Whole Woman's Health et al v. Lakey et al

Filing 101

ORDER GRANTING IN PART AND DENYING IN PART State Defendants' 83 Motion to Compel Production of Subpoenaed Documents. SWSC shall provide the declaration described herein no later than 07/14/14. Signed by Judge Andrew W. Austin. (klw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
WHOLE WOMEN’S HEALTH, et al.
V.
DAVID LAKEY, M.D., et al.

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A-14-CV-284-LY

ORDER
Before the Court are State Defendants’ Motion to Compel Production of Subpoenaed
Documents (Dkt. No. 83) and Non-party Southwestern Women’s Surgery Center’s Response (Dkt.
No. 89). The District Court referred the above motion to the undersigned Magistrate Judge for
resolution pursuant to 28 U.S.C. §636(b)(1)(A), FED. R. CIV. P. 72, and Rule 1(c) of Appendix C of
the Local Rules of the United States District Court for the Western District of Texas, Local Rules
for the Assignment of Duties to United States Magistrate Judges. On July 1, 2014, the Court held
a hearing on the motion.
I. BACKGROUND AND ANALYSIS
In this case, Plaintiffs allege facial and as-applied constitutional challenges to Texas House
Bill No. 2,1 contesting the constitutionality of the admitting privileges requirement and the
provisions that requires abortion facilities to meet the minimum Texas standards for ambulatory
surgical centers (“ASC”). The ASC requirement becomes effective September 1, 2014.
The instant motion pertains to discovery requests served upon non-party Southwestern
Women’s Surgery Center (“SWSC”) via subpoena on May 14, 2014. The subpoena requested the
production of information and documents related to the business and operations of SWSC. State
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Act of July 12, 2013, 83rd Leg., 2d C.S., ch. 1, §§ 1–12, 2013 Tex. Sess. Law Serv.
4795–4802 (codified at TEX. HEALTH & SAFETY CODE §§ 171.0031, 171.041–048, 171.061–064,
& amending §§ 245.010–.011; TEX. OCC. CODE amending §§ 164.052 & 164.055).

Defendants assert that the information sought is highly relevant to the claims alleged by Plaintiffs
in this suit because SWSC is one of a small number of abortion providers that meet the ASC
requirements imposed by H.B. 2. State Defendants and SWSC came to an agreement regarding the
scope of many of State Defendants’ discovery requests. This dispute is focused solely on SWSC
objection to producing income statements, profit/loss statements, balance sheets, and other specific
financial data. Dkt. No. 83 at 2–3.
Both in their motion and at the hearing, State Defendants argue that the specific financial
information requested from SWSC is needed to respond to Plaintiffs’ allegation that “requiring
existing abortion clinics to comply with [the] ASC minimum standards will cause abortion clinics
to close or cease providing abortions as of September 1, 2014.” Id. at 4. State Defendants further
point to the expert reports of George W. Johannes and Anne Layne-Farrar, in support of their
position. In particular, they state that the information is relevant to the issues of “the financial
viability of owning and operating an ASC, the profitability of ASCs, and whether new abortionprovider ASCs will be opened in Texas.” Id. at 5. In response, SWSC argues that information about
its income and profitability is confidential, proprietary, and irrelevant. It contends that it has already
produced or begun producing information related to its costs of opening and operating an ASC,
specifically information about its “purchase of the building out of which it operates, documents
relating to its application for a state license to operate as an ASC, and information concerning the
additional costs associated with operating as an ASC as opposed to a clinic.” Dkt. No. 89 at 1-2.
SWSC further submits that (1) Plaintiffs’ Complaint demonstrates that such specific financial
information is not necessary nor relevant to State Defendants’ case and (2) State Defendants’ have
mischaracterized the expert reports of Johannes and Layne-Farrar. Id. at 3–4. Additionally, SWSC
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notes that a facility’s profitability depends on a multitude of factors which will differ from facility
to facility, and so its information has little, if any, bearing on the Plaintiffs’ ability to operate as ASC.
Id. at 4.
As an initial matter, the Court notes that State Defendants’ have not asked the Court to order
SWSC to produce documents responsive to any particular subpoena request.

While State

Defendants’ do provide the Court a copy of SWSC’s response and objections to State Defendants’
subpoena, their motion only seeks the Court to review whether SWSC should be compelled to
produce detailed financial information such as income statements, profit/loss statements, and balance
sheets, without specifying the requests to which these documents purportedly are responsive.2
SWSC response is similarly limited to these same documents, without any discussion of particular
provisions of the subpoena. Consequently, the Court assumes there are no other disputes between
these parties requiring its attention, and will limit this discussion to whether the court should order
SWSC to produce to the State Defendants its income statements, profit/loss statements, balance
sheets, or tax returns.
After reviewing the State Defendants’ and SWSC’s arguments, the Court will grant in part
and deny in part State Defendants’ motion. In particular, the Court finds that State Defendants have
not demonstrated that the detailed financial information requested is relevant to this suit and
concludes that the information sought by State Defendants’ may be produced in a broader and less
intrusive manner.

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At the hearing, counsel for the State Defendants also referred to wanting to receive SWSC’s
tax returns.
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Federal Rule of Civil Procedure 26(b)(1) permits discovery “regarding any nonprivileged
matter that is relevant to any party’s claim or defense.” While the information sought in discovery
need not be admissible at trial, the discovery must be “reasonably calculated to lead to the discovery
of admissible evidence.” Id. As noted by State Defendants, “[t]he burden lies with [them] to show
clearly that the information sought is relevant to the case and would lead to admissible evidence.”
Export Worldwide, Ltd. v. Knight, 241 F.R.D. 259, 263 (W.D. Tex. 2006) (emphasis added). As the
party resisting discovery, SWSC must “articulate specifically how each discovery request is not
relevant or is overly broad, burdensome, or oppressive.” Id.
Here, State Defendants have not shown why SWSC’s confidential financial information is
relevant to this case, especially considering that SWSC is not a party to this case and has not put its
financial status in dispute. Although the Court understands that some financial information might
be relevant to Plaintiffs’ allegation that the ASC requirement would cause certain abortion clinics
to close, State Defendants have not articulated why it would be necessary to obtain SWSC’s detailed
income statements, profit/loss statements, and balance sheets in order to refute this claim. The
Plaintiffs’ 32-page Complaint only contains three paragraphs that could be construed as putting in
issue the costs of complying with the ASC requirement. Paragraph 2 alleges that Texas House Bill
2 “imposes costs that are far in excess of any potential benefits.” Dkt. No. 1, ¶ 2. This does not
appear to the Court to be an allegation about specific costs, but rather refers to the type of economic
cost/benefit analysis Dr. Layne-Farrar has conducted. Her report does not rely on anything close to
a detailed analysis of the specific costs of operating any particular ASC, but rather relies on the more
unremarkable—indeed, likely indisputable—contention that operating an ASC is more expensive
than operating a clinic. Paragraph 118 discusses the requirements Texas law imposes on an ASC,
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without reference to costs, and then Paragraph 119 states that “[a]n ASC is far more expensive to
acquire and operate than a health care facility that meets existing abortion facility standards. Id. at
¶¶ 118–19. The State Defendants have failed to explain why they need SWSC’s profit and loss data
to refute these claims. Had the Plaintiffs claimed that it was financially impossible to operate an
abortion facility and comply with the terms of H.B. 2, then perhaps the data would be relevant. But
no such claim is made in the Complaint.
Additionally, to the extent State Defendants contend that the expert reports of Johannes and
Layne-Farrar make the financial data relevant, the Court disagrees. Johannes’s report focuses almost
exclusively on the construction standards imposed by the ASC requirement. Dkt. No. 89, Exhibit
B. The only discussion regarding cost is limited to his estimate of the expenses associated with
renovating existing abortion facilities or building new ones. Id. SWSC has already agreed to
produce financial information relating to the costs it incurred in acquiring and opening an ASC. See
Dkt. No. 89 at 1, 3–4. Similarly, Layne-Farrar’s report focuses not on the precise finances of any
abortion provider complying with the ASC, but on the broader question of whether the ASC
requirement provides any benefits to women seeking abortions. Dkt. No. 89, Exhibit C. LayneFarrar’s discussion of costs related to abortion providers is limited to the costs of building and
operating an ASC—financial information that SWSC has again agreed to provide. Dkt. No. 89 at
4. Nowhere does either expert opine on the financial capability of the Plaintiffs specifically, or an
abortion provider generally, to comply with the ASC requirement.
Giving the State Defendants the benefit of the doubt, the most the Court can conceive they
need from SWSC to be prepared to defend against the claims made in the Complaint is knowledge
of whether SWSC has been able to operate profitably as an ASC providing abortions. Thus, the
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Court will order that SWSC provide the State Defendants a declaration stating whether SWSC has
operated at a profit or a loss in each of the past five years. To the extent an issue exists at trial
regarding whether it is possible to operate profitably under the requirements of H.B. 2, this will be
sufficient information for the State Defendant to address that issue.
II. CONCLUSION
ACCORDINGLY, the State Defendants’ Motion to Compel Production of Subpoenaed
Documents (Dkt. No. 83) is GRANTED IN PART and DENIED IN PART as set forth above.
SWSC shall provide the declaration described herein no later than Monday, July 14, 2014.
SIGNED this 7th day of July, 2014.

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ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE

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