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In a significant victory for the plaintiffs in the fen-phen diet drug cases, a federal judge has ruled that American Home Products must turn over thousands of documents after rejecting its argument that they are privileged under the “common interest doctrine.” AHP’s lawyers argued that it never waived the privilege when it shared the documents with Interneuron Pharmaceuticals Inc. and Les Laboratories Servier because all three companies shared the identical legal interest of persuading federal regulators to remove the drugs fenfluramine and dexfenfluramine from lists of “controlled substances.” But Senior U.S. District Judge Louis C. Bechtle with the U.S. District Court for the Eastern District of Pennsylvania found that AHP’s interests were neither truly “legal” nor “identical” to Interneuron’s and Servier’s. In re: Diet Drugs Litigation. In his 20-page memorandum announcing his ruling in PreTrial Order No. 1910, Bechtle upheld all of the decisions of court-appointed Special Discovery Master Gregory Miller. Although AHP has entered into a massive settlement, the ruling is nonetheless significant because the documents can now be used by plaintiffs who opted out of the settlement and intend to take their cases to trial. According to court papers, AHP refused to turn over about 9,500 documents on the basis of privilege. As required under Federal Rule of Civil Procedure 26(b)(5), AHP prepared a privilege log identifying the withheld documents. Lead plaintiffs’ attorneys Michael D. Fishbein and Laurence S. Berman of Philadelphia-based Levin Fishbein Sedran & Berman disputed the adequacy of AHP’s privilege log and the validity of the privileges. They also argued that any privilege was waived because the documents were exchanged between AHP, Interneuron and Servier. AHP’s lawyers at Arnold & Porter in Washington argued that Interneuron, Servier and AHP had a collective common interest in descheduling these drugs and that, as a result, it properly withheld all documents exchanged between or shared with Interneuron and/or Servier concerning descheduling efforts related to the diet drugs. In June 1999, Special Master Miller found that only some of the documents were truly privileged and that a portion of those were protected by the common interest doctrine. But for the remaining documents, Miller found there was either no privilege or that the privilege had been waived by sharing the documents among the three companies. To understand the rulings, it’s important to understand the relationships between AHP, Interneuron and Servier. Servier held the international patent rights to both fenfluramine and dexfenfluramine. In 1963, Science Union & Co., a Servier affiliate, entered into a licensing agreement with A.H. Robins Co. giving it the right to market fenfluramine in the United States. AHP acquired Robins in 1989. The licensing agreement with Science Union/Servier required AHP to seek FDA approval of fenfluramine. If approval was obtained, it also required AHP to pay royalties to Servier until 1988. In 1973, SmithKline Corp. filed a patent infringement suit against AHP, Servier and Science Union Co. over fenfluramine. In February 1990, Servier entered into a licensing agreement with Interneuron, granting Interneuron an exclusive license to market another diet drug, dexfenfluramine, in the United States. The licensing agreement required Interneuron to file for FDA approval to market dexfenfluramine in the United States and, if successful, to pay royalties to Servier. In November 1992, Interneuron and American Cyanamid (AHP’s predecessor in interest), entered into a sublicensing agreement for the patent of dexfenfluramine. The agreement gave AHP the right to comment on drafts of the FDA application for dexfenfluramine and said Interneuron was responsible for attempting to have dexfenfluramine “descheduled” or relieved of the scheduling requirements under the Controlled Substances Act. In April 1996, the FDA approved dexfenfluramine. Soon after, Interneuron and AHP entered into another agreement, which “allocated responsibility for the reporting of adverse drug events, provided for the parties’ cooperation in the defense of any product liability claims and provided for cross-indemnification arrangements relating to certain types of legal claims.” In September 1997, both fenfluramine and dexfenfluramine were withdrawn from the U.S. market. SPECIAL MASTER’S RULING In his June 1999 ruling, Miller found that some of the documents were privileged under the common interest doctrine. In the patent infringement action filed by SmithKline, Miller found that AHP and Servier were codefendants attempting to establish a common defense and that all of their communications on that issue were protected. Likewise, Miller found that when the diet drugs were withdrawn from the market in 1997, all three companies — AHP, Interneuron and Servier — were facing potential product liability litigation relating to the marketing of the drugs and, therefore, that their communications on that issue were also protected. But Miller found that none of the communications relating to the descheduling of the drugs were privileged under the common interest doctrine. Now Judge Bechtle has upheld Miller’s rulings in their entirety. The purpose of the attorney-client privilege, Bechtle said, is “to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.” However, Bechtle said, the privilege “must be construed narrowly” because it “obstructs the truth-finding process.” The privilege also “does not protect business and technical advice,” Bechtle found. Turning to the work product doctrine, Bechtle found that it protects materials prepared by an attorney, or an attorney’s agent, “in anticipation of or for litigation.” A lawyer’s “mental impressions, conclusions, opinions or legal theories” are also protected from discovery, Bechtle said, but the work product privilege “is also limited in that materials prepared in the regular course of business, even if prepared by an attorney, are not protected.” When applying the doctrine, Bechtle said, courts must inquire whether the document was truly “prepared or obtained because of the prospect of litigation.” On that point, Bechtle said, courts have held that “litigation must be more than a remote possibility and the anticipation of future litigation must have been the primary motivation which led to the creation of the documents.” Ordinarily, Bechtle said, a client’s voluntary disclosure of attorney-client privileged communications to a third party waives the privilege. The common interest doctrine provides an exception to that general rule, Bechtle said, by preserving the privilege “where two or more persons or companies that share a common interest in a legal issue exchange privileged communications with one another.” But the doctrine usually applies only when one attorney represents multiple individuals on the same matter, Bechtle said, in order to protect confidential communications “shared between the clients and their attorney to establish a defense strategy.” In certain cases, he said, the common interest doctrine extends to protect information shared between parties with a “community of interests” or an “identical legal interest with respect to the subject matter of a communication between an attorney and a client concerning legal advice.” But the subject matter “must be of a legal nature — something more than mere concurrent legal interests or concerns,” Bechtle found, and “there may not exist any divergence in the interests.” AHP argued that Miller was wrong in finding that the shared communications between AHP, Servier and Interneuron concerning descheduling was a business interest. But Bechtle found that Miller was correct for several reasons. “First, AHP has not shown that the representation was joint,” Bechtle wrote, noting that while a single lawyer represented all three companies, his representation “overlapped.” While Interneuron and Servier hired the lawyer in 1990, AHP did not retain him until 1996. “Although this lapse alone is not determinative, it is indicative of the lack of a joint representation,” Bechtle wrote. Bechtle also found that AHP failed to show that the interest in getting the drugs descheduled was “legal in nature” or that the three companies had an “identical” interest. The dexfenfluramine sublicensing agreement between AHP and Interneuron, he said, required Interneuron to seek descheduling and provided that Interneuron would receive payments if its efforts were successful. “Indeed, in 1991, Interneuron petitioned the DEA and FDA to deschedule fenfluramine. Interneuron alone had that duty. Neither AHP nor Servier shared it,” Bechtle wrote. “Thus, even if descheduling is considered legal in nature, the parties’ interests were not identical.” Instead, Bechtle said, “the only common interest was commercial — if the drug was descheduled, sales would increase.” But legal advice on such a commercial issue, he said, “does not bring the communication within the protection of the common interest doctrine.” Looking to the law of states that would look on AHP’s arguments most favorably, Bechtle found that neither the courts of New Jersey nor New York would hold that the common interest privilege applied. “Even under the law of New Jersey, in order to benefit from the common interest doctrine, the interests of the two entities sharing the information must be identical and legal, rather than commercial,” Bechtle wrote. Likewise, Bechtle said, New York courts have held that the common interest doctrine does not extend to communications about joint business strategy that also happen to include concern about litigation.

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