In re Restasis (Cyclosporine Ophthalmic Emulsion) Antitrust Litig.
Docket: 18-MD-2819 (NG) (LB)
Court: District Court, E.D. New York; January 16, 2019; Federal District Court
In this multi-district litigation, plaintiffs are seeking to compel Allergan to produce documents shared with independent consultants Robert Pollock and Timothy Hanford. The plaintiffs argue that Allergan waived attorney-client privilege by sharing these documents with third parties. Allergan counters this claim by invoking two exceptions to the waiver rule: it asserts that the consultants' input was essential for providing informed legal advice and that the consultants were effectively part of Allergan’s team, akin to employees.
On December 19, 2018, the court held a hearing on the plaintiffs' motion and subsequently granted it. Allergan submitted declarations from key personnel, including Damon Burrows, Robert Lively, and Christina Markus, detailing the consultants' roles in responding to FDA draft guidance relevant to the approval of generic versions of Allergan's Restasis.
Pollock, a former FDA official, was engaged in July 2013 for his specialized knowledge of FDA regulations, which Allergan believed was critical for shaping legal strategies. Markus noted that Pollock's input directly influenced her legal advice, highlighting a specific instance where she sought his strategic guidance on a draft comment to the FDA.
Hanford, retained in August 2015, was recommended by Lively for his extensive knowledge of congressional and federal agency practices, particularly in health care. Both consultants were regarded as integral to Allergan's legal team, with expectations of confidentiality regarding shared communications.
Mr. Hanford, a lawyer, did not provide legal advice to Allergan, though Mr. Lively regarded him as knowledgeable about the information needed for corporate legal advice. Mr. Lively, not a lawyer, forwarded emails containing privileged information from Allergan's attorneys to Mr. Hanford, specifically highlighting two emails that included legal advice from Allergan's General Counsel, Robert Bailey, regarding an executive order and an August 2017 citizen petition. Mr. Lively sought Mr. Hanford's strategic advice and input on these matters to assist his discussions with Mr. Bailey. Ms. Markus and Mr. Lively treated Mr. Hanford as an integral member of their team responding to the FDA and Congress about Restasis, and they viewed their communications with him as confidential. Allergan's consulting agreement with ADC Strategies mandated confidentiality regarding information shared.
The attorney-client privilege is established to encourage open communication between attorneys and clients, thus promoting public interests in law and justice. This privilege protects the provision of professional advice and the sharing of information necessary for informed legal counsel, particularly within corporate settings where communications between in-house counsel and employees are privileged if aimed at securing legal advice. However, the privilege, which limits public access to evidence, must be narrowly construed. Voluntary disclosure of privileged communications to third parties typically waives the privilege. Allergan claims that its communications with consultants Mr. Pollock and Mr. Hanford fall under exceptions to the waiver rule. As the party asserting the privilege, Allergan must prove its applicability. The Second Circuit's ruling in United States v. Kovel extended the privilege to third-party communications deemed necessary or highly useful for effective legal consultation, including interactions with accountants hired by tax lawyers.
An attorney's use of an interpreter to translate a client's communication does not waive attorney-client privilege. Similarly, an accountant’s presence during discussions about complex tax matters does not compromise that privilege, as accounting terms may be foreign to some attorneys. Courts must interpret the third-party waiver exception narrowly, requiring that communications remain confidential and that the third party is indispensable or serves a specialized role in facilitating communication between attorney and client. The privilege is not extended merely because the third party's input is significant to the attorney's representation; it must specifically enhance the understanding between the attorney and client. Allergan failed to demonstrate that the contributions of Mr. Pollock and Mr. Hanford were necessary for its counsel to grasp vital aspects of Allergan's communications for legal advice. The case's context, involving regulatory complexities with the FDA, does not change this analysis, as their roles were more about navigating challenges than aiding attorney-client communication. The precedent set in In re Grand Jury, which protected communications involving public relations consultants under specific circumstances, is limited and does not apply here, as Allergan's situation involves routine consultant hiring rather than unique legal challenges.
Allergan has failed to demonstrate that communications with consultants Mr. Pollock and Mr. Hanford are protected under the Kovel doctrine, which applies to situations where consultants translate concepts for attorneys. The court found that these consultants were not meaningfully distinct from typical consultants and that Allergan's request could undermine established third-party waiver rules.
The defense argued that these consultants functioned as equivalent to Allergan employees, invoking the 'functional equivalent' exception to attorney-client privilege, which was established in *In re Bieter Co.*. This exception applies when a consultant significantly contributes to a project and operates closely with the company. However, the Second Circuit has not definitively recognized this exception, with some district courts expressing skepticism towards its adoption.
If the exception is considered, it should be interpreted narrowly. Relevant factors for determining functional equivalency include whether the consultant made independent decisions for the company, had unique information, represented the company externally, spent substantial time working for the company, and sought legal guidance for their work. The court referenced prior cases that illustrate these principles, noting that in *In re Copper Mkt.*, a public relations firm was deemed functionally equivalent due to its decision-making authority and legal consultation, while in *Exp.-Imp. Bank*, a financial consultant was found to have waived attorney-client privilege due to insufficient functional equivalency.
The court determined that the consultants, despite their significant responsibilities in negotiating, formulating financial strategies, and communicating with creditors, did not meet the criteria for functional equivalency to company employees. It emphasized that extending this doctrine to all financial consultants would undermine the narrow scope of attorney-client privilege. In a related case, Church, Dwight Co., the court rejected the notion that outside marketing firm employees were equivalent to in-house employees, stating that hiring external agencies is common practice and does not necessitate sharing legal advice. The defendant cited In re Flonase Antitrust Litig. to argue for a broader interpretation of equivalency, but the court declined to adopt that approach, preferring to adhere to Second Circuit law. The court found that the consultants, Mr. Pollock and Mr. Hanford, were typical part-time consultants hired through standard agreements, without unique or specialized knowledge that surpassed internal capabilities. They did not exercise independent decision-making, nor did they represent Allergan in communications with third parties. The consultants operated from their offices, used their own email addresses, and likely worked with other clients simultaneously. Allergan's assertion that its in-house team was too small to manage the complexities of the situation did not elevate the consultants' status to that of employees. Ultimately, the defendant failed to prove that the consultants were functionally equivalent to Allergan's employees.
The court finds that the roles of certain consultants do not equate to those in precedent cases like In re Bieter and In re Copper Mkt., which influences the application of the privilege waiver rule. The plaintiffs' motion to compel the production of documents is granted, requiring the defendant to produce relevant materials within two weeks. The court refrains from addressing the plaintiffs' request for communications regarding Allergan's citizen petitions, pending further discussions between the parties.
Mr. Hanford's involvement, initiated by a non-attorney, Mr. Lively, raises doubts about the necessity of Hanford's input for legal advice, suggesting that communications between him and Allergan’s counsel may not be privileged. The analysis of privilege hinges on whether the consultant had a significant corporate role, maintained a close relationship with company principals, and possessed unique information. Most privilege log entries for Mr. Pollock are from a brief period, indicating a consultant role rather than that of an employee. Although Mr. Hanford's tenure at Allergan was longer, the relevance of his work specifically related to Restasis is unclear, as the motion pertains to a limited number of emails over two years, suggesting he may not function as a de facto employee. Additionally, Mr. Lively's declaration indicates a variable collaboration with Mr. Hanford, akin to that with other employees.
