In re Blue Cross Blue Shield Antitrust Litig.
In re Blue Cross Blue Shield Antitrust Litig.
2017 WL 11539508 (N.D. Ala. 2017)
January 20, 2017
Proctor, R. David., United States District Judge
Summary
The court overruled Defendants' Rule 72 Objection in part and sustained it in part, overruled the non-party targets' Objections, and denied Defendants' Motion To Strike. The court also noted that the non-party targets are not required to create any documents or records that do not exist in the ordinary course of each target's business, nor are they required to create (or purchase) any special software or computer applications for purposes of extracting ESI from their native ESI.
Additional Decisions
IN RE: BLUE CROSS BLUE SHIELD ANTITRUST LITIGATION
Master File No.: 2:13-CV-20000-RDP | MDL NO.: 2406
United States District Court, N.D. Alabama, Southern Division
Filed January 20, 2017
Proctor, R. David., United States District Judge
ORDER REGARDING OBJECTIONS TO DISCOVERY ORDER NO. 34
*1 This matter is before the court on certain Objections to Discovery Order No. 34. (Docs. # 845, 851 - 853). The matter has been fully briefed. (Docs. # 899 - 902, 908, and 910 - 912).
I. Background
Defendant Blue Cross Blue Shield of Michigan issued and served a number of Rule 45 subpoenas duces tecum to non-party health care providers and subscribers seeking the production of documents related to the availability and cost of health-care coverage in Alabama and the reimbursement rates paid by other health-care payers. They also subpoenaed the non-parties to attend and provide deposition testimony. Several of the non-party provider targets filed motions to quash the subpoenas. In Discovery Order No. 34, the Honorable T. Michael Putnam granted in part and denied in part the motions to quash. (Doc. # 832).
Of particular relevance to the objections to Discovery Order No. 34 are the following document requests which Judge Putnam quashed in their entirety:
2. For the past five years, a copy of each contract and contracted fee schedule with any commercial health insurer, government program, rental network, and any other third-party payer.
6. Documents showing your strategies for negotiating with third-party payers, including documents relating to your strategies for obtaining higher payments or avoiding payment reductions.
14. Documents showing your analysis of any rental network, including any costs or benefits of participating in such a rental network.
15. One copy of each communication between you and any Plaintiff, and one copy of any document you produced or disclosed to any Plaintiff.
(Doc. # 832 at 4-5).
Also of particular relevance are the following portions of Discovery Order No. 34 regarding depositions:
(5). Pursuant to Fed. R. Civ. P. 45(d)(3)(C)(ii), the requesting defendant shall reimburse the testifying provider targets their reasonable expenses incurred in researching and preparing for deposition. The non-party providers may decline to appear for deposition until they are paid such reasonable reimbursement of their expenses, but shall otherwise promptly appear and testify consistent with this Order upon payment.
(6). Absent good cause, these providers' depositions shall be completed within forty-five days following the entry of this Order.
Defendants have filed a limited objection to Discovery Order No. 34 raising two issues: (1) that the Order bars Defendants from obtaining any evidence regarding non-party providers' internal analyses and contract negotiations with healthcare insurers, and (2) that the portions of the order relating to the timing of and preconditions imposed upon non-party depositions are problematic. (Doc. # 845 at 2-3).
Three non-party targets also filed Objections to Discovery Order No. 34. (Docs. # 851 - 853). However, each of these non-party Objections merely purports adopt the non-party's previously filed objections to the subpoenas and motions to quash them. (Id.). None of these objections detail the precise error they believe Judge Putnam made in Discovery Order No. 34. (Id.).
II. Discussion
A. Standard of Review
*2 Because Discovery Order 34 does not dispose of a claim or defense of a party, it is a non-dispositive order. See Smith v. Sch. Bd. of Orange County, 487 F.3d 1361, 1365 (11th Cir. 2007). Therefore, to prevail on an objection, a party must establish that the conclusions to which it objects in the order are clearly erroneous or contrary to law. See Rule 72(a); 28 U.S.C. § 636(b)(1)(A); In re Commissioner's Subpoenas, 325 F.3d 1287, 1292 n. 2 (11th Cir. 2003) (observing that district court properly applied “clearly erroneous or contrary to law” standard of review in reconsidering magistrate judge's determination of pretrial matter); see also Merritt v. Int'l Bhd. of Boilermakers, 649 F.2d 1013, 1016–17 (5th Cir. Unit A June 1981)[1] (“Pretrial orders of a magistrate under § 636(b)(1)(A) are reviewable under the ‘clearly erroneous and contrary to law’ standard; they are not subject to a de novo determination....”). “Clear error is a highly deferential standard of review.” Holton v. City of Thomasville Sch. Dist., 425 F.3d 1325, 1350 (11th Cir. 2005) (citation omitted). “[A] finding is ‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Id. (citations and quotations omitted); see also Weeks v. Samsung Heavy Indus. Co., Ltd., 126 F.3d 926, 943 (7th Cir. 1997) (“The clear error standard [under Rule 72(a) and 28 U.S.C. § 636(b)(1) (A)] means that the district court can overturn the magistrate judge's ruling only if the district court is left with the definite and firm conviction that a mistake has been made.”). A magistrate judge's order “is contrary to law ‘when it fails to apply or misapplies relevant statutes, case law, or rules of procedure.’ ” Botta v. Barnhart, 475 F.Supp.2d 174, 185 (E.D. N.Y. 2007) (quoting Catskill Dev., L.L.C. v. Park Place Entm't Corp., 206 F.R.D. 78, 86 (S.D. N.Y. 2002); see also Pigott v. Sanibel Dev., LLC, 2008 WL 2937804, at *5 (S.D. Ala. July 23, 2008) (similar).
B. Specificity of Objections
“The policy of this Court is to promote the efficient utilization of magistrate judges and to avoid the unnecessary duplication of judicial action.” General Orders of Reference to Magistrate Judges dated January 1, 2015. An objecting party may, within reason, file objections with the district court to a Magistrate Judge's order that reference briefing before the Magistrate Judge. “But ‘[i]t is improper for an objecting party to attempt to relitigate the entire content of the hearing before the Magistrate Judge by submitting papers to a district court which are nothing more than a rehashing of the same arguments and positions taken in the original papers submitted to the Magistrate Judge.’ ” Lomasney v. Klimowicz, 2016 WL 7403813, at *2 (W.D. N.Y. Dec. 22, 2016) (quoting Camardo v. G.M. Hourly-Rate Employees Pension Plan, 806 F. Supp. 380, 382 (W.D. N.Y. 1992). “Parties must take before the magistrate, not only their best shot but all of their shots.” Frank Martin Sons, Inc. v. John Deere Const. & Forestry Co., 542 F. Supp. 2d 101, 107 (D. Me. 2008) (quoting Borden v. Secretary of Health & Human Services, 836 F.2d 4, 6 (1st Cir. 1987)).
Rule 72(a) provides that “a party may serve and file objections to a [Magistrate Judge's nondispositive] order within 14 days after being served with a copy. A party may not assign as error a defect in the order not timely objected to.” Fed.R.Civ.P. 72(a). As noted above, the non-party targets filed Objections and Appeals, but they merely adopted wholesale the objections to the subpoenas and their previously filed motions to quash which Judge Putnam considered. Nowhere in the objections do they allege any specific error in Discovery Order No. 34 itself. Therefore, their objections are not properly before the court.
C. Discovery from Non-Parties
Defendants' objection to Discovery Order No. 34 is, however, properly presented. The court begins by noting that the discovery at issue here is not discovery directed to a party. The subpoenas at issue were directed, pursuant to Rule 45, to non-parties. The quashed document requests, to which Defendants take issue, sought commercially sensitive information, internal analyses, and negotiation strategies. “Rule 45 provides in pertinent part that a subpoena may be quashed or modified to ‘protect a person subject to ... a subpoena’ if it requires ‘disclosing a trade secret or other confidential research, development, or commercial information ....’ ” Sams v. GA W. Gate, LLC, 316 F.R.D. 693, 698 (N.D. Ga. 2016) (quoting Fed. R. Civ. P. 45(d)(3)(B)(i); see also Fadalla v. Life Automotive Products, Inc., 258 F.R.D. 501, 504 (M.D. Fla. 2007). Therefore, “Rule 45(d)(3)(B)(i)12 expressly contemplates that subpoenas seeking confidential commercial information may be quashed.” United States Willis v. SouthernCare, Inc., 2015 WL 5604367, at *5 (S.D. Ga. Sept. 23, 2015).
i. Internal Analyses and Contract Negotiations
*3 In evaluating the subpoena requests for information regarding the non-party providers' internal analyses and contract negotiations, Judge Putnam's decision was properly guided by two concerns: (1) “the need to avoid unnecessary burden and expense to the non-parties”, and (2) “concern that the disclosure of the confidential and proprietary information sought in these subpoenas will damage the ability of the non-parties to compete in the economic marketplace.” (Doc. # 832 at 6).
“With regard to the burden imposed on non-parties in responding to discovery requests, courts consider the following factors: relevance, the requesting party's need for the documents, the breadth of the document request, and the time period covered by the request.” Great Am. Ins. Co. v. Veteran's Support Org., 166 F. Supp. 3d 1303, 1310 (S.D. Fla. 2015) (quoting Ubiquiti Networks, Inc. v. Kozumi USA Corp., 295 F.R.D. 517, 521 n. 2 (N.D. Fla. 2013)); see also U & I Corp. v. Advanced Med. Design, Inc., 2007 WL 4181900, at *4 (M.D. Fla. Nov. 26, 2007) (weighing factors such as relevance, need for the documents, the breadth of the requests, and the time period covered by the requests against the burden imposed on the non-party in complying with the subpoena). “In balancing the need for discovery against the burden imposed on the person from whom documents are sought ‘the status of a person as a non-party is a factor that weights against disclosure.’ ” Great Am. Ins. Co. v. Veteran's Support Org., 166 F. Supp. 3d 1303, 1310 (S.D. Fla. 2015) (quoting Am. Elec. Power Co., Inc. v. United States, 191 F.R.D. 132, 136 (S.D. Ohio 1999); see also Schaaf v. SmithKline Beecham Corp., 2006 WL 2246146, at *2 (M.D. Fla. Aug. 4, 2006) (“Courts must also consider the status of a witness as a nonparty when determining the degree of burden; the status of the person as a non-party is a factor often weighing against disclosure.”).
In Discovery Order No. 34, Judge Putnam ordered the non-party subpoena targets to produce significant amounts of information to Defendants. Yet, in pressing their Objection, Defendants want more. But the additional information they seek is commercially sensitive. Although “there is no absolute privilege for trade secrets or similar confidential information,” Sams, 316 F.R.D. at 698 (internal citations omitted), the manner in which Judge Putnam struck the balance in Discovery Order No. 34 is neither clearly erroneous, nor contrary to law.
Moreover, it is noteworthy that, although the subpoenas targeted non-parties, these non-parties are also putative class members. And as this court has previously noted, the Manual for Complex litigation contemplates limits on precertification discovery of putative class members:
Discovery of unnamed members of a proposed class requires a demonstration of need. If precertification discovery of unnamed class members is appropriate, the court should consider imposing limits beyond those contemplated by the Federal Rules of Civil Procedure. Such limits might include the scope, subject matter, number, and time allowed for depositions, interrogatories, or other discovery directed to class representatives or unnamed class members, and might limit the period for completing certification-related discovery.
Manual for Complex Litigation (4th) § 21.14 (emphasis added).
After careful consideration, the court upholds Judge Putnam's decision quashing the document requests at issue which seek evidence regarding non-party providers' internal analyses and contract negotiations with healthcare insurers. Defendants' objection in this regard is due to be overruled.
ii. Timing of and Preconditions on Non-Party Depositions
*4 Defendants' objection to the timing and preconditions on depositions apparently is focused on the requirement that the depositions be completed within a forty-five day window, but only after Defendants reimburse the testifying provider targets for their reasonable expenses incurred in researching and preparing for deposition. Defendants appear concerned that the targets might hold the depositions hostage over a dispute about “reasonable” expenses and Defendants would either be precluded from completing a deposition or be required to complete it an unreasonably short period of time.[2]
When Judge Putnam issued Discovery Order No. 34, there were very tight deadlines in place that made the forty-five day period entirely appropriate. Since that time, however, the court has indicated its willingness to extend the discovery period. The parties are currently negotiating a revised discovery schedule. Thus, under these changed circumstances, Defendants' anticipated timing dilemma may now be alleviated by eliminating the forty-five day deadline contained in Discovery Order No. 34 to complete the non-party depositions. Therefore, Defendants' objection to Discovery Order No. 34 is due to be sustained to this limited extent.
IV. Conclusion
Nothing in Discovery Order No. 34 is either clearly erroneous or contrary to law. See Fed. R. Civ. P. 72(a). For the reasons set forth above, Defendants' Rule 72 Objection to Discovery Order No. 34 (Doc. # 845) is OVERRULED IN PART AND SUSTAINED IN PART. The non-party targets' Objections to Discovery Order No. 34 (Docs. # 851 - 853) are OVERRULED as not properly presented to the court.
The court also notes (and reiterates) Judge Putnam's caveat that that the non-party targets are not required to create any documents or records that do not exist in the ordinary course of each target's business, nor are they required to create (or purchase) any special software or computer applications for purposes of extracting information from their native ESI; rather they need only extract such ESI and documents as are readily available in the ordinary course of their business.
Defendants' Motion To Strike Grandview Medical Center's Brief in Support of its Appeal and Objection to Discovery Order No. 34 (Doc. # 912) is DENIED.
DONE and ORDERED this January 20, 2017.
Footnotes
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc) the Eleventh Circuit adopted as binding precedent all the decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981.
There is no basis to object to the requirement that Defendant be responsible for the subpoena targets' reasonable expenses in preparing for the deposition. A court may issue an order requiring compliance with a deposition subpoena, but the order must protect a non-party from “significant expense resulting from compliance.” Fed. R. Civ. P. 45(d)(2)(B)(ii).