Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Fla.: Forensic analysis ordered to rectify discovery errors, (Mar 4, 2014)

By Jody Coultas, J.D.

The federal district court in Miami has granted Patheon Inc.’s motion for a forensic analysis of Procaps S.A.’s electronic media as part of ongoing antitrust litigation initiated by Procaps against Patheon (Procaps S.A. v. Patheon Inc., February 28, 2014, Goodman, J.). The court also ordered Procaps to pay Patheon’s attorney’s fees related to litigating this discovery issue.

Procaps and Patheon were developers and marketers, respectively, of softgel products. After Patheon acquired another softgel company, litigation between the parties arose as to the antitrust effect of the acquisition on their business agreement. In response to Patheon’s document requests, Procaps’ counsel permitted the company to self-collect electronically-stored information and documents, allowed some executives to use a single search term to collect emails, and failed to realize that Procaps never actually implemented a litigation hold. Many of Procaps’ executives, including its CEO, testified that they never saw Patheon’s document requests. After learning about Procaps’ discovery process, Patheon filed a motion for a forensic analysis of Procaps’ electronic media. Patheon also requested attorney’s fees as the party prevailing in this discovery dispute.

Forensic examination. Procaps was ordered to engage Kroll Ontrack, Inc. to conduct forensic analysis detailed by the court and to make available to Kroll all of the sources of Procaps’ electronically sourced information and documents relevant to this case, according to the court. As part of the forensic analysis, Procaps’ counsel must interview persons specified by the court and identify and disclose to Patheon any other people, potential sources of hard copy documents, or electronically stored information that were reasonably likely to contain relevant information. The parties must also agree to: (i) a preliminary list of proposed search terms; (ii) a reasonable procedure by which the terms may be reasonably refined; and (iii) a suitable format for production. Kroll was tasked with attempting to identify any user-created files that were deleted, and which of those documents contained the agreed-upon search terms. Any non-privileged documents that were previously undiscovered must be turned over to Patheon. Procaps must pay all of Kroll’s fees, costs, and expenses incurred in connection with performing its work.

Attorney’s fees. The court awarded Patheon $24,115 in attorney’s fees to cover the cost of adjudicating this discovery dispute. Federal Rule of Civil Procedure 37 required entering an award of reasonable expenses, including attorney fees, against the party or attorney advising the conduct that necessitated the successful discovery motion, unless one of three exceptions applied. Procaps was responsible for paying 50% of the Rule 37 fees-shifting award and its counsel was responsible for paying the rest. The court urged Procaps’ counsel to determine which attorneys caused, or helped cause, the discovery failure and whether those attorneys should pay all or some of the award.

The case is Civil Action No. 12-24356-CIV.

Attorneys: Chris S. Coutroulis (Carlton Fields) for Procaps S.A. David A. Vogel (Cooley, LLP) for Patheon Inc.

Companies: Procaps S.A.; Patheon Inc.

Cases: Antitrust FloridaNews