United States District Court, W.D. Missouri, St. Joseph Division
ORDER REGARDING DISCOVERY DISPUTE
KAYS, JUDGE UNITED STATES DISTRICT COURT
action arises out of an alleged pass-through billing scheme
for laboratory tests at a rural Missouri
hospital. Pending before the Court is a discovery
dispute between Plaintiffs and Defendants SeroDynamics, LLC;
LabMed Services, LLC; Mark Blake; and Beau Gertz
(collectively, the “Discovery Defendants”).
Plaintiffs maintain that the Discovery Defendants have failed
to comply with their discovery obligations and move the Court
for relief. The parties briefed the issues (Docs. 234, 237,
and 243), and the Court held a telephone hearing on July 11
to further discuss them. As set forth below, the Court GRANTS
IN PART and DENIES IN PART Plaintiffs' requests.
are entitled to discover any nonprivileged matter that is
relevant to their claims or defenses. Fed.R.Civ.P. 26(b)(1).
District courts “broadly and liberally” interpret
discovery rules “in order to fulfill discovery's
purposes of providing . . . parties with information
essential to the proper litigation of all relevant facts, to
eliminate surprise, and to promote settlement.”
Weiss v. Amoco Oil Co., 142 F.R.D. 311, 313 (S.D.
Iowa 1992) (citing Oppenheimer Fund, Inc. v.
Sanders, 437 U.S. 340, 341 (1978)) (internal quotations
and other citations omitted). District courts have
“very wide discretion in handling pretrial discovery,
” and their decisions will be upheld absent a
“gross abuse of discretion resulting in fundamental
unfairness in the trial of the case.” Voegeli v.
Lewis, 568 F.2d 89, 96 (8th Cir. 1977); see also
Cook v. Kartridg Pak Co., 840 F.2d 602, 604 (8th Cir.
1988) (“A district court must be free to use and
control pretrial procedure in furtherance of the orderly
administration of justice.”).
first complain that the Discovery Defendants refuse to apply
seventeen additional search terms to their repositories of
electronic information. The Discovery Defendants respond that
conducting the requested searches would yield 30, 490
documents that they would then have to review. They do not
specifically oppose certain search terms; rather, they
generally contend that Plaintiffs' requests are overly
broad, disproportionate to the needs of the case, and likely
to result in documents previously produced by other parties.
They state that they have already applied eight search terms
and produced 9, 986 documents.
request appears reasonable, given the nature of the case and
the amount in controversy. See Fed. R. Civ. P. 26(b)
(listing the factors courts consider in assessing
proportionality). Plaintiffs seek to recover more than $70
million in damages, and the Discovery Defendants admit that
$26 million is in dispute as to them. Moreover, Plaintiffs
have explained the relevance of the suggested terms-some are
other defendants' names-and the Discovery Defendants have
not shown how the requested information would be unreasonably
cumulative or duplicative. Id. R. 26(b)(2)(B);
Country Mut. Ins. Co. v. Wade, No. 4:10-cv-193-TIA,
2010 WL 3239105, at *1 (E.D. Mo. Aug. 13, 2010)
(“[A]fter the proponent of discovery makes a threshold
showing of relevance, the party opposing a motion to compel
has the burden of showing its objections are valid by
providing specific explanations or factual support as to how
each discovery request is improper.” (citing Hofer
v. Mack Trucks, Inc., 981 F.2d 377, 380 (8th Cir.
1993))). The Discovery Defendants also have not, to the
Court's knowledge, proposed any reasonable restrictions,
limitations, or alternatives to the search terms.
Court thus orders the Discovery Defendants to, within seven
days, provide to the Plaintiffs a “hit report” of
the seventeen suggested terms. See Castle Aero Fla.
Int'l, Inc. v. Innovatis Asset Mgmt., S.A., No. CV
11-2672 (PAM/JJG), 2012 WL 12902786, at *2 (D. Minn. Oct. 10,
2012) (“[H]it reports do not actually disclose
substantive information, but rather, they simply give the
litigants an idea of the contours of the relationship between
parties and the subject matter of the discussions in which
the parties were engaged.”). The parties shall then use
this report to more narrowly tailor the search terms and
production of retrieved documents.
next state that the Discovery Defendants refuse to produce
relevant financial records, which Plaintiffs claim are
necessary to prevail on their claim for restitution under
§ 502(a)(3) of the Employee Retirement Income Security
Act, 29 U.S.C. § 1132(a)(3). The Discovery Defendants
protest that they should not be required to produce personal
financial records. Section 502(a)(3), however, applies to
individuals as well as corporate entities. See Harris Tr.
& Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S.
238, 239 (2000) [“Section 502(a)(3)] admits of no limit
. . . on the universe of possible defendants.”). And
because it affords equitable relief only, Plaintiffs will
have to trace the money they seek to “particular funds
or property in the [defendants'] possession.”
Great-West Life Ann. Ins. Co. v. Knudson, 435 U.S.
204, 213 (2002). The Court has previously held that the
Plaintiffs are entitled to an opportunity to prove whether
the funds are traceable. (Doc. 171, at 9; Doc. 165, at
10-11). It sees no reason why relevant personal financial
documents would be off limits, and the Discovery Defendants
provide no legal authority in support of their argument. In
fact, such information could show that the funds have
“dissipated, ” rendering them unrecoverable under
§ 502(a)(3). See Montanile v. Bd. of Trs. of
Nat'l Elevator Indus. Health Ben. Plan, ___U.S.___,
136 S.Ct. 651, 658-59 (2016).
Court is nevertheless mindful of the burden involved in
permitting such broad discovery of sensitive material. It
therefore directs the parties to brief the issue. The briefs,
which shall not exceed three pages, shall address the
legality of ordering the Discovery Defendants to produce
personal financial records with respect to claims made under
§ 502(a)(3). The briefs shall also suggest the
appropriate breadth of discovery on this issue. The parties
shall submit their initial briefs no later than July 26 and
shall reply to the opposing brief no later than July 31. In
addition, if they have not already done so, SeroDynamics and
LabMed are ordered to produce financial records relevant to
the existence and location of any identifiable proceeds
received from Plaintiffs that are at issue in this
also seek to compel the production of the Discovery
Defendants' senior employees' relevant text messages,
at least to the extent the information contained in such
messages is not available elsewhere. The Discovery Defendants
respond that they are in the process of reviewing and
producing Gertz's text messages. They refuse to locate or
provide additional messages, however, claiming that they