ACC Joins Amicus Brief on Case That May 'Undermine' In-House Counsel's Ability to Function

For close to a decade, the Federal Trade Commission has been trying to get its hands on documents from drugmaker Boehringer Ingelheim Pharmaceuticals Inc., resulting in a years-long dispute over what documents and communications are protected when an in-house counsel is involved.

In a June 2 amicus brief filed in the U.S. Court of Appeals for the District of Columbia Circuit in support of Boehringer, the U.S. Chamber of Commerce and the Association of Corporate Counsel (ACC) express concern that the FTC’s approach would “upend settled law and undermine the ability of in-house counsel to function.”

The FTC began investigating Boehringer in 2009 because of a deal the company made with Barr Pharmaceuticals Inc., now a Teva Pharmaceutical Industries subsidiary, when the agency learned that Barr agreed to delay sales of certain generic drugs as part of patent litigation settlement agreements. So-called pay-for-delay deals are anti-competitive, according to the FTC, and so in 2009, the commission issued a subpoena requesting documents related to the patent infringement suits in question.

The FTC has argued that because former Boehringer general counsel Marla Persky held dual roles as legal counsel and businesswoman, the German drugmaker has to “prove which hat [Persky] wore” with respect to the communications in question. Boehringer, meanwhile, contends that the FTC’s approach would “eviscerate the attorney-client privilege and further undermine the work-product doctrine as they pertain to the work of in-house counsel.” 

The FTC declined to comment and Persky did not immediately respond to a request for comment.

The case has for years moved back and forth between the U.S. District Court for the District of Columbia and the D.C. Circuit in order to determine which, if any, of the communications are protected by the work-product doctrine or attorney-client privilege. In January of last year, the U.S. Supreme Court declined to hear the case.

Persky, who is now a senior adviser at consultancy BarkerGilmore, was general counsel when Boehringer entered the settlements with Barr.

Per a May 26 filing from Boehringer, the documents at issue are certain financial documents related to the settlements. The former GC was “in her capacity as an attorney, considering various settlement and litigation options, and … the documents at issue fulfilled her requests to company personnel for analyses of the potential financial consequences to the company of those options,” Boehringer claims.

With the case currently before the D.C. Circuit, the ACC and the Chamber of Commerce have added their voices to the mix to address the “FTC’s new and aggressive theory of attorney-client privilege.” The FTC’s position “will promote a moment-by-moment, communication-by-communication approach to attorney-client privilege that would chill clients’ communications with counsel,” according to the 31-page brief.  

“It is of paramount importance that businesspeople feel confident that they can share communications with counsel without risking disclosure so counsel may give well informed legal advice,” the organizations argued in the brief. “Having privilege turn on an after-the-fact determination of whether a particular communication facially concerns ‘business matters’ rather than ‘legal matters’ is artificial, because lawyers frequently must consider ‘financial information’ … and other business-related factual material when forming legal opinions.”

In-house counsel, as a result of their familiarity with the companies they represent, are uniquely qualified to provide legal advice to their clients, said ACC vice president and chief legal strategist Amar Sarwal, who was involved in the amicus brief.

“Because in-house counsel have become more involved in the underlying business … they’ve been able to deliver better advice,” Sarwal said. But if the D.C. Circuit agrees with the FTC’s position, he explained, “that will send a real message to in-house counsel … and to their corporate clients, that using your in-house counsel in these sensitive negotiations where really confidential matters are involved is really not worth it.”

Contact Jennifer Williams-Alvarez at jwilliams@alm.com.

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Jennifer Williams-Alvarez

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