The opinion of the court was delivered by: Amy J. St. Eve United States District Court Judge
MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge
Before the Court is Plaintiffs Macomb County Employees' Retirement System and St. Clair Shores Police and Fire Pension System's (collectively "Plaintiffs") Motion to Compel the Production of Documents from KPMG, LLP ("KPMG"). For the following reasons, the Court grants in part and denies in large part Plaintiffs' motion.
This class action concerns Motorola, Inc.'s ("Motorola") and certain of its officers and directors' (collectively "Defendants") alleged violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. Plaintiffs allege that Defendants made public misstatements and material omissions regarding Motorola's 3G mobile handset portfolio. Plaintiffs contend that throughout the Class Period (July 2006-January 2007), Motorola's 3G portfolio was not on track or running on the Argon platform due, in part, to third party supplier Freescale Semiconductor, Inc.'s ("Freescale") failure to provide chipsets to Defendants on time. Plaintiffs further allege that rather than disclosing the potential delays in the 3G product launch, Motorola continued to assert that its products would ship in late 2006. Motorola, however, did not launch a Motorola 3G phone until 2007.
During the discovery period, Plaintiffs filed a motion to compel Defendants to produce documents related to licensing agreements that Defendants entered into with Freescale and Qualcomm, Inc. ("Qualcomm") at the end of the third quarter of 2006 ("3Q06"). The Court granted Plaintiffs' motion to compel in part noting that, "[t]he fact that Defendants entered into licensing agreements with Freescale and Qualcomm in late 3Q06, especially considering Freescale's role in the delay of the 3G releases, and that Defendants included the earnings from those agreements in their 3Q06 earnings statements could evidence an attempt to cover up the failed 3G developments." (R. 200, pp. 3-4.) Plaintiffs Second Amended Complaint, filed on March 15, 2010, contains allegations that Defendants "failed to disclose the nature and financial effect of either the Freescale and Qualcomm 3Q06 IP transactions, which far exceeded $50.00 million, in blatant violation of GAAP and SEC rules." (R. 211-1, Second Amended Complaint, ¶ 153.) In their answer to the Second Amended Complaint, Defendants asserted the affirmative defense that, "Motorola accounted for and/or disclosed all material transactions consistent with generally accepted accounting principles and the requirements of the Securities and Exchange Commission." (R. 220, Fifty-Seventh Affirmative Defense, p. 126.)
Presently before the Court is Plaintiffs' motion to compel production of documents from KPMG. After serving subpoenas on KPMG in December 2009, Plaintiffs received a production from KPMG in March 2010. (R. 242-1, Pls.' Mot., p. 1.) Plaintiffs contend that KPMG's production is deficient and seek "full sets of 3Q06 quarterly review and 2006 audit workpapers" from KPMG. Id. at p. 2.
"Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party.. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Fed. R. Civ. P. 26(b)(1) (emphasis added). In the context of motions to compel, the Seventh Circuit instructs that a "district court may grant or deny the motion in whole or in part, and similar to ruling on a request for a protective order under Rule 26(c), the district court may fashion a ruling appropriate for the circumstances of the case." Gile v. United Air Lines, Inc., 95 F.3d 492, 496 (7th Cir. 1996) (citing Fed. R. Civ. P. 37(a)(4)(B), (C)). "Thus, a district court is not limited to either compelling or not compelling a discovery request; in making its ruling, a district court should independently determine the proper course of discovery based upon the arguments of the parties." Id. As with all discovery matters, district courts have broad discretion in determining motions to compel. See id.; see also Reynolds v. Jamison, 488 F.3d 756, 761 (7th Cir. 2007).
I. General Relevance of Documents Sought by Plaintiffs
While the parties spend a significant portion of their briefing detailing the meet and confer process and earlier agreements between the parties, the issue presently before the Court is whether the documents sought by Plaintiffs are relevant to this litigation. In their motion, Plaintiffs argue that the Court should order KPMG to produce its full set of workpapers for the Mobile Devices business segment for 3Q06, a complete set of audit workpapers for the Mobile Devices business segment 3Q06, and specified audit files from the consolidated workpapers for Motorola for full year 2006. The Court has already ruled that documents relating to the licensing agreements that Defendants entered into with Freescale and Qualcomm at the end of 3Q06 are relevant to this transaction. Plaintiffs now ask the Court to rule that the vast majority of KPMG's workpapers and audit files relating to Motorola's entire Mobile Devices unit for 3Q06 are relevant to this action.
In their motion, Plaintiffs contend that given that significant size of the two allegedly "sham" IP transactions, the Mobile Devices unit's "financial statements were globally infected by these serious issues." (R. 242, Pls.' Mot., p. 9.) In support, Plaintiffs rely on only one ruling issued by a court in this district. In Robin v. Doctors Officenters Corp., 1986 WL 8054, 1986 U.S. Dist. LEXIS 22836 (N.D. Ill. July 14, 1986), the plaintiff alleged that a prospectus issued by the defendant in connection with a public offering of stock was materially false and misleading. Among the materials included in the prospectus with respect to the defendant's financial condition were financial statements of the defendant for full year 1982 and a seven-month period ending July 31, 1983. Id. A non-party accounting firm audited and certified the financial statements. Id. The court granted the plaintiff's motion to compel seeking all accounting work papers, correspondence and memorandum from the non-party firm because the firm audited and certified the financial statements that were referenced in the allegedly false and misleading prospectus. Id. Conversely, in the present case, Plaintiffs have not put the entirety of Defendants' 3Q06 and full year 2006 workpapers and audit files at issue. Instead, Plaintiffs have merely asserted a claim that implicates two specific transactions that occurred during 3Q06. Keeping in mind that non-parties are entitled to "somewhat greater protection" in the discovery process than parties to the litigation, Thayer v. Chiczewski, 257 F.R.D. 466, 469 (N.D. Ill. 2009), the broad arguments raised by Plaintiffs in their initial motion fail to demonstrate that the documents sought are relevant to this action. The Court recognizes that Plaintiffs have submitted the affidavit of an accounting expert retained by Plaintiffs who asserts that review of the full set of workpapers is "essential to Plaintiffs' ...