Name That E-Discovery Tune: Procaps S.A. v. Patheon Inc.

Name That E-Discovery Tune: Procaps S.A. v. Patheon Inc.

As the nation prepares to celebrate its independence with barbecue, fireworks and the rousing march of “Stars and Stripes Forever,” we highlight the decisions in Procaps S.A. v. Patheon Inc., which make the case — at times, through movies and music — for conducting e-discovery clearly, completely and with expertise.

Intially, Procaps S.A., a pharmaceutical manufacturing and distribution company, and Patheon Inc., a fellow pharmaceutical company, entered into a collaboration agreement to produce and market a brand of softgels. When Patheon acquired Banner Pharmcaps Europe B.V., a former competitor of Procaps, Procaps filed suit in December 2012, alleging the acquisition made the collaboration agreement illegal under state and federal antitrust and competition laws, and sought more than $350 million in damages. After the filing, both companies “aggressively litigated the case.”

In his February 28, 2014 decision, the honorable Judge (and pop culture buff) Jonathan Goodman from the U.S. District Court for the Southern District of Florida referenced “Cool Hand Luke” (“[w]hat we’ve got here is [a] failure to communicate”) and “I Still Haven’t Found What I’m Looking For” by U2 when outlining inadequate e-discovery efforts by Procaps in response to Patheon’s Motion for a Forensic Analysis of Procaps’ Electronic Media.

For example, a formal litigation hold for the 2012 lawsuit was not implemented until the day before, February 27, 2014, when the court ordered one.

“Procaps’ United States lawyers never traveled to Colombia (where Procaps is based) to meet with Procaps’ information technology (“IT”) team (or other executives) to discuss how relevant or responsive electronically stored information (“ESI”) would be located, and it did not retain an ESI retrieval consultant to help Procaps implement a litigation hold or to search for relevant  ESI and documents.  It seems as though some critical Procaps executives and  employees conducted their own searches for ESI and documents without ever seeing Patheon’s document request or without receiving a list of search terms from its counsel.”

Patheon characterized the discovery process as  “shockingly deficient” and a “wholesale failure to preserve potentially relevant information or conduct a proper document collection, search or production process.”

The court agreed and reached the “indisputable conclusion that the ESI and document searches were inadequate” and ruled that a third-party forensic analysis vendor must be utilized. Also included in the order: the awarding of more than $24,000 in attorney’s fees.

Judge Goodman moved on to the ‘60s and ‘70s game show “You Don’t Say,” “Sorrow” by Pink Floyd and the “Sounds of Silence” by Simon and Garfunkel in his March 18, 2014 order. He could have also referenced the movie “Lost in Translation” to describe when Procaps created a paltry list of only eight proposed search terms and in English for their predominantly Spanish-speaking employees; a proposal that Patheon’s counsel described as “patently unreasonable.” Counsel also emphasized that “perhaps most  troubling is that it doesn’t appear these terms were discussed with Procaps’ employees  in order to determine what words and phrases they use.”

In the series of emails that were exchanged between counsel for Patheon and Procaps about these search terms, Procaps’ failure to communicate continued.

“Procaps lead counsel’s refusal to answer simple and direct questions, his silence on the specific issue when providing information on another related issue, and  his vague objection to Patheon’s purported efforts to demand additional  obligations all generated the (apparently incorrect) impression that Procaps’  counsel had not, and would not, obtain substantive input from his client on suggested search terms. Procaps’ communications were unhelpful and cryptic. They caused Patheon to file a motion to compel.”

Not surprisingly, this resulted in the awarding of more fees to Patheon, some of which Procaps’ lead attorney was personally responsible for paying.

If counsel for Procaps had issued a formal, timely legal hold, utilized an e-discovery vendor and clearly communicated with opposing counsel, perhaps Procaps would have been singing a different tune.

To review more engaging orders from Judge Goodman in this case, click here.


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