PAIN CENTER OF SE INDIANA, LLC et al v. ORIGIN HEALTHCARE SOLUTIONS LLC et al

Filing 290

ORDER denying Plaintiffs' 170 Motion for Sanctions and denying Plaintiffs' 172 Motion to Hold Defendants in Contempt. Signed by Judge Richard L. Young on 9/16/2015. (TMD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

PAIN CENTER OF SE INDIANA, LLC;
INDIANA PAIN MEDICINE AND
REHABILITATION CENTER, P.C.; and
ANTHONY ALEXANDER, M.D.,

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Plaintiffs,
vs.
ORIGIN HEALTHCARE SOLUTIONS
LLC;
SSIMED (d/b/a SSIMED Holding, LLC);
ORIGIN HOLDINGS, INC., a Delaware
Corporation; JOHN DOES (1–50)
inclusive; and JOHN DOES (1–100)
inclusive,
Defendants.

1:13-cv-00133-RLY-DKL

ENTRY ON PLAINTIFFS’ RENEWED MOTION FOR SANCTIONS AND
RENEWED PETITION TO HOLD DEFENDANTS IN CONTEMPT
Plaintiffs, the Pain Center of SE Indiana, LLC, the Indiana Pain Medicine and
Rehabilitation Center, P.C., and Anthony Alexander, M.D., once again move for
sanctions and an order of contempt against Defendants, SSIMED, d/b/a SSIMED
Holding, LLC, Origin Healthcare Solutions, LLC, and Origin Holdings, Inc, pursuant to
Federal Rule of Civil Procedure 37. For reasons set forth below, both motions are
DENIED.
Plaintiffs first moved for sanctions and a contempt order on September 3, 2014, in
response to Defendants’ objection to the Magistrate Judge’s July 25, 2014 Entry ordering
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Defendants to produce the so-called “alter ego” discovery. The requests for production at
issue seek documents concerning, inter alia, ownership interests in Defendant entities
and the extent to which those entities operate together. The Magistrate Judge denied both
of Plaintiffs’ motions (Filing Nos. 113 and 116) as premature. (See Filing No. 134).
Plaintiffs filed an objection to the Magistrate Judge’s ruling to the extent it denied their
request for sanctions. The court overruled Plaintiffs’ objection on March 12, 2015. For
the sake of ease, the court relies upon its March 12 Entry for procedural background
concerning this dispute:
Plaintiffs argued that Defendants purposefully and in bad faith
obstructed Plaintiffs’ efforts to conduct discovery. The dispute boiled over
when, on August 28, 2014, Defendants filed a belated Objection (Filing No.
112) to the Magistrate Judge’s July 25, 2014 Entry (Filing No. 107). (See
Filing No. 154 at 6). The July 25 Entry ordered Defendants to respond to
alter ego requests but did not specify a deadline for production. On August
22, the Magistrate Judge ordered Defendants to comply with the July 25
Entry by August 28, the day Defendants filed their Objection. Plaintiffs filed
the Motion for Sanctions (Filing No. 116) approximately one week later and
months before the court ruled on Defendants’ Objection. In its ruling, the
court observed Defendants’ noncompliance with Rule 72’s fourteen-day
deadline but ultimately overruled the Objection on substantive grounds.
(Filing No. 154 at 5–6). Notably, the court made no finding as to whether
Defendants acted in bad faith or whether their late Objection prejudiced
Plaintiffs. (See id.).
Before the Magistrate Judge, Plaintiffs requested sanctions for
Defendants’ alleged “willful and repeated failure to comply with discovery
orders.” (Filing No. 116 at 6). They colorfully described Defendants’
conduct as “sandbagging” and “playing by their own discovery rules” and
“hiding behind the guise of an [objection].” (Id.). Plaintiffs then concluded
that Defendants’ conduct “robbed Plaintiffs of time, resources, and
documents [they] should have long since had . . . .” (Id.).
Denying Plaintiffs’ Motion, the Magistrate Judge concluded that
“[t]here is no indication in Plaintiffs’ recitation of the facts that Defendants
failed to meet response deadlines in bad faith or as part of a campaign of
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obstruction and delay.” (Filing No. 134 at 2). The only disputable failure to
obey a discovery order occurred on August 28, when Defendants filed their
Objection rather than produce documents in accordance with the July 25 and
August 22 entries. On this point, the Magistrate Judge simply disagreed with
Plaintiffs’ description of events. Having worked closely with the parties
throughout the discovery process, she found no bad faith or intentional
obstructionism. 1 (See Filing No. 134 at 4–5). Moreover, she noted that
because the issue of timeliness—and therefore potentially sanctionable
conduct—was before the court on Defendants’ Objection, Plaintiffs’ Motion
for Sanctions was premature. (Id. at 4). Accordingly, and quite sensibly, the
Magistrate Judge denied the Motion.
(Filing No. 216 at 2–3).
Rule 37(b)(2)(A) grants the court broad discretion to sanction parties who fail to
comply with discovery orders. See Shine v. Owens-Illinois, Inc., 979 F.2d 93, 96 (7th
Cir. 1992) (“Indeed, because the district court is in the best position to determine whether
a party has complied with discovery orders, its discretion ‘is especially broad.’”). The
court, for example, may stay the proceedings until the offending party cooperates or, in
extreme cases, enter default judgment or dismiss the case. Fed. R. Civ. P. 37(b)(2)(A)(i)–
(vii). If the court finds noncompliance, it “must order the disobedient party . . . to pay the
reasonable expenses, including attorney’s fees, caused by the failure, unless the failure
was substantially justified or other circumstances make an award of expenses unjust.”
Rule 37(b)(2)(C).

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The Magistrate Judge appeared to accept that the lack of a production deadline in the July
25 Entry created some ambiguity. Although the court determined that Defendants’ filed an
untimely objection, (See Filing No. 154 at 6), this fact did not preclude the Magistrate Judge
from finding sanctions to be unwarranted.

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Plaintiffs seek sanctions and an order of contempt for Defendants’ alleged failure
to produce documents responsive to the requests outlined in the Magistrate Judge’s July
25 Entry. (Filing No. 171 at 6). Beneath the hyperbole and naked assertions unsupported
by citations to the record, Plaintiffs plainly ask the court to punish Defendants for their
last-ditch effort to challenge the alter ego requests for production. Plaintiffs hang their
hat on the court’s finding that Defendants filed their Objection to the July 25 Entry at
least two weeks late. (See Filing No. 154 at 6). As noted above, the court declined to
overrule Defendants’ objection on this ground and instead overruled on substantive
grounds, finding Defendants’ cries of burden and overbreadth unpersuasive. Denying
Plaintiffs’ first Motion for Sanctions and Petition to Hold Defendants in Contempt, the
Magistrate Judge did not find bad faith or obstructive tactics on the part of Defendants.
Having reviewed the parties’ briefs, the court agrees with this finding. Although
Defendants’ arguments in support of their objection to the July 25 Entry were not
persuasive, the court did not find them frivolous. Moreover, the absence of a hard
production deadline in the July 25 Entry satisfies the court that the circumstances do not
warrant the imposition of sanctions.

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Conclusion
For the foregoing reasons, Plaintiffs’ Renewed Motion for Sanctions (Filing No.
170) and Renewed Petition to Hold Defendants’ in Contempt (Filing No. 172) are
DENIED.
SO ORDERED this 16th day of September 2015.

__________________________________
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RICHARD L. YOUNG, CHIEF JUDGE
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
United States District Court
Southern District of Indiana
Southern District of Indiana

Distributed Electronically to Registered Counsel of Record.

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