Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-md-02521/USCOURTS-cand-3_14-md-02521-32/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 28:1331 Fed. Question

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED FOOD AND COMMERCIAL 

WORKERS LOCAL 1776 & 

PARTICIPATING EMPLOYERS HEALTH 

AND WELFARE FUND, et al.,

Plaintiffs,

v.

TEIKOKU PHARMA USA, et al.,

Defendants.

Case No. 14-md-02521-WHO 

ORDER RE ELECTIONS, PROFFER,

AND COMMON INTEREST 

PRIVILEGE

On August 9, 2016, I entered an Order on plaintiffs’ motions for production or preclusion 

and for production of attorney notes. I directed defendants to (i) file an election specifying 

whether they intended to rely on specific subjective beliefs (and thereby waive privilege as to 

those subjects) and (ii) provide additional proffers regarding identified subjective beliefs. Dkt. 

No. 536. I also directed the parties to submit briefing on whether the common interest privilege 

protects from disclosure notes reflecting the sharing of antitrust legal advice between Endo and 

Watson related to potential terms of the parties’ settlement. Id. at 41. During the October 4 status 

conference, I requested additional declarations from Teikoku regarding any legal advice sought or 

received concerning Subjective Belief 6. Having now reviewed the material submitted, I have a 

sufficient record on which to rule. 

I. ELECTIONS AND PROFFER

A. Endo Election

Endo has elected not to rely on any subjective beliefs that I determined would otherwise 

put at issue attorney-client advice except for the following:

The contemporaneous beliefs of Endo’s officers and employees 

concerning (i) the merits of Endo’s citizen petition submitted to the 

FDA, including amendments and supplements thereto (collectively, 

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the “Citizen Petition”), which addressed the standards for approval 

of generic versions of Lidoderm, (ii) the likelihood that the FDA 

would accept any or all of the positions taken and arguments made 

in the Citizen Petition, and (iii) the potential impact of the Citizen 

Petition on the timing and outcome of FDA’s review of Watson’s 

ANDA for its generic lidocaine 5% patch (see Endo Subjective 

Beliefs 18, 19, 23).1

Dkt. No. 543 at 1. Endo conditioned its election on an entry of an order: 

(a) strictly limiting the scope of any implied privilege waiver to the 

specific subject matter identified above, and (b) limiting the effect of 

such implied waiver and the use and distribution of any information 

(including but not limited to documents and testimony) produced 

pursuant to such waiver as HIGHLY CONFIDENTIAL and 

OUTSIDE COUNSEL EYES ONLY as defined in the Stipulated 

Protective Order entered on May 8, 2014 (Docket No. 37) 

(“Protective Order”); and (d) absent modification of the proposed 

order, prohibiting any party from disclosing any information 

produced by Endo pursuant to such waiver to any person or party 

not contemplated by the Protective Order, notwithstanding Section 

10.2 of the Protective Order. 

Id. at 1-2. 

Following the last Case Management Conference, plaintiffs asked to submit supplemental 

briefing on the scope and impact of Endo’s limited waiver and to explain its objections to Endo’s 

proposed order. I granted that request and allowed Endo to file a response to plaintiffs’ 

supplemental briefing. Dkt. No. 560. 

Plaintiffs argue that despite Endo’s attempts to limit its waiver to subjective beliefs 18, 19 

and 23 – regarding the chances of success of Endo’s Citizen Petition (“CP”) – to determine the 

scope of that limited waiver the court must consider Endo’s “theory of relevance” of its assertion. 

In other words, the scope of the waiver is determined by the nature of the affirmative defense 

Endo is making under Actavis. According to plaintiffs, the theory of relevance is as follows: the 

CP was meritorious and would block or delay Watson’s FDA approval through September 2013 

and, therefore, Endo had no need or reason to pay Watson for delay. Dkt. No. 561. Plaintiffs 

 

1

Endo’s Subjective Belief 18 is: “Whether FDA would approve Watson’s ANDA for a generic 

Lidoderm product was uncertain as of the date of the Agreement.” Subjective Belief 19 is: 

“Whether FDA would grant Endo’s citizen petition regarding the bioequivalence standards for 

generic Lidoderm, and if so whether it would apply new bioequivalence standards to Watson’s 

generic product, was uncertain as of the date of the Agreement.” And Subjective Belief 23 is: 

“The scientific position set forth in Endo’s citizen petition and amendments concerning Lidoderm 

was meritorious.” 

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assert that this theory of relevance is (or more presumably could be, because plaintiffs do not 

really know) contradicted by privileged documents which, in fairness, should be included within 

the scope of the waiver. Id.

To avoid Endo’s “disruption of trial by suggesting to the jury arguments and defenses 

relating to its beliefs about the CP for which plaintiffs have been denied fair discovery,”

plaintiffs request that language be added to Endo’s proposed order requiring Endo to produce 

privileged materials relating to: (a) Watson’s ANDA approval and launch and (b) the reasons or 

explanations for the free goods, not just those discussing the CP. Id. 

Endo responds that plaintiffs’ proposal is not “closely tailored” to matters “vital” to crossexamination on Endo’s beliefs as to the potential for success on its CP. Endo does not dispute that 

evidence relating to the merits of the CP may be relevant to Endo’s “alleged reason to pay Watson 

for delay,” but Endo’s subjective belief as to the chances of success on its CP is “also relevant” to 

other “potential issues that do not bear on the reasons for any particular term of the settlement.” 

Dkt. No. 568 at 2-3. Those other reasons include: (i) rebutting plaintiffs’ expected claims that the 

CP was a device to prevent generic competition and that Endo believed the CP was meritless, and 

(ii) Endo’s belief that the issues raised in the CP provide an independent reason (unrelated to 

patent litigation) why Watson’s generic might not have made it to market for a considerable 

amount of time.

Endo agrees that it will produce any documents that discuss the CP’s impact on Watson’s 

ANDA approval (because those topics are obviously connected), but objects to use of the language 

regarding Watson’s “approval and launch” because that is an overbroad attempt to include 

documents regarding other factors that might have affected Watson’s ability to launch, including 

Endo’s analysis of the strength of the patent litigation. Id. at 4.

I agree that the scope of the waiver plaintiffs suggest is too broad. Endo’s waiver is 

limited to documents regarding the CP (status, chances of success, strategies for amendments, etc.) 

as well as any documents bearing on the impact of the CP on the FDA’s approval of Watson’s 

ANDA. Endo’s waiver does not extend more generally to documents concerning Watson’s launch 

or more broadly to other reasons and explanations for the provision of free goods. 

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I recognize that the Federal Trade Commission has expressed concern about Endo’s 

proposed limiting order. See Dkt. No. 579 (10/3/16 Letter from FTC). However, the election at 

issue is not a selective waiver, as that concept is typically understood and as suggested by the 

FTC. See e.g., In re Pac. Pictures Corp., 679 F.3d 1121, 1130 (9th Cir. 2012) (discussing 

selective waiver in context of voluntary production of attorney-client privileged information to the 

government). Instead, the waiver here is as a result of a court order putting Endo to a choice about 

its source of proof. In these circumstances, Ninth Circuit case law directs district courts to adopt 

protective orders limiting the use of the disclosed attorney-client information to the case at hand. 

See, e.g., Lambright v. Ryan, 698 F.3d 808, 820 (9th Cir. 2012) (following Bittaker v. Woodford, 

331 F.3d 715 (9th Cir.2003) and approving use of protective order to limit use of attorney-client 

materials covered by implied-waiver); Oracle Am., Inc. v. Innovative Tech. Distributors, LLC, No. 

11-CV-01043-LHK, 2011 WL 2559825, at *2 (N.D. Cal. June 28, 2011) (imposing a “waiver 

strictly limiting the use of the documents to ITD's outside counsel’s eyes only in the current 

proceedings before this Court.”); Rambus Inc. v. Samsung Elecs. Co., No. C-05-00334 RMW, 

2007 WL 3444376, at *7 (N.D. Cal. Nov. 13, 2007) (ordering that documents produced under an 

implied-waiver “should be produced under a protective order to otherwise preserve Samsung’s 

attorney-client and work-product privileges”).2

Therefore, I will adopt the proposed limiting order suggested by Endo. Dkt. No. 543-1.

B. Teikoku Election and Proffer

Teikoku has elected not to rely on any subjective belief at summary judgment or trial that I 

determined would put at issue and waive the attorney-client privilege for that subject matter. Dkt. 

No. 544. In the August 9th Order, I noted that Teikoku’s “Subjective Belief 6” included a number 

of discrete assertions, some of which would place attorney-client information at issue and some of 

which would not.3 August 9th Order at 23. I determined that Teikoku could not rely on a portion 

 

2

I am not addressing in any way the discovery to which the FTC is entitled in its action pending 

against Endo in the Eastern District of Pennsylvania. That is entirely up to the court in that case. 

3

Teikoku’s Subjective Belief No. 6 is: “Apart from maintaining good business relations and 

avoiding further costs, distractions and uncertainties, as set forth above, and without taking into 

consideration the potential outcomes of the litigation or regulatory proceedings in the FDA, 

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of their Subjective Belief (that “the terms embodied in the May 28, 2012 Settlement and License 

Agreement would not necessarily benefit Teikoku”) absent “a proffer of a justification devoid of 

attorney-client input.” Id. Teikoku now provides that proffer, explaining it bases that belief on 

the following:

At the time Teikoku entered into the Settlement Agreement, 

Teikoku did not believe it was capable of accurately evaluating the 

impact that loss of exclusivity would have on it profits – regardless 

of whether such loss of exclusivity occurred in Summer 2012 or 

when the ’529 patent expired in October 2015 or any time in 

between. In particular, Teikoku witnesses would testify that Teikoku 

never before had one of its branded products lose exclusivity to a 

generic product. They would also testify that Teikoku executives 

had no experience analyzing the impact that loss of exclusivity 

would have on a brand product’s profits. Accordingly, these 

witnesses would testify that when Teikoku entered into the 

Settlement Agreement in May 2012, Teikoku did not believe it 

could predict with any degree of certainty whether the Settlement 

Agreement would benefit Teikoku regardless of whether Teikoku 

won or lost the underlying patent infringement litigation.

Dkt. No. 544 at 2. Teikoku explains that its “belief evidence – i.e., that it lacked the 

experience, knowledge and ability to predict how a loss of exclusivity might affect its revenues as 

compared the commercial terms set forth in the Settlement Agreement – would be based solely on 

the business knowledge of Teikoku executives and witnesses” and assets that “Teikoku’s belief 

was not the subject of any pre-settlement attorney-client communications and is not informed by 

advice received from counsel.” Id. at 3. 

The problem, as plaintiffs point out, is that in 2012 Teikoku created (and has produced in 

this litigation) forecasts of what would happen to Lidoderm’s price and Teikoku’s profit and 

royalties given different loss of exclusivity dates. Declaration of Lauren Ravkind (Dkt. No. 562-

4), Ex. A. And when these scenarios were shown to Teikoku’s outside counsel – who was cc’d on 

the forecasts sent to Teikoku’s CEO – he was not allowed to testify as to his understanding of why 

he was included in that discussion. Ravkind Decl. Ex. B.4

 

Teikoku believed that the terms embodied in the May 28, 2012 Settlement and License Agreement 

would not necessarily benefit Teikoku.” Id. at 14.

4

Plaintiffs also rely on testimony from Teikoku CEO Paul Mori where he was prevented from 

answering a question about whether the settlement negotiations with Watson may have had a 

substantial impact on Teikoku’s profits. Ravkind Decl., Ex. C. Teikoku says that the testimony 

plaintiffs rely on is irrelevant as Mori was actually discussing (or as being asked about) his 

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Teikoku responds that while the 2012 forecasts may have been discussed by counsel, the 

issue they want to present subjective evidence on is that in 2012 Teikoku lacked the ability to 

make accurate forecasts, a matter solely within the knowledge of business people. Teikoku also

asserts that any forecasts that were made in 2012 were made without the input of attorneys and not 

at the direction of counsel.

Given the various representations of the parties, at the October 4, 2016 Case Management 

Conference I asked Teikoku to submit declarations from persons knowledgeable about this 

subject. On October 6, 2016, Teikoku submitted two declarations; one from outside counsel 

Noriyuki Shimoda and one from Manager of Corporate Development Michael Speitz. Dkt. Nos. 

581-2. Those declarations confirm Teikoku’s position that its belief evidence (regarding ability to 

forecast consequences of loss of exclusivity) was based solely on the business knowledge of 

Teikoku executives and witnesses, was not the subject of any pre-settlement attorney-client 

communications, and was not informed by advice received from counsel. 

Therefore, Teikoku will be allowed to testify as to its subjective belief that the settlement 

with Watson was not necessarily in its best interest because it was not capable of accurately 

evaluating the impact the loss of exclusivity would have on it profits.5

II. COMMON INTEREST PRIVILEGE 

As discussed in the August 9th Order, Endo asserted a common interest privilege over 

portions of the Manogue notes that reflected advice/information exchanged with counsel for 

Watson reflecting the sharing of antitrust legal advice between Endo and Watson related to 

potential terms of the parties’ settlement. (Silver-coded notes). I ordered the parties to submit 

supplemental briefing on this narrow issue. Dkt. No. 536 at 41.

In its supplemental brief, Endo argues that it had an agreed-to common interest privilege 

 

knowledge about projections made in 2015 for presentation to the FTC. Dkt. No. 569 at 2. 

Plaintiffs at the October 4, 2016 CMC also pointed to Entry 18 on Exhibit I to the Kohn 

Declaration in Support of Production of Preclusion (Dkt. No. 462-17) which shows that Teikoku 

withheld emails discussing “possible outcome of settlement and Lidoderm simulation.” 

5 By request, Watson/Actavis was given until September 16, 2016 to make its election. Dkt. No. 

547. On September 16, 2016, Watson explained that it would not elect to rely on any of its 

identified subjective beliefs and, therefore, avoid waiver. Dkt. No. 570.

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with Watson (which was not in writing) that covered discussions between the two regarding 

antitrust advice over potential or actual terms of the parties’ settlement. Dkt. No. 540. It relies on 

In re: Androgel Antitrust Litig. (No. II), No. 1:09-CV-955-TWT, 2015 WL 9581828 (N.D. Ga. 

Dec. 30, 2015), where, in a similarly postured reverse-settlement antitrust litigation, the district 

court concluded that the defendant patent holder and the defendant generic manufacturer could 

assert a common interest privilege over their discussion of potential antitrust liability because,

“while the Defendants were adverse during the settlement negotiations, they shared a common 

legal interest in formulating a defense to any potential antitrust litigation.” Id. at *2.

There are a number of issues with Endo’s argument and its evidentiary showing. First, in 

the case Endo relies primarily on, In re: Androgel Antitrust Litig., the parties who had negotiated 

the underlying patent litigation settlement had entered into a written joint defense agreement to 

cover their discussion about potential antitrust liability for their settlement. Id., 2015 WL 

9581828, at *2. While Endo is correct that a joint defense agreement or other agreement sufficient 

to create a common interest need not be in writing, there still must be some evidence of an actual 

agreement between the parties. See, e.g., Avocent Redmond Corp. v. Rose Elecs., Inc., 516 F. 

Supp. 2d 1199, 1203 (W.D. Wash. 2007) (“A written agreement is not required, but the parties 

must invoke the privilege: they must intend and agree to undertake a joint defense effort.”).6 

There is no such evidence in this record. In her declaration, Manogue simply asserts: “In some 

instances, the Notes reflect my thoughts, mental impressions and opinions concerning antitrust 

 

6

Endo also argued at the August 30, 2016 Case Management Conference that the existence of the 

common interest privilege should be implied from Manogue’s conduct (that she disclosed her 

antitrust concerns to Buchen). I recognize that cases have concluded that even absent an express 

agreement, the conduct of parties can imply the existence of a joint defense agreement. However, 

in those cases, the exchange of information occurred once a government investigation (or 

litigation) had commenced and the risks to the parties were established. Here it is more than a 

stretch to apply the concerns recognized in those cases – the need to facilitate prompt and 

confidential exchange of information useful to those parties’ joint defense – to this situation where

the parties were still negotiating settlement terms and no true prospect of antitrust litigation has 

arisen. Nor is this case analogous to In re Regents of the Univ. of Cal., 101 F.3d 1386, 1390 (Fed. 

Cir. 1996), where the licensee and patent holder were securing counsel from the same attorneys. 

Manogue was not advising Buchen how they should protect their joint interests or what their joint 

strategy should be. Instead, she expressed concerns about potential antitrust liability from 

provisions still being negotiated. 

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legal advice shared between myself and David Buchen, then the General Counsel for Watson, 

during Settlement Discussions. I understood at the time that Endo and Watson shared a common 

interest in ensuring that any settlement complied with the antitrust laws and in minimizing the 

possibility that the settlement would be challenged under the antitrust laws.” Manogue Decl. (Dkt. 

No. 492-7) ¶ 6. Even Manogue does not provide facts showing that she and Buchen reached an 

agreement to protect the information Manogue shared with Buchen about her antitrust concerns. 

Manogue’s “understanding” that because Endo and Watson could be at risk in potential, future 

litigation as to a settlement that had not yet been finalized is insufficient to establish a common 

interest privilege as to the information she shared with Watson. 

Second, even if Manogue believed there was an agreement between Endo and Watson, 

there is no evidence that Watson had a similar understanding. Indeed, in his deposition in this case

Watson’s General Counsel David Buchen (whom Manogue was communicating with) testified 

that he did not have an understanding that an FTC investigation into the settlement might occur. 

Buchen Depo. (Dkt. No. 545-4) at 80:8-22. He destroyed his notes regarding the negotiation of 

the settlement terms with Manogue because “there was no reason to keep them after the settlement 

was entered into. There was no litigation. There was no investigation, so my regular practice was 

not to preserve my own handwritten notes, particularly after a matter had been resolved and I had 

moved on to something else.” Id., at 79:7-15. On the record before me, I cannot find that

Manogue’s sharing of her antitrust “concerns” or “advice” with Buchen is covered by the common

interest privilege. The silver-coded notes should be produced.

Finally, Endo seeks a “clarification” of the August 9th Order to allow Endo to withhold 

two very discrete notes taken by Manogue during her conversations with Buchen at Watson

because those two notes are either Manogue’s “mental impressions” and notes to herself about 

“legal matters,” or because those two notes are likewise covered by the common interest privilege 

with Watson for the same reason as the silver-coded notes discussed above. Dkt. No. 540.

Plaintiffs oppose Endo’s “ongoing attempt” to recode the notes, arguing Endo has had 

ample opportunity to appropriately code the notes (in the first instance, upon the parties’ meet and 

confers, and upon submission to this Court for the in camera review that led to the August 9th 

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Order) and that Endo should not be allowed to keep changing its rationale for redaction. I have 

reviewed the two discrete entries at issue. They are more clearly notes internal to Manogue’s 

thinking and not information she was disclosing to Buchen. They may be redacted from the 

production.

IT IS SO ORDERED.

Dated: October 11, 2016

______________________________________

WILLIAM H. ORRICK

United States District Judge

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