Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Fla.: In camera review for privilege denied for document produced by third party, (Apr 16, 2015)

By Linda O’Brien, J.D., LL.M.

In the discovery phase of an antitrust dispute that stemmed from an agreement between Procaps S.A. and Patheon Inc. to develop and market a branded softgel capsule service for pharmaceutical products, a magistrate judge in the federal district court in Miami has denied the plaintiff’s motion for in camera review for privilege of a document produced by a third party (Procaps S.A. v. Patheon Inc., April 15, 2015, Goodman, J.).

Procaps S.A. is a Columbia-based developer and manufacturer of softgel capsules. Procaps and Patheon entered into a collaboration agreement to market softgel manufacturing and developing services. After Patheon acquired another softgel company, Banner Pharmcaps, Procaps believed that it could no longer perform under the collaboration agreement, claiming that the agreement became an illegal horizontal restraint on trade. When Patheon refused to pay Procaps to leave the agreement or to divest Banner, Procaps filed suit, alleging antitrust violations of the Sherman Act.

In December 2013, Procaps served a subpoena on DSM, a New Jersey-based affiliate of Patheon, requiring production of certain documents. DSM refused, and the two companies litigated their discovery dispute arising from the subpoena in the New Jersey district court. In March 2015, DSM informed Procaps that it had inadvertently produced privileged information in response to a motion to compel and demanded the return of the information. Procaps, which had disclosed privileged portions of the challenged document in its responses to Patheon’s interrogatories, moved the court to review in camera for privilege DSM’s document and determine whether Procaps must revised its interrogatory answer.

The court determined that it lacked jurisdiction to entertain privilege and waiver issues concerning the subpoena served on DSM and that there were no exceptional circumstances that would justify the court’s resolution of prolonged discovery dispute already before the New Jersey district court. Federal Rule of Civil Procedure 45 provides that if a party makes a claim that information produced in response to a subpoena is privileged, then the party seeking to compel production may present the information under seal in the district court where compliance is required for a determination of the claim.

According to the court, DSM is headquartered in New Jersey, and Procaps had already filed three motions in the federal district court in New Jersey concerning the subpoena and raising the same arguments of privilege and waiver in its pending motion for in camera review. The New Jersey court had far more familiarity with the DSM subpoena than the court, given that it has held two hearings, issued orders, and reviewed the motions and memoranda.

Moreover, DSM was not a party before the court, and the dispute did not involve all discovery in the case. Therefore, the New Jersey court, where DSM was represented by counsel, should consider issues concerning a privilege claim documents produced by DSM and waiver caused by its apparent inadvertent production, the court concluded.

The case is No. 12-24356-CIV-GOODMAN.

Attorneys: Chris S. Coutroulis (Carlton Fields Jorden Burt, PA), and Karen L. Hagberg (Morrison & Foerster) for Procaps SA. David A. Vogel (Cooley, LLP), Derek Eduardo Leon (Leon Cosgrove, LLC), and Robert Mark Brochin (Morgan Lewis & Bockius) for Patheon Inc., Sobel USA, Inc., and Banner Pharmacaps Europe BV.

Companies: Procaps S.A.; Patheon Inc.; Sobel USA, Inc.; Banner Pharmacaps Europe BV.

Cases: Antitrust FloridaNews