Shelbyville Hospital Corporation d/b/a Heritage Medical Center v. Mosley
Filing
201
MEMORANDUM AND OPINION finding that Shelbyville Hospital fails to meet its burden to justify reopening discovery, and therefore its 197 Motion to Compel Defendant to Produce Documents. Signed by District Judge Thomas W Phillips on 3/27/2017. (c/m)(MDG)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
WINCHESTER DIVISION
SHELBYVILLE HOSPITAL
CORPORATION, d/b/a HERITAGE
MEDICAL CENTER,
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Plaintiff,
v.
E. WAYNE MOSLEY, M.D.,
Defendant.
No. 4:13-CV-88
MEMORANDUM OPINION
This matter is before the Court on Plaintiff’s Motion to Compel Defendant to
Produce Documents [doc. 197]. For the reasons herein, the Court will deny the motion.
I.
BACKGROUND
The Court will begin with the more recent events leading to this case’s current
procedural posture, rather than recapitulate its drawn-out history. On the issue of liability,
the Court previously entered summary judgment for Plaintiff Shelbyville Hospital Corp.
(“Shelbyville Hospital”), finding that Defendant E. Wayne Mosley, M.D. (“Dr. Mosley”)
breached the parties’ recruitment agreement because he failed to engage in the full-time
practice of medicine in Shelbyville, Tennessee. [Memo. Op., doc. 173, at 1–31]. On the
issue of damages, the Court informed the parties that it intended to hold an evidentiary
hearing. [Id. at 30–31]. Since then, each of the parties has fully briefed the Court on the
issue of damages, and Dr. Mosley has requested the opportunity “to put on proof” at the
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hearing to show that after the breach he returned to his practice and is therefore entitled to
receive a setoff, or reduction, in the amount of damages “based upon partial continued
performance.” [Def.’s Resp. to Mot. for Damages, doc. 180, at 2–3, 7]. The Court has
scheduled the hearing for May 24, 2017. [Order Scheduling Hr’g, doc. 193, at 1].
In anticipation of the hearing, Shelbyville Hospital moves to compel Dr. Mosley,
under Federal Rule of Civil Procedure 37, to produce his tax returns for the years 2013
through 2015 and execute forms that will authorize the Internal Revenue Service to release
them to Shelbyville Hospital’s counsel. [Pl.’s Mot. to Compel at 1]. Shelbyville Hospital
maintains that the tax returns are relevant to the upcoming hearing because they will permit
it to challenge Dr. Mosley’s contention that he returned to his practice after the breach and
is entitled to a setoff. [Id. at 1–2]. According to Shelbyville Hospital, it claims it “should
have access to the tax returns” because they will “likely reflect that Mosley was engaged
in activities other than the full-time practice of medicine in Shelbyville” and allow it “to
test the veracity of Mosley’s claim.” [Id. at 7]. Specifically, it believes the tax returns will
reveal that during 2013 he was working for his company Surgical Staffing Solutions, LLC
in Florida, rather than in Shelbyville. [Id. at 4 & n.2].
Shelbyville Hospital’s current request to compel production of Dr. Mosley’s tax
returns is a renewal of a request it made while discovery was ongoing in 2015, when it
moved the Court to order Dr. Mosley to produce his “tax returns for the tax years 2008 to
present.” [Pl.’s First Mot. to Compel, doc. 80, at 6]. In response to Shelbyville Hospital’s
request, the Court compelled Dr. Mosley to produce his tax returns and to execute forms
that would authorize the Internal Revenue Service to release Surgical Staffing Solutions’
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tax returns. [Order No. 1, doc. 91, at 2; Order No. 2, doc. 104, at 1–2; Order No. 3, doc.
170, at 1–2]. After the Court awarded summary judgment to Shelbyville Hospital on the
issue of liability, however, Shelbyville Hospital told the Court it no longer needed the tax
returns: “Plaintiff and Defendant have indicated to the undersigned that Defendant’s 2014
tax returns and the IRS Form 4506 for Surgical Staffing Solutions, LLC are relevant only
to the liability issues in this case and are not relevant to the issue of damages.” [Order 4,
doc. 177, at 1–2].1 As a result, the Court relieved Dr. Mosley of his obligation to produce
his tax returns. [Id.]. For the reasons the Court already mentioned, Shelbyville Hospital
now contends that Dr. Mosley’s and Surgical Staffing Solutions’ tax returns are pertinent
to damages after all and that, under Rule 37, Dr. Mosley must produce them for the
upcoming hearing. [Pl.’s Mot. to Compel at 1–2, 7, 8].2
II.
THE FEDERAL RULES OF CIVIL PROCEDURE
A party may obtain discovery “regarding any nonprivileged matter that is relevant
to any . . . claim or defense and proportional to the needs of the case.” Fed. R. Civ. P.
26(b)(1). In this vein, Rule 37(a) enables a party to move to compel discovery of relevant
information. Fed. R. Civ. P. 37(a). Although the term “relevant” information is broad for
purposes of discovery, Harris v. Bornhorst, 513 F.3d 503, 525 (6th Cir. 2008), discovery
has “ultimate and necessary boundaries,” Oppenheimer Fund, Inc. v. Sanders, 437 U.S.
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Although the Court, in 2015, ordered Dr. Mosley to produce his tax returns from 2008 to
present, only the production of Dr. Mosley’s tax returns from 2014 appear to have later been a
topic of dispute.
2
Dr. Mosley has not responded to the Motion to Compel and the deadline for a response
has passed. E.D. Tenn. L.R. 7.1(a), 7.2.
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340, 351 (1978) (quotation omitted), and “[t]he proponent of a motion to compel discovery
bears the initial burden of proving that the information sought is relevant,” Gruenbaum v.
Werner Enters., Inc., 270 F.R.D. 298, 302 (S.D. Ohio 2010) (quotation omitted).
III. ANALYSIS
While Rule 37(a) permits a party to move to compel discovery, it applies “during
the discovery process.” Cunningham v. Hamilton Cty., 527 U.S. 198, 208 (1999) (emphasis
added) (footnote omitted); see Snook v. Lorey, No. 07-14270, 2009 WL 1406639, at *1
(E.D. Mich. May 19, 2009) (acknowledging that Rule 37 governs motions to compel
production and sanction uncooperative behavior “in discovery”). The discovery deadline
in this case—and more specifically, the deadline for filing motions to compel—expired a
long time ago, [Order Amending Scheduling Order, doc. 126, at 1–2], and the Court
therefore must treat Shelbyville Hospital’s Motion to Compel under Rule 37 as a request
to reopen discovery, see FedEx Corp. v. United States, No. 08-2423 Ma/P, 2011 WL
2023297, at *3 (W.D. Tenn. Mar. 28, 2011) (stating that “because fact discovery closed,”
the defendant’s motion dealing with a discovery-related dispute “is actually a motion to
reopen discovery”); Ellis v. City of N.Y., 243 F.R.D. 109, 111 (S.D.N.Y. 2007) (viewing a
party’s motion to compel, which arose after the conclusion of discovery, as a motion to
permit “additional discovery at this late stage in the case”).
A district court has “substantial discretion over pretrial matters such as the conduct
of discovery.” In re Wilkinson, 137 F.3d 911, 916 (6th Cir. 1998) (Jones, J., dissenting
(citing Chem. & Indus. Corp. v. Druffel, 301 F.2d 126, 129 (6th Cir. 1962))); see Trepel v.
Roadway Express, Inc., 194 F.3d 708, 716 (6th Cir. 1999) (recognizing that discovery4
related matters “are in the sound discretion of the district court” and that “[w]e should not
interfere with a district court’s discretionary rulings concerning . . . timeliness of discovery
unless we are convinced that the trial court’s ruling resulted in substantial unfair prejudice
to the complaining litigant” (citation omitted)). Along these lines, a district court “may
properly deny a motion to compel discovery where the motion to compel was filed after
the close of discovery.” Willis v. New World Van Lines, Inc., 123 F. Supp. 2d 380, 401
(E.D. Mich. 2000) (citing Ginett v. Fed. Express Corp., No. 97-5481, 1998 WL 777998, at
*5 (6th Cir. Oct. 21, 1998)). At least a few district courts in this circuit, however, have
relied on a five-factor analysis to determine the propriety of reopening discovery after
receiving an untimely motion to compel, bringing clarity to a district court’s discretion in
this context. These factors include: (1) whether the movant has shown good cause for
reopening discovery, (2) whether the need for additional discovery is due to the movant’s
neglect, (3) the specificity of the discovery request, (4) the relevance of the discovery, and
(5) whether the party opposing the reopening of discovery will suffer prejudice. See FedEx
Corp., 2011 WL 2023297 at *3; Victory Lane Quick Oil Change, Inc. v. Hoss, No. 0714463, 2009 WL 777860, at *1 (E.D. Mich. Mar. 20, 2009); U.S. Diamond & Gold v. Julius
Klein Diamonds, LLC, No. C-3-06-371, 2008 WL 2977891, at *11 (S.D. Ohio July 29,
2008); see also Morgan v. Gandalf, Ltd., 165 F. App’x 425, 431–32 (6th Cir. 2006). The
party moving to reopen discovery has the burden of justifying it. W. Am. Ins. Co. v. Potts,
No. 89-6091, 1990 WL 104034, at *2 (6th Cir. July 25, 1990).
As an initial matter, Shelbyville Hospital does not identify its motion for what it
is—a motion to reopen discovery—failing not only to cite the appropriate legal standard
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but also to conduct an analysis under it. Although its discovery request is not unspecific, it
provides no legal basis for obtaining Dr. Mosley’s tax returns at this late stage other than
that they are “relevant,” presumably as Federal Rule of Civil Procedure 26(b)(1) defines
the term. [Pl.’s Mot. to Compel at 2, 4, 8]. The Court cannot overlook the fact, however,
that Shelbyville Hospital previously requested and obtained Orders in which the Court
required Dr. Mosley to produce these tax returns, only then to instruct the Court to relieve
him from these Orders after it entered summary judgment. Although Shelbyville Hospital
now claims that it was “Dr. Mosley [who] took the position that the information was no
longer relevant” and “[t]he Magistrate Judge therefore ordered that Mosley did not have to
produce the information,” this account is not the whole story. [Id. at 1]. The Court, in
relieving Dr. Mosley of his legal obligation to produce his tax returns, actually did so
because both “counsel for Plaintiff and Defendant have indicated to the undersigned” that
the information is “relevant only to the liability issues in this case” and “not relevant to the
issue of damages.” [Order 4 at 1–2 (emphasis added)].3
The Court can only conclude that Shelbyville Hospital, in forgoing its right to the
tax returns, neglected to see the relevance they might have to damages—an oversight that
the Court finds difficult to excuse now because, at the time, it had already informed the
parties that damages remained an issue and would be the topic of a future hearing. Before
that point, Dr. Mosley had also pleaded that he was “entitled to a setoff for his continued
practice in Shelbyville.” [Pl.’s Countercl., doc. 22, ¶ 36]. Shelbyville Hospital therefore
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Despite having made this representation to the Court, Shelbyville Hospital now describes
the tax returns as an “issue of missing discovery.” [Pl.’s Mot. to Compel at 1 n.1].
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had sufficient reasons to know of the tax returns’ potential relevance to damages, and it
had ample opportunity to develop them in discovery—even to the extent that it succeeded
in compelling their production. Because Shelbyville Hospital neglected to pursue the tax
returns further, the Court is unable to conclude that good cause exists to reopen discovery
now. See, e.g., Ginett, 1998 WL 777998 at *5 (affirming the district court’s denial of a
motion to compel that arose after the discovery deadline because the plaintiff knew of the
information at issue and its potential relevance during discovery); Yrityspankki Skop Oyj
v. Delta Funding Corp., No. 98Civ.7888(BSJ)(MHD), 1999 WL 1018048, at *4 (S.D.N.Y.
Nov. 9, 1999) (declining to reopen discovery because the defendant had reason to know
that the information at issue was relevant during discovery and should have developed the
information at that time); see Lore v. City of Syracuse, 232 F.R.D. 155, 159 (N.D.N.Y
2005) (“Discovery should not be extended when a party had an ample opportunity to pursue
the evidence during discovery.” (citations omitted)); see also Valente v. Univ. of Dayton,
No. 3:08-cv-225, 2009 WL 4255503, at *1 (S.D. Ohio Nov. 19, 2009) (“[A]n ‘ample
opportunity’ to conduct discovery . . . [is] not a new opportunity do so after the discovery
period . . . has expired.”).
In addition, Shelbyville Hospital—after informing the Court and Dr. Mosley that
the tax returns are not relevant to the issue of damages and petitioning the Court, on that
basis, to relieve Dr. Mosley of his obligation to produce them—cannot now renege on its
previous position without causing prejudice to Dr. Mosley. See FedEx Corp., 2011 WL
2023297 at *3 (stating that “[r]eopening discovery, particularly after the parties stipulated
that discovery had been completed, would be prejudicial and unfair to [the opposing
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party]”). Even if the Court were to overlook the prejudice inherent in this situation and
review Shelbyville Hospital’s request based solely on the contention that Dr. Mosley’s tax
returns are now relevant after all, the Court would still not be convinced that it should
reopen discovery. Again, although the term “relevant” information is far-reaching for
purposes of discovery, Harris, 513 F.3d at 525, discovery nevertheless has “ultimate and
necessary boundaries,” Oppenheimer Fund, 437 U.S. at 351 (quotation omitted), and “[t]he
proponent of a motion to compel discovery bears the initial burden of proving that the
information sought is relevant,” Gruenbaum, 270 F.R.D. at 302 (quotation omitted). The
issue of whether tax returns are discoverable merely when they are relevant, or whether
they deserve examination under a somewhat more heightened standard, has been subject
to scrutiny by courts in this circuit—a point that Shelbyville Hospital fails to mention but
is hardly incidental to its burden to show relevance.
Although no blanket privilege bars tax returns from discovery, DeMarco v. C & L
Masonry, Inc., 891 F.2d 1236, 1240 (6th Cir. 1989), courts in this circuit have applied a
two-part test to determine whether the discovery of tax returns is permissible. Under this
test, a party seeking tax returns has to show that they (1) are relevant and (2) contain
information that is not obtainable from other sources. Smith v. Mpire Holdings, LLC, No.
3:08-0549, 2010 WL 711797, at *1 (M.D. Tenn. Feb. 22, 2010); Burket v. Hyman Lippitt,
P.C., Nos. 05-CV-72110, 05-CV-72171, 05-CV-72221, 2007 WL 2214302, at *2 (E.D.
Mich. July 27, 2007); see Credit Life Ins. Co. v. Uniworld Ins. Co., 94 F.R.D. 113, 120
(S.D. Ohio 1982) (“Although tax returns are not privileged, there is a public policy against
unnecessary disclosure, in order that taxpayers can be encouraged to file accurate returns.”
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(citation omitted)); see also Terwilliger v. York Int’l Corp., 176 F.R.D. 214, 216 (W.D. Va.
1997) (“Courts have made it increasingly clear that tax returns in the hands of a taxpayer
are not privileged from civil discovery. Nevertheless, judicial consensus exists that, as a
matter of policy, great caution should be exercised in ordering the disclosure of tax returns.
Unnecessary disclosure of tax returns is to be avoided.” (citations omitted)); but see Kumar
v. Hilton Hotels Corp., No. 08-2689 D/P, 2009 WL 3681837, at *3 (W.D. Tenn. Oct. 30,
2009) (concluding that only the question of relevance is necessary to determine whether
tax returns are discoverable). The Sixth Circuit has never expressly adopted this two-part
test, but it has, arguably, in one of its older opinions implicitly endorsed it. See United
Motion Theatre Co. v. Ealand, 199 F.2d 371, 371 (6th Cir. 1952) (striking language from
the district court’s order requiring the production of tax returns and relying on precedent
in which courts did not authorize discovery of tax returns partly because the information
they contained was available elsewhere).
While this Court itself does not intend to expressly adopt this two-part test at this
time—particularly without direct guidance from the Sixth Circuit—it must at least be
mindful of the emphasis that its sister courts place on the public-policy concerns that have
unquestionably contributed to this test’s emergence. The words of caution resonating from
these courts—caution against unnecessary disclosure of tax returns—appear to be highly
relevant in this case, in which Shelbyville Hospital had the full benefit of discovery and,
by its own admission, obtained evidence in discovery that has already supplied it with a
portrait of Dr. Mosley’s activities from 2013 to 2014. For instance, here in its motion, it
tells the Court that it discovered Dr. Mosley was working for Surgical Staffing Solutions
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in Florida “throughout 2013.” [Pl.’s Mot. to Compel at 4 n.2]. Shelbyville Hospital also
informs the Court that it discovered Dr. Mosley “returned in May 2014,” at which time he
had “at least four months remaining on his commitment” but “treated exactly one patient
in Shelbyville during these four months.” [Id. at 7 n.3]. Shelbyville Hospital appears to
possess the very details concerning Dr. Mosley’s activities that it contends his tax returns
might contain—details concerning his activities with Surgical Staffing Solutions and his
practice in Shelbyville for the contract’s remainder. The Court therefore harbors doubts as
to whether disclosure of Dr. Mosley’s tax returns is truly necessary, not only in light of the
information that Shelbyville Hospital already has in tow but also the opportunity that it
likely will have to cross examine Dr. Mosley, who, again, has expressed his intention “to
put on proof” at the hearing. [Def.’s Resp. to Mot. for Damages at 7]; see generally
Broadcast Music, Inc. v. Marler, No. 1:09-cv-193, 2009 WL 3785878, at *5 (E.D. Tenn.
Nov. 12, 2009) (“Proof of damages ordinarily requires an evidentiary hearing in which the
defendant may contest the amount[.]”).
IV. CONCLUSION
Shelbyville Hospital fails to meet its burden to justify reopening discovery, and
therefore its Motion to Compel Defendant to Produce Documents [doc. 197] is DENIED.
IT IS SO ORDERED.
ENTER:
s/ Thomas W. Phillips
United States District Judge
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