eDiscovery Assistant

MSP Recovery Claims Series, LLC v. Sanofi-Aventis U.S., LLC

2023 WL 11986907 (D.N.J. 2023)

November 14, 2023

Cavanaugh, Dennis, Special Master (Ret.)

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Summary

Fallon Community Health Plan, Inc. filed a motion to quash a subpoena served by Defendants or for a protective order. The court denied Fallon's request within certain parameters, stating that Defendants are entitled to conduct a Rule 30(b)(6) deposition and that Fallon has similar discovery obligations as a named party. The court must now decide whether the deposition should be limited given the previous depositions and document production.

Additional Decisions

MSP RECOVERY CLAIMS, SERIES, LLC, MAO-MSO RECOVERY II, LLC, SERIES PMPI, and MSPA CLAIMS I, LLC, Plaintiffs,
v.
SANOFI-AVENTIS U.S. LLC, NOVO NORDISK INC. and ELI LILLY AND COMPANY, Defendants

Case No. 2:18-cv-2211(BRM)(LHG)

United States District Court, D. New Jersey

Filed November 14, 2023

Cavanaugh, Dennis, Special Master (Ret.)

ORDER AND OPINION OF THE SPECIAL MASTER JUDGE DENNIS CAVANAUGH, RET. AS TO FALLON COMMUNITY HEALTH PLAN, INC.’S MOTION TO QUASH SUBPOENA OR FOR A PROTECTIVE ORDER

*1 Before the Special Master is a motion filed by Fallon Community Health Plan, Inc. (“Fallon”) which seeks to quash a subpoena served by Defendants or for a protective order. In deciding this motion, the Special Master has reviewed and considered the following:

Fallon's motion to quash the subpoena or for a protective order with attached exhibits;
Defendants’ memorandum in opposition to Fallon's motion with attached exhibits; and
Fallon's reply memorandum.

After considering the parties’ submissions, and based upon the following analysis, it is the opinion of the Special Master that Fallon's request to quash the subpoena or for a protective order is DENIED within the parameters set forth in this Order and Opinion.

I. Procedural History and Statement of Facts

Given the parties’ familiarity with the procedural and underlying facts which form the basis of this motion, the Special Master will provide only a brief summary of those facts and events pertinent to this application.

Plaintiffs are MSP Recovery Claims Series, LLC; MAO-MSO Recovery II, LLC; Series PMPI; and MSPA Claims I, LLC (collectively referred to as “Plaintiffs” or singularly as “MSP”). From the inception of this litigation, Plaintiffs have asserted claims on behalf of certain assignors who are effectively private health plans that provide prescription drug coverage through Medicare Part D. Defendants manufacture analog insulin to treat patients with diabetes. Plaintiffs, on behalf of their assignors, contend that the manufacturers have employed an insulin pricing scheme that has unlawfully resulted in an inflated purchase price for that medicine. Plaintiffs are seeking to recover, as assignees, damages caused by this allegedly unlawful pricing scheme.

Fallon is one of the assignors whose claims have been transferred to MSP. Hence, Fallon's putative claims arising out of Defendants’ alleged scheme to improperly maintain insulin prices has been subsumed within this action. As is the case with the other assignors whose claims have been transferred to MSP, Fallon (through MSP) has produced written discovery, and has made available witnesses – employees and former employees – for depositions conducted by Defendants’ counsel. This motion concerns a proposed deposition.

Simply stated, on November 9, 2022, Defendants served a Rule 30(b)(6) deposition subpoena on Fallon. The subpoena sought to depose a corporate representative of that company, a Massachusetts based health insurer, and contained 31 topics as to the insulin pricing at issue in this lawsuit. Previously, Defendants had conducted three depositions of current Fallon employees, and a deposition of one former employee. Fallon had identified its vice president of pharmacy operations, Benjamin Barner, as its prospective corporate representative. Barner had been one of the three previously deposed Fallon employees and testified in his individual capacity.

Fallon now moves to quash the subpoena of its corporate representative, Barner, or alternatively, for a protective order limiting the extent and duration of the deposition.

II. Fallon's Argument

*2 Essentially, Fallon argues that the deposition of its corporate representative is unnecessary, duplicative, burdensome and costly, especially in light of the fact that Fallon is a third party and not a named litigant in this action. In support, Fallon emphasizes the following:

Defendants have deposed three current Fallon employees – Barner, vice president of pharmacy services; Lisa Lashbrook, senior director of Medicare programs and Medicare compliance officer; and David Sartini, manager of pharmacy operations and clinical programs. A fourth deposition of a former Fallon employee, Kevin Grozio, has also been taken.
The depositions of the Fallon employees deposed to date amounted to more than 22 hours of testimony.
Fallon incurred more than $21,000 in attorneys’ fees in preparing for and defending these depositions.
In response to prior requests, MSP produced a “voluminous set” of Fallon documents for which it took Fallon employees approximately 15 hours to retrieve and compile. Additionally, Fallon's counsel reviewed these documents for privileged and proprietary information consuming another three hours.
The Rule 30(b)(6) deposition subpoena demands that Fallon produce all documents used to prepare for the deposition which, Fallon says, is “completely duplicative of the Fallon documents previously produced to Defendants by MSP.” [See affidavit of Mark A. Mosby, Fallon's chief legal counsel, at page 3, ¶ 14.]
Fallon maintains that “almost all” of the subpoena topics have been discussed during the course of the prior depositions.
Fallon has agreed to be bound by its deponents’ deposition testimony.
As to the proposed 31 subpoena topics, only six of them have not already been covered in Barner's deposition. (Topic numbers 8, 9, 14, 16, 20, 27) Of those six topics, only numbers 8 and 9 were never raised in the depositions of the other witnesses. Fallon also argues that even though there exist subpoenaed topics not covered in the Barner deposition, those topics are overbroad and seek irrelevant information, that is, they are not limited to insulin or Fallon's Medicare Advantage health plan.
Fallon is concerned that based upon the depositions already concluded, Defendants will conduct a Rule 30(b)(6) deposition that will last in the area of six to seven hours.

Fallon maintains that it is a nonparty and, as such, is afforded the heightened protections to a nonparty under Federal Rule of Civil Procedure 45. Under the Rule, a party issuing and serving a subpoena “must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena.” Fed. R. Civ. P. 45(d)(1). Citing case law, Fallon says this heightened discovery standard as to nonparties constitutes a “critical protection” since our courts have recognized that nonparties “have no dog in the fight” and “are strangers to the [ ] litigation,” and should not be subject to invasive burdens associated with typical discovery. Cusumano v. Microsoft Corp., 162 F. 3d 708, 717 (1st Cir. 1998). Hence there is “special weight” afforded to nonparties seeking to quash the subpoena. Courts need to consider issues such as relevance, the requesting party's need, the breadth of the request, and the burden imposed on a nonparty.

Additionally, both parties and nonparties are protected by Federal Rule of Civil Procedure 26 which gives the court the power to limit the extent of discovery if the requested discovery is unreasonably cumulative or duplicative, can be obtained from another more convenient source or when the party seeking discovery has had ample opportunity to obtain the information previously. Fed. R. Civ. P. 26(b)(2)(C). Rule 26, like Rule 45, also contains a balancing test and the burden or expense of the proposed discovery must not outweigh its likely benefit. Fed. R. Civ. P. 26(b)(1).

*3 Put succinctly, Fallon says that Defendants are seeking to “redepose” Barner, an action which imposes an undue burden and expense on the company. Prior depositions have already exceeded 22 hours. Barner's deposition will be the fifth and the time incurred as a consequence of his deposition must also include the time needed to comply with the subpoena's request for documents. Further, the financial requirements are excessive, especially in light of the fact that the prior depositions forced Fallon to expend more than $21,000 in fees. As done in the past, Fallon's chief legal counsel will review the most recent document production. Finally, Defendants have not shown a particular need for redeposing Barner when he had been deposed for six and a half hours in September 2022 “on largely the same topics the Subpoena notice identifies.”

Adding to all of this, says Fallon, is the fact that Defendants have refused to narrow or refine any one of the 31 topics identified in the notice, insisting that Fallon – and not Defendants – bear the burden of reviewing the prior Fallon deposition testimony to exclude topics previously covered – a requirement that even an opposing party does not need to undertake.

Even if Fallon is considered a party (which movant insists it is not), the subpoena should be quashed because it fails to satisfy the discovery restrictions of Rule 26. It is unreasonably cumulative and Defendants had ample opportunity to obtain the information during the course of the four prior depositions.

Fallon specifically points to Barner's September 20, 2022 deposition transcript, a copy of which was supplied. The topics covered included, among other things, Fallon's insulin manufacturer rebates, purported “kickbacks,” Fallon's affiliation with health providers, Fallon's relationship with pharmacy benefit manufacturers, contractual relationships with pharmacies, internal policies, document retention, calculation of insulin payments, regulation compliance, and the company's relationship with MSP. [See, memorandum in support of Fallon's motion to quash and for protective order, page 9-10, items a-m.] Barner's testimony, in combination with the other Fallon witnesses, leave only two topics never covered – numbers 8 and 9 – “a fact which renders the Subpoena duplicative and cumulative.”[1] Fallon concedes that a subpoena is not duplicative solely because a Rule 30(b)(6) representative was previously deposed, but in this case, there is an overwhelming subject-matter overlap between the previous Fallon depositions (especially Barner's) and the subpoena's document demands. Citing District of Massachusetts case law, Fallon emphasizes that this overlap renders a subpoena impermissibly cumulative and duplicative.

Fallon has also agreed to be bound by the deposition testimony of its employees – Barner, Lashbrook, Sartini and its former employee, Grozio. Citing Anaheim Gardens v. United States, 124 Fed. Cl. 36, 41 (2015), movant says that courts will greatly limit the scope of a Rule 30(b)(6) deposition when a corporation offers to be bound by individual deposition testimony and when the deposition of a representative would comprise asking the same individual the same questions as in prior depositions.

Citing Rule 36, Fallon maintains that Defendants have been seeking discovery that they had ample opportunity to obtain previously. Having taken more than 22 hours of testimony and having been provided voluminous documents by Fallon, Defendants have had the opportunity to be fully versed in Fallon's pharmacy operations. Instead, it appears, the objective in deposing Barner is to retrieve different answers to the same questions.

*4 Finally, if the court determines that the subpoena should not be quashed, Fallon seeks a protective order “from the most egregiously burdensome and duplicative aspects of the Subpoena.” Fallon requests to reduce the topics to those not already covered in Barner's deposition and identifies topic numbers 8, 9, 14, 16, 20 and 27. Movant also seeks an order that the deposition is restricted to one hour.

III. Defendants’ Opposition

In opposing Fallon's motion to quash, Defendants emphasize certain procedural and factual events. Defendants stress that in 2017, Fallon entered into a recovery agreement with MSP which obligated the company to cooperate by providing information relating to the assigned claims and, in exchange, Fallon was to receive 50% of the net proceeds recovered by MSP. In 2021, while this litigation was pending, Fallon sold its interest to MSP for an undisclosed amount. Then, in 2018, MSP brought the underlying litigation in which Plaintiffs seek to recover damages on behalf of the remaining assignors including Fallon based upon a claim that the drug manufacturers have artificially inflated the list price of analog insulin as part of the scheme. Furthermore, MSP has no direct knowledge supporting its allegations and all the relevant information is in the possession of the assignors with these damages arising out of insulin purchases between 2009 and 2019.

Defendants go on to stress that during the course of discovery the court has issued several orders related to efforts to obtain discovery from the assignors, including Fallon. Defendants reiterate that in January 2021, the Special Master ordered Plaintiff to produce “the same documents and information from each assignor that Defendants would have been entitled to if the assignors had brought the lawsuit themselves.” As to depositions, on September 15, 2022, the Special Master ordered multiple assignor-related depositions including those of Fallon witnesses and a Fallon corporate representative. [ECF No. 255 at 2-3.]

As a consequence of those orders, Defendants deposed three current and one former Fallon employee at which time attorneys for Fallon and MSP jointly defended the witnesses and asserted that they were being deposed in their individual capacities, not as representatives of Fallon. None of the depositions lasted the seven hours allowed under Rule 30(d)(1) because, according to Defendants, “none of the witnesses meaningfully prepared for the deposition” and each failed to review appropriate corporate documentation. Barner, the subject of this motion, testified to merely reviewing recent Google articles and repeatedly testified to an absence of knowledge about matters which transpired before he joined Fallon in mid-2019. Defendants say the same is true for Fallon's other three witnesses – Lashbrook, Sartini and Grozio.

After being served with a Rule 30(b)(6) deposition notice in November 2022, Fallon objected to each topic asserting that the topics were overbroad, burdensome and oppressive. In December 2022, the parties conducted a meet and confer at which time Fallon identified Barner as Fallon's corporate witness and, asserted that since he had already been deposed, the deposition would be duplicative and cumulative. Defendants maintain that Fallon, having taken this position, refused (in an effort to compromise) to identify those portions of the earlier depositions that were duplicative or by stipulating to certain topics. Thereafter, this motion followed.

*5 Defendants argue that this motion is not governed by either Rule 45 or 26 but is effectively a motion to reconsider the Special Master's September 2022 order which compelled “dozens of Assignor-related depositions, including the depositions of [four Fallon witnesses and a corporate representative].” Fallon has failed to meet the standard necessary to succeed on a motion for reconsideration, i.e., this motion presents no newly discovered evidence, no intervening change in the law and was not based on a manifest error of law or was clearly unjust, citing United States v. Allen, 573 F. 3d. 42, 53 (1st Cir. 2009) and other cases.

However, Defendants go on to say that should the court analyze this motion under either Rule 26 or 45, Fallon's motion should be defeated.

As to Rule 45, which governs the scope of subpoenas as to nonparty witnesses and which is more stringent than Rule 26, Defendants say Fallon is wrong. Defendants argue that Fallon should be treated as a party for discovery purposes and held to the less stringent standard of Rule 26, citing In re Infant Formula Antitrust Litig., MDL No. 878, 1992 U.S. Dist. LEXIS 21981 (N.D. Fla. Jan. 13, 1992). That is, for discovery purposes, assignors should be treated as parties.

Nevertheless, even under the more stringent standard of Rule 45, Defendants cite a variety of reasons that they are entitled to fully depose a Fallon corporate representative and their right to take that deposition outweighs any burden to Fallon.

Defendants argue that they have never deposed a corporate representative, they have only garnered testimony from Fallon employees in their individual capacities. A corporate representative under Rule 30(b)(6) must testify on behalf of an organization based upon information reasonably available to that organization, i.e., in this case as to Fallon's corporate knowledge. Four individual depositions do not substitute for a Rule 30(b)(6) deposition as those witnesses did not bind the entity nor were they responsible for providing all relevant information knowable to the entity. Further along these lines, a Rule 30(b)(6) deposition witness has a greater responsibility to prepare for the deposition which includes, among other things, reviewing all relevant corporate documentation bearing on the deposition topic, citing Calzaturficico S.C.A.R.P.A. s.p.a. v. Fabiano Shoe Co., 201 F.R.D. 33, 36 (D.Mass. 2001).

The deposition of an individual and the deposition of the same person as a corporate representative are two distinct matters. Courts have rejected the argument that prior deposition from an individual fact witness relieves the corporation from designating a corporate spokesman, citing Smith v. Gen. Mills, Inc., No. C2 04-705, 2006 U.S. Dist. LEXIS 19093, 2006 WL 7276959, at *5 (S.D.Ohio Apr. 13, 2006) and other cases. Here, none of the Fallon witnesses attempted to educate themselves about the subject matter of the deposition and took minimal efforts to prepare. Accordingly, Fallon cannot argue that this unprepared testimony, in which the witnesses disclaimed knowledge of many of the topics, obviates Defendants’ need for a proper Rule 30(b)(6) deposition of Fallon.

Contrary to Fallon's argument, Defendants say a deposition would not be unreasonably duplicative of the prior witness’ testimony. They reiterate that courts reject the argument that previous individual depositions make a subsequent Rule 30(b)(6) deposition duplicative, citing Cabi v. Boston Children's Hospital, No. 15-cv-12306, 2017 U.S. Dist. LEXIS 230174, 2017 WL 8232179, at *2 (D. Mass. June 21, 2017). Barner repeatedly testified that he could not comment on matters occurring prior to 2019 when he joined Fallon, but the claims here date back to 2009. Additionally, his existing testimony is inadequate. In response to the statement in Fallon's motion that Barner was questioned about and testified to specific deposition topics, Defendants say Barner, in fact, was wholly unprepared to offer testimony about Fallon on those topics. Defendants list the topics allegedly covered at Barner's deposition in comparison with his deposition testimony on pages 15-17 of their memorandum in opposition. Those topics include Fallon's compliance with regulations, relationship with MSP, rebate programs, contracts with pharmacies, internal policies, document retention, cost savings on insulin, calculation of insulin payment, affiliation with health providers, health plan products, relationships with PBMs, geographic distribution and manufacturer rebates. In each case, say Defendants, Barner was unprepared to and failed to provide a direct response.

*6 Defendants say that this deficiency is true of the other witnesses including Lashbrook who, despite having held the title of Medicare compliance officer and director of Medicare programs, testified “more than 140 times that she could not answer various questions, including if Fallon even receives rebates from the PBMs.”

Defendants say that Fallon has failed to satisfy its obligation to show that the subpoena imposes an undue burden. As to time requirements, had Fallon directly pursued these claims, the company would have presumptively been obligated to produce up to ten witnesses (not four or five). As to financial requirements imposed by the subpoena, including attorneys’ fees, the fees of some $21,000 represent approximately 0.05% of the $40 million of Fallon insulin purchases. Moreover, these attorneys’ fees were self-imposed since three attorneys were present at each deposition (an attorney for MSP, one on behalf of Fallon, and in-house counsel for Fallon).

Finally, as to Fallon's request for a protective order limiting the number of topics and the time to one hour, Defendants say that they are entitled to a complete deposition of a representative on all topics – a right they would have been entitled to had Fallon brought the claim directly.

IV. Fallon's Reply

Fallon's reply was filed prior to the point when the Massachusetts District Court transferred this motion. Therefore, segments of the reply memorandum address what Fallon describes as Defendants’ “collateral attack” on another court's order. Given that this issue is mooted by the transfer, that aspect of Plaintiff's reply will not be addressed here.

As to Fallon's reply arguments still relevant here, the movant makes the following points:

Fallon principally argues that its motion is not, as Defendants claim, a “de facto motion for reconsideration.” That is, the order which compelled Fallon's witnesses and 30(b)(6) representatives to appear for deposition did not address, let alone resolve, the substance of Fallon's position that the subpoena should be quashed. The court never considered or required Fallon to produce its corporate representative under the circumstances that have evolved here – the amount of discovery Fallon has provided, the testimony of four Fallon deponents, and a cumulative total of 22 hours of depositions over four days. Fallon further states that it has never appeared in this New Jersey action as to this or any other dispute.
Instead, Fallon states, Defendants are improperly attempting to “shoehorn” irrelevant legal standards – meaning those pertinent only to a motion for reconsideration – into a dispute involving the validity and breadth of a subpoena. Fallon argues that the proper standard for resolving a subpoena challenge remains Rules 26 and 45. Under the text of either rule, the courts universally follow a balancing test that requires a court to weigh relevance, need, and confidentiality of the requested materials as well as considering the harm compliance would cause to the subpoenaed parties. Citing In Re Domestic Drywall Antitrust Litig., 300 F.R.D. 234, 239 (E.D.Pa. 2014) and Mannington Mills, Inc. v. Armstrong World Indus., Inc., 206 F.R.D. 525, 529 (D.Del. 2002). Indeed, says Fallon, Defendants have failed to cite one case that endorses the application of the motion for reconsideration standard to a motion to quash.
Fallon also argues that its offer to be bound by its witnesses’ depositions undermines Defendants’ arguments that they need to depose a company representative. Citing Anaheim Gardens, 124 Fed. Cl. 36, Fallon urges that the court should limit the scope of requested Rule 30(b)(6) depositions under circumstances where a defendant corporation offers to be bound by individual deposition testimony and when the deposition of the corporate representative would result in “asking the same individuals the same questions” as asked previously. Along these lines, Fallon also argues that the cases cited by Defendants to support the need for “a duplicative, cumulative...deposition of Mr. Barner do not support their position.” Essentially, says Fallon, the cases relied on by Defendants involved situations that the prospective Rule 30(b)(6) representatives had not been deposed in their individual capacities or their previous depositions were of limited context.
Fallon, however, does not dispute that there are indeed differences between the purpose, scope and preparation involved when a witness testifies as an individual versus giving testimony given as a corporate representative. Nevertheless, the differences do not allow “a duplicative, an unduly burdensome subpoena to stand” under Federal rules. Fallon takes issue with Defendants overarching argument that the depositions of Fallon's witnesses conducted to date resulted in scant information and a plethora of non-answers. Fallon argues that having presented four witnesses who gave a cumulative total of more than 22 hours of testimony, negates Defendants’ assertion the deponents were unprepared to offer testimony about Fallon. Fallon asserts that these individuals provided hours of substantive testimony on a multitude of topics. Therefore, when taken in conjunction with voluminous document production, Fallon is properly questioning whether Defendants are entitled to conduct this particular Rule 30(b)(6) deposition.

Finally, Fallon urges that Defendants are not entitled to a “complete” deposition of Barner given that only six of some 31 topics were not covered when he was deposed in September, i.e., Defendants had an opportunity to obtain information on almost all subpoena topics. With that said, if the court were to decide against quashing the subpoena, the requested protective order must limit the subpoenas to the six topics (numbers 8, 9, 14, 20 and 27) and that the deposition take no more than one hour.

V. Analysis and Findings

The Special Master is called upon to decide whether an assignor's Rule 30(b)(6) witness may, under these circumstances, be shielded from appearing for deposition or, alternatively, to limit the extent of that deposition. In essence, the moving party, Fallon, argues that its corporate representative has already been (effectively) deposed in his capacity as an individual fact witness and because three other Fallon employees have also been subject to questioning. Defendants counter by asserting that under the Federal rules, they are entitled to an unlimited Rule 30(b)(6) deposition and, to this date, no such deposition has been conducted.

Put another way, the Special Master needs to decide whether (a) Defendants are entitled to conduct a Rule 30(b)(6) deposition and, if so, (b) whether such deposition should be limited given what has transpired previously as to Fallon's discovery.

Before addressing this question further, the Special Master will first address an argument, indeed the first argument advanced by Defendants in support of their position. It is an argument which the Special Master finds to be without substantial merit. That is, Defendants contend that this issue has already been decided by virtue of the court's September 6, 2022 order (ECF No. 255), which compelled certain assignor-related depositions, including the depositions of the assignor's corporate representatives. Contrary to Defendants’ argument, that order clearly does not resolve the issue to be decided by way of this motion. It is evident from reviewing the order that it arose out of a status conference at which time the issue of an orderly deposition schedule as to all potential witnesses was addressed. Consequently, the timing of some 48 assignor depositions was addressed (and “so ordered”) in an effort to expedite discovery. That order included within its ambit four Fallon fact witnesses and a Fallon 30(b)(6) witness, but the order certainly did not address the substance of the depositions, the topics to be addressed or the potential that a witness might be subject to repetitive or duplicative questioning on the same issues. The order was entered simply for the purpose of keeping discovery on track. The order did not take into consideration any aspect of this motion and Fallon, as the movant correctly points out, had no direct part in opposing that scheduling order and in raising the issues as to undue burden that it raises here.

*8 Given this, Defendants’ initial argument that the instant motion is one for “reconsideration” fails. Therefore, the Special Master has not taken into account the standards for granting – or rejecting – a motion for reconsideration, i.e., an intervening change of law, newly discovered evidence or manifest in justice. Instead, the decision rests upon the analysis and the legal standards set forth below.

The starting point for this analysis, of course, centers on Rule 30(b)(6). The Rule is entitled “Notice or Subpoena Directed to an Organization” and states, in pertinent part:

In its notice or subpoena, a party may name as the deponent a...private corporation...or other entity and must describe with reasonable particularity the matters for examination. The named organization must then designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf; and it may set out the matters on which each person designated will testify. A subpoena must advise a nonparty organization of its duty to make this designation. The persons designated must testify about information known or reasonably available to the organization. This paragraph (6) does not preclude a deposition by any other procedure allowed by these rules.

As is evident from the plain language of the Rule, a designated Rule 30(b)(6) witness stands on entirely different ground than an individual fact witness, even one who is an employee of the corporation or entity whose testimony is sought. That is, “a 30(b)(6) witness testifies as a representative of the entity, his answers bind the entity, and he is responsible for providing all of the relevant information known or reasonably available to the entity.... Thus, the fact that individually named witnesses have testified concerning a subject is generally no obstacle to a 30(b)(6) deposition on the same subject.” Smith, No. C2 04-705, 2006 U.S. Dist. LEXIS 19093, 2006 WL 7276959, citing among other cases, Sabre v. First Dominion Cap., LLC, No. 01-0214, 2001 U.S. Dist. LEXIS 20637, 2001 WL 1590544, at *6 (S.D.N.Y. Dec. 12, 2001). Here, Fallon concedes that a prior deposition of a fact witness does not relieve a corporation from the obligation to present a representative for deposition but rather argues that Barner's prior testimony and its willingness to be bound by that testimony suffices.

Given that the Rule 30(b)(6) witness speaks for the company, our courts have held that such a witness, in addition to binding the entity through sworn testimony, has more extensive responsibilities than other witnesses. For example, Defendants cite a District of Massachusetts case which supports this proposition and which the Special Master finds instructive in deciding this motion, Calzaturficico S.C.A.R.P.A. s.p.a., 201 F.R.D. 33. This matter was a breach of contract suit brought by an Italian footwear manufacturer against an American distributor, a family owned shoe company. Defendants served Rule 30(b)(6) notices which resulted in the deposition of brothers Michael and Edward Fabiano as the shoe company's designated corporate representatives. Defendants charged that these individuals were not prepared to testify and did not testify regarding many topics listed in the notices despite undergoing a collective 37 hours of questioning. Id. at 85. Defendants sought thereafter to compel their re-depositions.

Both witnesses had testified merely as to what each personally knew, described as their “firsthand knowledge.” The court then examined the responsibilities of a 30(b)(6) witness and concluded that the deponents had failed to meet their obligations in that regard. The court emphasized that the law is well settled that a 30(b)(6) deponent does have an affirmative obligation to educate himself as to the matters regarding the corporation. Id. at *36. Citing United States v. Taylor, 166 F.R.D. 356, 362 (M.D.N.C. 1996), aff'd 166 F.R.D. 367 (M.D.N.C. 1996). The court provided the legal rationale for this obligation:

*9 Rule 30(b)(6) explicitly requires [a company] to have persons testify on its behalf as to all matters known or reasonably available to it and, therefore, implicitly requires persons to review all matters known or reasonably available to it in preparation for the 30(b)(6) deposition. This interpretation is necessary in order to make the deposition a meaningful one and to prevent the “sandbagging” of an opponent by conducting a half-hearted inquiry before the deposition but a thorough and vigorous one before the trial. This would totally defeat the purpose of the discovery process[.]

Id.

The court went on to say that a corporation itself had an obligation to investigate, identify and if necessary prepare a designee for each listed subject area in a Rule 30(b)(6) deposition notice. Since the deponents had failed to review the company's relevant records or correspondence (indeed each testified to reviewing one or only two documents in advance), the court concluded that they were inadequately prepared. Instead, they were obligated to review all corporate documentation that might have a bearing on the deposition topics even if documents were voluminous and even if review would be burdensome. Accordingly, re-depositions were ordered to proceed and the deponents were ordered to educate themselves on the designated topics. Id. at *37, 41.

Therefore, there is no doubt that the deposition of a 30(b)(6) witness (a corporate representative) is viewed differently from that of a fact witness even if those two individuals are one in the same. Not only is that witness's testimony binding on the entity that witness is required to familiarize himself or herself with the topics to be addressed at the deposition and the failure to do so comes with consequences.

Fallon takes the position that it is a non-party to this lawsuit. Consequently, movant argues, the court needs to look to Fed. R. Civ. P. 45(d)(1) which addresses subpoenas served on non-litigants. That Rule, subtitled, “Protecting a Person Subject to Subpoena; Enforcement,” goes on to state, “[a] party or attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena.” Furthermore, when a party or an attorney does not do so, the Rule provides for sanctions for failing to comply. Based on this, Fallon asserts that there is “special weight” and “critical protection” afforded to non-parties seeking to quash a subpoena and the courts must take into account more closely the need, breadth, and burden imposed on a non-party.

However, in the Special Master's estimation, Fallon's assessment that it is a “non-party” is a bit off the mark. While Fallon is not named in the caption, Fallon has a distinct interest in this suit and its outcome which imposes discovery obligations that are nearly tantamount to the obligations of a named party. By assigning its claims to MSP, and indeed having already received payment as a consequence, it has a non-delegable interest in this lawsuit more than sufficient to compel the entity to engage in discovery as if it were such a party. This is consistent with prior rulings by the Special Master in this litigation and also consistent with a body of case law which generally holds that an assignee bears the responsibility of producing discovery as if an assignor had filed suit. See cases cited in ECF Nos. 150 and 316.

Additionally, courts have treated assignors such as Fallon as the equivalent of parties for discovery purposes. Defendants in support of this proposition cite In re Infant Formula Antitrust Litig., MDL No. 878, 1992 U.S. Dist. LEXIS 21981, 1992 WL 503465 (N.D. Fla. Jan. 13, 1992). While not binding, this decision is instructive and closely on point to the circumstances here.

*10 In Re Infant Formula involved a price fixing claim concerning an important if not vital product, infant formula. Plaintiffs were direct purchasers of infant formula from the three nationwide manufacturers. However, several plaintiffs had assigned their claims and relinquished their independent rights to litigate. Id. at *9. Defendants thereafter moved to treat the assignors as parties. The court was then called upon to determine the assignors’ status in the course of litigation and, in particular, with respect to their discovery obligations.

In analyzing whether or not the assignors should effectively be treated as parties, the court noted that the assignees were the real parties in interest for the purpose of the actual litigation but the treatment of both assignors and assignees as parties for discovery, however, “is proper when to do otherwise would frustrate discovery...regardless of whether this frustration is intentional or not.” Id. at *9, citing Natta v. Holgan, 392 F. 2d 686, 691 (10th Cir. 1968). The court thereafter provided reasoning for this conclusion:

“[A] third party with a substantial interest in the litigation cannot be allowed to frustrate the rules of discovery to the disadvantage of another party.” Compagnie Fransais de D'Assurance Pour Le Commerce Exterieur v. Phillips Petroleum Co., 105 F.R.D. 16, 34 (S.D.N.Y. 1984). Although the “substantial interest” in the litigation held by the company has generally been financial, In Re Jee, 104 B.R. 289, 295-96 (Bnkr. C.D. Cal. 1989), such restricted reading of the requirement is unwarranted. “Otherwise a litigant by contracting with the third party could nullify and evade the rules of procedure.” Simper v. Trimbul, 9 F.R.D. 598, 600 (W.D.Mo. 1949).

Id. at *10.

The In Re Infant Formula court went on to order that all assignors in the case be treated as parties for the purpose of discovery and further ordered that they respond to all demands for production of documents “as though they were a party [and] shall enjoy all accompanying protections, and shall be held to all applicable sanctions.” Id.

The Special Master, therefore, finds that under the circumstances here, Fallon has a substantial interest in the litigation and for this purpose, meaning the production of discovery, should be treated as a party. To do so otherwise would, in fact, frustrate discovery given that Plaintiffs’ cause of action entirely derives from the assignors (and in this case Fallon's) claims with regard to insulin pricing and rebates and any financial losses suffered. Consequently, the Special Master also finds that Defendants are entitled to take the deposition of Fallon's Rule 30(b)(6) witness.

Nevertheless, since Fallon is also entitled to the protections afforded by our discovery rules, including Rule 26 which directly applies to parties, in its capacity as a party for the purpose of discovery, the Special Master will also consider whether or not it is entitled to a protective order limiting the scope or extent of the Rule 30(b)(6) deposition.

Fallon maintains that its witnesses, including its proposed corporate representative, Barner, have been subject to in excess of 22 hours of deposition testimony – testimony which is unnecessary, duplicative, cumulative, burdensome and costly. Moreover, says Fallon, it has agreed to be bound by the collective testimony of all four individual witnesses. Defendants counter by asserting that none of the witnesses were truly knowledgeable about or provided testimony sufficient to bind the entity on key issues and, therefore, Defendants have effectively been precluded from conducting a complete Rule 30(b)(6) deposition to which they are entitled.

*11 The witnesses’ deposition transcripts have been provided. The Special Master will now provide brief summaries of each.[2]

Deponent Lisa Ann Lashbrook has been with the company since 2002 and currently holds the position of Medicare Compliance Officer and Director of Medicare Programs. Her testimony as to her understanding as to why she was being deposed had “something to do with insulin” and increased costs. She did not know who the Plaintiffs (MSP) were but testified that Defendants were “health plans.” Defendants assert that the witness answered “I don't know” (or its equivalent) 140 times. Among the areas of questioning to which the witness responded “I don't know” included (and this is not an exhaustive list): understanding why manufacturers pay rebates, why manufacturers decline to pay rebates sought by PBMs, how the amount of rebates are determined, whether Fallon receives rebates from PBMs, whether the company receives rebates for drugs other than insulin, whether Fallon considers its PBM contracts confidential or sensitive, whether Fallon's current PBM (Optum) remits rebates under its agreement, how often Fallon adopts new formularies, and whether Fallon overpays for insulin.

Lashbrook's testimony lasted approximately 5 hours and 20 minutes, not counting breaks. Her preparation consisted of a meeting with counsel that lasted an hour. She performed no research, reviewed no other documents (except “a couple of claims”) and took no other steps to prepare for her testimony.

Deponent David Sartini joined Fallon in 2004 and is currently manager of pharmacy operations and clinical programs. Among other areas of questioning, Sartini was questioned about his knowledge of the wholesale price for insulin products, Fallon's agreements with PBMs and related issues. He confirmed that Fallon and its members benefit from rebates and that the company's formularies have been influenced by the amount of rebates it receives. He was unaware of any communications between Fallon and the manufacturers about rebates or list prices of insulin products. He was unaware of any changes in Fallon's business practices since MSP filed its complaint; unaware of any litigation hold or other efforts regarding the preservation of documents; and had no involvement in the recovery agreement signed between Fallon and MSP.

Sartini's deposition lasted approximately 6 hours and 20 minutes, not including breaks. Sartini's preparation for the deposition was to be present at two hour-long meetings with counsel when he reviewed four or five documents from a file folder containing 2500 documents which were linked to his name. He had also reviewed MSP's second amended complaint about two months before being deposed. He understood Fallon had assigned its claims to MSP.

Benjamin Barner's deposition took just over eight hours to complete with periodic breaks. He was asked multiple questions about elements of Fallon's business practice including the entity's relationships with PBMs. He was questioned about vendors employed by Fallon to recoup “lost money” from primary payers. He was questioned about Fallon's agreement with MSP in this litigation. He addressed questions regarding formularies and how payments for insulin were calculated. He was questioned on Fallon's submission of reports to CMS. He was questioned as to whether payment by manufacturers of rebates to PBMs constituted kickbacks and as to the amount of rebates Fallon received during certain time periods. He was asked whether Fallon communicated with insulin manufacturers and whether the manufacturers made representations related to rebates. He was directly asked whether Fallon made any changes to either PBM contracts or to formularies based on MSP's allegations and whether Fallon continues to receive rebates related to insulin.

*12 As Defendants point out, however, while Barner indeed answered general questions about Fallon's business practices, at points he denied having information as to topics and events which took place before he joined the company in 2019.

As to all three witnesses, there were limited objections and none of the witnesses were instructed by counsel to refrain from answering a single question.

In short, and specific to the testimony of Benjamin Barner, the proposed Rule 30(b)(6) witness, while Defendants perhaps did not cover every topic listed in the subpoena, they covered many of them including those which appear to be significant to Plaintiff's cause of action and Defendants’ defenses in this matter. Defendants also had an adequate opportunity to explore Fallon's business practices and its receipt of and knowledge about manufacturer rebates. On the other hand, Fallon concedes that six topics which appear in the Rule 30(b)(6) notice were not, in fact, covered.

Taking all of the aforementioned into consideration, and given that Fallon has agreed to be bound by the testimony of its witnesses, the Special Master finds that Defendants have been afforded an opportunity to at least conduct a partial Rule 30(b)(6) deposition of Fallon's corporate representative, Barner. Defendants somewhat overstate their claim that this witness was bereft of knowledge as to how Fallon functions as a business. Additionally, in the Special Master's estimation, the witness was not evasive and generally provided direct answers to questions although, at times, having limited knowledge as to the specific inquiries posed to him. Furthermore, given that Fallon has agreed to be bound by Barner's existing testimony, Defendants have the benefit of that concession and, therefore, are in a position to hold the corporation to Barner's testimony. Although the Special Master cannot know at this point what questions Defendants may pose to this witness at a continued deposition, there certainly appears to be a legitimate prospect that a full seven-hour proceeding will be duplicative or cumulative of the testimony already rendered.

Nevertheless, having not conducted a complete deposition, the Special Master finds that Defendants are entitled to conduct the deposition of Fallon's corporate representative on a mutually agreed upon date and time. The deposition will be limited to three hours. It will be Defendants’ counsel's decision as to which topics to address when the deposition takes place. Finally, in order not to repeat topics which were covered during the first deposition, Defendants’ counsel shall apprise Fallon of the intended topics to be addressed at the Rule 30(b)(6) deposition while Fallon's witness is directed to review all documents reasonably available in order educate himself as to those topics.

VI. Conclusion

For the reasons set forth above, the Special Master orders as follows:

Fallon's motion to quash the Rule 30(b)(6) subpoena is DENIED;
Defendants are entitled to take the deposition of Fallon's Rule 30(b)(6) witness at a mutually agreed upon date and time;
The deposition shall be limited to three hours;
Fallon, as an entity, shall be bound by testimony of its witnesses who have previously been deposed;
Defense counsel shall provide Fallon a list of topics to be addressed at the deposition; and
Fallon's witness shall review all documents reasonably available in order to educate himself as to the identified topics.

Date: November 13, 2023

Footnotes

[1]

Topic number 8 is addressed at Fallon's “Capitation Agreements or Risk Sharing Agreements concerning the administration of Medicare benefits.” Topic number 9 concerns Fallon's “methods and processes for managing and reconciling Service Funds.” [See, movant's Exhibit 1.]

[2]

Only an insignificant excerpt was provided of the deposition testimony rendered by deponent Grozio so it will not be addressed here.