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Perius v. Abbott Laboratories

August 20, 2008


The opinion of the court was delivered by: Geraldine Soat Brown United States Magistrate Judge

Magistrate Judge Geraldine Soat Brown

District Judge David H. Coar


Before the court are several discovery motions: Plaintiff's Renewed Motion to Compel [dkt 62], Defendant's Motion to Quash or Modify Subpoena [dkt 70], and Defendant's Motion for Protective Order [dkt 72]. The parties have submitted extensive briefing, including supplemental information and authority.*fn1 Those motions raise a number of common questions, which are ruled upon as follows.


Perius's Third Amended Complaint

The Third Amended Complaint ("TAC") [dkt 109] alleges that plaintiff Gregory Perius worked for Kos Pharmaceuticals ("Kos") between May 1997 and November 17, 2006, with his last position being Regional Director of Commercial Operations for Kos's Central Region. (Id. ¶ 5.)*fn2 In December 2006, defendant Abbott Laboratories ("Abbott") acquired the majority of the shares of Kos and all of Kos's assets and liabilities. (Id. ¶ 8.)

During his employment by Kos, Perius was granted approximately 84,463 Kos stock options, some of which he exercised, and 857 stock grants. (Id. ¶ 15.) At the time of his termination, Perius had 72,963 stock options of which 51,562 were vested. (Id. ¶ 19.) Perius claims that he was unlawfully terminated and his stock options wrongfully converted and withheld. (Id. ¶ 2.) At the time of his termination, his stock options had a value in excess of $3 million. (Id. ¶ 19.)

In February 2005, Kos was notified that it was being investigated by the United States Department of Justice ("DOJ") regarding its sales and marketing practices. (Id. ¶ 28.) Perius received a subpoena from the DOJ in March 2005. (Id.) Perius alleges that he cooperated with Kos's in-house counsel and its retained counsel, Holland & Knight, and reported practices that he believed disclosed violations of state or federal law. (Id. ¶¶ 28-38.) He alleges that Kos executives, upon being informed that the DOJ intended to pursue criminal and civil remedies against Kos, terminated Perius in retaliation for his protected activity in order to create a "scapegoat" and to promote the impending merger with Abbott. (Id. ¶¶ 40-42.) Perius asserts a number of claims including retaliation, breach of contract, and defamation .*fn3

Holland & Knight's investigation, and Mr. Hogan's conversation with Ms. Potter John Hogan, a partner in the law firm of Holland & Knight, represented Kos in connection with the DOJ investigation beginning in 2005. (Def.'s Opp'n Mot., Ex.W, Aff. John M. Hogan ¶ 5.) Holland & Knight attorneys represented Kos in a number of matters before that time, and continue to represent Abbott, although not in this lawsuit. (Id. ¶4.) Mr. Hogan states that he and other Holland & Knight attorneys investigated allegations regarding Kos's marketing and sales practices, and interviewed dozens of Kos employees, including Perius. (Id. ¶ 6.) Before each interview, he advised the employee that the conversation was privileged and confidential, and that only Kos could waive the privilege. (Id. at ¶ 7.) He states:

In November 2006, Holland & Knight attorneys, including myself, were asked by Kos's in-house counsel to investigate certain circumstances regarding Mr. Perius's conduct of which the Company had recently become aware. As legal counsel for Kos, Holland & Knight attorneys, including myself, interviewed Mr. Perius and a number of other employees during the month of November 2006.

(Id. ¶ 12.)

On December 4, 2006, about two weeks after Perius's termination, Robin Potter, one of Perius's attorneys, spoke with Mr. Hogan. (Pl.'s Mot., Ex. E, Decl. Robin B. Potter ¶ 4.) According to Ms. Potter, Mr. Hogan did not tell her the reasons why Perius was terminated, but did tell her "the allegations and some of the statements made against and/or concerning Mr. Perius." (Potter Decl. ¶ 5.) In particular, Mr. Hogan told Ms. Potter that an employee, Daniel Niedbalski, said that Perius asked him to delete information relating to the government investigation from his (Mr. Niedbalski's) computer and to coach employees' statements regarding the internal investigation. (Id. ¶ 7.) Also according to Ms. Potter, Mr. Hogan said that Perius's region followed a "quality initiative program" that was outside the scope of company policy and was a factor in the government's investigation. (Id. ¶¶ 8-9.) Mr. Hogan gave Ms. Potter a Termination Action Form from Perius's personnel file. (Pl.'s Mot., Ex. B.) It was signed by Kevin Phox and Mark Glickman and identifies a "Termination Reason Code 302," which is "violation of company rules or policies." (Id.) The form also states, "Not eligible to exercise vested stock options." (Id.).

Mr. Hogan says that in his December 4, 2006 conversation with Ms. Potter, he "gave her general facts regarding the situation, but [he] did not disclose the exact substance of any privileged communications. Nor did [Mr. Hogan] discuss with her any aspect of the compliance investigation not directly related to Mr. Perius." (Hogan Aff. ¶ 14.)

The Discovery Motions

The District Judge has set discovery to close on October 30, 2008, with expert disclosures by Perius on that date and by Abbott on November 30, 2008. [Dkt 59.]

In Plaintiff's Renewed Motion to Compel, Perius seeks to compel further responses to twelve interrogatories and eight document requests. Hearings were held on the motion, with rulings on some of Perius's interrogatories. Abbott was required to state every reason relied upon for Perius's termination, including every policy Perius was found to have violated, and to state the persons who participated in the decision. [Dkt 90.] Abbott served supplemental interrogatory answers, which Perius states provide the basis for his Third Amended Complaint. (Pl.'s Mot. for Leave File Third Am. Compl. ¶ 2.) [Dkt 114.] According to Perius, Abbott contends that Perius was terminated because Kos believed he encouraged Daniel Niedbalski and other Kos employees to alter or partially delete documents related to the investigation. (TAC ¶ 48.)

In addition to Abbott's objection that most of the requests and interrogatories are overly broad, two central issues emerge from the motion: first, Abbott's assertion of attorney-client privilege with respect to communications with Mr. Hogan; and second, Perius' request that Abbott identify "each employee or person who was alleged to or investigated or determined by the company to have violated any law, any Kos policy or provision of the Kos Compliance Program and Code of Business Ethics and Conduct," on the ground that Perius is entitled to support his retaliation claim with evidence that similarly situated persons were treated differently. (Pl.'s Mot. at 11, 13.) Perius seeks all documents produced by any person during the course of any investigation of Kos, arguing that he is entitled to discover the evidence defendants obtained, reviewed, and relied on in terminating him and not terminating others who allegedly violated company rules. (Id. at 24.) Abbott states that it has already produced over 21,000 pages of documents, including Perius's personnel file and the personnel files of twenty other former Kos employees. (Def.'s Opp'n Mot. at 5.)

Abbott's Motion for a Protective Order argues that Perius's requests constitute an improper attempt to take discovery on the issue of whether Kos's marketing complied with government regulations. (Def.'s Mot. at 2.) Indeed, Perius seeks "any document reproduced to any outside agency, entity, or person in connection with any investigation of Kos," and all Kos and Abbott documents "relating to [Kos's and Abbott's] sales and marketing practices," arguing that their actions toward Perius "cannot be separated from the government's investigation or whether Kos and its employees complied with or violated the law...." (Pl.'s Mot. at 4, 25, 26.) Abbott also objects to Perius's notice of deposition for seventeen persons and subpoenas served on ten former Kos employees and Mr. Hogan. (Def's Mot., Exs. C and D.) In its reply brief, ...

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