T-2408-91
B E T W E E N:
MERCK & CO. INC. and
MERCK FROSST CANADA INC.
Plaintiffs
- and -
APOTEX INC.
Defendant
REASONS FOR ORDER
(Quashing Subpoenas)
MACKAY, J.:
These reasons concern an Order allowing an application by the plaintiffs (collectively "Merck"), and setting aside two Subpoenas Duces Tecum earlier issued at the request of the defendant Apotex Inc. and Dr. Bernard Sherman, Chairman and Chief Executive Officer of Apotex Inc., in the course of contempt proceedings. When the subpoenas issued, by the Court Registry at the request of counsel, Apotex and Dr. Sherman were before the Court responding to an Order dated April 27th, 1995 that they show cause why they should not be found in contempt of this Court for activities following delivery of my Reasons for Judgment in this matter on December 14th, 1994, and the formal Judgment of this Court dated December 22nd, 1994. The show cause proceedings are still continuing.
At the conclusion of the second week of hearings under the show cause order a Writ of Subpoena Duces Tecum, dated September 19th, 1997, addressed to Mr. Robert Quesnel, was served upon him, with conduct money, directing his attendance on October 20th, 1997 and production before the Court of documents identified in the subpoena. Subsequently, a second subpoena, dated September 24th, 1997, issued and addressed to Mr. Quesnel, was forwarded to him through counsel for the Plaintiffs. It required his attendance on October 23rd and production before the Court of documents identified in the subpoena.
It appears that the second subpoena was intended by Apotex and Dr. Sherman to replace the first, and when this matter was heard on October 21st, both subpoenas were dealt with on that basis. The Order now issued, for the sake of clarity, is that both subpoenas be quashed or set aside. The second subpoena orders production of an additional class of documents but otherwise seeks documents described in similar manner as in the first subpoena, except that in the second, in four instances the time period for which the documents are sought is extended. While these reasons deal specifically with the second subpoena and its terms, in my view they are equally applicable to the first subpoena.
The second subpoena directs Mr. Quesnel to produce documents described as follows (the 11th paragraph here describes the additional class of documents not included in the first subpoena):
| 1. All records in writing, including handwritten, typewritten or electronically printed, memoranda, facsimile messages, letters, hard copies of electronic mail messages, authored or received by Mr. Robert Quesnel from any employee of Merck Frosst Canada Inc. or non-employee, relating to orders, sales, shipments, or distribution of Apo-enalapril tablets for the period December 14, 1994 to April 20, 1995, inclusive |
| 2. All records in writing, including handwritten, typewritten or electronically printed, memoranda, facsimile messages, letters, hard copies of electronic mail messages, whether such records are originals or duplicate copies, prepared or received by Mr. Robert Quesnel, or any employee of Merck Frosst Canada Inc., whether or not such communication was sent, addressed to any distributor, wholesaler, pharmacist or other vendor of pharmaceutical products, or any other person, relating to: |
| (a) orders for and/or sales of Apo-enalapril tablets on December 14, 15 and 16, 1994 and January 9, 1995; and |
| (b) the transfer and/or distribution of Apo-enalapril tablets from such distributors, wholesalers, pharmacist or other vendors of pharmaceutical products for the period January 9, 1995 to April 20, 1995, inclusive. |
| 3. All written records including facsimile messages, letters and internal memoranda of communications either sent or received by Merck & Co. Inc. and/or Merck Frosst Canada Inc. relating to the listing of Apo-enalapril on any and all provincial formularies for the period July 16, 1993 to June 1, 1995, inclusive. |
| 4. All written records including facsimile messages, transcripts of telephone calls, letters and internal memoranda of communications between Merck & Co. Inc. and/or Merck Frosst Canada Inc. and any federal or provincial ministry or department relating to Apo-enalapril for the period July 16, 1993 to June 1, 1995, inclusive. |
| 5. All written records including charts, graphs, letters and internal memoranda, whether stored in electronic or printed form, relating to any compilation or analysis of orders, sales or prescriptions for all brands of enalapril tablets for the period January 1, 1994 to June 1, 1995, inclusive. |
| 6. All written records including charts, graphs, letters and internal memoranda, whether stored in electronic or printed form, of any and all market research and analysis relating to the distribution and sale of all brands of enalapril tablets for the period January 1, 1994 to June 1, 1995, inclusive. |
| 7. All written records including charts, graphs, letters and internal memoranda, whether stored in electronic or printed form, of any and all investigations and /or analysis of the discounting and/or rebate practices in the Canadian pharmaceutical industry, including any and all records relating to Merck Frosst Canada Inc.'s discounting and/or rebate policies and practices, for the period January 1, 1994 and June 1, 1995, inclusive. |
| 8. All sales records and invoices, whether stored in electronic or printed form, which represent the sale, transfer or distribution of the Vasotec brand of enalapril for the years 1994 and 1995. |
| 9. All written records relating to the shipment of distribution of the Vasotec brand of enalapril, whether stored in electronic or printed form, entered, prepared or received on December 14, 15, and 16, 1994. |
| 10. The long distance telephone records and bills for such long distance telephone calls placed by personnel of Merck Frosst Canada Inc. to any Canadian wholesaler, distributor, pharmacist or other vendor of pharmaceutical products, and any federal or provincial ministry or department or any representative thereof for the period December 14, 1994 to January 9, 1995, inclusive. |
| 11. All records in writing, including handwritten, typewritten or electronically printed, memoranda, facsimile messages, letter, hard copies of electronic mail messages prepared or received by any employee of Merck Frosst Canada Inc. inclusive which relate to the Reasons for Judgment of Mr. Justice MacKay dated December 14, 1994, for the period December 14, 1994 to April 20, 1995, inclusive. |
The subpoena is directed to and requires production of these various classes of documents by "Robert Quesnel, Counsel, 16711 Trans-Canada Highway Exit 32 Kirkland, Québec, H9H 3C1". By his affidavit Mr. Quesnel, the person intended and subject to the subpoena, affirms that he is a member of the Bar of Québec and is Counsel and Director of Legal Affairs of the plaintiff Merck Frosst Canada Inc. ("Merck Frosst"), a position he has held since he joined the corporation in June 1995. He is not otherwise an officer of the company, nor is he a director, and he has no responsibilities in management except for providing legal advice to the officers and directors of the corporation, and instructing outside legal counsel on all matters involving Merck Frosst in respect of which outside counsel has been retained. He is the person to whom counsel appearing for Merck Frosst in these proceedings report and from whom they obtain instructions. Mr. Quesnel has no position of any responsibility in relation to the plaintiff Merck & Co. ("Merck"), a company incorporated in the United States, the parent of the plaintiff Merck Frosst. Although he communicates with Merck's corporate legal and patent counsel on matters of mutual interest to the two corporations, as I assume counsel acting for the plaintiffs in these proceedings also does, he has no position at and is not an employee of Merck. Merck has an interest in these proceedings as owner of the patent upon which the action for infringement was based, which led to the judgment which it is alleged Apotex and Dr. Sherman breached by their actions. Finally, with reference to Mr. Quesnel's position, his affidavit confirms that he assumed the responsibilities of, and succeeded to his company files concerning this matter which were formerly maintained by, his predecessor in the office he now holds.
By an additional affidavit filed in support of the plaintiffs' application, Alfonso Fiacco, National Logistics Manager of Merck Frosst, responsible for maintenance of the company's business records concerning sales, shipping and packaging, discusses the company's operations and records so far as these are relevant to the documents directed to be produced by the subpoena. From his own knowledge, and on the basis of information derived from others responsible at Merck Frosst, which he believes, some of the factors of significance in relation to the documents, directed by subpoena to be produced, are these:
| - the company's principal manufacturing and research facilities are located at Kirkland, Québec and there are three depots in Vancouver, Calgary and Mississauga (with a fourth in Winnipeg until 1996), and ten satellite offices across Canada; |
| - the company manufactures, and sells and distributes to some 14,000 customers, approximately 250 pharmaceutical products; |
| - the company has some 1,300 employees, mainly at Kirkland but also located across Canada, including 250 sales representatives based across the country who are responsible for providing information and promoting sales primarily to physicians and to a lesser extent to pharmacists, and among sales representatives there is substantial turnover in employees; |
| - sales of products by the company result in invoices numbering some 1,200 per day, or 300,000 or more per annum, which include products ordered by individual customers and these are not limited to any one particular product such as Vasotec, Marck's enalapril product; invoices including that product, it is suggested, would compile a stack of documents some 4 feet high for a year's sales; shipping documents relating to these sales would number more than the invoices and these refer only to invoices by number and not to products so that checking of each invoice would be required to produce the entire record of shipping documents concerning sales of Vasotec; |
| - the telephone records requested by the subpoena would be virtually impossible to produce for the 1,200 telephone extensions at Kirkland, Québec offices and additional lines at depots and satellite offices throughout Canada, aside from telephones used by sales representatives carrying out their duties, in part because any telephone record available would not identify customers or other persons called but would only include the telephone numbers to which calls are addressed. |
The Position of the Parties
The plaintiffs urge that the subpoenas be quashed on several grounds. It is urged that insofar as they direct production of documents within the possession or control of Mr. Quesnel, as Counsel and Director of Legal Affairs of Merck Frosst, the documents are subject to solicitor-client privilege and litigation privilege which has not been waived by the client, Merck Frosst. So far as the documents are not within Mr. Quesnel's control, it is urged he cannot be compelled to produce them. The description of documents, and their sources, are said to be overly broad, without sufficient particularity, and without reasonable relevance to the issues before the Court. Even if they could be produced, to do so would create an oppressive burden on Merck Frosst, its staff and its business operations and the documents then produced would reveal confidential commercial information and trade secrets relating to marketing, clientele, government relations and lobbying efforts in relation to Vasotec and other Merck Frosst products, disclosure of which would be prejudicial to the company. Finally, it is urged that all documents subject to disclosure requirements, that are relevant to these proceedings, not privileged and otherwise producible, have now been produced.
The plaintiffs also say that the subpoenas are issued for improper purposes, that they are an abuse of the Court's process and should be struck down. Compliance with them is impossible in terms of the return dates. Even if the times be extended, compliance, so far as it would be possible, would result in delay of several weeks or months in these proceedings, and it would be unreasonable and oppressive for Merck Frosst.
For Apotex and Dr. Sherman, it is urged that the application should be dismissed. Some of the plaintiffs' grounds set out in their notice of motion are read as implying that the plaintiffs have documents within the descriptions set out in the subpoena, which counsel for Apotex and Dr. Sherman infer are relevant, since, it is urged, the matter of relevance cannot finally be determined except by the Court upon examination of the documents after they have been produced. Indeed in view of the continuing responsibility of the plaintiffs to disclose documents which may be relevant and of any possible use to Apotex and Dr. Sherman in making full answer and defence in these quasi-criminal contempt proceedings, the test of what may be relevant is ultimately best left to them to determine since disclosure of all documents not clearly irrelevant is the test, a test not met at this stage when there is no obligation on them to disclose their defence and the plaintiffs' case has not yet been completed.
Analysis
In my opinion, the obligation of the plaintiffs to disclose documents that are relevant and that may assist the defence of Apotex and Dr. Sherman does not support the subpoenas here issued, with broad descriptions of documents sought. Even in criminal proceedings the obligation to disclose is not generally perceived to extend beyond the prosecutor's office, i.e. the office and files of counsel representing the Crown in prosecution. It is the information in possession of Crown counsel, relevant to the guilt or innocence of an accused, that is subject to disclosure in criminal proceedings. The obligation does not require disclosure of documents maintained in other crown departments or agencies. While there may be circumstances where other information is subject to a subpoena, only those documents known to the prosecutor and relevant to the issues arising in the prosecution are subject to disclosure. The law applicable to subpoenas and their use may direct production of particular relevant documents in other circumstances.
Neither a subpoena, nor the principle of disclosure may require production of irrelevant documents. It is true that relevance of a particular document may only be determined upon it being examined after it is produced. Yet in my opinion where a subpoena duces tecum describes documents in very general terms, as in this case, it is not reasonable to presume for purposes of production to the Court that all documents in the general class so described are relevant to the issues before the Court.
In these proceedings those issues are defined primarily by the terms of the Order of Pinard J. dated April 27, 1995, and matters arising from those terms. It is information concerning those issues that the principle of disclosure requires to be produced to permit full answer and defence by Apotex and Dr. Sherman. Those issues primarily concern whether the alleged contemners had knowledge of prohibitions included in the Reasons for Judgment and the Judgment, whether they acted in contravention of the prohibitions on December 14, 15, 16, 1994 and from January 9 to April 20, 1995, and, if both those issues are determined in the affirmative, whether there are factors that should be considered in determining any penalty to be imposed.
For these issues I am not persuaded that all the information described in the several classes of documents included in the subpoena can be considered relevant in these proceedings, for example, (in class 3) documents concerning Merck's lobbying about listing of Apo-Enalapril, Apotex's product, in provincial formularies, or anything else concerning Apo-Enalapril in messages to government departments (in class 4). No doubt decisions of provincial and federal officials in listing or licensing drug products may have a significant impact on the market place, but I am not persuaded that there is any result in the market directly traceable to the lobbying or other communications by any party directed to government administrators. Moreover, lobbying efforts by Merck in regard to Apo-Enalapril can hardly be considered relevant to activities of Apotex and Dr. Sherman in the limited periods in issue under the Order of Pinard J. That same assessment, in my opinion, is apt in considering the general classes of documents for the extended periods set out in classes 5, 6, 7, and 8, that is from January 1, 1994 to June 1, 1995, or in class 8 for the years 1994 and 1995, and to the general classes 8 and 9 for information, over extended periods, of sales of Merck's product, Vasotec, and to the telephone records in class 9 concerning calls by personnel of Merck Frosst to any wholesaler, distributor etc. and federal or provincial ministry or department. Class 7 describes records concerning discounting or rebate practices in the Canadian pharmaceutical ministry, a general class that in my opinion is irrelevant to be issues before the Court; those issues concern the actions of Apotex not of other companies. In my opinion those general classes of documents cannot be considered relevant to the issues arising under the show cause order.
For Apotex and Dr. Sherman it is argued that relevance is determinable not merely by the terms of the show cause order and matters necessarily arising from that, but also by the nature of evidence in introduced by the plaintiffs. I am not persuaded that evidence relating to the issues before the Court is a determining factor of relevance. For example, in my view detailed evidence of sales of Vasotec, Merck's enalapril product, are not relevant to the marketing of the Apotex product Apo-enalapril at the times here in issue. While that evidence may be relevant to the market for all enalapril products, I am not persuaded it is relevant to the matters at issue under the show cause order.
There is a further factor relating to relevance raised by the subpoena. That is the sources from which information is sought. Production is here argued in terms of the principle of disclosure, to assure opportunity to make full answer and defence. As noted earlier that principle does not ordinarily extend to information beyond the possession or control of the prosecution's office. At most, in the circumstances of this case, by analogy that office does not extend beyond the offices of counsel appearing for Merck in these proceedings and of instructing counsel employed by Merck, Mr. Quesnel. It clearly does not extend to the offices of all employees of Merck Frosst, or the offices of Merck, which are abroad and beyond the reach of this Court's subpoena in any event. Unless information based in those offices is brought to the attention of counsel involved in instructing or acting in prosecution of the show cause proceedings, the principle of disclosure has no application. Absent evidence the documents are found within the offices of counsel, they simply are irrelevant to the matters here at issue on the basis that they have not been considered by counsel in relation to these proceedings. If counsel has not considered a document for these proceedings it can hardly be relevant, for until counsel does consider a document there is no possibility of the document being introduced to the prejudice of the alleged contemners.
I turn to the submissions of Merck that all the documents maintained in the offices or under control of Mr. Quesnel, as Counsel and Director of Legal Affairs, are, because of his position as a member of the Bar and as in-house counsel, subject to solicitor/client privilege and those directly related to these proceedings are subject to that aspect of the privilege applicable because of use in preparation of this litigation, i.e., the litigation privilege. As earlier noted, it is urged the privilege is that of the client, Merck Frosst, and it has not been waived in this case. Those principles are readily applicable in ordinary civil proceedings.
In the proceedings now underway it is clearly established by now that, by reason of the nature of penalties assessable if contempt should be found, the protections generally available in criminal proceedings are here applicable to the rights of Dr. Sherman and, it may be, of Apotex. The principal production is by application of the principle of disclosure to ensure that the alleged contemners have full opportunity to answer and defend against the allegations which they are directed to answer. That applies even to documents which may otherwise be subject to solicitor/client privilege. In this case that principle has already been applied by counsel acting for Merck in this Court, in relation to the documents within their possession and control. It has also been applied by extension in relation to the file maintained by an expert witness who presented evidence in these proceedings for the plaintiffs.
In criminal proceedings the documents from the investigation leading to prosecution which are available to the prosecutor are subject to disclosure. In this case of civil contempt with private prosecution, it is safe to say that much of the investigation leading to the show cause order would have been arranged through the office of Counsel and Director of Legal Affairs of Merck Frosst and by that person would have been conveyed to counsel appearing for Merck in this proceeding. In these circumstances, for purposes of applying the principle of disclosure it is appropriate, in my view, to consider the office of in-house Counsel for Merck Frosst and the office of counsel appearing in these proceedings as comparable to the office of prosecution in ordinary criminal proceedings.
Out of an abundance of caution I direct that the same disclosure principles be applied in the case of relevant documents now in the possession of Mr. Quesnel, as instructing counsel on behalf of Merck Frosst, as has generally been applied by counsel for Merck in these proceedings in relation to documents in their control. In the application of that principle the standard established by Mr. Justice Sopinka for the Supreme Court of Canada in R. v. Stinchcombe, [1991] 3 S.C.R. 326, (1991) 68 C.C.C. (3d), at pp 8-12; and in R. v. Egger, (1993), 82 C.C.C. (3d) 193, at pp 203-204 (S.C.C.). That standard should be applied by counsel in these proceedings working with Mr. Quesnel in regard to those documents known to Mr. Quesnel, or his predecessor, to be relevant in this show cause proceeding. In that review, as in consideration of other documents within the possession of counsel appearing in this matter, the determination of relevance and the decision to disclose or not at this stage is left to counsel for Merck in this proceeding as officers of the Court. If relevant documents are not to be disclosed at this late stage, counsel should inform the other side who may then raise the matter with me if further direction is required.
While at first glance this may appear a substantial task, by his affidavit Mr. Quesnel affirms that to the best of his knowledge, understanding and belief, all the non-privileged documents that are relevant to the show cause hearing and are otherwise produceable, have been produced. Trial counsel is aware of the standard of Stinchcombe and Egger and decisions in these proceedings that have accepted those as the basis for disclosure in this case. The responsibility for disclosure is on-going, so that as documents are seen to be relevant they are subject to disclosure.
Conclusion
By order I allow the application of the plaintiffs and direct that the subpoenas duces tecum issued to Robert Quesnel, returnable on October 20 and October 23, 1997, respectively, are quashed and set aside.
That order is without prejudice to any application Apotex and Dr. Sherman may make for a further subpoena seeking documents described with greater particularity than in the subpoena here in question, and with a basis for determining their relevance to the issues before the Court in these proceedings.
The order also directs that counsel for Merck in these proceedings, in consultation with Mr. Quesnel as instructing counsel for Merck Frosst, arrange for production of any document in the possession of Mr. Quesnel, in his duties with Merck Frost, that is relevant to the discrete issues arising in these proceedings, on the standard for disclosure set by Stinchcombe and Egger.
Merck seeks costs of the motion on a solicitor and client basis. That basis ordinarily requires some abuse by counsel of the Court's process. While one might speculate on the purposes of the subpoenas issued in such general terms as those here in question, there is no evidence before me of improper purposes being pursued by counsel. Though the general descriptions of documents directed to be produced are clearly too broad, the overly zealous efforts of counsel are now checked by quashing the subpoenas. In my opinion costs should go to the plaintiffs in any event of the cause on a basis, as may be determined at conclusion of the show cause proceedings.
"W. Andrew MacKay"
Judge
Toronto, Ontario
October 29, 1997
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
COURT NO: T-2408-91
| STYLE OF CAUSE: MERCK & CO. INC. and |
MERCK FROSST CANANDA INC.
- and -
| APOTEX INC. |
DATE OF HEARING: OCTOBER 21, 1997
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR ORDER BY: MACKAY, J.
DATED: OCTOBER 29, 1997
APPEARANCES:
Mr. G. Alexander Macklin, Q.C.
Mr. Charles C. Beall
Mr. Emmanuel Manolakis
For the Applicants
Mr. H. Radomski
Mr. David Scrimger
For the Respondent
Mr. Brian Greenspan
For Dr. Bernard Sherman
- 2 -
SOLICITORS OF RECORD:
Gowling, Strathy & Henderson
2600-160 Elgin Street
P.O. Box 466, Station D
Ottawa, Ontario
K1P 1C3
For the Applicants
Goodman Phillips & Vineberg
Suite 2400
250 Yonge Street
Toronto, Ontario
M5B 2M6
For the Respondent
Grensspan, Humphrey
2714-130 Adelaide Street West
Toronto, Ontario
M5H 3P5
FEDERAL COURT OF CANADA
Court No.: T-2408-91
Between:
| MERCK & CO. INC. and |
MERCK FROSST CANADA INC.
Applicants
- and -
| APOTEX INC. |
Respondent
REASONS FOR ORDER