The opinion
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
SANDOZ, INC., et ano., Civil Action No.: 19-cv-10170
Plaintiffs,
OPINION AND ORDER OF THE
v. SPECIAL DISCOVERY MASTER
REGARDING DEFENDANT’S REQUEST
UNITED THERAPEUTICS CORP., et ano., FOR SETTLEMENT RELATED
DISCOVERY
Defendants.
LINARES, J.
This matter comes before the Special Master by way of a letter brief dated December 15,
2020 (“Request”) from counsel for Defendant United Therapeutics Corporation (“UTC”)
requesting discovery relating to Plaintiffs’ settlement negotiations with defendant Smiths
Medical ASD, Inc. (“Smiths”). The Special Master has reviewed the submissions, including the
December 21, 2020 Response from Plaintiffs Sandoz, Inc., and Raregen, LLC, UTC’s December
30, 2020 Reply letter, subsequent email communications from the parties dated December 30,
2020 and December 31, 2020, and the relevant controlling law. On January 12, 2020, the
Special Master held oral argument on this matter. For the reasons set forth below, the Special
Master makes the following findings and determinations, and rules as follows.
I. INTRODUCTION
The Special Master presumes that the parties are familiar with the facts surrounding the
underlying action and claims. Accordingly, the Special Master will only recite the relevant
procedural and factual background necessary to dispose of the dispute at hand.
Defendant UTC seeks discovery relating to settlement negotiations between Plaintiffs and
defendant Smiths Medical. In December 2019, Plaintiffs and defendant Smiths agreed to
mediate their claims. An in-person mediation session was held on January 31, 2020 with Hon.
Faith Hochberg, U.S.D.J. (ret.) serving as the mediator. Plaintiffs and Smiths thereafter signed a
settlement term sheet on November 6, 2020.
Specifically, UTC seeks documents relating to Plaintiffs’ negotiations with Smiths
beginning in 2019 until the settlement term sheet signed on November 6, 2020. UTC is not
seeking any communications with the mediator or any submissions made to the mediator during
the mediation process agreed to by Plaintiffs and Smiths.
UTC argues that the documents are relevant to a “critical issue” in the case – plaintiffs’
alleged failure to timely obtain a subcutaneous delivery device for generic treprostinil. UTC
argues this evidence is important to rebut plaintiffs’ claim that defendants UTC and Smiths
Medical prevented Sandoz from entering the market.
UTC also points to the fact that plaintiffs tried to resolve these issues with Smiths
Medical before they filed suit and have produced those related documents, arguing that
discussions that happened after the complaint was filed are no different than those that occurred
prior. UTC further argues that the documents it seeks now are no different than documents
plaintiffs previously produced that relate to their discussions with other device manufacturers
about potential delivery devices and cartridges.
Plaintiffs argue, on the other hand, that settlement discussions, including drafts of the
settlement term sheet, are not relevant. Moreover, Plaintiffs argue that these documents are
protected from disclosure by the mediation privilege.
In reply, UTC argues that Plaintiffs affirmatively put these settlement discussions at issue
during the preliminary injunction phase of the case and that the mediation privilege does not
apply.
II. DISCUSSION
UTC’s arguments are persuasive that there is some level of relevancy here that indicates
that it would be entitled to the information sought. However, based on the limited record before
the Special Master, more information is required in order to determine whether the mediation
privilege applies to protect these documents from disclosure.
D. N.J. Local Civ R 301.(e)(5) states:
All information presented to the mediator shall be deemed confidential
unless requested otherwise and shall not be disclosed by anyone, including
the mediator, without consent, except as necessary to advise the Court of
an apparent failure to participate . . .No statements made or documents
prepared for mediation shall be disclosed in any subsequent proceeding or
construed as an admission.
The question as to whether the mediation privilege applies, thus turns on whether the settlement
negotiations “have a clear nexus to the mediation.” Both parties discuss US Fid. & Guar Co. v.
Dick Corp., 215 F.R.D. 503 (W.D.Pa 2003), which, although a decision interpreting
Pennsylvania’s statutory mediation privilege, is instructive.
In Dick Corp., the parties agreed to mediation with a professional mediator who
conducted one session on November 30, 2000. The session did not result in an agreement. After
the single mediation session, the parties continued to discuss a settlement on their own and kept
the mediator apprised. Sometime between late December, 2000 and February, 2001, the parties
reached a settlement agreement. The mediator had no further contact with the parties involving
settlement negotiations or documents related to the settlement after December 20, 2001. The
parties entered into a formal settlement agreement on or before February 2, 2002. Id., 215 F.R.D.
at 505.
The Court held that the settlement agreement was discoverable because communications
purely between the parties and not involving the “active participation” of the mediator are not
privileged. In so holding, however, the Court noted the following specific facts:
[The mediator’s] declaration does not indicate that he had any
significant involvement in helping to reach the ultimate terms and
structure of the settlement reached by the parties. Instead, his
declaration confirms the limited nature of his involvement after the
November 20, 2000 failed mediation attempt. We might have quite
a different view had the evidence indicated that the parties and Mr.
Green explicitly agreed upon a mediation process which
contemplated one face to face meeting on November 20th and a
number of follow up sessions by telephone. There is nothing in the
evidence to support the existence of such an agreement.
The Court concluded that:
discussions among parties outside the presence of the mediator and
not occurring at a mediation proceeding are not privileged. Where
the mediator has no direct involvement in the discussions and
where the discussions were not designated by the parties to be a
part of an ongoing mediation process, the rationale underlying the
mediation privilege (i.e., that confidentiality will make the
mediation more effective) is not implicated. The mere fact that
discussions subsequent to a mediation relate to the same subject as
the mediation does not mean that all documents and
communications related to that subject are “to further the
mediation process” or prepared for the purpose of, in the course of,
or pursuant to mediation.
Id., 215 F.R.D. at 506.
The Court also looked to federal case law construing the federal mediation privilege for
guidance:
In Folb v. Motion Picture Indus. Pension & Health Plans, 16
F.Supp.2d 1164, 1180 (C.D.Cal.1998), the court held that holding
settlement discussions and exchanging related documents were not
protected by the federal mediation privilege simply because they
occurred, or were created, following a mediation. [S]ubsequent
negotiations between the parties ... are not protected even if they
include information initially disclosed in the mediation. A contrary
rule would permit a party to claim the privilege with respect to any
settlement negotiations so long as the communications took place
following an attempt to mediate the dispute.
Id., 215 F.R.D. at 506-507.
The Court then discussed circumstances under which documents created after the
mediation may be privileged.
We believe that documents created subsequent to the mediation
process may be protected by the privilege to the extent that they
have a clear nexus to the mediation. These would include drafts of
settlement proposals agreed upon at mediation.
However, under the facts of the instant case, plaintiffs have failed
to establish any nexus between the subsequently created
documents and the mediation process. The documents in question
cannot be tied to the November 20th mediation or to any
subsequent activity by the mediator. There is no evidence of any
sort of approval of the mediator or suggestions by him as to how to
resolve disputed points in the ongoing exchange of settlement
proposals following his initial involvement.
. . . we interpret “the language of Pennsylvania’s mediation
privilege as extending its protection to mediator-brokered
settlements, but not to settlements that were simply reached
following a mediation. Thus, there must be a sufficient nexus
between the mediator’s involvement with the parties and the
settlement reached by the parties. That nexus has not been
established with regard to the Settlement Agreement.
Id., 215 F.R.D. at 507.
Here, aside from general statements from Plaintiffs’ counsel that the mediator continued
to be involved in settlement discussions after the in-person mediation session, the record before
the Special Master is devoid of any declaration from the mediator or any specific facts that detail
the extent of participation by the mediator after the initial in-person mediation. During oral
argument on this application, however, Plaintiffs’ counsel advised the Special Master that after
the in-person mediation in January 2020, the mediator made a proposal to the parties on June 30,
2020 that ultimately led to the November 6, 2020 term sheet. The asserted mediator’s June 30th
proposal indicates that the mediator was involved in more discussions with the parties after the
in-person mediation.
III. CONCLUSION
Accordingly, the Special Master holds that Plaintiffs shall prepare a privilege log in
accordance with F.R.C.P. 26 identifying the documents claimed to be protected from disclosure
by the mediation privilege. In addition, the Special Master holds that Plaintiffs shall request that
the mediator prepare a statement describing the nature and extent of the mediator’s involvement
in settlement discussions between Plaintiffs and Smiths after the in-person mediation conducted
in January 2020. This statement should be limited to information such as dates and level of
participation in phone calls or written communications and should not contain the substance of
any of those discussions or communications. The mediator statement must be provided to the
Special Master and to all parties in this action.
IV. ORDER
For the foregoing reasons, it is on this 25th day of January 2021,
ORDERED that Plaintiffs shall prepare and serve a privilege log in accordance with
F.R.C.P. 26 identifying the documents claimed to protected from disclosure by the mediation
privilege within 30 days. The parties are to meet and confer regarding any challenges by UTC to
the privilege log within 10 days thereafter. If a dispute remains after this meet and confer, UTC
shall so advise the Special Master by letter, limited to 5 pages, within 10 days, identifying the
documents it seeks to challenge; and it is further
ORDERED that Plaintiffs shall request that the mediator prepare a statement describing
the nature and extent of the mediator’s involvement in settlement discussions between Plaintiffs
and Smiths after the in-person mediation conducted in January 2020. This statement should be
limited to procedural information, such as dates and level of participation in phone calls or
written communications, and should not contain the substance of any of those discussions or
communications. The mediator statement shall be provided to the Special Master and to all
parties in this action.
SO ORDERED.
__/s/ Jose L. Linares_______________________
Hon. Jose L. Linares, U.S.D.J. (Ret.)