Opinion
Master Docket No. PC-2018-9999
04-12-2019
IN RE: DAVOL/C.R. BARD HERNIA MESH MULTI-CASE MANAGEMENT This Document Relates to: ALL CASES
ATTORNEYS: For Plaintiff: Donald A. Migliori, Esq.; Jonathan D. Orent, Esq. For Defendant: Mark T. Nugent, Esq.; Michael K. Brown, Esq.; Eric L. Alexander, Esq.
DECISION GIBNEY , P.J. Before this Court is Plaintiffs' Motion to Compel C.R. Bard, Inc. (Bard) and Davol Inc. (Davol) (collectively Defendants) to respond to Plaintiffs' Third and Fourth Requests for Production of Documents. Plaintiffs further move this Court to strike Defendants' objections to Plaintiffs' Requests for Production. Defendants object to Plaintiffs' motions. Jurisdiction is pursuant to G. L. 1956 § 8-2-14.
I
Facts and Travel
On February 9, 2018, Plaintiffs filed a Master Long Form Complaint seeking to recover for injuries resulting from allegedly defective medical devices designed, manufactured, distributed, and sold by Defendants. The medical devices at issue are hernia repair products intended for permanent implantation in the human body. The Plaintiffs include both individuals who have been surgically implanted with these devices and their spouses.
Defendant Davol, a Delaware corporation with its principal place of business in Rhode Island, is engaged in the research, development, and manufacture of various medical products including the hernia repair devices at issue. Davol is a wholly owned subsidiary of Bard, a New Jersey corporation. On December 31, 2017, Bard was acquired by Becton Dickinson, a third party that has not been joined in this action. Davol became a wholly-owned subsidiary of Becton Dickinson upon completion of the acquisition.
Between August 2018 and October 2018, Plaintiffs served the Defendants with Plaintiffs' First, Second, Third, and Fourth Sets of Requests for Production of Documents. Between October 2018 and November 2018, Defendants submitted written responses and objections to Plaintiffs' Requests, but did not produce the requested documents or a privilege log. The parties subsequently met and conferred and reached a substantial agreement. However, they were unable to reach an independent agreement regarding two categories of documents: those arising from the due diligence process of Bard's merger with Becton Dickinson, and foreign regulatory documents.
On December 12, 2018, Plaintiffs moved to compel Defendants' responses to Plaintiffs' Third and Fourth Sets of Requests for Production of Documents. Plaintiffs' Third Set of Requests for Production seeks information concerning this hernia mesh litigation that Defendants sent to Becton Dickinson prior to the merger, while Plaintiffs' Fourth Set of Requests for Production seeks United States and foreign regulatory documents. On February 12, 2019, Plaintiffs moved to compel Defendants' responses to Plaintiffs' First, Second, and Fourth Sets of Requests for Production. Plaintiffs' First Set of Requests for Production seeks documents pertaining to Defendants' product testing and design, contracts with researchers and other third parties and budgeting for Defendants' products, while the Second Set of Requests for Production seeks documents responsive to search terms that accompanied the agreed upon Order of March 31, 2008 in MDL 1842 and R.I. State Court Coordination 2008-9999.
On February 19, 2019, Defendants objected to Plaintiffs' motions, arguing that Defendants were working as diligently as possible to fulfill their ongoing discovery obligations and that Plaintiffs' motions were either premature or moot. On February 20, 2019, Plaintiffs submitted their reply brief in further support of their motions to compel. On February 21, 2019, this Court heard the parties at oral argument.
II
Standard of Review
Under Super. R. Civ. P. 26(b), "[p]arties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending litigation." Super. R. Civ. P. 26(b)(1). The fact that information sought may not be admissible at trial is not grounds for an objection to a discovery request. Id. Pursuant to Super. R. Civ. P. 34, a party may serve any other party with a request for documents, electronically stored information, tangible things, or other discoverable information within the scope of Rule 26(b) and may move for a court order if the party that received the request fails to respond. The trial court may impose sanctions upon litigants who refuse to participate in discovery. Super. R. Civ. P. 37(b); see also Senn v. Surgidev Corp., 641 A.2d 1311, 1320 (R.I. 1994) (explaining that "Rule 37(b) . . . affords the court very broad discretion" in imposing sanctions for refusal to participate in discovery).
It is well-settled that the trial court has broad discretion over matters of discovery. Martin v. Howard, 784 A.2d 291, 296 (R.I. 2001) (citing Colvin v. Lekas, 731 A.2d 718, 720 (R.I. 1999)); see also Bashforth v. Zampini, 576 A.2d 1197, 1201 (R.I. 1990). This discretion extends to motions to compel discovery, which will only be disturbed by the Supreme Court in the event it finds "an abuse of that discretion." Colvin, 731 A.2d at 720 (citing Corvese v. Medco Containment Servs., Inc., 687 A.2d 880, 882 (R.I. 1997)). Likewise, "a trial court possesses the discretion to stay discovery in a civil case until one or more potentially dispositive issues have been decided." Martin, 784 A.2d at 297. In reviewing discovery orders for abuse of discretion, our Supreme Court has adopted a test "to determine relevancy . . . [that examines] 'whether the material sought is relevant to the subject matter of the suit, not whether it is relevant to the precise issues presented by the pleadings.'" Cardi v. Med. Homes of Rhode Island, Inc., 741 A.2d 278, 289 (R.I. 1999) (quoting DeCarvalho v. Gonsalves, 106 R.I. 620, 627, 262 A.2d 630, 634 (1970)).
III
Analysis
At oral argument, Plaintiffs narrowed their motion to three document requests from Plaintiffs' Third and Fourth Sets of Requests for Production of Documents, all of which pertain to the Becton Dickinson merger. Therefore, the Court shall address only those requests asking that Defendants
(1) "produce all documents and materials sent to Becton Dickinson related to your potential liability associated with its hernia products.Plaintiffs argue that although these documents may have originally been subject to the attorney-client privilege, the privilege was extinguished when Defendants shared these documents with Becton Dickinson during the due diligence process of the merger with Bard. Plaintiffs add that the documents are "highly relevant" to this Master Docket.
(2) "produce all documents and materials sent to [Becton Dickinson] related to your litigation associated with its hernia mesh products.
(3) "produce any analysis of potential financial liabilities to [Becton Dickinson] associated with your hernia mesh products." Oral Argument Tr. 2:16-21, Feb. 21, 2019.
In response, Defendants characterize Plaintiffs' requests as an "assault" on the attorney-client privilege and the work product doctrine. Defendants present persuasive precedent in which attorneys' documents exchanged by a parent corporation and its subsidiary in anticipation of a corporate transaction were protected by the attorney-client privilege and work product doctrines. Grinnell Corp. v. ITT Corp., 222 F.R.D. 74, 77 (S.D.N.Y. 2003); Guy v. United Healthcare Corp., 154 F.R.D. 172, 177 (S.D.N.Y. 1993). Moreover, Defendants argue no company would ever engage in a transaction if it had to give up all information concerning its litigation, as companies must make this information available during a merger.
At issue is the extent of the attorney-client privilege and work product doctrine as they pertain to disclosures in a corporate transaction. Specifically, the Court must consider whether a corporation's attorney's analyses and theories regarding the corporation's ongoing litigation are subject to the attorney-client privilege or work product doctrine if disclosed to a third party in anticipation of a merger or acquisition. Furthermore, if the attorney-client privilege is broken through such disclosure, this Court must determine whether these theories and analyses are relevant, discoverable information.
A
Attorney-Client Privilege and Work Product Doctrine
The attorney-client privilege has long been recognized under Rhode Island Law "to encourage full and frank communications between attorneys and their clients." DeCurtis v. Visconti, Boren & Campbell, Ltd., 152 A.3d 413, 425 (R.I. 2017) (quoting Mortg. Guarantee & Title Co. v. Cunha, 745 A.2d 156, 159 (R.I. 2000)) (internal citation omitted). The privilege exempts from discovery "communications made by a client to his [or her] attorney for the purpose of seeking professional advice, as well as the responses by the attorney to such inquiries." Id. The attorney-client privilege applies not only to individual clients but also extends to corporations. John W. Gergacz, Attorney-Corporate Client Privilege § 1:18 (3d, 2019-1 ed.); see also Radiant Burners, Inc. v. Am. Gas Ass'n, 320 F.2d 314, 323 (7th Cir. 1963). Only the client can waive this privilege, which may take place through "disclosure of a confidential communication to a third party." DeCurtis, 152 A.3d at 425 (citing Mortg. Guarantee & Title Co., 745 A.2d at 159).
In addition to the attorney-client privilege, Rhode Island recognizes the work product doctrine, under which "written materials 'obtained or prepared . . . with an eye toward litigation' are protected from discovery." Crowe Countryside Realty Assocs., Co., LLC v. Novare Eng'rs, Inc., 891 A.2d 838, 841 (R.I. 2006). This privilege protects an attorney's thoughts, and prevents attorneys from "freeloading" upon the work of their adversaries. Cabral v. Arruda, 556 A.2d 47, 48 (R.I. 1989) (citing Hickman v. Taylor, 329 U.S. 495, 516 (1947)). The work product doctrine is codified in Rule 26(b)(3), under which "the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation." Crowe Countryside Realty Assocs., Co., LLC, 891 A.2d at 842; Super. R. Civ. P. 26(b)(3). Furthermore,
"a party may obtain discovery of documents . . . prepared in anticipation of litigation . . . only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means." Id. (Emphasis added).
Although disclosure to a third party destroys the attorney-client privilege, "disclosure of [protected work-product information] to third persons does not waive the work product immunity." State v. Lead Indus. Ass'n, Inc., 64 A.3d 1183, 1196 (R.I. 2013) (citing 8 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2024 at 531, 532 (3d ed. 2010)) (alterations in original). This distinction reflects the underlying difference between the attorney-client privilege and the work product doctrine. Specifically, "the purpose of the work-product rule 'is not to protect the evidence from disclosure to the outside world but rather to protect it only from the knowledge of opposing counsel and his client.'" Id. "There is no waiver where the transferor of the protected information and the recipient of that information are co-parties or where they share interests in a matter litigated against a common adversary." Id. at 1196.
On the other hand, the "duty of disclosure has become a hallmark principle of . . . corporate" law, which the Delaware Court of Chancery refers to as the "obligation of 'complete candor."' Brittany M. Giusini, Pure Resources' "Fair Summary" Standard: Disclosures Away from Obtaining Clarity in the M&A Context, 38 Del. J. Corp. L. 595, 604 (2013). In a merger or acquisition, "directors have an obligation to disclose certain information to their shareholders when contemplating" the transaction. Id. at 604. Corporations are likewise required to release information to the other party to a transaction as part of "disclosure schedules." See 38 No. 2 Sec. Reg. L. J. Art. 4 (2010) ("[t]he requirement of a party to consummate a merger or acquisition is generally conditioned upon . . . the other party's representations and warranties being true and correct"). Notably, "disclosure schedule should identify all material litigation matters." 1 Corporate Counsel's Guide to Acquisitions & Divestitures § 6:8 (Mar. 2019 update).
The materials Plaintiffs seek in their Third and Fourth Requests for Production include documents evidencing communication between Defendants and their attorneys, such as litigation materials prepared by Bard. Therefore, these documents were originally subject to the attorney-client privilege. DeCurtis, 152 A.3d at 423 ('"communications made by a client to his attorney for the purpose of seeking professional advice, as well as the responses by the attorney to such inquiries, are privileged communications not subject to disclosure"') (quoting Mortg. Guarantee & Title Co., 745 A.2d at 158); see also Radiant Burners, Inc., 320 F.2d at 323 (applying the attorney client privilege to corporations). However, when these documents were disclosed to a third party, Becton Dickinson, the privilege protecting these documents from discovery was extinguished. DeCurtis, 152 A.3d at 425 ("it is well established that the attorney-client privilege can be waived 'when there has been disclosure of a confidential communication to a third party'") (citing State v. von Bulow, 475 A.2d 995, 1006 (R.I. 1984)); Id. at 1006 (holding that an attorney's disclosure of client communications to state police, with the client's consent, constituted a waiver of attorney-client privilege). Therefore, the attorney-client privilege no longer protects documents in Plaintiffs' Third and Fourth Requests for Production of Documents from discovery.
However, the documents sought by Plaintiffs' additionally constitute "documents . . . prepared in anticipation of litigation or for trial" by Defendants' attorneys. Specifically, Plaintiffs have requested "all [Defendants'] documents" related to their liability in this matter, Defendants' "documents . . . related to [this] litigation," and documents related to "financial liabilities" in this matter. Therefore, these materials are subject to the work product doctrine under Super. R. Civ. P. 26(c). Furthermore, Defendants did not disclose these documents to Becton Dickinson in an adversarial context; rather, they were disclosed to further the two corporations' shared interests of completing the merger, to a company that is now the parent company of Bard and shares its interests in this matter. Lead Indus. Ass'n, Inc., 64 A.3d at 1196; Super. R. Civ. P. 26. Accordingly, Defendants have not waived the work product privilege with respect to Plaintiffs' request. Id.
The Court is additionally unpersuaded that Plaintiffs have demonstrated a substantial need for the documents at issue, or that an undue burden would result if Defendants were not compelled to produce these documents. Under Rule 26, "a party may obtain discovery of documents . . . prepared in anticipation of litigation or for trial by . . . the other party's attorney . . . only upon a showing that the party seeking discovery has substantial need of the materials." Super. R. Civ. P. 26(b)(3). Plaintiffs argue that the attorney-client privilege was broken when Defendants disclosed these materials to Becton Dickinson but have not demonstrated any substantial need for these materials beyond the apparent temptation to gain insight into their adversary's theories and analyses of this litigation. See Hickman, 329 U.S. at 393-94 (explaining that without work product protection, "an attorney's thoughts . . . would not be [his or her] own," and "[t]he effect on the legal profession would be demoralizing"); but see DeCurtis, 152 A.3d at 418, 429 (finding plaintiff demonstrated a substantial need, under Super. R. Civ. P. 26(c), for "highly probative" prenuptial and postnuptial agreements drafted by attorney defendants in a legal malpractice action pertaining to those agreements). Accordingly, the Court finds that the information in Plaintiffs' Requests for Production of Documents is Defendants' work product, and therefore, Plaintiffs' motion to compel Defendants' production of these materials is denied.
B
Relevance
Plaintiffs further argue that their document requests are "highly relevant," "simple and straightforward," and impose little burden upon the Defendants. In response, Defendants state that the documents are marginally relevant at best and that Plaintiffs are not entitled to see these documents despite the obvious benefit they would confer. Defendants note that in a related hernia mesh action against them in New Jersey, the judge found that confidential litigation documents exchanged with Becton Dickinson in anticipation of the merger were irrelevant to the litigation after an in camera review. See In Re: Pelvic Mesh/Bard Litigation, Docket No. BER-L- 17717-14 (N.J. Super. Ct. Law Div. Nov. 8, 2017) ("I find that there's no relevance to the documents with regard to the transfer").
"The philosophy underlying modern discovery is that prior to trial, all data relevant to the pending controversy should be disclosed unless the data is privileged." Cabral, 556 A.2d at 48. Relevance is defined as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." R.I. R. Evid. 401. However, in order for materials to be discoverable, they must be both relevant and not privileged. Fireman's Fund Ins. Co. v. McAlpine, 120 R.I. 744, 747, 391 A.2d 84, 86 (1978). Under Rule 26, "[p]arties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action," through various methods including the production of documents. Super R. Civ. P. 26(b)(1) (emphasis added).
Having determined that the documents Plaintiffs seek are exempt from discovery under Rule 26, the Court need not determine their relevance. The Court is satisfied that the materials requested, including Defendants' analyses of liabilities related to this litigation and materials prepared in anticipation thereof, are outside the permissible scope of discovery under Rule 26. See Fireman's Fund Ins. Co., 120 R.I. at 747, 391 A.2d at 87 ("[u]nless a party can demonstrate 'injustice or undue hardship,' he will be precluded from obtaining 'a writing obtained or prepared by the adverse party['s] . . . attorney . . . in anticipation of litigation an in preparation for trial'") (citing Super. R. Civ. P. 26(b)). Plaintiffs seek materials prepared by Defendants in anticipation of the consolidated action at issue and have failed to demonstrate the requisite undue hardship or substantial need for these materials. Id. Accordingly, Plaintiffs' motion is denied.
IV
Conclusion
For the foregoing reasons, Plaintiffs' Motion to Compel Defendants' responses to Plaintiffs' Third and Fourth Sets of Requests for Production of Documents is denied. The documents Plaintiffs seek are protected under Super. R. Civ. P. 26(c), and Plaintiffs have failed to present a substantial need for the documents, or to demonstrate that Plaintiffs cannot obtain the substantial equivalent of these materials without undue hardship.
Prevailing counsel shall present the appropriate Order for entry.
ATTORNEYS:
For Plaintiff: Donald A. Migliori, Esq.; Jonathan D. Orent, Esq. For Defendant: Mark T. Nugent, Esq.; Michael K. Brown, Esq.; Eric L. Alexander, Esq.