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Shire LLC v. Amneal Pharmaceuticals, LLC

United States District Court, Third Circuit

January 10, 2014

SHIRE LLC, et al., Plaintiffs,
v.
AMNEAL PHARMACEUTICALS, LLC, et al., Defendant.

OPINION

CATHY L. WALDOR, Magistrate Judge.

I. Introduction

Pending before the Court is an informal application by Defendants Johnson Matthey Inc. and Johnson Matthey Pharmaceutical Materials (collectively "Defendants") to compel Plaintiffs Shire LLC and Shire Development LLC (collectively "Shire") to return or destroy privileged documents produced after August 1, 2013. (Docket Entry No. 389, ("Letter Request")). Defendants further request that the Court rule there has been no waiver of attorney-client privilege or work product protection by virtue of the document production discussed below. (Id.). Plaintiff cross-moves to compel Defendants to produce the 25 Exhibit A documents ("Exhibit A documents") as well as other withheld documents concerning Defendants' analyses of the patents-in-suit. (Docket Entry No. 399, ("Letter Response")).

Shire opposes the requests contending that Defendants intentionally waived the privilege by selectively producing self-serving documents analyzing the patents-in-suit. (Letter Response at 1). The Court has reviewed the letters in favor of and in opposition to the applications and considered the arguments raised by the parties. For the reasons set forth below Defendants' applications are hereby DENIED. Plaintiff's applications are GRANTED in part.

II. Background & Procedural History

Recognizing the breadth of confidential and commercially sensitive information likely to be involved in discovery, the parties executed a Discovery Confidentiality Order on March 5, 2012. (Docket Entry No. 65, ("the DCO")). Relevant to the current issue brought before the Court is Paragraph 15 of the DCO. Paragraph 15 instructs the parties that an inadvertent production of privileged material "shall not constitute a waiver" if the producing party promptly notifies the receiving party and requests the return or destruction of the subject material. (Id. at 12).

Prior to August 1, 2013, Defendants made eight productions of documents. During this time, Defendants and Shire filed a joint letter addressing Shire's request to compel the production of documents from Defendants' third-party customers or potential customers. (Docket Entry No. 240). Defendants ceased production during the pendency of that motion.

On July 25, 2013 Defendants discovered archived emails from a prior email client previously overlooked in discovery. (Docket Entry No. 414-7 at ¶ 4, ("Decl. of Douglas Nemec")). On August 1, 2013 this Court ordered Defendants to produce the third-party documents that were the subject of Shire's request to compel. At this time Defendants informed the Court of the existence of the newly discovered emails and that Defendants were in the process of reviewing them for production. The Court responded by extending fact discovery until September 20, 2013. Following the conference the parties agreed that Defendants would produce the documents by August 20, 2013 in order to avoid a disruption of the discovery schedule. (Id. at ¶ 5). Defendants produced a total of 249, 483 documents on August 9, August 12, August 16, and August 20, 2013. (Id. at ¶ 6).

On August 23, 2013 Shire alerted Defendants that the production appeared to contain documents subject to the attorney-client privilege. On that same day, Defendants contacted Shire acknowledging the inadvertent production and requested that Shire return or destroy the privileged material. (Docket Entry No. 389-2). Shire agreed to hold the documents in a secure fashion. (Letter Request at 2, fn. 1). Defendants conducted an investigation that uncovered two errors in the production process. (Decl. of Douglas Nemec at ¶ 7). Defendants remedial search efforts subsequently identified inadvertently produced documents.

In a letter dated September 19, 2013 Defendants brought this matter to the Court's attention asserting Shire's argument that Paragraph 15 of the DCO was inapplicable. (Letter Request at 1). Shire replied contending Defendants were not entitled to the return or destruction of the documents because they waived the privilege. (Letter Response; Docket Entry No. 401).

II. Discussion

A. Parties' Arguments

a. Defendants' Arguments in Support of the Motion

Defendants contend their inadvertent production does not constitute waiver and that their letter to Shire dated August 23, 2013 comports with the "clawback" procedure pursuant to Paragraph 15 of the DCO. (Letter Request; Docket Entry No. 389-2). They argue their compliance with Paragraph 15 overrides any contention that privilege was waived. (Letter Request at 2). Additionally Defendants contend that even in the absence of the DCO their screening practices comport with the applicable analysis courts in this District apply to determine whether or not a party has waived privilege under these circumstances. (Id.).

Much of the controversy involves documents related to Defendant's in-house counsel William Youngblood ("Youngblood"). Defendants argue that mere inclusion of an attorney on a document does not automatically make the document privileged. These documents were intentionally produced because they were not privileged so their production cannot be construed as a waiver. (Letter Request at 2.)

Additionally, Defendants argue: 1) the inadvertent production accounts for only 25 of the 249, 483 documents[1] produced within 20 days; 2) there was no delay between the point at which Defendants were aware of the disclosure and their issuance of a clawback letter; and 3) justice ...


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