Pennsylvania Federal District Court Holds Community-Of-Interest Privilege Requires Actual Implementation Of Coordinated And Ongoing Defense Effort

In King Drug Co. v. Cephalon, Inc., No. 2:06-cv-1797, 2011 U.S. Dist. LEXIS 71806 (E.D. Pa. July 5, 2011), U.S. District Judge Mitchell S. Goldberg compelled a generic drug manufacturer defendant to produce documents that the defendant asserted were protected by the community-ofinterest privilege. Although the defendant and one if its suppliers had supposedly entered into a formal joint defense agreement, the court held that the privilege did not apply because the joint defense never actually materialized and the communications at issue were not made in furtherance of the joint defense.

The dispute in King Drug involved "reverse payment settlement" antitrust allegations concerning patent infringement suits related to the drug Provigil. Specifically, the plaintiffs alleged that Cephalon, Inc., the manufacturer of the name brand drug Provigil, conspired with four generic manufacturers to delay non-name brand versions of the drug from going to market by paying more than $200 million in settlements to those manufacturers. The plaintiffs sought documents related to certain communications between one of the non-name brand manufacturer defendants, Barr Pharmaceuticals, Inc. and Chemagis, one of Barr's suppliers. The documents were generated in the weeks just prior to the settlement between Cephalon and Barr, and generally related to how the terms of the settlement may financially affect Chemagis. Although Chemagis was not named as a defendant in the suit, Barr and Chemagis had allegedly entered into a joint defense agreement around the time the suit was filed.

In response to Barr's refusal to produce certain documents based upon its assertion that the documents were protected by the community-of-interest privilege, the plaintiffs filed a motion to compel production. Barr argued that it shared a substantially similar legal interest with Chemagis because both were at risk of being sued for patent infringement by Cephalon, notwithstanding the fact that Chemagis was not actually named as a party. The plaintiffs countered by arguing that (1) Barr and Chemagis shared a purely "financial" interest, as opposed to the requisite "legal" interest required for the community-of-interest privilege to apply; (2) the alleged joint defense strategy never materialized because Chemagis was never sued by Cephalon; and (3) many of the communications at issue did not involve attorneys from both Barr and Chemagis.

The court's analysis was guided by the following...