Murphy, In re
| Decision Date | 12 August 1977 |
| Docket Number | Nos. 76-1916 and 76-1931,s. 76-1916 and 76-1931 |
| Parties | , 1977-2 Trade Cases 61,592 In re Subpoena addressed to Samuel W. MURPHY, Jr., and the law firm of Donovan Leisure Newton & Irvine, Appellants. UNITED STATES of America, Plaintiff-Appellee, v. PFIZER INC. et al., Defendants (two cases). In re Subpoena addressed to Merrell E. CLARK, Jr., and Henry J. Zafian, and the law firms of Winthrop, Stimson, Putnam & Roberts and Fish & Neave, Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Peter Dorsey, Minneapolis, Minn. (argued), for appellants Samuel Murphy et al.; Larry L. Vickery, Franklin D. Gray and Stephen J. Snyder, Minneapolis Minn., on brief.
Sheldon Oliensis, New York City (argued), for appellants Merrell Clark et al.; Gordon G. Budicker, Minneapolis, Minn., on brief.
John J. Powers, III, U. S. Dept. of Justice, Washington D. C. (argued), for appellee; Donald I. Baker, Asst. Atty. Gen., Barry Grossman, Paul A. Owens, Edward S. Panek and John Galus, Washington, D. C., and Don O. Burley, Minneapolis, Minn., on brief.
Before GIBSON, Chief Judge, and BRIGHT and HENLEY, Circuit Judges.
This appeal presents sensitive and far-reaching issues regarding the extent to which an attorney's "opinion work product" is immune from discovery under Fed.R.Civ.P. 26(b)(3). 1 Resolution of these issues requires an interpretation of Fed.R.Civ.P. 26(b)(3) and a review of the policies and competing interests underlying the work product privilege.
In 1969, the Government filed a three-count civil action against Pfizer Inc., Bristol Myers Company, American Cyanamid Company, Olin Corporation, Squibb Corporation and The Upjohn Company. In Count I, the Government is seeking to cancel Pfizer's tetracycline patent on the grounds that it was procured fraudulently. Count II is a common law action of deceit which seeks to hold Pfizer, Cyanamid and Bristol liable for overcharges in excess of $203 million sustained by the Government on direct and federally financed purchases of broad spectrum antibiotics. 2 Count III charges all defendants with various violations of federal antitrust laws. 3 During discovery proceedings in this case, the law firms representing Cyanamid and Bristol were ordered to turn over various documents containing opinion work product to the Government. The validity of this order is the primary issue on this appeal.
A skeletal history of this case will aid in placing the legal issues in perspective. In the early 1950's, product patent applications for the broad spectrum antibiotic drug tetracycline were filed by Pfizer, Cyanamid and Bristol. Because of these competing applications, the Patent Office declared "interference" between Pfizer and Cyanamid. This interference proceeding was settled when the parties executed a cross-licensing agreement in which Cyanamid conceded priority to Pfizer's tetracycline application and received a license from Pfizer to market tetracycline. In exchange, Pfizer received a license to use two of Cyanamid's crucial patents in the production of tetracycline.
In September 1954, before a patent had been issued on tetracycline, Bristol began producing tetracycline and marketing it in dosage form under its brand name. Cyanamid filed an action against Bristol which charged Bristol with infringing Cyanamid's patents in the production of tetracycline. This Cyanamid-Bristol litigation was settled when Cyanamid granted Bristol a license to use the Cyanamid patents in the manufacture of tetracycline.
In October 1954, the Patent Examiner ruled that Pfizer could not patent tetracycline because it lacked novelty. Eventually, however, the Patent Examiner reversed his decision and, in January 1955, issued the patent to Pfizer. On the day the tetracycline patent was issued, Pfizer commenced a lawsuit against Bristol, Squibb and Upjohn, charging defendants with infringing Pfizer's patent. Immediately thereafter, Bristol, Squibb and Upjohn filed an action to secure a declaratory judgment that they were not infringing the Pfizer patent. In 1956, these actions were settled when Pfizer granted licenses to Bristol to produce and sell tetracycline, with royalties paid to Pfizer. In addition, Pfizer issued licenses to Squibb and Upjohn which allowed them to purchase and sell tetracycline, with Pfizer receiving royalties on their net sales.
The Government has long viewed defendants' roles in the patenting and marketing of tetracycline with suspicion. The Government believes that Pfizer, Cyanamid and Bristol committed fraud on the Patent Office by suppressing relevant information and filing false and misleading statements in regard to the tetracycline patent applications. The fraud was committed, the Government argues, in order to assure that Pfizer would receive the tetracycline patent and allow Cyanamid and Bristol to share in the monopoly benefits of tetracycline through licensing agreements. The defendants are also accused of violating federal antitrust laws by conspiring to monopolize the tetracycline market. Essentially, the Government argues that the defendants, with full knowledge that the Pfizer tetracycline patent was invalid and unenforceable, settled the various patent interference and infringement proceedings in order to perpetuate their monopoly control over the drug tetracycline. These arguments of the Government were partially successful in a Federal Trade Commission action against, inter alia, Pfizer, Cyanamid and Bristol, 4 but were unavailing in an antitrust criminal case against these companies. 5 The present civil action was filed by the Government in 1969 to recover damages allegedly incurred because of the fraudulent and illegal activities of the defendant pharmaceutical companies.
Since the institution of this action, the parties have engaged in prolonged and hotly contested discovery proceedings. The primary point of contention between the parties stems from an attempt by the Government to review the files of the three law firms that have represented either Cyanamid or Bristol for the past several years. The law firm of Donovan Leisure Newton & Irvine (Donovan Leisure) has represented Cyanamid since approximately 1939, primarily in antitrust litigation. The firm of Winthrop, Stimson, Putnam & Roberts (Winthrop) and the patent law firm of Fish & Neave served as legal counsel to Bristol in the Federal Trade Commission and criminal proceedings, and presently represent Bristol in this civil litigation.
Early in 1971, the Government filed motions seeking to discover legal documents and internal memoranda that were prepared by these law firms on behalf of Bristol or Cyanamid from 1946 to 1956. 6 The scope of the discovery motions was broad and the subject matter of the subpoenaed documents was diverse. Primarily, the Government has requested from the law firms all documents relating to the filing and settlement of Cyanamid's patent infringement action against Bristol; Pfizer's infringement suit against Bristol, Squibb and Upjohn; and the declaratory judgment action filed by Bristol, Squibb and Upjohn against Pfizer. Requests were also made for all documents relating to the preparation and prosecution of tetracycline-related patent applications by Cyanamid and Bristol. Finally, the Government was interested in receiving any materials disclosing what Bristol and Cyanamid knew about tetracycline in the late 1940's and early 1950's.
In order to expedite the discovery proceedings, the District Court appointed a panel of three masters to review the numerous documents submitted by the parties and to make preliminary rulings on the Government's discovery motions. In 1971, the law firms of Donovan Leisure, Winthrop and Fish & Neave afforded the masters access to all legal files except those containing strictly internal documents that had not been seen by their clients. Temporarily acquiescing to this limitation on the scope of their search, the masters reviewed the files and withdrew a substantial number of documents.
On June 1, 1973, the masters rendered two decisions delineating the scope of work product immunity afforded the law firms' documents under Fed.R.Civ.P. 26(b)(3). In the first opinion, which dealt with documents not containing the mental impressions or opinions of the attorneys, the masters considered the issue of whether the work product privilege protects documents prepared in anticipation of previous, terminated litigation. They ruled that the work product privilege generally protects only those "documents prepared in anticipation of litigation in the case with regard to which the protection of (Rule 26(b)(3)) is involved." (Citation omitted.) If the documents were prepared in anticipation of terminated litigation, they are protected only if they discuss "substantially the same issues" involved in the present litigation.
The second opinion of the masters discussed the discovery of documents that embodied the opinions or thought processes of the attorneys, denoted here as "opinion work product." The masters rejected the arguments of the law firms that opinion work product is absolutely immune from discovery under Rule 26(b) (3). Rather, they adopted a rule allowing discovery of the law firms' opinion work product upon a showing of substantial need and an inability to obtain without undue hardship the substantial equivalent of the material by other means. Based upon their ruling that "no special protection" attaches to these documents, the masters ordered the documents to be turned over to them for in camera inspection.
Despite these rulings, the law firms adamantly refused to surrender their internal opinion work product to the masters. Finally, after the District Court issued subpoenas to the law firms, 7 the firms...
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