The High Costs of “Weaponizing” Discovery Strategies

What do you get when you “cross an approach to discovery à la Inspector Clouseau with a corporate lawyer caricature found in cartoon caption contests?” According to Judge Steven Rau of the District of Minnesota in a 32-page order that required an “exhaustive” 15-page factual outline, you would get the 2011 qui tam case U.S. ex rel. Higgins v. Boston Scientific Corp., 11-cv-02453, Dkt. No. 313 (D. Minn. Oct. 16, 2019).  In this “disaster” of a case, Judge Rau sanctioned Defendant Boston Scientific Corporation (BSC) for failing to disclose a “central” witness until the final day of a year-long discovery. Notably, the court justified its finding that BSC acted intentionally with respect to its discovery strategy because an alternative finding would mean that BSC acted nefariously during the nearly five-year government investigation that preceded this case.

Higgins caught our attention earlier this month due to the potential ramifications of Judge Rao’s dramatic decision ordering BSC to produce presentations it had made to the government as part of settlement discussions.  We explained how this ruling could potentially discourage defendants from engaging in candid discussions with the government in the future.

Here, the court issued a new order regarding BSC’s failure to identify four key custodians until the final day of a year-long discovery process. One of these witnesses, Erika Huffman was “central” to the litigation, given her communications with FDA on pertinent matters. The court found that these incomplete discovery disclosures violated BSC’s disclosure obligations under Rule 26 because they were without any justification, they “prejudiced” the Relator, and affected the “entire course of discovery in this matter.” Moreover, “it [was] readily apparent to the Court that this was an intentional discovery tactic by Boston Scientific . . . Essentially, Boston Scientific calculated that since the discovery endpoint was not likely to shift, it would be worthwhile to delay and obstruct discovery to hamstring Relator’s efforts to gather information to support his claims.” The court said that it “will not reward such gamesmanship.”

The court rejected BSC’s arguments that the Relator should have realized Huffman’s importance to the litigation as “disingenuous and mendacious.” By that token, the court reasoned, BSC itself should have realized Huffman’s importance—particularly after going through a 4.5-year government investigation on the matter. He found BSC’s arguments that it did not know that Huffman had discoverable information “absurd” and “stretch[ing] all credulity,” given that BSC “operates in a heavily regulated medical device industry and, as such, has compliance departments in contact with federal agencies like the FDA.” The court concluded that BSC “intended to use Huffman as a witness and hid that information until the final moments of discovery.”

Of particular note is how the court related BSC’s behavior at discovery to its actions during the government qui tam investigation. The court reasoned that “either Boston Scientific knew of Huffman’s importance and deliberately left her off its list of initial disclosures,” or the company “withheld documents from the federal government during its investigation.” The court concluded that it was “much more palatable to believe Boston Scientific committed a discovery violation than impeded a government investigation.” Order at 22-23.

In the end, the judge used the judicial discretion permitted under Fed. R. Civ. P. 37(c)(1) and tailored sanctions for the circumstances of the case in an effort to “cleanse” the “taint of Boston Scientific’s Rule 26 violation.” The court ordered BSC to produce within 14 days all documents from the four newly disclosed custodians that hit on the parties’ search terms; barred BSC from using any documents or testimony that had not been produced to Relator in the normal course of discovery; and required BSC to pay Relator’s costs and attorney’s fees for this motion and for any additional discovery required beyond the discovery deadline. The court did not go as far as to apply an “adverse inference sanction,” as requested by Relator, but left open that possibility “should Boston Scientific fail to meet its obligations under this Order.” Although judge Rau called out the Relator for not being diligent enough and backloading discovery to near the end of the process, he refused to punish “the bully and the victim” equally, where the “Relator was essentially fighting with a blindfold on because of Boston Scientific’s discovery actions.”

This case illustrates the risks defendants face when litigating claims declined by the government.  Not only are there tremendous costs for the protracted investigation and discovery process, but even “technical” discovery violations can result in painful rulings that could potentially affect the outcome of the case. The judge’s admonition to outside counsel is also worth noting. “Even if lead counsel was merely implementing directives from Boston Scientific’s in-house counsel, lead counsel ultimately bears the burden of Boston Scientific’s actions. . . . [I]t was outside counsel’s obligation to actually counsel Boston Scientific as to the propriety of such a tactic.” Order at 27, n.13 (emphasis in original).