This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:

  1. a U.S. Court of Appeals for the Eighth Circuit ruling upholding a district court’s order limiting the scope of discovery and imposing sanctions against the plaintiff for disregarding the court’s orders and repeatedly relitigating issues decided by the court
  2. a U.S. District Court for the District of Kansas decision requiring production of documents included on defendants’ privilege logs that cited state but not federal privileges as the basis for withholding the documents when the information contained therein related to both plaintiff’s federal and state claims
  3. a U.S. District Court for the Southern District of California decision requiring production of an email after the magistrate judge found that the email failed to qualify for the common-interest privilege because the sender was not represented by counsel
  4. a U.S. District Court for the District of Oregon decision denying a request for a protective order shielding a privileged document shown to a witness in preparation for a deposition, finding that the document lost its privileged status pursuant to Fed. R. Evid. 612 and holding that the document could be shown to and used with other witnesses at trial besides the individual originally shown the document

1. In Vallejo v. Amgen, Inc., 2018 WL 4288360 (8th Cir. Sept. 10, 2018), the U.S. Court of Appeals for the Eighth Circuit upheld a district court’s rulings limiting the scope of discovery and imposing sanctions against the plaintiff for disregarding the court’s orders and repeatedly relitigating issues decided by the court.

A decedent’s estate alleged that the decedent’s use of Enbrel, a biologic developed by Amgen, Inc., Wyeth, and Pfizer (collectively, Amgen) to treat psoriasis, caused him to develop myelodysplastic syndrome (MDS), which ultimately resulted in his death. Id. at *1.

Magistrate Judge Cheryl Zwart ordered phased discovery, the first phase of which was to address “general medical causation to determine whether Enbrel can cause MDS.” After multiple planning conferences, the parties still disputed the scope of discovery. Plaintiff requested (1) 206 search terms of adverse event reports submitted to the Food and Drug Administration (FDA) based on Enbrel, (2) information regarding other medications that work similarly to Enbrel and (3) the names of anyone responsible for determining whether Enbrel is capable of causing MDS, the names of those in charge of compiling adverse events and the person in charge of maintaining source documents for MDS adverse events. The magistrate judge found these requests unreasonable and entered a discovery order (1) limiting discovery to “15 search terms that provided the most specificity to MDS,” (2) requiring Amgen to produce only nonpublic studies on the possible relationship between Enbrel and MDS and (3) allowing plaintiff to depose Amgen’s global safety officer in charge of Enbrel (though plaintiff could later depose others if the deponent could not provide sufficient answers). Id. at *1-*2.

Shortly after this order, plaintiff filed a motion for clarification with the magistrate judge and an objection with the district court seeking to reverse the magistrate judge’s order. While these motions were pending, plaintiff served Amgen with a notice of deposition of the global safety officer. Amgen sought a protective order limiting the scope of the deposition to the magistrate judge’s discovery order. The magistrate judge granted the order and delayed the deposition until the district court could rule on plaintiff’s objections, which the district court overruled. Id. at *3.

At the deposition of the global safety officer, the parties again disputed the scope of discovery. The parties sought guidance from the magistrate judge, who rescheduled the deposition in order to provide “direct judicial supervision.” Id. at *3 (quoting Vallejo v. Amgen, Inc., 2017 WL 3037391, at *2 (D. Neb. May 30, 2017) (the Sanctions Order)). During the reconvened deposition at which the magistrate judge presided, she “field[ed] . . . numerous objections, arguments, and re-arguments over the court’s past and present rulings.” Id. at *4 (quoting Sanctions Order, at *2). Plaintiff’s counsel argued with the magistrate judge’s rulings on objections approximately 16 times. On multiple occasions, plaintiff’s counsel asked the witness questions that were “explicitly beyond the scope of discovery as ordered by the court.” Id. (quoting Sanctions Order, at *2). Also during the deposition, the plaintiff’s counsel disclosed to the magistrate judge that plaintiff had a general causation expert.

The following day, plaintiff filed a motion to depose additional Amgen employees and to compel Amgen to provide additional documents. The magistrate judge denied the motion, stating that plaintiff had sufficient information on causation from previous discovery and also ordered plaintiff to disclose her experts. The plaintiff objected to the order, which the district court overruled.

Amgen requested sanctions in the amount of $141,257.21 for work performed responding to or filing various motions and objections. Plaintiff moved to strike this request. The magistrate judge found that plaintiff’s counsel’s conduct was sanctionable and included the filing of (1) the motion for clarification, (2) the premature notice of deposition and refusal to withdraw the notice, (3) the motion to compel discovery and (4) the motion to strike. The magistrate judge ordered sanctions of $25,665. Plaintiff objected to the sanctions, which the district court overruled.

On appeal to the Eighth Circuit, plaintiff claimed that the district court erred by limiting her discovery and imposing sanctions. With respect to discovery requests, she first claimed the district court had no basis to assess proportionality because Amgen had failed to provide affidavits showing that plaintiff’s discovery requests were unduly burdensome. The Eighth Circuit rejected the argument that affidavits or other sworn statements are the only acceptable form by which to submit evidence but also rejected Amgen’s argument that statements in a brief, signed by counsel, were adequate substitutes for affidavits or other forms of evidence: “[C]ertification that the facts have evidentiary support may not be helpful in the context of Rule 26(b)(1), where a party’s burden must be quantified.” Id. at *6. Still, the Eighth Circuit found no abuse of discretion in the district court’s conclusion, saying, “Contrary to [plaintiff’s] contention that the district court had no basis to weigh proportionality, the district court, ‘based on common sense and the search conducted by [the plaintiff’s] counsel during the [discovery] hearing,’ had sufficient information to make an informed decision.” Id. at *7 (citations omitted).

The court of appeals also rejected claims that Amgen had misrepresented facts to the court and that plaintiff was denied the opportunity to cross-examine Amgen’s expert, finding any such error to be harmless, as the district court did not rely on the expert’s opinion in reaching its discovery decision. Id. at *7-*8.

Plaintiff also claimed that the court should have ordered Amgen to provide her with the same information the FDA would consider when evaluating medical causation. This argument failed because (1) MDS has never been identified as a safety signal in connection with Enbrel, (2) the causation standard used by the FDA differs from that used by courts and (3) the documents the FDA requests are optional and nonbinding, not essential or necessarily relevant. Id at *8.

Next, plaintiff claimed the limitation placed on the scope of discovery by the district court prejudiced her case, leading the district court to grant of summary judgment in favor of Amgen. Plaintiff argued that the magistrate judge misunderstood her counsel’s statement regarding her general causation witness. The Eighth Circuit found that there was no misunderstanding: “[A]lthough [the plaintiff] informed the magistrate judge that she had an expert on causation, in actuality she did not.” Id. at *9. Further, even if the magistrate judge had misunderstood counsel’s statement, the plaintiff nevertheless did not identify how the discovery denials resulted in unfairness. The district court granted summary judgment because “[t]here is no dispute that [the plaintiff’s] allegations involve complex scientific matters, and yet inexplicably — throughout the 3-year life span of this litigation — she has failed to retain an expert.” Id. at *10 (quoting Vallejo v. Amgen, Inc., 274 F. Supp. 3d 922, 927 (D. Neb. 2017)). The Eighth Circuit found that the district court properly exercised its discretion with respect to the discovery rulings.

Finally, plaintiff challenged the sanctions imposed by the district court pursuant to Fed. R. Civ. P. 11, 28 U.S.C. § 1927, and the court’s inherent power. According to the Eighth Circuit, Rule 11 sanctions are intended to “deter attorney and litigant misconduct.” The Eighth Circuit looked to plaintiff’s motion to compel discovery, finding that the motion was filed after the district court had overruled counsel’s objection to the magistrate judge’s discovery order. Further, “[t]he bulk, if not the entirety, of [the plaintiff’s] motion to compel represented relitigation of issues already decided by the court.” Id. at *11. “[A]bsent any change in circumstances, filing additional motions raising the same arguments was harassing, caused unnecessary delay, and needlessly increased the cost of this litigation.” Id. (quoting Sanctions Order, at *4).

The Eighth Circuit also found that plaintiff’s motion for clarification, motion to compel discovery and motion to strike unreasonably and vexatiously multiplied the proceedings, “wast[ing] everyone’s time.” Id. (quoting Sanctions Order, at *7). Under 28 U.S.C. § 1927, such conduct allows the court to order sanctions. Furthermore, “[t]he district court possesses inherent power ‘to manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases.’ ” Id. at *12 (citations omitted). In addition to relitigating issues, the Eighth Circuit found that plaintiff’s counsel became “unnecessarily argumentative” with the magistrate judge during the magistrate judge’s supervision of the Amgen witness’s deposition and repeatedly went beyond the scope of discovery as ordered by the court. “Attorneys are entitled to advocate zealously for their clients, but they must do so in accordance with the law, the court rules, and the orders of the court.”

The Eighth Circuit concluded that the district court did not err by limiting discovery or by imposing sanctions and affirmed the district court.

2. In D.M. v. Wesley Med. Ctr. LLC, 2019 WL 329569 (D. Kan. Jan. 25, 2019), Magistrate Judge Kenneth G. Gale required defendants to produce responsive documents identified on their privilege logs as being subject to either the medical peer review privilege or risk management privilege under Kansas law, finding that federal law did not recognize either privilege and that the documents at issue related to both plaintiff’s federal and state law causes of action.

Plaintiff, through his natural guardian and next friend, filed suit against defendant healthcare providers Wesley Medical Center LLC and Via Christi Health, alleging that under their care he suffered a stroke that left him with debilitating physical injuries. Id. at *1. Plaintiff brought claims under Kansas state medical malpractice laws and the Federal Emergency Medical Treatment and Active Labor Act.

In response to a number of plaintiff’s requests for production, defendants each identified on a privilege log a number of responsive documents over which defendants asserted Kansas’ medical peer review or risk management privileges. Defendant Via Christi’s privilege log indicated that certain of the withheld documents included details of the event, injury details, when and where the event occurred and who was notified about the event, which plaintiff argued were discoverable because they contained “essential facts going to the heart of [his] claims.” Accordingly, plaintiff filed a motion to compel seeking an order requiring defendants to provide the materials in question to the court for an in camera inspection and redaction of nonfacts from the documents, after which defendants would be required to produce them.

Magistrate Judge Gale began his analysis by stating that “[n]either the Supreme Court nor the Tenth Circuit has recognized a medical peer review or medical risk management privilege under federal common law.” He noted, however, that plaintiff brought pendant state law causes of action under Kansas law and that both the medical peer review and risk management privileges were recognized by statute in Kansas. Id. at *2. The magistrate judge thus framed the question presented as “whether and/or how the Kansas state court statutory peer review privilege [and risk management privilege] appl[y] to Plaintiff’s federal and pendant state law claims in federal court.” Id. at *3.

Magistrate Judge Gale relied on the standard articulated in one of his prior opinions to answer this question. In particular, he held that “to the extent evidence relates to both the federal and state law causes of action, the privilege[s] will not apply to the extent [they] w[ere] adequately opposed by Plaintiff.” Although the parties did not address whether the evidence at issue related to plaintiff’s claims under federal or state law, Magistrate Judge Gale went on to find that the information implicated by plaintiff’s discovery requests related to both his federal and state law causes of action. He further held that because plaintiff adequately opposed the invocation of the privileges by bringing a motion to compel, Kansas’ statutory privileges did not apply.

Accordingly, Magistrate Judge Gale overruled defendants’ objections to plaintiff’s requests for production based on Kansas’ medical peer review and risk management privileges and granted plaintiff’s motion to compel. He also declined to engage in an in camera review of the documents and instead ordered the defendants to produce unredacted copies of the responsive documents within 30 days of the order.

3. In Regents of University of California v. Affymetrix, Inc., 2018 WL 3032846 (S.D. Cal. June 19, 2018), Magistrate Judge Nita L. Stormes required production of an email after finding the email was not protected by the common-interest privilege because the sender was not represented by counsel.

This case concerned patent infringement claims regarding fluorescent dyes used as biomarkers. During discovery, third-party AAT Bioquest Inc. (AAT) inadvertently produced an email from an Affymetrix scientist to Affymetrix in-house counsel that copied Jack Diwu, the lead scientist and principal of AAT, which was sent during negotiations between AAT and Affymetrix over a subsequently executed licensing agreement. Id. at *1. AAT clawed the email back after production, but plaintiff sought to defeat the privilege claim, arguing that Diwu’s presence rendered the attorney-client privilege inapplicable and, in the alternative, that the email contained facts and was not a privileged communication.

Magistrate Judge Stormes began her analysis with a description of the law relating to privilege, finding that the law of the Ninth Circuit governed the privilege issues in this case. Under Ninth Circuit law, disclosure to a third-party destroys the privilege unless the third party shared a legally sufficient common interest in the legal matter at issue. This common-interest exception applies when “(1) the communication is made by separate parties in the course of a matter of common interest; (2) the communication is designed to further that effort; and (3) the privilege has not been waived.” Id. (quoting U.S. v. Bergonzi, 216 F.R.D. 487, 495 (N.D. Cal. 2003)). A business interest is not enough — the privilege must arise from attempts to create and further a common defense strategy. The protection extends beyond litigation and “is applicable whenever parties with common interests join forces for the purpose of obtaining more effective legal assistance.” Id. (quoting Nidec Corp. v. Victor Co. of Japan, 249 F.R.D. 575, 578 (N.D. Cal. 2007)). “Parties may have both common commercial and legal interests, such as when the parties are discussing a merger or negotiating for a patent license.” Id. at *3.

Plaintiffs argued that the common-interest doctrine did not apply because each side must be represented by counsel. On this issue, Magistrate Judge Stormes stated that “neither party disputes that the email to which the challenged document is attached sought legal advice; it is simply Mr. Diwu’s relationship to Affymetrix that causes challenge, and falls into a somewhat nebulous area.” The magistrate judge acknowledged that communications between inventors or employees of the same company can be privileged but concluded that this line of authority was inapplicable as there was no dispute that Diwu was employed by a different company and was not “the functional equivalent of an employee.” “As he was neither a co-worker nor the functional equivalent of an employee, this case presents a third party business associate that was included on a communication between Affymetrix and its counsel. Accordingly, privilege was waived by Mr. Diwu’s inclusion, unless the common interest exception applies.” Id. at *4.

The magistrate judge reviewed the case law and concluded that the two parties to a common-interest agreement must be represented by counsel. Id. (citing cases). This approach “comports with the intent behind the common-interest privilege, to permit attorneys to develop a joint legal strategy; the development of legal strategy requires the participation of lawyers.” The magistrate judge then explained that

While this Court was not able to locate any Ninth Circuit precedent that explicitly requires both parties be represented by separate counsel, nor was there any precedent that extended the benefits of the common interest exception to the attorney client privilege when the disclosure at issue involved an unrepresented third-party employed by a separate entity.... Review of case law regarding common interest exception within the Ninth Circuit reveals that in analogous cases where the common interest exception was applied in the attorney-client (as opposed to work-product) context, the parties on both sides of the equation were represented by counsel. Id. at *5 (emphasis in original).

Affymetrix relied on In re Regents of the University of California, 101 F.3d 1386 (Fed. Cir. 1996), which held that the common-interest exception applied to prevent the disclosure of communications between the university and Eli Lilly’s in-house counsel “because as an optionee and licensee of the patent, Lilly shared a common interest in obtaining a valid and enforceable patent.” According to the magistrate judge, Regents was distinguishable, however, because the parties were represented by separate counsel, they had entered into an exclusive license and option agreement and the communication occurred during patent prosecution, not during development of the underlying technology.

As defendants had failed to show that both parties to the communication were represented by counsel, Magistrate Judge Stormes concluded that the common-interest exception was not applicable to the document at issue and ordered its production to plaintiff. Id. at *6.

4. In Adidas America, Inc. v. TRB Acquisitions LLC, 2018 WL 4849312 (D. Ore. Oct. 5, 2018), Judge Michael H. Simon held that a privileged document shown to a witness in preparation for a deposition lost its privileged status pursuant to Fed. R. Evid. 612 and denied plaintiffs’ request for a protective order, ruling that the document at issue could be shown to and used with other witnesses at trial besides the individual originally shown the document.

In this trademark litigation, a witness reviewed and relied on the substance of an email protected in part by the attorney-client privilege during the preparation for a Rule 30(b)(6) deposition. Id. at *2. In an earlier ruling, Judge Simon held that plaintiffs had thus waived the attorney-client privilege for the entire email. Federal Rule of Evidence 612 provides that when a witness uses a writing to refresh her memory before testifying, “an adverse party is entitled to have the writing produced at the hearing, to inspect it, to cross-examine the witness about it, and to introduce in evidence any portion that relates to the witness’s testimony.” Rule 612 applies at depositions, and, on this basis, Judge Simon held that the privilege had been waived for the document at issue. See Fed. R. Civ. P. 30(c) (“The examination and cross-examination of witnesses may proceed as permitted at the trial under the provisions of the Federal Rules of Evidence ….”). Plaintiffs moved for a protective order clarifying that at trial, the privileged email could only be shown to the witness who had reviewed its contents in preparing for a deposition and that defendants could not question other witnesses about the email.

Defendants argued that Rule 612 does not contemplate any evidentiary restrictions on the use of a document at trial admitted under this provision. Judge Simon agreed and denied the motion for a protective order, holding that the entire privileged email could be entered into evidence, shown to other witnesses, and used for the questioning of other witnesses pursuant to Rule 612. Id. at *2-3. Judge Simon explained that Rule 612 provides that the writing used to refresh a witness’ memory before trial could be introduced into evidence and, once entered into evidence, the provision contained no “express limit” on the document’s use. Id. at *3.