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Eshelman v. Puma Biotechnology, Inc.

United States District Court, E.D. North Carolina, Southern Division

July 13, 2017




         Defendant Puma Biotechnology Inc. ("Puma") moves the court to compel Plaintiff Fredric N. Eshelman ("Eshelman") to produce a privilege log for documents withheld on the basis of attorney-client privilege and/or work product doctrine. [DE-117]. Eshelman opposes the motion. [DE-118]. The motion has been referred for disposition pursuant to 28 U.S.C. § 636(b)(1)(A). For the reasons stated below, Puma's motion is denied.

         I. BACKGROUND

         On February 2, 2016, Eshelman filed a complaint against Puma and Alan H. Auerbach ("Auerbach"), Puma's chief executive officer ("CEO") and Board Chairman, [1] asserting claims of libel per se and libel per quod related to an allegedly defamatory investor presentation. See [DE-1, -5]. Puma is abiopharmaceutical company focused on acquiring, developing, and commercializing innovative cancer-care products. Compl. [DE-5] ¶ 6. Eshelman founded Pharmaceutical Product Development ("PPD"), a North Carolina-based global contract pharmaceutical research organization. Id. ¶¶5, 16.

         On November 1, 2001, PPD contracted with Aventis Pharmaceuticals, Inc. ("Aventis") to provide clinical research services during a clinical trial to determine the safety and effectiveness of the drug Ketek. Id. ¶¶ 22-23. During the Ketek trial, which occurred while Eshelman was CEO of PPD, a clinical investigator falsified documents. Id. ¶¶ 23-25. Eshelman alleges that in the course of a proxy contest, Puma posted a link on its investor-relations website to download an "Investor Presentation" that falsely stated or gave the impression that Eshelman had been personally and culpably involved in the Ketek clinical-trial fraud, when in fact PPD had been the victim of the fraud. Id. ¶¶ 46-82.

         On January 12, 2017, Puma moved the court to compel Eshelman to produce a privilege log corresponding to documents withheld from production on the basis of attorney-client privilege in response to Puma's Requests for Production of Documents ("RFPs") 19, 20, 22-30 and 40. [DE-74]; Ex. A [DE-74-1] at 8-13; Ex. B [DE-74-2] at 2-3. According to Puma, the RFPs at issue seek documents related to the proxy contest and are crucial to Puma's defense that its response to Eshelman's proxy contest was appropriate and accurate. [DE-75]. Eshelman responded in opposition to Puma's motion, asserting that he raised valid objections to the RFPs at issue and, consequently, pursuant to the parties' agreement memorialized in their Joint Discovery Plan [DE-37], no privilege log was required. [DE-76] at 1.

         On February 21, 2017, Puma answered Eshelman's complaint and asserted counterclaims of libeller se and libeller quod against Eshelman on the basis of statements he made on November 30, 2015 and January 4, 2016, during the proxy contest. [DE-86] ¶¶ 25-73. On March 19, 2017, Eshelman withdrew his opposition to Puma's motion to compel a privilege log, explaining that the scope of discovery had changed in light of Puma's counterclaims and that Eshelman would produce a privilege log to Puma, thereby mooting Puma's motion. [DE-102]. On June 7, 2017, in the court's order on other disputed discovery matters, Puma's motion to compel was denied as moot. [DE-115].

         On June 12, 2017, the court dismissed Puma's counterclaims against Eshelman as time-barred, [DE-116] at 9-10, 12-13, and on June 16, 2017, Puma filed the instant motion renewing its motion to compel Eshelman to produce a privilege log [DE-117]. According to Puma, Eshelman never produced a privilege log as previously agreed. Id.; Ex. E [DE-74-5]. Eshelman objects to the renewed motion on the grounds that the dismissal of Puma's counterclaims places the requested documents beyond the appropriate and proportional scope of discovery. [DE-118].


         Puma contends the RPPs at issue seek documents related to the proxy contest by Eshelman and are central to Puma's defense that its "Investor Presentation accurately exposed Eshelman's misstatements and mischaracterizations during the proxy contest, thus providing necessary context to the statements made in the January 7, 2016 Investor Presentation regarding the Ketek clinical trials, which Dr. Eshelman claims are defamatory." [DE-75] at 2-3. Puma argues further that Eshelman's agreement to produce non-privileged documents related to the proxy contest, regardless of whether they also relate to the Ketek trial, evidences the unfounded nature of his objection to producing a privilege log. Id. at 3-4; Ex. C [DE-74-3]. Finally, Puma concludes that Eshelman's failure to produce a privilege log impedes its ability to assess the validity of Eshelman's privilege claims. [DE-75] at 4-5.

         Pursuant to Rule 34, a party asserting an objection to a document request "must specify the part [to which it objects] and permit inspection of the rest." Fed.R.Civ.P. 34(b)(2)(C). When a privilege objection is asserted, the party "must expressly assert it in response to the particular discovery request involved and serve with its discovery responses a privilege log in conformance with Fed.R.Civ.P. 26(b)(5)(A)." Spring v. Bd. of Trs. of Cape Fear Cmty. Coll., No.7:15-CV-84-BO, 2016 WL 1389957, at *2 (E.D. N.C. Apr. 7, 2016). A proper privilege log must "describe the nature of the documents, communications, or tangible things not produced or disclosed-and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim." Fed.R.Civ.P. 26(b)(5)(A). Failure to timely serve a privilege log meeting the requirements of Rule 26(b)(5)(A) may be deemed a waiver of the privilege. Mezu v. Morgan State Univ., 269 F.R.D. 565, 577 (D.Md. 2010) ("Absent consent of the adverse party, or a Court order, a privilege log... must accompany a written response to a Rule 34 document production request, and a failure to do so may constitute a forfeiture of any claims of privilege.") (citations omitted); PCS Phosphate Co., Inc. v. Am. Home Assurance Co., No. 5:14-CV- 99-D, 2015 WL 8490976, at *3 (E.D. N.C. Dec. 10, 2015).

         The parties in their Joint Discovery Plan agreed to the following exceptions to their obligation to produce a privilege log:

Privilege Logs. Except as ordered by the Court for good cause shown, the parties agree that they will not produce or prepare privilege logs with respect to: (a) documents prepared by the below counsel of record in this litigation in anticipation of this litigation; (b) emails or other communications exchanged with the below counsel of record in this litigation; or (c) documents or information withheld on the basis of an objection other than privilege or protection of the attorney work product doctrine.

[DE-37] at 2 (emphasis added). The court approved the parties' Joint Discovery Plan, with modifications regarding matters not at issue here, in the September 16, 2016 Scheduling Order. [DE-54]. Under Rule 29(b), the parties' stipulations in the Joint Discovery Plan are effective unless otherwise ordered by the court. Fed.R.Civ.P. 29(b) ("Unless the court orders otherwise, the parties may stipulate that... procedures governing or limiting discovery be modified ...."). Other courts have observed that, pursuant to Rule 29, the parties' stipulation should be followed so long as it does not run afoul of the local rules or the judge's preferences. See e.g., Stroup v. United Airlines, Inc., 2016 WL 7176717, at *4 n.l 1 (D. Col. Sept. 16, 2016) ("Unless a stipulated protective order runs afoul of or purports to supersede [a local rule] or the presiding judge's individual practice standards, the court has little reason to ...

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