Navarro v. Wexford Health Source Inc. et al
Filing
52
ORDER regarding May 28, 2019 Discovery Dispute Conference. Signed by Magistrate Judge Reona J. Daly on 5/30/2019. (ely)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
ANGEL NAVARRO,
Plaintiff,
v.
WEXFORD HEALTH SOURCES, INC., et
al.,
Defendants.
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Case No. 18-cv-143-JPG-RJD
ORDER
DALY, Magistrate Judge:
This matter is before the Court on the discovery dispute conference held on May 28, 2019.
The parties discussed Defendant Wexford’s responses to Plaintiff’s discovery request. The Court
heard argument during the discovery dispute conference and further briefing is not necessary.
The following Requests for Production are in dispute:
1.
Any and all audited or unaudited financial statements of Defendant Wexford created
or relating to Defendants’ finances in the last three years.
Defendant objects to this request on the grounds that the requested documents are not
relevant to any party’s claims or defense, and the request is overbroad in time and
scope.
2. Any and all federal tax returns of Defendant Wexford from the last three years.
Defendant objects to this request on the grounds that the requested documents are not
relevant to any party’s claims or defense, and the request is overbroad in time and
scope.
3. Copies of any and all documents evidencing repayments made to the State of Illinois
or the Illinois Department of Corrections pursuant to the contract between the State of
Illinois and Defendant Wexford Health Sources, Inc. for the time period beginning
2011 to present, including but not limited to checks, ledgers, payment schedules, and
wire transfer receipts.
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Defendant objects to this request on the grounds that the requested documents are not
relevant to any party’s claims or defense, and the request is overbroad in time and
scope.
Under the Federal Rules of Civil Procedure, 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(1). Information within this scope of discovery need not be
admissible in evidence to be discoverable. Id. The standard for discovery under Rule 26(b)(1)
is widely recognized as one that is necessarily broad in its scope in order to allow the parties
essentially equal access to the operative facts. Scott v. Edinburg, 101 F. Supp. 2d 1017, 1021
(N.D. Ill. 2000). The Seventh Circuit has recognized a trial court’s “broad discretion over
discovery matters.” Spiegla v. Hull, 371 F.3d 928, 944 (7th Cir. 2004).
Disputed Requests 1 & 2
Plaintiff asserts the Defendant Wexford’s financial information is relevant for his claim of
punitive damages.
As a general rule, “[e]vidence of a tortfeasor’s wealth is traditionally
admissible as a measure of the amount of punitive damages that should be awarded….” Newport
v. Fact Concerts, 453 U.S. 247, 270 (1981) (citing Restatement (Second) of Torts § 908(2) (1979);
D. Dobbs, Law of Remedies § 3.9, pp. 218–219 (1973)). The Seventh Circuit pattern jury
instruction for punitive damages in § 1983 cases also instructs: “In determining the amount of any
punitive damages, [the jury] should consider the following factors…Defendant’s financial
condition.” See 7th Cir. Pattern Jury Instr. 7.28.
Defendants argued the Seventh Circuit’s decision in Zazu Designs, Inc. v. L’oreal, S.A.,
979 F.2d 499 (7th Cir. 1992), sets forth an exception to this rule for corporate defendants. In
Zazu, the Seventh Circuit reversed the lower court’s holding that the defendant had infringed on
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plaintiff’s trademark, finding that the undisputed facts did not support such a result. The lower
court had calculated punitive damages by taking five percent (5%) of the defendant’s believed net
worth ($20 million), or $1 million. In discussing the punitive damages award, the Seventh Circuit
noted that “[c]ourts take account of a defendant’s wealth when an amount sufficient to punish or
deter one individual may be trivial to another.” The Court went on to discuss a distinction
between corporations and individuals:
For natural persons the marginal utility of money decreases as wealth increases, so that
higher fines may be needed to deter those possessing great wealth. (“May be” is an
important qualifier; the entire penalty includes extra-judicial consequences, such as loss of
business and other future income, that is likely to be greater for wealthier defendants.)
Corporations, however, are not wealthy in the sense that persons are. Corporations are
abstractions; investors own the net worth of the business. These investors pay any
punitive awards (the value of their shares decreases), and they may be of average wealth.
Pension trusts and mutual funds, aggregating the investments of millions of average
persons, own the bulk of many large corporations. Seeing the corporation as wealthy is
an illusion, which like other mirages frequently leads people astray.
…
Corporate assets . . . are unrelated to either the injury done to the victim or the size of the
award needed to cause corporate managers to obey the law.
Id. at 508. Defendant Wexford argues the language implies that for a corporate defendant, its
financial condition is irrelevant for purposes of calculating punitive damages. Defendant asserts
that Plaintiff’s discovery requests are not relevant, and, therefore, not discoverable. Plaintiff
argues that the passage is dictum and should not be followed.
This issue has been evaluated by numerous district courts in this circuit. Some district
courts have found Zazu was “controlling precedent” for the proposition that, at least for corporate
and institutional entities, “evidence of a defendant’s wealth should be irrelevant to the assessment
of punitive damages.” See Yund v. Covington Foods, Inc., 193 F.R.D. 582 (S.D. Ind. 2000); Pivot
Point Int’l, v. Charlene Products, Inc., 932 F.Supp. 220, 223 (N.D. Ill. 1996). A majority of
district courts, however, have found the Court’s passage in Zazu to be dictum and declined to
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follow Zazu’s proclamation on punitive damages as binding precedent. See, e.g. Donald v.
Wexford Health Sources, Inc., 266 F. Supp. 3d 1097, 1099-1100 (C.D. Ill. 2017) (collecting cases);
Jones v. Scientific Colors, Inc., 2001 WL 902778 (N.D. Ill.); Isbell v. John Crane, Inc., 74 F. Supp.
3d 893, 898-99 (N.D. Ill. 2014); Cox v. Prime Fin. Mortgage Corp., 2006 WL 1049948 (N.D. Ill.
2006).
This Court agrees with the majority of other district courts in finding the passage in Zazu
is dictum. Further, this Court does not interpret Zazu as stating corporate wealth is wholly
irrelevant to an award of punitive damages. While the Seventh Circuit in Zazu cautioned against
calculating an award of punitive damages based solely upon a corporation’s percentage of net
worth, it did not conclude that corporate net worth is entirely and always irrelevant. Pursuant to
the rule espoused by the Supreme Court in Newport, and the direction provided in the Seventh
Circuit’s pattern jury instructions, the Court finds that the financial information Plaintiff seeks in
the disputed requests 1 and 2 is relevant to Plaintiff’s claim for punitive damages. Further, the
Court finds Plaintiff’s requests for documents pertaining to the last three years proportionate under
the circumstances.
Defendant Wexford is ORDERED to supplement its responses to requests 1 and 2 and
provide the requested documents by June 13, 2019.
Disputed Request 3
Plaintiff’s third request for documents pertains to repayments made to the State of Illinois
pursuant to the contract between the State and Defendant Wexford. Plaintiff is pursuing a claim
against Wexford for maintaining a policy of denying and delaying needed medical services in favor
of ineffectual treatments and denial of care in order to save costs, resulting in inadequate and
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untimely treatment of Plaintiff’s ruptured Achilles tendon. Plaintiff argues the repayments made
to the State of Illinois by Wexford are relevant to the policy claim regarding cost-saving.
Defendant objects that the requested documents are not relevant to Plaintiff’s claim and
that the request is overbroad. The Court finds that documents evidencing repayments made by
Defendant Wexford is relevant to Plaintiff’s claim alleging cost-saving policies. The Court will,
however, limit the request to documents beginning in 2013 to present.
Defendant Wexford is ORDERED to supplement its response to request 3 and provide the
requested documents beginning 2013 to present by June 13, 2019.
IT IS SO ORDERED.
DATED: May 30, 2019
s/ Reona J. Daly
Hon. Reona J. Daly
United States Magistrate Judge
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