FTC v. Boehringer Ingelheim Pharmaceuticals , 778 F.3d 142 ( 2015 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 14, 2014 Decided February 20, 2015
No. 12-5393
FEDERAL TRADE COMMISSION,
APPELLANT
v.
BOEHRINGER INGELHEIM PHARMACEUTICALS, INC.,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:09-mc-00564)
Mark S. Hegedus, Attorney, Federal Trade Commission,
argued the cause for appellant. With him on the briefs were
Jonathan E. Nuechterlein, General Counsel, David C. Shonka,
Principal Deputy General Counsel, John F. Daly, Deputy
General Counsel for Litigation, and Leslie Rice Melman,
Assistant General Counsel for Litigation. David L. Sieradzki,
Attorney, entered an appearance.
Lawrence D. Rosenberg argued the cause for appellee.
With him on the brief was Michael Sennett.
Before: ROGERS, GRIFFITH and WILKINS, Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKINS.
2
WILKINS, Circuit Judge: In 2009, the Federal Trade
Commission initiated an antitrust investigation into a patent
settlement agreement between Boehringer Ingelheim
Pharmaceuticals, Inc. (“Boehringer”), a brand-name
pharmaceutical company, and Barr Industries (“Barr”), a
generic drug manufacturer. As part of its investigation, the
FTC issued an administrative subpoena seeking various
documents relating to the settlement. When Boehringer failed
to comply, the FTC initiated an enforcement proceeding in the
District Court for the District of Columbia. See FTC v.
Boehringer Ingelheim Pharm., Inc., 286 F.R.D. 101 (D.D.C.
2012). Although Boehringer ultimately certified compliance
with the subpoena, it withheld hundreds of responsive
documents under the work product doctrine and the attorney-
client privilege. After the FTC objected, the District Court
reviewed in camera a sample of the contested documents, and
found that almost all were properly withheld under the work
product doctrine or the attorney-client privilege. On appeal,
the FTC challenges the District Court’s application of the
work product doctrine.
The FTC first asserts that the District Court erred as a
matter of law when it concluded that settlement documents
pertaining to a co-promotion agreement between Boehringer
and Barr were prepared “in anticipation of litigation,” as
required under the work product doctrine. According to the
FTC, this conclusion cannot be reconciled with Boehringer’s
representation that the co-promotion agreement involved
payment for other services apart from Barr’s agreement to
dismiss the patent litigation. We reject the FTC’s argument
and hold that a settlement term may have independent
economic value and still be considered part of a settlement for
purposes of work product protection. In addition, we find that
the District Court reasonably concluded that the bulk of the
contested co-promotion materials were prepared “in
3
anticipation” of the Boehringer-Barr litigation. The sole
exception is a small group of documents drafted after the
settlement was executed, which the District Court did not
explicitly address. Accordingly, we generally affirm the
District Court’s findings on this issue but remand for further
consideration with respect to the post-settlement documents.
The FTC next argues that the District Court committed
legal error by applying an overly expansive definition of
“opinion” work product, which is highly protected, as
opposed to “fact” work product, which is substantially less so.
Because we agree that the District Court misapprehended the
proper distinction between fact and opinion work product, we
reverse and remand on this issue.
I.
Boehringer manufactures Aggrenox and Mirapex, two
patented pharmaceutical drugs that earn hundreds of millions
of dollars in U.S. sales each year. In 2005, Barr sought and
received FDA approval to market generic versions of these
drugs, which led Boehringer to sue Barr for patent
infringement. See Boehringer Ingelheim Int’l GmbH v. Barr
Labs. Inc., Civ. Action No. 05-700-JJF (D. Del. filed Sept. 26,
2005). Barr, in turn, contended that Boehringer’s patents
were invalid. While the Delaware litigation was pending,
Boehringer and Barr entered into settlement negotiations.
Boehringer’s senior vice president and general counsel, Marla
Persky, served as its lead negotiator during these discussions.
FTC Investig. Hr’g Tr. at 70-71, J.A. 755-56. To this end,
Persky and her staff engaged in both legal and business
activities, including evaluating possible litigation outcomes,
considering potential antitrust concerns, and evaluating and
negotiating the business terms of the settlement. Id. at
113-16, 118, 120-23, J.A. 772-80.
4
On August 11, 2008, the two companies settled their
dispute on the following terms: Barr would refrain from
marketing its generic versions of Aggrenox and Mirapex in
the immediate future, but Boehringer would permit Barr to
enter the market several months ahead of the expiration of
Boehringer’s patents. Boehringer, 286 F.R.D at 105; see also
Aggrenox Settlement Agreement, J.A. 871-83; Press Release,
J.A. 886-88. In the meantime, under a related co-promotion
agreement, Barr would help Boehringer promote Aggrenox to
medical professionals in exchange for certain specified fees
and royalties on Aggrenox sales. Boehringer, 286 F.R.D at
105; see also Co-Promotion Agreement, J.A. 889-930.
While this type of settlement deal is not necessarily
unlawful, see FTC v. Actavis, Inc., 133 S. Ct. 2223, 2237-38
(2013), such a settlement may be subject to antitrust scrutiny
if it appears that the patent-holding firm – here, Boehringer –
was using the co-promotion agreement as a vehicle to avoid
legitimate competition. Id. at 2236-37. And, indeed, the
specific terms of this settlement raised the suspicions of the
FTC that Boehringer was simply paying Barr off in order to
delay the entry of generics into the market. Boehringer, 286
F.R.D at 105. The FTC initiated an investigation and served
Boehringer with a subpoena duces tecum. Id. After
Boehringer failed to meet a deadline for production, the FTC
filed a petition in district court for an order enforcing the
subpoena. Id.
Boehringer ultimately completed production and certified
compliance with the subpoena, although it withheld nearly a
quarter of identified responsive documents as protected by the
attorney-client privilege, the work product doctrine, or both.
Id. at 106. The FTC was not satisfied with Boehringer’s
response and objected that many of the withheld documents
fell outside the scope of these privileges. Id. It specifically
 5
challenged Boehringer’s refusal to produce documents
containing financial analyses of the Aggrenox co-promotion
agreement, forecasting analyses of alternative time lines for
generic entry into the market, and financial analyses of the
business terms of the settlement agreement. Id. at 108. The
FTC also challenged Boehringer’s withholding of several
other categories of documents not at issue in this appeal. See
id. at 112 (discussing emails, notes, and reports on strategic
decisions and other issues; emails containing legal advice or
requests for legal advice; transmittal emails; and duplicate
documents); Appellant’s Br. 12-16 (limiting challenge on
appeal to financial documents analyzing litigation settlement
and co-promotion agreement).
By agreement of the parties, Boehringer submitted a
sample set of documents in camera to the District Court.
Boehringer, 286 F.R.D at 106. After reviewing the
documents, the District Court issued a decision largely
upholding Boehringer’s work product claims. Id. at 108-12.
The District Court first explained why the financial
analyses and forecasts fell within the scope of the work
product doctrine. It began by observing that work product
developed for the purpose of settling a lawsuit falls within the
scope of materials prepared “in anticipation of litigation,” as
required under Rule 26. Boehringer, 286 F.R.D. at 107, 109;
see FED. R. CIV. P. 26(b)(3) (protecting from disclosure
materials “prepared in anticipation of litigation”). The
documents analyzing litigation outcomes and the settlement
terms were, therefore, plainly work product. Boehringer, 286
F.R.D. at 109. As for the co-promotion agreement materials,
the court found that the co-promotion agreement was
“integral” to the global settlement deal and therefore also
belonged in the class of materials prepared in anticipation of
litigation. Id.
6
The District Court next considered whether the materials
sought were fact work product, which may be discovered
under certain circumstances, or opinion work product, which
is subject to strict protection. Id. at 109-10. It found that
although the materials resembled financial reports that might
be prepared in the standard course of business, the specific
reports were prepared using “information and frameworks”
provided by Boehringer counsel and reflected, at minimum,
counsel’s opinions as to what data were important in
determining an acceptable settlement. Id. at 109. On these
grounds, the District Court concluded that the materials
constituted opinion work product, deserving of the utmost
protection. Id. at 110. The District Court further found that
the FTC had not demonstrated the sort of “overriding and
compelling” need required to pierce opinion work product
protection. Id. at 109-10. Because the District Court found
that the documents were wholly protected under the work
product doctrine, it did not reach Boehringer’s attorney-client
privilege claims with respect to any of these financial
documents. See id.
The FTC contends that the District Court erred in two
ways. It first argues that the District Court failed to properly
consider whether many of these materials – particularly, the
financial analyses of the Aggrenox co-promotion agreement
and materials produced after the settlement agreement was
executed – actually were prepared “in anticipation of
litigation.” It next asserts that even if all of the contested
documents are work product, then they are, at most, fact work
product and therefore may be discovered by the FTC upon a
showing of substantial need and undue hardship.
7
II.
We review a district court’s decision to enforce an
administrative subpoena for abuse of discretion. See U.S.
Int’l Trade Comm’n v. ASAT, Inc., 411 F.3d 245, 253 (D.C.
Cir. 2005). A district court necessarily abuses its discretion if
it applies the incorrect legal standard, a question that is
reviewed de novo. See Conservation Force v. Salazar, 699
F.3d 538, 542 (D.C. Cir. 2012); FTC v. Church & Dwight
Co., 665 F.3d 1312, 1315 (D.C. Cir. 2011).
A district court’s factual findings are reviewed for clear
error. Boca Investerings P’ship v. United States, 314 F.3d
625, 629 (D.C. Cir. 2003). A finding is clearly erroneous,
even where there is record evidence to support it, if “the
reviewing court on the entire record is left with the definite
and firm conviction that a mistake has been committed.”
Awad v. Obama, 608 F.3d 1, 6-7 (D.C. Cir. 2010) (internal
quotation marks omitted).
III.
A.
The Supreme Court first articulated the federal work
product doctrine in Hickman v. Taylor, 329 U.S. 495 (1947),
where it was asked to define the reach of the pre-trial
deposition and discovery mechanisms established by the then-
new Federal Rules of Civil Procedure. These rules, which
required each party “to disgorge whatever [relevant, non-
privileged] facts he has in his possession,” dramatically
expanded the scope of pre-trial discovery. Id. at 507. Under
a literal reading of the Rules, a party would be entitled to
discover any non-privileged trial preparation materials, such
8
as attorney notes from witness interviews, created by his
opponent in that litigation. See id. at 506.
The Supreme Court rejected this literal reading, holding
that compelled disclosure of attorney work product would
“contravene[] the public policy underlying the orderly
prosecution and defense of legal claims.” Id. at 510. The
Court explained that in performing one’s duties as a lawyer:
[I]t is essential that a lawyer work with a certain degree
of privacy, free from unnecessary intrusion by opposing
parties and their counsel. Proper preparation of a client’s
case demands that he assemble information, sift what he
considers to be the relevant from the irrelevant facts,
prepare his legal theories and plan his strategy without
undue and needless interference.
Id. at 510-11. Readily compelling the disclosure of such work
product to opposing counsel would lead to “[i]nefficiency,
unfairness and sharp practices.” Id. at 511.
Hickman clarified that discovery of an attorney’s work
materials was permitted only in limited circumstances. Id. A
party seeking such materials must establish “adequate reasons
to justify production through subpoena or court order,” and
even then, discovery is limited to “relevant and non-
privileged facts.” Id. at 511-12 (emphasis added).
Hickman was later codified in substantial part in Rule
26(b)(3) of the Federal Rules. Rule 26 provides that a party
generally may not discover “documents and tangible things
that are prepared in anticipation of litigation or for trial by or
for another party or its representative[.]” FED. R. CIV. P.
26(b)(3)(A). Such discovery is permissible, however, if “the
party shows that it has substantial need for the materials to
9
prepare its case and cannot, without undue hardship, obtain
their substantial equivalent by other means,” so long as
counsel’s “impressions, conclusions, opinions, or legal
theories” are not disclosed. FED. R. CIV. P. 26(b)(3)(A)-(B);
see FED. R. CIV. P. 81(a)(5) (providing that the Federal Rules
apply to proceedings to enforce an administrative subpoena).
The work product protection is broader than the attorney-
client privilege in that it is not restricted solely to confidential
communications between an attorney and client. In re Sealed
Case, 676 F.2d 793, 808-09 (D.C. Cir. 1982). It is narrower,
however, insofar as the doctrine protects only work performed
in anticipation of litigation or for trial. See Senate of Puerto
Rico v. Dep’t of Justice, 823 F.2d 574, 586 (D.C. Cir. 1987)
(“The work product doctrine does not extend to every written
document generated by an attorney . . . rather, work product
covers only documents prepared in contemplation of
litigation.”) (internal quotation marks omitted). A document
prepared as work product for one lawsuit will retain its
protected status even in subsequent, unrelated litigation. See
FTC v. Grolier Inc., 462 U.S. 19, 27-28 (1983); In re Murphy,
560 F.2d 326, 333-35 (8th Cir. 1977) (holding that materials
prepared for patent settlement retained work product
protection in subsequent antitrust litigation).
B.
1.
When considering whether a document is prepared “in
anticipation of litigation,” this Court employs a “because of”
test, inquiring “whether, in light of the nature of the document
and the factual situation in the particular case, the document
can fairly be said to have been prepared or obtained because
of the prospect of litigation.” United States v. Deloitte LLP,
10
610 F.3d 129, 137 (D.C. Cir. 2010) (internal quotation marks
omitted); accord 8 CHARLES ALAN WRIGHT ET AL., FEDERAL
PRACTICE & PROCEDURE § 2024, at 502 (3d ed. 2010). Where
a document would have been created “in substantially similar
form” regardless of the litigation, work product protection is
not available. Deloitte, 610 F.3d at 138 (quoting United
States v. Adlman, 134 F.3d 1194, 1195 (2d Cir. 1998)).
The FTC does not challenge the District Court’s ruling
that documents created by Boehringer for the purpose of
settling the patent infringement litigation are protected work
product. It takes issue, however, with the District Court’s
finding that the materials relating to the co-promotion
agreement fall within the category of protected settlement
documents.
The FTC points out that Boehringer has represented that
the co-promotion agreement, despite being part of the
litigation settlement, was a “fair arms-length business
arrangement” that had independent economic value apart
from the litigation settlement. April 6, 2010 Letter from
Boehringer counsel to the FTC, J.A. 577; FTC Investig. Hr’g
Tr. 112-13, J.A. 991-92. The FTC contends that the
purported “arms-length” nature of the co-promotion
agreement logically compels a finding that the related
documents would have been created “in substantially similar
form” irrespective of the patent infringement litigation.
Appellant’s Br. 21, 33-41. According to the FTC, Boehringer
may not point to the independence of the co-promotion
agreement from the litigation settlement for purposes of its
antitrust defense while relying on the interdependence of
these agreements to avoid discovery.
We find no merit in the proposition that any settlement
term that has some independent economic value to both
11
parties must always be treated as an ordinary (non-litigation)
business transaction for purposes of work product protection.
Common sense and practical experience teach that settlement
deals routinely include arrangements that could be isolated
from the overall agreement and stand on their own but were
nonetheless crafted for the purpose of settling litigation.
Indeed, the Supreme Court’s refusal in Actavis to hold reverse
payment settlement agreements presumptively unlawful
anticipates that a reverse payment could “represent payment”
for “other services” aside from a party’s agreement to end
litigation yet still be part of the settlement. 133 S. Ct. at 2237.
Upon our review of the record, we find no clear error in
the District Court’s factual finding that the co-promotion
agreement was “integral” to the broader settlement.
Boehringer, 286 F.R.D. at 109. Accordingly, the District
Court did not err in drawing the legal conclusion that the co-
promotion agreement materials were prepared “in anticipation
of” the patent litigation and were therefore entitled to work
product protection.
The FTC posits that our ruling on this point could lead to
gamesmanship by counsel in future cases. It imagines a
scenario in which parties engaged in litigation settlement
discussions could tack on an unrelated side deal for the
purpose of evading regulatory scrutiny. See Appellant’s
Reply Br. 12-13, 17. While we do not have occasion to rule
on such facts, we note that the work product doctrine is “an
intensely practical one, grounded in the realities of litigation
in our adversary system.” United States v. Nobles, 422 U.S.
225, 238 (1975). We do not reach the question of whether the
work product protection is available in the hypothetical
situation where settlement terms run far afield of the
12
underlying litigation, or where there is evidence, not present
here, of gamesmanship or abuse. 1
2.
The FTC also raises a temporal objection to many of the
withheld documents. It notes that the District Court
characterized the documents as having been prepared “to
assess settlement option[s].” Boehringer, 286 F.R.D. at 109.
This finding is inconsistent with the dates on many documents
(including at least eight submitted in camera) that were
prepared after the settlement agreement was executed. See
Index of Challenged Entries at 36, J.A. 703.
Boehringer concedes that many documents were created
after settlement negotiations concluded. See Appellee’s Br.
15. It asserts, however, that these materials contain
information initially prepared in anticipation of the settlement,
related to other pending litigation, or involving requests for or
the provision of legal advice. Id. While Boehringer articu-
lates potentially viable grounds for protection, these grounds
are not the reasons articulated by the District Court, which
characterized all of the documents as having been created in
anticipation of the Boehringer-Barr litigation and settlement.
Boehringer, 286 F.R.D. at 109. We therefore remand for
consideration of whether these documents were, in fact,
created in anticipation of litigation. 2
1
Because we find that the documents are protected, we do not
reach Boehringer’s alternative argument that the co-promotion
agreement materials are protected because counsel used them to
evaluate potential antitrust liability.
2
The FTC also suggests that documents created prior to the
commencement of settlement negotiations cannot be related to the
13
C.
As noted, Rule 26 distinguishes between opinion work
product, which reveals “the mental impressions, conclusions,
opinions, or legal theories of a party’s attorney or other
representative concerning the litigation,” and fact work
product, which does not. FED. R. CIV. P. 26(b)(3)(B); see In
re Sealed Case, 124 F.3d 230, 235-36 (D.C. Cir. 1997), rev’d
on other grounds sub nom. Swidler & Berlin v. United States,
524 U.S. 399 (1998). The District Court, after reviewing
financial analysis documents submitted in camera, concluded
that the documents contained information that, while
primarily factual in nature, gave insight into the highly
protected mental impressions of counsel. Boehringer, 286
F.R.D. at 109-10. Specifically, it found that the documents
revealed not only what data the attorneys were seeking, but
also “information and frameworks” developed by counsel. Id.
at 109. On this basis, it ruled that the documents contained
only opinion work product and fact product inextricably
intertwined with counsel’s opinions and thus were wholly
protected from disclosure. Id. at 110.
The FTC argues that the District Court applied an overly
broad definition of opinion work product. After carefully
reviewing the materials submitted in camera and the record as
a whole, we agree.
When a factual document selected or requested by
counsel exposes the attorney’s thought processes and theories,
it may be appropriate to treat the document as opinion work
product, even though the document on its face contains only
settlement. Appellant’s Br. 6, 33. We find no merit to this
proposition. To the contrary, one would expect a company’s
attorneys to discuss settlement strategy internally before entering
into negotiations with opposing counsel.
14
facts. See Dir., Office of Thrift Supervision v. Vinson &
Elkins, LLP, 124 F.3d 1304, 1308 (D.C. Cir. 1997) (“At some
point . . . a lawyer’s factual selection reflects his focus; in
deciding what to include and what to omit, the lawyer reveals
his view of the case.”). At the same time, however, “not
every item which may reveal some inkling of a lawyer’s
mental impressions . . . is protected as opinion work product.”
In re San Juan Dupont Plaza Hotel Fire Litig., 859 F.2d
1007, 1015 (1st Cir. 1988). Opinion work product protection
is warranted only if the selection or request reflects the
attorney’s focus in a meaningful way. See Dir., Office of
Thrift Supervision, 124 F.3d at 1308; In re San Juan Dupont
Plaza Hotel Fire Litig., 859 F.2d at 1015 (heightened
protection is triggered only if “disclosure creates a real,
nonspeculative danger of revealing the lawyer’s thoughts”).
And where a document contains both opinion and fact work
product, the court must examine whether the factual matter
may be disclosed without revealing the attorney’s opinions.
See Deloitte, 610 F.3d at 139 (remanding case to district court
to assess whether a redacted version of a document containing
opinion work product could be disclosed); In re Sealed Case,
146 F.3d 881, 888 (D.C. Cir. 1998) (same).
In Sealed Case (1997), for example, we held that attorney
notes of preliminary interviews with a witness were not
necessarily opinion work product, as the mere fact that an
attorney had chosen to write a fact down was not sufficient to
convert that fact into opinion work product. 124 F.3d at
236-37. Rather, there must be some indication that the lawyer
“sharply focused or weeded the materials.” Id. at 236. After
in camera review of the documents in that case revealed that
much of the information contained therein “could be
classified as opinion only on a virtually omnivorous view of
the term,” we reversed and remanded to the district court for
reexamination. Id. at 236-37.
 15
As in Sealed Case, many of the documents at issue here
contain only factual information requested or selected by
counsel. Much of what the FTC seeks is factual information
produced by non-lawyers that, while requested by Ms. Persky
and other attorneys, does not reveal any insight into counsel’s
legal impressions or their views of the case.
In holding to the contrary, the District Court implied that
an attorney’s mere request for a document was sufficient to
warrant opinion work product protection. In discussing
financial reports, the court noted that the reports were
“prepared at the behest of [Boehringer] attorneys,” who
requested the use of “certain data.” Boehringer, 286 F.R.D. at
110. The District Court further noted that “[r]evealing the
data chosen for this analysis would necessarily reveal the
attorneys’ mental impressions, including, at a bare minimum,
that the attorneys believed such analyses of that data was [sic]
necessary or important to determining an appropriate
settlement.” Id.
As is plain from the District Court’s decision, the
materials in the joint appendix, and Boehringer’s in camera
submissions, however, counsel’s requests were often general
and routine. And indeed, the District Court noted that the
documents requested by the FTC are “the sort of financial
analyses one would expect a company exercising due
diligence to prepare when contemplating settlement options.”
Id. In many documents, the only mental impression that can
be discerned is counsel’s general interest in the financials of
the deal. But such interest reveals nothing at all: anyone
familiar with such settlements would expect a competent
negotiator to request financial analyses like those performed
here, and Boehringer does not attempt to hide this interest in
its briefs. There is no “real, nonspeculative danger of
revealing the lawyer’s thoughts” when the thoughts are
16
already well-known. In re San Juan Dupont Plaza Hotel Fire
Litig., 859 F.2d at 1015.
Moreover, as Ms. Persky observed in her testimony
before the FTC, questions about whether the agreements
made financial sense were a matter of business judgment, not
legal counsel. See FTC Investig. Hr’g Tr. at 68, J.A. 590. In
fact, the financial parameters of an acceptable settlement were
provided by Boehringer’s board of directors and its business
managers. Id. A company may select an executive who is a
lawyer to negotiate the business terms of a settlement; this
does not mean that the lawyer’s thoughts relating to financial
and business decisions are opinion work product when she is
simply parroting the thoughts of the business managers.
The District Court also reasoned that many of the
documents were created using specific “information and
frameworks” provided by Boehringer counsel. Boehringer,
286 F.R.D. at 109. In many documents, however, the
“information and frameworks” provided have no legal
significance. For example, in several documents, the
“frameworks” provided by counsel are simply time frames for
requested financial data – for example, forecasting in x-month
intervals. Boehringer posits that disclosing these time frames
could reveal something of legal significance, but it has failed
to explain how. Where an attorney’s mental impressions are
those that “a layman would have as well as a lawyer in these
particular circumstances, and in no way reveal anything
worthy of the description ‘legal theory,’” those impressions
are not opinion work product. In re HealthSouth Corp. Sec.
Litig., 250 F.R.D. 8, 11 (D.D.C. 2008) (quoting In re John
Doe Corp., 675 F.2d 482, 493 (2d Cir. 1982)).
Where it appears that the focus or framework provided by
counsel is obvious or non-legal in nature, it is incumbent upon
17
the party claiming opinion work product protection to explain
specifically how disclosure would reveal the attorney’s legal
impressions and thought processes. The District Court failed
to demand such a showing from Boehringer and instead
concluded categorically that the contested documents were
highly protected opinion work product. This was error.
D.
1.
The District Court’s error matters because, as noted, a
party’s ability to discover work product often turns on
whether the withheld materials are fact work product or
opinion work product. A party generally must make an
“extraordinary showing of necessity” to obtain opinion work
product. In re Sealed Case, 676 F.2d at 811; see also Dir.,
Office of Thrift Supervision, 124 F.3d at 1307 (observing that
opinion work product is “virtually undiscoverable”). By
contrast, “[t]o the extent that work product contains relevant,
nonprivileged facts,” the work product doctrine “merely shifts
the standard presumption in favor of discovery and requires
the party seeking discovery to show ‘adequate reasons’ why
the work product should be subject to discovery.” In re
Sealed Case, 676 F.2d at 809 (emphasis added) (quoting
Hickman, 329 U.S. at 512). This “adequate reasons” test
corresponds to Rule 26(b)(3)’s requirement, adopted in 1970,
that a party seeking fact work product demonstrate that “it has
substantial need for the materials to prepare its case and
cannot, without undue hardship, obtain their substantial
equivalent by other means.” FED. R. CIV. P. 26(b)(3)(A)(ii);
see In re Sealed Case, 676 F.2d at 809 n.59.
The District Court, believing that the contested
documents contained only opinion work product or facts
18
inextricably intertwined with legal opinions, confined its
inquiry to whether the FTC had demonstrated an “overriding
and compelling need” for those materials and concluded that
it had not. Boehringer, 286 F.R.D. at 109-10. Because the
FTC does not claim that it is entitled to opinion work product,
we have no occasion to consider whether the District Court
applied the correct standard for evaluating when opinion work
product immunity may be pierced.
On the other hand, the FTC does contend that it is
entitled to any facts that can be reasonably excised from
counsel’s legal opinions and mental processes. Because it is
the duty of the District Court to consider whether the FTC had
met the less demanding standard for fact work product, see
FED. R. CIV. P. 26(b)(3)(A)(ii), the customary next step would
be to remand the case to allow the District Court to make this
determination in the first instance.
Each party contends, however, that we have what we
need to decide whether the FTC has met the Rule 26(b)(3)
standard in that party’s favor, based on other findings made
by the District Court. Boehringer points specifically to the
District Court’s observation that the documents contain “no
smoking guns” and are “not in any way evidence of any
conspiratorial intent to violate the law.” Appellee’s Br. 54
(quoting Boehringer, 286 F.R.D. at 110). This statement,
Boehringer argues, is “fatal” to the FTC’s claim of need. Id.
Boehringer’s theory seems to be that a party “needs” fact
work product only if the materials are critical to, or
dispositive of, a key issue at trial.
We find no merit in Boehringer’s argument, for two
reasons. First, although some courts have demanded a
heightened showing of a document’s relevance or probative
value for discovery of fact work product, see Logan v.
19
Commercial Union Ins. Co., 96 F.3d 971, 977 (7th Cir. 1996),
we have never characterized Rule 26(b)(3)’s “substantial
need” requirement in this manner. See, e.g., Dir., Office of
Thrift Supervision, 124 F.3d at 1308; In re Sealed Case, 676
F.2d at 809-10. Nor is such an approach consistent with the
1970 amendments to Rule 26 or the case law that they
codified, as we explain below. Second, even if a heightened
relevance requirement were appropriate during discovery in a
typical post-complaint civil lawsuit, such a rule would be
misplaced in the investigatory context of an agency subpoena
enforcement proceeding. See Linde Thomson Langworthy
Kohn & Van Dyke, P.C. v. Resolution Trust Corp., 5 F.3d
1508, 1512 (D.C. Cir. 1993); FTC v. Texaco, Inc., 555 F.2d
862, 872 (D.C. Cir. 1977) (en banc).
The FTC, on the other hand, maintains that the District
Court implicitly determined that the FTC had satisfied the
“substantial need” and “undue hardship” requirements.
Because the District Court found that the financial documents
are relevant to the FTC’s investigation and would provide
unique information that the FTC cannot reasonably obtain
elsewhere, and because we detect no error in this finding, we
agree with the FTC. We discuss each of these points in turn.
2.
The meaning of Rule 26(b)(3)’s “substantial need”
requirement is not clear from the plain language of the rule.
Cf. Pierce v. Underwood, 487 U.S. 552, 563-64 (1988)
(discussing the ambiguity implicit in the term “substantial”
while interpreting 28 U.S.C. § 2412(d)(1)(A)); see also A.I.A.
Holdings, S.A. v. Lehman Bros., Civ. Action No. 97-4978,
2000 WL 1639417, at *2 (S.D.N.Y. Nov. 1, 2000) (noting
that “[t]he law is not well developed as to what constitutes
‘substantial need’”); Special Project, The Work Product
20
Doctrine, 68 CORNELL L. REV. 760, 802 (1983) (“The
substantial need requirement is the least uniformly applied by
the courts.”). Helpfully, the Advisory Committee’s notes on
the amendments “provide a reliable source of insight into the
meaning of a rule, especially when, as here, the rule was
enacted precisely as the Advisory Committee proposed.”
United States v. Vonn, 535 U.S. 55, 64 n.6 (2002)
(interpreting FED. R. CRIM. P. 11(h)).
The “substantial need” and “undue hardship”
requirements were added to Rule 26(b)(3) in an attempt to
clarify and codify the tests developed by the Supreme Court
in Hickman and by the lower courts construing former Rule
34’s “good cause” provision. See FED. R. CIV. P. 26(b)(3)
advisory committee’s note to 1970 Amendments (hereinafter
Advisory Committee’s Notes), reproduced at 48 F.R.D. 487,
500-01; see also In re Sealed Case, 676 F.2d at 810 n.59;
WRIGHT ET AL., supra, § 2023, at 489 (characterizing Rule
26(b)(3) as “a largely accurate codification of the doctrine
announced in the Hickman case and developed in later cases
in the lower courts”). The Committee explained that the
amendments were intended to require an inquiry into “the
importance of and need for” the fact work product at issue, as
well as “alternative sources for securing the same
information.” Advisory Committee’s Notes, 48 F.R.D. at
500. The Committee did not further define the “substantial
need” and “undue hardship” concepts.
The Committee did provide guidance, however, by
pointing to four cases that had demanded a “special showing”
to obtain trial preparation materials; it explained that the new
“substantial need” and “undue hardship” requirements
reflected the holdings of those cases. Id. (citing Guilford
Nat’l Bank v. Southern Ry., 297 F.2d 921 (4th Cir. 1962);
Mitchell v. Bass, 252 F.2d 513 (8th Cir. 1958); Hauger v.
21
Chicago, R.I. & Pac. R.R., 216 F.2d 501 (7th Cir. 1954);
Burke v. United States, 32 F.R.D. 213 (E.D.N.Y. 1963)). The
Committee also approved of a list of circumstances under
which witness statements could be discoverable, as recited in
a fifth case, Southern Ry. v. Lanham, 403 F.2d 119 (5th Cir.
1968). Advisory Committee’s Notes, 48 F.R.D. at 501. 3
These cases indicate that a moving party’s burden is
generally met if it demonstrates that the materials are relevant
to the case, the materials have a unique value apart from those
already in the movant’s possession, and “special
circumstances” excuse the movant’s failure to obtain the
requested materials itself. See Mitchell, 252 F.2d at 518-19
(permitting discovery of opponent’s witness statements where
witnesses refused to speak with movant); Burke, 32 F.R.D. at
215 (permitting discovery of accident report materials where
information contained therein was otherwise unavailable); cf.
Hauger, 216 F.2d at 505-06 (finding no “special
circumstances” warranting disclosure of witness statements
where plaintiff had deposed those same witnesses, and
3
Each of these cases involved factual work product prepared by
non-attorneys. See Lanham, 403 F.2d at 126-27 (claim agents);
Hauger, 216 F.2d at 506 (agents); Mitchell, 252 F.2d at 518
(investigators); Guilford, 297 F.2d at 922 (claim agent); Burke, 32
F.R.D. at 214 (post office personnel). Although Hickman did not
expressly apply to work product prepared by non-lawyers, these
courts required a special showing for such materials under Rule
34’s “good cause” provision. See, e.g., Mitchell, 252 F.2d at
518-19; Guilford, 297 F.2d at 927; but see Hauger, 216 F.2d at
506-07 (finding “no logical basis” for distinguishing between
statements taken by counsel and a counsel’s agent and therefore
applying both Rule 34 and Hickman). The 1970 amendments
abolished the distinction between factual materials prepared by
counsel and those prepared by non-attorneys. FED. R. CIV. P.
26(b)(3)(A); see Nobles, 422 U.S. at 254 n.16.
22
plaintiff’s purported need for materials for purposes of
impeachment was speculative); Guilford, 297 F.2d at 923-27
(finding no “special circumstances” where plaintiff possessed
substantially similar materials and impeachment value was
speculative). A list of special circumstances was provided in
Lanham, where the Fifth Circuit observed that a
contemporaneous witness statement typically would be
discoverable if the witness was unavailable, reluctant, or
hostile, or if the witness had a lapse of memory or deviated
from prior statements. 403 F.2d at 128-31.
Although each of these cases mentioned the relevance of
the requested documents, none articulated a requirement that
the documents be essential to the claim or probative of a
critical element. The Advisory Committee notably did not
cite any of the then-existing decisions demanding a
heightened showing of relevance. Compare Republic Gear
Co. v. Borg-Warner Corp., 381 F.2d 551, 558 (2d Cir. 1967)
(requiring party seeking fact work product to demonstrate that
the documents were “essential to the preparation of
[movant’s] case on [a] critical issue” in the litigation).
Boehringer’s argument that factual work product is
discoverable only if it contains a “smoking gun” therefore has
no basis in the Committee notes or the cases cited therein.
The Advisory Committee also observed that the
substantial need and undue hardship requirements
corresponded to the showing required under Hickman, see
Advisory Committee’s Notes, 48 F.R.D. at 501, which further
supports the conclusion that no heightened showing of
relevance is required. Hickman instructed that fact work
product that is unavailable elsewhere may be discovered if it
is admissible or could “give clues as to the existence or
location of relevant facts” – a standard remarkably similar to
the relevance standard under Rule 26(b)(1). Hickman, 329
23
U.S. at 511; see FED. R. CIV. P. 26(b)(1) (evidence is relevant
if admissible or “appears reasonably calculated to lead to the
discovery of admissible evidence”). Indeed, a mere relevance
requirement is consonant with Hickman’s statement that
“[m]utual knowledge of all the relevant facts gathered by both
parties is essential to proper litigation.” 329 U.S. at 507
(emphasis added).
Of course, this interest in liberal discovery must be
balanced against the key goal underlying the protection for
fact work product: that each side must undertake its own
investigation of the relevant facts and not simply freeload on
opposing counsel. See Guilford, 297 F.2d at 926 (work
product rule serves to prevent a less-than-diligent litigant
from “perform[ing] its functions either without wits or on wits
borrowed from the adversary”) (quoting Hickman, 329 U.S. at
516 (Jackson, J., concurring)); Nat’l Union Fire Ins. v.
Murray Sheet Metal Co., Inc., 967 F.2d 980, 985 (4th Cir.
1992) (characterizing the substantial need and undue hardship
requirements primarily as “an ‘anti-freeloader’ rule designed
to prohibit one adverse party from riding to court on the
enterprise of the other”). But neither of these competing
interests is served when unique, relevant information is
withheld from a party that never had an opportunity to obtain
the information on its own. The “substantial need” inquiry
requires a careful examination of whether non-disclosure will
impair the truth-seeking function of discovery. See Dir.,
Office of Thrift Supervision, 124 F.3d at 1308 (finding no
substantial need for fact work product where movant already
possessed similar materials). A moving party need not show,
however, that the requested documents are critical to, or
dispositive of, the issues to be litigated. 4
4
There has been a ratcheting up of the “substantial need” standard
in recent years by some courts, due at least in part to a conflation of
24
3.
Boehringer’s argument for a “smoking gun” standard is
problematic for a second reason. Even if such a requirement
were justified in the context of a typical civil proceeding –
where the scope of the charges are clear – such a rule would
be misplaced in the investigatory context here. We have
previously observed that in an administrative subpoena
enforcement proceeding, “[t]he district court is not free to
speculate about the possible charges that might be included in
a future complaint, and then to determine the relevance of the
subpoena requests by reference to those hypothetical
charges.” Texaco, 555 F.2d at 874. In undertaking this
investigation, the FTC is “merely exercising its legitimate
what is sufficient and what is necessary to demonstrate need. For
example, in In re Int’l Sys. & Controls Corp. Sec. Litig., 693 F.2d
1235 (5th Cir. 1982), the fact work product sought related to an
“essential element” of plaintiff’s claims; the Fifth Circuit noted that
this “could be grounds for a finding of substantial need,” but did
not hold that such a finding was required. Id. at 1241. This
“essential element” language nevertheless was incorporated into the
legal standard articulated by a popular treatise, see 6 JAMES WM.
MOORE ET AL., MOORE’S FEDERAL PRACTICE § 26.70[5][c], at 26-
457 to 26-459 (3d ed. 2009), and has been applied by district
courts, see, e.g., Fletcher v. Union Pac. R.R. Co., 194 F.R.D. 666,
672 (S.D. Cal. 2000) (finding no substantial need for surveillance
videos because they were not “essential to [plaintiff]’s prima facie
case”); see also Nat’l Cong. for Puerto Rican Rights v. City of New
York, 194 F.R.D. 105, 110 (S.D.N.Y. 2000) (collecting cases where
materials sought were “essential” to party’s defense, were “crucial”
to determination of liability, or carried “great probative value on
contested issues”); Nevada v. J-M Mfg. Co., 555 F. App’x 782, 785
(10th Cir. 2014) (relying on National Congress and the cases cited
therein as providing minimum standards and denying discovery of
fact work product because movant failed to show that the evidence
“carr[ied] great probative value”).
25
right to determine the facts” and to decide whether a
complaint should issue. Id.; see also Linde Thomson, 5 F.3d
at 1512 (“An investigation conducted by the [FTC] may
conceivably neither culminate in litigation, nor be initially
designed to inspire it.”). If the District Court is correct that
the contested materials reveal an absence of conspiratorial
intent, then the materials nevertheless may be helpful to the
FTC in determining whether to issue a complaint in the first
place.
4.
We turn to the FTC’s argument that the District Court
implicitly found that the FTC had met the “substantial need”
and “undue hardship” requirements. When it decided not to
require Boehringer to disclose facts contained in the financial
analyses and forecasts, the District Court based this decision
on its misplaced belief that the information could not be
disclosed without revealing protected legal opinions and
attorney thought processes. The District Court never
suggested that the FTC had failed to make the requisite
showing for factual work product.
To the contrary, the District Court stated that it was
“sympathetic to the FTC’s argument that these financial
analyses are the only documents that could demonstrate
whether or not [Boehringer] was using the co-promotion
agreement to pay Barr not to compete.” Boehringer, 286
F.R.D. at 110. The District Court then credited the FTC’s
argument with respect to the emails that accompanied the
financial documents, and it directed Boehringer to produce
“factual work product that can be reasonably excised from
any indication of opinion work product.” Id. We agree with
the FTC that this ruling makes clear that the District Court
found that the FTC had shown a substantial need and undue
26
hardship for materials relating to financial analyses and
forecasts. And although Boehringer asserts that the FTC
possesses equivalent documents or could reproduce similar
analyses on its own, none of these arguments are persuasive.
As the District Court indicated, Boehringer’s
contemporaneous financial evaluations provide unique
information about Boehringer’s reasons for settling in the
manner that it did. Id.; see also United States v. Brown Univ.,
5 F.3d 658, 671-72 (3d Cir. 1993) (considering evidence of
party’s intent when assessing the likely antitrust effects of the
challenged conduct); Guilford, 297 F.2d at 926 (noting the
special value of contemporaneous witness accounts).
We therefore will remand to the District Court to revisit
the financial documents in light of the correct legal standards,
as clarified above. The District Court should determine which
of the sampled documents may be produced, in full or in
redacted form, as factual work product. To the extent that any
such documents were withheld in whole or in part on the
alternative basis of attorney-client privilege, the District Court
will have to determine whether this privilege independently
bars discovery. 5
5
In its opening brief, the FTC asserts that the District Court abused
its discretion in accepting and relying on in camera, ex parte
affidavits. See Appellant’s Br. 53-58. But the FTC is precluded
from raising this issue on appeal, as it presented no explanation for
its failure to object, much less “exceptional circumstances” to
excuse its failure. Marymount Hosp., Inc. v. Shalala, 19 F.3d 658,
663 (D.C. Cir. 1994) (noting that arguments not made below
generally are deemed waived). We therefore decline to consider
this issue.
27
IV.
For the foregoing reasons, we vacate in part, affirm in
part, and remand for further proceedings consistent with this
opinion.
So ordered.