Well, today the Second Circuit affirmed those sanctions in an appeal filed by James B. Gottstein, one of the intermediaries that Egilman used in his little stunt:
We agree with the district court that Mr. Gottstein’s actions in acquiring and disseminating certain of these documents involved his aiding and abetting a violation of the court’s protective order through the use of sham subpoenas. The district court had the power to enjoin Mr. Gottstein in these circumstances.Eli Lilly & Co. v. Gottstein, No. 07-1107, slip op. (2d Cir. Aug. 12, 2010).
Here are the facts of the sorry episode, as the Second Circuit described them:
The present appeal arises from the flouting of a protective order entered in high-stakes litigation concerning Eli Lilly Co.’s anti-psychotic drug, Zyprexa. David S. Egilman, a plaintiff’s expert witness and signatory to the protective order, received confidential documents produced by Eli Lilly. Finding much to dislike in the content of those documents, Egilman wished to distribute them to the media. Not wanting to release the documents to the public in a manner brazenly in disregard of the protective order, he needed a suitably minded individual to act as his partner and to subpoena those documents. Egilman contacted New York Times reporter Alex Berenson, who put him in touch with Alaska attorney and mental-health advocate James B. Gottstein, who readily agreed to help. Gottstein, who was not a signatory to the protective order, intervened in an unrelated Alaskan guardianship case, which he used to generate subpoenas purporting to require Egilman to produce all documents in his possession pertaining to Zyprexa. Failing to abide by the terms of the protective order, Egilman distributed a large volume of documents to Gottstein, who in turn copied and forwarded them to a variety of other interested parties. The next day, the Times began a series of front-page articles based on the information contained in those documents.Slip op. at 2-3.
Among other things, Gottstein got his himself enjoined. He appealed. The Second Circuit's opinion affirmed "in all respects." Slip op. at 3.
To understand the Second Circuit's ruling, it's necessary to know exactly what Egilman and Gottstein did to violate the protective order, which involved deceiving not only Lilly and its counsel, but the lawyers who retained Egilman as well:
Gottstein is an Alaskan attorney and an advocate for patients’ rights. After talking to Egilman about Eli Lilly’s confidential documents and their mutual desire to see those materials disseminated to the public, Gottstein intervened in an unrelated case in which the Alaskan Office of Public Advocacy had been granted guardianship and the right to make treatment decisions for a patient, William Bigley. At that time, Gottstein had no idea if the patient had taken Zyprexa or if the state would use Zyprexa in its treatment of the patient. Yet within hours of intervening, he issued a subpoena that purported to compel Egilman to produce all documents in his possession relating to that particular drug. Despite being addressed to Egilman in Massachusetts, however, the subpoena issued from the Superior Court for the State of Alaska. Gottstein placed the request for documents pertaining to Zyprexa in the middle of requests for documents relating to 14 other drugs, none of which he expected Egilman to possess. The subpoena, issued on December 6, 2006, called for production of the material by December 20.Slip op. at 4-5.
In an effort to comply, however perfunctorily, with CMO-3, Egilman faxed a note and copy of the subpoena to Eli Lilly’s corporate general counsel. He did not, however, inform the firm that retained him of the subpoena; nor did he apprise Eli Lilly’s litigation counsel. Nevertheless, the fax was routed internally and, on December 13, the Lanier Law Firm told Egilman not to produce any documents until Eli Lilly’s planned motion to quash the subpoena had been ruled upon in the Alaskan court. Unbeknownst to Lanier and Eli Lilly, however, Egilman had already begun to distribute a plethora of documents to Gottstein the day before.
The Second Circuit unanimously affirmed: First, it agreed with Judge Weinstein's conclusion that that the Alaskan subpoena was a "sham" and used to "aid and abet" Egilman's violation of the protective order:
There is therefore no question that Gottstein and Egilman were in close contact with one another and strategized how best to facilitate the dissemination of documents protected by CMO-3. The subpoenas served on Egilman merely formalized and facilitated what had already been agreed to. They both understood that issuing a subpoena was a necessary ploy for achieving that distribution in a fashion ostensibly consistent with the protective order to which Egilman was bound as a signatory. It is therefore unsurprising that the manner in which Egilman and Gottstein responded to the subpoenas and caused them to issue, respectively, was designed to delay Eli Lilly’s learning of them and taking action to prevent production. Neither Gottstein nor Egilman informed Eli Lilly’s litigation counsel or the Lanier Law Firm of the first subpoen a - actions that both knew would have resulted in Eli Lilly’s learning of the subpoena’s existence promptly. Nor did either of Gottstein and Egilman inform anyone else of the second, secret subpoena, which called for earlier production. They hindered Eli Lilly’s recognizing the purpose of the subpoenas by burying the request for Zyprexa documents in the middle of requests for documents for some 14 other drugs. This is all strong evidence of Gottstein and Egilman’s acting in concert.Slip op. at 8-9. There was no evidence that the subpoenae had any valid purpose. Id. at 8-9 ("[c]ausing a subpoena to be served, with notice that compliance with it by the complicit recipient would violate a court’s lawful order, cannot be characterized as 'legitimate'”). Nor was there any evidence that Gottstein acted "independently" of Egilman. Id. at 11 ("[a]iding and abetting a party is not acting independently, as Gottstein himself admits").
Further evidence of the subpoena’s being a sham abounds, and this similarly evidences the fact of concert between Egilman and Gottstein. When introduced to Egilman through Berenson, Gottstein wasted no time in planning an end run around the protective order. He searched for, found and then intervened in a case of state guardianship that was wholly unrelated the Zyprexa litigation. Gottstein admitted that he had no evidence at the time of causing the subpoenas to be served on Egilman that Zyprexa was relevant to the case in which he had intervened. On receipt of the material, Gottstein quickly disseminated it to a list of recipients without even reviewing it or applying it to his Alaskan patient’s case. It bears noting, too, that the subpoenas duces tecum issued through the Alaskan state court were presumably without legal force in Massachusetts, where Egilman resided and was served. This further supports the district court’s determination that the subpoenas were a sham.
Second, the court agreed that the protective order was valid. The order was sufficiently definite. Slip op. at 12 ("it is unclear why a protective order would seek to dictate the boundaries of permissible behavior by non-signatories"). There was no requirement to give Gottstein "reasonable opportunity" to object. Id. at 13 ("Gottstein’s contention is border-line disingenuous, however, in light of his election not to read the protective order before aiding and abetting its violation").
Third, the court had jurisdiction to enjoin Gottstein, even though he was a "non-party."
First, Rule 26 neither provides nor suggests that courts lack the power to enjoin nonparties or nonsignatories who aid and abet the violation of their discovery orders. Second, relevant case law is against Gottstein’s position. Third, a protective order might be thought of as a form of injunction in this particular setting, in which case reading Rules 26 and 65 together would obviously foreclose Gottstein’s argument. Fourth, if taken to its logical conclusion, Gottstein’s proposed rule would render protective orders little more than liability-generating documents. If courts cannot bind third parties who aid and abet the violation of their protective orders, then any party, agent, attorney or expert who comes into possession of material he wanted to use against the producing party could simply disseminate the information quickly, then deal with the damages issue after the fact. . . . Gottstein’s proposed rule would eviscerate courts’ ability to manage discovery and, hence, litigation.Slip op. at 14-15.
Finally, the Judge Weinstein properly found that most of the documents that were leaked were, in fact, confidential.:
Gottstein also devotes considerable pages to arguing that Eli Lilly’s mass designation of documents as confidential violated CMO-3 because such designation was not made in good faith. He unconvincingly attempts to bolster this conclusory assertion by arguing for “[t]he inference that one of Lilly’s motivations for over-designation of documents as confidential under CMO-3 was to avoid civil and criminal liability.” His argument is in any event misguided, since the question whether Eli Lilly designated its produced documents in good faith is distinct from the question whether those subject to the protective order were free to ignore it. If Egilman or Gottstein believed that particular documents were improperly designated as confidential, then the proper procedure was for either of them to avail himself of the procedure envisioned by CMO-3 for declassifying such documents. What Gottstein was not entitled to do was to aid and abet Egilman’s violation of the protective order on the ground that that order had been improperly entered.Slip op. at 16.
What lessons can be gleaned from this sorry spectacle? We note that the principal in the scheme, Egilman, did not appeal the sanctions against him. Much of that was moot, as well, since the plaintiffs in Zyprexa fired him as a result.
One thing we note is that Egilman is a recidivist. He has been sanctioned before for violating confidentiality orders. In Ballinger v. Brush Wellman, Inc., 2001 WL 36034524 (Colo. Dist. June 22, 2001), he was found to have “flagrant[ly]” violated a protective order. His testimony was stricken for being so biased that he would not be a credible witness. Id. at *1. As further sanction, the court also barred him from ever appearing before it again. Id. On appeal, exclusion of his testimony was affirmed, but the permanent bar was overturned for lack of prior notice that such a sanction was under consideration. Egilman v. District Court, 2002 WL 2027530 (Colo. App. Sept. 5, 2002) (unpublished).
We would suggest that, as it's essentially impossible to put the toothpaste back into the tube after a protective order is breached by a leak to the press, the only place where any future sanctions could meaningfully be interposed to prevent this sort of contumacious conduct is at the mouth of the toothpaste tube itself. If Egilman were to do something like this again, the only effective sanction would be to bar him from ever having anything more to do with civil litigation. Not only is litigation a form of remuneration, but it is also what puts him in a position deliberately to violate court orders – as has happened more than once.
While we’re not entirely sure how this punishment could be effectively imposed, we have a few ideas for anyone unlucky enough to be in a position to seek sanctions against Egilman, should something of this nature happen again. First, if Egilman were disqualified, he should be required to disgorge all fees he has received. That money properly should be returned to whoever might be the plaintiffs’ counsel, since they would be just as damaged by a disqualification. Second, there should be a fine, we'd say in an equivalent amount, for contempt of court, to be paid to the whatever defendant was the intended target of any future protective order violation.
Third, beyond mere monetary penalties, a court should do the same thing that the Colorado court did – only this time with proper prior notice. That is, issue a permanent bar from involvement in any case pending before it. But if a court wishes to deter similar violations of confidentiality orders, it would need to do more than that. Thus, fourth, the aggrieved defendant should request the court to issue a detailed bill of particulars that recites the supporting facts. Although no court can bind other judges to follow its lead, it could certainly request that other courts do so. Thus, the bill of particulars could include a such request to fellow judges, explaining that permanent exclusion is the only sure deterrent of a demonstrated willingness to flout court orders. Fifth, since a court has jurisdiction over any expert who appears before it, it could order Egilman (or some similar recidivist) to provide a copy of the bill of particulars and request for exclusion to any lawyer that may seek to involve him in future litigation, and to any court overseeing such litigation.
The way we see it Egilman has already twice proven himself untrustworthy to receive confidential documents in the context of litigation. Should he do it again, he should never again be permitted to be in a position where he could receive such documents. Strike three, you're out.
We can dream, anyway.