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Eastern District Of Pennsylvania Denies Motion To Compel The Election Of Defendants’ “Subjective Beliefs”
09/18/2024On August 22, 2024, Judge Harvey Bartle III of the United States District Court for the Eastern District of Pennsylvania denied a motion to compel defendants to provide information concerning the “subjective beliefs” of their decisionmakers concerning allegedly meritless patent litigation. King Drug Co. of Florence v. Abbott Lab’ys, No. CV 19-3565, 2024 WL 3904045 (E.D. Pa. Aug. 22, 2024).
The litigation involves an alleged pharmaceutical “reverse payment” settlement. Plaintiffs, direct purchasers of wholesale pharmaceutical drugs, allege that brand pharmaceutical manufacturer defendants pursued sham patent infringement lawsuits against generic pharmaceutical manufacturer defendants in order to maintain a patent monopoly over a topical testosterone gel drug product. Then, to settle these patent infringement lawsuits, plaintiffs allege that the generic pharmaceutical manufacturer defendants delayed introducing the supply of competing generic drugs in exchange for payments from the branded manufacturer.
Subjective beliefs relating to underlying patent actions, such as case strength and strategy, are critical fact inquiries in reverse payment litigations insofar as they speak to the legitimate justification for settlement. They are also often privileged. Plaintiffs moved the court to “requir[e] all of the defendants to make an election stating certain subjective beliefs on which they intend to rely in this case [pertaining to the underlying patent actions and settlements] and whether in doing so they intend to waive [attorney-client] privilege as to those beliefs.” Defendants responded by declaring their intention not to waive attorney-client privilege in stating certain subjective beliefs.
The Court acknowledged the relevance of plaintiffs’ request, citing to Supreme Court precedent that “the relevant antitrust question” in reverse payment cases centers on the reasons for reverse settlement payments. The Court also appreciated plaintiffs’ concern that defendants—who said that they will rely on attorney-client privilege and do not intend to utilize an advice of counsel defense—will “bait-and-switch” at the final hour. However, in denying plaintiffs’ motion, the Court emphasized that it is impossible to anticipate pretrial what waivers of attorney-client privilege might be made and observed that the pretrial election sought by plaintiffs could not realistically provide any additional certainty. The Court emphasized that there are a variety of alternative means to learn defendants’ subjective beliefs on relevant topics, such as through depositions, interrogatories, motions in limine, and motions to compel. Still, the Court noted that because defendants represented to the court that they will not invoke the advice of counsel defense, they are “locked in” to that decision.
