# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Ar gued November 15, 2017 Decided June 19, 2018

No. 16

- 5356

F EDERAL T RADE C OMMISSION , A PPELLANT

v.

B OEHRINGER I NGELHEIM P HARMACEUTICALS , I NC ., A PPELLEE

Consolidated with 16

- 5357

Appeals from the United States District Court for the District of Columbia (No. 1:09

- mc

- 00564)

Mark S. Hegedus , Attorney, Federal Trade Commission, argued the cause for appellant. With him on the briefs were David C. Shonka , Acting General Counsel, and Joel Marcus

, Deputy General Counsel for Litigation.

Lawrence D. Rosenberg argued the cause for appellee. With him on the briefs were Michael Sennett and Nicole C. Henning

.

John P. Elwood

, Zachary J. Howe

, Kate Comerford Todd

, Sheldon Gilbert , and Amar D. Sarwal were on the brief for2

amicus curiae Chamber of Commerce of the United States of America and Association of Corporate Counsel in support of Boehringer Ingel heim Pharmaceuticals, Inc. Warren D. Postman entered an appearance.

Before: K AVANAUG H and P ILLARD , Circuit Judges , and R ANDOLPH , Senior Circuit Judge

.
Opinion for the Court filed by Circuit Judge K AVANAUGH , w ith whom Circuit Judge P ILLARD and S enior Circuit Judge R ANDOLPH join.

Concurring opinion filed by Circuit Judge P ILLARD

.

K AVANAUGH , Circuit Judge : The pharmaceutical
company Boehringer claimed attorney

- client privilege over certain documents subpoenaed by the Federal Trade Commission

. T he attorney

- client privilege applies to a communication between attorney and client if at least “ one of the significant purposes ” of the communication was to o btain or provide legal advice. In re Kellogg Brown & Root, Inc.

, 756 F.3d 754, 758 (D.C. Cir

. 2014). Under that standard, the attorney

- client privilege applies to the documents at is sue here. We affirm the judgment of the District Court.

I

A drug manu facturer that holds a patent has a market advantage . When a generic drug company challenges the validity of that patent, it threate ns the patent holder’s monopoly. Such a challenge c an result in a settleme nt in which the patent holder pays the challen ger to drop the challenge. That scenario is known as a “reverse payment” settlement

– so labeled because the settlement requires the3

patent holder to “ pay the alleged infringer, rather t han the other way around

. ” FTC v. Actavis, Inc. , 570 U.S. 136, 141 (2013).

In Actavis

, the Supreme Court analyz ed the legality of

reverse payments. If the payments are made simply to avoid litigation costs

, they may be lawful

. But if “ the basic reason is a desire to maintain and to share patent

- generated monopoly profits

, ” then “ the antitrust laws are likely to forbid the arrangement.” Id. at 158

.
In 2008, a patent negotiation occurred between Boehr inger (the name brand with the patent ) and Barr (the generic seeking to challenge the patent ). Ultimately

, the parties reached a reverse payment settlement

.
The Federal Trade Commission pays close attention to reverse payment settlements to ensure that they do not run afoul of antitrust law. In 2009, t he Commission began investigating the Boehringer

- Barr settlement. During the investigation, the Commission subpoenaed documents from Boehringer

. Boehringer claimed that the subpoenaed documents were created by Boehringer employees for Boehringer’s general counsel , Marla Persky, at her request . The documents allowed Persky to analyze and navigate the treacherous antitrust issues surrounding reverse payment settlements. Other documents reflected communications between Persky and Boehringer executive s regarding the possible settlement. Boehringer asserted attorney

- client privilege over the documents

.
The burden is on the proponent of the privilege to demonstrate that it applies. See United States v. Legal Services for New York City , 249 F.3d 1077 , 1081 (D.C. Cir. 2001). In a thorough and careful opinion , the District Court agreed with Boehringer that the documents at issue here are covered by the attorney

- client privilege. T o the extent t he4

Commission challenges the legal test employed by th e District Court, o ur review is de novo. To the extent the Commission challenges the facts found by the District C ourt, our review is for clear error.

II

As relevant here, t he a ttorney

- client privilege applies to a confidential communication bet ween attorney and client if the communication was made for the purpose of obtaining or providing legal advice. See Upjohn Co. v. United States , 449 U.S. 38 3 (1981) ; In re Kellogg Brown & Root, Inc.

, 756 F.3d 754, 757 (D.C. Cir

. 2014). The privilege covers bot h (i) those communications in which an attorney gives legal advice ; and (ii) those communications in which the clie nt informs the attorney of facts that the attorney needs to understand the problem and provide legal advice

.
In the corporate context, t he a ttorney

- client privilege applies to communications between corporate employees and a corporation’s counsel made for the purpose of obtai ning or providing legal advice. T he privilege applies regardless of whether the attorney is in

- house counsel or outside counsel.

The application of th e attorney

- client privilege can become more complicated when a communication has multiple
purposes

– in particular

, a legal purpose and a business
purpose. In this case, for example, the communications had a legal p urpose: to help the company ensure compliance with the antitrust laws and negotiate a lawful settlement . But the communications also had a business purpose: to help the
company negotiate a settlement on favorable financial terms.

I n a situation like this where a communication has multiple
purposes , court s apply the “primary purpose” test to determine5
whether the communication is privileged. See Kellogg , 756 F.3d at 759. In Kellogg , t his Court recently explained that
courts applying the p rimary purpose test should not try “ to find the one primary purpose” of a communication. A ttempting to do so “can be an inherently impossible task” when the communications have “ overlapping purposes (one legal and one business, for example).” Id. “It i s often not useful or even feasible to try to determine whether the purpose was A or B when the purpose was A and B.” Id. Rather, courts applying the primary purpose test should determine “whether obtaining or providing legal advice was one of the signif icant purposes of the attorney

- client communication.” Id. at 760 (emphasis added) ; see 1 R ESTATE MENT (T HIRD ) OF THE L AW G OVERNING L AWYERS § 72, Reporter’s Note

, at 554 (2000).

Our approach to this issue

, as we explained in Kellogg

, helps to reduce uncertainty regarding the attorney

- client privilege. Reducing uncertainty is important in the privilege
context because, as the Supreme Court has stated

, an “uncertain privilege , or one which purports to be certain but results in widely v arying applications by the courts, is little better than no privilege at all.” Upjohn

, 449 U.S. at 393

.
In this case, the question therefore is whether obtaining or providing legal advice was one of the significant purpose s of the communication s at issue

. The answer is yes.

The relevant communications consist primarily of the transmission of factual information from Boehringer’s employees to the general counsel , at the general counsel’s request, f or the purpose of assisting the general counsel in formul ating her legal advice regarding a possible settlement

. Other communications were between the general counsel and the corporation’s executives regarding the settlement. All of
t hose c ommunications are protected by the attorney

- client6
privilege because one of the significant purposes of the communications was “obta ining or providing legal advice ”

– namely, settlement and antitrust advice. Kellogg , 756 F.3d at 758

.
To be sure, the communications at issue here also served a business purpose . T he decis ion whether and at what price to settle ultimately was a bus iness decision as well as a legal decision for Boehringer . But as we stated in Kellogg , what matters is whether obtaining or providing legal advice was one of the significant purposes of the atto rney

- client communication s

. Here, as the District Court correctly concluded, one of the significant purpose s of the se communication s was to obtain or provide legal advice

. It follows that Boehringer’s general counsel was acting as an attorney and that the communications are privileged.

In so ruling, w e emphasize that the attorney

- client privilege “only pr otects disclosure of communi cations; it does not protect disclosure of the underlying facts by those who communicated with the attorney.” Upjohn , 449 U.S. at 395

. In this case, therefore, t he attorney

- client privilege did not and does not prevent the FTC’s discovery of th e underlying facts and data possessed by Boehringer and its employees. Nor did it prevent the FTC’s disco very of pre

- existing business documents. But the attorney

- client privilege does protect the communication of facts by corporate employee s to the general counsel when, as here, the communi cations were for the purpose of obta ining or providing legal advice. As t he Upjohn C ourt noted

, discovery “was hardly intended to enable a learned profession to perform its functions . . . on wits7
borrowed from the adversary.” Id. at 396 (quoting Hickman v. Taylor , 329 U .S. 495, 516 (1947)). 1

* * *

I n its landmark decision in Upjohn Co. v. United States

, 449 U.S. 383 (1981) , the Supreme Court explained the importance of the attorney

- client privilege in the business
context : The “ vast and complicated array of regulatory legislation” requires corporations to “constantly go to lawyers to find out how to obey the law . . . particularly since compliance with the law in this area is hardly an instinctive matter.” Id. at 392. So it was in this case. We af firm the judgment of the District Court.

So ordered.

1 For a few documents sought by the FTC, Boehringer asserted only the work product privilege and not the attorney

- client privilege. This Court’s prior decision in this case analyzed t he work product issue. FTC v. Boehringer Ingelheim Pharmaceuticals, Inc

. , 778 F.3d 142 (D.C. Cir. 2015). O n remand, the Distric t Court applied that decision. In a cross

- appeal in this case, Boehringer challenges the District Court’s decision on the work product privilege. But Boehringer forthrightly recognizes that this pa nel is bound by the prior panel’s decision. Boehringer’s real beef is with the prior decision. We find no reversible error in the District Court’s application of our prior decision.P ILLARD , Circuit Judge

, concurring : I agree with the opinion of the court as far as it goes. I write separately to emphasize why the spare elegance of the court’s opinion should not be mistaken for an expansion of the attorney

- client privilege rec ognized in our prior precedents: In short, the district court engaged extensively with the disputed documents and the bases for the privilege claims, and followed certain truncated procedures only with the parties’ consent.

As an exception from the general presumption i n favor of discovery, the “attorney

- client privilege must be strictly confined within the narrowest possible limits consistent wit h the logic of its principle. ” In re Lindsey , 158 F.3d 1263, 1272 (D.C. Cir. 1998) (quoting In re Sealed Case , 676 F.2d 793, 807 n.44 (D.C. Cir. 1982) ) ; see 1 Paul R. Rice, Attorney

- Client Privilege in the U.S. § 2:3. The party asserting attorney

- client privilege must prove that “each communication” sought to be withheld merits the privilege. United States v. Legal Serv s

. for N

.Y.C. , 249 F.3d 1077, 1081

- 82 (D.C. Cir. 2001) (rejecting unparticularized assertion of attorney client privilege) ; see Attorney

- Client Privilege in the U.S. § 11:11. Under settled law, t he burden of establishing that privilege applies rests with the party claim ing it

. See Op. 3; Legal Serv s

. for N .Y.C. , 249 F.3d at 1081

- 82 ; Lindsey , 1 5 8 F.3d at 127 0 ; In re Sealed Case

, 737 F.2d 9 4, 99 (D.C. Cir. 1984) [hereafter Sealed Case (1984)] ; FTC v. TRW, Inc. , 628 F.2d 207, 213 (D.C. Cir. 1980 )

. T he proponent must , that is, show that a “significant” purpose of every individual “ communication ” for which it asserts privilege is to secur e or provid e “legal advice.” See In re Kellogg Brown & Root , 756 F.3d 754, 759

- 60 (D.C. Cir. 2014); Sealed Case (1984), 737 F. 2 d at 98

- 99.

Clients claiming privilege may seek to shield information supplied in confidence to their lawyers . When a client’s confidences are a “significant and inseparable part” of th e lawyer’s advice, they are protected as they appear within privileged communications between lawyer and client. Sealed2

Case (1984), 737 F.2d at 99. As the court emphasizes, however, the attorney

- client privilege “only protects disclosure of communicatio ns; it does not protect disclosure of the underlying facts by those who communicated with the attorney.” Op. 6 (quoting Upjohn Co. v. United Stated

, 449 U.S. 383, 395 (1981))

.

The FTC does not dispute the status of the documents as “communications” betwee n lawyer and client, O ral Argument Tr. at 12, instead focusing on the magistrate judge’s conclusion that Boehringer had met its burden to show that the communications at issue had a significant legal purpose. Where a privilege claimant has closely intertwined purposes

— a legal purpose as well as a business purpose

— it must still establish to a “reasonable certainty,” Sealed Case (1984) , 737 F.2d at 99, that “ obtaining or providing legal advice was on e of the significant purposes” animat ing each communication withheld, Kellogg Brown & Root

, 756 F.3d at 75 8

- 5 9

. Neither

a general statement that the lawyer wore both lawyer and businessperson “hats” during the communications nor a blanket assertion of legal purpose is enou gh. See Sealed Case (1984), 737 F.3d at 99; Lindsey , 158 F.3d at 1270. Nor is it sufficient to offer as support privilege logs with bare, conclusory assertions that the listed communications were made for the purpose of securing legal advice. See Legal Serv s

. for N .Y.C. , 249 F.3d at 1081

- 82; a ccord Equal Employment Opportunity Commission v. BDO USA, LLP , 876 F.3d 690, 696 (5th Cir. 2017)

. The claimant must instead “present to the court sufficient facts to establish the privilege” so that the court is in a position independently to review the legal

- purpose assertion for each relevant communication

. Sealed Case (1984) , 737 F.2d at 99.

The magistrate judge , having personally “reviewed in

camera all the documents at issue,” found that Boehringer met3

that considerable burden in this case. FTC v. Boehringer Ingelheim Pharm., Inc. , 180 F. Supp. 3d 1, 6 (D.D.C. 2016). That decision is not clearly erroneous. The burden

- of

- proof issue is , to be sure, somewhat obscured on this record becaus e of the special process the parties adopted. In response to the FTC’s 2009 subpoena, Boehringer initially produced approximately 9,500 documents to the FTC and withheld approximately 2,400 on the basis of work

- product protection and/ or attorney

- client pr ivilege. See Appellee Br. at 14. The FTC challenged the application of those shields to over 600 documents listed in Boehringer’s privilege log. Id. Faced with hundreds of disputed documents, a magistrate judge in 2011 ordered Boehringer to choose a re presentative sample of documents for in camera review. See FTC v. Boehringer Ingelheim Pharm

. , Inc. , 286 F.R.D. 101, 106 (D.D.C. 2012) ; O ral A rgument Tr. a t 31. Boehringer submitted a supporting affidavit with specific explanation s of its claim s of privilege for each of the documents in the sample. Sealed App’x 473

- 85. At oral argument, Boehringer explained

— and the FTC did
not contest

— that Boehringer offered to supplement or amend the original privilege logs to provide more support for its priv ilege assertions. T he FTC passed on that offer

. See O ral Argument Tr. a t 31

- 32 , 42

. In light of our 2015 decision in this case clarif ying the standard for work

- product protection, see FTC v. Boehringer Ingelheim Pharmaceuticals , 778 F.3d 142 (D.C. Cir. 2015)

, the magistrate judge on remand reviewed not only residual work product claims but also assertion s that documents we held not protected as work product were nonetheless privileged attorney

- client communications

, s ee Boehringer , 180 F. Supp. 3d 1. Bo ehringer again offered to supplement the record with additional briefing and ex parte affidavits, but the court held that no additional materials were necessary or appropriate

. S ee id . at 22

- 23, 28. In view of the parties’ original briefing on4

attorney

- c lient privilege, the sample documents reviewed in

camera , and the record , which included Boehringer’s supporting ex parte affidavit and its privilege logs , the court sustained Boehringer’s claims of attorney

- client privilege . It determined that Boehringer offered more than conclusory assertions that each of the disputed com munications had a legal
purpose and, after confirming those assertions through its own review of the documents, credited Boehringer ’s contention that obtaining legal advice was a signifi cant purpose animating each communication

. Id. at 29

- 30.

The court enjoys considerable discretion in making that determination in the first instance, and we owe its fact

- finding appreciable deference. See Boehringer , 778 F.3d at 148 ; Fed. R. Civ. P. 52(a)(6) (“Findings of fact . . . must not be set aside unless clearly erroneous.”) . Because I see no clear error in the district court’s finding, I concur.