Health Grades, Inc. v. MDX Medical, Inc.
Filing
569
ORDER denying 424 / 425 MDx Medical, Inc.'s Motion for Sanctions Under Federal Rule of Civil Procedure 37 for Health Grades Repeated Efforts to Conceal Its Prior Art. By Magistrate Judge Boyd N. Boland on 4/25/13.(mnfsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge Boyd N. Boland
Civil Action No. 11-cv-00520-PAB-BNB
HEALTH GRADES, INC.,
Plaintiff,
v.
MDX MEDICAL, INC., d/b/a Vitals.com,
Defendant.
______________________________________________________________________________
ORDER
______________________________________________________________________________
This matter arises on MDx Medical, Inc.’s Motion for Sanctions Under Federal Rule
of Civil Procedure 37 for Health Grade’s Repeated Efforts to Conceal Its Prior Art [Doc. #
425, filed 12/4/2012] (the “Motion for Sanctions”), which is DENIED.
MDx argues that Health Grades improperly “failed to produce critical information about
its own prior art” in its discovery responses, Motion for Sanctions [Doc. # 425] at p. 3; stated in
response to MDx’s Interrogatory No. 2 that “Health Grades is currently not aware of any prior
art, including any prior public use or sale,” which MDx claims was “utterly false,” id.; and
produced two witnesses pursuant to Rule 30(b)(6)--Messrs. Dodge and Neal--whose testimony
was “largely useless,” who “basically did nothing to prepare” for their depositions, and who
were “extremely uncooperative and evasive.” Id. at pp. 7, 12, and 13. Based on this alleged
misconduct, MDx requests extreme sanctions, including that the jury be instructed that Health
Grades gave a false interrogatory response, failed to produce documents showing the details of
its prior art, and failed to produce witnesses able to provide critical facts about the prior art, id. at
p. 16; the jury be instructed that it should infer that Health Grades’ prior art “comprised all the
elements of all the claims of the ‘060 patent,” id.; and Health Grades be assessed MDx’s
reasonable expenses, including attorneys’ fees, associated with the depositions of Messrs. Dodge
and Neal. Id.
Health Grades opposes the Motion for Sanctions. First, it disputes that its answer to
Interrogatory No. 2 is false or that it failed to disclose prior art. Specifically, Health Grades
argues that it “was not aware of any prior public use or sale of the claimed invention that
qualifies as prior art and is still not aware of any prior public use or sale of the claimed invention
that qualifies as prior art.” Response [Doc. # 473] at p. 7. In addition, Health Grades argues that
its Rule 30(b)(6) deponents “gave adequate, substantive and detailed responses to the vast
majority of questions asked by MDx’s counsel,” id., but that the witnesses are “not expected to
be clairvoyant, so as to divine [opposing counsel’s] specific questions.” Id. (citing Arctic Cat,
Inc. v. Injection Research Specialists, Inc., 210 F.R.D. 680, 686 (D. Minn. 2002)).
The Motion for Sanctions springs from a false premise--that MDx has demonstrated that
Health Grades withheld known prior art. The particular prior art allegedly withheld by Health
Grades are (1) “[t]he critical ‘Drucker Report’”; and (2) Product Development Plans (“PDPs”).
Id. at pp. 2-3.
The PDPs were not withheld at all. Health Grades produced 111 PDPs in December
2011, Exh. D [Doc. # 473-4]; produced additional PDPs totaling 824 pages in March and April
2012, Exh. E [Doc. # 473-5]; and produced still more documents, including but not limited to
PDPs, on or before May 10, 2012, pursuant to my Order compelling discovery. Order [Doc. #
192](requiring the production of responsive documents “no later than May 10, 2012"); Letter
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[Doc. # 424-5] (evidencing production pursuant to the Order on May 9, 2012); Motion [Doc. #
425](acknowledging production of additional PDPs on May 9, 2012).
Nor has MDx established that either the Drucker Report or the PDPs are prior art.
Apparently MDx claims, although it does not specify, that the Drucker Report and the PDPs are
prior art disqualifying patentability under 35 U.S.C. §102(b), which provides:
§ 102. Conditions for patentability; novelty and loss of right to
patent
A person shall be entitled to a patent unless-* * *
(b) the invention was patented or described in a printed
publication in this or a foreign country or in public use or on sale
in this country, more than one year prior to the date of the
application for patent in the United States. . . .
MDx provides no evidence that the PDPs were in public use or on sale more than one
year prior to the date Health Grades applied for its patent. Nor has MDx provided evidence that
the PDPs anticipate every claim of the ‘060 patent. Similarly, with respect to the Drucker
Report, MDx argues only that “[i]t shows a public consumer URL, proving it was on the Public
Health Grades website in mid-2005; it has patient ratings of Dr. Drucker; it has comparison
ratings of healthcare provider hospitals; and it has the other claimed elements as well.” Reply
[Doc. # 495] at p. 2 (emphasis added). I am not prepared, on this sparse record, to say that the
Drucker Report is prior art disqualifying patentability under § 102. Although the issue would be
better raised in a motion for summary judgment with a fully developed evidentiary record, and
MDx has filed motions seeking summary judgment in whole or in part on at least six occasions,
it has not sought summary judgment based on § 102. Cf. MDx Medical, Inc.’s Motion for
Summary Judgment [Doc. # 490](seeking summary judgment based on non-infringement but not
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attempting to invalidate the patent in suit); MDx Medical, Inc.’s Motion for Partial Summary
Judgment [Doc. # 378](seeking partial summary judgment on Health Grades’ claims for lost
profits and royalty rates but not attempting to invalidate the patent in suit); MDx Medical, Inc.’s
Motion for Summary Judgment [Doc. # 370](seeking summary judgment on the issue of willful
infringement but not attempting to invalidate the patent in suit); MDx Medical, Inc.’s Motion for
Summary Judgment [Doc. # 367](seeking summary judgment based on non-infringement but not
attempting to invalidate the patent in suit); MDx Medical, Inc.’s Second Motion for Partial
Summary Judgment of Non-Infringement [Doc. # 195](seeking summary judgment based on
non-infringement but not attempting to invalidate the patent in suit); and MDx Medical, Inc.’s
Motion for Partial Summary Judgment [Doc. # 9](seeking summary judgment based on noninfringement but not attempting to invalidate the patent in suit).
MDx also seeks sanctions alleging that Health Grades failed to designate knowledgeable
witnesses adequately prepared to testify under Rule 30(b)(6). In particular, MDx served a Rule
30(b)(6) deposition notice identifying the following sweeping matters for examination:
1. All facts surrounding each and every Health Grades product or
service for providing information on healthcare providers prior to
August 29, 2006, including but not limited to facts concerning
dates of use, structure, operation, development, testing, sales,
public access, and the accessing and compiling of all data used in
each such product and/or service (such products and/or services
include, but are not limited to, Health Grades’ Physician Research
Comparison Report, Physician Quality Report, and Physician
Quality Guide).
2. Identification of each person who developed and/or tested one
or more of the products and/or services addressed in topic 1.
3. Identification of all other prior art known to Health Grades,
including but not limited to Health Grades’ products and services
sold and/or known to the public before August 29, 2006, and not
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disclosed to the Patent & Trademark Office in connection with the
application that led to the ‘060 patent.
MDx Medical, Inc.’s Notice of Rule 30(b)(6) Deposition to Health Grades, Inc. [Doc. # 424-6] at
p. 4. Health Grades designated Allen Dodge to testify about the matters for examination
specified in Topic 1, except for the information called for by the parenthetical, and designated
John Neal to testify as to all remaining matters for examination.
MDx complains that Mr. Dodge was not able to identify the specific dates when Health
Grades first implemented certain features in its products, beyond stating that implementation
occurred in 2006. It also complains that Mr. Dodge was not familiar with the Nursing Home
Quality Comparison Reports, Physician Research Quality Reports, Comparative Physician
Reports, or Premium Reports.
MDx also complains that Mr. Neal was not able to testify about specific information
concerning the Physician Research Comparison Reports, Physician Quality Guide, or Physician
Quality Reports, and was unable to state when the first product embodied by the claims of the
‘060 patent was launched beyond the “2006, 2007 timeframe.” Deposition of John Neal [Doc. #
425-7] at pp. 61-62.
Rule 30(b)(6), Fed. R. Civ. P., requires a noticing party to “describe with reasonable
particularity the matters for examination.” This requirement was interpreted in McBride v.
Medicalodges, Inc., 250 F.R.D. 581, 584 (D. Kan. 2008), to require the following:
To allow Rule 30(b)(6) to effectively function, the requesting party
must take care to designate, with painstaking specificity, the
particular subject areas that are intended to be questioned, and that
are relevant to the issues in dispute. The responding party must
make a conscientious, good-faith endeavor to designate the persons
having knowledge of the matters sought and to prepare those
persons in order that they can answer fully, completely, and in a
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non-evasive manner, the questions as to the relevant subject
matters. Once notified as to the reasonably particularized areas of
inquiry, the corporation then must not only produce such number
of persons as will satisfy the request, but more importantly,
prepare them so that they may give complete, knowledgeable, and
binding answers on behalf of the corporation.
(Quotations, citations, and notes omitted.)
Although an essential and useful discovery device, Rule 30(b)(6) presents unique
challenges. As Professors Wright and Miller have described, prior to the advent of the rule:
In some instances corporations were able to exploit their size and
complexity to advantage by “bandying” their opponents with
deposition witnesses who all disclaimed knowledge on the topics
the adversary wanted to investigate. . . . [Rule 30(b)(6)] was
designed to curb the “bandying” by which officers and managing
agents of a corporation are deposed in turn but each disclaims
knowledge of facts that are clearly known to persons in the
organization and thereby to it.
* * *
Some contend that practice under Rule 30(b)(6) has on occasion
imposed unfair burdens on responding parties. The starting point
in assessing such claims is to compare the risks of “bandying,”
which Rule 30(b)(6) was designed to cure. When the rule was
introduced, the Advisory Committee was aware of the burdens it
could impose, but concluded that the burden is not essentially
different from that of answering interrogatories under Rule 33, and
is in any case lighter than that of an examining party ignorant of
who in the corporation has knowledge.
Thus Rule 30(b)(6) called on the courts to ensure that both sides
are adhering to the rule’s objective of fair access to corporate
information and, at the same time, to guard against overreaching
by the party seeking discovery and failure of the corporate party to
satisfy its obligations under the rule.
8A Wright & Miller Federal Practice and Procedure §2103 at pp. 452-58 (internal quotation and
note omitted).
Fault here lies with both parties. First, MDx employed sweeping matters for examination
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and failed to “designate, with painstaking specificity, the particular subject areas that are
intended to be questioned,” McBride, 250 F.R.D. at 584, as the Rule requires. In addition, by
requiring that Health Grades designate a representative to testify about “products and/or services
includ[ing] but not limited to” those specified in the parenthetical of Topic 1, MDx rendered the
notice overbroad. Reed v. Bennett, 193 F.R.D. 689, 692 (D. Kan. 2000)(finding that a Rule
30(b)(6) notice specifying areas of inquiry which “will include, but not be limited to,” is
overbroad and “subjects the noticed party to an impossible task”).
On the other hand, Health Grades’ designees, and particularly Mr. Neal, do not appear to
have fully complied with the requirement to prepare themselves so that they could give
complete, knowledgeable, and binding answers on behalf of the corporation. McBride, 250
F.R.D. at 584.
On balance, however, I agree with Health Grades that Messrs. Dodge and Neal generally
were knowledgeable and well informed in most areas of inquiry. Response [Doc. # 473] at p. 17.
As the court noted in QBE Ins. Corp v. Jorda Enterprises, Inc., 2012 WL 266431 at *13 (S.D.
Fla. Jan. 30, 2012), “[a]bsolute perfection is not required of a 30(b)(6) witness. The mere fact
that a designee could not answer every question on a certain topic does not necessarily mean that
the corporation failed to comply with its obligation.”
Importantly, if MDx believes that the Rule 30(b)(6) designees were inadequately
prepared on important matters for examination, a better approach would have been to move to
compel discovery rather than to seek evidentiary sanctions. MDx’s delay in seeking relief,
combined with its decision to seek evidentiary sanctions at trial rather than an order compelling
discovery, evidences the kind of “overreaching by the party seeking discovery” about which
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Professors Wright and Miller warn.
IT IS ORDERED that the Motion for Sanctions [Doc. # 425] is DENIED.
Dated April 25, 2013.
BY THE COURT:
s/ Boyd N. Boland
United States Magistrate Judge
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