Natkin v. Am. Osteopathic Ass'n
Natkin v. Am. Osteopathic Ass'n
2023 WL 11983636 (D. Or. 2023)
July 5, 2023
Simon, Michael H., United States District Judge
Summary
The Plaintiffs filed two discovery motions to quash or modify a subpoena issued to their accountant and to preclude the production of a privilege log for items protected by the work-product doctrine. The Defendants had served a subpoena on the accountant requesting tax returns and communications between the Plaintiffs and the accountant. The Plaintiffs objected to the subpoena and filed a motion to quash, arguing that the information was privileged and not relevant to the lawsuit. The Defendants argued that the motion was untimely, but the Court found that the objections did not indicate that no documents would be produced and that the Plaintiffs were not required to provide notice.
Additional Decisions
DR. ERIK NATKIN, D.O. P.C., a Utah corporation; and DR. ERIK NATKIN, D.O., an individual, Plaintiffs,
v.
AMERICAN OSTEOPATHIC ASSOCIATION, et al., Defendants
v.
AMERICAN OSTEOPATHIC ASSOCIATION, et al., Defendants
Case No. 3:16-cv-1494-SI
United States District Court, D. Oregon
Filed July 05, 2023
Simon, Michael H., United States District Judge
ORDER
*1 Before the Court are two discovery motions filed by Plaintiffs. The first is a motion to quash or modify a subpoena issued to Plaintiffs’ accountant Complete Accounting Solutions (CAS). In that motion, Plaintiffs also request a protective order declaring that they have produced sufficiently responsive documents to show Plaintiff Dr. Erik Natkin's income, including from the seven entities in which he has or had an interest, and protecting Plaintiffs from producing any further information relating to his income. Plaintiffs’ second motion requests a protective order to preclude Plaintiffs from having to produce a privilege log on items Plaintiffs claim are protected by the work-product doctrine.
A. Motion to Quash and for Protective Order—CAS
1. Motion to Quash
On April 3, 2023,[1] Defendants Samaritan Health Services, Inc., Good Samaritan Hospital Corvallis, and Dr. Luis R. Vela, DO (the Samaritan Defendants) provided Plaintiffs with notice of a proposed subpoena they intended to serve on CAS on April 7, 2023. The subpoena requests all state and federal tax returns from 2015 to the present for Plaintiffs and six other entities with which Dr. Natkin has some connection, including the tax return schedules, business records used to prepare the tax returns, and tax workpapers. The subpoena also requests all communications from 2015 to the present between Plaintiffs or the entities, and CAS. The subpoena includes a response date for CAS of April 24, 2023. The Samaritan Defendants served the subpoena on CAS.
On April 20, 2023, CAS emailed objections to the subpoena. On May 24, 2023, CAS produced 14 unredacted tax returns. On June 2, 2023, Plaintiffs’ counsel demanded that counsel for the Samaritan Defendants return or destroy those tax returns, arguing that they contained attorney-client privileged information, information subject to Colorado's taxpayer's privilege, and “confidential commercial information” that is not relevant to this lawsuit. On June 6, 2023, Plaintiffs filed the pending motion to quash.
The Samaritan Defendants argue that Plaintiffs’ motion is untimely. Under Rule 45, a motion to quash must be “timely” filed. Fed. R. Civ. P. 45(d)(3)(A). “Courts generally agree that a motion to quash under Rule 45 is timely if made before the date specified for compliance with the subpoena.” Handloser v. HCL America, Inc., 2020 WL 4700989, at *4 (N.D. Cal. Aug. 13, 2020). The due date was April 24, 2023, and Plaintiffs did not informally object to the subpoena or move to quash the subpoena before that date. Plaintiffs did not file their motion until June 6, 2023.
*2 Plaintiffs do not directly address timeliness but instead mention that they were busy working on other discovery issues. That does not relieve Plaintiffs of their obligation under the Federal Rules to timely file a motion. Plaintiffs also note that CAS emailed objections to the subpoena on April 23, 2023.[2] That, however, also does not relieve Plaintiffs of their obligation for several reasons.
First, CAS’ objections did not indicate that they were not producing any documents. Plaintiffs’ reliance on those objections to avoid timely objections or a motion is unreasonable.
Second, CAS may resolve its own objections to avoid motion practice with the Samaritan Defendants, and any such motion practice would not involve Plaintiffs and would be in Colorado. Any motion by Plaintiff, on the other hand, would be heard in this Court.
Third, CAS’ interests are not necessarily identical to Plaintiffs. Indeed, each have different bases on which they may challenge the subpoena. Plaintiffs are limited and may not, for example, raise undue burden or relevance. See Krenitsky v. Kirsch, 2020 WL 5017270, at *1 (E.D. Cal. Aug. 25, 2020) (“The general rule, however, is that a party has no standing to quash a subpoena served upon a third party, except as to claims of privilege relating to the documents being sought. Under this general rule, plaintiff lacks standing to object to the subpoena on grounds of relevance or undue burden.” (quotation marks and citations omitted)).
Fourth, the point of the requirement in Rule 45 to provide the party with notice “ ‘well in advance of the production date,’ [is] to enable reasonable opportunity for objection.” Rollins v. Traylor Bros., 2017 WL 1756576, at *2 (W.D. Wash. May 5, 2017) (quoting Butler v. Biocore Med. Techs, Inc., 348 F.3d 1163, 1173 (10th Cir. 2003))). Plaintiffs filed their motion 64 days from receiving notice and 43 days after the subpoena's production deadline. This is untimely. See Xu v. Weis, 2023 WL 2043540, at *2 (W.D. Wash. Feb. 16, 2023) (“The Motion to Quash is untimely, as it was filed 39 days after service of the Subpoena and 25 days after the deadline for compliance with the Subpoena.” (citing cases)).
2. Motion for Protective Order
U.S. Magistrate Judge Stacie Beckerman previously ordered:
Plaintiffs must produce documents sufficient to allow the Samaritan Defendants to calculate Plaintiffs’ income during the relevant time period. These documents must include a detailed accounting of Dr. Natkin's interest in, and monies received from, each of the seven entities in which he holds a financial interest, including monies he has received in the form of management fees or officer salaries.
ECF 239 at 7. Judge Beckerman concluded that “Plaintiffs’ income during the relevant time period is relevant to determine any appropriate offset in damages, Plaintiffs’ mitigation efforts, and Plaintiffs’ future earning capacity.” Id. at 6. She also noted that Plaintiff Dr. Natkin's “financial situation is complicated,” but she believed the parties could confer and identify documents that would provide the necessary information and not be unduly burdensome for Plaintiffs to produce. That conferral failed.
*3 Plaintiffs now seek a protective order determining that Plaintiffs have provided the Samaritan Defendants with sufficient documentation of Plaintiffs’ income and may not seek further documentation of Plaintiffs’ tax returns. Plaintiffs have produced Profit and Loss statements from the entities, two W-2s (one from a Samaritan entity), and one 1099-MISC.[3] Plaintiffs’ counsel has spent two hours explaining this information to Samaritan Defendants’ counsel. Plaintiffs argue this is sufficient to fully explain Dr. Natkin's income.
The Samaritan Defendants respond that despite the two-hour tutorial, counsel still does not understand Dr. Natkin's income. Additionally, contend the Samaritan Defendants, neither counsel are witnesses and if it takes a two-hour tutorial to understand these documents, they cannot provide the necessary evidence to the jury. The Samaritan Defendants point out that the Profit and Loss statements include “management fee” expenses for some entities and income for other entities and they do not understand the relationship between the entities and why money appears to be flowing between the entities and to Dr. Natkin. The Samaritan Defendants note that Plaintiffs have stated there are no documented agreements between the entities that would explain their interrelationship.
Plaintiffs contend that Dr. Natkin's tax returns will not elucidate “management fees” because they are not paid to Dr. Natkin and are irrelevant to his income. That, however, is not the dispositive question of whether Plaintiffs have provided sufficient discovery to identify all of Dr. Natkin's income. The Court has reviewed the Profit and Loss statements, and it is not evident from their face what amounts went to Dr. Natkin.
The Court also rejects Plaintiffs’ argument that Dr. Natkin's tax returns are protected by Colorado's accountant privilege. Plaintiffs fail to demonstrate that Colorado privilege law governs. Under Rule 501 of the Federal Rule of Evidence, “state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” Fed. R. Evid. 501. The Court has repeatedly held that Oregon law applies to the claims in this case.
Plaintiffs cite Oregon Revised Statutes § 15.355(1)(c), which provides that the law chosen by the parties does not apply if it would “[c]ontravene an established fundamental policy embodied in the law that would otherwise govern the issue in dispute under ORS 15.360.” Dr. Natkin signed a contract with Good Samaritan Hospital Corvallis that contained a choice of law provision selecting Oregon law. Plaintiffs fail to demonstrate that Colorado law would otherwise govern this dispute under § 15.360 if the Samaritan Defendants and Dr. Natkin had not signed a contract with a choice of law provision.
Plaintiffs do not argue that Colorado law would govern any claim or defense between Plaintiffs and the Samaritan Defendants even absent the contract's choice of law provision. The claims between Plaintiffs and the Samaritan Defendants arise out of a contract performed in Oregon, by parties residing in Oregon at the time, with harm suffered in Oregon at the time, through actions taken in Oregon. See Or. Rev. Stat. § 15.360 (discussing factors). The claims (e.g., fair procedure and defamation) would still be governed by Oregon law, not Colorado law, even if there were no choice of law provision in the contract. Thus, it is Oregon's law of privilege and not Colorado's law of privilege that governs. and Oregon Revised Statutes § 15.355(1)(c) is inapplicable.
B. Motion for Protective Order—Privilege Log
*4 Plaintiffs move for a protective order alleviating Plaintiffs from the burden of providing a privilege log relating to Requests for Production (RFP) Nos. 48-54. Among other arguments, Plaintiffs argue that the Samaritan Defendants’ request is untimely because Judge Beckerman required all discovery disputes be raised by March 25, 2022.
On August 9, 2019, the Samaritan Defendants served Plaintiffs with discovery requests, including RFPs. On October 15, 2019, Plaintiffs served their responses to the RFPs, raising objections. Plaintiffs’ objections to RFP Nos. 48-54 were that those requests called for the production of material subject to protection under the attorney work-product doctrine and that any privilege log would necessarily disclose privileged information.
On April 2, 2021, the Samaritan Defendants conferred with Plaintiffs regarding deficiencies in Plaintiffs’ production and problems with Plaintiffs’ objections. The Samaritan Defendants did not raise any concerns with Plaintiffs’ objections to RFP Nos. 48-54.
On December 6, 2021, Judge Beckerman issued an order requiring that discovery disputes be submitted by February 25, 2022, so the court could resolve “any discovery issues.” ECF 230. Per the joint request of the parties, on February 22, 2022, Judge Beckerman extended that submission deadline to March 25, 2022. ECF 233.
On March 25, 2022, the Samaritan Defendants raised several issues with Plaintiffs’ responses to the RFPs, but did not raise any concern with Plaintiffs’ response to RFP Nos. 48-54. The Samaritan Defendants, however, included a challenge to Plaintiffs’ refusal to provide a privilege log with respect to RFP No. 35, for documents that Plaintiffs declined to produce based on the attorney-client privilege.
On March 8, 2023, for the first time, the Samaritan Defendants raised in conferral a challenge to Plaintiffs’ refusal to provide a privilege log with respect to RFP Nos. 48-54. The Samaritan Defendants indicated they would move to compel. Plaintiffs preemptively filed this motion for protective order.
The Samaritan Defendants concede that the dispute over this privilege log is untimely. They acknowledge “that Judge Beckerman ordered that all disputes regarding the first set of discovery requests were to be submitted to her by March 25, 2022.” ECF 319 at 4. The Samaritan Defendants argue that their untimely filing should be excused because there will be no unfair prejudice to Plaintiffs, given that discovery remains open, depositions have not yet occurred, and trial is more than one year away. The Samaritan Defendants also argue that because discovery is ongoing, they simply can request the same information again and then the same dispute will arise, so addressing it now is efficient.
The Court construes the Samaritan Defendants’ response as a motion under Rule 6(b) of the Federal Rules of Civil Procedure for an extension of time to submit the discovery dispute beyond the deadline set by Judge Beckerman. “When an act may or must be done within a specified time, the court may, for good cause, extend the time ... on motion made after the time has expired if the party failed to act because of excusable neglect.” Fed. R. Civ. P. 6(b)(1)(B). In determining whether neglect is excusable, courts consider four factors: “(1) the danger of prejudice to the opposing party; (2) the length of the delay and its potential impact on the proceedings; (3) the reason for the delay; and (4) whether the movant acted in good faith.” Bateman v. U.S. Postal Serv., 231 F.3d 1220, 1223-24 (9th Cir. 2000).
*5 The Samaritan Defendants have not offered any reason for their delay. The point of Judge Beckerman's order was so that she could resolve all discovery disputes before transferring the case to the undersigned Judge so this case could expeditiously move forward to trial. Raising untimely discovery disputes continues to delay the forward progression of this case, which already has been litigated for seven years. The dispositive motion deadline in this case is 11 months away and more discovery appears to be needed. Litigating disputes that are 16 months past their deadline is not an efficient use of the parties’ or the Court's resources. The Court finds the Samaritan Defendants’ request for a privilege log relating to RFP Nos. 48-54 untimely.[4] The Court, therefore, grants Plaintiffs’ motion for a protective order regarding the requested privilege log.
C. Conclusion
The Court DENIES Plaintiffs’ Motions to Quash or Modify Subpoena to Nonparty Complete Accounting Solutions and for Protective Order, ECF 311. The Court GRANTS Plaintiffs’ Motion for Protective Order, ECF 313. Plaintiffs are not required to produce a privilege log for documents withheld in response to RFP Nos. 48-54 based on the attorney work-product doctrine.
IT IS SO ORDERED.
DATED this 5th day of July, 2023.
Footnotes
Plaintiffs’ counsel states in his Declaration that he received notice on April 1, 2023. ECF 314, ¶ 43. The notice attached to the declaration, however, is dated April 3, 2023. The April 1, 2023 date appears to be a scrivener's error. Regardless, the discrepancy between April 1 and April 3 is immaterial—there is no dispute that the Samaritan Defendants provided notice to Plaintiffs before serving the subpoena on CAS.
The objections emailed by CAS were to the scope (six years when CAS stated they could only produce three years), deadline (CAS stated it was the busy season up to the tax deadline and then its offices would be closed until May 4, 2023), cost (CAS requested reimbursement for time and materials), and a concern that the Samaritan Defendants already had many of the items requested and had been specifically denied the ability to request other items via a court order. CAS provided a phone number and contact to further discuss the subpoena request. The objections did not imply a categorical denial that CAS would produce the requested documents.
Plaintiffs provided redacted tax returns as part of a confidential settlement negotiations, and that information is not usable data by the Samaritan Defendants.
The Court expresses no opinion whether it would be appropriate for the Samaritan Defendants to propound identical, duplicate requests for production and then attempt to litigate Plaintiffs’ anticipated identical objections. The Court, however, notes that courts have rejected this approach. See, e.g. McCall v. State Farm Mut. Auto. Ins. Co., 2017 WL 3174914, at *6 (D. Nev. July 26, 2017) (“If a party has served discovery requests on the opposing party to which the latter has objected, then the requesting party should (1) attempt to resolve the discovery dispute through the meet and confer process required by Rule 37(a)(1) ... and if that is unsuccessful, (2) timely file a motion to compel production of the requested documents or information.... It would be improper, for example, to serve duplicate requests for production of documents to which the opposing party has already objected, thereby forcing the party to once again object.”).