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Paris v. R.P. Scherer Corp.

July 13, 2006

LAURENCE PARIS AND INTERPHARM DEVELOPMENT, S.A., PLAINTIFFS,
v.
R.P. SCHERER CORP. R.P. SCHERER INC. AND MEMORANDUM OPINION R.P. SCHERER TECHNOLOGIES INC. DEFENDANTS.



The opinion of the court was delivered by: Hughes, U.S.M.J.

This matter having come before the Court upon motion by Defendants R.P. Scherer Corp., R.P. Scherer Inc. and R.P. Scherer Technologies, Inc. ("Defendants") for Discovery Order Sustaining Privilege, [Docket Entry #212], returnable June 19, 2006. Plaintiffs Laurence Paris and Interpharm Development, S.A. ("Plaintiffs") submitted opposition to the Motion claiming Defendants failed to demonstrate that the documents in question were prepared "in anticipation of litigation". (Pl.s' Br. 5). The Court considered the submissions of the parties and conducted oral argument on June 21, 2006. For the reasons below, Defendant's Motion for Discovery Order Sustaining Privilege is denied.

I. BACKGROUND AND PROCEDURAL HISTORY

In December 1997, Defendant and Plaintiff had entered into an Evaluation Agreement ("The Agreement"), pursuant to which Defendant had an exclusive right to evaluate Plaintiffs' carrageenan-only formulations for the purpose of determining whether those formulations would be useful on a commercial scale. (Stevens Cert., Ex. A. ¶ 5 and Ex. B). The Agreement provided for an initial "option period" of six months to perform a preliminary evaluation, and the right of Defendant to proceed with a second "option period" to continue its evaluation for another twenty months, upon payment of additional consideration. (Id., Ex. B, at Articles II and III). Defendant opted to exercise its rights to the second "option period," which would expire as of January 31, 2000. (Id., at §3.3).

The Agreement further provided that Defendant would have the exclusive right during the option periods to negotiate with Plaintiff for a license for the product and any proprietary information thereto, or to purchase the rights to her formulations. (Id. at Article IV). Absent further agreement, upon termination of the option periods, Plaintiff would be free to shop her formulations to others, and Defendant would have no further obligations to her. (Id.).

In addition to Plaintiffs' carrageenan-only formulations, as part of the Gelatin Alternative Project, Defendant had developed and was pursuing its own primarily starch-based compositions for making gelatin-free soft capsules. (Id. ¶ 9). Those compositions included both modified starch and iota carrageenan. When the Evaluation Agreement and negotiations with Plaintiff ended, Defendant continued the development of its own primarily starch-based compositions for making gelatin free capsules. (Id. ¶ 11).

The documents at issue are two internal emails ("emails") that Bob Stevens sent to Peter Draper on January 19, 2000. The emails were written shortly after the parties' evaluation agreements and licensing negotiations had been terminated. Mr. Stevens was Scherer's Director of Corporate Intellectual Property and Mr. Draper was in charge of the company's Gelatin Alternative Project when the emails were written.

Over two years later, on March 7, 2002, Plaintiff filed a complaint with the United States District Court for the District of New Jersey. [Docket Entry # 1]. During discovery, Defendant produced the emails in question, apparently inadvertently. On May 2, 2006, Defendant filed this Motion for Discovery Order Sustaining Privilege to compel Plaintiff to return the emails that were produced. [Docket Entry # 212].

Defendant argues that the emails were written in anticipation of litigation making them privileged under the work product doctrine embodied in Fed. R. Civ. P. 26(b)(3). Plaintiff argues that the emails predated any litigation between the parties by almost two years, which both standing alone and together with other circumstances precludes the possibility that they were prepared in anticipation of litigation. Therefore, Plaintiff claims that the emails are not protected by the work product privilege doctrine.

II. DISCUSSION

Work product doctrine is codified by Rule 26(b)(3) of the Federal Rules of Civil Procedure. Rule 26(b)(3) provides that documents and other tangible things prepared in anticipation of litigation are generally protected from discovery by another party. See Fed. R. Civ. P. 26(b)(3).

...A party may obtain discovery of documents and tangible things otherwise discoverable under subdivision (b)(1) of this rule and prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means.

Id. For a document to be protected by work product privilege, it must have been prepared in "anticipation of litigation." Id. "A document satisfies Rule 26(b)(3) when 'in light of the nature of the document and the factual situation in the particular case, the document can fairly have been prepared or obtained because of the prospect of litigation.'" Martin v. Bally's Park Place Hotel & Casino, 983 F.2d 1252 (3d Cir. 1993) (quoting In re Grand Jury Proceedings, 604 F.2d 798, 803 (3d Cir. 1979)).

The Third Circuit has adopted a two prong test to determine the factually based inquiry of whether a document was prepared "in anticipation of litigation." To fall within the privilege which the moving party asserts, the documents must have been prepared (1) at a time when litigation was reasonably predictable or foreseeable, and (2) primarily for the purpose of litigation. In re Gabapentin Patent Litig., ...


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