Fresenius Med. Care Holdings, Inc. v. Hood

• Decision Date: 04 October 2018
• Docket Number: CONSOLIDATED WITH NO. 2017-IA-00443-SCT,NO. 2016-IA-01385-SCT,2016-IA-01385-SCT
• Citation: 269 So.3d 36
• Parties: FRESENIUS MEDICAL CARE HOLDINGS, INC. and Fresenius USA, Inc. v. Jim HOOD, Attorney General of the State of Mississippi, ex rel. and State of Mississippi
• Court: Mississippi Supreme Court

269 So.3d 36

FRESENIUS MEDICAL CARE HOLDINGS, INC. and Fresenius USA, Inc.

v.Jim HOOD, Attorney General of the State of Mississippi, ex rel. and State of Mississippi

NO. 2016-IA-01385-SCT

CONSOLIDATED WITH NO. 2017-IA-00443-SCT

Supreme Court of Mississippi.

October 4, 2018

ATTORNEYS FOR APPELLANTS: ROY D. CAMPBELL, III, W. WAYNE DRINKWATER, JR., MARGARET OERTLING CUPPLES, SIMON TURNER BAILEY, Jackson, EDWARD L. DOWD, JR., JAMES FORREST BENNETT, MEGAN SUSAN HEINSZ, GABRIEL E. GORE, LISA S. HOPPENJANS, KELLY J.H. MURRIE, Saint Louis, LEIGH ANNE HODGE, Birmingham, MARIA DURANT, Boston, KEVIN CHRISTOPHER NEWSOM

ATTORNEYS FOR APPELLEE: OFFICE OF THE ATTORNEY GENERAL, BY: JACQUELINE H. RAY, GEORGE W. NEVILLE, Jackson, DONALD L. KILGORE, Philadelphia, RICHARD T. PHILLIPS, Batesville, J. BURTON LeBLANC, IV, LAURA J. BAUGHMAN, S. ANN SAUCER, RUSSELL W. BUDD, Dallas, JESSE MITCHELL, III, Ridgeland, ROBERT A. MALOUF

EN BANC.

COLEMAN, JUSTICE, FOR THE COURT:

¶ 1. Fresenius Medical Care Holdings, Inc., and Fresenius USA, Inc., operates dialysis treatment clinics throughout the United States, including Mississippi. Fresenius also manufactures and sells dialysis products, including GranuFlo, a product administered to patients being treated for end-stage renal disease

. GranuFlo is an acid concentrate that is mixed with bicarbonate and water to create a dialysis fluid. In 2014, the State of Mississippi brought a civil action against Fresenius, alleging that it had engaged in unfair and deceptive trade practices in connection with GranuFlo in violation of the Mississippi Consumer Protection Act. Today, a batch of discovery disputes arising between the State and Fresenius reach the Court on interlocutory appeal.

¶ 2. On February 22, 2016, the State filed a motion to compel discovery against Fresenius and requested a privilege log. On March 25, 2016, Fresenius provided the State with a privilege log similar to the logs produced in other GranuFlo litigation pending elsewhere. Although the State had objected, Fresenius did not log each individual email and email attachment; rather, Fresenius logged "families" or aggregates of documents, i.e. , Fresenius logged only the last email in an email chain.

¶ 3. On April 22, 2016, the chancery court granted the State's motion to compel and ordered Fresenius to produce a "full and complete privilege log" to the State. On July 1, 2016, Fresenius produced a second amended privilege log to the State. Fresenius continued utilizing the family logging method. On July 29, 2016, the State filed a second motion to compel, seeking (1) all emails and email attachments not separately identified on Fresenius's July 1, 2016, privilege log; (2) withheld documents referred to as attorney notifications¹ (nurses' memoranda sent to doctors and in-house counsel); and (3) withheld documents referred to as public comment advice² (public relations documents).

¶ 4. On September 9, 2016, the chancery court ordered Fresenius to produce all emails and email attachments that were responsive to the State's discovery requests, that had not been produced, and that had not been separately identified on Fresenius's July 1, 2016, privilege log. The chancery court also ordered Fresenius to submit attorney notifications and public relations documents for in camera review. Fresenius sought interlocutory review of the portion of the September 9, 2016, order requiring the production of emails and email attachments. Meanwhile, Fresenius submitted the attorney notifications and public relations documents for in camera review. On March 15, 2017, the chancery court ordered that Fresenius produce the attorney notifications and public relations documents. Fresenius also sought interlocutory review of the March 15, 2017, order. The Court granted both interlocutory appeals and consolidated the separate appeals.

¶ 5. Fresenius raises the following issues on interlocutory appeal:

I. Whether the Chancery Court erred in imposing the "death penalty" sanction–finding a blanket waiver and ordering Fresenius to produce privileged documents–based on a determination that Fresenius'[s] extensive, detailed privilege log was somehow inadequate.³

II. Whether the Chancery Court erred in ordering Fresenius to produce documents known as Attorney Notifications, which were prepared by Fresenius employees at the direction of in-house counsel for the purpose of facilitating legal analysis of certain adverse events that were deemed likely to lead to litigation, simply because those documents were also copied to Fresenius'[s] Chief Medical Officer, a senior Fresenius executive, for the purpose of reviewing medical and safety issues.

III. Whether the Chancery Court erred in ordering Fresenius to produce documents identified as Public Comment Advice documents, which are communications between Fresenius employees and Fresenius'[s] Chief Litigation Counsel concerning the appropriate public statements for the company to make concerning GranuFlo, a Fresenius product that was the subject of likely litigation.

IV. Whether the Chancery Court violated Rule 53 of the Mississippi Rules of Civil Procedure by adopting the Special Master's Recommendation before the Special Master filed the record with the clerk and before the parties even had a chance to review the Recommendation, let alone file written objections, thereby tainting its further decisions with respect to the same issues.

FACTS AND PROCEDURAL HISTORY

¶ 6. On January 28, 2014, the State filed a civil action against Fresenius, alleging that Fresenius had violated the Mississippi Consumer Protection Act by providing false product information and misrepresenting or concealing the risks associated with its dialysis product GranuFlo. The State alleged that Fresenius knew or should have known that the administration of GranuFlo resulted in dangerously increased bicarbonate levels during dialysis treatment. The State alleged that Fresenius had violated the Act because GranuFlo used in dialysis treatments was defective; Fresenius failed to provide adequate warnings of the risks associated with GranuFlo; treatments using GranuFlo harmed dialysis patients in Mississippi; and the State bore the costs of treatments using GranuFlo that were provided to patients covered by Medicaid and the State Health Plan.

¶ 7. Throughout the proceedings below, the parties frequently referenced pending lawsuits filed by individual personal injury and wrongful death plaintiffs against Fresenius in other jurisdictions relating to GranuFlo and another Fresenius product, NaturaLyte. The pending cases have been consolidated in the United States District Court for the District of Massachusetts, the Superior Court of Massachusetts, and the City Court of St. Louis, Missouri. After the State commenced the present action, Fresenius removed the case to federal court, and ultimately the case was transferred to the multidistrict litigation pending (MDL) in the United States District Court for the District of Massachusetts. The State made a special appearance in the multidistrict litigation solely for the purpose of contesting jurisdiction. On January 2, 2015, the district court granted the State's motion to remand the case to state court. In re Fresenius Granuflo/NaturaLyte Dialysate Prod. Liab. Litig. , 76 F.Supp.3d 268, 278 (D. Mass. 2015).

¶ 8. On July 16, 2015, the State served its initial discovery requests, which included a request for a privilege log. Given what it would contend was similarity to the discovery requests served in the multidistrict litigation, on August 31, 2015, Fresenius notified the State of its intent to produce the same "generic" document production it had produced in the multidistrict litigation consisting of "non-bellwether-patient-specific" documents. On October 16, 2015, the chancery court entered a joint protective order, which provided that the parties "shall comply with the Mississippi Rules of Civil Procedure (unless otherwise ordered by the [chancellor] ) with regard to the production of privilege logs[.]"

¶ 9. On October 22, 2015, Fresenius produced a computer drive containing 22.3 million pages of documents, essentially what it had produced in the pending litigation elsewhere. Fresenius did not provide a privilege log along with the production. Consistent with Fresenius's practice in the other cases, Fresenius withheld attorney notifications and public relations documents. The parties dispute the characterizations and definitions of attorney notifications and public relations documents.

¶ 10. Fresenius defines attorney notifications as "documents created by Fresenius'[s] corporate Clinical Quality Managers at the direction of Fresenius in-house counsel for the purpose of facilitating counsel's rendering legal advice to the company." Clinical Quality Managers are company "nurses or former dialysis nurses that are corporate employees." Fresenius identifies public relations documents as "Public Comment Advice" and defines the documents as "documents containing communications between Fresenius employees and Fresenius'[s] chief litigation counsel concerning the appropriate public statements for the company to make (e.g. , in press releases and customer talking points) after the company determined that GranuFlo was likely to become the subject of litigation."

¶ 11. On November 13, 2015, the State wrote a letter to Fresenius again requesting that Fresenius produce a privilege log. On December 17, 2015, Fresenius informed the State that it "will produce privilege logs produced to Plaintiffs in the MDL and the Mass[achusetts] State Consolidated Proceeding." In response, on December 30, 2015, the State wrote Fresenius, noting that it had yet to receive a privilege log. The State asked when the privilege log would be produced and sought clarification about whether Fresenius claimed privilege for any documents responsive to the State's discovery that had not been included on the privilege logs produced in the other two litigation matters.

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