On June 19, the D.C. Circuit issued a decision setting forth the Court’s views on attorney-client privilege in Federal Trade Commission v. Boehringer Ingelheim Pharms., Inc. The D.C. Circuit previously ruled on attorney work-product protection issues in the same matter. See 778 F.3d 142 (D.C. Cir. 2015). Boehringer ultimately prevailed in its attorney-client privilege claims, and the case provides good precedent for companies facing disputes with the government over attorney-client privilege. However, the D.C. Circuit and underlying District Court decisions also highlight the difficulty of establishing privilege over dual-purpose documents and communications.
By way of background, Federal Trade Commission v. Boehringer Ingelheim Pharms., Inc. involves a Federal Trade Commission (“FTC”) antitrust investigation into Boehringer’s settlement agreement and co-promotion agreement with generic drug manufacturer Barr Pharmaceuticals, Inc. The Boehringer-Barr settlement resolved patent litigation between the two companies, upon agreement that (1) Barr would not market its generic versions of two Boehringer drugs until shortly before Boehringer’s patents expired, and (2) in exchange for fees and royalties, Barr would help to promote one of Boehringer’s drugs until its own generic version entered the market.
The privilege issues in Boehringer centered on documents created by Boehringer employees at the request of Boehringer’s general counsel, as well as communications between the general counsel and Boehringer executives regarding the settlement with Barr. The documents created for Boehringer’s general counsel included various financial analyses of the proposed agreements between Boehringer and Barr. Applying a “primary purpose” analysis, the D.C. Circuit Court affirmed the lower court’s ruling that these documents were covered by attorney-client privilege.
In its ruling, the Circuit Court reiterated that attorney-client privilege applies to communications between in-house counsel and their clients just as it does to communications between outside counsel and clients. However, it “can become more complicated when a communication has multiple purposes – in particular, a legal purpose and a business purpose.” Slip Op. at 4. Because Boehringer’s general counsel was both advising the company on how to “ensure compliance with the antitrust laws and negotiate a lawful settlement” and helping to “negotiate a settlement on favorable financial terms,” the communications and documents at issue had both legal and business purposes. Nevertheless, the Court opined, the “primary purpose” analysis demands only that one of the significant purposes of an attorney-client communication was obtaining or providing legal advice. Id. at 5 (citing In re Kellogg Brown & Root, Inc., 756 F.3d 754, 757 (D.C. Cir. 2014)). The Circuit Court concluded that Boehringer’s communications satisfied this test, and affirmed the lower court’s ruling that they were properly withheld as privileged.
A concurring opinion authored by Judge Pillard emphasized the importance of extensive factual development before the District Court in Boehringer, which permitted the D.C. Circuit to defer to the lower court’s factual determination of a “significant” legal purpose for the documents and communications in question. Judge Pillard described the difficulty of establishing in the first instance a “reasonable certainty” that obtaining or providing legal advice was a significant purpose of any particular dual-purpose communication. See Conc. Op. at 2. The fact that a general counsel “wore both lawyer and businessperson ‘hats’ during the communications” is not enough. Id. Judge Pillard noted that the District Court approved the privilege claims only after Boehringer supported its claims through privilege logs and an affidavit by the general counsel, and after the Court had actually reviewed a representative sample of the documents in camera and been satisfied that Boehringer’s characterization of those documents was accurate. The District Court conducted a detailed factual and legal analysis of each document before ruling on its privilege status.
Both District and Circuit Court opinions in this case rejected the idea that factual materials pre-dating a request by counsel, or as the Circuit Court described them, “the underlying facts and data possessed by Boehringer and its employees. . . . [and] pre-existing business documents” are subject to privilege, even if the communication of those documents to an attorney may be privileged. Slip Op. at 6. The District Court, in particular, emphasized that attachments to a privileged communication should not be viewed as privileged without additional justification. Dist. Ct. Op. at 45. Thus, for example, a company’s existing test records on its products would not be subject to attorney-client privilege even if it sends those records to counsel seeking a legal opinion. However, if an attorney acting in his or her legal capacity directs the company or a third-party expert to conduct testing and provide a report to inform that attorney’s legal advice, the testing results may be subject to privilege consistent with D.C. Circuit precedent.
Boehringer and other cases make it clear that every document subject to a claim of privilege need not “reflect express requests for or provision of legal advice.” See Dist. Ct. Op. at 47-48. Nor is it sufficient to sustain a claim or privilege that a document is sent to an attorney or labeled as “privileged.” Rather, the question of whether a document is privileged is fact-specific, and turns on the role and involvement of counsel in creating the document, and the purpose for which a document was created. While it is usually a good idea to label potentially privileged communications as such, the substance of and context surrounding the documents will ultimately determine the fate of a privilege claim. We will continue to monitor this and other cases involving privilege challenges by government regulators, to help our blog readers understand when and how the attorney-client privilege and attorney work-product protections apply.