Exeltis USA Inc. v. First Databank, Inc.

Background

Exeltis, described by the court as a prenatal-vitamin manufacturer, challenged First Databank’s changes to the “class value” coding system in its MedKnowledge pharmaceutical database. Exeltis alleged that the new coding would falsely characterize its prescription prenatal vitamins as over-the-counter products and could cause coverage problems. Exeltis asserted claims under the Lanham Act, California’s Unfair Competition Law, California’s false-advertising statute, intentional interference with prospective economic advantage, and trade libel.

First Databank moved to exclude the expert reports and anticipated testimony of three Exeltis experts: Dr. J. Kevin Gorospe, Norman Smith, and Dr. Kathryn M. Rexrode. The court applied Federal Rule of Evidence 702, which allows qualified experts to testify when their opinions are relevant and reliable. The court also considered Rule 26’s requirements for disclosing the facts and data considered by an expert, and Rule 37’s consequences for disclosure failures.

Dr. J. Kevin Gorospe

First Databank argued that Dr. Gorospe’s testimony should be excluded because Exeltis had not disclosed all information he considered, because he lacked sufficient qualifications, and because his opinions were not reliable or included improper legal conclusions.

The court found that any failure to disclose information under Rule 26 was harmless. Dr. Gorospe testified that omitted materials merely confirmed opinions he had already formed, and First Databank had learned about the materials during his deposition and had an opportunity to question him about them.

The court also found that Dr. Gorospe had the minimum foundation of knowledge, skill, and experience needed to testify about claims-processing systems and the use of First Databank’s database. His work in healthcare consulting and his former role with the California Department of Health Care Services supported his qualifications. The court said First Databank could challenge the limits of his experience through cross-examination.

The court found the reliability issue a close question but concluded that Dr. Gorospe’s report was based on his healthcare-industry experience rather than merely summarizing documents. The court cautioned that he could not use his testimony to introduce otherwise inadmissible evidence or give legal conclusions. The court therefore denied First Databank’s motion to exclude Dr. Gorospe’s report and testimony, Dkt. No. 169.

Norman Smith

Mr. Smith designed qualitative market research involving telephone interviews with twelve pharmacy directors at health plans that used First Databank. First Databank argued that Exeltis violated disclosure rules by not identifying the participants and by failing to produce certain survey-related materials. It also challenged Smith’s qualifications and the reliability of his research.

The court found the disclosure issues harmless. The participants had been promised confidentiality, First Databank had access to the same information because they were its customers, and the later-produced materials did not meaningfully differ from information First Databank already possessed. The court also found that changes Smith made to interview notes were non-substantive.

The court rejected First Databank’s characterization of Smith’s work as a quantitative survey. It found that Smith was qualified in qualitative market research based on his experience in managed-care and pharmaceutical marketing, and that his research was a reasonable approach for obtaining feedback from First Databank’s customers. The small sample and participant-selection issues affected the weight of the evidence, not its admissibility. The court denied First Databank’s motion to exclude Smith’s report and testimony, Dkt. No. 170. The court left open the possibility of specific objections to particular survey responses if Exeltis sought to introduce them at trial.

Dr. Kathryn M. Rexrode

Dr. Rexrode’s report addressed the potential effects on women’s health if the database changes caused Medicaid plans and commercial insurers to deny coverage for prescription prenatal vitamins. First Databank argued that the importance of prenatal vitamins and possible effects on third parties were not relevant to Exeltis’s claims.

The court held that some of Dr. Rexrode’s testimony was relevant. She could discuss what prenatal vitamins are, the distinction between prescription and over-the-counter prenatal vitamins, prescribing decisions for prenatal vitamins, and how the database changes might affect prescribers and patients. The court also found that testimony about differences between prescription and over-the-counter prenatal vitamins could be relevant to Exeltis’s trade-libel claim.

The court found other proposed testimony irrelevant or insufficiently connected to Exeltis’s claims. In particular, Dr. Rexrode could not testify about why physicians and health organizations recommend prenatal vitamins as a standard of care, the benefits of prescription prenatal vitamins except when explaining the prescription/over-the-counter distinction, how and why a patient may be prescribed a prenatal vitamin, vitamin deficiency and supplementation, or harm to patients and public health. The court explained that Exeltis’s Unfair Competition Law claim was based on its own alleged economic injury, not harm to lower-income women.

The court therefore granted in part and denied in part First Databank’s motion to exclude Dr. Rexrode’s report and testimony, Dkt. No. 190. If the case proceeded to trial, her testimony would be limited to topics relevant to Exeltis’s claims. The order also terminated Dkt. Nos. 210 and 211.

Disposition

The court denied the motions to exclude the reports and testimony of Dr. Gorospe and Mr. Smith. It granted in part and denied in part the motion to exclude Dr. Rexrode’s report and testimony.