Federal District Court Imposes Important Restraints on “Fishing Expeditions” in Qui Tam Litigation

Posted by Kristin Graham Koehler and Brian P. Morrissey

A federal district court opinion issued last week could prove highly useful to defendants seeking to avoid unduly burdensome discovery in qui tam litigation. In United States ex rel. King v. Solvay S.A., No. H-06-2662, 2013 WL 820498 (S.D. Tex. Mar. 5, 2013), the Court granted a motion for a protective order prohibiting qui tam relators from obtaining discovery of documents generated after they had left the defendant’s employment and after government investigations of their allegations had ceased.

In 2002, a pair of former Solvay sales representatives filed a qui tam complaint alleging, inter alia, that Solvay violated the FCA by engaging in off-label promotion of the pharmaceutical products Aceon®, Luvox®, and AndroGel®. The DOJ and Attorneys General of several states investigated these allegations over the following years, but all declined to intervene and the case was unsealed.

Moving forward with the litigation on their own, relators filed numerous iterations of their complaint and the District Court ultimately denied Solvay’s motion to dismiss their fifth amended version. When the case moved to discovery, relators became quite zealous, alleging “ongoing fraud” at the company and demanding that the company produce documents generated as late as 2012, even though relators had no personal knowledge of Solvay’s operations since 2002 and even though the last governmental subpoena arising from relators’ allegations was issued to Solvay in 2008. Solvay moved for a protective order, arguing that (1) relators’ complaint failed to allege fraud after 2007 with sufficient particularity to warrant discovery after that date; (2) Solvay had no document preservation obligations beyond the date of the last governmental subpoena issued in early 2008; and (3) Solvay was not obligated to preserve documents post-dating its acquisition by Abbott Products LLC in 2010.

The District Court agreed with Solvay on all counts and adopted the discovery and preservation cut-off dates Solvay proposed. The Court held that, although relators had made sufficiently particularized allegations of fraud up until the cut-off dates, their complaint merely contained a handful of “generalized” allegations that the fraud continued beyond those dates “to the present” and that this was too vague to allow discovery into that time period. Id. at 4 n.2 (refusing to allow “generalized claims of ongoing conduct to form the basis for a fishing expedition into conduct that post-dates the filing of the original complaint and relators’ personal knowledge by more than a decade”). Equally important to the Court’s holding was Solvay’s evidence demonstrating that relators’ sought-after discovery would have been exceedingly expensive. Id. at *1 (citing Solvay’s evidence that review of the requested documents alone could cost $2.3 million, exclusive of any quality control, privilege log, production, or processing costs). When the District Court weighed the combination of the relators’ vague allegations and the costly nature of the discovery they sought, it found the discovery unduly burdensome and thus prohibited under Federal Rule of Civil Procedure 26. See Id. at *4 (“A few generalized allegations that conduct continued ‘to the present’ in a 267-page complaint containing more than 786 paragraphs does not justify the burden and expense associated with unfettered discovery ‘to the present’ in a case in which discovery is already going to be incredibly expensive and time-consuming.”).

The Court’s decision establishes two helpful guideposts for defendants seeking to limit burdensome discovery. First, the Court’s ruling emphasizes the principle that discovery into defendant’s conduct during a particular time period should be supported by specific allegations directly related to that period. Second, the ruling demonstrates that defendants seeking to limit discovery into a particular time period should be prepared to muster clear evidence of the costs and burdens associated with that discovery. If a court is already weighing allegations of dubious specificity, proof that discovery into those allegations would be highly expensive could very well tip the balance in the defendant’s favor.