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Physicians Healthsource, Inc. v. A-S Medication Solutions, LLC

United States District Court, N.D. Illinois, Eastern Division

September 7, 2017

PHYSICIANS HEALTHSOURCE, INC., an Ohio corporation, individually and on behalf of similarly situated persons, Plaintiffs,
v.
A-S MEDICATION SOLUTIONS, LLC, JAMES BARTA, WALTER HOFF and JOHN DOES 1-10, Defendants.

          MEMORANDUM OPINION & ORDER

          Joan B. Gottschall United States District Judge.

         In this class action, the plaintiff, Physicians Healthsource, Inc. (“PHI”), claims that the defendants, primarily A-S Medication Solutions, LLC (“A-S”), [1] violated the Telephone Consumer Protection Act of 1991 (“TCPA”), as amended, 47 U.S.C. 227 et. seq., by sending an advertisement to 11, 422 fax numbers in 2008. After nearly three years of discovery, the court certified this case as a class action in September 2016. Plaintiff sent notice to the class, and PHI then filed a motion for summary judgment.

         But briefing on that motion has stalled due to a dispute over the declarations of putative class members; the declaration of Ya n i v Schiff (“Schiff”), a designated expert, dated February 20, 2017; and an accompanying spreadsheet attached to A-S's Local Rule 56.1(b)(3) statement of additional facts (“A-S SOF”), ECF No. 227, (collectively “the disputed evidence”). PHI contends that A-S violated Federal Rule of Civil Procedure 26(a)(1) and (2) by failing to make disclosures about the disputed evidence before discovery closed in December 2015 (the date on which discovery closed is disputed, but the court does not resolve that dispute today). PHI moves under Rule 37(c)(1) to strike the disputed evidence and the portions of A-S's summary judgment response that refer to the disputed evidence. As explained below, any nondisclosure was harmless under Rule 37(c)(1) because PHI was complicit in bringing about the only prejudice it claims to have suffered. Accordingly, the court denies PHI's motion to strike.

         I. PROCEDURAL HISTORY

         After two initial rounds of motion practice on the sufficiency of the complaint, PHI filed its amended complaint, ECF No. 38, and first motion for class certification, ECF No. 39, on April 2, 2013. Discovery began, and the court referred the case to the assigned magistrate judge for discovery supervision on September 4, 2013. ECF No. 51. The court entered an order on November 26, 2013, denying the first motion for class certification without prejudice. ECF No. 57. The order stated that “[a]s Rule 23 discovery is ongoing in this case, Plaintiff's Motion to certify class is denied without prejudice, in the interest of judicial economy.” Id. (citation omitted).

         Discovery continued. See, e.g., Status Report & Proposed Schedule, Mar. 14, 2014, ECF No. 62; Am. Protective Order, May 14, 2014, ECF No. 75. A-S's third motion to compel culminated in the entry of an order by the magistrate judge on September 18, 2014. That order provided:

The discovery schedule is amended pursuant to the parties' joint stipulation. All Rule 23 fact discovery to be completed by 2/2/2015. Plaintiff to provide disclosures and reports from Plaintiff's Rule 23 opinion witness(es) on or before 3/2/2015. Defendants to depose Plaintiff's Rule 23 opinion witness(es) and provide Defendants' Rule 23 opinion witness(es) disclosures and reports on or before 3/30/2015. Plaintiff to depose Defendants' Rule 23 opinion witness(es) on or before 4/30/2015. Plaintiff's Rule 23 rebuttal witness(es) to be disclosed and opinion report(s) served on or before 5/14/2015. Defendants to depose Plaintiff's Rule 23 rebuttal witness(es) by 5/28/2015.

ECF No. 90. After this point, explicit references to Rule 23 discovery drop from the docket. Later docket entries use unqualified language to set discovery deadlines, as though the deadlines set controlled discovery on all issues rather than just class issues. See, e.g., ECF No. 103 (“All expert discovery to be completed by 8/31/2015.”).

         The subsequent discovery deadlines nonetheless trace their lineage to the September 18, 2014, minute en t r y.[2] The path of explicit deadlines runs from September 18, 2014, ECF No. 90, to October 9, 2015.[3] On October 9, 2015, the parties reported only one outstanding fact-discovery issue, a Rule 30(b)(6) deposition. Minute Entry, Oct. 9, 2015, ECF No. 138. That issue provoked some further litigation. See Minute Entry, Nov. 9, 2015, ECF No. 143 (deciding third party's motion for relief from discovery order). The magistrate judge held a status conference on December 10, 2015. The minute entry for that conference reads: “The parties report that discovery has been completed.” ECF No. 145.

         This court then set a status conference, ECF No. 146, and PHI moved for class certification, ECF No. 147. A-S first filed the declarations of putative class members that are the subject of the instant motion to strike with its response to the motion to certify on May 13, 2016. ECF No. 254 at 5; compare ECF Nos. 171-5, 171-6, 171-15, 171-16, and 171-17 with ECF Nos. 227-7, 227-8, 227-9, 227-10, and 227-11. The court granted the motion for class certification on September 27, 2016. Physicians Healthsource, Inc. v. A-S Medication Solutions, LLC, 318 F.R.D. 712, 725 (N.D. Ill. 2016). After sending notice to the class members, the parties announced at a status conference held December 9, 2016, in response to the court's inquiry, that they did not need to take further discovery. Consistent with its representations at that hearing, PHI then filed a motion for summary judgment, and A-S filed a response to that motion. A-S cites the declarations of class members generally to show that “[c]lass members also specifically gave A-S Medication permission to send them fax advertisements because they wanted to stay apprised of A-S Medication's products.” A-S SOF ¶ 19, ECF No. 227. Also, Schiff's declaration dated February 20, 2017, ECF No. 227-14 Ex. N, and a spreadsheet he prepared, ECF No. 227-15, Ex. O, number among the exhibits supporting A-S's Local Rule 56.1(b)(3) statement of additional facts. See A-S SOF ¶¶ 22-23, ECF No. 227. A-S relies on Schiff's analysis of publicly available government data, described in his declaration, and the spreadsheet for the proposition that “[t]here are on average more than five other provider organizations or persons associated with each of the 11, 422 unique numbers identified in the fax log at issue here.” Id. ¶ 23.

         II. RULE 26(a) DISCLOSURES

         In most cases, including this one, Federal Rule of Civil Procedure 26(a)(1) requires parties to make certain initial disclosures “without awaiting a discovery request.” Fed.R.Civ.P. 26(a)(1) (allowing court to order otherwise); but see Id. R. 26(a)(1)(B) (exempting certain types of cases). Under Rule 26(e), a party must supplement its disclosures “in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process.” Id. R. 26(e)(1)(A).

         Rule 37(c)(1) supplies a remedy for initial-disclosure and supplementation violations. It provides, in part, that “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1). The Seventh Circuit has held that “[t]he exclusion of non-disclosed evidence is ‘mandatory under Rule 37(c)(1) unless non-disclosure was justified or harmless.'” Rossi v. City of Chicago, 790 F.3d 729, 737-38 (7th Cir. 2015) (quoting Musser v. Gentiva Health Servs., 356 F.3d 751, 758 (7th Cir. 2004)); accord Cripe v. Henkel Corp., 858 F.3d 1110, 1112 (7th Cir. 2017) (citing Hassebrock v. Bernhoft, 815 F.3d 334, 341 (7th Cir. 2016) and Novak v. Bd. of Trs. of S. Ill. Univ., 777 F.3d 966, 972 (7th Cir. 2015)). Rule 37(c)(1) allows the court to impose lesser sanctions “[i]n addition to or instead of this sanction.” See Malik v. Falcon Holdings, LLC, 675 F.3d 646, 649-50 (7th Cir. 2012) (citing Ball v. City of Chicago, 2 F.3d 752 (7th Cir. 1993)) (“[Rule 37] gives the judge discretion to match a remedy to the wrong.”); Dynegy Mktg. & Trade v. Multiut Corp., 648 F.3d 506, 514 (7th Cir. 2011) (“Whether a failure to comply with Rule 26(a) or (e) is substantially justified, harmless, or warrants sanctions is left to the broad discretion of the district court.” (citing David v. Caterpillar, Inc., 324 F.3d 851, 857 (7th Cir. 2003))).

         III. ...


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