Docket: T-989-13
Citation:
2016 FC 1131
Ottawa, Ontario, October 11, 2016
PRESENT: The Honourable Mr. Justice Phelan
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BETWEEN:
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TEVA CANADA
LIMITED
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Plaintiff
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and
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ELI LILLY
CANADA INC. and
ELI LILLY AND
COMPANY
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Defendants
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ORDER AND REASONS
I.
Nature of
Matter
[1]
There are two motions before the Court. The
first by Eli Lilly [Lilly] seeking an Order (a) requiring Teva Canada
Limited [Teva] to produce a specific individual as a representative for
continued examination for discovery; and (b) requiring answers to questions
refused.
The
second motion is by Teva seeking an Order requiring answers to questions
refused.
[2]
As a result of overlap and some general concerns
about the way in which discoveries have been conducted to date, applicable to
both parties, I am issuing a single set of Order and Reasons.
[3]
These motions relate to an action in which Teva
alleges that it suffered damages due to false or misleading statements made by
Lilly (or related companies) with respect to Novopharm and/or Novo-olanzapine.
II.
Motion to
Substitute Witness
[4]
In the first round of examinations for
discovery, Lilly put forward John Rudolph, General Counsel, and Teva’s witness
was Scott Sherwood, Associate Director Business Finance.
Lilly
seeks to require the substitution of Ms. Terry Creighton for Sherwood because
he was so ill informed/non-informed of matters relevant.
[5]
This motion is made pursuant to Rule 237(3):
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237 (3) The Court may, on the motion of a party entitled to examine a
person selected under subsection (1) or (2), order that some other person be
examined.
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237 (3) La Cour peut, sur requête d’une partie
ayant le droit d’interroger une personne désignée conformément aux
paragraphes (1) ou (2), ordonner qu’une autre personne soit interrogée à sa
place.
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[6]
A review of the transcript points to how ill
informed/non-informed Sherwood was.
[7]
In Liebmann v Canada (Minister of National
Defence) (1996), 110 FTR 284 at para 31, 62 ACWS (3d) 1088 (FCTD) [Liebmann],
the Court canvassed the considerations in determining substitution of the
discovery witness and set out some of the considerations on this type of
motion:
1. The
party being examined must put forward a proper and knowledgable [sic] witness
…;
2. The
witness must be able to give broad discovery, including as to supplemental questions
…;
3. The
onus is on the party examining to demonstrate objectively the unsuitability of
the witness in an application for a second discovery … and indeed the applicant
must show that the first witness is either incapable of giving evidence of his
own knowledge or by informing himself … or that the second witness is in a much
better position to give evidence …;
4. Convenience
may be a factor, for in some instances it is more desirable and practical to
have the individual involved examined, rather than to have a witness inform
herself or himself …;
5. The expense of a second witness
is a factor …;
6. The
circumstances of the case, including the responsiveness of the witness, the
degree to which the witness has taken pains to inform herself or himself and
the materiality of the evidence sought to be canvassed with the second witness
are also factors … and indeed the discovery of a second or subsequent witness
should be restricted where its purpose is predominantly that of a fishing
expedition … .
[8]
It is the examined party’s right prima facie
to put forward the representative it wishes. Lilly has not established that the
chosen witness is “incapable of giving evidence of his
own knowledge or by informing himself …” (Liebmann at para 31).
Lilly has also not established that anyone else (Creighton, for example) is in
a better position to give evidence for the corporation on all the matters in
this case, although she may be knowledgeable on specific aspects.
[9]
Lilly has established that Sherwood did little
or nothing to inform himself. Whether this was a tactic to avoid answering
questions directly, to offer undertakings and then to craft responses later is
an open issue as is the tactic of counsel answering over the objections of the
examining party. For the next round of discoveries, Sherwood is to properly
inform himself.
[10]
Lilly’s complaint about Teva’s witness would be
more sympathetic if its own representative had been properly prepared.
[11]
Neither party has covered themselves in glory on
this issue. The parties are reminded of their obligations under the Rules and
counsels’ obligation to assist in compliance.
[12]
The tactic of putting up a “straw witness” must stop and must stop immediately.
The Court will not permit such shenanigans. Failure to comply with both the spirit
and the letter of the Rules will have consequences.
[13]
On this issue of tactical discoveries, the
record is replete with examples of counsel answering questions despite the
objection of examining counsel. This is contrary to Rule 246(1). Counsel
answering over objection is not an answer to the question posed (Rule 246(2)).
[14]
The party examining is entitled to the witness’
answer not the answer counsel for the examined party wishes his/her witness
would give.
[15]
Like the matter of the ill-informed witness – and
perhaps because of being ill informed counsel answered – that conduct must
cease. There will be consequences for violation of this Rule which may be meted
out to counsel personally.
III.
Motions to
Compel Answers
[16]
The following paragraphs dispose of the questions
to be answered, organized by topics, and reflects the state of disclosure as of
the date of the argument on the motions.
A.
Lilly Category 1: Questions regarding Teva’s
Claim
[17]
This category addresses questions regarding
Teva's claim and Lilly's ability to know the case that it has to meet. Certain
questions (e.g., questions 168, 276, 404, 2053-2054, and 2055) have already
been answered, or counsel has undertaken to provide answers and nothing need be
ordered yet.
[18]
Lilly seeks information from Teva regarding any
legal opinions of the validity of Canadian Patent No. 2,041,113 and the
probability of success in that litigation. This information is prima facie
privileged. However, as held in Lapointe v Canada (Minister of Fisheries and
Oceans), [1987] 1 FC 445 (TD), parties may waive privilege through their
pleadings, and this is what Teva has done by claiming that the statements made
by Lilly were baseless. The existence and content of any legal opinions are
relevant to whether the allegations made by Lilly were indeed “baseless”; therefore, questions 195 and 196 must be
answered.
[19]
Lilly also seeks information regarding Teva's
understanding of whether a product can be removed from the Canadian market by
way of an injunction, as well as Teva's understanding of what use Lilly made of
the “Novopharm” trademark as contemplated by the
Trade-marks Act, RSC 1985, c T-13. These are legal questions that do not
seek to elicit facts, and are therefore improper questions for discovery.
Questions 212, 430-432, and 1722-1724 should not be answered.
B.
Lilly Category 2: Questions regarding
Novo-levofloxacin
[20]
This category addresses questions with respect
to Novo-levofloxacin, a Teva product that was put onto the market and
subsequently removed. Lilly seeks a broad range of information including dates,
notifications sent to provincial formularies, steps taken to remove the product
from the market, responses from provincial formularies, formulary listings, and
feedback from provincial formularies and customers.
[21]
The inquiries in this area are irrelevant to the
issues pleaded. Therefore, the questions in this category should not be
answered.
C.
Lilly Category 3: Questions regarding Teva’s
Dealings with Formularies
[22]
This category addresses Teva's interactions with
provincial formularies and Lilly's requests for unredacted copies of documents.
Responsive answers have already been provided to certain questions (e.g.,
questions 576-577 and 1700-1702), and it is not open to Lilly to seek broader
disclosure.
[23]
Teva's interactions with the provincial formularies
concerning Lilly or Lilly products are not relevant to the issues pleaded, nor
are any alleged uses that Teva has made of the Lilly trademark; therefore,
questions 462, 463-468, and 1729-1731 should not be answered.
[24]
However, the existence of any emails sent to BC
similar to those at productions 246 and 252 are relevant to issues raised in
the pleadings (such as resulting damage); therefore, questions 1972-1974 must
be answered.
[25]
With respect to the redactions in Teva
documents, it is not the case that a party receiving relevant documents is
always entitled to the entire, unredacted documents. In Eli Lilly Canada Inc
v Sandoz Canada Incorporated, 2009 FC 345 at para 14, the Court indicated
that certain principles should be considered when determining whether
redactions of portions of text in a disclosed document should be allowed: “The redacted portion should be clearly irrelevant to the
issues in dispute and would clearly not assist in properly understanding those
parts of the documents which are relevant. Redactions should also only be
resorted to where important confidentiality concerns exist.”
[26]
In the present case, the redactions cover
unrelated litigation and an unrelated branded product. Teva has already agreed
to provide the redacted information on dates. The remaining redactions cover
irrelevant information; therefore, questions 541 and 542 need not be answered.
[27]
Any legal opinions provided by Teva to BC would
be relevant to determining the reason that the listing for Novo-olanzapine was
delayed. Therefore, questions 1696-1698 must be answered.
D.
Lilly Category 4: Questions regarding Teva’s
Ability to Supply
[28]
This category addresses questions concerning
Teva's ability to supply the market. This topic is directly relevant to the
issues pleaded. However, Teva has already provided answers to some of the
questions asked (e.g., questions 484, 560-561, 1009-1010, and 1672-1674).
Furthermore, some of the information sought by Lilly has already been provided.
Teva has already supplied the information relevant under questions 1021-1022
(that is, the volume of Novo-olanzapine from the exhibit batches available for
sale), and the exhibit batches themselves are not relevant. Teva has also
already supplied the relevant information under questions 1599-1605 (proposed delivery
dates).
[29]
Lilly requests that Teva inquire with its
supplier Dr. Reddy's as to the supply of active pharmaceutical ingredient [API]
that Dr. Reddy's had available at the relevant time period. Dr. Reddy's is a
third party, and as such the appropriate method of obtaining disclosure would
be to pursue a motion under Rules 233 and/or 238. Therefore, questions 483 and
515-517 need not be answered.
[30]
Whether there were any supply shortages would be
relevant to an assessment of damages. Therefore, question 600 should be
answered.
[31]
In addition, any concerns by healthcare
providers regarding future unavailability of Novo-olanzapine would be relevant
to the issues pleaded. As Teva is alleging that Lilly attempted to raise these
concerns through allegedly false and misleading statements, then the proof that
such concerns were indeed raised would be germane. As such, question 608 must
be answered.
[32]
Indications of changes in API purchasing around
the relevant time would be part of a train of inquiry leading to further relevant
information, and as such questions 1612-1615 must be answered.
[33]
Some of the information sought by Lilly in this
category is irrelevant, including information on the amount of API available
prior to the time period in issue, the dates of manufacture of batches of
Novo-olanzapine tablets, and batch records. Therefore, questions 1647-1648,
1655-1664, and 1665 need not be answered. Lilly already has the relevant
information in its possession, such as the amount of Novo-olanzapine tablets
manufactured in the relevant time period and Teva's manufacturing capacity.
E.
Lilly Category 5: Questions regarding Teva’s Use
of Lilly Trademarks
[34]
This category addresses questions concerning
Teva’s use of Lilly trademarks. Any alleged Teva use of the Lilly trademark is
irrelevant to the issues in this case, which concern Lilly’s use of the Teva
trademark. Furthermore, some of the questions in this category seek to elicit
legal interpretations. Therefore, the questions in this category should not be
answered.
F.
Lilly Category 6: Questions regarding Trade
Spend
[35]
This category addresses questions concerning
trade spend. Teva has indicated that it is not pursuing claims with respect to
lost sales of other products or increased trade spend for customers, and
therefore questions 861 and 1439-1441 do not need to be answered.
[36]
In addition, Teva has already provided
responsive answers to certain questions (e.g., questions 1223-1230, 1237, and
1548-1549), and it is not open to Lilly to attempt to broaden the scope of the
information originally sought in the question.
[37]
With respect to Lilly's stated need for the
algorithm used to reconcile indirect and direct sales in order to remove
duplicate records, Teva has advised that the algorithm it uses has already
removed the duplicate records. Therefore, Lilly already has the relevant
information with respect to sales, and it is not necessary to answer questions
1260-1262.
[38]
It is inappropriate to request speculative
answers (that is, what Teva could have done) rather than facts in an
examination for discovery. Therefore, question 687 should not be answered.
[39]
Teva's answer with respect to whether there is
anyone still at Teva today who was in the group responsible for profitability
analysis in 2007 is not responsive to the question asked. Teva must answer
questions 815-817.
[40]
Lilly requests that Teva produce the trade spend
sales data for one year past the relevant time period. This is an onerous and
overly burdensome task, and the data has minimal relevance to the issues
pleaded. Therefore, it would not be consistent with the principles in
Rule 3 to require the production of this data, and questions 1270-1276
should not be answered.
[41]
However, if Teva does claim any losses past
2008, then the relevance of this data will outweigh the burden caused by its
production and it will have to be produced.
[42]
Lilly seeks information with respect to the
identities of authors of documents and the sources of data. As noted in
Category 7 below, these documents were created in the usual and ordinary course
of business with data drawn from systems such as Oracle and Data Analyzer.
Therefore, questions 1334-1337 and 1394-1395 should not be answered.
[43]
Regarding documents produced by Teva that
describe projections for sales in 2007, the source of this information is
directly relevant to the events at issue (and, in particular, to the damages
allegedly suffered by Teva). Lilly is entitled to know the basis of such
projections, and questions 1397-1403 must therefore be answered.
[44]
With respect to the documents that were produced
and subsequently withdrawn, Lilly requests that Teva provide information as to
how these documents were determined to be unreliable. This may assist Lilly in
determining the trade spend specific to Novo-olanzapine. This is essentially a
narrative question, seeking an explanation for the unreliability of previously
produced documents, and it has not been answered responsively on the record.
Therefore, questions 1541-1544 must be answered.
G.
Lilly Category 7: Questions regarding Authors of
Documents
[45]
This category of questions addresses inquiries
as to the authors of documents produced by Teva. Many of these documents were
created in the usual and ordinary course of business; therefore, as indicated
in Canada (Minister of Citizenship and Immigration) v Skomatchuk, 2006 FC
730 at para 13, they are exceptions to the hearsay rule and admissible under s.
30(1) of the Canada Evidence Act, RSC 1985, c C-5. As such, and
considering that Teva has already produced or will be producing the names of
the departments that authored these documents or that the data was simply drawn
from programs such as Oracle or Data Analyzer, it would be unduly onerous and
burdensome to require Teva to identify the individual authors of these
documents. Therefore, questions 974-975, 1035-1040, 1054-1055, 1072, 1128-1130,
1133-1134, 1236, 1277-1279, 1285-1286, 1328-1329, 1353-1354, 1380-1386, and
1448-1452 need not be answered.
[46]
However, it is unclear that the document at
production 101 (being a summary of the “Open Capacity”
for olanzapine tablets) was created in the usual and ordinary course of
business, and the information is directly relevant to the issues pleaded.
Therefore, Teva should make best efforts to respond to questions 994-995.
H.
Lilly Category 8: Miscellaneous Questions
[47]
This category concerns the balance of Lilly’s questions.
Firstly, Lilly seeks unredacted versions of financial statements from 2007 to
2011. As noted above, it is not the case that a party is always entitled to the
entire, unredacted version of a relevant document. In the current
circumstances, it is not at all clear that financial information with respect
to unrelated legal proceedings is relevant to the issues pleaded. Therefore,
questions 941-945 need not be answered.
[48]
Lilly also seeks a legible copy of a bill of
lading produced by Teva. The relevant information has already been produced in
the purchase order and invoice, and the bill of lading has a very low degree of
relevance. Therefore, questions 1124-1125 need not be answered.
[49]
Furthermore, Lilly seeks to know whether Terry Creighton
is a registered lobbyist and whether her job duties require her to lobby
provincial governments. This is not a legal question, and it may be relevant to
assessing Teva's efforts to list Novo-olanzapine with the provincial
formularies. Therefore, questions 1691-1695 must be answered.
[50]
Finally, Lilly seeks information as to the
source of data for the public market versus the private market for olanzapine
in Ontario. The source of this information may be relevant to assessing Teva's
damages; therefore, questions 1821-1823 must be answered.
I.
Teva Category 1: Further Relevant Documents
[51]
This category deals with questions relevant for
determining the existence of further relevant documents. The items remaining in
this category consist of a request for Lilly to advise whether it sent out a
litigation hold letter with respect to the present litigation, and a request
for Lilly to inquire and advise whether Messrs. Ricks, McCool, and/or Stovall
have further documents regarding the negotiations preceding the August 2007
Product Listing Agreement [PLA] with BC.
[52]
These inquiries are relevant to the issues in
the proceeding. In particular, any documents concerning negotiations leading up
to the execution of the PLA are relevant to assessing the circumstances
surrounding any allegedly false and misleading statements. Furthermore, in Control
Data Canada, Ltd v Senstar Corp (1987), 10 FTR 153, 13 CPR (3d) 546 (FCTD),
the Court indicated that the representative of a company being examined for
discovery is not excused from attempting to obtain information from former
employees simply because they no longer work for the company. As such, the
remaining questions in this category must be answered.
J.
Teva Category 2: Discussions with the BC
Formulary
[53]
This category addresses discussions that Lilly
had with the BC formulary. Several of the questions under this category have
been answered (e.g., questions 70-72 and 82-83), and it is not open to Teva to
substitute broader or alternative questions.
[54]
With respect to questions regarding Lilly’s
understanding of the litigation referred to in Article 5 of the PLA, this
question is not directed to a legal opinion. Rather, the question is directed
to “Lilly’s understanding” of the meaning of
that term. In Kun Shoulder Rest Inc v Joseph Kun Violin & Bow Maker Inc,
[1997] FCJ No 1386, 76 CPR (3d) 488 at 494 (FCTD), the Court indicated that
while it is improper to ask a witness to speculate or interpret a document, it
is appropriate to ask “what the company understands is
meant by certain wording”. The company may or may not have such an
understanding. If the company in question does not have such an understanding,
it would be inappropriate to provide a speculative answer.
[55]
Questions with respect to Lilly’s discussions
with the BC formulary are relevant to understanding the context of any
allegedly false or misleading statements. As noted in E Mishan & Sons,
Inc v Supertek Canada Inc, 2016 FC 986 at para 11 [Mishan], the
Court must inquire into the nature and circumstances of allegedly false and
misleading statements, as well as any subsequent conduct by the party making
such statements. Requests made by the province for indemnification, and
requests by Lilly that the PLA be exclusive, are therefore relevant for
assessing the context surrounding any allegedly false or misleading statements.
[56]
The answer provided by Lilly with respect to
Lilly’s understanding of why Mr. Malikail was writing to BC in the period of
time represented by the September 27 letter is not responsive to the question
asked. Lilly states that provincial formularies are generally interested in
such information, but this does not reflect whether this was Lilly’s
understanding in these particular circumstances. It may be that this was
Lilly’s understanding, but Teva is entitled to a more responsive answer.
[57]
Therefore, questions 66-68, 88, 89-90, and
122-125 must be answered.
K.
Teva Category 3: Requests by Regulators
[58]
This category addresses requests made to Lilly
by provincial regulators regarding the status of litigation. This is directly
relevant to issues raised in Lilly’s Statement of Defence, wherein Lilly claims
that any statements made to provincial regulators were made in response to the
requests of regulators. This question is not overbroad or unduly onerous,
because it is explicitly limited to those requests referred to in Lilly’s
Statement of Defence and would therefore be limited to those requests relating
to the relevant litigation in the relevant time period. Therefore, question 128
must be answered.
L.
Teva Category 4: Lilly’s Strategy
[59]
The issue dealt with in this category is Lilly’s
strategy for coping with the loss of exclusivity for its olanzapine products,
which is relevant to what Lilly planned to say to customers of Teva. As
previously noted, Mishan at para 11 indicates that the Court should
inquire into the relevant circumstances surrounding allegedly false and
misleading statements. Therefore, questions 152 and 153 must be answered.
M.
Teva Category 5: Prior Drafts of the Agreement
[60]
This category addresses prior drafts of an
agreement produced by Lilly. Such drafts may speak to the circumstances
surrounding any allegedly false and misleading statements; in other words,
while prior drafts may not have been executed, they may indicate what was
occurring in the discussions between Lilly and the province. Therefore,
question 168 must be answered.
N.
Teva Category 6: Discussions between Lilly and
the Provinces
[61]
The issues addressed in this category are
whether Lilly and BC engaged in discussions between Lilly’s submission of its
response to the Request for Proposal and the execution of the PLA and whether
there were discussions between Lilly and the provinces of Manitoba and
Saskatchewan that included reference to Novopharm. Such discussions are
directly relevant to the issues pleaded.
[62]
With respect to the discussions between Lilly
and Manitoba and Saskatchewan, it is not a sufficient answer to say that the
discussions “would have been” about a topic
other than Novopharm (namely, Zyprexa). This response is purely speculative.
Lilly must respond to the question asked by making inquiries of the relevant
individuals as to their recollection of these discussions.
[63]
Therefore, questions 177-180, 227-228, and 244
must be answered.
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