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Defendants in business litigation are often called to produce confidential business information in the course of discovery. Companies are naturally loathe to turn over such material unless compelled to because of the ever-present danger that confidential information may be leaked by unscrupulous plaintiffs. Recently, the conspiracy between a plaintiff's witness and an activist attorney has underscored the reality of these concerns.
In connection with high-stakes litigation concerning Eli Lilly Co.'s anti-psychotic drug Zyprexa, the law firm representing the plaintiffs hired Dr. David S. Egilman as an expert witness. Unfortunately, Dr. Egilman did not respect his role in the judicial process and began to actively advocate against Eli Lilly. Hi most egregious act was to help funnel Eli Lilly's confidential business documents to a newspaper reporter. After receiving half-a-million documents from Eli Lilly pursuant to plaintiffs' discovery requests (and subject to a protective order), Dr. Egilman hatched a scheme to share the documents with the media. To this end, Dr. Egilman contacted attorney James B. Gottstein, who issued a sham subpoena to Dr. Egilman requesting that he turn over the documents for use in an unrelated proceeding in Alaska. However, attorney Gottstein had no real interest in the proceeding in Alaska -- it was merely a vehicle for him to issue a subpoena and obtain the documents from Dr. Egilman. Dr. Egilman quickly complied with the subpoena without even informing the attorney who hired him as an expert witness and who provided him with the documents. As the Second Circuit explains, "The subpoenas served on Egilman merely formalized and facilitated what had already been agreed to. They both understood that issuing a subpoena was a necessary ploy for achieving that distribution in a fashion ostensibly consistent with the protective order to which Egilman was a bound signatory. It is therefore unsurprising that the manner in which Egilman and Gottstein responded to the subpoenas and caused them to issue, respectively, was designed to delay Eli Lilly's learning of them and taking action to prevent production."
What can be done to ensure that this doesn't happen again? First, courts must recognize that a problem exists. As long as the parties agree to a protective order, courts are usually willing to go along. Where things fall apart is in the enforcement of the protective order. Too often, courts render protective orders meaningless by taking too narrow a view of confidential business information that should be subject to protection. They also seem to not realize the extent to which activists will go to broadly disseminate damaging information about defendants in lawsuits. Thus, judicial attitudes should change.
Second, defendants must be willing to launch civil lawsuits against anyone who intentionally violates a protective order. If confidential business information is leaked, the leaker should be required to pay damages to the defendant for the commercial harm that has been caused. In the Eli Lilly matter, the defendant reached a settlement with Dr. Egilman in which he paid Eli Lilly $100,000 and, perhaps just as important, confirmed that his dissemination of documents painted a false picture of Eli Lilly's conduct.
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