Weirton Medical Center, Inc. v. Community Health Systems, Inc. et al

Filing 71

MEMORANDUM OPINION AND ORDER GRANTING AS FRAMED DEFENDANTS' 62 64 MOTIONS FOR PROTECTIVE ORDERS. The parties are directed to take the depositions of Robert Vento and John Waltko on July 6, 2017 in Nashville Tennessee. Signed by Senior Judge Frederick P. Stamp, Jr. on 6/27/17. (copy to counsel via CM/ECF) (lmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
WEIRTON MEDICAL CENTER, INC.,
Plaintiff,
v.

Civil Action No. 5:15CV132
(STAMP)

COMMUNITY HEALTH SYSTEMS, INC.,
QUORUM HEALTH RESOURCES, LLC,
STEPHEN MILLER, MICHAEL ROLPH,
ROBERT LOVELL, ROBERT VENTO,
DANIEL HAMMAN and JOHN WALTKO,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING AS FRAMED
DEFENDANTS’ MOTIONS FOR PROTECTIVE ORDERS
I.

Procedural History

Previously, this Court directed the parties to conduct limited
discovery on the nature and extent of defendant Community Health
Systems, Inc.’s minimum contacts with West Virginia as they pertain
specifically to the claims alleged in this civil action dealing
with personal jurisdiction.1

ECF No. 56.

Plaintiff Weirton

Medical Center, Inc. (“Weirton”) has since served Community Health
Systems, Inc. (“CHS”) with eleven interrogatories, fifteen document
requests,

and

a

notice

of

deposition

of

CHS’s

corporate

representative under Federal Rule of Civil Procedure 30(b)(6).
1

This Court’s order dated April 25, 2017 states “the parties
are DIRECTED to conduct limited discovery on the nature and extent
of CHS’s contacts with West Virginia as they pertain specifically
to the claims alleged in this civil action . . . . Discovery shall
be limited to the personal jurisdiction issue only.” ECF No. 56 at
2 (emphasis in original).

Further, Weirton served notices of depositions of defendants Robert
Vento and Daniel Hamman.
Defendants Quorum Health Resources, LLC (“QHR”), Stephen
Miller, Michael Rolph, Robert Lovell, Robert Vento, Daniel Hamman,
and John Waltko (collectively “the QHR defendants”) filed a joint
motion for a protective order asking this Court to strike the
notices of depositions of Vento and Waltko, arguing that they are
overly broad and not proportional to the dispute.

ECF No. 62.

Alternatively, the QHR defendants ask that this Court order the
depositions to be taken in Nashville, Tennessee where the deponents
live.
CHS then filed a separate motion for a protective order asking
this Court to strike the notice of deposition of its corporate
representative as to seven of the nineteen topics listed by Weirton
in the notice.

ECF No. 64.

CHS argues that these seven topics are

outside the scope of the ordered limited discovery and are overly
broad.
On June 23, 2017, the parties appeared before this Court for
oral arguments on the defendants’ motions.

At the hearing, this

Court granted as framed the defendants’ motions.

Specifically,

this Court ruled that Weirton may conduct the depositions of Vento,
Waltko, and CHS’s corporate representative on matters within the
scope of the ordered limited discovery.
adopted

Weirton’s

alternative

request

2

Further, this Court
and

ruled

that

the

depositions of Vento and Waltko shall be taken in Nashville,
Tennessee.

This Court directed the parties to meet and confer to

schedule those depositions and to report to this Court the date on
which those depositions will be held.

The parties have now

scheduled those deposition for July 6, 2017.

This memorandum

opinion and order serves to confirm this Court’s pronounced order.
II.

Applicable Law

Federal Rule of Civil Procedure 26(b)(1) permits parties to
“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(b)(1).

In considering

proportionality, courts must consider: (1) “the importance of the
issues at stake in the action”; (2) “the amount in controversy”;
(3) “the parties’ relative access to relevant information”; (4)
“the parties’ resources”; (5) “the importance of the discovery in
resolving the issues”; and (6) “whether the burden or expense of
the

proposed

discovery

outweighs

its

likely

benefit.”

Id.

“Information within this scope of discovery need not be admissible
in evidence to be discoverable.”

Id.

This, of course, is limited

by the express scope of the limited discovery this Court previously
ordered.
III.

Discussion

Weirton asserts three theories to establish this Court’s
personal jurisdiction over CHS: (1) that CHS’ subsidiaries CHSPSC,

3

LLC, QHR, and QHR Intensive Resources, LLC (“QIR”), were jointly or
severally agents of CHS regarding the underlying dispute; (2) that
CHS

exercised

control

over

its

subsidiaries

such

that

their

contacts should be imputed to CHS; or (3) that CHS’s agents
otherwise made contacts with West Virginia regarding the underlying
transactions.
West Virginia’s long-arm statute, which is coextensive with
the Due Process Clause of the Fourteenth Amendment, expressly
imputes an agent’s contacts with West Virginia to the agent’s
principal. W. Va. Code § 56-3-33. The West Virginia Supreme Court
of Appeals has held that an agent’s contacts are imputed to its
corporate principal.
641 (W. Va. 2010).
which

a

The court has also set forth a standard by

subsidiary’s

corporation.
1998).

Nezan v. Aries Techs., Inc., 704 S.E.2d 631,

contacts

may

be

imputed

to

a

parent

Bowers v. Wurzburg, 501 S.E.2d 479, 490 (W. Va.

Thus, the existence of a principal-agent relationship and

the nature of a parent-subsidiary relationship may be relevant to
determining whether a corporation has minimum contacts with West
Virginia.
Accordingly, this Court reaffirms the scope of the ordered
limited discovery to “the nature and extent of CHS’s contacts with
West Virginia as they pertain specifically to the claims alleged in
this civil action.”

ECF No. 56.

Based on the parties’ arguments

and proffers, issues relevant to CHS’s contacts with West Virginia

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include:

(1)

any

principal-agent

relationships

between

the

defendants; (2) the nature of CHS’s parent-subsidiary relationships
with CHSPSC, LLC, Quorum Health Resources, LLC, and QHR Intensive
Resources, LLC; and (3) any other minimum contacts CHS may have
with West Virginia relating to the claims alleged in this civil
action.
The QHR defendants argue that the depositions of Vento and
Waltko

are

unduly

burdensome

because

those

defendants

were

previously deposed and provided live testimony in the parties’
first arbitration.

Weirton argues that CHS’s contacts with West

Virginia were not at issue in the first arbitration and were not
relevant there. Thus, Weirton argues that it is entitled, pursuant
to the ordered limited discovery, to question Vento and Waltko
regarding CHS’s contacts.
Weirton indicated that it intends to question Vento and Waltko
as to the involvement of any CHS employees or agents in the
transactions between QHR or QIR and Weirton underlying this civil
action.

Such testimony goes to the existence of any principal-

agent relationships between CHS and the QHR defendants and any
contacts of CHS agents with West Virginia. Accordingly, this Court
finds that Weirton is entitled to depose Vento and Waltko within
the scope of the ordered limited discovery.

However, as stated

above, this Court directs the parties to complete those depositions

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on

July

6,

2017

in

Nashville,

Tennessee

to

accommodate

the

witnesses.2
CHS argues that nine of the topics identified in Weirton’s
notice of deposition of CHS’s corporate representative are overly
broad. These topics are identified in a notice of deposition filed
as CHS’s exhibit at the motions hearing.

ECF No. 70.

Those topics

are identified as:
2.
The business of CHSPSC in 2009, 2010 and 2011 and
the way and manner in which CHSPSC carried out that
business.
. . .
4.
CHS’s 10-K filings for the years 2009 through the
present.
. . .
10. Communications (including topics, but not specifics)
between CHSPSC and QHR relating to [Weirton] from 2009 to
2015, including:
(i) information CHSPSC
regarding [Weirton];
(ii) information QHR
regarding [Weirton];

provided

provided

to

to

QHR

CHSPSC

(iii)any due diligence conducted by CHSPSC or
any CHSPSC subsidiary concerning [Weirton];
(iv) any review of the contract between QHR
and [Weirton] conducted by CHSPSC;
(v) internal communications, presentations or
cost-benefit analysis reflecting CHSPSC’s
decision to refer [Weirton] to QHR.

2

The parties indicated at the hearing that they agree to
conduct the depositions in Nashville.
6

11. Communications (including topics, but not specifics)
between CHSPSC and QIR relating to [Weirton] from 2009 to
2015, including:
(i) information CHSPSC
regarding [Weirton];
(ii) information QIR
regarding [Weirton];

provided

provided

to

to

QIR

CFISPSC

(iii) any due diligence conducted by CHSPSC or
any CHSPSC subsidiary concerning [Weirton];
(iv) any review ofthe contract between QIR and
[Weirton] conducted by CHSPSC;
(v) internal communications, presentations or
cost-benefit analysis reflecting CHSPSC’s
decision to refer [Weirton] to QIR.
12. Any meetings relating to [Weirton] attended by
CHSPSC from 2009 to 2015.
13. CHSPSC communications (including topics, but not
specifics) with any third party discussing or otherwise
related to [Weirton] from 2009 to 2015.
14. The relationship between CHS and CHSPSC from January
1, 2009 to the present, including any ownership interest
of CHS in CHSPSC, any contracts between CHS and CHSPSC,
and the nature of any services provided by CHSPSC to CHS.
15. The relationship between CHSPSC and QHR from January
1, 2009 to the present, including any ownership interest
of CHSPSC in QHR, any contracts between CHSPSC and QHR,
and the nature of any services provided by CHSPSC to QHR.
16. The relationship between CHSPSC and QIR from January
1, 2009 to the present, including any ownership interest
of CHSPSC in QIR, any contracts between CHSPSC and QIR,
and the nature of any services provided by CHSPSC to QIR.
ECF No. 70 at 4-6.

Specifically, CHS takes issue with questions

regarding the business practices of CHSPSC, LLC, its communications
with CHS, its meetings with CHS, its meetings with third parties
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relating to Weirton, and the ownership relationships between it,
CHS, QHR, and QIR.

Weirton argues that these topics are relevant

to determining whether CHSPCS, LLC was an agent of CHS, whether QHR
or QIR were agents of CHSPCS, LLC, and whether any of these parties
was the alter ego of the other.
This Court finds that, generally, the contested topics Weirton
set

forth

in

its

notice

of

deposition

of

CHS’s

corporate

representative, numbers 2, 4, 10, 11, 12, 13, 14, 15, and 16, are
relevant to a determination of whether CHS had sufficient minimum
contacts with West Virginia for this Court to exercise personal
jurisdiction over CHS.

This Court makes no specific ruling as to

the disputed topics in the notice of deposition of CHS’s corporate
representative but states that Weirton is entitled to question
CHS’s corporate representative about the disputed topics but only
within the limited scope of the ordered discovery, that is the
issue of personal jurisdiction over CHS.
IV.

Conclusion

For the above reasons, the QHR defendants’ motion for a
protective order (ECF No. 62) is GRANTED AS FRAMED, and CHS’s
motion for a protective order (ECF No. 64) is GRANTED AS FRAMED.
Further, the parties are directed to take the depositions of Robert
Vento and John Waltko on July 6, 2017 in Nashville Tennessee.
IT IS SO ORDERED.

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The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

June 27, 2017

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

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