VALUE DRUG COMPANY v. TAKEDA PHARMACEUTICALS, U.S.A., INC., PAR PHARMACEUTICAL, INC., WATSON LABORATORIES, INC., TEVA PHARMACEUTICAL INDUSTRIES, LTD., TEVA PHARMACEUTICALS USA, INC., AMNEAL PHARMACEUTICALS, LLC CIVIL ACTION NO. 21-3500 United States District Court, E.D. Pennsylvania Filed December 06, 2022 Kearney, Mark A., United States District Judge ORDER *1 AND NOW, this 6th day of December 2022, upon considering Defendant Takeda Pharmaceuticals, U.S.A., Inc.'s Objections (ECF Doc. No. 665) to Judge Vanaskie's Report (ECF Doc. No. 663) recommending we grant Plaintiff's Motion to compel production of attorney-client communications under the crime-fraud exception (ECF Doc. No. 634), agreeing with Judge Vanaskie as to the issues presented to him but recognizing Plaintiff did not address the timing of the challenged advices before the alleged conspiratorial conduct fairly obviating a reasonable basis to find evidence of an intent to pursue a conspiracy at the time of the emails, and thus finding no basis at this stage to order disclosure of the challenged attorney-client emails under the crime-fraud exception to the attorney-client privilege, it is ORDERED Plaintiff's Motion to compel (ECF Doc. No. 634) is DENIED without prejudice to be renewed with a focus on the timing of the advices relative to beginning the alleged conspiracy along with the factors addressed by the parties before Judge Vanaskie.[1] Footnotes [1] Our Court of Appeals instructs the crime-fraud exception to the attorney-client privilege applies “[w]here there is a reasonable basis to suspect that the privilege holder was committing or intending to commit a crime or fraud and that the attorney-client communications or attorney work product were used in furtherance of the alleged crime or fraud.” In re Grand Jury Subpoena, 745 F.3d 681, 691 (3d Cir. 2014) (quoting In re Grand Jury, 705 F.3d 133, 143 (3d Cir.2012)). For the crime-fraud exception to apply, the client must be “committing or intending to commit a crime or fraud” at the time the attorney is consulted. In re Grand Jury Subpoena, 745 F.3d at 691 (quoting In re Grand Jury, 705 F.3d at 153). This requirement “does not by its terms apply to a situation where a client consults an attorney about a possible course of action and later forms the intent to undertake that action” or “where the client forms the intent to engage in criminal or fraudulent activity after the consultation.” In re Grand Jury Subpoena, 745 F.3d at 691–92. Takeda objects to Special Discovery Master Judge Vanaskie's December 1, 2022 Recommended Order (ECF Doc. No. 663) arguing “nothing in the email exchange among Takeda's lawyers provides a reasonable basis to reach [the] conclusion” Takeda intended to commit a fraud or crime at the time of the email exchange. ECF Doc. No. 665 at 5. Takeda further argues the emails show Takeda “intended to (and did) engage in an entirely lawful course of conduct” and they discussed with the lawyers the “impact that a contemplated license to Par in a bilateral settlement might have on Amneal and Watson, with which Takeda continued to litigate.” Id. Judge Vanaskie's Recommended Order and Value Drug's Response to Takeda's objections do not address this timing issue. See ECF Doc. Nos. 663, 667. It appears the parties did not fully brief this issue before Judge Vanaskie. Both the Recommended Order and Value Drug's Response to Takeda's Objections focus on furtherance of the alleged crime or fraud presuming the conspiracy began at the time of the email exchange. Id. Value Drug did not show us a reasonable basis from the months of extensive discovery Takeda committed or intended to commit a crime or fraud at the time of the challenged email exchange. Value Drug instead seemingly concedes the crux of our analysis: “The pre-settlement attorney advice at issue, exemplified by TAK-COLCRYS-02061306-08 (the “E-Mail”), prompted the realization by Takeda that its all-but-signed settlement agreement with Par was not, standing alone, enough to effectuate a market-wide output restriction conspiracy, as it had initially believed. The attorney advice informed Takeda that each of Watson and Amneal would also need to agree to restrict their respective output. Following this course-corrective advice, Takeda sought and obtained Watson and Amneal's agreement, recruiting them into the conspiracy.” ECF Doc. No. 667 at 2 (emphasis added). If the email exchanges “prompted the realization” and “the attorney advice informed Takeda each of Watson and Amneal would also need to agree to restrict their respective output,” then the intent to engage in criminal activity occurred after the attorney consultation. Id. (emphasis added). See also In re Grand Jury Subpoena, 745 F.3d at 691–92. Value Drug did not adduce a basis for us to find Takeda had the requisite intent to commit a crime or fraud at the time of the challenged email exchange.