Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Va.: In camera inspection ordered for documents allegedly protected by attorney-client privilege, (Mar 11, 2015)

By Edward L. Puzzo, J.D.

A pharmaceutical company under investigation by the FTC for unfair competition must identify and produce all documents for which attorney-client privilege claims are disputed for in camera review by a court-appointed Special Master, the federal district court in Richmond, Virginia has ruled (Federal Trade Commission v. Reckitt Benckiser Pharmaceuticals, Inc., March 10, 2015, Payne, R.).

This ongoing litigation arose from an FTC investigation into whether Reckitt Benckiser Pharmaceuticals hindered generic competition for Suboxone, its prescription opiate dependence treatment. On June 13, 2013, the FTC issued a Civil Investigative Demand (CID) to Reckitt, investigating whether it abused public regulatory processes, including filing a “citizen petition” with the FDA and negotiating with competing manufacturers, in order to maintain its monopoly in the market for Suboxone. Reckitt produced nearly 600,000 documents in response to the CID, but withheld approximately 28,000 other documents on the basis of attorney-client privilege.

Subsequently, the FTC petitioned the court to order Reckitt to produce the documents it had withheld. Reckitt argued that the documents sought—including draft memoranda, draft letters, draft press releases, draft public relations documents, and draft reports—were protected from disclosure by attorney-client privilege.

Attorney-client privilege. In the Fourth Circuit, if a client communicates information to his attorney with the understanding that the information will be revealed to others, that information—as well as the details underlying the data which was to be published—will not enjoy the privilege.

The FTC argued that attorney-client privilege should not apply to communications connected to a proposed public disclosure, including Reckitt’s published “citizen petition” to the FDA. Reckitt argued that there was a distinction between confidential communications regarding a document and the later publication of the document itself. It further argued that, as long as the attorneys involved provided legal advice and were not mere conduits for information to be disclosed publicly, the privilege should apply. But the court countered that legal advice was not privileged if it qualified as a detail underlying published data.

Reckitt argued that Grand Jury 2003, 341 F.3d 331 (4th Cir. 2003), overturned previous circuit precedent on the subject of privilege, but the court disagreed. Grand Jury 2003 pertained to a situation in which the client had not employed the attorney for purposes of publishing any information, even though a public disclosure was eventually made, the court explained. In contrast, other circuit precedent involved situations such as clients retaining attorneys expressly for the purpose of preparing a prospectus, SEC securities filings, or other documents intended for public disclosure. Considered on its facts, Grand Jury 2003 did not alter earlier circuit law governing documents prepared for publication.

The court concluded that, in the Fourth Circuit, the attorney-client privilege with respect to confidential communications does not apply to published documents—and the underlying details and data—if, at the time the communication was made, the client intended that the document was to be made public. Although some documents may not be privileged in their entirety, other documents—such as attorney's notes, communications between the attorney and client containing relevant data, and other documents that might contain "details underlying the data"—might well be privileged. Thus an individualized inspection of the documents was required to ensure that only non-privileged content is disclosed.

In camera review. In order to determine whether privilege has been properly asserted, an in camera inspection of documents whose privilege is disputed is appropriate and necessary in this case, the court ruled. Without it, the court could not correctly apply the Fourth Circuit’s attorney-client privilege law. Therefore, the court declared its intention to appoint a Special Master to determine the most efficient method to review categories of documents, to devise a system to determine which documents fall within the rule excluding them from privilege, to set a schedule for production of documents for in camera review, and to report to the court its findings. To that end, Reckitt was ordered to identify and produce all documents that did not require further review for privilege by April 1, 2015. Reckitt, as the party claiming privilege, was also ordered to bear the fees and expenses incurred by the Special Master, subject to the court’s reserved right to reallocate the costs in the future.

The case is Civil Action No. 3:14-mc-00005-REP.

Attorneys: Burke William Kappler, and Robert P. McIntosh, U.S. Attorney's Office, for Federal Trade Commission. William V. O'Reilly (Jones Day) for Reckitt Benckiser Pharmaceuticals, Inc.

Companies: Reckitt Benckiser Pharmaceuticals, Inc.

Cases: Antitrust FederalTradeCommissionNews VirginiaNews