In re ACTOS Antitrust Litigation

UNITED STATES DISTRICT COURT EDLOECC#T: RONICALLY FILED

SOUTHERN DISTRICT OF NEW YORK DATE FILED:

No. 13-CV-9244 (RA) (SDA)

IN RE ACTOS END-PAYOR ANTITRUST

LITIGATION MEMORANDUM

OPINION & ORDER

RONNIE ABRAMS, United States District Judge:

On July 25, 2023, Plaintiffs in this antitrust litigation filed a letter-motion asserting that

Defendants Takeda Development Center Americas, Inc., Takeda Pharmaceutical Company

Limited, Takeda Pharmaceuticals U.S.A., Inc., and Takeda America Holdings, Inc. (collectively,

“Takeda”) waived attorney-client privilege over a document referred to by the parties as the “Inaba

Memo.” On August 1, 2023, Magistrate Judge Aaron issued an Opinion and Order ruling in favor

of Plaintiffs (the “Order”). In re Actos Antitrust Litig., 2023 WL 4875926 (S.D.N.Y. Aug. 1,

2023). Now pending before the Court is Takeda’s timely objection to Judge Aaron’s Order.1 For

the reasons that follow, Takeda’s objection is overruled.

BACKGROUND

The Court assumes the parties’ familiarity with the relevant facts and procedural history,

which are detailed in Judge Aaron’s Order, and summarizes only the most pertinent facts here.

Takeda originally identified the Inaba Memo as privileged and included it on a categorical

privilege log dated May 20, 2022. On August 8, 2022, however, Takeda produced to Plaintiffs a

batch of documents that included a mostly unredacted version of the Inaba Memo in its original

Japanese. On September 8, 2022, Plaintiffs filed a reply brief regarding the scope of Takeda’s

1 Takeda filed its objection on August 15, 2023. See Fed. R. Civ. P. 72(a) (“A party may serve and file

objections to the [magistrate judge’s] order within 14 days after being served with a copy.”).

express privilege waiver. Attached to that reply brief, among other exhibits, was an English-

translated version of the Inaba Memo.

The next morning, during a telephone conference with the parties, Judge Aaron expressly

asked Takeda: “In the reply brief that was filed yesterday by the plaintiffs, they attached certain

exhibits and my question for the defendants . . . [is] did you intend to produce those documents

with the information on them unredacted[?]” Hr’g Tr. at 5:11-15 (ECF No. 410). Takeda

responded that they “did intend to produce those documents,” id. at 5:20-21, and further clarified:

“[W]e are not proposing to claw back any of the documents that are attached to the reply brief

. . . we endeavored to produce documents that related to the subject matter of the waiver,” id. at

6:19-23.

On November 4, 2022, during a meet and confer, Plaintiffs reminded Takeda that the Inaba

Memo had been attached to the September 8 reply brief, and Plaintiffs’ counsel both displayed the

Inaba Memo on the Zoom “screen share” function and emailed it to Takeda’s counsel. See ECF

No. 532-1 ¶ 2. According to Plaintiffs, during this meet and confer, “[d]efense counsel never

stated the Inaba Memo was inadvertently produced and will be clawed back.” Id. On February

27, 2023, Plaintiffs sent Takeda a letter with a list of documents, including the Inaba Memo, that

they believe had been improperly redacted or withheld. See ECF No. 532-5. Takeda agreed to

review the documents identified in the letter, and on March 17, 2023, Takeda reproduced the Inaba

Memo with all redactions removed. See ECF No. 532-1 ¶ 3.2

On April 3, 2023, Plaintiffs again filed the Inaba Memo under seal as an exhibit to a letter-

motion. This time, Takeda sought to claw it back, on the ground that it had been inadvertently

2 Takeda does not dispute any of these assertions—in fact, in Takeda’s briefing on its objection to Judge

Aaron’s Order, it does not once mention the November 4 meet and confer, the February 27 letter, or the

March 17 reproduction.

produced. See ECF No. 531-6 at 5. After Plaintiffs sent Takeda an email explaining why they

opposed the claw back, Takeda responded: “We maintain our position that unredacted portions of

[the Inaba Memo] were inadvertently produced . . . But in light of the statements made during the

September 9, 2022 hearing and the passage of time, we will agree to withdraw our claw back for

[the Inaba Memo].” Id. at 3. Finally, on July 21, 2023, during the deposition of Atsuhiro Inaba—

the original author of the Inaba Memo—Takeda again sought to claw back the Memo when

Plaintiffs’ counsel marked it as an exhibit in the deposition.

DISCUSSION

Pursuant to Federal Rule of Civil Procedure 72(a), when a party objects to a magistrate

judge’s ruling with respect to a non-dispositive issue, “[t]he district judge in the case must consider

[the] timely objections and modify or set aside any part of the order that is clearly erroneous or

contrary to law.” Fed. R. Civ. P. 72(a). “Clear error is present when, ‘upon review of the entire

record, the court is left with the definite and firm conviction that a mistake has been committed.’”

Janes v. Berryhill, 498 F. Supp. 3d 540, 541 (S.D.N.Y. 2020) (quoting United States v. Snow, 462

F.3d 55, 72 (2d Cir. 2006)).

Takeda first argues that Judge Aaron clearly erred by applying the wrong standard for

waiver. According to Takeda, where a protective order governs the procedure for clawing back

privileged documents, “the terms of that order control.” Takeda Objections at 6 (quoting In re

Google Digital Advertising Antitrust Litig., 2023 WL 196146, at *2 (S.D.N.Y. Jan. 17, 2023)).

Here, Takeda argues, “the sole requirement for claw back [in the protective order] is that the

document be inadvertently produced.” Id. (citing ECF No. 190 at 11). Other courts in this District

have observed, however, that even “where parties execute [a protective] order, waiver is

appropriate . . . if production of the privileged material was ‘completely reckless.’” Sure Fit Home

Prods., LLC v. Maytex Mills Inc., 2022 WL 1597000, at *1 (S.D.N.Y. May 20, 2022) (collecting

cases) (quoting HSH Nordbank AG N.Y. Branch v. Swerdlow, 259 F.R.D. 64, 75 (S.D.N.Y. 2009)).

Indeed, the case Takeda relies on, In re Google, also noted that “[a] possible exception to the literal

application of the [protective order] may exist where a party asserting inadvertent production has

acted in a manner that was ‘completely reckless.’” 2023 WL 196146, at *2 (quoting HSH

Nordbank, 259 F.R.D. at 75).

“For a production to be ‘completely reckless,’ the producing party must have shown no

regard for preserving the confidentiality of the privileged documents.” Sure Fit, 2022 WL

1597000, at *1 (quoting Prescient Partners, L.P. v. Fieldcrest Cannon, Inc., 1997 WL 736726, at

*4 (S.D.N.Y. Nov. 26, 1997)). Judge Aaron found that Takeda’s actions clear this high bar,

because “Takeda had multiple opportunities prior to July 21, 2023 to exercise its rights under the

Protective Order . . . and insist upon clawing back the Inaba Memo.” In re Actos, 2023 WL

4875926, at *3. Specifically, Judge Aaron reasoned, “Takeda could have done so during the

September 9, 2022 hearing, during the November 4, 2022 meet and confer, when it reproduced the

Inaba Memo in March 2023 and when it made and then withdrew its claw back request in April

2023.” Id.

The Court agrees. Even if the initial production of the Inaba Memo was inadvertent, the

Memo was expressly brought to Takeda’s attention multiple times in the following months. At

the telephone conference held on September 9, 2022, Judge Aaron asked Takeda whether they had

intended to produce unredacted versions of the exhibits attached to Plaintiffs’ reply brief—which

totaled only six exhibits, one of which was the Inaba Memo—and Takeda responded in the

affirmative. ECF No. 410. Then, at the meet and confer between the parties on November 4,

2022, Plaintiffs’ counsel displayed the Inaba Memo on Zoom’s “screen share” function for

Takeda’s counsel to see, and also emailed to Takeda the same six exhibits that had been attached

to their reply brief, which, again, included the Inaba Memo. ECF No. 532-1. Still, according to

Plaintiffs, Takeda did not seek to claw back the Inaba Memo. Id. Finally, after Plaintiffs sent

Takeda a letter in February 2023 with a list of documents that contained improper redactions,

Takeda reproduced the Inaba Memo with all redactions removed on March 17, 2023. ECF No.

532-1, -5.

Takeda offers no explanation for any of these missed opportunities to claw back the Inaba

Memo, nor do they directly dispute these facts—they merely assert that they “ultimately

discovered the inadvertent production” of the Inaba Memo on April 7, 2023. Takeda Objections

at 3-4. Even if it were true that Takeda was unaware of the Inaba Memo’s purportedly inadvertent

production until April 2023—which the Court finds doubtful—it was “completely reckless” for

Takeda to choose to remain in the dark for so long, when the Memo’s production had been brought

to their attention multiple times in the preceding months. Indeed, Takeda’s own attorneys agreed,

in April 2023, to “withdraw” their claw back request of the Inaba Memo, “in light of the statements

made during the September 9, 2022 hearing and the passage of time.” ECF No. 531-6 at 3. Under

these circumstances, the Court finds no error, let alone clear error, in Judge Aaron’s conclusion

that Takeda showed “no regard” for preserving the confidentiality of the Inaba Memo. See Sure

Fit, 2022 WL 1597000, at *3 (finding that plaintiffs were “completely reckless” with respect to

privileged material where they were given “multiple clear opportunities to claim the privilege” but

did not do so).

Takeda insists that they demonstrated at least some effort to preserve the confidentiality of

the Inaba Memo, relying on the following language from the August 8 production letter to

Plaintiffs: “We are producing in redacted form 203 completely privileged scanned documents.”

ECF No. 536-1. Takeda also points to the fact that they objected to the use of the Inaba Memo at

Inaba’s deposition, when they attempted to claw it back. But again, these efforts cannot overcome

the fact that Takeda was given repeated opportunities over the course of almost a year—between

the August 8 production and the July 21 deposition—to assert privilege over the Memo, and they

did not do so.

Takeda makes two additional arguments, both of which are similarly unpersuasive. First,

Takeda points to Rule 4.4(b) of the New York Rules of Professional Conduct, which states that

“[a] lawyer who receives a document . . . relating to the representation of the lawyer’s client and

knows or reasonably should know that it was inadvertently sent shall promptly notify the sender.”

N.Y. Rules of Pro. Conduct 4.4(b). According to Takeda, Plaintiff’s “failure” to comply with Rule

4.4(b) immediately after the initial production of the Inaba Memo renders Judge Aaron’s finding

of waiver clearly erroneous. Takeda Objections at 8. Even assuming it was obvious that the initial

production of the Inaba Memo was inadvertent, however—which Plaintiffs dispute—Takeda cites

no authority suggesting that an ethical rule violation changes the application of the “completely

reckless” standard, or should otherwise affect the waiver analysis in this instance. See Point 4

Data Corp. v. Tri-State Surgical Supply & Equip., Ltd, 2013 WL 12503118, at *17 n.29 (E.D.N.Y.

July 18, 2013) (citing Fagan v. U.S. Dist. Ct. for the S. Dist. of N.Y., 644 F. Supp. 2d 441, 450

(S.D.N.Y. 2009)) (“[W]hile complaining that [the defendant] ‘sandbagged’ them and delayed

litigation over this issue, plaintiffs do not articulate what effect, if any, an ethics violation [of Rule

4.4(b)] would have on their motion for a protective order. Nor do they explain why a federal court

is the appropriate forum for litigating what essentially amounts to a state attorney ethics

complaint.”).

Finally, Takeda argues that it would suffer unfair prejudice if privilege over the Inaba

Memo is waived, because Takeda would not be able to provide context for the Inaba Memo without

waiving privilege over other documents. Takeda again fails to cite any authority, however, nor is

the Court aware of any, that has considered prejudice to the disclosing party when analyzing waiver

of privilege.?

Accordingly, the Court finds no clear error in Judge Aaron’s Order, and Takeda’s objection

to the Order is overruled.

SO ORDERED.

Dated: September 22, 2023 i]

New York, New York ( f

onnie Abrams 7

United States District Judge

> The Court is also skeptical that either of these additional objections are proper, given that the legal

arguments were not specifically raised before Judge Aaron. See Nike, Inc. v. Wu, 349 F. Supp. 3d 346, 353

(S.D.N.Y. 2018) (“[C]ourts in this Circuit generally do not entertain new legal arguments not presented to

the magistrate judge.”). Although Takeda did mention Rule 4.4(b) in its letter-motion to Judge Aaron, it

did so only as a footnote in the background section—it did not argue that, because of the alleged ethics

violation, there should be no privilege waiver. See ECF No. 536. In any event, as discussed, the Court

finds both arguments to be meritless.