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UltiMed, Inc. v. Becton, Dickinson and Co.: US District Court : DISCOVERY - instructions to deponent not to answer overbroad, not justified

1 The court construes UltiMeds Memorandum of Law in Support
of its Objection to the Denial in Part of its Motion to Compel
Discovery [Doc. No. 179] as an appeal of the magistrate judges
September 5, 2005, order.
Civil No. 06-2266(DSD/JJG)
UltiMed, Inc.,
Becton, Dickinson and Company,
This matter is before the court upon plaintiffs appeal1 from
Magistrate Judge Jeanne J. Grahams September 5, 2008, order
denying in part its motion to compel discovery.
Plaintiff UltiMed, Inc. (UltiMed) manufactures and
distributes hypodermic needles and syringes for diabetic home use.
Defendant Becton, Dickinson & Co. (Becton) is a medical
technology company that manufactures and sells medical supplies
throughout the world. In a June 6, 2006, complaint, UltiMed
alleged that Becton unreasonably restrained trade and willfully
acquired and maintained monopoly power in the home use insulin
syringe market through anti-competitive conduct in violation of
sections 1 and 2 of the Sherman Act. UltiMed also alleged that
Becton entered into rebate contracts with third parties that
substantially lessened competition in that market in violation of
section 15 of the Clayton Act and Minnesota law.
On July 29, 2008, UltiMed deposed Bectons Director of Managed
Markets, Karl S. Schumann (Schumann). Prior to his employment at
UltiMed, Schumann worked for Advanced Paradigm (now CaremarkPCS)
and Medco, negotiating rebate contracts with pharmaceutical
companies. On September 26, 2003, Schumann filed a False Claims
Act (FCA) qui tam action against Medco in the United States
District Court for the Eastern District of Pennsylvania. (Def. Ex.
A-6 at 2.) On April 25, 2005, Schumann brought a second FCA qui
tam action against CaremarkPCS in the same district. (Def. Ex. A-
4.) The entire Medco docket and portions of the CaremarkPCS docket
remain under seal.
During Schumanns July 29, 2008, deposition, UltiMeds counsel
questioned him about the qui tam actions. Schumann acknowledged
filing the actions against his former employers and discussed the
monetary awards he received. However, upon further questioning,
the following exchange took place between UltiMeds counsel,
Schumann and Bectons counsel:
UltiMed: What was your involvement in the
contracting matters that you alleged to have
been wrongful?
Becton: Objection. This is a subject that
pertains to other companies, not his
employment at Becton and there are issues that
pertain to the rights of these other entities
that are not represented here today. And so I
am going to instruct the witness not to
UltiMed: Are you going to accept that
Schumann: Yes....
UltiMed: [S]o with respect to the Medco case,
I want to make sure that we have a clear
record, what conduct were you complaining
about in that case?
Becton: Objection. You asked the very same
question and I instruct him not to answer on
the grounds that I already articulated.
UltiMed: The same question with respect to
... Caremark, what conduct were you
complaining about?
Becton: Same instruction, same objection.
UltiMed: With respect to the Medco case, did
the conduct that you were complaining about
occur while you were at Medco?
Becton: Same objection and instruction.
UltiMed: How did you know about the conduct
that you were complaining about?
Becton: Same objection, same instruction.
UltiMed: And as to Caremark did the conduct
that you were complaining about occur while
you were with the entity that Caremark later
Becton: Same objection, same instruction.
UltiMed: ow did you know about the conduct of
the Caremark entity?
Becton: In addition to being asked and
answered or unanswered, same objection, same
UltiMed: Now, you have heard a number of
instructions in the last two minutes from your
counsel, are you relying on those instructions
and declining to answer the questions?
Schumann: Yes, I am.
(Def. Ex. A-15 at 29-30, 272-274.)
Becton provided UltiMed a statement of the legal and factual
basis for its objections on August 19, 2008. According to Becton,
the questions involved privileged communications with other
counsel, were unrelated to Schumanns work at Becton and
potentially implicated confidentiality and other legal obligations
Schumann owed his former employers. (Def. Ex. A-19.)
On August 21, 2008, Becton moved for a protective order
prohibiting further discovery from Schumann. The next day, UltiMed
filed a motion to compel Schumanns testimony relating to his
involvement in the qui tam actions. On September 5, 2008, the
magistrate judge denied UltiMeds motion from the bench because the
information and questions were too attenuated and lack[ed] any
probative value. (Sept. 23, 2008, Hrg Tr. at 60:6-21.) As a
result, Becton withdrew its motion for a protective order and
UltiMed appealed the magistrate judges decision.
A district court will reverse a magistrate judges order on a
nondispositive discovery matter only if it is clearly erroneous or
contrary to law. 28 U.S.C. 636(b)(1)(A); D. Minn. L.R. 72.2(a).
Any nonprivileged matter that is relevant to any partys claim
or defense is discoverable. Fed. R. Civ. P. 26(b)(1). This
includes any material that bears upon, or that reasonably could
lead to other matter that could bear upon, any issue that is or may
be in the case. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340,
351 (1978). The material need not be admissible as evidence but
must be reasonably calculated to lead to admissible materials.
Fed. R. Civ. P. 26(b)(1). In a deposition, counsel may only
instruct the deponent not to answer in three circumstances: (1) to
preserve a privilege; (2) to enforce a limitation ordered by the
court; or (3) to present a motion under Rule 30(d)(3). Id. at
Schumanns testimony with respect to the qui tam actions
satisfies the discovery rules liberal relevancy standard.
Specifically, UltiMed alleges that Schumann negotiated contracts
similar to those at issue in this case while he was employed at
CaremarkPCS and Medco. Discovery of such information is relevant
to determine Schumanns credibility as a material witness and his
knowledge of the types of rebate contracts that UltiMed challenges
in this case. Therefore, Bectons counsels instructions not to
answer were only appropriate in the three circumstances set forth
in Rule 30(c)(2).
A. Privilege
An instruction not to answer is permissible under Federal Rule
of Civil Procedure 30(c)(2) when necessary to preserve a privilege.
See Armstrong v. Hussmann Co., 163 F.R.D. 299, 302 (E.D. Mo. 1995)
(instruction not to answer inappropriate when question did not
threaten disclosure of privileged evidence); Dravo Corp. v. Liberty
Mutual Ins. Co., 164 F.R.D. 70, 75 (D. Neb. 1995) (same). Becton
argues that instructing Schumann not to answer was necessary to
protect multiple privileges, including attorney-client, joint
prosecution and work-product protections.
Confidential communications between an attorney and client are
absolutely privileged from disclosure against the will of the
client. Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 601
(8th Cir. 1977). Similar to the attorney-client privilege, a
joint-defense or common-interest privilege protects
confidential communications made by the client or his lawyer to a
lawyer representing another in a matter of common interest. See
Morrell v. Local Union 304A, 913 F.2d 544, 555-56 (8th Cir. 1990).
In addition, the attorney work product doctrine protects from
discovery materials obtained or prepared in anticipation of
litigation, as well as an attorneys mental impressions. Hickman
v. Taylor, 329 U.S. 495, 511 (1947). These privileges, however, do
not prevent disclosure of factual information. Upjohn Co. v.
United States, 449 U.S. 383, 396 (1981); Hickman, 329 U.S. at 512.
When it is clear that a deponent is not being asked to reveal
communications between client and lawyer or attorney work product,
but rather to discuss facts, the claim of privilege is improper.
The party asserting the privilege bears the burden of establishing
its applicability. Bouschor v. United States, 316 F.2d 451, 456
(8th Cir. 1963).
In this case, UltiMeds questions did not seek discovery of
privileged communications or attorney work product. Rather,
UltiMed sought general facts related to Schumanns conduct in the
qui tam actions. The court recognizes that certain questions
related to the qui tam actions may improperly seek privileged
information. Bectons blanket assertion of privilege, however,
does not allow the court to assess the applicability of the
privilege on a question-by-question basis. See In Re Milk Prod.
Antitrust Litig., 84 F. Supp. 2d 1016, 1028 (D. Minn. 1997) (party
asserting attorney-client privilege must provide factual support).
Accordingly, the court determines that Bectons assertion of
privilege is overly broad and the facts underlying the qui tam
actions are not privileged.
B. Court-Ordered Limitations
Becton also argues that its instruction not to answer was
necessary to enforce orders sealing certain portions of the Medco
and CaremarkPCS cases. An instruction not to answer is
permissible to enforce a court directive limiting the scope or
length of permissible discovery. Fed. R. Civ. P. 30(c)(2)
advisory committees note. However, only limitations ordered in
the underlying case are applicable. Cf. In Re Application Pursuant
to 28 U.S.C. 1782, 249 F.R.D. 96, 104 (S.D.N.Y. 2008); Frazier v.
Se. Pa. Transp. Authority, 161 F.R.D. 309, 316 (E.D. Pa. 1995).
Therefore, orders sealing the Medco and CaremarkPCS cases do not
authorize Schumanns refusal to answer questions related to those
C. Protective Order
Finally, a deponent may refuse to answer a question in order
to present a motion under Rule 30(d)(3). Fed. R. Civ. P. 30(c)(2).
Rule 30(d)(3) provides that, at any time during a deposition, the
deponent or a party may move to terminate or limit it on the ground
that it is being conducted in bad faith or in a manner that
unreasonably annoys, embarrasses, or oppresses the deponent or
party. Id. at 30(d)(3)(A). The court may then order that the
deposition be terminated or may limit its scope and manner as
provided in Rule 26(c). Id. at 30(d)(3)(B).
On August 21, 2008, Becton moved for a protective order to
prevent further discovery on Schumanns involvement in the qui tam
actions. That motion, however, was withdrawn after the magistrate
judge denied UltiMeds motion to compel. Therefore, the court
remands this matter to the magistrate judge to permit Becton to
renew its motion for a protective order addressing the sealed
nature of the qui tam actions and any confidentiality agreements
between Schumann and his former employers. Upon ruling on the
protective order, the magistrate judge shall reconsider UltiMeds
motion to compel Schumanns testimony.
Accordingly, IT IS HEREBY ORDERED that UltiMeds appeal of the
magistrate judges order is granted and this matter is remanded to
the magistrate judge for further action consistent with this order.
Dated: November 6, 2008
s/David S. Doty
David S. Doty, Judge
United States District Court


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