Walgreen Co. v. U.S. Drug Enforcement Admin., 1:12-mc-43 (JCC/IDD)

CourtUnited States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)
Writing for the CourtJames C. Cacheris
Decision Date21 December 2012
PartiesIn re: Administrative Subpoena WALGREEN CO., Movant, v. UNITED STATES DRUG ENFORCEMENT ADMINISTRATION Respondent.
Docket Number1:12-mc-43 (JCC/IDD)

In Re: Administrative Subpoena WALGREEN CO., Movant,

1:12-mc-43 (JCC/IDD)


Dated: December 21, 2012


This matter is before the Court on Movant Walgreen Co.'s Objections [Dkt. 37] to the Magistrate Judge Ivan D. Davis' Order [Dkt. 32] denying Walgreens' Motion to Compel Return of Privileged Material [Dkt. 1] for lack of subject matter jurisdiction and the absence of a cause of action upon which to compel the Drug Enforcement Administration ("DEA") to return documents. For the following reasons, the Court will affirm the Magistrate Judge Davis.

1. Background

1. Factual Background

This case arises from Magistrate Judge Davis' denial of Movant's Motion to Compel Return of Privileged Material ("the Order"). In Judge Davis' Order, the court found that "there is no subject matter jurisdiction to hear the request and no cause

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of action upon which to compel the Drug Enforcement Administration to return documents." (Order at 1.)

Walgreens is required, as a distributor and dispenser of controlled substances, to maintain a DEA registration. In March of 2012, DEA issued a subpoena for documents to Walgreens ("subpoena") related to their distribution facility in Jupiter, Florida, and a number of Walgreens retail pharmacies located in the state. [Dkt. 2-1 Ex A.] A Magistrate Judge thereafter issued a Warrant for Inspection in April for various records, reports, files, and other documents associated with the DEA's investigation. [Dkt. 2-1 Ex B.] Walgreens complied with the terms of the subpoena and on June 8, 2012 made its fifth and final production in response. Walgreens did not include a privilege log. An accompanying cover letter stated that two of Walgreens' in-house attorneys and an outside counsel had conducted a review of the produced materials "to verify that the materials were non-privileged and responsive to the . . . categories of requests set forth in [the DEA subpoena]." A privilege log was promised in "in due course." [Dkt. 19-4.] Among the documents produced was a series of e-mails between involving various Walgreens personnel, including Dwayne Pinon, a Walgreens corporate attorney. [Dkt. 19-16.]

On August 9, 2012, DEA wrote a letter to Walgreens requesting that it produce a privilege log. [Dkt. 19-7.]

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Walgreens was informed that, because it had certified it had conducted a privilege review, the DEA assumed that Walgreens was not claiming privilege over the e-mails from Mr. Pinon included in the production, totaling 61 documents that included Mr. Pinon's name. On August 10, 2012, Walgreens' counsel responded to DEA's letter stating that it was "currently processing this information" and that it would send "a privilege log, along with any qualifying information, as soon as possible." [Dkt. 2-3 Ex. 3.] Over the following month, the DEA states that Walgreens did not contact DEA to claim privilege over any of the e-mails involving Mr. Pinon that had been produced, and they did not produce a privilege log. (DEA Resp. at 4.) The DEA states that because Walgreens did not claim privilege during this time, and because Walgreens had stated when it completed its production that it had conducted an extensive privilege review, the DEA concluded that Walgreens was not claiming privilege over the e-mails from Mr. Pinon that were produced. (DEA Resp. at 4-5.) On September 13, 2012, the DEA Administrator signed an Immediate Stop Order ("ISO") for Walgreens' Jupiter facility. The ISO described and relied in part on an e-mail involving Mr. Pinon. [Dkt. 19-8.]

On September 14, 2012, after DEA had provided a copy of the ISO to Walgreens' counsel, a member of Walgreens' legal team emailed the DEA with an attached letter, authored by

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counsel David S. Weinstein, seeking the return of documents that Walgreens claims were "inadvertently and erroneously produced" on June 8. [Dkt. 19-11.] The letter is dated September 10, 2012. [Id.] Walgreens did not email this letter to DEA prior to September 14. [Dkt. 19-12.] The letter was postmarked September 12. (DEA Resp. at 5.) The parties do not dispute, and the record shows, that DEA did not have it when the ISO was signed. [Dkt. 19-10.] Walgreens produced a privilege log on September 27, 2012. [Dkt. 19-12.]

Although DEA has not returned the e-mails in dispute, it communicated to Walgreens on October 3, 2012, its decision not to "voluntarily publicly release the ISO" or to "make further affirmative use of the claimed material pending a determination of the privilege issue," and to "safeguard the email and the ISO as it does for all evidence collected during an investigation." [Dkt. 19-13.] On the same day, October 3, Walgreens filed the present Motion seeking an order compelling DEA to return the allegedly privileged documents. On October 10, 2012, Walgreens also filed a petition for review of the ISO in the D.C. Circuit. [Dkt. 19-19.] Walgreens also intends to contest the allegations in the ISO during an upcoming administrative hearing before DEA. [Dkt. 19-14; 19-15.] Walgreens' counsel has stated that the hearing is scheduled for January 7, 2013.

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2. Procedural Background

Movant's original Motion to Compel Return of Privileged Material [Dkt. 1] was filed on October 3, 2012. They also filed a Memorandum in Support. [Dkt. 2.] The action was referred to Magistrate Judge Davis. On November 9, 2012, Judge Davis entered an Order dismissing Movant's Motion to Compel for lack of subject matter jurisdiction and failure to state a cause of action. [Dkt. 32.] On November 16, 2012, Movant filed the present Objections to the Order Denying their Motion to Compel. [Dkt. 37.] On December 7, 2012, the DEA filed a Response to Walgreens' Objections. [Dkt. 39.] On December 12, 2012, Movant filed a Reply to the DEA's Response. [Dkt. 41.]

2. Standard of Review

There is some disagreement as to what standard of review should be employed in reviewing the position of the Magistrate Judge. In their Objections memorandum, Walgreens suggests that a de novo standard is appropriate because the Motion to Compel was dispositive of the present business. At the magistrate level, Judge Davis observed that, because there was no pending case or proceeding underlying Walgreens' Motion to Compel, ruling on the Motion was not be dispositive. Tr. 27:13-15. If that were the case, the clearly erroneous or contrary to law standard would seemingly apply. Thus, in order to decide this question, the Court must first determine whether a motion to compel is, in this

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context, a "dispositive" or "non-dispositive" motion within the meaning of Rules 72(a) and 72(b) of the Federal Rules of Civil Procedure and 28 U.S.C. § 636(b)(1).

Rule 72(a) of the Federal Rules of Civil Procedure allows a magistrate judge to hear and decide non-dispositive motions. If a party wishes to object to a magistrate judge's order, he may do so within ten days and the district court will review the magistrate judge's order under a clearly erroneous or contrary to law standard. Rule 72(b) provides that a magistrate judge can make only recommendations as to dispositive motions and that the district judge, upon a de novo review, makes the final decision. Neither Rule 72(a) nor 72(b) defines the term "dispositive" beyond stating that a magistrate judge may issue an order in a case "not dispositive of a claim or defense of a party" and that he may issue only a recommendation in a case "dispositive of a claim or defense of a party...."

The Court observes here that neither the ruling of this Court as it relates Walgreens' Objections, nor the original ruling of Judge Davis, dispose of Walgreens' "claim or defense" of privilege over the documents in questions. Walgreens is still capable of claiming privilege over the documents. Furthermore, neither this Court's ruling, nor that of Judge Davis, forecloses Walgreens from filing a motion to quash the subpoena or a motion for a protective order.

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In filing the instant Motion to Compel, Walgreens seeks a favorable ruling upon the issue of privilege, through which to they would be able compel the return of documents upon which the DEA has relied in issuing the ISO for Walgreens' facility, thereby sidestepping the necessity of mounting a direct challenge to either subpoena or the ISO. Though the case law cited by and relied upon by Walgreens seemingly represents an entreaty to the Court to construe its jurisdiction over the present Motion as similar to its ability to hear a motion to quash an administrative subpoena, this case does not present a situation wherein it is appropriate to treat the present Motion as a motion to quash. The Court simply does not find it appropriate to do so when the Movant, by its own admission, has stated that "[they] don't have a motion to quash here." Tr. 7:20-21.

In essence, the Movant has made an evidentiary motion, and seeks a ruling as to privilege, yet has no underlying case, claim, or cause of action before this Court. While there is authority that suggests the applicability of either standard, the Court is confident that, whatever the standard employed, the result is...

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