Sunday, January 13, 2008

Claim substantiation research not privileged

Procter & Gamble Co. v. Ultreo, Inc., 2008 WL 110245 (S.D.N.Y)

P&G sued Ultreo for false advertising. Both parties make toothbrushes; P&G disputes Ultreo’s claim “that its power toothbrush cleans beyond the reach of the toothbrush’s bristles by virtue of its high-speed sonic bristle action and ultrasound wave technology.” In particular, P&G considers this misleading because it’s based exclusively on lab studies rather than clinical tests in humans. P&G sought discovery of five scientific studies by Ultreo and its affiliates, but Ultreo argued they were privileged attorney work product. The court disagreed and ordered production.

Ultreo argued that the studies were privileged because its attorney advised it to conduct the studies given the likelihood of suit by P&G, and that the privilege should extend to investigators seeking factual information, such as clinical study results, when they work on behalf of an attorney. P&G responded that the studies were part of Ultreo’s ordinary business and no different from other studies that had been produced.

FRCP 26(b)(3) protects materials “prepared in anticipation of litigation or for trial or for another party or by or for that other party’s representative” unless the party seeking discovery has substantial need of those materials and can’t obtain their substantial equivalent by other means. The burden of establishing the privilege is on the party invoking it, but the privilege does cover facts as well as attorney opinions and strategies. As a result, the privilege can apply to non-lawyer party representatives, including investigators seeking factual information.

Nonetheless, the privilege requires such facts to be created “by or for counsel in anticipation of litigation or for trial.” Even if documents are in an attorney’s possession, they aren’t protected if they were created in the ordinary course of business and would have been created in substantially similar form irrespective of the anticipation of a lawsuit.

The court found that Ultreo’s lawyer’s statement that the studies were conducted at his behest was insufficient to establish the privilege. The record clearly showed that Ultreo “has long sought to obtain clinical proof of the effectiveness of the ultrasound component of its toothbrush.” It even applied for (and won) a grant from the National Institute of Health to conduct clinical studies, and planned additional such studies. Ultreo has also planned to use the studies for which privilege was claimed to sell its toothbrushes and has talked about the studies with retailers. The court’s in camera review confirmed that the studies were part of Ultreo’s routine business efforts to substantiate its ad claims. Thus, Ultreo failed to meet its burden.

“Ultreo’s business plan was built around developing a new and innovative toothbrush, and conducting scientific investigations to demonstrate that the toothbrush worked. The fact that these investigations were undertaken in consultation with outside counsel, under the looming specter of litigation, does not, by itself, clothe them with protection. Such a holding would effectively shield every clinical investigation and scientific inquiry, so long as the party was savvy enough to include outside counsel in the decision-making process.” (citations omitted).

Comment: the research here was designed to substantiate a factual claim, not to assess consumer understandings of an ad. Getting discovery of the latter type of research, which is important in implicit falsity cases, could be a harder task, depending on whether the advertiser routinely surveys for consumer reactions and whether the prelitigation survey resembles ordinary market research. Advertisers should also remember that heavy attorney involvement in shaping a survey may make judges less likely to credit it when the advertiser introduces the survey into evidence.

1 comment:

Anonymous said...

pretty interesting and insightful!!!