MEMORANDUM
I. INTRODUCTION
Direct and Indirect Purchasers of a steroid nasal spray containing the active ingre
In response to the Special Master’s Decision and Recommendation, GSK filed a motion for de novo review of the Special Master’s finding that the Swiftwater Documents were not privileged. On May 2, 2012, I held a hearing on GSK’s motion. Following the hearing, I issued an order granting GSK’s motion for de novo review to the extent that otherwise privileged communications between GSK and Swift-water do not lose their privileged status simply by having Swiftwater included in them. See No. 08-3149, ECF No. 333; No. 08-3301, ECF No. 421. Based on this conclusion, I ordered an in camera review of the Swiftwater Documents that Direct Purchasers believe GSK incorrectly claims are privileged. I referred this task to Magistrate Judge Strawbridge for a Report and Recommendation as to which documents should be entitled to privilege. The opinion that follows explains why the Swiftwater Documents do not lose their privileged status sоlely because Swiftwater is an independent consultant.
II. BACKGROUND
Swiftwater is a national consulting firm that provides pharmaceutical consulting services, as an independent contractor, to large multi-national corporations like GSK. On July 1, 1999, GSK and Swiftwater began a Master Consulting and Service Agreement (“Master Agreement”). Def.’s Mot.App. II, C2. According to the Master Agreement, Swiftwater was to provide consulting services that included, but were not limited to, “adviсe, analysis, management, technical or operational support or software programming.” Id. at ¶ 1. The Master Agreement characterized Swiftwater’s role as an “independent contractor” and “not as [GSK’s] ... agent or employee,” and further stated that Swiftwater had “no authority to make any statement, representation, or commitment ... binding upon [GSK]” without GSK’s authorization. Id. at ¶ 13. Additionally, the Master Agreement required confidentiality as to “аny and all information provided” relating to Swiftwater’s services. Id. at ¶ 7.
In 2001, GSK formed a Flonase brand maturation team to assist the corporation as the Flonase brand matured. From its inception, Swiftwater was involved with the Flonase brand maturation team. Def.’s Mot.App. I, B2 at Attach A ¶ A.l. Swiftwater’s involvement with the Flonase brand maturation team was defined by a series of engagement letters and work agreements. Def.’s MotApp. I. The Flonase brand maturation teаm was expected to “help generate the development of the
Specifically, during the initial stage of the Flonase brand maturation plan, Swift-water’s role was “to work with ... the core-team to determine the necessary work streams for the creation of the Brand Maturation Plan,” and to “help creаte and integrate the project plans necessary to build the strategy.” Def.’s MotApp. I, B2 at Attach. A ¶ A.l. To do this, Swiftwater would be “drawing on [its] experience in [its] work with Zantac and Ceftin in helping to guide the expanse of strategic options to consider and in developing the plans to determine the viability and or effectiveness of each option.” Id.
As the Flonase brand maturation project progressed, Swiftwater entered into a new wоrk agreement with GSK “to serve in project management and analytical service roles to help the Flonase Brand team guide and create recommendations for Flonase Brand Maturation Strategy.” Def.’s MotApp. I, B3 at Attach. A ¶ A.l. As part of this work agreement, Swiftwater agreed to provide: a white paper summarizing its analysis and recommendations for brand maturation strategy, an executive summary presentation of the brand maturаtion plan, interim presentations, and scenarios in financial models to support its recommendations. Id.
By October 2001, three work streams had been identified to develop the Flonase brand maturation strategy: legal and regulatory, business development, and standard business practices. Def.’s MotApp. I, A2 and C2. Swiftwater contributed to the development and analysis of all three work streams. Def.’s MotApp. I, A2, C2, and B4.
According to an “integrated action plan,” Swiftwater and the Flonase brand maturation team evaluated possible projects that touched on legal and regulatory advice such as:
• Assessment and assertion of GSK’s patent and other intellectual property rights with respect to Flonase. (Integrated Action Plan, App. Ill, Tab A, at GSK-FLON-1913438).
• Application for and receipt of “pediatric exclusivity” period for Flonase.... (Id. at GSK-FLON1913439).
• Application to FDA seeking permission to market over-the-counter Flonase. (Id. at GSK-FLON-1913437).
• Submission of comments to FDA’s Draft Guidance to ensure consistent and fair standards for bioequivalence in nasal spray products. (Id. at GSK-FLON-1913440).
• Application to FDA for permission to market line extensions for Flonase, such as a fragrance-free or double-strength version. (Id. at GSKFLON-1913440).
Def.’s Mot. at 3-4 (citing Def.’s MotApp. Ill, A).
Thus, Swiftwater played a role in the creation, development, and implementation of the Flonase brand maturation plan, which required Swiftwater not only to engage in administrative tasks and business strategy, but also to delve into the legal and regulatory issues associated with the
III. DISCUSSION
Both parties agree that the attorney-client privilege may attach to the Swiftwater Documents if Swiftwater operated as the “functional equivalent” of a GSK employee.
In Upjohn Company v. United States,
The Court defined the purpose of the attorney-client privilege “to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.” Id. at 389,
Beyond providing legal advice on a spеcific problem, the Court acknowledged the valuable role of corporate counsel “to ensure their client’s compliance with the law.” Id. at 392,
Given the underlying purpose of the privilege to providе sound legal advice, the Court held that whether the attorney-client privilege applies shall be determined on a case-by-case basis, looking at the reasons for the communication, rather than the status of the employee. Id. at 394-96,
Although Upjohn addressed whether the attorney-client privilege may apply to corporate communications involving lower-level employees, it did not address whether the attorney-client privilege may apply to communications involving independent consultants of a corporation.
In In re Bieter Company,
Since Bieter, several courts have grappled with how to determine when an independent consultant is the functional equivalent of an employee. Some courts have taken a very narrow view of which independent consultants may qualify as the functional equivalent of employees. See, e.g., Exp.-Imp. Bank of the U.S. v. Asia Pulp & Paper Co.,
whether the consultants: (1) were incorporated in the staff to perform a corporate function, which is necessary in the context of actual or anticipated litigation; (2) possessed information needed by attorneys in rendering legal advice; (3) possessed authority to make decisions on behalf of the company; and (4) were hired because the company lacked sufficient internal resources and/or adequate prior experience within the consultant’s field.
Direct Purchasers advocate that this Court adopt the multi-factor test established in Bristol-Myers, and argue that, under this narrow interpretation of the functional equivalent doctrine, the Swift-water Documents are not entitled to attorney-client privilege because Swiftwater was not the functional equivalent of a GSK employee. However, this restrictive view of attorney-client privilege, as it relates to independent consultants, does not comport with the purpose of privilege as defined in Upjohn. By requiring an independent consultant to possess the authority to make decisions on behalf of the corporation in оrder to be the functional equivalent of an employee, Bristol-Myers resurrects the control group test that the Supreme Court expressly rejected in Upjohn. As the Bieter Court recognized, “too narrow a definition of ‘representative of the client’ will lead to attorneys not being able to confer confidentially with nonemployees who, due to their relationship to the client, possess the very sort of information that the privilege envisions flowing most freely.” Bieter,
Based on the underlying purpose of the attorney-client privilege, several courts have adopted a broad practical approach to determining whether an independent consultant is the functional equivalent of an employee. See, e.g., U.S. ex rel. Strom v. Scios, Inc., No. C05-3004,
The broad approach to determining whether an independent consultant is the functional equivalent of an employee reflects the privilege analysis in Upjohn by focusing its inquiry on whether the com
Lawyers play a valuable role in the corporate setting, “ensuring] their client’s compliance with the law.” Upjohn,
As the record demonstrates, Swift-water acted as an integrated member of the brand maturation team, which was comprised of full-time GSK employees. Swiftwater playеd a crucial role in the team, assisting in an administrative, managerial, and analytic capacity. Moreover, Swiftwater was intimately involved in the creation, development, and implementation of the Flonase brand maturation plan. As part of brand maturation strategy, Swift-water assisted employees on three work streams, including the legal and regulatory work stream. This work touched on several legal and regulatory issues, such as GSK’s assertiоn of intellectual property rights, interaction with the FDA, and application for and receipt of pediatric exclusivity for Flonase. The Swiftwater Documents, produced as a result of Swiftwater’s collaboration with GSK employees, were at all times kept confidential and treated as if the attorney-client privilege applied.
The evidence establishes that Swiftwater was the functional equivalent of a GSK employeе. However, without looking at the individual documents, it is impossible to know whether each Swiftwater Document was created for the purpose of providing or obtaining legal advice. This analysis must occur before a final determination may be made on the merits of GSK’s assertion of privilege over the Swiftwater Documents.
IV. CONCLUSION
For the reasons stated above, I hold that Swiftwater is the functional equivalent of a GSK employee. Thus, as a matter of lаw, communications involving Swiftwater and GSK’s counsel may be entitled to the attorney-client privilege. However, whether the privilege applies to each communication must be determined on a case-by-case basis under the principles established in Upjohn. In light of this conclu
ORDER
AND NOW, this 3rd day of May 2012, as stated during oral argument on May 2, 2012 in the above-captioned matter, it is ORDERED that Defendant GSK’s Motion for De Novo Review of Part III of Special Master’s Decision and Recommendation (No. 08-3149, ECF No. 276; No. 08-3301, ECF No. 334) is GRANTED in part and DENIED in part. GSK’s motion is granted to the extent that I find that any otherwise privileged communications between GSK and Swiftwater (“Swiftwater Documents”) do not lose their privileged status simply by having Swiftwater includеd in them. GSK’s motion is denied to the extent that it requests denial of an in camera review of the Swiftwater Documents.
It is FURTHER ORDERED that GSK shall review all Swiftwater Documents to which it had claimed attorney-client privilege. By May 29, 2012, GSK shall inform plaintiffs of all Swiftwater Documents that GSK has determined it no longer asserts the attorney client privilege. By June 11, 2012, plaintiffs shall notify GSK and the Honorable David R. Strawbridge, United States Magistrate Judge, of which Swift-water Documents they seek to have reviewed in camera to determine if GSK’s assertion of privilege is appropriate.
It is FURTHER ORDERED that an in camera review of all Swiftwater Documents over which GSK maintains an assertion of privilege and of which plaintiffs request review is referred to Magistrate Judge Strawbridge for a Report and Recommendation.
Notes
. Only Direct Purchasers filed an opposition to GSK's motion for de novo review. Indirect Purchasers later joined their objection. For the purposes of brevity, I will only refer to Direct Purchasers in this opinion.
. The Third Circuit has not yet had the opportunity to address whether a functional equivalent test governs the determination of whether attorney-client privilege may attach to corporate documents involving communications with independent contractors. However, both parties agree that determination of whether Swiftwater is the functional equivalent of an employee is essential to the attorney-client privilege dispute in this case. Moreover, the appellate courts that have considered this issue have applied a functional equivalent test. See United States v. Graf,