Opinion
01 Civ. 8095 (HB)(RLE)
September 6, 2002
OPINION AND ORDER
This case is here on remand from the Honorable Harold Baer so that this Court might provide written reasons for one of the issues decided in its July 10, 2002 oral ruling. As discussed below, the parties have submitted additional declarations for the Court's consideration. Because of this additional evidence, this remand will not be limited simply setting forth the reasoning of the July ruling. Rather, the Court will treat the remand as a belated request for reconsideration in light of the additional evidence submitted.
The dispute herein concerns plaintiff Innomed Labs' ("Innomed") Second Request for the Production of Documents to defendant Alza Corporation ("Alza"). Specifically, Innomed sought a variety of documents regarding the relationship between Alza and Ciba Consumer Pharmaceuticals ("Ciba") and between Alza and Ciba's successor, Novartis Consumer Health Care ("Novartis"), collectively Ciba/Novartis. For the reasons discussed below, the Court finds that the information sought is not relevant to the claims or defenses of any party in this action.
I. DISCUSSION
A. Background
The case was referred to the undersigned by Judge Baer on June 14, 2002. The reference indicated that the Court should address "discovery motions" and "discovery disputes." The referral resulted from a June 10, 2002 letter from Innomed seeking intervention by Judge Baer in the dispute regarding the challenged requests from Innomed, and a June 11, 2002 response from Alza, asserting that the documents were irrelevant. Also, on June 12, 2002, Judge Baer granted Innomed's motion to amend its complaint to add new claims, including a claim that Alza had imposed disparate pricing on Innomed in violation of Section 2(a) of the Robinson-Patman Act. On June 19, 2002, Innomed's counsel wrote to the Court to request expedited decisions on the pending discovery disputes:
This amendment should moot some of the discovery issues and/or should raise new issues on the pending motions that Your Honor should be aware of before deciding the motions. Second, the case is now proceeding on a tight discovery schedule and we therefore, respectfully request a conference with Your Honor in an attempt to promptly resolve any remaining discovery disputes.
On June 24, 2002, the Court held a telephone conference to address an objection by Alza to Innomed's amended complaint. According to Alza, one of the documents attached to the complaint should have been filed under seal. Innomed argued that Judge Baer's June 12, 2002 order had superceded the outstanding discovery motion, that is, by allowing the amended complaint, Judge Baer had ruled that the document in question was not confidential. The parties stated that Judge Baer would not be available for two weeks and that they had a tight schedule to abide by. The Court allowed additional submissions by June 26, 2002. On July 1, 2002, the Court held another telephone conference with the parties. Among the issues addressed by the parties was Innomed's motion to declassify documents designated as "highly confidential." The Court ruled that Alza had failed to establish that the documents in question were entitled to the extra protection afforded "highly-confidential" material and should be subject only to the basic confidentiality agreement between the parties.
B. The July 1, 2002 Conference
The parties continued to have disputes and the Court held an in-person conference on July 10, 2002. Among the issues presented to the Court were:
1. Innomed's request for the Ciba documents which are the subject of this remand;
2. Alza's request to clarify the Court's June 28, 2002 oral order concerning confidentiality;
3. Innomed's request to continue the deposition of former Alza vice-president Robert Myers;
4. Innomed's request for Warner-Lambert documents;
5. Innomed's request to continue the deposition of American Home Products FED. R. Civ. P. Rule 30(b)(6) witness;
6. Alza's request to depose Innomed president Howard Wendy;
7. Scheduling issues concerning expert reports.
The Court asked the parties whether it was their understanding that the order of reference included only the specific issues which had already been raised before Judge Baer. Both parties agreed that the reference included "all discovery disputes" and both expressed concern that these matters be resolved quickly because of the time constraints under which they had to work. Innomed thereupon pressed the issue of the Ciba documents. The Court allowed the parties to present arguments on each of the seven matters listed, including extensive arguments on the Ciba documents.
The Court ultimately addressed each of the issues, except for the-scheduling of the expert reports, which after reviewing the transcript before Judge Baer, the parties agreed should be presented to Judge Baer.
The dispute here centers around the sale and distribution of a 24-hour cold remedy produced by Alza Corporation. Prior to 1997, there was a single product on the market, Efidac 24, a product of Ciba and its successor Novartis. After Novartis left the market, Innomed began distributing Efidac 24. At or near this time, Warner-Lambert began distributing Alza's product as Sudafed 24. Innomed sought documents concerning Alza's agreement with Ciba and/or Novartis regarding, among other things, payments by Ciba/Novartis to Alza, the supply of Efidac by Alza to Ciba/Novartis, and correspondence between Alza and Ciba/Novartis about the distribution of Efidac.
For example, Request No. 1 asked for:
Any and all agreements or contracts between Alza and Ciba Consumer Pharmaceuticals and/or Novartis Consumer Health concering the distribution of Efidac and/or any Alza Products by Ciba Consumer Pharmaceuticals and/or Novartis Consumer Health.
Innomed argued that the Ciba documents were highly relevant as a "reference point for its claim of price discrimination." The Court observed that the claim concerned differences in treatment between Innomed and Warner-Lambert, and questioned how prices charged to Ciba would be relevant to this claim. It appeared to the Court that the relevant inquiry was how the current distributors were treated by Alza. The Court found that because Ciba had ceased distributing the 24-hour cold remedy before Innomed entered the picture, information concerning pricing between Alza and Ciba was not relevant to Innomed's claim that it was treated less favorably than Warner-Lambert.
As is the Court's practice with oral rulings, the parties were asked if they required a written ruling on any of the issues. Innomed requested a written ruling on the Ciba documents dispute. Because the parties expressed continued concern about their "tight discovery schedule," the Court informed the parties that if they needed rulings on subsequent discovery disputes, the Court would be available to rule on them immediately.
At the conference, Innomed did not mention a declaration by Zona or request that it be given the opportunity to present additional evidence to demonstrate the relevance of the disputed documents. Subsequent to the conference, Innomed did not seek to introduce the Zona declaration, and did not seek reconsideration of the Court's oral ruling.
Before the Court issued its written decision, Innomed informed the Court that it intended to take the matter to Judge Baer in an expedited fashion and forego the written ruling. Because the parties had engaged in extensive argument and because the basis for the Court's ruling had been stated to both parties, Innomed indicated that it had a sufficient record for appeal.
By order dated July 29, 2002, Judge Baer rejected Innomed's contention that a de novo review standard applied, affirmed the Court's oral ruling as not clearly erroneous or contrary to law, and observed that "the relevance of the Ciba documents to any aspect of this lawsuit is at best doubtful." Innomed thereupon sought reconsideration Judge Baer's order, and for the first time introduced the declaration of J. Douglas Zona as support for its position. While the gist of Innomed's justification for reconsideration is its complaint that the Court's oral ruling was made at an informal conference where it was not afforded the opportunity to present formal briefs, it appears that its ultimate goal is to insure that the Zona affidavit forms part of the record on appeal:
See, for example,
"While at the status conference Innomed did ask that Magistrate Judge Ellis handle the discovery dispute regarding the Novartis Data, it did not seek a sua sponte ruling without benefit of making a considered motion to compel." Reply Memorandum of Law in Support of Motion for Reconsideration or in the Alternative to include the Declaration of J. Douglas Zona in the Record ("Reply") at 2.
"Moreover, we realize after the July 10th status conference that the normal review by this court would be required in any event, as magistrate Judge Ellis ruled without the benefit of briefing, and without presence of a court reporter." July 22, 2002 Letter from Harold P. Weinberger to Judge Baer, attached as Exhibit G to Weinberger Declaration.
"Judge Ellis' ruling was made from the bench, at a status conference, the purpose of which was to seek the right to move to compel, pursuant to Local Rule 37.2. Without the benefit of motion papers, supporting declarations, or even a court reporter, Judge Ellis made his determination during the course of an informal argument." Reply at 2.
"In the alternative, because Innomed was prevented from making a record concerning the necessity of the Novartis Data, the Court should grant Innomed's application to include the declaration of J. Douglas Zona in the record for appeal. The Zona Decl. establishes the reasons why the Novartis Data is needed to support Innomed's claims, including its Robertson-Patman [sic] Act claims against Alza for unlawful price discrimination."
The Zona declaration states that:
With respect to its Robinson-Patman Act claims, Innomed has alleged that Warner-Lambert purchased the same product from Alza as Innomed ("the "Pseud product"), but at a more advantageous price, thus providing Warner-Lambert with a competitive advantage in the market of 24-hour cold remedies that was not related to efficiencies.
Memorandum of Law in Support of Motion for Reconsideration or in the Alternative to Include the Declaration of J. Douglas Zona in the Record ("Memo in Support") at 2-3.
Were it up to this Court, Innomed's application would be summarily rejected as procedurally infirm. Innomed's laments notwithstanding, it has no justification for seeking to introduce the Zona declaration at the present time. Innomed was not prevented from presenting the declaration to this Court. There are several ways in which the matter could have been raised during or after the conference, including in a request for reconsideration. Having elected to proceed to Judge Baer, Innomed had created its own Catch-22. On the one hand, it would be improper to rely on evidence not presented to the Magistrate Judge. On the other hand, the record would not contain a declaration which Innomed claims "establishes the reasons why the Novartis Data is needed to support [its] claims . . . for unlawful price discrimination." Memorandum in Support at 3. But this is a dilemma of its own creation. Protestations about an "informal" conference and the lack of an opportunity to present a memorandum of law do not change the essential fact that Innomed had the opportunity to make whatever record it deemed necessary, but failed to act.
Despite this failure on the part of Innomed, it is clear that a meaningful decision on remand requires consideration of the declarations submitted by both parties. Based on the record before it and the arguments of the parties on July 10, 2002, the Court had concluded that the information sought was not relevant to the "claim or defense of any party." FED. R. Civ. P.26(b). In its amended complaint, Innomed had been allowed to plead a cause of action under the Robinson-Patman Act. Innomed described this claim in its June 19, 2002 letter to the Court as "a claim for violation of section 2(a) of the Robinson-Patman Act as a result of Alza's disparate pricing of the same product it supplied Innomed and Warner Lambert pursuant to contemporaneous Distribution and Supply Agreements." The Court's queries to Innomed focused on how information about dealings between Alza and Ciba/Novartis could be relevant on the question of whether Alza treated Innomed differently from Warner Lambert. The Court expressed the view that because the documents requested concerned a time before Innomed and Warner Lambert were competing, and when Ciba/Novartis was the only company in the market, they would provide no relevant comparison for the Robinson-Patman claim.
The Court will also consider the declaration of Darrell L. Williams, submitted by Alza in opposition to Innomed's application, and Zona's reply declaration. Innomed argues that the Williams declaration should be stricken because Judge Baer directed that there "be no further argument." The Court disagrees with this interpretation and finds that the declaration does not violate Judge Baer's order, and is necessary to make a complete record.
What does the Zona declaration add to this inquiry? In paragraph 5 of his declaration, Zona states:
In order to determine the competitive impact of the alleged price discrimination, it is first necessary to determine the nature of competitive conditions in the market in which Warner-Lambert and Innomed were competing. Economists typically look at three different factors that determine market outcomes: the demand for the product in question, the production costs of the various competitors, and the nature of the competitive interaction in the market. These three factors together determine the market price(s) of the product, as well as the total quantity of the product sold, and the profits realized by the competing firms. As a result, these factors are also important in any analysis of the degree to which price discrimination would harm competition in the market.
The problem, however, is that Alza's dealings with Ciba/Novartis do not concern the "competitive conditions in the market in which Warner-Lambert and Innomed were competing." Ciba/Novartis was in the market at a different time and was not competing with other firms. Moreover, there is no reason to believe that Ciba's experience will "provide important information for an analysis of the product market in question." See Zona Declaration ¶ 7. The nature of the competition in the marketplace is different in kind because Ciba/Novartis had no competition. As pointed out by Darrell Williams, "`the nature of the competitive interaction in the market' is not informed by the Novartis experience since the identity and number of competitors were substantially different at the time when Novartis was the sole distributor versus when Warner Lambert and Innomed were semi-exclusive distributors." Williams Declaration ¶ 10. Indeed, each of the three factors cited by Zona in his paragraph 5 are subject to different influences during the Ciba/Novartis period as opposed to the relevant time frame for the claims in this case.
II. CONCLUSION
For the foregoing reasons, including consideration of the declarations by Zona and Williams, the Court finds that the requested documents are not relevant to any claim or defense and Innomed's request for production is DENIED.