United States District Court, D. New Jersey
In re Valeant Pharmaceuticals International, Inc., Securities Litigation. In re Valeant Pharmaceuticals International, Inc., Third-Party Payor Litigation,
LETTER OPINION & ORDER
Michael A. Shipp United States District Judge
matter comes before the Court upon two motions: (i) in the
action with Docket No. 15-7658 (the "Securities Class
Action"), Class Plaintiffs' Motion to Compel (ECF
No. 386)and (ii) in the action with Docket No.
16-3087 (the "TPP Litigation"), Andrew Davenport
and Philidor RX Services. LLC's ("Philidor RX")
Motion to Continue Stay (TPP Litigation, ECF No. 91). In the
Securities Class Action, Philidor RX and Philidor
Entities (collectively, "Philidor")
opposed (ECF No. 391), and Class Plaintiffs sought leave to
file a reply (ECF No. 394)In the TPP Litigation, Plaintiffs
opposed (TPP Litigation, ECF No. 93), and Andrew Davenport
and Philidor RX replied (TPP Litigation, ECF No. 95), The
Court decides the instant motions together because of the
common parties, overlapping issues, and similar arguments.
The Court has carefully considered the parties'
submissions and decides the motions without oral
argument pursuant to Local Civil Rule 78.1. For the reasons
set forth below. Class Plaintiffs' Motion to Compel is
granted and Andrew Davenport and Philidor RX's Motion to
Continue Stay is denied.
parties are familiar with the factual background of these
matters. The Court, accordingly, recounts the procedural
history only to the extent necessaty to decide the instant
The Securities Class Action
Plaintiffs seek documents and electronically stored
information from Philidor. (See Exs. 2-35, ECF Nos.
386-4 to -37.) Class Plaintiffs state that on December 3,
2015, they issued subpoenas to Philidor, and issued subpoenas
to the Philidor I utities sometime between June and
August 2017. (Pis/ Moving Br. 4, ECF No. 386-1.) Class
Plaintiffs state that on December 14, 2015, Philidor served
objections and responses and indicated that it would produce
documents responsive to certain of Class Plaintiffs"
requests. (Id. at 5.) On July 11, 2016, the
Honorable Lois H. Goodman, U.S.M.J.. vacated a previous order
granting Class Plaintiffs expedited discovery and she granted
a stay of the enforcement of the subpoenas issued to
Philidor. (Order, ECF No. 143.)
October 19, 2017, the Court issued an order to show cause why
certain proceedings, now consolidated into the Securities
Class Action, should not be stayed. (See Order to
Show Cause. ECF No. 273.) On November 29, 2017, pursuant to
the parties' stipulation, the Court stayed all
proceedings and discovery, except for certain exceptions,
until the conclusion of the criminal trial in United
States v. Tanner, etui, No. 17-61 (S.D.N.Y.) (the
"Tanner Matter"). (Order, ECF No. 291.)
30, 2018, the parties advised the Court that guilty verdicts
had been entered in the Tanner Matter and requested that the
November 29, 2017 stay be lifted as of June 5, 2018.
(Correspondence, ECF No. 315.) On June 5, 201.8, the Court
lifted die discovery stay in the Securities Class Action.
(Order, ECF No. 316.) On June 5, 2018, in the TPP
Litigation, the parties submitted joint correspondence
indicating that they disputed whether the Court's August
9. 2017 stay of all proceedings should be continued in light
of a pending appeal in the Tanner Matter. (TPP Litigation,
Correspondence, ECF No. 82.) On June 6, 2018, Philidor
advised Class Plaintiffs' counsel that it would rely on
correspondence in the TPP Litigation and would not produce
any documents in response to the subpoenas. (Class Pis.'
Moving Br. 7, ECF No. 386-1.)
October 26, 2018. Class Plaintiffs fded the instant Motion to
Compel Philidor to comply with the subpoenas. (Mot. to
Compel, ECF No. 386.) On November 5, 2018, Philidor opposed
Class Plaintiffs' Motion to Compel. (Philidor`s Opp'n
Br., ECF No. 391.) On November 12, 2018, Class Plaintiffs
sought leave to file a reply brief attaching the same to
their correspondence. (ECF No. 394.) On November 16, 2018,
Valeant filed correspondence taking no position with respect
to Class Plaintiffs' motion to compel. (Correspondence,
ECF No. 400.) In the same correspondence, Valeant disputed
Class Plaintiffs' suggestion that it controls or has
access to Philidor`s documents.
(Id.) Specifically, Valeant asserts
that '`[a]lthough it received approximately 800 documents
in late 2015 and early 2016, Valeant does not control or
otherwise have access to Philidor`s documents."
The TPP Litigation
TPP Litigation, on August 9, 2017, the Court granted Matthew
Davenport, Andrew Davenport, and Philidor RX`s Motions to
Stay. (TPP Litigation, Order, ECF No. 74.) On September 28,
2018. Judge Goodman ordered the parties to file any motion
seeking to continue the stay. (TPP Litigation, Order, ECF No.
90.) On October 12, 2018. Andrew Davenport and Philidor RX
("Moving Defendants") filed the instant Motion to
Continue Stay. (TPP Litigation, Mot. to Continue Stay, ECF
No. 91.) All Plaintiffs opposed (TPP Litigation, Pis.'
Opp'n Br., ECF No. 93). and Moving Defendants replied
(TPP Litigation. Defs.` Reply Br. ECF No. 95).
THE PARTIES' POSITIONS
Plaintiffs argue that Philidor has inappropriately shifted
Phitidor"s burden to move to quash or modify the
subpoenas and forced Class Plaintiff;- to file the instant
motion to compel. (Class Pls.` Moving Br. 10.) Thus, Class
Plaintiffs frame the issue as whether a continued stay of
discovery is appropriate and insist that applying the factors
set forth in Walsh Securities, Inc. v. Crista Property
Management, 7 F.Supp.2d 523, 526 (D.`N.J. 1998), a stay
is not warranted. (Id.) Specifically, Plaintiffs
argue that: (1) Philidor has failed to meet its burden of
justifying a further stay; (2) Courts routinely reject
indefinite stays pending the resolution of criminal appeals;
(3) the lengthy nature of a stay pending resolution of any
appeal in the Tanner Matter and consequent delay in necessary
discovery is prejudicial; (4) the responsive documents are
not protected by the Fifth Amendment: and (5) no testimony is
being sought from Philidor. (See Id. 9-20.)
opposes Class Plaintiffs' motion, arguing that a stay of
discovery should continue in the TPP Litigation and
compelling Philidor to respond to Class Plaintiffs'
subpoenas "would create the same risk of prejudice to
Andrew Davenport and Philidor that allowing discovery to
proceed in the TPP Litigation would create."
(Philidor's Opp'n Br. 1-2.) Philidor rejects Class
Plaintiffs' burden shifting argument and insists that a
mo ion to quash the subpoenas was not necessary given the
parties' failure to address the subpoena:- in their
request to the Court to lift the discovery stay.
(Id. at 6.) Philidor next argues that the continued
stay of discovery is warranted until after the Tanner Matter
is completely resolved, including any criminal appeals,
because courts in this district have held that a stay of
civil proceedings pending the appeal of a guilty verdict is
an appropriate safeguard of a criminal defendant's Fifth
Amendment rights. (Id. at 8-9 (citing Seeman v.
Locane No. 10-6597, 2015 WL 5822806, at *l (D.N J. Oct.
I, 2015); Edwards v. Serrecchia, 15-3569, slip op.
at 1 (D.NJ. Aug. 18, 2016)).) Philidor further argues that
the remaining Walsh factors favor continuing the
stay. (Id. at 9-11.)
also argues that pursuant to Federal Rule of Civil Procedure
45,  the Court should stay the subpoenas
because compliance would place an undue burden on Philidor.
(Id. at 12.) In support of its undue burden
argument, Philidor first contend: that Class Plaintiffs have
no need for immediate production by Philidor because Class
Plaintiffs 'have alleged they can obtain similar
documentation from Valeant[, ]" and if Class
Plaintiffs' allegations are true, Class Plaintiffs
"can simply issue a discovery request under [Rule 34] to
Valeant,' (Id. at 13-14.) Next, Philidor argues
that the nature of the litigation and the delays in discovery
result in the conclusion that "there is no compelling
reason to compel immediate production by Philidor.'`
(Id., ) Finally, Philidor argues that
"requiring Philidor to respond to the subpoenas now
would impose a significant risk to Philidor and Andrew
Davenport." (Id. at 15.)
TPP Litigation. Philidor repeats the same arguments regarding
the satisfaction of the Walsh factors in support of
its Motion to Continue Stay. (See TPP Litigation,
Defs.' Moving Br.. ECF No. 91 -1.) TPP Plaintiffs aver
that a stay of discovery i i its entirety is overbroad and
request that the Court deny Philidor's motion or limit
the stay to only non-documentary evidence from Andrew
Davenport. (TPP Litigation. Pls.` Opp`n Br. 2, E< `F No.
93.) TPP Plaintiffs cite J.C. Penney Life Insurance
Company v. Houghton, No. 86-2637 1986 WL 14732 (E.D. Pa.
Dec. 24. 1986), in which the Court denied a stay of discovery
sough by defendants who were appealing their criminal
convictions stemming from issues overlapping those in a civil
action. In Houghton, the court entered a protective
order limited to "testimonial discovery concerning
matters for which the defendants faced the possibility of
additional criminal charges." (Id. at 6.) TPP
Plaintiffs also note that the tailored discovery approach
adopted in Locane is similar, if not a mirror of,
the approach proposed by TPP Plaintiffs. (Id.)
Moreover, TPP Plaintiffs aver that in Locane, the
Honorable Anne E. Thompson. U.S.D.J, "expressly noted
that permitting all other discovery to proceed avoided undue
prejudice to plaintiffs." (Id.)
to the Walsh factors, TPP Plaintiffs argue that: (1)
because the theories of liability in the criminal matter and
civil matter are fundamentally different, overlap between the
two cases is insignificant, and Davenport is the only
overlapping defendant; (2) the delay of litigation is not
prejudicial to Philidor, but will be prejudicial to
Plaintiffs because it will delay their opportunity for their
case to be heard; (3) delay weighs against the Court s
interest in keeping litigation moving to conclusion without
unnecessary delay; and (4) delay weighs against the public
interest because "Congress designed RICO to
encourage private civi. litigation to supplement
criminal prosecution." (Id. at 8-12.) TPP
Plaintiffs also argue that corporations, like Philidor, do
not have a Fifth Amendment right against self-incrimination.
(Id. a 9 (citing De'Omilia Plastic Surgery,
PC v. Sweeton, No. 12-6415, 2013 WL 6070037, at *6
(D.N.J. Nov. 18, 2013)).)
Plaintiffs' argument that Philidor inappropriately failed
to respond to facially valid subpoenas after the Court's
June 5, 2018 Order lifting the discovery stay in the
Securities Class Action has merit. Indeed, Rule 45(d)
provides a comprehensive scheme for objecting to, modifying,
or quashing a subpoena. Philidor did not seek to avail itself
of Rule 45's protection despite receiving correspondence
from Class Plaintiffs ii July 2018 indicating that, in Class
Plaintiffs' view, the subpoenas were valid and Philidor
was obligated to respond. (See Ex. 37, ECF No.
386-39.) On the other hand, Philidor is correct that the stay
in the TPP ...