Fed. Trade Comm'n v. Boehringer Ingelheim Pharm., Inc.
Opinion of the Court
KAVANAUGH, Circuit Judge:
The pharmaceutical company Boehringer claimed attorney-client privilege over certain documents subpoenaed by the Federal Trade Commission. The attorney-client privilege applies to a communication between attorney and client if at least "one of the significant purposes" of the communication was to obtain or provide legal advice.
In re Kellogg Brown & Root, Inc.
,
I
A drug manufacturer that holds a patent has a market advantage. When a generic drug company challenges the validity of that patent, it threatens the patent holder's monopoly. Such a challenge can result in a settlement in which the patent holder pays the challenger to drop the challenge. That scenario is known as a "reverse payment" settlement-so labeled because the settlement requires the patent holder to "pay the alleged infringer, rather than the other way around."
FTC v. Actavis, Inc.
,
In
Actavis
, the Supreme Court analyzed the legality of reverse payments. If the payments are made simply to avoid litigation costs, they may be lawful. But if "the basic reason is a desire to maintain and to share patent-generated monopoly profits," then "the antitrust laws are likely to forbid the arrangement."
In 2008, a patent negotiation occurred between Boehringer (the name brand with the patent) and Barr (the generic seeking to challenge the patent). Ultimately, the parties reached a reverse payment settlement.
The Federal Trade Commission pays close attention to reverse payment settlements to ensure that they do not run afoul of antitrust law. In 2009, the Commission began investigating the Boehringer-Barr settlement. During the investigation, the Commission subpoenaed documents from Boehringer. Boehringer claimed that the subpoenaed documents were created by Boehringer employees for Boehringer's general counsel, Marla Persky, at her request. The documents allowed Persky to analyze and navigate the treacherous antitrust issues surrounding reverse payment settlements. Other documents reflected communications between Persky and Boehringer executives regarding the possible settlement. Boehringer asserted attorney-client privilege over the documents.
The burden is on the proponent of the privilege to demonstrate that it applies.
See
United States v. Legal Services for New York City
,
II
As relevant here, the attorney-client privilege applies to a confidential communication between attorney and client if the communication was made for the purpose of obtaining or providing legal advice.
See
Upjohn Co. v. United States
,
In the corporate context, the attorney-client privilege applies to communications between corporate employees and a corporation's counsel made for the purpose of obtaining or providing legal advice. The privilege applies regardless of whether the attorney is in-house counsel or outside counsel.
The application of the attorney-client privilege can become more complicated when a communication has multiple purposes-in particular, a legal purpose and a business purpose. In this case, for example, the communications had a legal purpose: to help the company ensure compliance with the antitrust laws and negotiate a lawful settlement. But the communications also had a business purpose: to help the company negotiate a settlement on favorable financial terms.
In a situation like this where a communication has multiple purposes, courts apply the "primary purpose" test to determine whether the communication is privileged.
See
Kellogg
,
Our approach to this issue, as we explained in
Kellogg
, helps to reduce uncertainty regarding the attorney-client privilege. Reducing uncertainty is important in the privilege context because, as the Supreme Court has stated, an "uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all."
Upjohn
,
In this case, the question therefore is whether obtaining or providing legal advice was one of the significant purposes of the communications at issue. The answer is yes.
The relevant communications consist primarily of the transmission of factual information from Boehringer's employees to the general counsel, at the general counsel's request, for the purpose of assisting the general counsel in formulating her legal advice regarding a possible settlement. Other communications were between the general counsel and the corporation's executives regarding the settlement. All of those communications are protected by the attorney-client privilege because one of the significant purposes of the communications was "obtaining or providing legal advice"-namely, settlement and antitrust advice.
Kellogg
,
To be sure, the communications at issue here also served a business purpose. The decision whether and at what price to settle ultimately was a business decision as well as a legal decision for Boehringer. But as we stated in Kellogg , what matters is whether obtaining or providing legal advice was one of the significant purposes of the attorney-client communications. Here, as the District Court correctly concluded, one of the significant purposes of these communications was to obtain or provide legal advice. It follows that Boehringer's general counsel was acting as an attorney and that the communications are privileged.
In so ruling, we emphasize that the attorney-client privilege "only protects disclosure of communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney."
Upjohn
,
* * *
In its landmark decision in
Upjohn Co. v. United States
,
So ordered.
For a few documents sought by the FTC, Boehringer asserted only the work product privilege and not the attorney-client privilege. This Court's prior decision in this case analyzed the work product issue.
FTC v. Boehringer Ingelheim Pharmaceuticals, Inc.
,
Concurring Opinion
I agree with the opinion of the court as far as it goes. I write separately to emphasize why the spare elegance of the court's opinion should not be mistaken for an expansion of the attorney-client privilege recognized in our prior precedents: In short, the district court engaged extensively with the disputed documents and the bases for the privilege claims, and followed certain truncated procedures only with the parties' consent.
As an exception from the general presumption in favor of discovery, the "attorney-client privilege must be strictly confined within the narrowest possible limits consistent with the logic of its principle."
In re Lindsey
,
Clients claiming privilege may seek to shield information supplied in confidence to their lawyers. When a client's confidences are a "significant and inseparable part" of the lawyer's advice, they are protected as they appear within privileged communications between lawyer and client.
SealedCase
(1984),
The FTC does not dispute the status of the documents as "communications" between lawyer and client, Oral Argument Tr. at 12, instead focusing on the magistrate judge's conclusion that Boehringer had met its burden to show that the communications at issue had a significant legal purpose. Where a privilege claimant has closely intertwined purposes-a legal purpose as well as a business purpose-it must still establish to a "reasonable certainty,"
Sealed Case
(1984),
Neither a general statement that the lawyer wore both lawyer and businessperson "hats" during the communications nor a blanket assertion of legal purpose is enough.
See
Sealed Case
(1984),
The magistrate judge, having personally "reviewed
in camera
all the documents at issue," found that Boehringer met that considerable burden in this case.
FTC v. Boehringer Ingelheim Pharm., Inc.
,
In light of our 2015 decision in this case clarifying the standard for work-product protection,
see
FTC v. Boehringer Ingelheim Pharmaceuticals
,
The court enjoys considerable discretion in making that determination in the first instance, and we owe its fact-finding appreciable deference.
See
Boehringer
,
("Findings of fact ... must not be set aside unless clearly erroneous."). Because I see no clear error in the district court's finding, I concur.
Reference
- Full Case Name
- FEDERAL TRADE COMMISSION, Appellant v. BOEHRINGER INGELHEIM PHARMACEUTICALS, INC., Appellee
- Cited By
- 11 cases
- Status
- Published