Gian Biologics, LLC v. Cellmedix Holdings, LLC et al
Filing
57
ORDER denying without prejudice 42 Defendants' Motion to Quash Third Party Subpoenas, granting 26 Plaintiff's Request for Attorney's Fees, and denying 50 Plaintiff's Request to Sanction Defendants under Rule 26(g)(3). The Court awards attorney's fees and costs of $18,925 to Plaintiff. Signed by Magistrate Judge Carol Mirando on 11/4/2016. (HJ)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
GIAN BIOLOGICS, LLC, a Delaware
limited liability corporation
Plaintiff,
v.
Case No: 2:15-cv-645-FtM-99CM
CELLMEDIX HOLDINGS, LLC,
PERFUSION.COM, INC., NORTH
AMERICAN STERILIZATION
AND PACKAGING COMPANY,
INC., BRYAN V. LICH and PAUL
WIEBEL, JR. ,
Defendants.
ORDER
This matter comes before the Court upon review of Defendants’ Motion to
Quash Third Party Subpoenas (Doc. 42) filed on August 30, 2016 and Plaintiff’s
Supplemental Briefing in support of Plaintiff’s Motion for Attorneys’ Fees (Doc. 50)
filed on September 19, 2016. Plaintiff opposes Defendants’ motion to quash, and
Defendants oppose Plaintiff’s request for attorney’s fees (Doc. 26). Docs. 42, 52.
I.
Background
On October 14, 2015, Plaintiff filed a Complaint against Defendants Cellmedix
Holdings, LLC (“Cellmedix”) and Perfusion.com, Inc. (“Perfusion”), alleging patent
infringement.
Doc. 1 ¶ 4.
Plaintiff is a corporation that develops and
commercializes devices for preparing autologous platelet rich plasma from blood
samples.
Id. ¶ 1. Plaintiff is an assignee of a patent named “Centrifuge Tube
Assembly” (the “Patent”), which relates to an improved centrifuge tube assembly.
Id. ¶ 7. Plaintiff alleges that Cellmedix manufactures and sells centrifuge tube
assemblies and that Perfusion also sell similar products. Id. ¶¶ 8, 12. Plaintiff
argues that Defendants’ commercial activities constitute infringement of the Patent.
Id. ¶ 15. After filing of the Complaint, on February 22, 2016, the Court entered a
Case Management and Scheduling Order (“CMSO”) setting the deadline for motions
to amend pleadings or add parties to March 21, 2016 and the discovery deadline to
September 15, 2016. Doc. 20.
On June 24, 2016, Plaintiff filed a Motion to Compel and for Attorney’s Fees,
seeking to compel Defendants to produce a full and complete response to Plaintiff’s
interrogatory and requests for production of documents as well as seeking attorney’s
fees associated with the motion to compel. Doc. 26. On July 8, 2016, Defendants
filed a response in opposition to Plaintiff’s motion to compel. Doc. 27. On July 19,
2016, Plaintiff filed a reply to Defendants’ response after obtaining leave of court.
Docs. 28, 29, 30. On July 22, 2016, Plaintiff filed an unopposed motion to extend the
expert disclosure deadlines and the discovery deadline by at least sixty (60) days.
Doc. 31.
On August 11, 2016, Plaintiff filed an Unopposed Motion for Leave to
Amend Complaint and to Join Additional Defendants. Doc. 37.
To address Plaintiff’s various motions, on August 18, 2016, the Court held a
hearing. Doc. 39. During the hearing, Plaintiff clarified that the parties disputed
not over a specific discovery request but over Defendants’ failure to commit to the
agreed deadlines. Doc. 43 at 12. In response, Defendant stated that they were in
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the process of producing responsive documents, but sought to limit the scope of
discovery because this case involves only approximately $8,750.
Id. at 25, 28.
Based on the evidence and arguments presented, the Court granted in part and
denied in part Plaintiff’s motion to compel and granted the motion for extension and
the motion to amend.
Doc. 39.
The Court also ordered the parties to submit
supplemental briefing on Plaintiff’s request for attorney’s fees and reserved ruling on
the issue. Id. at 3. On August 19, 2016, the Court entered an amended CMSO
setting the deadlines for affirmative disclosure of expert reports to October 31, 2016
and for rebuttal to November 30, 2016, the discovery deadline to December 30, 2016,
the mediation deadline to January 13, 2017, the deadline for dispositive motions to
January 30, 2017, and a trial term of August 7, 2017. Doc. 41.
On September 22, 2016, Defendants substituted their counsel to their present
attorneys, who currently are representing Defendants. Doc. 51. On October 13,
2016, the parties filed the joint motion to extend the amended CMSO deadlines. Doc.
55. The Court granted the motion, extending the discovery deadline to January 31,
2017 and the deadline for dispositive motions to March 3, 2017. Doc. 56. The case
remains on the August trial term. Id.
II.
Plaintiff’s Request for Attorney’s Fees (Doc. 26)
According to Plaintiff, the history of the parties’ discovery disputes is as
follows. Plaintiff served its First Requests for Production and Interrogatories on
February 10, 2016. Doc. 50 at 2. On March 10, 2016, Defendants asked for a twoweek extension to respond to the discovery requests, to which Plaintiff agreed on
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certain conditions, including that Defendants produce all responsive documents.
Doc. 50-1 at 4.
On March 15, 2016, Defendants produced some documents
responsive to the discovery requests and also as part of the Rule 26 disclosures,
stating that “these [were] not all the documents responsive to the request for
production.”
Id. at 8.
Plaintiff followed up with Defendants on April 4, 2016
because Defendants had not produced more documents after March 15, 2016. Id. at
11. Plaintiff inquired whether what Defendants already had produced constituted a
complete response to Plaintiff’s request for production, and if so, asked Defendants to
produce a Rule 26(g) certification. Id. at 10-11. On April 25, 2016, the parties had
a conference call to resolve the outstanding discovery disputes. Doc. 50 at 2.
On May 3, 2016, Defendants produced a second response, which still seemed
deficient to Plaintiff. Id. at 2-3. On June 17, 2016, the parties had a conference call
regarding the discovery issues, during which Defendants did not confirm dates
certain for the production of any remaining documents responsive to Plaintiff’s
requests for production and for a complete and full response to Plaintiff’s
interrogatory on Cellmedix.
Id. at 3. Plaintiff asserts that overall, Defendants
evaded their duty to supplement their deficient discovery responses and the parties’
efforts to resolve the discovery disputes without the Court’s involvement. Id. As a
result, Plaintiff filed a motion to compel on June 24, 2016. Id. On July 7, 2016,
Defendants produced additional documents and a 26(g) certification. Id.
Plaintiff argues that Defendants should bear attorney’s fees incurred by
Plaintiff in preparing the motion to compel (Doc. 26), the motion for leave to file a
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reply (Doc. 28), and its reply to Defendants’ response to the motion to compel (Doc.
30).
Id.
Plaintiff argues that on numerous occasions, it tried to resolve the
discovery disputes in good faith, but Defendants responded with untimely and
boilerplate objections.
Id. at 5.
Furthermore, Plaintiff claims that Defendants
should be sanctioned under Rule 26(g)(3) because their certification is improper. Id.
at 6. Plaintiff cites to the hearing on August 18, 2016 during which Defendants
stated that they needed to conduct additional searches for other responsive
documents and that Defendants received additional responsive documents the night
before. Doc. 43 at 48-50. As a result, Plaintiff seeks a total of $18,925 as reasonable
attorney’s fees associated with the motions to compel and for leave to file a reply
(Docs. 26, 28) and its reply to Defendants’ response (Doc. 30). Doc. 50 at 8.
In response, Defendants argue that Plaintiff did not clarify what it was seeking
to compel until June 17, 2016 when the parties had a phone conference concerning
the discovery disputes. Doc. 52 at 3; Doc. 50-1 at 23. According to Defendants, all
prior discussions regarding discovery were non-specific. Doc. 52 at 3. Defendants
argue that absent a meaningful and specific discussion, Defendants could not have
recognized what their production purportedly was missing. Id. at 4. Defendants
also state that Plaintiffs did not seek to have a keyword search on Defendants’ servers
to procure responsive documents.
Id.
Although Plaintiff’s discovery requests
encompass over 45,000 documents, Defendants allege that Plaintiff did not tailor its
requests to what is proportional to the needs of this case. Id. at 4.
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Here, the Court finds Plaintiff’s argument persuasive that Defendants should
bear Plaintiff’s attorney’s costs. As Plaintiff points out, Defendants produced and
supplemented their responses three times in the span of five months after Plaintiff
served its discovery requests on February 10, 2016: first on March 15, 2016, second
on May 3, 2016, and lastly on July 7, 2016. Doc. 30-3; Doc. 50 at 2-3; Doc. 50-1 at 8,
19.
Even then, Defendants were fully aware that their three productions were
deficient, demonstrated by the statement of Defendants’ counsel during the hearing
on August 18, 2016 that Defendants still had more searches to do, and by Defendants’
late 26(g) certification finally produced on July 6, 2016. Doc. 30-1 at 1-2; Doc. 43 at
49-50; Doc. 50 at 2. Had Defendants believed Plaintiff’s discovery requests were
overly burdensome and broad given the scope of this case, Defendants had many
venues to pursue: they could have moved for a protective order or sought Plaintiff’s
clarification of what exactly Plaintiff wanted them to supplement and negotiated to
reduce the scope of discovery.
Doc. 52 at 5-6.
Instead, Defendants untimely
produced incomplete sets of documents after the parties’ agreed deadlines had
passed. Id. at 2-3; Doc. 50-1 at 4, 8, 10, 18, 23. Furthermore, Defendants’ brief in
opposition does not focus on explaining their conduct during the discovery process,
but rather on highlighting Plaintiff’s faults. Doc. 52 at 2 (“Plaintiff was equally at
fault for failing to negotiate ESI search terms in good faith at the outset of this case.”).
If a motion to compel is granted in part, the court may, “after giving an
opportunity to be heard, apportion the reasonable expenses for the motion.” Fed. R.
Civ. P. 37(a)(5)(C). Plaintiff has provided an itemized chart of the hours spent on
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bringing the motion to compel (Doc. 26), which shows a total of 51.4 hours at the rate
of $455 per hour for counsel Alejandro Fernandez and $350 per hour for counsel
Stephen Leahu. Doc. 50 at 9; Doc. 50-3 at 8-18. Defendants contest that the total
number of hours submitted by Plaintiff is not reasonable because Plaintiff’s time
entries are vague or intertwined with other topics not covered by the motion to
compel. Doc. 52 at 7. Because Defendants untimely produced insufficient sets of
documents and Plaintiff’s motion to compel (Doc. 26) addressed a number of
outstanding discovery requests, 1 the Court finds Plaintiff’s requested fees of $18,925
to be reasonable. Doc. 50 at 9. Accordingly, the Court awards the attorney’s fees of
$18,925 to Plaintiff.
In addition, Rule 26(g) of the Federal Rules of Civil Procedure requires that:
Every disclosure under Rule 26(a)(1) or (a)(3) and every discovery
request, response, or objection must be signed by at least one attorney
of record in the attorney’s own name . . . . By signing, an attorney or
party certifies that to the best of the person’s knowledge, information,
and belief formed after a reasonable inquiry:
(A) with respect to a disclosure, it is complete and correct as of the time
it is made; and
(B) with respect to a discovery request, response, or objection, it is:
(i)
consistent with these rules and warranted by existing law or
by a nonfrivolous argument for extending, modifying, or
reversing existing law, or for establishing new law;
Plaintiff sought to compel Defendants (1) to produce a full and complete response to
Interrogatory No. 1 and (2) to produce responsive documents to Requests Nos. 4, 11, 12, 13,
14, 15, 16, 17, 26, 27, 31, 32, 33, 36, 39, 40, 43, 46, 47, and 48. Doc. 26. Plaintiff sought to
discover the extent and circumstances of Defendants’ commercialization of the device in
question, revenues from sales, Defendants’ knowledge of the Patent, Defendants’ attempts to
redesign in light of the Patent, Defendants’ efforts to conceal infringement, and Defendants’
inducement of others to infringe the Patent. Id. at 2.
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(ii)
not interposed for any improper purpose, such as to harass,
cause unnecessary delay, or needlessly increase the cost of
litigation; and
(iii)
neither unreasonable nor unduly burdensome or expensive,
considering the needs of the case, prior discovery in the case,
the amount in controversy, and the importance of the issues
at stake in the action.
Fed. R. Civ. P. 26(g). In other words, the signature “certifies that the filing conforms
to the discovery rules, is made for a proper purpose, and does not impose undue
burdens on the opposing party in light of the circumstances of the case.” Chudasama
v. Mazda Motor Corp., 123 F.3d 1353, 1372 (11th Cir. 1997). This rule imposes a
duty on an attorney to make a reasonable inquiry under the circumstances. Fed. R.
Civ. P. 26(g) advisory committee’s note to 1983 amendment. Under this rule, “every
discovery request, response, or objection should be grounded on a theory that is
reasonable under the precedents or a good faith belief as to what should be the law.”
Id. The standard under Rule 26(g) depends heavily on the circumstances of each
case, and the certification “speaks as of the time it is made.” Id.
If a certification is improper without substantial justification, “the court, on
motion or on its own, must impose an appropriate sanction on the signer, the party
on whose behalf the signer was acting, or both.” Fed. R. Civ. P. 26(g)(3). Available
sanctions include “an order to pay the reasonable expenses, including attorney’s fees,
caused by the violation.” Fed. R. Civ. P. 26(g)(3). The decision to impose sanctions
under Rule 26(g)(3) is not discretionary. Chudasama, 123 F.3d at 1372. “Once the
court makes the factual determination that a discovery filing was signed in violation
of the rule, it must impose an appropriate sanction.” Id. (quotation marks omitted).
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The district court, however, has a discretion to decide what sanction is appropriate.
Id. A party who allegedly has failed to comply with Rule 26 has the burden to show
that its actions were substantially justified or harmless. Parrish v. Freightliner,
LLC, 471 F. Supp. 2d 1262, 1268 (M.D. Fla. 2006).
Here, the Court finds persuasive Defendants’ argument that Defendants
should not be sanctioned under Rule 26(g)(3).
Plaintiff argues that Defendants’
26(g) certification is improper because Defendants conducted insufficient research in
preparation of their responses to Plaintiff’s discovery requests. Doc. 50 at 6. In
response, Defendants assert that Plaintiff’s discovery requests were overly broad and
burdensome given the scope of this case and that Defendants could not have
completed research in producing responsive documents absent an adequate
description of deficient topics and a negotiation of search terms. Doc. 52 at 4-5. As
of July 6, 2016 when Defendants made their 26(g) certification, because the amount
in controversy here is not great and given the absence of the parties’ negotiation over
search terms, Defendants were not unreasonable in objecting on the ground that the
requests were overly broad or burdensome and in producing what they did on July 7,
2016.
See Fed. R. Civ. P. 26(g) advisory committee’s note to 1983 amendment.
Hence, Defendants have demonstrated substantial justifications for their 26(g)
certification. See Parrish, 471 F. Supp. 2d at 1268.
III.
Defendants’ Motion to Quash Third Party Subpoenas (Doc. 42)
Defendants allege that in August 2016, Plaintiff served twenty-one third party
subpoenas to Defendants’ customers. Doc. 42 at 1. Defendants submitted one of
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the subpoenas as an example, which contains twenty-two (22) requests for production
of documents. Doc. 42-1 at 10-12. The requests seek comprehensive information
about Defendants’ device in question, communications between Defendants and their
customers, fees and payments, a list of other clients and customers who received the
device in question. Doc. 42 at 1. Five of the subpoenas were due September 1, 2016,
and sixteen (16) were due September 7, 2016. 2 Id. Defendants seek to quash all of
the subpoenas. Id. at 2.
Pursuant to Rule 45, the “court for the district where compliance is required
must quash or modify a subpoena that: (i) fails to allow a reasonable time to comply;
(ii) requires a person to comply beyond the geographical limits specified in Rule 45(c);
(iii) requires disclosure of privileged or other protected matter, if no exception or
waiver applies; or (iv) subjects a person to undue burden.” Fed. R. Civ. P. 45(d)(3)(A).
A party does not have standing to quash a subpoena served on a third party unless
the party seeks to quash based on a “personal right or privilege with respect to the
materials subpoenaed.” Brown v. Braddick, 595 F. 2d 961, 967 (5th Cir. 1979); 3 see
also Maxwell v. Health Ctr. of Lake City, Inc., No. 3:05-cv-1056-J-32MCR, 2006 WL
1627020, at *2 (M.D. Fla. June 6, 2006). The court has held that a party seeking to
quash a subpoena aimed at a party’s financial records does not have standing to move
to quash the subpoena under Rule 45 because the party has no expectation of privacy
Defendants filed their motion to quash on August 30, 2016, and Plaintiff filed its
response on September 13, 2016. Docs. 42, 48.
2
In Bonner v. City of Prichard, 661 F.2d 1206, 1207, 1209 (11th Cir. 1981)(en banc),
the Eleventh Circuit adopted as binding precedent the decisions of the Fifth Circuit rendered
prior to October 1, 1981.
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in the business transactions with other corporations. Auto-Owners Ins. Co. v. Se.
Floating Docs, Inc., 231 F.R.D. 426, 429 (M.D. Fla. 2005); see also Cornett v. Lender
Processing Servs. Inc., No. 3:12-cv-233-J-32TEM, 2012 WL 5305990, at *2 n. 3 (M.D.
Fla. Oct. 29, 2012). Here, as Plaintiff argues, Defendants do not sufficiently show
their standing to challenge Plaintiff’s subpoenas. Doc. 42; Doc. 48 at 2-3; see Brown,
595 F. 2d at 967.
Even if a party lacks standing to challenge a subpoena under Rule 45, the court
may construe a motion to quash a subpoena as a motion for a protective order under
Rule 26(c). Auto-Owners Ins. Co., 231 F.R.D. at 429. Rule 26(c) provides that “a
party or any person” may move for a protective order to protect a person from
“annoyance, embarrassment, oppression, or undue burden or expense.” Fed. R. Civ.
P. 26(c).
The court, upon showing of good cause, may issue a protective order
including “specifying terms, including time and place or the allocation of expenses,
for the disclosure or discovery” and “forbidding the disclosure or discovery.” Fed. R.
Civ. P. 26(c). “Rule 26(c) gives the district court discretionary power to fashion a
protective order.” Farnsworth v. Procter & Gamble, Co., 758 F.2d 1545, 1548 (11th
Cir. 1985). The court’s decision to enter a protective order does not depend on a legal
privilege. Auto-Owners Ins. Co., 231 F.R.D. at 429.
In addition, Rule 26(b) permits discovery
regarding any nonprivileged matter that is relevant to any party’s claim
or defense and proportional to the needs of the case, 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
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outweighs its likely benefit. Information within this scope of discovery
need not be admissible in evidence to be discoverable.
Fed. R. Civ. P. 26(b)(1). Rule 26(b)(1) provides that among the factors considered in
deciding the scope of discovery are “whether the burden or expense of the proposed
discovery outweighs its likely benefit,” “the parties’ relative access to relevant
information,” and “the importance of the discovery in resolving the issues.” Fed. R.
Civ. P. 26(b)(1). The court must limit the extent of discovery if it finds that “the
discovery sought is unreasonably cumulative or duplicative, or can be obtained from
some other sources that is more convenient, less burdensome, or less expensive.”
Fed. R. Civ. P. 26(b)(2)(C)(i).
Here, the Court finds that Plaintiff’s subpoenas might be overly broad and
burdensome and not proportional to the needs of the case. Doc. 42 at 4-12. This
case involves approximately $8,750, and Defendants allege that per the Court’s Order
(Doc. 39), they still are in the process of responding to Plaintiff’s discovery requests.
Doc. 42 at 3; Doc. 43 at 12. Furthermore, Defendants argue that the subpoenas force
Defendants’ customers to undergo an exhaustive search of their records when
Defendants either already have the requested documents or have less costly methods
to discover the same documents. Doc. 42 at 4-12. Given the scope of this case and
Defendants’ arguments, the Court finds that serving twenty-one (21) subpoenas to all
of Defendants’ customers with similar or identical requests might not be proportional
to the needs of this case and might be burdensome or cumulative. See Fed. R. Civ.
P. 26(b)(1).
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The Court, however, cannot reach a conclusive resolution because Plaintiff
alleges that the parties have not conferred regarding Defendants’ specific objections
and that the subpoenas will discover information Defendants do not possess. Doc.
48 at 3-4, 7-8. In addition, neither parties’ briefs clearly define (1) what the parties
already have, (2) what less costly and easier methods to discover materials are
available, and (3) what the parties are willing to identify or produce without the
Court’s intervention. Docs. 42, 48.
Before resorting to the Court regarding discovery disputes, the parties must
conduct adequate and proper legal research and submit concise and simple briefs.
Defendants’ brief contains each response to twenty-two (22) requests contained in the
subpoena (Doc. 42-1 at 10-12), and each response is substantially similar to the other.
Doc. 42 at 4-12. Defendants also do not sufficiently show that they have standing to
challenge Plaintiff’s subpoenas. Id. Furthermore, the parties should not object or
argue based on what would lead to the discovery of admissible evidence because
effective December 1, 2015, the phrase “reasonably calculated to lead to the discovery
of admissible evidence” is no longer part of Rule 26(b)(1); Doc. 42 at 4-8; Doc. 43 at 45. “The former provision of [Rule 26(b)(1)] for discovery of relevant but inadmissible
information that appears ‘reasonably calculated to lead to the discovery of admissible
evidence’ is [] deleted.” Fed. R. Civ. P. 26(b)(1) advisory committee’s note to 2015
amendment.
Based on the above reasons and, the Court will deny without prejudice
Defendants’ motion to quash and direct the parties to have a meaningful discussion
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over what discovery materials they already have and are in the process of producing.
Only if the parties cannot resolve their disputes after exchanging information and
discussing in good faith should they resort to the Court’s help and present meaningful
arguments for the Court to consider.
ACCORDINGLY, it is hereby
ORDERED:
1.
Defendants’ Motion to Quash Third Party Subpoenas (Doc. 42) is DENIED
without prejudice.
2.
Plaintiff’s Request for Attorney’s Fees (Doc. 26) is GRANTED.
The
Court awards attorney’s fees and costs of $18,925 to Plaintiff.
3.
Plaintiff’s Request to Sanction Defendants under Rule 26(g)(3) (Doc. 50)
is DENIED.
DONE and ORDERED in Fort Myers, Florida on this 4th day of November,
2016.
Copies:
Counsel of record
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