Minge et al v. TECT Corporation et al

Filing 330

MEMORANDUM AND ORDER granting in part and denying in part 302 Motion to Amend Scheduling Order. Deadlines for submitting confidential settlement statements, expert disclosures, and dispositive motions are SUSPENDED and will be re-set at hearing referenced in attached written Order (date to be determined). Signed by Magistrate Judge Kenneth G. Gale on 4/3/2012. (df)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
UNITED STATES OF AMERICA EX REL. )
MINGE, et al.,
)
)
Relators,
)
)
vs.
)
)
TECT AEROSPACE, INC., et al.,
)
)
)
Defendants.
)
___________________________________ )

Case No. 07-1212-MLB

ORDER ON RELATORS’ MOTION FOR MODIFICATION
OF THE SCHEDULING ORDER AND EXTENSION OF
DISCOVERY CUT-OFF AND OF DEADLINE TO SUBMIT
CONFIDENTIAL SETTLEMENT REPORT
Before the Court is Relators’ motion to modify the current scheduling order
(Doc. 202) to amend various deadlines and increase the authorized depositions
limit. (Doc. 302). The Court will deny Relators’ motion for a general extension of
discovery, and deny the request to take additional depositions or issue new
discovery. However, the Court will hold a hearing following the Court’s rulings
on pending discovery motions to determine if additional discovery is necessary to
remedy deficiencies, if any, in any parties’ discovery responses. The deadline to
submit confidential settlement reports, and the deadlines to submit expert reports
and to file dispositive motions are suspended, to be re-set at that hearing.

Procedural History of the Case
Relators bring this qui tam action under the False Claims Act, 31 U.S.C. §
3730(b). The case also includes a count for retaliatory discharge from employment
under 21 U.S.C. § 3730(h). After Relators filed a Third Amended Complaint (Doc.
18), Defendants filed motions to dismiss (Docs. 36, 38). The District Judge
notified the parties of his intent to view those motions as motions for summary
judgment under Rule 56, and then issued a Memorandum and Order denying
Defendants’ motions as to the retaliation claim, but dismissing the qui tam claims
on the grounds that Relators had not plead fraud with the particularity required
under Rule 9(b). The Court ruled that the Third Amended Complaint failed to
specify whether any aircraft were equipped with the allegedly defective parts and,
if so, which parts and which planes. The Court also found that the complaint failed
to adequately plead false claims for payment. (Doc. 65, pages 19, 22).
Thereafter, Relators filed a motion to file a Fourth Amended Complaint
(Doc. 69). The proposed amendments included allegations concerning specific
aircraft (paragraphs 293 and 294 of the Fourth Amended Complaint, referred to
here as “exemplar” aircraft) which relators contend were manufactured and sold to
the government with defects and false representations. The Court allowed the
amendment over Defendants’ objections (Doc. 79) and ruled that the additional
information provided in the information cured the previous Rule 9(b) deficiencies.

However, in granting the motion the District Judge provided the following
guidance to the parties and the Magistrate Judge concerning the management of
this case:
The court recommends that discovery be initially limited in this case to
determining whether non-conforming parts were in fact present on the
planes identified in the fourth amended complaint and the extent of the false
statements provided to the government at the time of the claim for payment.
At the close of the initial discovery period, defendants may file a motion for
summary judgment, if one is appropriate at that time.
(Doc. 79, at 5.) As permitted by the Court, relators filed their Fourth Amended
Complaint (Doc. 80).
Relators’ theory, explained in their Fourth Amended Complaint (Doc. 80,
“the Complaint”), is that the parts at issue (wing spars) were “manufactured using a
defective process.” Relators identified certain aircraft as examples of a broader
category of aircraft they contend were impacted by the alleged deficient process.
This Court interprets the purpose of the District Judge’s recommendation
as a “litmus test” for Relators’ theories, intended to allow the parties to conduct
discovery limited to determine whether Relators can support their claims as to the
exemplar aircraft sufficient to survive a summary judgment challenge. The intent
of this initial procedure is to require Relators to establish their basic claims
concerning the exemplar aircraft before allowing the more extensive discovery
which may be required to prove their broader claims. By recommending limited

discovery in this initial phase, and by providing Defendants an earlier opportunity
to file a dispositive motion, the District Judge intended to require Relators, whose
claims had been resuscitated only by the fourth amendment to the complaint, to
establish that the parts installed on the exemplar aircraft were defective, before
allowing broader discovery and litigation covering the entire manufacturing
program.
Thus, the parties began the current period of limited discovery with the
Court’s Scheduling Order entered in November of 2010 (Doc. 98). In that Order
this Court announced its intent to follow the District Judge's recommendation, thus
limiting initial discovery to the specified issues. The Scheduling Order provided
that discovery on those topics may proceed within the scope of Rule 26(b)
concerning any matters “relevant to any party’s claim or defense” regarding the
specified issues. Because the District Judge invited an interim motion for
summary judgment at the conclusion of the period of initial discovery, discovery
concerning defenses raised or available to the specified claims was deemed
appropriate. Discovery was reserved on issues relating solely to damages, or
relating solely to the retaliation claim. In the Scheduling Order, the limited
discovery was to be completed within eight to ten months (by July to September
2011), with a final discovery deadline to be set at a scheduled April 2011 status
conference. Depositions on the limited discovery issues were limited to twenty

(20) for each side.
A Second Scheduling Order (Doc. 139) was entered on April 12, 2011,
following the status conference. The discovery deadline was set as September 30,
2011, with the qualification that it would be revisited at a July 2011 status
conference and could be extended for “good cause.” At the July conference, the
Court and parties planned to 1) affirm or, for good cause shown, extend the initial
period of discovery; 2) set deadlines for exchanging expert reports and deposing
experts on the specified issues within the initial discovery period; and 3) set a
deadline for filing dispositive motions on the initial issues.
Throughout the period of initial discovery, through the discovery and
motions process, the Defendants have maneuvered to limit, and the Relators to
expand, discovery based on competing interpretations of the discovery limitation
recommended by the District Judge and applied by this Court. The Court rejected
the parsimonious interpretation urged by the Defendants, but resisted efforts by
Relators to open discovery to the whole history of parts manufactured under the
program at issue. The Court first addressed this conflict in a July 1, 2011,
Memorandum and Order Granting in Part and Denying In Part Relator's Motion to
Compel (Doc. 172). The Court allowed some specific and limited discovery into
the manufacture of parts used on aircraft other than the exemplar aircraft, to the
extent the information was relevant to determining the manufacturing process used

on the aircraft identified in the complaint. These principles were repeated and
applied in the Court's Order of July 8, 2011 (Doc. 175).
Following these rulings, on July 20, 2011, the Court held a telephone
hearing on Relators' Motion to Modify the Second Scheduling Order (Doc. 160).
Over Defendants’ objections (Doc. 171), the Court granted Relators’ motion (Doc.
160) to extended the deadline to complete fact discovery to November 30, 2011,
and scheduled a conference for November 10 to set expert and dispositive motions
deadlines. (Docket entry July 20, 2011).
The Court held an in-person status conference with counsel on November
10, 2011. Relators requested a substantial extension of the discovery period to
complete discovery, which they claimed was necessitated by a large volume of
documents produced by Defendants. The Defendants opposed this request, except
for the need to complete a few additional depositions. Over Defendants’
objections, the Court entered a Third Scheduling Order (Doc. 202), granted
Relators' motion and extended the period of discovery on the limited issues to
March 1, 2012, the date requested by Relators. The Court also set a March 1,
2012, date for the submission of confidential settlement reports. Other limitations,
including the 20 depositions per party limitation, were repeated. Expert disclosure
deadlines were set in May, July, and August of 2012. A deadline of October 5,
2012, was set for the filing of dispositive motions on the limited issues specified by

the District Judge. The Court expressed its disinclination to move the dates again.
(Exhibit B, attached to Doc. 313).
Since the entry of the first Scheduling Order 16 month ago, this Court has
issued rulings on seven discovery motions filed by all parties (Docs.154, 172, 175,
189, 203, 219; 11/3/11 oral motion). These disputes have, no doubt, hampered the
progress of discovery. In addition, there are at least seven other discovery motions
currently pending before the Court.
Relators now request additional adjustments to the Third Scheduling Order.
They cite a “dramatic imbalance between the parties in access to information,” a
reference to the fact that except for Relators’ (perhaps substantial) personal
knowledge, all the records relating to parts manufacture are the Defendants’.
Relators request that the deadline to close discovery be extended to 60 days after
Defendants have responded to all paper discovery (referring to pending motions
relating to discovery). They ask for a suspension of the deadline to submit
confidential settlement reports. They also request an expansion of the deposition
limitation, explaining that they have exhausted the 20 deposition allowance, and
that they need up to 30 more depositions to further explore engineering issues
which they contend were not fully answered by engineers already deposed.
Defendant Hawker opposes the present motion, claiming that Relators have
not shown good cause for the requested extension (Doc. 313). Hawker arguments

include that Relators did not start taking depositions until forty-five days before
discovery was to end. They point out that Relators did not propound any discovery
or notice any depositions from June 2011 until the November 2011 status
conference. Relators respond that delays in deposition discovery were caused by
Defendants’ recalcitrance in responding to paper discovery (Doc. 325).
This period of limited discovery was recommended by the District Judge,
and constructed by the Magistrate Judge, to be limited in scope and time. The
District Judge allowed Relators to amend their claims after the heart of their case
had been dismissed. However, before allowing this complex and far-reaching case
to expand into general discovery, the parties were to be allowed limited discovery
and an early dispositive motion opportunity to test the specifically-plead claims.
This Court generously interpreted the recommended discovery limitation, allowing
an expanded inquiry into areas beyond, but related to, the claims concerning the
exemplar aircraft. The Court has extended the period of initial discovery at least
twice at Relators’ request over Defendants’ objections.
Relators’ new request threatens the purpose of the initial discovery period,
which was to avoid broad-reaching discovery into the program if the Realtors are
unable to support their allegations concerning the exemplar aircraft. The deadlines
in this case may be modified only for good cause shown. This requires a showing
that the Relators could not reasonably comply with the deadline despite acting

diligently and in good faith. Deghand v. Walmart Stores, Inc., 904 F. Supp. 1218
(D. Kan. 1995). Extensive discovery has occurred, and Relators have taken twenty
depositions. Assuming Realtors had a factual basis for the claims made in their
Fourth Amended Complaint (see Fed. R. Civ. Proc. 11), the Court finds that
Relators have had sufficient opportunity to complete discovery to support those
allegations, and that good cause to expand discovery further is not shown. The
Court will not extend the discovery deadline or permit the additional depositions.
That portion of the motion is DENIED.
However, the Court has at least seven pending discovery motions, some of
which are not yet ripe for ruling, relating to discovery served by the parties within
the discovery period. Those rulings may result in orders requiring parties to
complete or modify discovery responses. Additionally, it is possible that some
limited additional discovery could be required as a remedy for responses the Court,
as a result of the pending motions, finds are incomplete, improper or delayed.
Following the Court’s rulings on the pending motions, the Court will hold a
hearing with counsel to discuss what, if any, additional discovery is required. The
current deadlines for submitting confidential settlement statements, expert
disclosures, and dispositive motions, are suspended and will be re-set at that
hearing. To this extent only, the motion is GRANTED.
IT IS SO ORDERED.

Dated this 3rd day of April, 2012.
S/ KENNETH G. GALE

Kenneth G. Gale
United States Magistrate Judge