*1 THIS CAUSE has come before the Court upon Movants’ Rule 45 Motion to Compel Production Against Non-Parties Amexpo International, LLC, Surplus Diabetic, Inc., Hironori Mitsuishi, and Haviv Cohen filed by Roche Diagnostics Corp. and Roche Diabetes Care, Inc. (“Motion to Compel”) (DE 1), and a corresponding Motion to Quash and Modify Subpoena filed by Surplus Diabetic, Inc. and Haviv Cohen (“Motion to Quash”) (DE 24). This matter was referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636 and the Magistrate Rules of the Local Rules for the Southern District of Florida (DE 13). The Court has considered both motions, the responses, and the replies thereto, and is otherwise duly advised. For the reasons set forth below, it is ORDERED that the Motion to Compel (DE 1) be GRANTED and that the Motion to Quash (DE 24) be DENIED.

I. Background

Roche Diagnostics Corporation and Roche Diabetes Care, Inc. (together, “Roche”) are Plaintiffs in a civil action pending in the United States District Court for the Northern District of Alabama. In that action, Roche seeks damages for fraudulent insurance reimbursements based on unauthorized secondary-market purchases of its medical products. In an 8-count complaint brought under both federal and Alabama state law, Roche sets forth claims for RICO violations, civil conspiracy, fraud, negligent misrepresentation, and unjust enrichment against Priority Healthcare Corp. and its related entities (collectively, “Priority Care”). See Roche Diagnostic Corp. and Roche Diabetes Care, Inc. v. Priority Healthcare Corp. d/b/a Priority Care, et al., Case No. 2:18-cv-01479-KOB-HNJ (N.D. Ala. 2017). That action supplies the predicate for the third-party discovery dispute presently before this Court.

In the present matter, Roche seeks to compel compliance with subpoenas directed to Priority Care's alleged grey-market suppliers: Amexpo International, LLC (“Amexpo”), Surplus Diabetic, Inc. (“Surplus Diabetic”), and their respective principals, Hironori Mitsuishi and Haviv Cohen (collectively the “Respondents”). The subpoenas seek documents, as well as deposition testimony from Mitsuishi and Cohen.

Resolution of this discovery dispute requires a review of the underlying litigation. According to the Amended Complaint, Roche is one of the leading manufacturers of blood-glucose test strips, which it sells under the Accu-Chek brand. (DE 4-1 ¶ 65). Roche describes two ways in which the test strips are paid for using health insurance: through “pharmacy benefit” insurance, which covers retail test strips, and through “medical benefit” insurance, which typically covers purchases from mail-order distributors, who are under special contracts with Roche. (Id. ¶ 66). A third channel of distribution also exists: strips intended for international sale. (Id. ¶ 140).

Roche alleges that pricing for its pharmacy-supplied retail strips is higher than its pricing for test strips covered by medical benefit insurance or other not-for-retail strips. (Id. ¶ 74). In turn, Roche explains, pharmacies dispensing test strips to patients receive reimbursement directly from health insurance companies at a substantially higher rate than they do for not-for-retail strips. (Id.). Roche ultimately covers the expense for the difference through a system of rebates and administrative fees that it pays to the health insurance companies that, in turn, pay for the retail strips. (Id.).

*2 The margin between the reimbursement rate for retail and not-for-retail strips apparently is fertile ground for fraud. Unscrupulous individuals can take advantage of the differential by obtaining not-for-retail strips through the grey market (such as, international or mail-order vendors) and then submitting fraudulent insurance claims designating the test strips as retail strips. (Id. ¶ 79).

According to Roche, discovery received from Priority Care revealed that the substantial majority of the Priority Care's insurance claims were fraudulent. For instance, Roche claims that Priority Care represented to insurance companies that its affiliated pharmacies had dispensed over 750,000 fifty-count boxes of retail test strips; however, Priority Care's invoices indicated that it purchased only approximately 322,000 fifty-count boxes of retail strips and approximately 410,000 boxes of not-for-retail test strips. (Id. ¶ 117). Roche deduces that Priority Care fraudulently represented these not-for-retail-sale test strips as retail test strips. (Id.).

That is not the end of the matter, however. Although Priority Care's invoices indicate on their face that hundreds of thousands of their test strip purchases were “retail” purchases, and thus legitimately reimbursed at the higher retail rate, Roche has doubts about the accuracy of those invoices. (Id. ¶ 136). More specifically, based on its known pricing data, Roche asserts that the invoiced retail strips were purchased for sums well below wholesale, suggesting that either the invoices were falsified by secondary-market suppliers or, improbably, Priority Care's suppliers resold legitimate test strips at a substantial loss. (Id.). Roche posits that the invoiced retail strips are, in fact, not-for-retail strips, or international purchases that are not eligible for retail reimbursement rates. (Id. ¶ 137). Accordingly, Roche initiated third-party discovery to trace the source of the purported retail strips.

Although Roche's third-party discovery has been extensive, the matter before this Court involves only two entities; Surplus Diabetics and Amexpo, and their respective principals. Roche's subpoenas to these parties include the following requests for supplier information, which serve as the backdrop for the instant dispute:

(DE 4-2).

Respondents have provided invoices of sales to Priority Care entities, but refuse to provide supplier information to Roche. Accordingly, Roche filed a motion to compel production against Respondents. (DE 1). Surplus Diabetics filed objections and a dueling motion to quash. (DE 24). Amexpo filed objections as well. (DE 25). Each party has responded and replied, and this matter is now ripe for adjudication.

Reduced to its essence, Roche's motion presents two reasons for requesting Respondents’ supplier information: (a) to calculate “lost profits” and (b) to identify the “number of acts of fraud.” (DE 1: 11-12). Roche also seeks communications between Mitsuishi and Priority Care to uncover the “nature of the RICO enterprise.” (Id.: 13). Furthermore, Roche argues that Respondents objections are untimely and therefore waived. (Id.: 14).

*3 Surplus Diabetics responds that its supplier lists are “totally irrelevant” to Roche's “evidentiary quest” and also privileged trade secrets (DE 24: 5-6). More specifically, Surplus Diabetics argues that it has already provided invoices to Roche, which clearly reveal the identity of the strips sold to Priority Care. (Id.: 8). Surplus Diabetics accuses Roche of improperly utilizing discovery in the Alabama case to “wage war” on the secondary market for its test strips and fears “that Roche will contact, subpoena, harass and sue its suppliers.” (Id.: 5, 7). Surplus Diabetics further argues that even if ordered to make the requested disclosures, it would not be able to “identify where the specific products it sells came from, as diabetic strips are fungible, thrown into a stockroom for distribution.” (DE 39: 3).

Amexpo similarly objects to the breadth and relevance of the requested discovery and challenges Roche's right to question to authenticity of its invoices. In this connection, Amexpo points out that Roche's representative “attests that the pricing is not consistent which [sic] the prices at which Roche sold retail test strips” and therefore “the information contained in the [i]nvoices has enough specificity of pricing information that can be used by Roche in its damage's [sic] analysis.” (DE 25: 8). And as to communications between Mitsuishi and Priority Care, Amexpo asserts that it has only been able to recover very limited communication after a diligent search. (DE 25-2).

II. Waiver

Initially, Roche claims that Respondents failed to serve objections to the subpoenas within the time allowed by Federal Rule of Civil Procedure 45, rendering their objections waived. See Fed. R. Civ. P. 45(d)(2)(B) (requiring that a subpoenaed party serve written objections to a subpoena within at least “14 days after the subpoena is served”). Roche further argues that Surplus Diabetics’ motion to quash is also untimely under Rule 45.[1]

Yet, Roche overlooks that its own motion to compel is also untimely and may be denied for that reason alone. Local Rule 26.1(g)(1) provides:

S.D. Fla. L.R. 26.1(g)(1).

The subpoenas were served between November 5 – 8, 2018. (DE 4-9). The due date for compliance was November 14, 2018. (DE 4-2). Production was received by Roche on November 19, 2018. (DE 1: 14). In a letter dated November 26, 2018, counsel for Roche identified deficiencies in the production from Respondents. (DE 4-7). The depositions of Cohen and Mitsuishi were scheduled to take place on December 3 and 5, 2018. (DE 4-2). Because the time for compliance has long passed, and Roche discovered the deficiencies in late November 2018, Roche's motion to compel was untimely-filed by more than 6 months.

*4 Nevertheless, Local Rule 26.1(g)(1) is “permissive and affords the Court discretion in whether to consider a late-filed motion.” Sandalwood Estates Homeowner's Ass'n, Inc. v. Empire Indem. Ins. Co., 2010 WL 411088, at *2 (S.D.Fla. Jan. 29, 2010) (citing predecessor Local Rule 26.1(h)(1)). Because all parties are untimely—Roche in its motion, and Respondents in their objections—the Court finds that denying Roche's motion as untimely would merely trigger another round of discovery, objections, and briefing. No benefit would be gained from such wheel-spinning. Accordingly, the Court will exercise its discretion and proceed to the merits of this discovery dispute.

III. Legal Standards

The scope of discovery under the Federal Rules of Civil Procedure is provided by Rule 26(b)(1), which states in pertinent part:

Fed. R. Civ. P. 26(b)(1). Although the scope of discovery is broad, it is not without limits. For instance, Rule 45 requires that the “party or attorney responsible for issuing and serving a subpoena [ ] take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena.” Id. at (d)(1).

As relevant here, Rule 26 further provides that a Court may issue a protective order “requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way.” Fed. R. Civ. P. 26(c)(1)(G). Rule 45 similarly permits a Court to issue an Order modifying or quashing a subpoena if the subpoena requires “disclosing a trade secret or other confidential research, development, or commercial information ....” Fed. R. Civ. P. 45(c)(3)(B)(i).

District courts must balance the interests of the litigants in determining whether disclosure is appropriate. See, e.g., Empire of Carolina, Inc. v. Mackle, 108 F.R.D. 323, 325–27 (S.D. Fla. 1985) (Marcus, J.) (applying a balancing test and stating that “there is no absolute privilege that immunizes trade secrets and similar confidential information from discovery”). Whether disclosure is required rests in the sound discretion of the trial court, and “the party resisting discovery has a heavy burden of showing why the requested discovery should not be permitted.” Paul Gauguin Cruises, Inc. v. eContact, Inc., 2010 WL 11558227, at *2 (S.D. Fla. Nov. 2, 2010) (citing Rossbach v. Rundle, 128 F. Supp. 2d 1348, 1354 (S.D. Fla. 2000)).

IV. Analysis

A. Supplier Information

Applying the principles set forth above, the Court concludes that Respondents have not met their burden to prevent disclosure of the requested supplier information to Roche. Several considerations compel the Court's conclusion.

First, the Court rejects Respondents’ assertion that their invoices clearly reveal the identity or origin of the blood-glucose test strips sold to Priority Care and make further discovery “totally irrelevant.” Indeed, Amexpo tacitly concedes that its invoices are questionable by failing to deny Roche's assertion that the retail strip pricing in the invoices is inconsistent with genuine retail sales. (DE 25: 8). Amexpo simply suggests that based on Roche's investigation “the information contained in the [i]nvoices has enough specificity of pricing information that can be used by Roche in its damage's [sic] analysis.” (Id.) That argument is unpersuasive. Because the invoices bear some indicia of unreliability, which has not been denied by Respondents, Roche is entitled to trace the source of the secondary sales. And Surplus Diabetics’ contention that it is incapable of identifying “where the specific products it sells came from, as diabetic strips are fungible, thrown into a stockroom for distribution” (DE 39: 3), only highlights Roche's need for supplier information. In sum, the Court finds that the origin of the strips is relevant in determining the scope of the alleged fraud, as well as the amount of alleged damages suffered by Roche, based on its rebates for the insurance claims.

*5 Having concluded that the information sought is relevant, the Court must further consider the purported confidentiality of Respondents’ supplier information. Here too, the equities weigh in favor of disclosure. Although the Court agrees with Respondents that commercial information of the nature involve here is typically regarded as confidential, see, e.g., Mackle, 108 F.R.D. at 325–27; Coty Inc. v. C Lenu, Inc., 2010 WL 5392887, at **2–4 (S.D. Fla. Dec. 22, 2010), a confidentiality order is currently in place. Moreover, Roche is part of—and indeed the origin of—the supply chain. Respondents’ argument that the identities of the companies that sell Roche's own product is a trade secret vis-à-vis Roche is not persuasive. Roche, and resellers of its own product, all profit from the ultimate purchasers downstream in the supply chain. This is not a case of a competitor acquiring an opponent's “playbook.”

Finally, the Court considers the harm of disclosure. The Court recognizes that Roche may seek further discovery based on the disclosures, thus “strik[ing] worry into the hearts of suppliers” and indirectly chilling Respondents’ business (DE 24: 7). Yet the Court does not place great weight on this prospective harm. Although legitimate secondary-market suppliers to Respondents may be inconvenienced by subpoenas, that inconvenience is the same inconvenience incident to all civil litigation. Moreover, the scope of any subpoenas would be subject to the proportionality and relevance inquiries of Rule 26. The Court is not persuaded that legitimate resellers of Roche products would be deterred from maintaining business relationships with Respondents by virtue of such routine litigation requests alone.

B. Communications between Mitsuishi and Priority Care

Roche further seeks communications between Mitsuishi and Priority Care. Mitsuishi, however, declares under penalty of perjury that he has been unable to locate the documents requested. (DE 25-2). A party responding to discovery cannot produce what he does not have. Nevertheless, the Court reminds Mitsuishi that he is under a continuing obligation to supplement discovery should these documents be located. In addition, given that Mitsuishi has been unsuccessful locating the requested documents on his own, the Court directs counsel for Mitsuishi to work with counsel for Roche to supplement or modify search parameters as appropriate, and within reasonable limits, with the objective of locating documents within the scope of the discovery request.

C. Deposition of Mitsuishi and Cohen

Given the Court's ruling that the supplier lists are relevant and must be produced, it follows that Mitsuishi and Cohen should not be precluded from testifying on that subject at a deposition. Respondents have not asserted any other viable grounds for resisting the depositions of their principals. Accordingly, Mitsuishi and Cohen shall appear for a deposition as soon as practicable, on a mutually agreeable date, during the relevant discovery period.

V. Conclusion

For the foregoing reasons, Plaintiff's Motion to Compel (DE 1) is GRANTED and the Motion to Quash (DE 24) is DENIED.

DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 20th day of August 2019.

Notably, “[t]he deadline for motions to quash ‘is not defined in the Rule or the Committee notes thereto.’ ” Bond v. Ripa & Assocs., LLC, 2009 WL 10670731, at *2 (M.D. Fla. July 8, 2009) (quoting Schaaf v. SmithKline Beecham Corp., 2006 WL 2246146, at *1 (M.D. Fla. Aug. 4, 2006)). A motion to quash need only be “timely” filed. Fed. R. Civ. P. 45(d)(3)(A).