In Staubus, et al v. Purdue Pharm, et al., No. C-41916 (Tenn. Cir. Ct. Apr. 6, 2021), Tennessee Circuit Court Chancellor E. G. Moody granted a default judgment sanction in the plaintiffs’ favor on liability, in addition to other sanctions, and reserved issuing a final judgment pending a damages trial for the Endo defendants’ numerous eDiscovery and litigation violations.

Case Background

In this litigation over claims of claims under Tennessee’s Drug Dealer Liability (DDLA) against three groups of major pharmaceutical manufacturer defendants, a former Morristown prescriber who later lost his license and was sentenced to prison, and certain street-level dealers on behalf of a baby born drug dependent (referred to in the litigation as Baby Doe), the only defendants left were the Endo defendants (after other defendants had filed bankruptcy or settled).  In the case, the plaintiffs sued for $2.4 billion (with expert testimony which supported that amount) and millions of documents having been produced by the parties.

The plaintiffs served discovery requests in June 2017, seeking, among other things, Endo’s prescriber-related files. After the parties disputed the sufficiency of Endo’s responses to this first set of discovery, the plaintiffs filed a Motion to Compel, which was granted in September 2018, and the Court ordered Endo to produce certain records within 90 days, including for all of its prescription opioids from June 13, 2007 to the present:

• Endo’s knowledge of suspect practices concerning the drugs, including but not limited to high-volume prescribers who were likely engaged in diversion or or over-prescribing,
• Endo’s policies, practices, and procedures for addressing potential abuse and diversion of its drugs; and
• the volume of Endo Opioids streaming into the relevant geographic area and the illegal drug market.

Chancellor’s Ruling

As Chancellor Moody’s order detailed: “In response to this Order, it is now clear that Endo knowingly did not fully comply with it. Endo did not search the files of any of its 86 Tennessee sales representatives, any of 18 District Sales Managers with responsibility for Tennessee, or the files of its non-executive level compliance officials. Incredibly, it did not produce its formal “Reports of Suspected Diversion” that sales representatives had filled out concerning Tennessee prescribers. Nor, relative to Tennessee prescribers, did it produce the various iterations of its Global Exclusion List or the District Manager Exclusion List. Instead, as it admitted in response to Plaintiffs’ Motion for Sanctions, it simply searched the files of custodians that it had identified in the separate Multi-District Litigation proceeding that did not involve Tennessee-specific discovery. Most of those custodians were executive-level officials and department heads. During the discovery period, it never told Plaintiffs or the Court that it had self-limited its response to the September 28, 2018 Order to Compel in this way.

Instead, Endo engaged in obfuscation and delay, While it did make some productions during that time frame, it refused to specify which records, if any, were responsive to the Court’s Order and whether Endo’s Court-ordered production was complete…When Plaintiffs asked Endo to certify that it had fully complied with the Court’s 9/28/18 Order to Compel, Endo’s counsel stated vaguely that Endo had “complied” with the Court’s Order (This wasn’t true.) referred Plaintiffs to the “millions of pages” of documents it had produced, and stated that Endo had “neither the obligation nor the inclination to certify” whether it had fully complied.”

Detailing eleven additional false statements by the Endo defendants over the course of the litigation, Chancellor Moody ultimately discussed the plaintiffs Motion for Sanctions and/or Order to Show Cause, filed on April 9, 2020 (where the Plaintiffs maintained that Endo’s prescriber files still appeared to be deficient), and the “Contempt Order” by the Court granting the plaintiffs’ motion and holding both Endo and its lawyers in contempt for failing to conduct a reasonable search and for making a series of false statements regarding the same (which opened the possibility of the default judgment sanction).  Ultimately, Chancellor Moody summed up the violations accordingly:

“Between the close of fact discovery on February 14, 2020 and the Court’s sanctions hearing on April 24, Endo produced over 127,000 documents…After the Court issued its sanctions order, Endo produced another 255,000 documents…This means that, in total, Endo produced nearly 400,000 documents after the close of fact discovery — despite certifying on February 14 (per this Court’s Certification Order) that its productions were complete and it had not withheld any responsive documents.

By the time that Endo had completed these productions, all pretrial deadlines had run. The parties had completed expert disclosures and expert depositions, filed and fully briefed numerous summary judgment motions (filed by Plaintiffs and by Endo), filed and fully briefed numerous motions in limine, filed and fully briefed numerous expert exclusion motions by Endo, and exchanged witness lists, exhibit lists, and deposition designations.”

As a result, Chancellor Moody found:

• “that Endo willfully withheld this information during the discovery phase to gain a litigation advantage at trial”;
• “that Endo and its attorneys’ false statements violated the Tennessee Rules of Civil Procedure and the Tennessee Rules of Professional Conduct”; and
• “that Endo’s willful discovery violations were severely prejudicial to Plaintiffs” (noting that to remedy the violations “would effectively force Plaintiffs to start discovery over in a case that is trial ready and has been litigated for over three years”).

As a result, Chancellor Moody stated in awarding the default judgment sanction: “The Court finds that the Plaintiffs’ Supplement as to Default Judgment Against Endo to be accurate and incorporates it by reference. It clearly shows that Endo and its attorneys have still not learned their lesson. It appears to the Court that Endo and its attorneys, after delaying trial, have resorted to trying to improperly corrupt the record.”

So, what do you think?  Does the default judgment sanction seem harsh or does it seem appropriate, given the extent of discovery violations by the Endo defendants?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant, an Affinity partner of eDiscovery Today.

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