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In re Bard IVC Filters Products Liability Litigation

United States District Court, D. Arizona

July 25, 2016




         This dispute concerns documents withheld from discovery under the attorney-client privilege and the work-product doctrine by Defendants C.R. Bard, Inc. and Bard Peripheral Vascular, Inc. (“Bard”). Plaintiffs challenge a substantial number of documents on Bard’s privilege log. Plaintiffs sampled 307 documents on the log, which represents five percent of the total. After meeting and conferring, the parties reached agreement on all but 133 of the sampled documents. The resolution of this discovery dispute will be used to guide the parties as they attempt to resolve the overall privilege dispute in this multi-district litigation (“MDL”).

         On March 25, 2016, Plaintiffs moved to compel production of the 133 disputed documents. Doc. 1214. On March 31, 2016, the Court held a third case management conference where the issue was discussed (Doc. 1246), and the Court provided additional guidance in the ensuing case management order (Doc. 1319 at 5-6). The issues have now been fully briefed (Docs. 1476, 1590, 1976, 2219, 2222), and the Court heard oral arguments on June 21, 2016. The Court has also reviewed the representative sample documents submitted by the parties. For the following reasons, the Court will grant in part and deny in part Plaintiffs’ motion to compel.

         I. Choice of Law.

         The parties agree that the work-product doctrine is governed by federal law, but disagree on which law should govern the attorney-client privilege. The parties’ briefing suggests four possibilities: (1) generally applicable common law, (2) Arizona law, (3) New Jersey law, or (4) the law of each transferor district.

         A. Choice of Law Approaches.

         Federal Rule of Evidence 501 provides that “in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” Fed.R.Evid. 501. “Rule 501, however, does not tell us which state law the forum state should apply.” KL Grp. v. Case, Kay & Lynch, 829 F.2d 909, 918 (9th Cir. 1987). Commentators have suggested several methods of resolving this choice-of-law issue: (1) use the privilege law of the state whose substantive law provides the rule of decision; (2) apply the privilege law of the state in which the federal court sits; or (3) apply the conflict-of-law doctrine of the state in which the federal court sits. Id. (citing 23 C. Wright & K. Graham, Jr., Federal Practice and Procedure § 5435, at 865-69 (1980); 2 Weinstein’s Federal Evidence § 501[02] (1986)).

         The issue is complicated in the MDL context, where cases originate in many different states. In In re Yasmin and Yaz (Drospirenone) Marketing, Sales Practices and Products Liability Litigation, MDL No. 2100, 2011 WL 1375011, at *1 (S.D. Ill. Apr. 12, 2011), the court addressed a privilege challenge to 330 documents, a representative sample of the 12, 857 documents withheld as privileged. Consistent with Rule 501, the Court found that “privilege matters that are relevant to an element of a claim or defense for which state law supplies the rule of decision will be governed by state privilege law.” Id. at *7. The court recognized that “a federal court sitting in diversity applies the choice of law rules emanating from the state in which it sits, ” and that, in the MDL context, “the transferee court applies the choice of law rules of the state in which the transferor court sits.” Id. at *4. After surveying the choice of law principles of every state, the court decided to apply the “most significant relationship” test found in Restatement (Second) of Conflict of Laws § 139 (Am. Law Inst. 1971). The court found that in most states, “the law of the state with the most significant relationship to the communication will govern the existence and scope of attorney-client privilege.” Id. at *9.[1]

         Other cases have adopted different approaches. See In re Vioxx Prods. Liab. Litig., MDL No. 1657, 501 F.Supp.2d 789, 791-92 (E.D. La. 2007) (applying generally-known principles of the attorney-client privilege); In re Baycol Prods. Litig., MDL No. 1431, 2003 WL 22023449, at *1-2 (D. Minn. Mar. 21, 2003) (applying the choice-of-law rules of the state where the transferee court sits); U.S. Surety Co. v. Stevens Family Ltd., No. 11-C-7480, 2014 WL 902893, at *1 (N.D. Ill. Mar. 7, 2014) (applying the privilege law of state that supplies the substantive rule of decision).

         After considering these various approaches, the Court agrees with Yasmin, which looked to the transferor states’ choice of law rules to determine which privilege law to apply. This approach comports with the Supreme Court’s instruction that federal courts should look to state conflict laws as well as substantive laws. See Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 496-97 (1941). The Court also agrees with Yasmin’s selection of the Restatement’s most significant relationship test as best representative of the choice of law rules applied by the various states. 2011 WL 1375011, at *7. The parties also agree. Docs. 1476 at 6; 1590 at 2. Thus, the Court will use Restatement § 139 to identify the privilege law to be applied in this case.

         B. Section 139 Analysis.

         Part 1 of § 139 provides: “Evidence that is not privileged under the local law of the state which has the most significant relationship with the communication will be admitted, even though it would be privileged under the local law of the forum, unless the admission of such evidence would be contrary to the strong public policy of the forum.” Restatement (Second) of Conflict of Laws § 139 (Am. Law Inst. 1971). Part 2 provides: “Evidence that is privileged under the local law of the state which has the most significant relationship with the communication but which is not privileged under the local law of the forum will be admitted unless there is some special reason why the forum policy favoring admission should not be given effect.” Id. Thus, § 139 applies only when the privilege law of the forum differs from that of the state with the most significant relationship to the allegedly privileged communication.

         To determine which state has the most significant relationship, Comment e to § 139 provides this guidance:

The state which has the most significant relationship with a communication will usually be the state where the communication took place, which, as used in the rule of this Section, is the state where an oral interchange between persons occurred, where a written statement was received or where an inspection was made of a person or thing. . . . The state where the communication took place will be the state of most significant relationship in situations where there was no prior relationship between the parties to the communication. If there was such a prior relationship between the parties, the state of most significant relationship will be that where the relationship was centered unless the state where the communication took place has substantial contacts with the parties and the transaction.


         In the case of written communications (the only kind of communication at issue in this order), the comment suggests that the state where the communication was “received” has the most significant relationship. This suggestion, made by the ALI in 1971, is problematic in a day of electronic communications. Email communications – which represent most of the communication at issue in this motion – usually go back and forth between the communicating parties several times in a single email string, resulting in virtually everyone being the “receiving” party for at least some of the communications. Email communications can also be “received” by many people in many states simultaneously. Thus, it may be impossible to determine which party “received” the communication. Commentators have noted this difficulty with the Comment e approach. See Graham C. Lilly & Molly Bishop Shadel, When Privilege Fails: Interstate Litigation and the Erosion of Privilege Law, 66 Ark. L. Rev. 613, 643 (2013) (“determining the state with the ‘most significant relationship’ may prove problematic with electronic communication”).

         This case provides an apt example. The first communication at issue in this motion (Log 2, Control 809) is just over one page long, and yet it includes an initial email between two people on July 15, 2005; a response copied to three more people on July 17, 2005; a forwarding of the email to still another person on July 18, 2005; and a response from the recipient of the forwarded email that is addressed to five new individuals and copied to one new individual, in addition to those already in the email chain. Three communications, among a total of 12 people, over the course of four days render it virtually impossible to determine where this communication was “received.” To make matters more difficult, the parties have not provided the Court with the roles and locations of many of the people on this email, and this is just one of dozens the Court must review. Many of the documents at issue in this motion include the same kind of back-and-forth among many persons over the course of several days.

         The Court concludes that it would make little sense to find that the state with the most significant relationship – and therefore the applicable privilege law – varies from email to email, or maybe even within a single email string, depending on whom happens to be copied and whom the Court deems to be the primary recipient. The Court finds that the “received” test for written email communication is simply not workable in this case.[2]

         The Court need not dwell longer on this issue, however, because the other part of Comment e suggests that if the parties to the communication in question had a prior relationship, then the state where that relationship was “centered” will usually be the state with the most significant relationship. This approach provides a workable solution for this case. The communications in question appear primarily to be among Bard in-house lawyers, based at C.R. Bard headquarters in New Jersey, and managers and employees of Bard Peripheral Vascular (“BPV”), located in Arizona. The subject of this litigation is the design and performance of filters made and sold by BPV, as well as the marketing and compliance efforts of BPV. Thus, although lawyers and paralegals for Bard may be based in New Jersey, it appears their client for purposes of these communications, as well as the subject of their communications, is primarily BPV and its activities in Arizona.

         This appearance is confirmed by the evidence. BPV is a wholly-owned subsidiary of C.R. Bard. Doc. 2219-1 at 2, ¶ 3. BPV is headquartered in Arizona, id., and “is the company that was and is primarily responsible for all activities related to” the filters at issue in this case, id., ¶ 4.

From its headquarters in Tempe, Arizona, [BPV] had and continues to have principal responsibility in designing the filters, testing the filters, directing the manufacturing of the filters, developing contents of the instructions for use that accompanies the filters, communicating with the FDA regarding the filters, developing marketing material for the filters, training the sales force regarding interacting with physicians about [the] filters, developing written communications to physicians related to the filters, developing and maintaining a quality and post-market surveillance system regarding the filters, and deciding when each new generation of filter is first marketed and the previous filter stops being marketed.

Id., ¶ 5. BPV is responsible for managing its own day-to-day operations. Doc. 2219-2 at 3-4. C.R. Bard is responsible for setting “corporate quality standards or guidance[] that the divisions would need to follow at a global level, ” id. at 4, but the divisions act as “their own business that reports back up to Bard corporate or C.R. Bard, ” id. at 5. C.R. Bard’s legal department acts as “a full functioning legal department” covering “[a]ll matters of legal breadth, ” and the legal work for BPV. Id. at 6.

         Given these facts, and the reality that lawyers advise clients on the clients’ activities and issues, not the lawyers’ activities and issue, the Court concludes both that there was a preexisting relationship between the Bard in-house lawyers and BPV, and that the relationship can most accurately be described as “centered” in Arizona. That is where products are developed, marketing materials are written, FDA communications originate, training occurs, testing is done, and legal advice is needed, received, and acted upon.

         The authors of the law review article cited above reach a similar conclusion. They note that “[s]ince privileges primarily benefit their holders – such as a client or patient – identifying the holder should be an important indication of which state has the most significant relationship to the communication.” Lilly & Shadel, 66 Ark. L. Rev. at 649. The privilege holder’s “affiliation with competing states is of paramount importance” and “should be a primary factor in determining which state has the most significant relationship to a communication.” Id.

         The Court concludes that the preexisting relationship between the parties to the communications at issue in this case was centered in Arizona, and that Arizona therefore has the most significant relationship to the communications.[3] As a result, the Court will apply the privilege law of Arizona. Because Arizona also is the forum where this Court is located, the Court need not further apply the conflict resolution principles set forth in parts 1 and 2 of § 139.[4]

         C. Plaintiffs’ Arguments.

         Plaintiffs argue that New Jersey is the state with the most significant relationship to the communications, but the evidence does not support this conclusion. It is true that C.R. Bard’s corporate center, including its legal department, is located in New Jersey. But the evidence shows that C.R. Bard was not involved in the management of day-today operations of BPV and, as discussed above, virtually all of the relevant conduct and events occurred at BPV. The fact that Bard’s legal department is located in New Jersey is not dispositive, particularly when the relevant client, BPV, is located in Arizona.

         Plaintiffs argue that “in the intra-corporate context, the parent and wholly-owned subsidiary should be treated as one entity.” Doc. 2222 at 4. Plaintiff cite Teleglobe Communications Corp. v. BCE Inc., 493 F.3d 345 (3d Cir. 2007), but that case addressed the effect of disclosing an otherwise privileged attorney-parent communication to the parent’s subsidiary, see Id. at 369-74. It did not address the complicated choice-of-law issue presented in this case.

         Plaintiffs argue that “it is reasonable to presume that Bard’s lawyers relied on New Jersey law” when advising BPV. Doc. 2222 at 4-5. The Court does not agree. Plaintiffs’ own cases suggest that lawyers typically apply the laws of their client’s state when providing guidance. See, e.g., Compuware Corp. v. Moody’s Investors Servs., Inc., 222 F.R.D. 124, 133 (E.D. Mich. 2004) (holding that New York company’s lawyers advising on privilege “surely relied on the protections of New York law”).

         Plaintiffs assert that Bard’s litigation counsel never mentioned Arizona law in the parties’ meet and confer process, involving “claims going back several years” in related cases. Doc. 2222 at 5. While this may support an estoppel argument, which Plaintiffs have not made, it is does not address the choice of law issue.

         Plaintiffs assert that Bard “is hardly a major employer in Arizona” and that BPV “does not specifically market in Arizona, has no retail locations here, and some of its products including IVC filters are manufactured elsewhere.” Doc. 2222 at 5. But Plaintiffs do not dispute that BPV is an Arizona corporation with its principal place of business here. The relevant question is not the significance of BPV’s presence in Arizona, but where the relationship between BPV and its lawyers was centered. For reasons discussed above, the Court concludes that the relationship was centered in Arizona, the location of the activities for which the legal advice was provided.

         II. Legal Standard.

         A. Attorney-Client Privilege.

         The attorney-client privilege “is rigorously guarded to encourage full and frank communications between attorneys and their clients and thereby promote broader public interests in the observance of law and the administration of justice.” State v. Sucharew, 66 P.3d 59, 64, ¶ 10 (Ariz.Ct.App. 2003) (citing State v. Towery, 920 P.2d 290, 299 n.6 (Ariz. 1996) (internal quotation marks omitted)). “The privilege belongs to the client and encompasses communication between the attorney and client made in the course of the attorney’s professional employment.” Id. (citing State v. Holsinger, 601 P.2d 1054, 1058 (Ariz. 1979)). “The burden of showing the relationship, the ...

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