has
been
and
the
the Special Master's
to some extent,
suggestion for further proceedings have merit.
as
advanced
Reckitt's
To begin.
completed.
Step 1
Therefore,
the
parties shall proceed forthwith to communicate with the Special
Master as to how,
Reckitt's
to
if at all,
recommendations.
suggest
another
to proceed with Steps
The
approach
decide
event,
to
expand
or
and 3 of
Special Master may well
that
may
reviewing the other 19,000 documents.
may
2
limit
ease
And,
further
that process shall proceed with a
the
desire
burden
of
the Special Master
proceedings.
In
any
view to concluding the
Special Master's assignment as promptly as possible.
Further,
overruled
having
Reckitt's
appropriate
documents
that
Report,
to
the
concern
that
to
on
the
documents.
assert,
now
must
be
Special
so
could
the
later,
the
now
produced
directed
privilege
However,
or
to
extent
do
the
objections,
Reckitt
required
position
adopted
issue
FTC
that
has
by
Special
to
the
the
Reckitt
as
the
represented
production,
13
it
to
construed
as
and
considers
Court
Report
produce
therein.
be
Master's
as
a
has
FTC
Master's
expressed
waiver
remaining
that
the
it
required
of
its
19,000
will
not
by
the
special Master's
privilege
as
Report
respects
constitutes a waiver of any claim of
the
remaining
19,000
documents.
That
agreement will be reflected in an Order to be entered herein,
and, the FTC will be required not to disclose those documents to
any person or entity (other than the FTC s lawyers or the staff
working on the CID) without further order from this Court.
Finally, the Court will continue to assess the validity of
the
alternative
ADOPT/PRODUCE.
Master
argument
made
by
the
FTC
in
its
MOTION
TO
To that end, the Court requests that the Special
supplement
the
Special
Master's
Report
describing
the
extent to which the privilege log herein is inadequate so that
the Court can assess the FTC's argument that the defect in the
privilege
claimed
much
log
itself
therein.
that
the
constitutes
The
principal
descriptions
in
a
waiver
problem
the
log
of
the
appears
are
privileges
to
per
be
se
not
so
defective
(although there appears to be many instances where that is so),
but
that the descriptions
in the
log are so at odds with the
text of the documents that are being identified as to make the
log a functionally useless document, thereby rendering it no log
at
all.
A determination
on
that
point
by
the
Court
requires
some assessment from the Special Master as to the percentage of
documents
in
the
3,704
documents
already
reviewed
wherein
the
description of a document is so at odds with the document itself
as to render the description in the log meaningless.
14
The Court
will
confer with the Special Master about a
supplement
conferred
after
the
Special
respecting
Master
further
review
schedule for this
and
of
the
the
parties
remaining
have
19,000
documents.
CONCLUSION
For
the
INDIVIOR,
SECOND
foregoing
INC.'S
INTERIM
reasons,
CORRECTED
REPORT
the
objections
OBJECTIONS
AND
(Docket
TO
RECOMMENDATIONS,
SUPPLEMENT
THERETO
overruled,
the MOTION TO ADOPT/PRODUCE
the FTC will be granted,
the FTC forthwith,
73)
Master,
No.
83)
filed
and
RESPONDENT
SPECIAL
AS
by
WELL
Reckitt
(Docket No.
74)
MASTER'S
AS
THE
will
be
filed by
the 3,704 documents will be produced to
the Special Master Report
will be adopted,
Special
THE
in
(Docket Nos. 71 and
the parties will forthwith confer with the
the
Special
Master
will
be
tasked
with
preparing the supplemental report respecting the FTC's alternate
waiver agreement.
The Clerk is directed to send a
copy of this Order to the
Special Master.
It
is
so ORDERED.
/s/
Robert E. Payne
Senior United States District Judge
Richmond, Virginia
Date:
August 1,
2016
15
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