Linet Americas, Inc. v. Hill-Rom Holdings, Inc.
Linet Americas, Inc. v. Hill-Rom Holdings, Inc.
2024 WL 5481238 (N.D. Ill. 2024)
December 30, 2024
McLaughlin, Daniel, United States Magistrate Judge
Summary
The plaintiff filed a Motion to Compel Discovery, seeking ESI from the defendants related to their alleged anticompetitive behavior in the hospital bed market. The court granted the motion in part, finding that the requested ESI was relevant and proportional to the needs of the case. The defendants were ordered to produce the requested ESI from specific time periods.
Additional Decisions
LINET AMERICAS, INC., Plaintiff,
v.
HILL-ROM HOLDINGS, INC., et al., Defendants
v.
HILL-ROM HOLDINGS, INC., et al., Defendants
No. 21 C 6890
United States District Court, N.D. Illinois, Eastern Division, EASTERN DIVISION
Filed: December 30, 2024
McLaughlin, Daniel, United States Magistrate Judge
ORDER
*1 This matter is before the Court on Plaintiff's Motion to Compel Discovery from Hillrom Defendants [162]. For the reasons that follow, Plaintiff's Motion is granted in part and denied in part.
BACKGROUND
Plaintiff brings this lawsuit alleging that the “[H]illrom Defendants monopolized and attempted to monopolize the market for hospital beds through a combination of anticompetitive behavior that began when Linet entered the market in 2010 and continues through the present day.” [163], p. 2. Plaintiff filed a Motion to Compel (“Motion”) over the temporal scope of certain document requests on June 12, 2024. [162], [163], [164]. Defendants responded to the Motion on July 1, 2024. [196]. Plaintiff replied on July 10, 2024. [211]. The Motion is now ready for the Court's review.
LEGAL STANDARD
Parties are allowed broad discovery to investigate facts and clarify issues. Grayson v. City of Aurora, No. 13C1705, 2013 WL 6697769, at * 2 (N.D. Ill. Dec. 19, 2013) (citing Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)). “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). “Relevance focuses on the claims and defenses in the case, not its general subject matter.” Motorola Sols., Inc. v. Hytera Communications Corp., 365 F. Supp. 3d 916, 924 (N.D. Ill. 2019). In addition, discovery must be proportional to the needs of the case, considering “[t]he importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id. “Proportionality, like other concepts, requires a common sense and experiential assessment.” Gross v. Chapman, No. 19C2743, 2020 WL 4336062, at *4 (N.D. Ill. July 28, 2020). “Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Fed. R. Civ. P. 26(b)(1).
Under Federal Rule of Civil Procedure 37, a party may file a motion to compel when another party provides an insufficient response to a discovery request. Fed. R. Civ. P. 37(a). Furthermore, under Local Rule 37.2, the movant must show that counsel consulted over the dispute and attempted to reach an agreement.[1] LR 37.2. Once this has been shown, “[d]istrict courts enjoy broad discretion when considering motions to compel and have consistently adopted a liberal interpretation of the discovery rule.” Martinez v. Cook County, No. 11C1794, 2012 WL 6186601, at * 2 (N.D. Ill. Dec. 12, 2012) (citations and quotations omitted).
DISCUSSION
*2 Plaintiff asks the Court to compel Defendants to produce certain documents from specific time periods in “Phase 2” discovery.[2] [163], p. 6. For requests related to “Relevant Products (i.e., hospital beds),” Plaintiff seeks documents back to January 1, 2012 (“First Request”); for requests related to “Hillrom's Nurse Call Products and Connected Care Strategy,” Plaintiff seeks documents back to January 1, 2013 (“Second Request”); and for requests “seeking Data, Contracts, and Competitive and Market Analyses, and References to Linet,” Plaintiff seeks documents back to January 1, 2010 (“Third Request”). Id. Plaintiff argues that the “[o]rigins of [Hillrom's] anticompetitive scheme can be traced back to at least 2010, when Linet entered the market and Hillrom set out to crush [Linet],” making discovery as far back as 2010 “appropriate and necessary.” [163], p. 3 (emphasis omitted). Hillrom argues that production of documents dating back to these timeframes has “[v]anishingly little importance to resolving the issues in this case” and that the requests’ burden is “[w]holly disproportionate to its expected benefits.” [198], p. 8, 12. The Court will take each argument in turn.
I. Relevance
“Federal Rule of Civil Procedure 26(b)(1) gives expansive power to discover information regarding any nonprivileged matter that is relevant to any party's claim or defense.” Grayson 2013 WL 6697769, at *2. “Courts broadly construe relevancy to include any matter that bears on, or that reasonably could lead to other matters that could bear on, any issue that is or may [be] in the case.” Batchelor v. City of Chicago, No. 18CV8513, 2020 WL 13647794, at *2 (N.D. Ill. Nov. 17, 2020) (citing Webster Bank, N.A. v. Pierce & Assocs., P.C., No. 16C2522, 2017 WL 11560211, at *2 (N.D. Ill. Aug. 15, 2017)[3] and Oppenheimer Fund, Inc. 437 U.S. at 351 (internal quotations and citations omitted). “If relevance is in doubt, courts should err on the side of permissive discovery.” Coleman, 2020 WL 5752149 at *3. Furthermore, “[d]istrict courts – including magistrate judges – have broad authority to manage their dockets, including determining the scope of allowable discovery.” In re Turkey Antitrust Litig., No. 19C8318, 2021 WL 6428398, at *2 (N.D. Ill. Dec. 16, 2021).
*3 Moreover, “[c]ourts generally take an expansive view of discovery in antitrust cases.” Kleen Prods. LLC v. Packaging Corp. of Am., No. 10C5711, 2013 WL 120240, at *9 (N.D. Ill. Jan. 9, 2013); see also Methodist Health Servs. Corp. v. OSF Healthcare Sys., No. 13C1054, 2016 WL 5817176, at *18 (C.D. Ill. Sept. 30, 2016), aff'd, 859 F.3d 408 (7th Cir. 2017) (noting that discovery in antitrust litigation has a “broad nature”). “Broad discovery is permitted because direct evidence of... anticompetitive [conduct] is often difficult to obtain, and the existence of [anticompetitive conduct] frequently can be established only through circumstantial evidence, such as business documents and other records.” Kleen Prods. LLC v. Packaging Corp. of Am., No. 10C5711, 2012 WL 4498465, at *13 (N.D. Ill. Sept. 28, 2012), objections overruled.
In light of the expansive view of discovery in antitrust cases, and the broad relevance standard generally, the Court finds that Plaintiff's request timeframes are relevant. Plaintiff's First Request asks for documents for “relevant products” back to January 1, 2012.[4] [163], p. 13. Plaintiff argues that the timeframe for these documents is necessary because the anticompetitive strategy that is the subject of the complaint “[w]as the brainchild of incoming Hillrom CEO John Greisch, who joined Hillrom... in January 2010.” Id. This anticompetitive strategy allegedly consisted of “[c]onfidential, long-term, exclusive dealing contracts covering the Relevant Products known as ‘Corporate Enterprise Agreements’ ” and an “ultra-aggressive sales team” that was fully formed in “[e]arly 2013.” [211], p. 5; [163], p. 13. Accordingly, Plaintiff argues that its First Request timeframe, which predates the Corporate Enterprise Agreements’ (“CEA”) 2014 execution, is relevant to both its monopolization claim and attempted monopolization claim because it goes towards Defendant Hillrom's “intent” behind the CEAs. [1], p. 55; [198], p. 11 (“[T]he CEA allegations that allowed Linet's claims to survive Rule 12 turn on contracts introduced in 2014.”); [163], p. 14.
The Court agrees that the First Request timeframe is relevant. “The Supreme Court has unambiguously stated that intent[5] to monopolize is relevant to the question of whether the challenged conduct is fairly characterized as exclusionary or anticompetitive.” JamSports & Ent., LLC, 336 F. Supp. 2d at 842 (citing Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 602 (1985)) (internal quotations omitted). Accordingly, documents which predate the CEAs’ introduction in 2014 are relevant in that they may reveal the intent of Defendant Hillrom in designing those agreements.
*4 Further, courts in this circuit have routinely authorized discovery in antitrust cases that predates the “[e]arliest possible date of the actionable wrong.” In re Outpatient Med. Ctr. Emp. Antitrust Litig., No. 21C305, 2023 WL 4181198, at *5 (N.D. Ill. June 26, 2023) (quoting In re Rail Freight Fuel Surcharge Antitrust Litig. 2009 WL 10703132, at *1 (D.D.C. July 13, 2009) and allowing discovery back to May 1, 2008 where the alleged conspiracy began in 2010); Kleen Prods. LLC, 2013 WL 120240 at *9 (allowing discovery back to 2003 when price-fixing allegations are dated to 2005); In re Sulfuric Acid Antitrust Litig., 231 F.R.D. 351, 360 (N.D. Ill. 2005) (allowing discovery that predated the contract at issue by roughly four years). Given that the CEAs at issue in the complaint were first executed in 2014, First Request discovery which predates that execution by two years, and which may therefore reveal the intent behind the CEA strategy, is relevant.
Second Request documents dating back to January 1, 2013 are relevant for similar reasons. Plaintiff explains that “[n]o later than 2014-2015,” non-bed products such as Nurse Call were being incorporated into the CEAs. [211], p. 8. Plaintiff further explains that “Nurse Call is the centerpiece of Hillrom's Connected Care strategy” because it creates “[a] closed ecosystem of Hillrom products.” [163], p. 13. Discovery that predates the formal incorporation of Nurse Call products into the CEAs by one year is therefore relevant to Defendants’ intent as well, as such documents may reveal “[t]he legitimacy of [Defendants’] conduct” in incorporating Nurse Call products “[a]s measured by its intended effect on the competitive process.” Panhandle E. Pipe Line Co., 935 F.2d at 1481.
Plaintiff's Third Request seeks documents dated all the way back to 2010, when Linet first entered the US market. [163], p. 13. Plaintiff argues that these documents are necessary for its ability to “[identify] how and when Hillrom first identified Linet as a threat” and its ability to “[conduct] economic analyses of the market and Hillrom's conduct before and during the alleged monopoly.” [163], p. 13. Plaintiff also argues that these documents go towards intent. Id at 14. Other courts have recognized that discovery which predates the beginning of the alleged anticompetitive conduct is relevant for a comparison of the “[t]he competitive conditions when the [conduct] was and was not in effect.” In re Outpatient Med. Ctr. Emp. Antitrust Litig., 2023 WL 4181198 at *5; see also Kleen Prods. LLC, 2013 WL 120240 at *9 (allowing discovery into a twelve-year timeframe as going towards the “ ‘[b]efore’ and ‘after’ effect of the alleged [conduct] upon prices.”).
The Court therefore finds the Third Request relevant in that it can provide a comparison of the competitive conditions at issue, which also ultimately goes towards Defendants’ alleged “[i]ntent to maintain or achieve monopoly power by anticompetitive means.” JamSports & Ent., LLC, 336 F. Supp. 2d at 842. This conclusion draws support from the District Judge's order denying Defendants’ Motion for Judgement on the Pleadings, in which the District Judge noted that Plaintiff's “[c]omplaint raises a plausible continuing violation theory” for which discovery is warranted. [114], p. 6.
In sum, the Court finds that the First, Second, and Third Requests clear the low relevance hurdle of “[a]ny matter that bears on, or that reasonably could lead to other matters that could bear on, any issue that is or may [be] in the case.” Batchelor, 2020 WL 13647794 at *2.
II. Proportionality
“Rule 26 directs courts to evaluate proportionality in discovery requests by considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Life Spine, Inc. v. Aegis Spine, Inc., No. 19C7092, 2021 WL 5415155, at *5 (N.D. Ill. Nov. 19, 2021). Although Defendants put forth an argument only as to the final factor—the discovery's burden or expense as weighed against its likely benefit—the Court will address each factor in turn. [198]. P. 14.
*5 The issues at stake in this action are significant; they concern allegations of antitrust violations that impact an important segment of the American economy. The amount in controversy is correspondingly high. Further, Defendants have better access to the requested information because it is their documents at issue. As to resources, though Plaintiff alleges that Defendants’ resources are significantly greater, Plaintiff is a multi-million-dollar company with access to seasoned litigators; the balance of resources is consequently not so unevenly distributed as Plaintiff claims. [163], p. 16 (characterizing Hillrom as “[e]njoy[ing] a market capitalization of over $10 billion” and explaining that Linet is a “$500 million company”). On balance, the first four factors tip slightly in favor of Plaintiff. The Court thus turns to the final two factors.
Importantly, the Court is mindful that “[i]n practice...the final two factors—the importance of the requested discovery and balancing discovery benefits against its burdens—are generally the most important and determinative of the issues.” Deal Genius, LLC v. O2COOL, LLC, 682 F. Supp. 3d 727, 733 (N.D. Ill. 2023). As to the importance of the requested discovery, the Court believes that it is significant. Plaintiff has multiple allegations that survived Defendants’ Motion for Judgment on the Pleadings in part because the District Judge “[d]eclined to make a determination as to when [Plaintiff's] claims accrued... without further factual discovery.” [114], p. 5. The Court is therefore inclined to allow Plaintiff to conduct such further factual discovery so that the District Judge can eventually make a determination as to when Plaintiff's claims accrued. In other words, “[i]f... the parties are allowed to engage in the discovery now, then the factual premises [as to certain doctrines, like fraudulent concealment, the discovery rule, or continuing violation] will be available for the parties to argue; indeed, the uncovered facts might even render unnecessary definitive decisions on certain doctrines, because the facts might not support them.” In re Evanston Nw. Corp. Antitrust Litig., No. 07C04446, 2015 U.S. Dist. LEXIS 198712, at *5-6 (N.D. Ill. May 28, 2015).
Furthermore, as articulated in the preceding section, all of the requested discovery is directly relevant to claims in the case; each requested timeframe goes towards Defendants’ intent in crafting the CEAs that are the crux of the case. The requested discovery therefore goes to the heart of the case to the extent it may reveal information about Defendants’ intent and to the extent it may provide a factual premises for some of the doctrines Plaintiff has invoked. The requested discovery is clearly important.
As to the burden of the requested discovery, Defendants put forth no specific argument as to why the subject of this Motion, being the contested timeframes for specific productions, is overly burdensome such that the burden of production from those timeframes outweighs the benefit. Instead, Defendants argue that the discovery requests are generally burdensome because (1) they seek “all documents;” (2) a subsequent discovery motion by Plaintiff leaves the scope of discovery at issue; and (3) a subsequent discovery motion by Plaintiff leaves the number of custodian requests at issue. [198], p. 14-16. Defendants also make a limited argument that the requested discovery is not proportional because of Plaintiff's alleged “[E]SI destruction and improper withholding of court-ordered alternative resources.” Id at 16. As the present Motion does not concern the spoliation of evidence or challenges to a privilege log, the Court declines to consider this argument further. Similarly, because the subsequent discovery motions are not at issue in the present Motion, the Court also declines to consider those arguments.
*6 That leaves Defendants’ concern over the inclusion of the “all documents” language in some of the requests. Defendants simply assert that this language is “[f]acially overbroad, burdensome and not proportional to the needs of the case” and put forth no further argument articulating the specific burden this language places on Defendants. [198], p. 14. Because “[r]esponding parties must in turn supply hard information substantiating claimed burdens,” this argument is unpersuasive. Deal Genius, LLC, 682 F. Supp. 3d at 733; see also Grimes v. Keramida Env't, Inc., No. 22C1598, 2023 WL 5384049, at *2 (S.D. Ind. Aug. 22, 2023) (“[I]f a party is to resist discovery as unduly burdensome, it must adequately demonstrate the nature and extent of the claimed burden by making a specific showing as to how disclosure of the requested documents and information would be particularly burdensome.” (internal quotations and citations omitted)).
The burden of producing information from the requested timeframes therefore does not outweigh its likely benefit. This said, the Court finds that the timeframe for the Third Request should be narrowed to be more proportional to the needs of the case. DSM Desotech Inc. v. 3D Sys. Corp., No. 08C1531, 2008 WL 4812440, at *2 (N.D. Ill. Oct. 28, 2008) (“As the Supreme Court, the Seventh Circuit, and this court have all recognized, discovery in any antitrust case can quickly become enormously expensive and burdensome to defendants.”).
The First and Second Requests are grounded in specific dates or events (i.e. requesting discovery that incrementally predates the first CEA execution or the first introduction of the Nurse Call products to the CEAs), but the Third Request broadly seeks documents back to 2010, presumably on the basis of Plaintiff's market entry that year. Although discovery that predates the “[e]arliest possible date of the actionable wrong” is viable in antitrust cases for the reasons discussed previously, the Court is also mindful of the general scope of “predate discovery” allowed in other cases. In re Outpatient Med. Ctr. Emp. Antitrust Litig., 2023 WL 4181198 at *5. Other cases in this circuit have generally constrained the scope of predate discovery to roughly two years before the earliest possible date of the actionable wrong. See id. (allowing two years of predate discovery); Kleen Prods. LLC, 2013 WL 120240 at *9 (allowing two years of predate discovery). The timeframes requested in the First and Second Requests are consistent with this scope, but the Third Request seeks information even further back than the First and Second Requests. Accordingly, in the effort to keep the Third Request consistent with caselaw and the First and Second Requests, the Third Request timeframe is modified to include documents back to January 1, 2012. The First and Second Requests retain their original timeframe.
CONCLUSION
For the foregoing reasons, Plaintiff's Motion to Compel Discovery from Hillrom Defendants [162] is granted in part and denied in part. Defendants have until 2/26/25 to produce responsive discovery in accordance with this order.
SO ORDERED.
Footnotes
Plaintiff indicated that the parties met and conferred on April 4, 2024 and April 26, 2024 prior to filing this motion. [163], p. 3. Although the Court finds this representation sufficient for purposes of this order, prior to filing future discovery motions, the Court encourages the parties to review Judge McLaughlin's standing order on “Discovery Motion Requirements” for Judge McLaughlin's specific meet and confer expectations.
Discovery in this case was bifurcated to “Phase 1” discovery, which covered the time period of December 28, 2017, to the present, and “Phase 2” discovery, which covers the pre-December 28, 2017, time period, pending the District Judge's ruling on Defendants’ Motion for Judgment on the Pleadings. [87], p. 2, fn. 2, 3 (“Phase 1 Time Period refers to documents from December 28, 2017 forward...” and “Phase 2 Time Period refers to documents from prior to December 28, 2017”). On January 17, 2024, the District Judge denied Defendants’ Motion for Judgment on the Pleadings, and the parties transitioned to Phase 2 discovery. [114]; see also [154], p, 2, fn. 2 (Magistrate Judge Gilbert's May 2024 discovery scheduling order noting that, at this point in the case, Phase 1 discovery has been completed such that “[t]he deadlines in this Order presumptively apply to non-Phase 1 Time Period document requests.”).
Defendants argue that this language regarding relevancy is outdated, and specifically argue that the Webster Bank case misstated the standard, because the 2015 amendments to Federal Rule of Civil Procedure 26(b)(1) removed the “subject matter of the action” language from the rule. [198], p. 11, fn. 5. Although the 2015 amendments mean that “[r]elevance, for discovery purposes, is now gauged in relation to claims or defenses in the action” rather than the “subject matter” of the action, the “[t]he rule itself offers no further definition of relevance.” Coleman v. Illinois, No. 19C3789, 2020 WL 5752149, at *3 (N.D. Ill. Sept. 25, 2020). The Court therefore sees no reason why Oppenheimer Fund’s relevancy standard (relevance “has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case”) is no longer good law, especially in light of the myriad of cases that continue to rely on it. Oppenheimer Fund, Inc., 437 U.S. 340 at 351; see e.g. Pable v. Chicago Transit Auth., No. 19C7868, 2024 WL 3688708, at *6 (N.D. Ill. Aug. 7, 2024) (citing Oppenheimer Fund’s relevancy standard); Belcastro v. United Airlines, Inc., No. 17C1682, 2019 WL 1651709, at *9 (N.D. Ill. Apr. 17, 2019), objections overruled (citing Oppenheimer Fund’s relevancy standard); Arriaga v. Dart, No. 20C4498, 2023 WL 1451526, at *2 (N.D. Ill. Feb. 1, 2023) (Kendall, Chief J., citing Oppenheimer Fund’s relevancy standard); Cent. States, Se. & Sw. Areas Pension Fund v. Wingra Redi-Mix, Inc., No. 21C3684, 2023 WL 199360, at *2 (N.D. Ill. Jan. 17, 2023) (citing Oppenheimer Fund’s relevancy standard).
Plaintiff originally sought documents in their First Request back to January 1, 2010, but after pushback from Defendant Hillrom, Plaintiff offered a “compromise” timeframe of January 1, 2012, which Defendant Hillrom also rejected. [163], p. 9-10.
Defendants rely on A.A. Poultry Farms, Inc. in their effort to discredit Plaintiff's argument that intent is relevant to claims of monopolization. [198], p. 13 (citing A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1396, 1402 (7th. Cir. 1989)). This reliance is misplaced. A.A. Poultry Farms, Inc. in turn relies on Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370 (7th Cir.1986), which the Seventh Circuit “reconciled with” the Supreme Court's Aspen Skiing Co. decision in Panhandle E. Pipe Line Co. In Panhandle, the Seventh Circuit explicitly recognized that “[i]ntent is relevant to the offense of monopolization.” State of Ill., ex rel. Burris v. Panhandle E. Pipe Line Co., 935 F.2d 1469, 1481 (7th Cir. 1991); see also JamSports & Ent., LLC, 336 F. Supp. 2d 824, 842 (N.D. Ill. 2004) (“The Panhandle court seemingly reconciled Olympia Equipment Leasing with Aspen Skiing, recognizing the continuing relevance of intent.”). Intent is therefore relevant to claims of monopolization.