KCI USA, INC., Plaintiff, v. HEALTHCARE ESSENTIALS, INC., Defendant CASE NO. 1:14 CV 549 United States District Court, N.D. Ohio, Eastern Division Filed May 01, 2015 Counsel Anthony C. Sallah, David A. Landman, Thomas O. Crist, Benesch, Friedlander, Coplan & Aronoff, Cleveland, OH, for Plaintiff. Eric J. Weiss, Komlavi Atsou, Michael R. Rasor, Cavitch Familo & Durkin, Cleveland, OH, James S. Gentile, Rhys B. Cartwright-Jones, Youngstown, OH, John J. Lisy, King & Spalding, Charlotte, NC, for Defendant Baughman, Jr., Willliam H., United States Magistrate Judge ORDER *1 District Judge Lesley Wells has referred this case to me for general pretrial supervision, including the determination of all pretrial motions concerning discovery.[1] I currently have before me a motion for sanctions against defendant Healthcare Essentials, Inc. and its counsel filed by plaintiff KCI USA, Inc. arising out of purported conduct during discovery, as well for an extension of the deadlines contained in the case management plan and order.[2] Healthcare Essentials has responded in opposition.[3] KCI has now replied.[4] As I explain below, I have serious concerns about the conduct of discovery by counsel and the parties on both sides. I, therefore, deny the motion and undertake to give further direction for the orderly and expeditious completion of discovery without further dispute and posturing. Background The facts relevant to consideration of the present motion reflect a lawsuit fraught with posturing, disputes, and impasses that have increasingly strained the boundaries of good order and comity set out in the Federal Rules of Civil Procedure and Evidence and in this Court’s orders. In this diversity case the parties assert only claims based on state law. Counsel got off to a good start by filing straightforward and understandable pleadings setting forth the operative facts, claims asserted, and relief sought. Based on these pleadings this should not be a complicated case. In its complaint, KCI alleges that it develops, manufactures, and distributes VAC Negative Pressure Wound Care Systems (“VACs”).[5] KCI further alleges that Healthcare Essentials has marketed and distributed VACs in Ohio and West Virginia without KCI’s knowledge, which systems Healthcare Essentials did not obtain from KCI.[6] Further, the complaint alleges that Healthcare Essentials has falsely represented affiliation with KCI.[7] KCI prays for injunctive relief and damages based on multiple legal theories.[8] Healthcare Essentials has responded with an answer and counterclaim.[9] The answer makes a general denial with affirmative defenses.[10] Healthcare Essentials admits that it possesses some VACs.[11] It alleges in the counterclaim that KCI has converted some of those units.[12] The counterclaim further alleges that KCI has tortiously interfered with Healthcare Essential’s business relationship with customers to whom it has distributed VACs.[13] Healthcare Essentials seeks damages.[14] KCI has filed an answer to the counterclaim.[15] Despite the solid foundation furnished by the pleadings, counsel and the parties quickly abandoned cooperation and embraced contention. Shortly after the entry of the case management plan and order, counsel reached an impasse over the arrangements for the scheduling of the depositions of the principals of KCI and Healthcare Essentials. I entered an order setting a date certain for those depositions, specifying the order thereof, and requiring the depositions to be conducted at the courthouse.[16] That order also required the service of supplemental or corrected initial disclosures,[17] reinforcing my earlier order to the same effect.[18] Further disputes arose during the depositions requiring the Court to give additional directions for the conduct of those depositions.[19] *2 Continued disputes prompted counsel to contact the Court about outstanding discovery issues, requiring still further direction from the Court about the steps necessary for resolution of such matters.[20] In that order of February 13, 2015, I directed counsel to the guidance previously issued about the completion of discovery and the resolution of disputes and further directed them to review those instructions and renew efforts to resolve the discovery disputes without judicial intervention.[21] On March 6, 2015, after an additional communication to the Court on discovery disputes, I issued an additional order directing compliance with prior orders in this case, emphasizing that all disclosures would be under the applicable protective order, and that any objections to disclosure would be preserved for resolution in connection with a later adjudication on the merits.[22] Since those two orders, Healthcare Essentials has claimed that it has “substantially complied” with the order of February 19, 2015,[23] while KCI argues that Healthcare Essentials has played “hide the ball” and not fully complied with the relevant orders, thus requiring the imposition of sanctions.[24] The squabbling continues as counsel have now submitted additional letters to the Court complaining about the conduct of discovery.[25] Ruling and Rationale KCI’s motion for sanctions[26] is denied without prejudice. Counsel and the parties are best served by viewing a legal action as a problem to be solved rather than as a war to be won. The Federal Rules of Civil Procedure provide numerous and varied tools for problem solving, which counsel and the parties ignore at their peril. Discovery as provided by the Rules affords an opportunity to confirm or dispel facts as perceived pre-suit through a cooperative exchange between the parties. Facts as discovered enable counsel to evaluate the strengths and weaknesses of their claims and defenses with a view toward a negotiated solution to the underlying problem, with the possible assistance of a mediator. The Court should play a minimal role in this process, aside from setting the procedural schedule through a case management plan, adjusting that schedule for good cause shown, and steering counsel and the parties toward a negotiated resolution with mediation by a neutral as necessary. Most “disputes” over micro-scheduling, scope of discovery, and privilege and protection waste judicial and client resources if they erupt into proceedings that prematurely invite the Court to become immersed in the merits. As explained below, procedures imbedded in the Rules of Civil Procedure and Evidence, supplemented by Court procedural orders, can preserve objections and sanctions for determination if and when the Court must decide the merits in the context of summary judgment or trial. Counsel have a professional duty to explain to clients that despite the emotions engendered by suing and being sued, the Rules and the proper expectations of the Court point to a civil and orderly solution of the problem, with a decision on the merits if necessary, not continuous and contentious squabbling. Both parties and their respective counsel have repeatedly invited me to inappropriately micromanage the discovery in this case by scrutinizing, critiquing, and dictating the content of individual discovery requests and the responses thereto. This I decline to do. *3 The parties and their counsel have the most comprehensive and best understanding of the matters at issue in this case and of the documents and witnesses relating to those matters. They are in the best position to cooperatively determine and execute a reasonable plan for identifying and producing those documents and witnesses. Any discovery plan so generated is preferable to a plan imposed on the parties and counsel by a judicial officer. Here despite multiple, court-ordered meet and confer conferences, the parties and counsel remain mired in deep conflict. The discovery process in this case is broken. It is necessary to reboot the process. As stated in Civil Rule 1, the objective must be to secure the just, speedy, and inexpensive determination of the action. This must start with the careful and thoughtful examination of each claim, counterclaim, and defense asserted. The law sets out the elements that the party must prove to prevail on such claims or defenses. These elements must be established by facts. These facts must be evidenced by witness testimony or documents. Through the procedure set out in the Civil Rules, the Court, with the input of counsel, decides if any disputes exist as to material facts that must be resolved at trial. Under the rules and the case law interpreting those rules, few genuine issues of material fact typically remain for decision at trial. In these times when more specific factual pleadings are required,[27] the case law actively encourages trial courts to consider summary judgment or partial summary judgment,[28] and most cases tried are submitted to the jury with either a special verdict or a general verdict with written questions,[29] the days are gone when counsel can hope to prevail by telling a good story at trial and receiving a favorable general verdict. In this context, the Civil Rules provide for initial disclosures and for supplements and corrections thereto. These demand that counsel take a conscientious snapshot of the evidence in support of the case and disclose that evidence to the opponent at appropriate junctures. The initial disclosures provided for early in the case must be based upon the careful identification and consideration of the elements of the claims or defenses referred to above and reflect counsel’s thorough investigation of the facts supporting those elements. As discovery proceeds, counsel must correct or supplement those disclosures – take additional snapshots – as the content of the initial disclosures becomes incomplete or incorrect. Whenever documents supporting a claim or defense or witness supporting a claim or defense becomes known after the initial disclosure, then that disclosure becomes incomplete or incorrect and must be supplemented or corrected. This is particularly so when supplements and corrections are ordered by the Court, as I have now done here. Given the wording of Civil Rule 26(a), a document or a witness cannot be withheld from disclosure merely because counsel has made a professional judgment that the document or witness may be used as evidence in support of a claim or defense. Otherwise, the disclosure process as set out in the rules becomes meaningless. For this reason, the disclosures – initial, supplemental, and corrected – will eventually include every witness or document that will appear on a trial list for purposes of supporting a claim or defense. Counsel may well not formulate a list of documents or witnesses for purposes of dispositive motions or trial until after the close of discovery. For various strategic or practical reasons, certain witnesses or documents that provide support for claims or defenses may not be offered for purposes of decision on the merits. Nevertheless, these witnesses and documents must be timely disclosed or, if not, excluded as evidence on dispositive motion or at trial.[30] *4 Counsel may propound interrogatories or requests for production to discover documents or witnesses detrimental to the opponent’s claims or defenses. But these discovery tools have inherent limitations.[31] In many cases, the most effective discovery tool for obtaining facts is the deposition, including the deposition of an organization under Civil Rule 30(b)(6). In response to a notice or subpoena for such a deposition, the named organization must designate as many persons with knowledge necessary to address the matters for examination described with reasonable particularity by the deposing party.[32] Regardless of the number of persons presented in response to the notice or subpoena by the organization, the deposition must be completed within the limitations set out in Civil Rule 30(d), unless the Court grants relief therefrom. Federal Rule of Evidence 502(d) provides for disclosure of documents or witness testimony claimed to be privileged or protected without waiver of the privilege or protection asserted. I have entered a Rule 502(d) order in this case.[33] Such an order, coupled with an attorneys-eyes-only provision in a protective order,[34] should permit the limited disclosure of privileged or protected information free of waiver concerns without the need for interim rulings from the Court with burdensome in-camera inspections. There may be certain documents or testimony that should not be disclosed, waiver notwithstanding, such as an opinion letter from an attorney to a client on an issue relating to the litigation, the request from a client to an attorney for such advice, testimony about a conference between an attorney and a client in which advice is sought or given, or trial preparation documents outlining potential direct or cross-examination at trial or summarizing facts and authorities in preparation for a motion for summary judgment. Counsel should recognize such documents for what they are and agree that they are beyond the scope of discovery without resort to the Court. To be sure, the Rules provide for protection from discovery abuses. A party may object to discovery on the ground that the burden outweighs the benefit.[35] Also, a party may object that discovery sought is not relevant to any party’s claim or defense.[36] In such instances, the discovery sought should go forward with these objections made and preserved for resolution in the context of the Court’s decision on the merits. The Court has the discretion in the merits context to exclude any evidence beyond the permissible scope of discovery from consideration and to impose costs of discovery when the burden of disclosure outweighs the benefits.[37] The Court preferably should not address relevancy and burden issues prematurely in a vacuum before a decision point on the merits. Further, counsel and the parties must consider the consequences of a Court’s resolution of a discovery dispute, particularly one that the parties and counsel could have avoided by consultation and cooperation. If the Court must resort to sanctions under Federal Rule of Civil Procedure 37, reasonable expenses, including attorney’s fees, must be awarded “against the party whose conduct necessitated the motion,”[38] “the disobedient party,”[39] “the attorney advising” the conduct[40] or disobedience,[41] or both.[42] Counsel must advise their clients of these sanctions and of the serious difficulties caused by an award of sanctions jointly and severally against the attorney and the client. *5 Finally, counsel must consider carefully the potential under 28 U.S.C. § 1927 for personal liability for “excess costs, expenses, and attorney’s fees” for multiplication “of proceedings in any case unreasonably and vexatiously” caused by his or her conduct.[43] This liability can attach for conduct during discovery,[44] even if the attorney’s client ultimately prevails on the merits.[45] Turning to this case and the current dispute, the pleadings point to one, overarching legal issue for resolution: Healthcare Essentials has possession of VACs originally manufactured and distributed by KCI. Healthcare Essentials has distributed some of those units to its customers. Does Healthcare Essentials have a legal right to possess and distribute those units? The resolution of this issue requires at a minimum the following information: • The identity of the VACs possessed by Healthcare Essentials, • The “chain of custody” of each of these units from the time of distribution by KCI until those units came into the possession of Healthcare Essentials, • The “chain of custody” of each of these units from the time of possession by Healthcare Essentials to the present, • Any documentation in the possession of either party regarding the units in dispute, • The identification of any person having information about the identification of the units in dispute or the “chain of custody” of such units, and • Any documents that go to KCI’s claim that Healthcare Essentials does not have a right to possess or distribute the units in dispute or to Healthcare Essentials’ claim that it has that right. This is a non-exclusive list that centers primarily on liability. Another list must be generated for damages. This information is critical to proof of the claims asserted in the complaint or counterclaim and of the defenses asserted to those claims. As I explain in great detail above, the initial disclosure process set out in Civil Rule 26(a) requires counsel to voluntarily disclose this information without a formal discovery request. The multiple discovery disputes presented to the Court strongly suggest that counsel and the parties have not exchanged the critical information patently within the proper scope of voluntary initial disclosures compelled by the Rule. Furthermore, I have entered several orders directing the parties to provide certain specifically-identified discovery by dates certain.[46] On my further review of those orders, it appears that the parties and counsel should have exchanged all of the subject discovery through the voluntary disclosure process, or the exchange of that discovery should have naturally flowed from such voluntary disclosures. Nevertheless, those orders stand and remain in full force and effect. The parties and counsel cannot ignore them by recasting their positions under the guise of new discovery disputes or by giving the clear terms of those orders strained interpretations. Nor may the parties and counsel excuse compliance on the bases that counsel has turned over everything received from the client to date or that the opposing party has unclean hands. This case, including the ongoing and seemingly continuous discovery disputes therein, come before me on referral. My orders addressing those disputes are rulings on “nondispositive matters” as set forth in Federal Rule of Civil Procedure 72(a). If a party disagrees with any such ruling, the proper recourse is objection to the referring district judge within 14 days after service of the order.[47] The district judge will then review the order under the clearly erroneous or contrary to law standard.[48] *6 The parties have made no timely objection to my orders. They, therefore, must comply with them. To return discovery to a collaborative, problem-solving process as intended by the Civil Rules and my orders, I hereby order the following: • Counsel and a representative or representatives of each party with best knowledge of the information relevant to this case must meet[49] and confer in Courtroom 10A, United States Courthouse, 801 West Superior Avenue, Cleveland, Ohio, on May 11, 2015, to reach a consensus on the scope and specific constituent components of the required disclosures required by Federal Rules of Civil Procedure 26(a)(1)(A), 26(a)(1)(E), and 26(e)(1)(A) and (B). This conference will begin at 9:00 a.m. and continue until counsel and the parties reach such a consensus. The conference may extend into additional days if necessary. • On or before May 6, 2015, counsel must deliver to their clients a copy of this order and must discuss with them: • the require disclosures obligation under the Civil Rules and the Court’s orders; • the sanction of exclusion from consideration on the merits of any evidence that should have been but was not timely disclosed; • the possibility and consequences of joint and several liability of the attorneys and parties for monetary sanctions imposed because of the breach of duty to make required disclosures; and • the significance of the Court’s orders providing for the reservation of all objections to disclosures and the resolution of those objections with the decision on the merits of the case, including the protection provided by the Court’s Evidence Rule 502(d) orders and the stipulated protective order. • On or before May 29, 2015, the parties must serve supplemental and corrected disclosures consistent with Civil Rule 26(e)(1) and the prior orders of the Court. • The supplemental and corrected disclosures so ordered must take into consideration and address outstanding discovery that this Court has previously ordered. In any event, all discovery previously ordered must be completed by June 15, 2015. • By June 22, 2015, counsel must jointly submit to the Court a proposed schedule for the completion of discovery and the briefing on dispositive motions (summary judgment or partial summary judgment) if such motions are contemplated. Conclusion KCI’s motion for sanctions is denied without prejudice. The parties and counsel must proceed with discovery in compliance with this order. IT IS SO ORDERED. Footnotes [1] ECF # 17. [2] ECF # 42. [3] ECF # 49. [4] ECF # 52. [5] ECF # 1, at ¶ 7. [6] Id., at ¶ 12. [7] Id., at ¶ 14. [8] Id., at 9-10. [9] ECF # 10. [10] Id. [11] Id., at ¶ 4. [12] Id., at ¶¶ 13-17. [13] Id. at ¶¶ 18-23. [14] Id., at 12-13. [15] ECF # 16. [16] ECF # 30. [17] Id. [18] ECF # 18. [19] ECF # 31. [20] ECF # 39. [21] Id. [22] ECF # 41. [23] ECF # 49. [24] ECF # 42. [25] Letter dated April 9, 2015 (Healthcare Essentials); April 12, 2015 (KCI); and April 20, 2015 (Healthcare Essentials). [26] ECF # 42. [27] Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). [28] Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby, 477 U.S. 242 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). [29] Fed. R. Civ. P. 49. [30] Fed. R. Civ. P. 37(c)(1). [31] E.g., Fed. R. Civ. P. 33(a)(1) (limiting the number of interrogatories to 25). [32] Fed. R. Civ. P. 30(b)(6). [33] ECF # 18. [34] I have also approved a stipulated protective order. ECF # 21. [35] Fed. R. Civ. P. 26(b)(2)(c)(iii). [36] Fed. R. Civ. P. 26(b)(1). [37] See, Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358 (1978); Boeynaems v. LA Fitness Int’l, LLC, 285 F.R.D. 331, 335-36 (E.D. Pa. 2012). Also a party may shift the burden and expense of disclosure, to some extent, by unilaterally exercising the option to produce business records in response to an interrogatory under Fed. R. Civ. P. 33(d) or by producing documents or electronically stored information as kept in the usual course of business under Fed. R. Civ. P. 34(b)(2)(E). [38] Fed. R. Civ. P. 37(a)(5)(A). [39] Fed. R. Civ. P. 37(b)(2)(C). [40] Fed. R. Civ. P. 37(a)(5)(A). [41] Fed. R. Civ. P. 37(b)(2)(C). [42] Fed. R. Civ. P. 37(a)(5)(A) and 37(b)(2)(C). [43] 28 U.S.C. § 1927. [44] See, Jones v. Ill. Central R.R. Co., 617 F.3d 843, 854-56 (6th Cir. 2010). [45] See, id. at 850-54. [46] ECF #s 30, 38, and 40. [47] Fed. R. Civ. P. 72(a). [48] Id. [49] Throughout this order I use the word “must.” So that no misunderstanding exists, “must” means “is required to.” See, B.A. Garner, Guidelines for Drafting and Editing Court Rules, 29 (2007), available at www.uscourts.gov/uscourts/RulesAndPolicies/rules/guide.pdf.