Federal Trade Commission v. Boehringer Ingelheim, Pharmaceuticals, Inc.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FEDERAL TRADE COMMISSION, :
:
Petitioner, :
:
v. : Misc. Action No. 09-564 (JMF)
:
BOEHRINGER INGELHEIM :
PHARMACEUTICALS, INC., :
:
Defendant. :
MEMORANDUM OPINION
This matter was assigned to me for all purposes. Before me is the remaining issue in the
Petition of the Federal Trade Commission for an Order Enforcing a Subpoena Duces Tecum [#1].
I resolved the privilege issues presented in that petition and subsequent status reports in my
recent Memorandum Opinion [#69]. Federal Trade Commission v. Boehringer Ingelheim
Pharmaceuticals, Inc., No. 09-564, 2012 WL 4464490 (D.D.C. Sept. 27, 2012). I will now turn
to the FTC’s argument that Boehringer Ingelheim Pharmaceuticals, Inc. (“BIPI”) did not conduct
an adequate search of its electronically stored information because it refused to search back-up
tapes in accordance with the subpoena’s demands.
I. Background
BIPI first filed the executed settlement agreements from the Barr-BIPI litigation 1 with the
Department of Justice and the Federal Trade Commission in August of 2008. Response of
Boehringer Ingelheim Pharmaceuticals, Inc. to the Order to Show Cause [#34] at 5. Five months
later, on February 9, 2009, the FTC served BIPI with the subpoena at issue in this case. Id. BIPI
1
For an explanation of the background of the FTC’s investigation and the subpoena at issue
here, see [#69] at 1-4.
responded to the subpoena by initiating a custodian-directed search, “whereby the inside legal
department and outside counsel [were directed to] review the subpoena, identify potentially
relevant custodians, ask them about their files, gather potentially responsive files both in
electronic and hard copy as appropriate, and review the fruits of the search.” Id. BIPI also
“instituted a document preservation notice for persons who were deemed likely to have any
responsive documents,” which included placing responsive e-mails in a “hold file” to be
“retained indefinitely until the legal hold is lifted.” Id. at 5-6. BIPI identified “over 66
employees” who received the document preservation notice. Id. at 7.
The e-mail system used by BIPI “automatically deleted emails from its employees’ in-
boxes 90 days after the email was sent or received,” and the FTC argues that this automatic
deletion feature was not turned off once the subpoena was served. Reply of the Federal Trade
Commission In Further Support of Status Memorandum Advising the Court of New
Developments [#33] at 19. The FTC also complains that some relevant e-mails were
inappropriately deleted manually or otherwise lost. Id. at 20. As a whole, argues the FTC, BIPI’s
efforts to retain documents through manual archiving of relevant e-mails was not sufficient to
prevent all relevant e-mails from being deleted under the 90-day automatic deletion program. Id.
Consequently, the FTC requests a search of the back-up tapes “due to the document preservation
obligations in this investigation and other litigations.” Id.
Originally, the FTC requested that BIPI search “all of Boehringer’s Electronically Stored
Information,” including backup tapes and servers dating back to 2003. See [#1] at 8-12. BIPI,
however, maintains that the “disaster recovery backup tapes . . . do not separate [] working
documents such as spreadsheets, documents, PowerPoints, and other types of materials . . . [n]or
are they easily segregable by author or custodian.” [#34] at 20-21. As such, BIPI estimated that
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a search of all the backup tapes from January 2003 to October 2010 would cost over $25 million
dollars. Id. at 21. This estimate did not include the cost of searching hard drives, which also fell
under the FTC’s request that BIPI search “all” databases and archives. Id. at 19-20. During oral
argument, however, the FTC conceded that it is “willing to forgo the F&G drive at this point, in
favor of the backup tapes.” See Transcript of Status Hearing [#59] at 70. The FTC also noted
that the relevant period for which backup tapes must be searched is February through August,
2008, [#59] at 70, and that a search of four tapes would be sufficient, rather than the 24
originally subpoenaed, id. at 52.
Despite the concessions at oral argument, the FTC retains its position that BIPI did not
conduct an adequate search of its records, in that it declined to search any server back-up tapes
for responsive documents. See Status Report of the Federal Trade Commission [#41] at 12-13.
BIPI, on the other hand, contends that it has done a full and thorough search and that the FTC’s
request for additional electronic searches remains “unnecessary and unduly burdensome.”
Response of Boehringer Ingelheim Pharmaceuticals, Inc. to the Federal Trade Commission’s
Status Report [#44] at 13.
Fueling this disagreement is a debate among the parties regarding the standard of review
for the FTC’s request. The FTC asserts that its request for a search of the backup tapes should be
analyzed under the standards of FTC v. Texaco, Inc., 555 F.2d 862 (D.C. Cir. 1977). [#41] at 13.
BIPI, on the other hand, points to the “good cause” standard set forth in Federal Rule of Civil
Procedure 26(b)(2)(B). [#44] at 13. This opinion, therefore, must resolve two distinct issues: 1)
what law governs requests submitted via administrative subpoena to search information stored on
backup tapes; and 2) whether BIPI should be required to conduct a search of the backup tapes,
and, if so, under what terms.
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II. Legal Standard
Under Federal Rule of Civil Procedure 26(b)(2)(B), “[a] party need not provide discovery
of electronically stored information from sources that the party identifies as not reasonably
accessible because of undue burden or cost.” Fed. R. Civ. P. 26(b)(2)(B). If the producing party
can make such a showing, the court may “nonetheless order discovery from such sources if the
requesting party shows good cause.” Fed. R. Civ. P. 26(b)(2)(B). It follows, therefore, that the
court will not consider a requesting party’s “good cause” unless the producing party has first met
her burden of showing “undue burden or cost.”
In the administrative subpoena context, however, a much stronger showing of “undue
burden” is required. See Texaco, 555 F.2d at 882. When evaluating an administrative subpoena
enforcement petition, the court should enforce the subpoena “if the inquiry is within the authority
of the agency, the demand is not too indefinite and the information sought is reasonably
relevant.” Id. at 872 (citing United States v. Morton Salt Co., 337 U.S. 632, 665 (1950)). See
also Linde Thomson Langworthy Kohn & Van Dyke, P.C. v. Resolution Trust Corp., 5 F.3d
1508, 1517 (D.C. Cir. 1993) (“The burden of proving undue hardship ‘is not easily met where . .
. the agency inquiry is pursuant to a lawful purpose and the requested documents are relevant to
that purpose.’”). 2
To that end, to reject a petition to enforce an administrative subpoena, this Circuit
requires a showing that compliance with the subpoena “threatens to unduly disrupt or seriously
hinder normal operations of a business.” Texaco, 555 F.2d at 882. “The burden of showing that
the request is unreasonable is on the subpoenaed party.” Id. This does not mean the Court’s
2
While the Texaco decision antedated the amendment to the Federal Rules that created what is
now Rule 26(b)(2)(B), in this jurisdiction, the Court must construe the words “undue burden” in
the Rule consistently with the Texaco decision, if the Texaco decision is to be given the
precedential force to which it is entitled.
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hands are tied to the exact terms of the subpoena request; indeed, “in formulating protective
conditions for administrative subpoenas, courts may resort analogously to techniques
conventional to judicial subpoenas.” Sec. & Exch. Comm'n v. Arthur Young & Co., 584 F.2d
1018, 1033 (D.C. Cir. 1978) (citing the Federal Rules of Civil Procedure as one such technique).
III. Analysis
There is no doubt that the breadth of the search requested in the FTC’s original subpoena
would have consumed much of BIPI’s time and money. Many of the status updates and other
submissions to the Court on this issue addressed whether the search, as requested, constituted an
undue burden on BIPI. Although both sides raised interesting arguments in this regard, the
request as it stands today is on a different scale. Developments between the parties, both on their
own and before me during the last status conference, indicate that the scope of the search
requested by the FTC has been narrowed significantly, and as a result, it appears that the request
is, in its modified form, not unduly burdensome for BIPI. See Texaco, 555 F.2d at 882-83.
I am not convinced, having reviewed the status reports of both the FTC and BIPI, that
such a limited search would be the kind of burden upon BIPI described in the Texaco case—
“threaten[ing] to unduly disrupt or seriously hinder normal operations of a business.” Texaco,
555 F.2d at 882. BIPI bears the burden of establishing such a disruption and it has not
demonstrated to the Court, either through filings or during the November 2011 status conference,
that complying with this request, as modified, would meet that burden. Instead, “some burden
on the subpoenaed party is to be expected.” Federal Trade Commission v. Church & Dwight Co.,
Inc., 747 F. Supp. 2d 3, 8 (D.D.C. 2010), aff’d 665 F.3d 1312 (D.C. Cir. 2011). BIPI is a large
pharmaceutical company, and, although it does not have unlimited resources, it certainly has the
ability to conduct the limited search requested here.
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More to the point, the burden or lack thereof in doing the search is a function of how
efficiently it is conducted. Obviously, to the extent that documents found on the backup tapes
are duplicative or near-duplicative of documents already disclosed or deemed privileged,
production is unnecessary and unwarranted. The parties should meet and confer to determine the
appropriate method of searching the relevant backup tapes to render the process as efficient as
possible. Additionally, if they deem it appropriate, I will ask the mediator who assisted them
previously to meet with them again to guide their discussions as to how to conduct the search. If
the parties still cannot agree, they will have to submit their disagreement to me for resolution.
Additionally, any documents produced by this search and claimed to be privileged will be
subject to the same principles and holdings laid out in my recent opinion in this case. See
Memorandum Opinion [#69]. Thus, to the extent that the documents produced in the backup
tape search fall under the work product or attorney-client privileges, as I have interpreted them in
that opinion, they would be protected from disclosure. Searching for them again would result in
a needless expenditure of resources.
Any documents found on the backup tapes that are responsive and not privileged must be
turned over immediately. As stated previously, however, if a document contains some factual
work product and some opinion work product, and the opinion work product can be excised from
the rest of the document, BIPI should redact the privileged material and disclose the rest. If, at
the end of this process, there remains a dispute as to whether any of these documents may be
privileged, they may be submitted to me for in camera review.
An Order accompanies this Memorandum Opinion.
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Digitally signed by John M. Facciola
DN: c=US, st=DC, l=Washington,
email=john_m._facciola@dcd.uscou
rts.gov, o=United States District
Court for the District of Columbia,
cn=John M. Facciola
___________________________________09:35:12 -04'00'
Date: 2012.10.16
JOHN M. FACCIOLA
UNITED STATES MAGISTRATE JUDGE
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