Merix Pharmaceutical Corp. v. EMS Acquisition Corporation

Filing 210

MEMORANDUM Opinion and Order. Signed by the Honorable Young B. Kim on 9/21/2010. (aac, )

Merix Pharmaceutical Corp. v. EMS Acquisition Corporation

Doc. 210

UNITED STATES DISTRICT COURT N O R T H E R N DISTRICT OF ILLINOIS E A S T E R N DIVISION ) ) ) P la in tif f , ) v. ) ) E M S ACQUISITION CORPORATION, ) ) D e f e n d a n t. ) M E R I X PHARMACEUTICAL C O R P O R A T IO N ,

C a s e No. 09 CV 5871 M a g is tr a te Judge Young B. Kim S e p te m b e r 21, 2010

M E M O R A N D U M OPINION and ORDER P e n d in g before the court are plaintiff Merix Pharmaceutical Corporation's ("Merix") m o tio n to compel the production of documents responsive to its Third Set of Requests for P ro d u c tio n ("Requests for Production"), motion to deem as admitted each of its First Set of R e q u e s ts for Admission ("Requests for Admission") and motion for sanctions. For the f o llo w in g reasons, the motions are denied: Background O n July 30, 2010, Merix served defendant EMS Acquisition Corporation ("EMS") w ith its Requests for Production and Requests for Admission. A month later, on August 31, 2 0 1 0 , EMS served Merix with its responses to each of these requests. After reviewing E M S 's responses, Merix filed the instant motion to compel the production of documents re s p o n s iv e to its Requests for Production on September 2, 2010, and also filed the subject m o tio n to deem as admitted its Requests for Admission on September 3, 2010. EMS then f ile d briefs in opposition to both motions on September 9, 2010. Merix subsequently filed

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a motion for sanctions on September 13, 2010, and EMS filed its brief in opposition to the m o tio n on September 15, 2010. Thereafter, Merix filed its reply briefs in support of its three m o tio n s on September 15, 2010. Analysis A. M o tio n to Compel In its motion, Merix moves the court for an order compelling EMS to produce d o c u m e n ts responsive to its Requests for Production, request numbers 71 through 87. (R. 1 8 7 at 1.) Merix first asserts that EMS's August 31, 2010 responses to its Requests for P ro d u c tio n were untimely because they were one date late. (Id.) Next, Merix contends that E M S 's responses are deficient and wholly unresponsive because EMS simply copied and re a s s e rte d the same identical objection to each and every request. (Id.) Here, Merix claims th a t EMS's bad faith responses are exemplified by the fact that the responses include an o b je c tio n to producing tax returns when the only request seeking the production of tax re tu rn s is request number 71. (Id. at 2.) Thus, Merix contends that EMS "did nothing more th a n list the same stonewalling responses to each and every one of the document requests." (Id. at 3.) Merix argues that it is entitled to seek production of documents pertaining to EMS's f in a n c ia l condition and operations because it has alleged a fraud claim in its Fourth Amended C o m p la in t against EMS. (Id. at 3-4.) Specifically, Merix claims that it is entitled to explore th e legitimate bounds of EMS's financial condition to look for unusual transactions,

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including financial incentives paid by GlaxoSmithKline for putting the active ingredient B K C in the subject placebo and to determine whether EMS has siphoned off assets to the b e n e f i t of its officers and owners to avoid paying a recovery to Merix. (Id. at 4.) Next, M e rix contends that it legitimately seeks documents pertaining to the original master record c re a te d at EMS regarding the production of the product Releev because EMS made several u n a u th o riz e d and unexplained changes to the manufacturing instructions. (Id. at 5.) Here, M e rix seeks production of these documents because Merix claims it is entitled to investigate c h a n g e s made to its manufacturing instructions and documentation to support its version of w h a t occurred before, during and after Merix's September 2005 trip to EMS. (Id. at 5-6.) E M S defends that it timely served its responses to Merix's Requests for Production o n August 31, 2010, which was one day before the September 1, 2010 due date. (R. 192 at 3 .) EMS next asserts that pursuant to Federal Rule of Civil Procedure 37(a)(1) Merix was re q u ire d to confer in good faith with EMS prior to filing this motion. (Id. at 4.) EMS points o u t that Merix did not include the certification required under this rule detailing its efforts to work out the subject production issues. (Id.) EMS also contends that Merix's motion should be denied because the information it s e e k s is not relevant to any material issue in this lawsuit. (Id. at 1-2.) First, EMS claims that M e rix should not be permitted access to its financial records because Merix's fraud claim t h a t EMS manufactured the subject placebo contrary to the specified manufacturing in s tru c tio n s is without merit. (Id.) EMS maintains that Merix's President personally

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approved the placebo when she visited EMS on September 15, 2005, and observed the m a n u f a c tu rin g of the placebo. (Id. at 2.) EMS also maintains that it provided Merix with a C e rtif ic a te of Analysis clearly identifying BKC as the very ingredient in the placebo, as c a lle d for in Merix's protocol. (Id.) Second, EMS objects to producing telephone records b e c a u s e there is no suggestion that there was any telephone call in 2005 when Merix made th e request for the placebo that discloses any information relevant to the issues in this la w s u it. (Id.) Rule 34(a)(1) provides that a party may request, among other things, the production o f documents that constitute matters within the scope of Rule 26(b) and are in the possession, c u s to d y, or control of another party. Fed.R.Civ.P. 34(a)(1). According to Rule 26(b)(1) " [ p ]a rtie s may obtain discovery regarding any nonprivileged matter that is relevant to any p a rty's claim or defense." The party from whom the documents are requested "must either s ta te that inspection and related activities will be permitted as requested or state an objection to the request, including the reasons." Fed.R.Civ.P. 34(b)(2)(B). Under Rule 34, a party is p e rm itte d to seek an order compelling disclosure when the opposing party fails to allow in s p e c tio n of the requested documents. Fed.R.Civ.P. 37(a)(3)(B)(iv). A court has broad d is c r e tio n when reviewing a discovery dispute between parties and "should independently d e te rm in e the proper course of discovery based upon the arguments of the parties." Gile v. U n ite d Airlines Inc., 95 F.3d 492, 496 (7th Cir. 1996). The value of the materials sought and

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the burden of providing the same should also be considered when ruling on motions to c o m p e l. See Patterson v. Avery Dennison Corp., 281 F.3d 676, 681 (7th Cir. 2002). T h e motion to compel is denied. First, the court finds that EMS timely served its re s p o n s e s and objections. Under Rule 34(b)(2)(A), a party to whom a document request is d ire c te d must respond in writing within 30 days after being served with the request. F e d .R .C iv .P . 34(b)(2)(A). And under Rule 6(d), three additional days are added "after the p e rio d would otherwise expire" when service is effected electronically pursuant to Rule 5 (b )(2 )(E ). Here, it is undisputed that on July 30, 2010, Merix electronically served EMS's c o u n s e l with its Requests for Production and EMS served Merix with its responses and o b je c tio n s on August 31, 2010. Because Merix effectuated electronic service, EMS had 33 d a ys , or until September 1, 2010, to respond to Merix. See Ford v. Wright, No. 06-cv-449, 2 0 0 9 WL 297575, at *1 (S.D. Ill. Feb. 6, 2009) (Rule 6(d) provided defendants with an a d d itio n a l three days to respond to discovery beyond the 30-day period provided in Rule 34). A c c o rd in g ly, EMS's responses and objections were timely served on Merix. Second, as EMS correctly points out, Merix failed to comply with Rule 37(a)(1) and N o rth e rn District of Illinois Local Rule ("LR") 37.2. LR 37.2 requires a party to make a g o o d faith attempt to resolve any discovery disputes with the opposing party prior to bringing a motion before the court and also submit the following certification: T o curtail undue delay and expense in the administration of justice, this court s h a ll hereafter refuse to hear any and all motions for discovery and production o f documents under Rules 26 through 37 of the Federal Rules of Civil P ro c e d u re , unless the motion includes a statement (1) that after consultation 5

in person or by telephone and good faith attempts to resolve differences they a re unable to reach an accord, or (2) counsel's attempts to engage in such c o n s u lta tio n were unsuccessful due to no fault of counsel's. Where the c o n s u lta tio n occurred, this statement shall recite, in addition, the date, time and p la c e of such conference, and the names of all parties participating therein. W h e re counsel was unsuccessful in engaging in such consultation, the s ta te m e n t shall recite the efforts made by counsel to engage in consultation. L R 37.2. Furthermore, this court's own standing order on discovery motions requires the f o llo w in g : The court will not hear or consider any discovery motion unless the parties h a v e complied with the meet and confer requirement of Local Rule 37.2. D is c o v e ry motions must state with specificity when and how the parties c o m p lie d with L.R. 37.2. Compliance with L.R. 37.2 requires the moving p a rty to exercise good faith effort to resolve the discovery disputes in person o r by phone. Here, Merix did not include the required statement with its motion certifying that it engaged in good faith attempts to resolve any differences it had with EMS regarding this discovery m a tte r prior to filing its motion. Although the court permitted EMS to file its motion to c o m p e l (R. 180) without this certification, the court also explained to the parties on August 2 4 , 2010, that the parties are still required to meet and confer for future discovery motions. Third, Merix's Requests for Production are overly broad and place an undue burden o f production on EMS. Merix has exceeded the bounds of reasonably requesting documents p e rta in in g to the instant lawsuit by repeatedly asking EMS to produce all documents p e rta in in g to very broad categories of its business operations and to its financial condition. F o r example, in Requests for Production Numbers 73, 76, and 86, Merix asks EMS to p ro d u c e : 6

Request for Production Number 73: A ll documents generated within the past two years that refer to, relate to, or c o n c e rn any proposed actual, projected or forecasted financial performance, f in a n c ia l condition, revenues, income, profits, losses, sales, surplus, earnings p e r share, or charges against earnings related to EMS, including but not limited to EMS' financial statements or drafts thereof, budgets, forecasts, business p la n s , operating plans or statements, general ledger calculations, accounting w o rk papers or other documents, whether by week, month, quarter or year, w h e th e r estimated or actual, and whether prepared by EMS or any other person o r entity on EMS' behalf. Request for Production Number 76: For the period June 1, 2001 through the present, monthly bank statements for a n y bank account for which EMS is or was an account holder or approved s i g n a t o r y. Request for Production Number 86: F ro m June 1, 2004 through the present, all telephone bills and records relating th e re to for each telephone line and number that EMS has or had during the re f e re n c e d period, including but not limited to land lines and any cell phones w h ic h EMS ever paid the bills for at any time during the referenced period, e v e n if later reimbursed therefor by any other party; in particular, but not by w a y of limitation, the cell phone(s) should include any and all such cell phones w h ic h Stacie Kirsch ever used or had access to at any time during the re f e re n c e d period. Yet, similar to Merix's other requests, Merix failed to explain the basis for asking EMS to p r o d u c e these documents and that these documents are reasonably calculated to lead to d is c o v e ry of admissible evidence in this lawsuit. See Fed.R.Civ.P. 26(b)(1). Merely in d ic a tin g that Merix is entitled to this vast amount of information because it alleged fraud (F o u rth Amended Compl. ¶¶ 47-51) is inadequate. And as EMS persuasively points out,

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Merix's requests for its financial records and original master record pertaining to the m a n u f a c tu rin g of Releev would do little to shed any light on the relevant issues in this case. T h e court has ruled that Merix should be entitled to conduct a preliminary in v e s tig a tio n as to whether EMS deliberately sabotaged the clinical trial in question in order to curry favor with GlaxoSmithKline and granted Merix's motion compel to secure answers to certain interrogatories. However, the court must consider the burden placed on EMS when c o n s id e rin g the requests in question and cannot permit Merix to seek everything and anything u n d e r the sun to see if its theory holds water. The court is mindful of the fact there does not s e e m to be a factual dispute that EMS clearly noted the ingredient the placebo contained prior to PRACS purportedly using it for the clinical trial. B. M o tio n to Admit In this motion, Merix asks this court for an order deeming admitted each enumerated re q u e s t contained in its Requests for Admission. (R. 189 at 1.) Here, Merix once again a s s e rts that EMS's discovery responses were untimely because EMS served Merix with its re s p o n s e s to its Requests for Admission on August 31, 2010, which was one day after they w e re due. (Id.) Merix next claims that EMS's responses to its Requests for Admission were d e f ic ie n t because EMS failed to admit those matters that have been clearly established by d e p o s itio n testimony and documentary evidence. (Id.) Thus, Merix contends that this court m u s t deem Request for Admission Number 1 and Requests for Admission Numbers 4 th ro u g h 10 as admitted as required by Rule 36(a)(6). (Id.)

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EMS, however, defends that it timely served its responses to Merix's Requests for A d m iss io n on August 31, 2010, which was one day before the September 1, 2010 due date. (R . 191 at 3.) And EMS again asserts that Merix failed to confer in good faith discussions re g a rd in g this discovery dispute pursuant to LR 37.2 before filing this motion. (Id. at 2-3.) E M S next avers that its responses to Merix's Requests for Admission are sufficient because th e y constitute specific and complete answers as required by Rule 36(a)(4). (Id. at 4-6.) EMS points out that the veracity of its responses are not a consideration at the discovery s ta g e of litigation. (Id.) The motion to have the requests deemed admitted is denied. Rule 36(a)(4) states that: If a matter is not admitted, the answer must specifically deny it or state in d e ta il why the answering party cannot truthfully admit or deny it. A denial m u s t fairly respond to the substance of the matter; and when good faith re q u ire s that a party qualify an answer or deny only a part of a matter, the a n s w e r must specify the part admitted and qualify or deny the rest. The a n s w e rin g party may assert lack of knowledge or information as a reason for f a ilin g to admit or deny only if the party states that it has made reasonable in q u iry and that the information it knows or can readily obtain is insufficient to enable it to admit or deny. Fed.R.Civ.P. 36(a)(4). The purpose of Rule 36(a)(4) is "to define the matters in controversy a n d expedite the trial by narrowing the issues in dispute." Starks-Harris v. Taylor, No. 08C V -1 7 6 , 2009 WL 535778, at *2 (N.D. Ind. Mar. 3, 2009) (citation omitted). If the re q u e s tin g party believes the responding party has provided insufficient answers, it may file a motion regarding the sufficiency of the opposing party's answers pursuant to Rule 36(a)(6), w h ic h provides in pertinent part:

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The requesting party may move to determine the sufficiency of an answer or o b je c tio n . Unless the court finds an objection justified, it must order that an a n s w e r be served. On finding that an answer does not comply with this rule, th e court may order either that the matter is admitted or that an amended a n s w e r be served. Fed.R.Civ.P. 36(a)(6); see also Patterson v. Burge, No. 03 C 4433, 2008 WL 4875948, at *2 (N .D . Ill. July 29, 2008) (citation omitted). The parties once again dispute the timeliness of EMS's responses. Under Rule 3 6 (a )(3 ), a request to admit the truth of any matter pertaining to a pending action is deemed a d m itte d , unless the party to whom the request is directed serves the requesting party with a written answer or objection within 30 days. Fed.R.Civ.P. 36(a)(3). It is undisputed that o n July 30, 2010, Merix electronically served EMS's counsel with its Requests for A d m iss io n and EMS served Merix with its responses and objections on August 31, 2010. As discussed supra, because Merix electronically served EMS with its Requests for A d m iss io n , EMS had 33 days or until September 1, 2010, to respond to Merix. Ford, 2009 W L 297575, at *1; see also Rule 6(d). Accordingly, EMS's responses and objections were tim e ly served on Merix. Also, EMS again correctly points out that Merix failed to engage in good faith discussions to resolve the disputed discovery issues delineated in Merix's m o tio n to admit. Here, Merix did not provide the required statement attesting to its attempts to resolve any differences prior to filing this motion. See Rule 37(a)(1); LR 37.2. F u rth e rm o re , having reviewed EMS's responses to Request for Admission Number 1 , and Requests for Admission Numbers 4 through 10, the court finds that EMS provided

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sufficient responses to each of these requests. EMS initially responded to each request for a d m is sio n by either denying or partially denying the request. And after each denial or partial d e n ia l, EMS provided an appropriate detailed explanation for its denial. Accordingly, EMS's re s p o n s e s are sufficient under Rule 36(a)(4) because EMS answered each of the requests w ith the level of specificity and completeness required by the rule. E M S correctly points out that Merix cannot base its sufficiency challenge on the v e ra c ity of EMS's responses. "[I]f a responding party files a response that contains the p ro p e r detail . . . the propounding party may not challenge the denial on the ground that it is u n s u p p o rte d by the evidence." 8B Charles Alan Wright & Arthur R. Miller, Federal Practice a n d Procedure § 2263 (3d ed. 2010). Towards this end, "courts have concluded that the a b ility to move to determine the sufficiency of answers and objections does not entitle one to request that a court determine the accuracy of a denial." United States v. Operation R e sc u e Nat'l, 111 F.Supp.2d 948, 968 (S.D. Ohio 1999) (citations omitted). In Foretich v. Chung, 151 F.R.D. 3, 4-5 (D.D.C. 1993), the court recognized that the " d e f e n d a n ts [were] incorrect in their assumption that the right to challenge the `sufficiency' o f a response is the equivalent to the right to challenge the veracity of a denial." 151 F.R.D. a t 5. The court explained that "there is simply no provision of the Federal Rules allowing a party to litigate a denied request for an admission" at the discovery stage of the p ro c e e d in g s . Id. Rather, the court reasoned that the defendants' motion contained arguments m o re appropriately reserved for a motion for summary judgment. Id. Similarly, Merix is

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improperly challenging the veracity of EMS's responses even though such a challenge is not p e rm iss ib le during the discovery phase of the case. The court will not hold a mini-paper trial a n d render factual findings during discovery. C. M o tio n for Sanctions M e rix seeks an award of attorney's fees in the amount of $2,700 for the time its a tto rn e y spent traveling to downtown Chicago in order to present its motions to compel and to admit, and to prepare the motion for sanctions. In support, Merix accuses EMS of filing its opposition briefs at the last minute so as to intentionally cause a delay in the court's p ro c e e d in g s . EMS filed an opposition and raised issues and arguments not directed at the m o tio n for sanctions or germane to the motion for sanctions. T h e motion for sanctions is denied. Merix failed to allege any conduct on the part o f EMS that would warrant this court's imposition of sanctions. The court sua sponte re s c h e d u le d the presentment date of Merix's motions once EMS filed its written opposition s o that the court could properly consider the merits of the motions without unnecessarily w a s tin g the parties' time and resources.

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Conclusion F o r the foregoing reasons, Merix's motion to compel the production of documents re s p o n s i v e to its Requests for Production, motion to deem as admitted its Requests for A d m iss io n and motion for sanctions are denied. ENTER:

_________________________________ Y o u n g B. Kim U .S . Magistrate Judge

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