Seventh Circuit rescinds Herndon's 'deeply troubling' sanction in Pradaxa MDL; dissent says it was "superbly tailored"

By Bethany Krajelis | Feb 3, 2014

CHICAGO-- A split panel of a federal appeals court has rescinded a portion of U.S. District Judge David Herndon’s sanctions order in multidistrict litigation over a blood-thinning drug, saying he “imposed a non-monetary sanction that is deeply troubling.”

In an opinion handed down late last month, the majority of the Seventh Circuit Court of Appeals determined Herndon exceeded his authority when he changed the deposition location for 13 employees of the Boehringer Pharmaceutical defendants from Germany to the United States.

Herndon’s decision over the location of the depositions, which the parties previously agreed would take place in Amsterdam, was part of a Dec. 9 order that also imposed nearly $1 million in monetary sanctions against Boehringer for various discovery abuses.

Neither the majority of the Seventh Circuit panel – Judges Richard Posner and Diane Skyes-- nor dissenting Judge David Hamilton disagreed with Herndon’s “finding of bad faith or with the imposition of substantial monetary sanctions” against the pharmaceuticals giant.

In his dissenting opinion, however, Hamilton, backed up Herndon, saying the portion of the sanctions order that the majority rescinded “was a careful and temperate stroke by a veteran judge experienced in the challenges of multi-district litigation.”

Multidistrict litigation over Pradaxa was created about two years ago to handle claims over the drug’s warning label and allegations it caused serious and fatal bleeding. In August 2012, it was assigned to Herndon in southern Illinois’ federal court.

While the matter was in the discovery stage, where it currently remains, the plaintiffs asked Herndon to impose sanctions on Boehringer for repeatedly failing to comply with orders dealing with the preservation and production of certain documents, as well as putting litigation holds on other documents and the text messages of its employees.

Part of their request, according to the majority opinion, was that Herndon change the site of the depositions to a location convenient to the plaintiffs and to the defendants’ U.S. counsel because flying to Amsterdam and setting up shop there presented financial and timing issues.

In his Dec. 9 order, which marked the second set of sanctions in the litigation, Herndon accommodated the plaintiff’s request by moving the depositions to New York or some other place in the U.S. the parties could unanimously agree on. He also imposed nearly $1 million in monetary sanctions, an increase from his first order of $30,000.

Boehringer then petitioned the Seventh Circuit for a writ of mandamus seeking to quash the sanctions, a request a split panel granted when it came to the non-monetary sanction, but unanimously denied in regards to the monetary sanction.

In rescinding Herndon’s sanction over the deposition location, Posner wrote for the majority that the nonmonetary sanction basically ordered “Boehringer to be the court’s agent in violating federal legal limitations on compelled discovery in foreign countries, merely so that depositions could be shifted to a place inconvenient for the witnesses who are to be deposed.”

He explained that under Herndon's order, the 13 employees scheduled for depositions, 10 of whom are citizens of Germany,  would be “punished for the sins of their employer."

“And they are not even corporate bigwigs, who might feel humiliated by a travel order; so far as appears, they are merely research scientists,” Posner wrote. “They are not responsible for Boehringer’s contumacy, yet they are the targets of the sanction.”

Stressing that the 10 foreign employees couldn’t be forced to come to here for the depositions because they are beyond the subpoena power of U.S. courts, Posner added, “And suppose Boehringer complains to the German government, or for that matter the U.S. State Department, that the judge’s order is ultra vires and infringes German sovereignty. Do we need that?”

Posner noted that while discovery orders don’t fall into the category of orders that are challengeable through interlocutory appeal, the Supreme Court has “made it clear that mandamus provides a ‘safety valve’ enabling appellate review" of discovery orders “in the exceptional case.”

“This is one of those rare ‘safety valve’ cases for mandamus because of the risk of international complications arising from a U.S. judge’s having ordered foreigners to be brought to the United States to be deposed, when there is no legal authority for such an order,” Posner wrote, adding that alternative sanctions were available and the order also punishes innocents.

Hamilton, however, disagreed in his dissent, saying Boehringer “failed to show a clear and undisputable right to the writ,” which he added “is being misused here to obtain immediate appellate review of an interlocutory discovery sanction.”

“The defendant-petitioners even admit as much,” Hamilton wrote. “They have told us they filed for the writ because they were simply unwilling to annoy the district judge further by inviting an appealable contempt sanction.”

Hamilton wrote that Boehringer’s petition “should be rejected on procedural grounds alone” because allowing the use of mandamus as an alternative to simply refusing to comply could invite “far too many interlocutory appellate reviews of discovery orders.”

“With all due respect, this is a major league discovery dispute in highstakes international litigation” he wrote. "Refusing to comply with a discovery order you believe is unlawful is the respectful course and the orderly procedure.”

Herndon, Hamilton added, ordered the 13 employees to be disposed in the U.S. “as a well-aimed sanction for repeated, bad-faith discovery abuses” and noted that “no authority teaches that the sanction was unreasonable, let alone unauthorized.”

“In fact,” he adds, “when properly understood, the district court’s sanction was superbly tailored to solve the problem the court faced.”

Hamilton explained the portion of Herndon’s sanction order changing the deposition location was aimed at getting the attention of Boehringer’s executives and lawyers and done so in a way that didn’t affect the merits of the litigation.

“The lawyers would have to explain to their clients why they would need to have the deponents take the extra time to fly to New York instead of Amsterdam,” he wrote. “The correct explanation would have to be because those involved—counsel and clients together—had been failing to respect the court and its orders.”

In his dissent, Hamilton wrote that while Boehringer wasn’t happy with Herndon’s Dec. 9 order, it “may regret the issuance of the writ”  when the district judge revisits his sanctions later.

“Other sanctions that the district court should consider may have much more serious consequences for the litigation than the cost and inconvenience of some transatlantic flights," he wrote.

Court records show the plaintiffs are represented by several attorneys, including Roger Denton of St. Louis, Tor Hoerman and Steven D. Davis of Edwardsville, Mark Neimeyer of Missouri, Michael London of New York, Seth Katz of Colorado and Mikal Watts of Texas.

The defendants are represented by Dan Ball of St. Louis, Paul Schmidt of Washington D.C., Beth S. Rose of New Jersey, Eric E. Hudson of Tennessee and  Orlando Rodriquez Richmond Sr. of Mississippi.

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