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Eshelman v. Puma Biotechnology, Inc.

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

November 30, 2017



          Robert B. Jones, Jr., United States Magistrate Judge

         This matter is before the court on the motion of non-party movant Pharmaceutical Product Development, LLC ("PPD") to quash or, in the alternative, to enter a protective order limiting the scope of information PPD is required to produce in response to: (1) a subpoena to testify at a deposition in a civil action issued by Defendant Puma Biotechnology, Inc. ("Defendant"); (2) a subpoena to testify at a deposition in a civil action issued by Plaintiff Fredric N. Eshelman ("Plaintiff); and (3) a subpoena duces tecum issued by Defendant. [DE-125]. Plaintiff and Defendant have responded separately in opposition to the motion [DE-135, -136] and the matter is ripe for disposition. For the following reasons, PPD's motion to quash or for entry of a protective order [DE-125] is ALLOWED in part and DENIED in part.

         I. BACKGROUND

         A. Ketek Clinical Trial

         On November 1, 2001, Aventis Pharmaceuticals, Inc. ("Aventis") entered into a contract with PPD, under which PPD was to perform clinical research services in connection With a clinical study to determine the safety and effectiveness of Ketek, a drug developed to treat respiratory tract infections. Compl. [DE-1] ¶¶ 22, 23. Plaintiff was the CEO of PPD at the time of the contract's execution and subsequently during the Ketek clinical trial. Id. ¶ 23. According to Plaintiff, Aventis retained the responsibility for quality assurance under the contract, and PPD was to report to Aventis any physician serving as a clinical investigator who did not comply with the study plan. Id. Plaintiff contends that, pursuant to the contract, PPD did not have the authority to end a clinical investigator's participation in the study or to report a clinical investigator's conduct to the FDA. Id.

         On November 5, 2001, Aventis, through PPD, entered into a contract with Dr. Maria Anne Kirkman-Campbell ("Kirkman-Campbell"), under which Kirkman-Campbell was to participate in the Ketek clinical trial as a clinical investigator. Id. ¶ 24. Under the terms of the contract, Kirkman-Campbell agreed to conduct the study in strict compliance with the criteria set forth in the study protocol. Id. Kirkman-Campbell disregarded her obligations under the contract by submitting false documentation to PPD and Aventis concerning the Ketek clinical trial. Id. at ¶ 25.

         According to the complaint, after discovering "red flags" relating to Kirkman-Campbell, PPD personnel notified Aventis and recommended that Aventis exclude the Kirkman-Campbell data from the Ketek clinical trial. Id. ¶ 26. Plaintiff contends that once he was "generally apprised" of what was known at the time about the situation, he instructed PPD's head of quality assurance to place a call directly to Aventis' head of quality assurance. Id. Plaintiff also cooperated in bringing Kirkman-Campbell's misconduct to light. Id. According to Plaintiff, at no time did he participate in, authorize, or condone Kirkman-Campbell's fraud, nor was he involved in her fraud in any way. Id. ¶ 27.

         Ann Marie Cisneros ("Cisneros"), a former PPD Senior Clinical Research Associate, assisted in monitoring the Ketek clinical trial. PL's Mem. Opp'n. Ex. 3 [DE-135-3] at 6. Cisneros testified before the United States House of Representatives about her observations and what she learned monitoring Kirkman-Campbell, as well as her discussions about Kirkman-Campbell with PPD and Aventis. Id. at 6-7. Plaintiff also testified before Congress regarding PPD's role in the Ketek clinical trial. PL's Mem. Opp. [DE-135] at 3.

         B. Plaintiffs Claims of Defamation

         In October 2015, Plaintiff, a stockholder of Defendant, proposed that Defendant increase the size of its board from five to nine directors and elect Plaintiff and three other nominees to the board. Compl. [DE-1] ¶ 29; [DE-20-6]. Defendant responded to Plaintiffs solicitation by mailing a consent revocation to stockholders which directed stockholders to the homepage of Defendant's investor-relations website for further consent revocation materials. Compl. ¶ 10; [DE-20-5]. Plaintiff alleges that Alan H. Auerbach ("Auerbach"), Defendant's CEO, defamed him in an investor presentation to stockholders charging Plaintiff with committing scientific fraud in the Ketek clinical trial. Compl. ¶¶ 1, 33. In particular, Plaintiff alleges the following statements contained in the investor presentation falsely charge him with scientific fraud in the clinical trial of Ketek and falsely allege that such fraud resulted in him being replaced as the CEO of PPD:

"Eshelman Continues to Demonstrate a Lack of Integrity"
"Eshelman's misrepresentations are no surprise given his history"
"Eshelman was Chief Executive Officer (CEO) of Pharmaceutical Product Development (PPD) when it managed a clinical trial during the development of the antibiotic drug Ketek . . . Fraud was uncovered in this trial by the FDA's Office of Criminal Investigation."
"As Chief Executive Officer of PPD, Eshelman was forced to testify before Congress regarding PPD's involvement in this clinical trial fraud in 2008"
"Eshelman was replaced as CEO of PPD in 2009"
"Puma's Board does not believe that someone who was involved in clinical trial fraud that was uncovered by the FDA should be on the Board of Directors of a public company; particularly a company that is in the process of seeking FDA approval"

Id. ¶ 33; Ex. A [DE-1-1] at 14-15.

         On January 20, 2016, by letter to Defendant, Plaintiff demanded an apology and retraction of these statements, asserting that it is known and well-documented in the public record that PPD discovered and reported the fraud under Plaintiffs leadership. Compl. [DE-1] ¶ 35. He contended that these actions by PPD led to criminal charges being filed against Kirkrnan-Campbell and that the United States Attorney subsequently identified PPD as a victim of the fraud committed by Kirkman-Campbell in the criminal indictment filed July 24, 2008. Id. On January 27, 2016, Defendant responded to Plaintiffs letter by refusing to correct and/or retract its original statements and by threatening to reveal additional information about Plaintiff to the shareholders. Id. ¶ 37.

         In his complaint, Plaintiff asserts claims of libel per se and libel per quod with respect to the statements supra issued by Defendant regarding Plaintiffs role in the Ketek clinical trial. On February 21, 2017, Defendant answered the complaint and asserted counterclaims of libel per se and libel per quod against Plaintiff on the basis of statements he made on November 30, 2015, and January 4, 2016, during the proxy contest. Answer [DE-86]. Defendant also asserted ten defenses, primarily challenging Plaintiffs claims based on the elements required to prove libel (i.e., truth, malice, publication). Id. at 20-21. On June 12, 2017, the court dismissed Defendant's counterclaims as time-barred. [DE-116] at 9-10, 12-13.

         C. Third-Party Subpoenas to PPD

         On June 1, 2017, Defendant caused to be issued upon PPD a subpoena to testify at deposition and a notice to take the deposition pursuant to Fed.R.Civ.P. 30(b)(6). PPD Mot. Ex. A [DE-125-1]. Defendant designated the following matters for examination:

1. PPD's code of ethics, employee handbook, and all policies, procedures and training materials relating to honesty, integrity, or ethics that were ...

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