• Third Circuit Rejects Petition For Mandamus And Backs Ruling Requiring Production Of Communications With Counsel Regarding Suit With “Pay-for-Delay” Settlement

  03/26/2024

  On March 11, 2024, the United States Court of Appeals for the Third Circuit denied a mandamus petition from AbbVie Inc. and Besins Healthcare Inc. (collectively “Petitioners”) seeking to overturn a district court order which required the production of documents prepared by in-house counsel pursuant to the crime-fraud exception to the attorney-client privilege. In re Abbott Lab’ys, No. 23-2412, 2024 WL 1040669 (3d Cir. Mar. 11, 2024). In its opinion, the Court cited the high bar for mandamus petitions, the lack of binding precedent with a similar fact pattern, and the alternative remedies that remain available to Petitioners.

  The current case traces its origins back to a 2014 Federal Trade Commission (“FTC”) lawsuit alleging Petitioners maintained an illegal monopoly through the filing of alleged sham patent infringement lawsuits. In that case, the district court sided with the FTC after a bench trial, finding that internal counsel for Petitioners had “actual knowledge” that the infringement lawsuits were “baseless” and intended to delay the introduction of generic alternatives to Petitioners’ pharmaceutical products. The Third Circuit upheld the district court’s ruling in the FTC case.

  In 2019, Respondents, various drug manufacturers, filed a follow-on suit alleging violations of the antitrust laws consistent with the FTC’s claims. During discovery in the follow-on case, Respondents moved to compel the production of 211 documents, which they contended revealed Petitioners’ in-house counsel’s purported understanding of the sham litigation. Petitioners sought to prevent these documents from being produced, citing attorney-client privilege. Following in-camera review, the district court ordered the production of 19 documents holding that these documents fall within the crime fraud exception because they show that the “attorneys used their own legal research and analysis . . . in furtherance of the fraud.” Petitioners sought a writ of mandamus overturning the district court’s order.

  The Third Circuit explained that a writ of mandamus is an “extreme” remedy, which requires the showing of (1) a clear and indisputable abuse of discretion or error of law, (2) a lack of an alternative avenue for adequate relief, and (3) a likelihood of irreparable harm. Even when these three elements are satisfied, courts still have broad discretion regarding whether to grant a mandamus opinion. 

  Here, according to the Third Circuit, none of these three elements were met. First, the Court held there was no clear and indisputable right to relief because there was no binding precedent protecting this information from disclosure. The Court did not find any precedent, nor did the Petitioners point to any precedent, holding that a sham litigation is not a type of fraud that allows a party to invoke the crime-fraud exception to the attorney-client privilege. Second, the Court indicated there were multiple alternative avenues for adequate relief. The Petitioners may file a post-judgment appeal to remedy any improper disclosure of privileged materials. The Court noted that, in cases of improper disclosure, appellate courts can “vacate the adverse judgment and remand for a new trial in which the protected materials and its fruits are excluded from evidence.” Finally, the Court held that Petitioners failed to show irreparable harm because the documents at issue were more than a decade old and related to an expired patent. Further, the Court noted that the parties have already agreed to protective orders to help prevent harmful public disclosure. For these reasons, the Third Circuit denied the petition.

  CATEGORY: Antitrust
  

LINKS & DOWNLOADS

• In re Abbott Lab’ys