Pernix Ir. Pain Dac v. Alvogen Malta Operations Ltd.

• Decision Date: 08 June 2018
• Docket Number: Civil Action No. 16–139–WCB
• Citation: 316 F.Supp.3d 816
• Parties: PERNIX IRELAND PAIN DAC and Pernix Therapeutics, LLC, Plaintiffs, v. ALVOGEN MALTA OPERATIONS LTD., Defendant.
• Court: U.S. District Court — District of Delaware

316 F.Supp.3d 816

PERNIX IRELAND PAIN DAC and Pernix Therapeutics, LLC, Plaintiffs,

v.ALVOGEN MALTA OPERATIONS LTD., Defendant.

Civil Action No. 16–139–WCB

United States District Court, D. Delaware.

Signed June 8, 2018

Michael P. Kelly, Benjamin A. Smyth, Daniel M. Silver, McCarter & English, LLP, Wilmington, DE, Brendan M. O'Malley, Pro Hac Vice, Christopher P. Borello, Pro Hac Vice, David G. Varghese, Pro Hac Vice, Dominick A. Conde, Pro Hac Vice, Josh Calabro, Pro Hac Vice, for Plaintiffs.

David M. Fry, Jeffrey Thomas Castellano, Nathan Roger Hoeschen, Shaw Keller LLP, Wilmington, DE, Thomas K. Hedemann, Pro Hac Vice, Chad A. Landmon, Pro Hac Vice, Christopher M. Gallo, Pro Hac Vice, Edward M. Mathias, Pro Hac Vice, Matthew J. Becker, Pro Hac Vice, Seth I. Heller, Pro Hac Vice, for Defendants.

MEMORANDUM OPINION AND ORDER

WILLIAM C. BRYSON, UNITED STATES CIRCUIT JUDGE

In this order, the Court addresses a dispute between the parties over the admissibility of certain exhibits that the plaintiffs (collectively, "Pernix") intend to offer at trial. Defendant Alvogen Malta Operations Ltd. ("Alvogen") contends that the materials are inadmissible as hearsay. Pernix argues that the materials in dispute are non-hearsay and can be used to cross-examine Alvogen's witnesses.

A. The Admissibility of Alvogen's Expert Witness Reports Against Alvogen

The principal issue before the Court involves the admissibility of five exhibits (PTX 84, 85, 89, 133, and 134) proffered by Pernix. Those exhibits consist of reports by two experts who were retained by a related Alvogen entity in connection with another case. That case, Purdue Pharma L.P. et al. v. Alvogen Pine Brook LLC, Civil Action No. 15–687 (referred to as "the Hysingla litigation"), recently settled, quite literally, on the eve of trial. Pernix seeks to use Alvogen's experts' reports to challenge Alvogen's claim that U.S. Patent No. 8,808,740 to Huang is an invalidating prior art reference in this case.

Three of the exhibits in question are reports prepared by Alvogen expert Michael Mayersohn for the Hysingla litigation. To begin with, it is clear that statements by Dr. Mayersohn in those reports may be used to impeach Dr. Mayersohn if he testifies in this case in a manner that is inconsistent with any of the statements he made in the reports he prepared for the Hysingla litigation. That much is not in dispute. See Fed. R. Evid. 613.

What is in dispute is whether the expert reports of Dr. Mayersohn and another of Alvogen's experts, Fernando Muzzio, in the Hysingla litigation are admissible as substantive evidence over a hearsay objection. Pernix's argument is that those statements are non-hearsay statements of an opposing party and are admissible under Fed. R. Evid. 801(d)(2). Alvogen contends that the statements do not satisfy the requirements of any of the categories of party admissions that are covered by that Rule. The Court agrees with Alvogen.¹

Rule 801(d) defines certain statements as non-hearsay. The second subsection of that rule, Rule 801(d)(2), lists five types of statements that are attributable to an opposing party and are admissible if offered in evidence against the opposing party. Only three of the five are arguably pertinent here. Rule 801(d)(2)(B) refers to a statement that "is one the party manifested that it adopted or believed to be true." Rule 801(d)(2)(C) refers to a statement that "was made by a person whom the party authorized to make a statement on the subject." And Rule 801(d)(2)(D) refers to a statement that "was made by the party's agent or employee on a matter within the scope of that relationship and while it existed."

There is substantial case law dealing with the admissibility under Rule 801(d)(2) of the testimony, depositions, or reports of an expert against the party that retained the expert. The case law on this subject is mixed, however, with courts reaching different results under a variety of different factual circumstances.

1. Admissibility Under Rules 801(d)(2)(C) and (D)

The leading Third Circuit case in this area, Kirk v. Raymark Industries, Inc., 61 F.3d 147 (3d Cir. 1995), held that testimony from a previous, unrelated trial by an expert retained by a party was not admissible under Rule 801(d)(2)(C). The court based its ruling on its analysis of the role of expert witnesses in general. It stated:

In theory, despite the fact that one party retained and paid for the services of an expert witness, expert witnesses are supposed to testify impartially in the sphere of their expertise. Thus, one can call an expert witness even if one disagrees with the testimony of the expert. Rule 801(d)(2)(C) requires that the declarant be an agent of the party-opponent against whom the admission is offered, and this precludes the admission of the prior testimony of an expert witness where, as normally will be the case, the expert has not agreed to be subject to the client's control in giving his or her testimony. Since an expert witness is not subject to the control of the party opponent with respect to consultation and testimony he or she is hired to give, the expert witness cannot be deemed an agent....

Because an expert witness is charged with the duty of giving his or her expert opinion regarding the matter before the court, we fail to comprehend how an expert witness, who is not an agent of the party who called him, can be authorized to make an admission for that party.

Id. at 164 (citations omitted). Although the court in Kirk specifically addressed only Rule 801(d)(2)(C), which deals with statements by a person authorized to make a statement on behalf of a party, the court predicated its ruling on a finding that the expert in that case was not an "agent" of the defendant. In light of that language, Kirk has been interpreted as applying equally to Rule 801(d)(2)(D), which deals with statements by a party's agent on a matter within the scope of the relationship and while it existed.

A number of cases have followed Kirk in applying Rules 801(d)(2)(C) and (D), including several from this district. See, e.g., AVM Techs., LLC v. Intel Corp., Civil Action No. 15-33, 2017 WL 1753999, at *2 (D. Del. May 1, 2017) ("If AVM does not call [Intel's expert witness], and if Intel does not call her, her report is inadmissible hearsay that does not fall within one of the exceptions to the hearsay rule."); In re Air Crash Near Rio Grande Puerto Rico, Case No. 11–md–02246, 2016 WL 6916599, at *2 (S.D. Fla. Jan. 21, 2016) (plaintiffs did not "have the necessary control over the retained experts to establish an agency relationship"); Fed. Hous. Fin. Agency v. Nomura Holding Am., Inc., No. 11-cv-6201, 2015 WL 539489, at *10 (S.D.N.Y. Feb. 10, 2015) (findings of experts retained by plaintiff not admissible because "there has been no showing that FHFA's reunderwriting experts were agents of FHFA authorized to speak on its behalf"); N5 Techs. LLC v. Capital One N.A., 56 F.Supp.3d 755, 765 (E.D. Va. 2014) (defendants' expert's report in same case not admissible under Rule 801(d)(2)(C) or (D) because the expert "is not defendants' agent or employee, nor did defendants specifically authorize [the expert] to make any statement" on the subject matter in dispute); In re Refco Inc. Sec. Litig., Nos. 07–md–1902 et al., 2013 WL 12191891, at *10 (S.D.N.Y. Mar. 11, 2013) ("The agency rationale [of Rule 801(d)(2)(C) ] is dubious because experts cannot comfortably be called agents of the party who retained them."); SanDisk Corp. v. Kingston Tech. Co., 863 F.Supp.2d 815, 818–19 (W.D. Wis. 2012) (because expert's testimony was given in a separate case and "never proffered ... in this case, it is neither reasonable nor fair to find that SanDisk authorized Reed's deposition testimony so that it can be deemed a party admission and used against SanDisk"); Durham v. County of Maui, 804 F.Supp.2d 1068, 1071 (D. Haw. 2011) ("[I]t is only when the party presents the expert at trial that the court may ‘assume that those experts who have not been withdrawn are those whose testimony reflects the position of the party who retains them."); Lizotte v. Praxair, Inc., 640 F.Supp.2d 1335, 1338–39 (W.D. Wash. 2009) (only expert testimony "sworn at trial or a deposition" is admissible under Rule 801(d)(2) ; "retention without testimony is not enough"); Pfizer, Inc. v. Ranbaxy Labs., Ltd., No. Civ. A 03-209, 2005 WL 2296613, *1 (D. Del. Sept. 20, 2005) ("[A]n expert witness cannot be viewed as a party's agent, because he or she is supposed to testify impartially in the sphere of his or her expertise.").²

While, as indicated, there are numerous authorities holding that out-of-court statements in the form of expert testimony, expert depositions, and expert reports are not admissible under Rule 801(d)(2)(C) or (D), there are also many cases holding to the contrary. The leading cases holding that an expert's prior testimony, deposition, or report is admissible as non-hearsay under Rule 801(d)(2)(C) are Collins v. Wayne Corp., 621 F.2d 777 (5th Cir. 1980), and In re Hanford Nuclear Reservation Litigation, 534 F.3d 986 (9th Cir. 2008). In Collins, a products liability action brought against Wayne, a bus manufacturer, following a collision involving one of Wayne's buses, Wayne hired a Mr. Greene as "an expert in the field of automobile collision investigation" to analyze the accident. Mr. Greene was deposed and prepared a report. At trial, the plaintiff wished to use Mr. Greene's deposition testimony and argued it was admissible as a statement of a person authorized by Wayne to make a statement on the subject matter under Rule 801(d)(2)(C). The Fifth Circuit held that Mr. Greene's testimony was admissible on that ground, as Wayne had "hired Greene to investigate the bus accident and to report his conclusions. In giving his deposition he was performing the function that Wayne had employed him to perform. His deposition, therefore, was an admission of Wayne." Collins, 621 F.2d at 782.³

In the Hanford Nuclear...