IN RE: GENERIC PHARMACEUTICALS PRICING ANTITRUST LITIGATION ALL ACTIONS MDL NO. 2724 | 16-MD-2724 United States District Court, E.D. Pennsylvania Filed July 29, 2020 Marion, David H., Special Master SPECIAL MASTER DAVID H. MARION'S AMENDED FOURTH REPORT AND RECOMMENDATION RELATING TO DEFENDANTS’ MOTION TO COMPEL PENNSYLVANIA *1 Pursuant to Pretrial Orders Nos. 49 [Doc. No. 667] and 68 [Doc. No. 823], Special Master David H. Marion hereby submits this Amended Fourth Report and Recommendation regarding Defendants’ Motion to Compel the Commonwealth of Pennsylvania (1) to produce discovery from its state agencies whose alleged purchases of, and/or reimbursements for, generic pharmaceuticals form the basis of Pennsylvania's claims; and (2) to identify likely sources of documents and data that support Pennsylvania's claims. I. BACKGROUND On May 5, 2020, by way of letter brief Defendants’ moved to compel the Commonwealth of Pennsylvania (“Pennsylvania”) (1) to produce discovery from its state agencies whose alleged purchases of, and/or reimbursements for, generic pharmaceuticals form the basis of Pennsylvania's claims; and (2) to identify likely sources of documents and data that support Pennsylvania's claims. Defendants claim they have sought the production and identification of this information through multiple discovery requests and meet-and-confers. Pennsylvania has asserted that it does not have control of other state agencies’ documents and data, and that its discovery obligations do not extend beyond the confines of the Office of Attorney General. In support of its Motion, Defendants cite multiple sources of legal authority, including specific Pennsylvania state statutes (i.e. 71 Pa. Stat. and Cons. Stat. Ann. § 732-204). On May 19, 2020, Pennsylvania responded to Defendants’ motion to compel. Pennsylvania argues it is incorrect to assert that the Attorney General inherently represents state agencies or that the Attorney General has control over state agency documents and requiring the Attorney General to produce state agency documents would be an attempt to override the separation of powers mandated by the Pennsylvania Constitution. Moreover, Pennsylvania argues that the Attorney General is not seeking damages on behalf of any state entities and any supplemental disclosure of the requested information would constitute premature expert discovery. In its Reply, Defendants reiterate their position, further stating that whether Pennsylvania “represents” the Commonwealth agencies in this action is irrelevant because Pennsylvania law, Section 732-208 of the Commonwealth Attorneys Act, explicitly grants the Office of Attorney General authority to obtain the requested material. That statute states that, “[t]he Office of Attorney General shall have the right to access at all times to the books and papers of any Commonwealth agency necessary to carry out his duties under this act.” 71 P.S. § 732-208. The Pennsylvania Supreme Court explained that Section 732-208 “lists only one condition on the mandate of production: the material sought must be ‘necessary’ for execution of the OAG's duties.” In re Thirty-Third Statewide Investigation Grand Jury, 624 Pa. 361, 381 (2014). Therefore, Defendants argue, as part of the Attorney General's representation of the Commonwealth and its citizens in an action brought for violation of the antitrust laws, the Attorney general must comply with valid discovery requests seeking relevant information, even if it is outside of the Office of the Attorney General. *2 On May 27, I conducted a joint meeting among counsel to discuss the above issues. At the close of that meeting it was clear the parties were not in agreement on the issues presented, nor ready to move from their asserted positions. On June 8, 2020, I issued an informal recommendation. On June 23, 2020, Defendants’ accepted my informal recommendation with one point of clarification. However, Pennsylvania requested formal briefing pursuant to PTO 68, Paragraph 9, prior to the submission of my formal report and recommendation. On June 30, 2020, Pennsylvania submitted its formal briefing. In its formal briefing, Pennsylvania argues that once litigation commences the Federal Rules of Civil Procedure apply, not the Attorney General's statutory investigative subpoena power pursuant to 71 P.S. § 732-208. Moreover, Pennsylvania claims Defendants’ position would result in making Commonwealth Agencies a party subject to F.R.C.P. 26 discovery in every litigation brought by or against the Attorney General. II. DISCUSSION Pennsylvania is seeking disgorgement and monetary relief based on alleged overpayments by Pennsylvania agencies and citizens. A party seeking monetary relief pursuant to antitrust laws must produce data and documents relevant to its claims. Defendants discovery requests are seeking the production of materials fundamental to those claims, such as, prices and reimbursement of amounts paid by state agencies, product utilization information, and discounts offered or obtained by Pennsylvania. Defendants are not able to rebut those claims, without evaluating evidence that Pennsylvania entities and citizens actually purchased the at-issue products and paid a certain price for them. Moreover, under Pennsylvania statutory law, the Office of Attorney General is authorized to assert antitrust claims on behalf of the Commonwealth and is empowered to require state agencies to produce documents in support thereof; therefore, the AG is in “control” of such records. III. CONCLUSION My recommended resolution is as follows: 1. On or before November 16, 2020, Pennsylvania will inform Defendants of its theories of recovery and the nature of any remedies they will seek at trial; 2. On or before November 16, 2020, Pennsylvania will identify the nature and source of all known documents and data they will rely upon to prove their purported remedies; 3. On or before November 16, 2020, Pennsylvania will produce all discoverable documents and data within its possession, custody, or control; 4. At any time, Pennsylvania may appeal to the Special Master for leave to amend its theories of recovery and each of the above matters for good cause shown provided this is done well before the end of fact discovery; and 5. Defendants’ may oppose such changes or amendments if prejudicial to their ability to defend their cases. A Proposed Order is attached to this Amended Report. Respectfully submitted, /s/ David H. Marion David H. Marion WHITE AND WILLIAMS LLP 1650 Market Street One Liberty Place, Suite 1800 Philadelphia, PA 19103 Tel: (215) 864-7000 mariond@whiteandwilliams.com Attachment IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA IN RE: GENERIC PHARMACEUTICALS PRICING ANTITRUST LITIGATION ALL ACTIONS MDL NO. 2724 16-MD-2724 HON. CYNTHIA M. RUFE [PROPOSED] PRE-TRIAL ORDER NO. __ (Defendants’ Motion to Compel Pennsylvania) AND NOW, this _____ day of __________, 2020, upon consideration of the Amended Fourth Report and Recommendation of Special Master David H. Marion and responses and Objections thereto, it is hereby ORDERED that the Objections are OVERRULED and the Report and Recommended Order is APPROVED as follows: *3 1. On or before November 16, 2020, Pennsylvania will inform Defendants of its theories of recovery and the nature of any remedies they will seek at trial; 2. On or before November 16, 2020, Pennsylvania will identify the nature and source of all known documents and data they will rely upon to prove their purported remedies; 3. On or before November 16, 2020, Pennsylvania will produce any and all discoverable documents and data within its possession, custody, or control; 4. At any time, Pennsylvania may appeal to the Special Master for leave to amend its theories of recovery and each of the above matters for good cause shown provided this is done well before the end of fact discovery; and 5. Defendants’ may oppose such changes or amendments if prejudicial to their ability to defend their cases. IT IS SO ORDERED. BY THE COURT: ______________________________ CYNTHIA M. RUFE, J.