Robert E. Connolly
Law Office of Robert Connolly
In a Pretrial Order No. 105 (“PTO”) district court Judge Cynthia M. Rufe, ordered that the defendant companies produce responsive documents from agreed upon custodian with agreed upon search terms without regard for the relevance or responsiveness of the document. The PTO allows the companies to try to ‘claw back” irrelevant material after it is has been produced. The corporate defendants contend that the Court ignored the relevant Federal Rule of Civil Procedure by ruling that the companies could not conduct relevance review until after production. Then they could attempt to “claw back” non-relevant documents.
This discovery dispute is part of the sprawling multidistrict litigation, spearheaded by the State of Connecticut, in which the attorney general of all 50 states and several territories, combined in a multidistrict litigation (MDL) with private plaintiffs, have alleged a price fixing conspiracy the generic pharmaceutical industry involving 35 generic pharmaceutical manufacturers and 18 individual executives for allegedly fixing the price and allocating markets for approximately 200 generic drugs.
The rule at issue is Federal Rule of Civil Procedure 26(b)(1) which defines “the scope of discovery” in federal civil cases as “any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case[.]” A party may object to discovery requests, and inform the requesting party that “materials are being withheld,” insofar as they exceed “the scope of Rule 26(b).” Fed. R. Civ. P. 34(b)(2)(C). For its part, “the court must limit the * * * extent of discovery” if “proposed discovery is outside the scope permitted by Rule 26(b)(1).” Fed. R. Civ. P. 26(b)(2)(C)(iii).
The PTO establishing the discovery procedure at issue was based on the Report and Recommendation of a Special Master which the Court adopted. Judge Rufe’s only comment in adopting this PTO was a footnote stating: “the Recommended Order sufficiently balances the interests of the parties and, most importantly, provides a road map to move the litigation forward at this time.” Pretrial Order No. 105, filed 10/24/2019, In re: Generic Pharmaceuticals Pricing Antitrust Litigation, Case No. 2: 16-MD-27124 (E.D. Pa.) J. Rufe.
After the district court entered the PTO, the defendants sought a writ of mandamus from the Third Circuit. A divided Third Circuit panel denied mandamus, stating that district courts have broad discretion to compel document production and that the CMO allowed petitioners to attempt to “claw back” irrelevant documents after they were produced. In re: Actavis Holdco U.S. Inc., et al., No. 19-3549 (3d Cir. Dec. 6, 2019). But Judge Phipps explained in dissent, the CMO “constitutes a serious and exceptional error” that upends the most fundamental norms of civil discovery. Judge Phipps wrote: “[T]he rules of civil procedure allow for a review for responsiveness and relevance before production,” and “a court does not spontaneously gain authority to compel production of non-responsive, irrelevant documents simply by establishing a period of time afterwards for the review and potential return of the documents produced.” Id.
In February 2020, Justice Samuel A. Alito Jr. stayed the PTO which allowed the drug companies to hold onto documents that met the search terms but that they felt weren’t relevant to the litigation. The partial stay was lifted a week later, however, in a one-paragraph order handed down without any explanation for the reversal.
Whether the Supreme Court ultimately grants cert may depend upon which version of the facts the Court finds persuasive. The companies framed the cert. petition issue as “Whether, contrary to Rule 26(b), this Court’s decisions, and the decisions of five circuits, a district court may compel a party that has not engaged in discovery-related misconduct to produce documents that are neither relevant nor responsive. Petition for Writ of Certiorari, Activas Holdco, Inc. v. State of Connecticut, No 19-1010 (S. Ct.) filed, Feb 11, 2020. The States in their opposition to cert claimed that the corporate defendants had engaged in obstructive discovery that justified the PTO. According to the States, the Supreme Court should deny cert arguing the PTO in the case was “entirely fact-bound, specifically tailored to the unique circumstances of this case. Respondents’ Brief in Opposition to Petition for Writ of Certiorari at 4.
A dozen major corporations including Microsoft, GlaxoSmithKline and 3M filed an amicus brief urging the Supreme Court to take the case. The companies allege that the PTO is a particularly distressing example of discovery abuse where companies are required to overproduce documents and then attempt to “claw back” those which are not relevant or otherwise should not have been produced. Motion for Leave to File Brief for Amici Curiae and Brief of Twelve Companies and Robert D. Owen As Amici Curiae in Support of Petitioners, Actavis Holdco U.S.., Inc et al v. Connecticut, et al, No. 19-1010 (filed March 16, 2020).
The case is worth noting because plaintiffs may seek similar orders in other mass civil litigation. The briefs filed to date should be a rich resource for any party heading down this road. Moreover, if the decision stands, it could become the new norm in civil litigation.
[Note: The author represents an individual defendant in this case but took no part in the discovery dispute discussed above. ]