Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_03-cv-03709/USCOURTS-cand-3_03-cv-03709-19/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

In re CV THERAPEUTICS, INC.

SECURITIES LITIGATION

___________________________________/

No. C-03-3709 SI (EMC)

ORDER GRANTING PLAINTIFFS’

MOTION FOR CLARIFICATION OR

RECONSIDERATION

(Docket No. 327)

Plaintiffs have filed a motion for clarification or consideration. Having reviewed the parties’

briefs and accompanying submissions, and good cause appearing therefor, the Court hereby

GRANTS Plaintiffs’ motion. The Court further orders that Defendants produce the documents

identified below as they are not privileged.

I. DISCUSSION

On June 16, 2006, this Court issued an order regarding its in camera review of documents

claimed as privileged by Defendants. In the order, the Court held that Defendants had established

that the majority of documents were privileged. In discussing examples of privileged documents,

the Court commented that “[d]ocuments created in the context of seeking FDA approval, an

inherently legal process, present ‘a circumstance virtually necessitating legal representation,’ as the

FDA approval process requires close supervision by legal counsel.” Order of 6/6/06, at 7. The

Court also compared the process of seeking FDA approval to the process of crafting a patent

application before the PTO. See id. Plaintiffs seek clarification or reconsideration largely because

of these statements.

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As a preliminary matter, the Court takes note of Defendants’ procedural objection to

Plaintiffs’ motion. Defendants argue that, to the extent Plaintiffs’ motion is one for reconsideration,

it is barred by Civil Local Rule 7-9. Civil Local Rule 7-9 governs motions for reconsideration and

indicates that a court can give leave to a party to file such a motion if there was a manifest failure by

the court to consider material facts or dispositive legal arguments which were presented to the court

prior to the issuance of its order. See Civ. L.R. 7-9(b)(3). The commentary for Civil Local Rule 7-9

states that the “rule does not apply to motions for reconsideration of a Magistrate Judge’s order

pursuant to 28 U.S.C. § 636(b)(1)(A). See Civil L.R. 72.” Civ. L.R. 7-9, commentary. This

commentary does not preclude a magistrate judge from reconsidering his or her order under Civil

Local Rule 7-9. Rather, given the citation to 28 U.S.C. § 636(b)(1)(A) and Civil Local Rule 72, it is

evident that the commentary means that a district judge who reconsiders a pretrial matter ruled upon

by a magistrate is not bound by Civil Local Rule 7-9. See 28 U.S.C. § 636(b)(1)(A) (providing that

“a judge may designate a magistrate to hear and determine any pretrial matter pending before the

court” and that “[a] judge of the court may reconsider any pretrial matter under this subparagraph

(A) where it has been shown that the magistrate’s order is clearly erroneous or contrary to law”)

(emphasis added); Civ. L.R. 72 (discussing objections to orders issued by magistrate judges). 

Moreover, for reasons of judicial economy, it makes no sense from a policy perspective to bar

magistrate judges from reconsidering orders and forcing instead an objection to be heard and

adjudicated by the district judge. Accordingly, Plaintiffs’ motion for reconsideration of this Court’s

prior order is proper.

The Court has reviewed its prior order and re-reviewed the 300-plus documents that it

previously held were privileged. Having done so, the Court concludes that clarification of its order

is warranted and, moreover, that it did not fully consider dispositive legal arguments. Accordingly,

Plaintiffs’ motion for clarification and reconsideration is granted.

In its prior order, the Court analyzed documents related to the FDA application process

which were sent to nonlegal personnel as well as counsel. The pivotal point of the order was its

conclusion that the inherent legal nature of that process together with the Suvari declaration

sufficiently established the attorney-client privilege under In re Grand Jury Subpoena, 357 F.3d 900

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(9th Cir. 2004). More specifically, the legal nature of the FDA process and the declaration

established that inclusion of counsel on the recipient list of these documents fairly implied a request

for legal advice. See Order of 6/16/06 at p. 6. Although the Court gave examples of documents

where the importance of legal advice was evident, the Court did not apply with sufficient rigor the

standard for testing dual purpose documents which were disseminated simultaneously to legal and

nonlegal personnel for review and comment. In many of these documents, counsel is only one of a

large number of recipients, the rest being nonlegal personnel. In other documents, the number of

recipients is smaller but the recipients are comprised largely of the major business decisionmakers

(e.g., board members and/or senior executives) and often counsel is only carbon copied.

As a preliminary matter, the Court takes note that, in its prior order, it cited the “because of”

standard laid out by the Ninth Circuit in In re Grand Jury Subpoena, 357 F.3d at 900, even though

that case dealt with the work product privilege and not the attorney-client privilege. Since In re

Grand Jury Subpoena, the Ninth Circuit has not commented on whether the “because of” standard

should be applied to the attorney-client privilege. At least one judge in this District has continued to

apply the “primary purpose” or “predominate purpose” standard. See, e.g., In re Napster, Inc. v.

Bertelsmann AG, Nos. C MDL-00-1369 MHP, C 04-1351MHP, C 04-1671 MHP, C 04-2121 MHP,

2005 U.S. Dist. LEXIS 11497, at *19 n.1 (N.D. Cal. Apr. 12, 2005) (“[L]egal advice must

predominate for the communication to be protected.”) (internal quotation marks omitted). While

“[t]he Court discerns no reason why and neither of the parties has advanced any reason why, for

purposes of determining the discoverability of documents that have both a legal purpose and a

nonlegal purpose (e.g., business purpose), the methodology in In re Grand Jury Subpoena should

not be applied to the attorney-client privilege,” Visa U.S.A., Inc. v. First Data Corp., C-02-1786

JSW (EMC), 2004 U.S. Dist. LEXIS 17117, at *15-16 (N.D. Cal. Aug. 23, 2004), the result in the

instant case is the same under either standard. 

Under the “because of” standard, the proponent of the privilege must prove that the

document was created because of the purpose of obtaining legal advice and that it “would not have

been created in substantially similar form but for” that purpose. In re Grand Jury Subpoena, 357

F.3d at 908; see also Visa U.S.A., Inc., 2004 U.S. Dist. LEXIS 17117, at *27. Under the “primary

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purpose” standard, the proponent of the privilege must show the documents were created for the

primary purpose of obtaining legal advice, not business advice. See North Pacifica, LLC v. City of

Pacifica, 274 F. Supp. 2d 1118, 1127 (N.D. Cal. 2003). 

In this regard, the Court finds In re Buspirone Antitrust Litig., (“Buspirone”) No. 1413, 2002

U.S. Dist. LEXIS 23463 (S.D.N.Y. Dec. 10, 2002), a case cited by both parties, highly persuasive. 

In Buspirone, the court addressed the same issue in the case at bar -- namely, whether documents

submitted for simultaneous legal and nonlegal review were privileged. The court stated that a

document sent for simultaneous review and comment by both attorneys and nonattorneys could not

be privileged because “[w]here non-legal personnel are asked to provide a response to a matter

raised in a document, it cannot be said that the ‘primary’ purpose of the document is to seek legal

advice.” Buspirone, 2002 U.S. Dist. LEXIS 23463, at *9. On the other hand, where the specific

purpose of the document is to seek legal advice and the document is sent to nonlegal business staff

“for the purpose of informing them that legal advice has been sought or obtained,” the attorneyclient privilege obtains even though the document was provided to nonlegal personnel. See id. at

*10-12. The Buspirone court found that documents prepared specifically to provide patent counsel

with information essential to their rendering legal advice were privileged. The privilege was not

vitiated simply because copies were sent to approximately five to ten other corporate employees. 

The “specific purpose in giving these persons the documents was that they were the ‘personnel

responsible for making decisions on these projects’ and he [the sender] wished to inform them that

he had provided particular information to the attorney.” Id. at *13. The sender made clear that these

documents were not to provide “general status information” to these personnel as they received

many other more detailed documents intended for that specific purpose. See id. at *13-14. The

copies sent to non-legal personnel were ancillary to the specific purpose of obtaining legal advice. 

Importantly, the documents were not sent out to solicit responses or comments from nonlegal

personnel, in contrast to many of the documents at issue in the instant case. 

Guided by Buspirone, the Court concludes that Defendants have failed to meet their burden

of establishing that the attorney-client privilege applies to those documents sent for simultaneous

review and comment by both attorneys and nonattorneys. See United States v. Martin, 278 F.3d

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 In this regard, the Court notes that although there is an analogy between patent and FDA

applications in that both are likely to require the advice and assistance of counsel, see Order of 6/16/06

at p. 7, that analogy is not perfect. Given the intensive scientific and medical data necessary to inform

the FDA application process, it is reasonable to expect significant input from nonlegal personnel in the

drafting and deliberative process. There is no basis for presuming the primary purpose in circulating

FDA related documents here was to obtain legal advice absent some specific showing.

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988, 999-1000 (9th Cir. 2002) (stating that “[t]he burden is on the party asserting the privilege to

establish all the elements of the privilege”). These documents on their face seek comments from

nonattorneys (or in some instances reflect comments from nonattorneys). Moreover, the content of

and context of many of these documents make clear there was an obvious substantive need for

comments by nonattorneys -- e.g., to obtain opinions on the scientific data.1

 Defendants did not, as

defendants did in Buspirone, submit particularized evidence establishing that the specific purpose of

any of the documents was to obtain advice only of counsel with copies sent to others only

secondarily. Nor have Defendants established that the predominate purpose was to obtain advice of

counsel as opposed to soliciting review and comment by nonattorneys. In short, Defendants failed

to establish that the “primary purpose” was to obtain legal advice. See also 1 Paul R. Rice,

Attorney-Client Privilege in the United States § 7:2, at 24 (1999 ed.) (noting that many courts fear

businesses will immunize internal communications from discovery by placing legal counsel in

strategic corporate positions and funnel documents through counsel). Of course, the actual

comments made by attorneys (as opposed to nonattorneys) would still be privileged.

The same result obtains under the “but for” test of In re Grand Jury Subpoena. Defendants

have failed to establish that many of the documents would not have been created in substantially the

same form were it not sent simultaneously to counsel. To the extent review and/or comment was

expected from nonlegal personnel, nothing suggests documents would not have been sent or would

have been sent in a materially different form had counsel not been included on the list of recipients.

The Court further concludes that Defendants have failed to meet their burden of establishing

that the attorney-client privilege applies to those documents sent to attorneys and nonattorneys for

simultaneous review, even if such documents did not expressly seek comment. These documents are

akin to the “general status information” documents distinguished by the court in Buspirone. While

defendants in Buspirone demonstrated that there were many other detailed documents sent to the

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 In the binder provided to the Court, there are actually two different e-mails at Tab No. 182.

The first e-mail is the e-mail described on Defendants’ privilege log. That e-mail is privileged. The

second e-mail (one authored by Sara Arzeno and dated November 10, 2004) was not identified on the

privilege log; it should have been designated as a separate entry on the log. This second e-mail is not

privileged.

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 Of course, nonattorney comments might reflect attorney comments, in which case the privilege

would apply.

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nonlegal personnel for the specific purpose of providing general status information, no such showing

was made here. See Buspirone, 2002 U.S. Dist. LEXIS 23463, at *11. And in contrast to the

documents at issue in Buspirone, the documents listed below do not appear to be directed

particularly to counsel. 

Accordingly, the Court hereby finds the following documents in addition to those previously

identified in the Court’s order of June 16, 2006 are not privileged and thus must be produced:

(1) Hard Copy Documents Nos. 50, 51, 52, 55, 71, 127, 137, 143, 145, 164, 186, 187, 199, 200,

201, 214, and 241.

(2) E-mail Documents Nos. 25, 37, 46, 49, 51, 56, 58, 63, 64, 67, 70, 71, 78, 81, 82, 83, 84, 85,

86, 87, 90, 91, 96, 99, 102, 103, 105, 106, 107, 108, 109, 111, 112, 113, 114, 115, 116, 117,

118, 119, 121, 122, 123, 124, 129, 134, 135, 137, 139, 140, 141, 145, 146, 147, 156, 165,

168, “182,”2

 199, 201, 202, 203, 204, 205, 218, 219, 224, 225, 227, 228, 230, 232, 235, 236,

239, 242, 267, 268, 269, 270, and 280.

The documents shall be produced within two weeks of this order.

The Court notes that, on some of the above hard copy documents, there are handwritten

notes, and it is not clear whether such notes were made by an attorney in his or her legal capacity. If

so, such notes may be redacted. For both the hard copy and e-mail documents, there are some

documents in which it is not clear whether attorney comments can be segregated from nonattorney

comments.3 Where attorney comments are segregable, they may be redacted so long as the

comments made by the attorney in his or her legal capacity. If segregation is not possible, then such

documents need not be produced. Finally, for the e-mail documents, the binders provided to the

Court did not contain E-mail Documents Nos. 21 and 238. Defendants are directed to review these

documents and, consistent with this order, determine whether they should be produced. 

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As a final matter, the Court notes that Defendants’ privilege log may not provide entirely

accurate descriptions for the following documents: E-mail Documents Nos. 3, 4, 5, 8, 13, 30, 32, 33,

40, 41, 50, 57, 60, 126, 237, 259, 260, 262, 281, and 288. The log describes these documents as

involving legal advice but, based on the Court’s review, it appears that the documents involved the

mere drafting of minutes, a task that would seem to be secretarial rather than legal in nature. 

Notably, Ms. Suvari is not only general counsel for CVT but also assistant corporate secretary, and

Mr. Mendelson, though outside counsel, also appears to be secretary. Defendants are ordered to rereview these documents to determine whether they should be produced.

II. CONCLUSION

For the foregoing reasons, the Court grants Plaintiff’s motion for clarification or

reconsideration. While the Court adheres to its observations made in its order of June 16, 2006, that

seeking legal advice from counsel can fairly be implied as to FDA related documents widely

circulated even in the absence of an express request for legal comment, the proper application of In

re Grand Jury Subpoena and Buspirone and closer review of the documents in question leads the

Court to conclude Defendants have not proven the above documents meet the “because of” or

“primary purpose” test. Defendants are ordered to produce the documents identified above by

within two weeks of this order.

This order disposes of Docket No. 327.

IT IS SO ORDERED.

Dated: August 30, 2006

_________________________ EDWARD M. CHEN

United States Magistrate Judge

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