GlaxoSmithKline In-House Attorney Acquitted of Obstruction of Justice Charges; Judge Criticizes Application of Crime Fraud Exception to Privileged Documents

In November 2010, a former in-house counsel for the pharmaceutical company GlaxoSmithKline, Lauren Stevens, was indicted on charges of making false statements and obstructing a federal investigation into illegal drug marketing with regard to the antidepressant Wellbutrin.  The federal investigation surrounded allegations that GlaxoSmithKline had illegally marketed Wellbutrin for weight-loss, a use for which had not been approved by the Food and Drug Administration (FDA).  The Justice Department had alleged that Ms. Stevens made false statements to the FDA that GlaxoSmithKline had not engaged in marketing this “off-label” use of the drug.  The indictment also alleged that Ms. Stevens had improperly withheld presentation slide sets from disclosure to the FDA which purportedly demonstrated the marketing scheme.

Although the indictment was initially dismissed, the government refiled the case and it proceeded to trial.  A key component of the government’s case against Ms. Stevens was a legal memorandum—and related documents—prepared for Stevens that set forth the “pros” and “cons” of producing the presentation slide sets to the FDA.  This memorandum allegedly expressed concern that a release of the slides would potentially expose GlaxoSmithKline to liability.  These documents normally would have been barred from disclosure under the attorney-client privilege.  The government, however, had obtained these documents after a federal magistrate judge ordered them produced under the “Crime Fraud Exception” to the attorney-client privilege.  That exception applies when a court finds that a lawyer is assisting a client in the perpetration or furtherance of a crime or fraudulent act.

At the conclusion of the government’s presentation of its case, Ms. Stevens’ attorneys moved for an acquittal under Federal Rule of Criminal Procedure 29.  This rule allows a judge to acquit a defendant before the jury if he finds that, after viewing all the evidence “in the light most favorable” to the government, no rational trier of fact could find that defendant guilty beyond a reasonable doubt.

On Tuesday, May 10, 2011, the presiding judge of the United States District Court for the District of Maryland, the Honorable Roger W. Titus, granted the motion and ordered the acquittal of Ms. Stevens on all charges, concluding the case.  According to the published transcript of the hearing, Judge Titus found that the Crime Fraud Exception was improperly applied because the documents at issue demonstrated that Ms. Stevens had not assisted GlaxoSmithKline in perpetrating any crime or fraud.  Instead, those documents showed “a studied, thoughtful analysis” of requests from the FDA and that Ms. Stevens issued her responses to the FDA “in the course of her bona fide legal representation of a client and in good faith reliance on both external and internal lawyers for GlaxoSmithKline.”

Of most interest to lawyers that are defending Crime Fraud Exception challenges to otherwise privileged documents, Judge Titus focused on what he determined were “serious implications for the practice of law” raised by the prosecution of Ms. Stevens:

“[A] lawyer should never fear prosecution because of advice that he or she has given to a client who consults him or her, and a client should never fear that its confidences will be divulged unless its purpose in consulting the lawyer was for the purpose of committing a crime or fraud.”

Judge Titus ultimately concluded that Ms. Stevens “should never have been prosecuted” and noted the “potential of abuse in allowing prosecution of an attorney for giving legal advice.”

It is unclear whether the government will appeal.  As of this writing, both the Department of Justice and the F.D.A. have declined to comment.

This post was contributed by David Nardolillo.