Eastman et al v. Quest Diagnostics Incorporated

Filing 65

ORDER ON DISCOVERY DISPUTE by Hon. William H. Orrick re: 62 Discovery Letter Brief. For all these reasons, plaintiffs' request for pre-complaint discovery is DENIED. Plaintiffs may have until January 13, 2016 to file their second amended complaint. (jmdS, COURT STAFF) (Filed on 1/6/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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COLLEEN EASTMAN, et al.,

Case No. 15-cv-00415-WHO

Plaintiffs,
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ORDER ON DISCOVERY DISPUTE
v.

Re: Dkt. No. 62

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QUEST DIAGNOSTICS
INCORPORATED,

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United States District Court
Northern District of California

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Defendant.

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This Order concerns the discovery dispute set out in the joint letter the parties filed on

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December 31, 2015. Dkt. No. 62. Some background is necessary before addressing the parties’

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current dispute.

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On June 9, 2015, I dismissed plaintiffs’ original complaint with leave to amend. Dkt. No.

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42. On June 15, 2015, plaintiffs filed an administrative motion seeking an order requiring Quest

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to produce documents responsive to seven broad document requests. Dkt. No. 43. I denied the

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motion, observing that plaintiffs had not yet stated a claim, and that this is not a case where all the

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information necessary to plead a plausible claim is in the hands of the defendant. Dkt. No. 45.

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Plaintiffs submitted a first amended complaint, which I again dismissed with leave to

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amend. Dkt. Nos. 46, 59. In the dismissal order, I denied plaintiffs’ request to supplement the

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record with a letter (filed nearly three weeks after the hearing on the motion to dismiss)

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documenting how they had not been allowed to obtain the requested discovery from Quest. Id. at

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9 n.3. Plaintiffs appealed the dismissal order to the Ninth Circuit but voluntarily dismissed the

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appeal on December 23, 2015, within two weeks of filing it, after the Ninth Circuit noted that its

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jurisdiction over the appeal was questionable. Dkt. Nos. 60, 63.

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Plaintiffs have now returned to this Court with another demand for pre-complaint

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discovery. Dkt. No. 62. They seek the production of Quest’s fee-for-service pricing for the years

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2013 and 2015 for six geographic areas (Northern California, Southern California, New York,

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Portland, Seattle, and Tampa) and for twenty-one different routine diagnostic testing codes. Id. at

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2. Quest opposes. Id. at 3-4.

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There is nothing about plaintiffs’ current discovery request or the current circumstances of
this case that warrants a different result from the last time I decided this issue. Plaintiffs remain

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without a complaint on file that states a claim. As I stated in denying plaintiffs’ last discovery

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request, “[t]he Supreme Court has cautioned against subjecting antitrust defendants to burdensome

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discovery before plaintiffs have stated plausible claims to relief.” Dkt. No. 45; see also Bell Atl.

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Corp. v. Twombly, 550 U.S. 544, 558 (2007) (“[I]t is one thing to be cautious before dismissing an

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antitrust complaint in advance of discovery, but quite another to forget that proceeding to antitrust

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United States District Court
Northern District of California

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discovery can be expensive . . . [A] district court must retain the power to insist upon some

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specificity in pleading before allowing a potentially massive factual controversy to proceed.”)

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(internal citations and quotation marks omitted); Sky Angel U.S., LLC v. Nat’l Cable Satellite

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Corp., 296 F.R.D. 1, 2-3 (D.D.C. 2013) (“[Plaintiff] points to no case in which a court has granted

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pre-complaint discovery in order to identify the underlying conduct that gives rise to a cause of

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action . . . The Rule 8 screening function would be rendered toothless if [plaintiff] were entitled to

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pre-complaint discovery in order to fish for conduct that gives rise to an antitrust violation.”).

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While plaintiffs’ current discovery request is somewhat narrower than their previous one, the same

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principles continue to apply.

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Further, this still is not a case where all the information necessary to plead a plausible

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claim is in the hands of the defendant. See Dkt. No. 45. Plaintiffs’ first amended complaint failed

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to plausibly establish causal antitrust injury not only because of the lack of specific pricing

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information, but also because their “attempt to plead Quest’s alleged overcharging in the

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plan/outpatient market [was] at odds with their repeated emphasis on how Quest benefits from its

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‘substantial economies of scale’ and ‘large cost advantages’ over its competitors.” Dkt. No. 59 at 14.

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I need not decide the issue now, but I assume that plaintiffs could plausibly establish monopoly

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overcharging in this case, even in the absence of specific pricing information, by pleading other

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facts that supported such an inference. I do not see how such facts would be exclusively in the
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“custody and control” of Quest. Dkt. No. 62 at 2.
Nor is it clear to me how the pricing information plaintiffs now seek would be sufficient,

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on its own, to enable them to cure the deficiencies in their first amended complaint. Plaintiffs

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would still lack pricing information for Quest’s competitors in Northern California and elsewhere,

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and would still lack a coherent and plausible explanation as to why it is appropriate to assume that

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Quest’s pricing is attributable to its alleged antitrust violations.

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United States District Court
Northern District of California

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For all these reasons, plaintiffs’ request for pre-complaint discovery is DENIED. Plaintiffs
may have until January 13, 2016 to file their second amended complaint
IT IS SO ORDERED.
Dated: January 6, 2016
______________________________________
WILLIAM H. ORRICK
United States District Judge

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