Abbott scores case-ending sanctions against wholesaler
Medical device maker Abbott has secured a series of case-ending sanctions against a wholesaler, bringing the five-year-long dispute to a close.
In an opinion handed down on Tuesday, March 24 at the US District Court for the Eastern District of New York, Judge Carol Amon granted the sanctions after concluding that H&H Wholesale Services had committed a fraud on the court by withholding information in bad faith during discovery.
The smoking gun
Back in October 2015, Abbott accused H&H, and hundreds of other defendants, including pharmacies, distributors, importers, and online sellers, of violating its rights by selling the international version of Abbott’s FreeStyle diabetes test strips in the US.
Two years later, Abbott launched another related action, accusing H&H of selling international FreeStyle test strips repackaged into counterfeit US boxes (Abbott II).
Earlier this week, the court concluded that H&H had lied about how many responsive documents it would need to produce, and then purposely chose not to turn over relevant documents.
At first, H&H claimed that there were approximately 6,000 responsive documents for 2014 and that producing more than one year of responsive documents would be “unduly burdensome”.
In response, Magistrate Judge Bloom directed the H&H Defendants to produce only their 2014 documents. Despite the assertion that there were 6,000 documents for that year, H&H only produced 314 responsive documents.
Subsequently, the New York court entered a seizure order in Abbott II, authorising Abbott to seize a copy of H&H’s email server.
“Once Abbott had seized H&H’s email server, Abbott ‘had the proverbial smoking gun’ and raised concerns that the H&H defendants had failed to comply with the court’s order to produce responsive documents in the instant action,” said Amon, earlier this week.
It quickly became clear that H&H’s initial representation had been false and that the search terms it used to make its 2014 were “intentionally deficient”, failing to capture the vast majority of documents they had been ordered to produce, added Amon.
“Not only were these documents willfully withheld when they should have been produced, but the H&H defendants—largely through their then-counsel and through their general manager, Andrew Sweet—proffered serial, inconsistent excuses as to why they were not produced,” added the court.
Case-ending sanctions
Earlier this week, Amon followed Bloom’s “thorough and well-reasoned report and recommendation” which stated that the court should grant Abbott’s motion for sanctions and enter a default judgment.
H&H argued that Bloom had failed to consider lesser sanctions on the record before recommending the imposition of case-ending sanctions, but Amon sided with the magistrate judge’s recommendations.
“In any event, it is clear to this court that lesser sanctions would be ineffective in this case,” said Amon.
She added that, given the “bad-faith, repeated, and egregious nature” of H&H’s discovery misconduct and its other actions, lesser sanctions—such as merely awarding attorneys’ fees or providing an adverse inference instruction at a potential trial—would “not sufficiently punish the H&H defendants nor deter those who might be tempted to similar conduct”.
The court granted Abbott’s motion for sanctions and entered a default judgment against H&H, while also denying the wholesalers’ request to certify this order for interlocutory appeal.
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories sent like this straight to your inbox.
