JEFFREY H. LIEBMAN, et al v. METHODIST LE BONHEUR HEALTHCARE, et al No. 3:17-cv-0902 United States District Court, M.D. Tennessee, Nashville Division Filed April 16, 2021 Counsel Bryan A. Vroon, Law Offices of Bryan A. Vroon, LLC, Atlanta, GA, David Rivera, Jerry E. Martin, Seth Marcus Hyatt, Barrett Johnston Martin & Garrison, LLC, Nashville, TN, Edward D. Robertson, Jr., Bartimus Frickleton Robertson Rader, PC, Jefferson City, MO, Kara F. Sweet, U.S. Attorney's Office, Nashville, TN, Scott M. Corley, Office of the Attorney General of Tennessee, Nashville, TN, for Jeffrey H. Liebman. Kara F. Sweet, U.S. Attorney's Office, Nashville, TN, Scott M. Corley, W. Anthony Hullender, Tennessee Attorney General's Office, Nashville, TN, for State of Tennessee. Bryan A. Vroon, Law Offices of Bryan A. Vroon, LLC, Atlanta, GA, David Rivera, Jerry E. Martin, Seth Marcus Hyatt, Barrett Johnston Martin & Garrison, LLC, Nashville, TN, Edward D. Robertson, Jr., Bartimus Frickleton Robertson Rader, PC, Jefferson City, MO, for Dr. David M. Stern. Brian D. Roark, Taylor M. Sample, Hannah E. Webber, J. Taylor Chenery, Bass, Berry & Sims, Nashville, TN, Robert Salcido, Akin, Gump, Strauss, Hauer & Feld LLP, Washington, DC, for Methodist Le Bonheur Healthcare. Brian D. Roark, Bass, Berry & Sims, Nashville, TN, for UT Methodist Physicians, LLC. Brian D. Roark, Hannah E. Webber, J. Taylor Chenery, Taylor M. Sample, Bass, Berry & Sims, Nashville, TN, Robert Salcido, Akin, Gump, Strauss, Hauer & Feld LLP, Washington, DC, for Methodist Healthcare---Memphis Hospitals. Brian D. Roark, Hannah E. Webber, J. Taylor Chenery, Taylor M. Sample, Bass, Berry & Sims, Nashville, TN, Robert Salcido, Akin, Gump, Strauss, Hauer & Feld LLP, Washington, DC, for Gary Shorb. Brian D. Roark, Hannah E. Webber, J. Taylor Chenery, Taylor M. Sample, Bass, Berry & Sims, Nashville, TN, Robert Salcido, Akin, Gump, Strauss, Hauer & Feld LLP, Washington, DC, for Chris Mclean. Walter E. Schuler, University of Tennessee Office of General Counsel, Memphis, TN, for University of Tennessee. Holmes, Barbara D., United States Magistrate Judge ORDER *1 Currently pending is a motion by Defendants Methodist Le Bonheur Healthcare, Methodist Healthcare—Memphis Hospitals, Chris McLean, and Gary Shorb (collectively referred to as the “Methodist Defendants”) to compel discovery from non-party University of Tennessee Health Sciences Center (“UTHSC”). (Docket No. 127.) UTHSC filed a response in opposition to this motion (Docket No. 137), to which the Methodist Defendants replied. (Docket No. 150.) However, because UTHSC's response represents the functional equivalent of a motion to quash under Rule 45 of the Federal Rules of Civil Procedure, and because the Methodist Defendants did not have the opportunity to respond to arguments that might have supported a motion to quash, the Court reserved its ruling pending additional briefing from both the Methodist Defendants and UTHSC to address the proportionality considerations contained in Rules 26 and 45. (Docket No. 153.) The Methodist Defendants have since filed a supplemental reply in support of their motion to compel (Docket No. 157), to which UTHSC has filed a surreply (Docket No. 159). For the reasons that follow, the Methodist Defendants' motion (Docket No. 127) is DENIED WITHOUT PREJUDICE. The Court presumes familiarity with the facts of this case and will therefore provide only minimal background information necessary for context to or explanation of its ruling. Two relators have brought claims under the False Claims Act based on allegations that the named defendants perpetrated fraud on federal and state healthcare programs. One of the relators, Dr. David Stern, served on the Board of Directors for Defendant Methodist Le Bonheur Healthcare and as Executive Dean and Vice Chancellor of UTHSC between 2011 and 2017. (Docket No. 59 at ¶ 17.) The operative complaint alleges that Dr. Stern has “direct, detailed, and personal knowledge” that the defendants violated multiple federal statutes, and that the Methodist CEO “orchestrat[ed]” Dr. Stern's removal from his positions at Methodist Le Bonheur Healthcare and UTHSC due to Dr. Stern's opposition to the defendants' fraudulent business practices. (Id. at ¶¶ 21, 26.) Discovery ensued. On August 21, 2020, the Methodist Defendants issued a subpoena duces tecum to UTHSC that sought records relating to Dr. Stern's employment between 2011 and 2019. (Docket No. 113-1 at 10.) After the Court denied by order the relators' motion to quash the subpoena (Docket No. 117), UTHSC produced additional documents to the Methodist Defendants. Nevertheless, the Methodist Defendants now claim that UTHSC continues to “hold ransom” relevant documents, namely by refusing to “load, search, review or produce emails” that may be responsive to the subpoena until the Methodist Defendants agree to advanced payment of anticipated costs associated with such production. (Docket No. 128 at 1, 4.) UTHSC responds by accusing the Methodist Defendants of unreasonably shifting their demands over time and mischaracterizing the nature of the disagreement. (Docket No. 159 at 1-2.) *2 A brief recital of the discussions between the Methodist Defendants and UTHSC regarding the discovery sought is warranted. On October 21, 2020, UTHSC advised the Methodist Defendants that certain email archive files known as “personal storage table” (“PST”) files had been sent to an e-discovery vendor, LogicForce, and were “ready to be searched, pending receipt of search instructions and payment arrangements” from both the Methodist Defendants and the relators. (Docket No. 138-13 at 3.) On November 24, the Methodist Defendants offered to pay for one-third of the $8,600 total that would be owed to LogicForce for loading the data of three designated custodians – Dr. Stern, Steve Schwab, and Ken Brown. (Docket No. 138-15 at 10.) They also suggested that any additional discussion of cost-sharing be reserved until LogicForce was “better able to estimate” its additional fees after running the proposed search terms across the custodial data. (Id.) On December 1, the Methodist Defendants changed their position and offered to pay half of the initial $8,600 amount that would be owed to LogicForce for loading the email data of the three custodians at issue. (Docket No. 138-11 at 5.) They also recommended once more that any additional cost-sharing discussions take place after LogicForce was “better able to estimate” its additional fees after running the proposed search terms across the custodial data. (Id.) On December 8, UTHSC sent a letter to counsel for both the Methodist Defendants and the relators stating that, in response to the Methodist Defendants' requests, LogicForce had agreed to a reduction of the initial cost for loading the three custodians' data from $8,600 to $5,160. (Docket No. 138-13 at 8-9.) UTHSC also suggested that the Methodist Defendants and the relators “agree to share all of LogicForce's consulting fees and charges for uploading and searching the PST files, and pay such costs as they are incurred,” as well as develop a list of narrow search terms to be applied by LogicForce to the three custodians' data. (Id. at 9.) UTHSC further suggested that the Methodist Defendants ensure that email domain names belonging to Methodist and the West Clinic were excluded from the search terms in order to “reduce [UTHSC's] review burden” and avoid duplication of documents already in the parties' possession. (Id.)[1] On December 10, the Methodist Defendants again changed course and agreed to pay the full $5,160 amount owed to LogicForce “for uploading and searching the .PST files” for the three custodians previously identified. (Docket No. 129-2 at 2.) Of note, the Methodist Defendants expressed their understanding that “further costs will not be incurred until data is promoted for review.” (Id.)[2] The Methodist Defendants also advised UTHSC that they had already developed a list of search terms, and that while they were willing to refine their search terms, any such refining should take place after “the contents of the initial search report” were produced. (Id.) The Methodist Defendants then pushed for use of a different e-discovery vendor for promotion of the data: [A]lthough we appreciate LogicForce's willingness to reduce its costs for uploading data, its costs for promoting data review are still significantly higher than our usual vendor, Legility. To the extent [UTHSC] expects the Methodist Defendants to pay some or all of the costs associated with promoting data for review, Legility should be the vendor engaged for this project in order to reduce those costs as much as possible and avoid unnecessary expense. We are happy to connect you and/or LogicForce with Legility to coordinate transferring the .PST files for our three requested custodians. *3 (Id.) The correspondence also asserted that, “[b]ased on [the Methodist Defendants'] agreement, [UTHSC] will bear no out-of-pocket cost for uploading and searching the data for the three requested custodians.” (Id.) On December 16, UTHSC responded by first noting that even though the parties had previously agreed to use LogicForce as the e-discovery vendor, UTHSC had asked a representative from LogicForce to reduce its data promotion fee from $125/GB to match Legility's $95/GB rate. (Docket No. 138-14 at 4.) UTHSC reported that LogicForce was unwilling to match this rate and cited certain e-discovery publications that purported to demonstrate the reasonableness of LogicForce's $125/GB rate. (Id. at 4-5.) UTHSC also stated that before providing any responsive documents, it would require the Methodist Defendants to pay not only “all of LogicForce's fees,” but also “an amount equal to the amount allowed for document requests presented to [UTHSC] under the Tennessee Public Records Act, Tenn. Code Ann. § 10-7-503” if UTHSC was required to spend more than three hours reviewing the search results promoted by LogicForce. (Id. at 6.) UTHSC thus advised that it would instruct LogicForce to ingest and search the PST files only after it received “counsel's written agreement to be financially responsible for all of LogicForce's fees going forward, and to otherwise to proceed [sic] as set forth herein,” and only upon payment of $5,510 to LogicForce for ingesting and searching the three custodians' data, which represented the initial $5,160 amount plus $350 in consultation calls. (Id.) Finally, on January 7, 2021, the Methodist Defendants sent an email response indicating that although they were “willing to reimburse [UTHSC] for its reasonable vendor fees moving forward for the three custodians” at issue, they could not “reasonably agree to pay for unknown review costs before any email data is loaded or searched and any such costs can even be estimated.” (Docket No. 129-4 at 2.) The Methodist Defendants' motion to compel was filed shortly thereafter. The foregoing circumstances do not convince the Court that this dispute is in fact ripe for judicial intervention. While the communications presented to the Court for review indicate that UTHSC and the Methodist Defendants spent months working assiduously to facilitate production of certain electronic files, they now appear trapped in a semantic standoff consisting of – according to UTHSC – “equivocal and ambiguous offers” of compensation for e-discovery vendor fees. (Docket No. 159 at 4.) The Methodist Defendants' initial brief in support of the motion to compel relays a willingness to “pay 100% of LogicForce's fees.” (Docket No. 128 at 5.) The Methodist Defendants now state that they are prepared to cover “all reasonable vendor costs” related to the three custodians' data (Docket No. 157 at 4), but their most recent email to UTHSC does not confirm their willingness to continue using the services of LogicForce to promote the data at issue. Moreover, it is unclear from this email whether such “reasonable” vendor costs will include LogicForce's additional consulting fees for “processing” the three custodians' files before promotion of the data, an issue that UTHSC specifically raised in its December 16, 2020 letter in response to the Methodist Defendants' intimation that they would not bear any such charges. (Docket No. 138-14 at 5.) *4 UTHSC emphasizes in its surreply that the Methodist Defendants have only recently agreed – since the filing of the motion to compel, in fact – both to cover “all fees charged by ... LogicForce” and to limit the scope of the subpoena to tailored searches of email files from just three custodians. (Docket No. 159 at 1-2.) The Methodist Defendants may or may not hold a different view of whether such proposals were made previously during the course of this dispute. Regardless, UTHSC views the Methodist Defendants' various representations as prevaricating, which means there is no consensus between the two entities even as to which offers remain on the table and which have been scrapped. The absence of any clarity regarding basic discovery proposals lends little support to Methodist Defendants' claim that the “importance of the requested discovery cannot be overstated” (Docket No. 157 at 9), and, more significantly, creates the unwelcome possibility of piecemeal discovery disputes. The Court is not inclined to expend its limited judicial arrows on such moving targets. Accordingly, the Court will DENY the Methodist Defendants' motion to compel without prejudice pending further discussions with UTHSC. The Court is unwilling to accept that two sophisticated entities – with highly experienced counsel – negotiating over the course of several months are now unable to agree on even the contours of their previous representations. If the discovery sought is indeed crucial to the instant litigation, as the Methodist Defendants assert, they are directed to engage in further discussions with UTHSC regarding both the precise scope of their discovery requests and the extent of their willingness to reimburse UTHSC for its efforts. If the Methodist Defendants are unable to reach an agreement with UTHSC regarding these terms within 14 days from the date of entry of this order, they may refile their motion to compel. The Methodist Defendants are reminded, however, that should the Court again be asked to compel production from UTHSC – an objecting non-party – it will be required to insulate UTHSC “from significant expense resulting from compliance.” Fed. R. Civ. P. 45(d)(2)(B)(ii). Notwithstanding this ruling, the Court pauses to address the posture articulated by UTHSC in its December 16 letter to counsel for the Methodist Defendants. (Docket No. 138-14.)[3] While UTHSC's ongoing efforts to safeguard its resources are certainly understandable, the Court will take a dim view of any extrajudicial efforts to frustrate production in response to narrowly tailored subpoena requests accompanied by specific offers of reimbursement by the Methodist Defendants. Even as a non-party, UTHSC “can be required to bear some or all of its expense where the equities of a particular case demand it,” In re Honeywell Int'l, Inc. Sec. Litig., 230 F.R.D. 293, 303 (S.D.N.Y. 2003), especially since it has an interest in the outcome of this action and the litigation “is of public importance,” both of which are factors weighed in determining how discovery costs are allocated. In re Exxon Valdez, 142 F.R.D. 380, 383 (D.D.C. 1992). *5 Substantial resources have undoubtedly been consumed by this dispute. The Court cannot help but wonder whether a resolution could have been crafted had the Methodist Defendants and UTHSC spent as much time and effort working cooperatively toward that goal as they have spent on insisting on a particular outcome. They would be well served to now commit that energy level to a resolution. In sum, the Methodist Defendants have 14 days from the date of entry of this order to reach an agreement with UTHSC regarding the cost and scope of production of the electronic files at issue. If no agreement is reached, the Methodist Defendants are free to refile their motion to compel, which must precisely state the specific discovery sought by the Methodist Defendants, including search terms and custodians and which must otherwise comply with Local Rule 7.01. Failure to refile a motion to compel by this date will be deemed a waiver of any further complaint about this particular discovery. It is SO ORDERED. Footnotes [1] The West Clinic is part of the three-way affiliation agreement that is the subject of the fraud allegations at issue in the operative complaint. (Docket No. 59 at ¶¶ 178-85.) [2] “Promoting” data in this context refers to a process by which the data – after being uploaded – are moved to a “review platform” accessible by the requesting party. (Docket No. 138-11 at 2.) [3] The Court also notes that UTHSC failed to follow the Court's ECF filing procedures for descriptions of exhibits. The User Manual for Case Management Electronic Case Filing System Version 6.2.3 (found on the Court's website), Section II, Subpart B.2 specifically provides that a description of exhibits is mandatory. The purpose of the required docketed description of the exhibits is to allow for easy identification and location of the exhibits by a review of the docket without having to review some other document for the exhibit description. Admittedly, for the referenced filing, the difficulty in finding a particular exhibit amongst multiple generically described exhibit designations is lessened by the descriptions of the exhibits in counsel's declaration (Docket No. 138), but review of the entire declaration is still required, which is contrary to the intended purpose of the Court's required procedures for electronic filing of exhibits.