F.T.C. v. Glaxosmithkline
| Decision Date | 02 July 2002 |
| Docket Number | No. 01-5391.,01-5391. |
| Citation | 294 F.3d 141 |
| Parties | FEDERAL TRADE COMMISSION, Appellee, v. GLAXOSMITHKLINE, Appellant. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (No. 01ms00163).
Melvin A. Schwarz argued the cause for appellant. With him on the briefs were Stephen A. Saltzburg and Stephen A. Stack Jr.
Melvin H. Orlans, Special Litigation Counsel, Federal Trade Commission, argued the cause for appellee. With him on the brief was John F. Daly, Deputy General Counsel for Litigation.
Before: GINSBURG, Chief Judge, and HENDERSON and ROGERS, Circuit Judges.
Opinion for the Court filed by Chief Judge GINSBURG.
In the course of investigating whether a manufacturer of drugs listed its patents properly in the compilation maintained by the Food and Drug Administration, the Federal Trade Commission issued a subpoena directing the company to produce documents relating to a particular drug. When the company resisted, claiming the attorney-client privilege shields the documents, the Commission repaired to the district court, which enforced the subpoena. We reverse the decision of the district court because the court both relied upon an argument to which the company had no opportunity to respond and ruled erroneously that, by failing to keep confidential the contents of the documents, the company had waived the attorney-client privilege.
GlaxoSmithKline manufactures paroxteine hydrochloride hemihydrate under the brand name Paxil, the annual sales of which in the United States exceed $1 billion. See FTC v. GlaxoSmithKline, 203 F.R.D. 14, 15 (D.D.C.2001). Several companies have applied to the Food and Drug Administration for permission to sell generic versions of Paxil when GSK's patents expire. The Federal Trade Commission is investigating whether GSK, in an attempt to prevent or delay competition from generic versions of Paxil, has abused the process for listing its patents in the FDA's compilation of "Approved Drug Products with Therapeutic Evaluations." Id. at 16.
The Commission issued a subpoena directing GSK to produce two types of documents. First, the Commission sought all documents concerning Paxil that the United States District Court for the Northern District of Illinois had directed GSK to disclose when GSK had sued two manufacturers of generic pharmaceuticals for infringement of its patents — the so-called Chicago documents, see Smithkline Beecham Corp. v. Apotex Corp., 193 F.R.D. 530, aff'd, No. 98C3952, 2000 WL 1310669 (Sept. 13, 2000). Second, the Commission wanted all "documents related to the manufacturing and marketing of Paxil, the listing and use of any patents regarding Paxil, and any filings with the FDA regarding Paxil." GlaxoSmithKline, 203 F.R.D. at 16. GSK and the Commission resolved their differences over the inclusion or exclusion of thousands of documents, but because GSK declined to produce hundreds of others — primarily on the ground that they were shielded by the attorney-client privilege — the Commission petitioned the district court to enforce the subpoena.
The parties then agreed upon a procedure for presenting their positions to the district court. See Stipulation Establishing Schedule & Procedure for Resolving FTC's Enforcement Pet. (April 20, 2001). First, each would submit its contentions about the Chicago documents. See id. ¶ 1. If the court compelled GSK to produce those documents, then the parties would contest the second category of documents as follows. The Commission would "identify for GSK ... every responsive (and allegedly privileged) document that the Commission [sought] to have produced and the reason(s) why each privilege claim [was] invalid." Id. ¶ 3(a). GSK would then either produce the document or list it in a "privilege log identifying any documents as to which it continue[d] to assert privilege." Id. ¶ 3(b). Accordingly, only after the Commission had informed GSK of its objections to the Company's claims of privilege would the parties seek judicial resolution. See id. ¶ 3(c). At that final stage the court would either call for oral argument or resolve summarily "[a]ny issues submitted to [it] in connection with the FTC's enforcement petition." Id. ¶ 5.
The district court did enforce the subpoena with respect to the Chicago documents. FTC v. GlaxoSmithKline, 202 F.R.D. 8, 12 (D.D.C.2001). The parties then resolved through negotiation their disputes about the disclosure of hundreds more documents, leaving unresolved the status of only 91. GSK asserted that all 91 documents were protected by the attorney-client privilege and that 34 of them were protected also by the privilege for attorney work product. The Commission told GSK it considered the assertions of privilege invalid for two reasons: (1) GSK had forfeited its claim to confidentiality by disseminating all 91 documents widely both within GSK and to consultants and other third-parties; and (2) the decision in Apotex estopped GSK from asserting that the 34 documents were attorney work product, that is, were prepared in anticipation of litigation. In response to these objections, GSK compiled a privilege log describing each of the 91 documents, and the parties presented their arguments to the district court.
In its opening brief to the district court, the Commission raised the two objections it had previously presented to GSK. The Commission also introduced in that brief a new argument: Regardless whether Apotex foreclosed the Company's claim of attorney work product, GSK's privilege log "fail[ed] to provide facts demonstrating that the document[s] w[ere] created in anticipation of litigation." When GSK objected that the Commission had not made this argument during pre-motion negotiations, the Commission withdrew the argument. It explained in a Stipulation approved by the district court that it had "inadvertently failed to provide GSK with the agreed advance notice regarding the grounds for challenging the documents." Stipulation & Order with Respect to Certain Docs. in FTC's Req. for Enforcement (Sept. 6, 2001) at ¶ 1.
GSK submitted its responsive brief to the district court and attached thereto the Company's privilege log and the affidavit of Charles Kinzig, GSK's Vice President and Director of Corporate Intellectual Property. For each document, the log described the contents; listed the author, intended recipients, and date of creation; and noted whether the author or intended recipients were attorneys. A supplement to the log indicated the title or titles of each person therein named who was not an attorney. The Kinzig Declaration stated that the documents had been disseminated to various "teams" of company employees and contractors, and explained the duties of each team. According to Kinzig, all the teams were "involved in seeking or giving legal advice and/or gathering and recording information in anticipation of or preparation for litigation." The Kinzig Declaration states also that every employee and contractor named in the privilege log was "bound not to disclose confidential information to persons outside [GSK]" without receiving permission from a high-ranking official of the Company.
The Commission then filed a reply brief in which it made yet another argument for the first time: The attorney-client privilege does not shield the documents because they contain no confidential information.
The district court ordered GSK to produce the 91 documents. The court rejected GSK's claims of attorney-client privilege on the grounds that (1) "GSK ha[d] not sustained its burden of demonstrating that the relevant documents were distributed on a `need to know' basis or to employees that were `authorized to speak or act' for GSK," 203 F.R.D. at 19, and (2) the Company had "failed to provide sufficient evidence that the information contained therein is confidential," id. at 20. The court rejected GSK's claims of attorney work product for the reason withdrawn by the Commission, namely, that "GSK fail[ed] to set forth objective facts that support the corporation's assertion that the relevant documents were created in anticipation of litigation." Id. at 21. Having determined that "even if GSK is not precluded from asserting the privilege [for attorney work product], it has failed to satisfy its burden of showing the applicability of the doctrine to the relevant documents," the district court found it unnecessary to resolve whether the decision in Apotex estopped GSK from claiming otherwise. Id. at 22 n.3. GSK sought and we granted a stay pending appeal.
GSK contends the district court erred both by rejecting its claims of privilege based upon arguments the Commission did not raise properly and by misapplying the standard for determining whether a corporation has kept confidential the contents of a communication. The Commission defends the decision of the district court and argues that GSK is collaterally estopped in any event, by reason of the Apotex litigation, from claiming the 34 documents are attorney work product.
Preliminarily, the parties disagree about the proper standard of review. The Commission claims we should defer to the district court unless it committed a clear error, whereas GSK argues that because the circumstances of this case "are procedurally identical to an appeal of a ruling on a motion for summary judgment," we should review the decision of the district court de novo. This debate need not detain us long; our standard of review is well established. We review a decision to enforce a subpoena "only for arbitrariness or abuse of discretion." In re Sealed Case, 146 F.3d 881, 883 (D.C.Cir.1998). We will affirm the decision unless it "rests upon a misapprehension of the relevant legal standard or is unsupported by the record." In re Subpoena Served upon the Comptroller of the Currency, 967 F.2d 630,...
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