Ketayi et al v. Health Enrollment Group et al, No. 3:2020cv01198 - Document 273 (S.D. Cal. 2022)
Court Description: ORDER denying 268 Motion for Discovery. Signed by Magistrate Judge Karen S. Crawford on 10/27/2022. (alns)
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Ketayi et al v. Health Enrollment Group et al Doc. 273 Case 3:20-cv-01198-RSH-KSC Document 273 Filed 10/27/22 PageID.4251 Page 1 of 8 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 13 ERIC KETAYI and MIRYAM KETAYI, both individually and on behalf of all others similarly situated and for the benefit of the general public, ORDER ON JOINT MOTION CONCERNING DISCOVERY DISPUTEBETWEEN PLAINTIFFS AND CCG Plaintiffs, 14 15 v. 16 HEALTH ENROLLMENT GROUP, et al., 17 Case No.: 20-cv-1198-RSH-KSC [Doc. No. 268] Defendants. 18 19 20 21 Before the Court is a Joint Motion Concerning Discovery Disputes (the “Joint 22 Motion”) by plaintiffs Eric and Miryam Ketayi and defendant Cost Containment Group, 23 Inc. (“CCG”), in which CCG seeks a protective order staying discovery until the District 24 Court rules on CCG’s pending Motion to Dismiss. Doc. No. 268. The Court has considered 25 the parties’ moving papers and hereby DENIES CCG’s request. 26 //// 27 //// 28 //// 1 20-cv-1198-RSH-KSC Dockets.Justia.com Case 3:20-cv-01198-RSH-KSC Document 273 Filed 10/27/22 PageID.4252 Page 2 of 8 1 I. Factual and Procedural Background 2 This case was originally filed on June 26, 2020. See Doc. No. 1. The parties describe 3 the matter generally but accurately as a “RICO conspiracy among nine defendants in the 4 marketing, sale[,] and administration of several insurance products.” See Doc. No. 26 ¶ 1. 5 After a series of challenges to the pleadings and the entry of default against one of the 6 defendants (later set aside), plaintiffs filed a Third Amended Complaint on July 28, 2021. 7 See generally Doc. Nos. 2-134. Some of the defendants answered the Third Amended 8 Complaint. See, e.g., Doc. Nos. 138-49, 151-52. Others, including CCG, moved to dismiss. 9 See, e.g., Doc. Nos. 142-45, 153. On December 3, 2021, the District Court issued an 10 omnibus Order ruling on numerous motions. See generally Doc. No. 178.1 As part of the 11 Order, the District Court granted CCG’s Motion to Dismiss the Third Amended Complaint 12 for lack of personal jurisdiction [Doc. No. 143]. See Doc. No. 178 at 23.2 The District Court 13 ultimately concluded the Third Amended Complaint did not present sufficient 14 “uncontested facts which support a conclusion that CCG directed activities at California” 15 such that an exercise of the Court’s jurisdiction would comport with due process. Id. at 7. 16 At the same time, the District Court treated plaintiffs’ Opposition to CCG’s Motion 17 as a request for “jurisdictional discovery,” granted that request, and gave plaintiffs leave to 18 amend the Third Amended Complaint to cure the jurisdictional defects. See id. at 11-13. 19 After the District Court granted CCG’s Motion to Dismiss, the parties, including CCG, 20 21 22 23 24 25 26 27 28 1 Specifically, the District Court ruled on the following three motions: Defendant Health Plan Intermediaries Holdings, LLC and Health Insurance Innovations Holdings, Inc.’s Motion to Partially Dismiss the Third Amended Class Action Complaint [Doc. No. 142]; Defendant Cost Containment Group Inc.’s Motion to Dismiss For Lack of Personal Jurisdiction [Doc. No. 143]; and, Defendant Administrative Concepts, Inc.’s Motion for Judgment on the Pleadings and Joinder in Motion to Partially Dismiss the Third Amended Class Action Complaint Filed By Health Plan Intermediaries Holdings LLC and Health Insurance Innovations Holdings Inc. [Doc. No. 145]. 2 This Court uses the pagination applied by the Court’s CM/ECF case management system throughout this Order, as opposed to the pagination use by the parties. 2 20-cv-1198-RSH-KSC Case 3:20-cv-01198-RSH-KSC Document 273 Filed 10/27/22 PageID.4253 Page 3 of 8 1 engaged in substantial discovery, often with guidance from (and intervention by) this 2 Court. See, e.g., Doc. Nos. 198, 201, 204, 210, 213, 216, 228, and 229. Despite being 3 ordered by the District Court to provide jurisdictional discovery, CCG opposed plaintiffs’ 4 efforts to take a 30(b)(6) deposition consistent with the District Court’s Order, which 5 ultimately required this Court to compel CCG’s testimony. See Doc. No. 201. 6 On June 8, 2022, having taken jurisdictional discovery, plaintiffs obtained the 7 District Court’s leave to file an amended pleading.3 See Doc. No. 230 at 4-9. The District 8 Court analyzed Rule 15(a) of the Federal Rules of Civil Procedure, which governs 9 amendment of pleadings, and determined, inter alia, “[f]rom a review of the proposed 10 [Fourth Amended Complaint], it appears Plaintiffs have incorporated jurisdictional 11 allegations . . . that were developed through discovery” and that “[t]here are numerous 12 allegations that may, upon a brief review, serve to show [CCG’s] contacts with California.” 13 Doc. No. 230 at 8-9. Consistent with this ruling, the District Court’s Order expressly states 14 “[t]o be sure, allowing Plaintiffs to amend their complaint will require CCG to continue 15 to participate in and litigate this case.” Id. at 7 (emphasis added). 16 Plaintiffs filed the Fourth Amended Complaint on June 9, 2022. See Doc. No. 231. 17 On June 29, 2022, this Court held a hearing attended by counsel for CCG and other parties 18 to discuss various discovery issues. See generally Doc. No. 255. At the hearing, the 19 following exchange occurred between this Court and counsel for CCG: 20 THE COURT: I understand . . . CCG may proceed [with] filing yet another motion to dismiss. 21 22 [COUNSEL]: Yes, your Honor. . . . 23 THE COURT: You do not get a pass on discovery in the meantime. You are a part in this litigation until such time that Judge Huie grants any motions dismissing you as a party. Discovery is not going to be put on hold for you 24 25 26 27 28 On April 14, 2022, CCG opposed plaintiffs’ Motion to File the Fourth Amended Complaint. Doc. No. 218. The District Court rejected CCG’s Opposition in its Order Granting Leave to File Fourth Amended Complaint, filed on June 6, 2022. Doc. No. 230. 3 3 20-cv-1198-RSH-KSC Case 3:20-cv-01198-RSH-KSC Document 273 Filed 10/27/22 PageID.4254 Page 4 of 8 1 or any other party pending your filing of yet another motion. So your obligation to produce documents is the same as all other defendants. . . . 2 3 [COUNSEL]: I understand your position. 4 See Doc. No. 255 at 21-22 (emphasis added). CCG’s counsel did not at that time raise the 5 issue of any limitations to discovery based on the District Court’s December 2021 Order. 6 7 8 9 10 11 See id. CCG moved to dismiss the Fourth Amended Complaint for lack of personal jurisdiction on July 7, 2022, which Motion remains pending before the District Court. See Doc. No. 248. CCG neither moved to stay discovery pending determination of the dismissal motion, nor sought clarification from the District Court (or the undersigned Magistrate Judge) as to whether discovery from CCG would continue to be limited to jurisdictional issues. 12 II. The Parties’ Discovery Dispute 13 14 15 16 17 18 19 After filing the Fourth Amended Complaint, plaintiffs sought written discovery from CCG on August 25, 2022, which discovery plaintiffs contend is relevant to their impending motion for class certification. See Doc. No. 268 at 8; 268-1 at 5. This discovery included requests for production of documents, interrogatories, and requests for admission. See generally Doc. No. 268-1 at 5, 31-60. On September 28, 2022, CCG responded with “objections-only” responses to the discovery requests at issue. See generally id. at 72-113, 141-43, 172-78. Specifically, it interposed a single, identical objection to each and every 20 discovery request: “This request exceeds the scope of Judge Curiel’s December 3, 2021, 21 [Order] . . . regarding jurisdictional discovery.” Id.4 On September 30, 2022, the parties 22 23 24 25 Any objections to plaintiff’s discovery requests other than the one based on the District Court’s prior Order are forfeited because CCG failed to timely raise them. Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1473 (9th Cir. 1992). CCG’s boilerplate “general” objections are meaningless and preserve nothing. See Walker v. Lakewood Condo. Owners Ass’n, 186 F.R.D. 584, 587 (C.D. Cal. 1999). 4 26 27 28 4 20-cv-1198-RSH-KSC Case 3:20-cv-01198-RSH-KSC Document 273 Filed 10/27/22 PageID.4255 Page 5 of 8 1 informed the Court they were at an impasse as to that objection, and the Court ordered the 2 parties to file the Joint Motion. Doc. No. 266. 3 In the Joint Motion, CCG does not contest the relevance of the discovery to class 4 certification or assert any belated objections. It only argues the District Court’s December 5 2021 Order limited the scope of discovery by plaintiff as to CCG to issues of personal 6 jurisdiction. Accordingly, it asserts this Court should issue a protective order staying 7 discovery pending resolution of CCG’s Motion to Dismiss the Fourth Amended Complaint 8 by the District Court. Doc. No. 268 at 4-5. Plaintiffs contend both this Court and the District 9 Court have unambiguously ruled CCG is obligated to participate in discovery, and the 10 interposition of a jurisdictional objection to discovery is nothing more than a delay tactic. 11 See id. at 7, 11-12. 12 III. Analysis 13 Unless otherwise limited by Court order, the scope of discovery is generally defined 14 by the claims and defenses set forth in the pleadings. See Fed. R. Civ. P. 26(b); Castillo v. 15 Norton, 219 F.R.D. 155, 160 n.2 (D. Ariz. 2003); EEOC v. United States Bakery, 03-64- 16 HA, 2004 U.S. Dist. LEXIS 11350, at *7 (D. Or. Feb. 4, 2004). An amended complaint 17 has the procedural effect of “superseding” any previous pleadings. See, e.g., Saddozai v. 18 Davis, 35 F.4th 705, 709 (9th Cir. 2022); Ave 6E Invs., LLC v. City of Yuma, 818 F.3d 493, 19 503 (9th Cir. 2016); Truesdell v. S. Cal. Permanente Med. Grp., 293 F.3d 1146, 1153 (9th 20 Cir. 2002). 21 This Court may issue a protective order for good cause. See Fed. R. Civ. P. 26(c). 22 “The Federal Rules of Civil Procedure do not provide for automatic or blanket stays of 23 discovery when a potentially dispositive motion is pending.” Tradebay, LLC v. eBay, Inc., 24 278 F.R.D. 597, 601 (D. Nev. 2011) (citing Skellerup Inds. v. City of Los Angeles, 163 25 F.R.D. 598, 600-01 (C.D. Cal. 1995)). Any party seeking such a stay carries a “heavy 26 burden.” See Georgiou Fam. Trust v. Ruthen, 2:21-cv-1060-JCM-DJA, 2022 U.S. Dist. 27 LEXIS 11178, at *14 (D. Nev. Jan. 21, 2022). This Court may nonetheless exercise its 28 discretion to issue a protective order that stays discovery pending resolution of a dispositive 5 20-cv-1198-RSH-KSC Case 3:20-cv-01198-RSH-KSC Document 273 Filed 10/27/22 PageID.4256 Page 6 of 8 1 motion when the motion would dispose of the entire case and no further discovery is needed 2 to resolve the pending motion. See Pac. Lumber Co. v. Nat’l Union Fire Ins. Co., 220 3 F.R.D. 349, 352 (N.D. Cal. 2003). At the same time, the Court will use its discretion to 4 balance the convenience of a stay against the risk of unfair prejudice to the party opposing 5 a discovery stay. See Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. Supp. 6 2d 1028, 1030-31 (C.D. Cal. 2013); accord Masimo Corp. v. Apple, Inc., 2022 U.S. Dist. 7 LEXIS 111724, at *4-5 (C.D. Cal. June 23, 2022); Ahern Rentals, Inc. v. Mendenhall, C20- 8 00542-JCC, 2020 U.S. Dist. LEXIS 120948, at *3-4 (W.D. Wash. July 9, 2020). The Court 9 generally considers the propriety of a discovery stay under the totality of the circumstances. 10 Universal Elecs., 943 F. Supp. 2d at 1031. 11 As CCG notes, the facts of this case superficially fit the test set forth in Pacific 12 Lumber Co. because the pending Motion to Dismiss would, if granted, completely release 13 CCG from the case, and there is no further discovery necessary to resolve the jurisdictional 14 issue. See Doc. No. 268 at 6. This could support an exercise of this Court’s discretion to 15 stay the case. See Pac. Lumber Co., 220 F.R.D. at 352. But this Court also notes plaintiffs’ 16 impending deadline to move for class certification. Plaintiffs contend, and CCG does not 17 dispute, the discovery at issue here is relevant and necessary to the class certification 18 motion. Doc. No. 268 at 8. Plaintiffs thus persuasively and credibly argue they would be 19 severely prejudiced by CCG’s failure to provide discovery responses. Id. at 12. The Court 20 therefore finds the prejudice to plaintiffs weighs in favor of denying a protective order here, 21 and under the totality of the circumstances such request should be denied. Universal Elecs., 22 943 F. Supp. 2d at 1031.5 23 24 25 26 27 28 5 At the time the parties filed the Joint Motion, the deadline was November 4, 2022. See Doc. No. 252 at 2. In a separate Order, filed concurrently with this Order, this Court has continued that deadline until December 19, 2022. This short continuance in no way eliminates the prejudice faced by plaintiffs in preparing to certify a class because it would have been effectively impossible for plaintiffs to compel discovery from CCG and prepare the Motion for Class Certification if the Court had not continued the deadline to file that 6 20-cv-1198-RSH-KSC Case 3:20-cv-01198-RSH-KSC Document 273 Filed 10/27/22 PageID.4257 Page 7 of 8 1 The Court has considered CCG’s argument that a prior Order of the District Court 2 [Doc. No. 178] limits discovery to material showing whether the Court has personal 3 jurisdiction over CCG. Doc. No. 268 at 4-5. While the District Court agreed with CCG that 4 the Third Amended Complaint lacked adequate jurisdictional allegations in the granting of 5 CCG’s Motion to Dismiss, in granting that Motion without prejudice on December 3, 2021, 6 the District Court allowed plaintiffs the opportunity to conduct discovery to correct this 7 deficiency. Doc. No. 178 at 11-13. On June 8, 2022, the District Court concluded plaintiffs 8 had alleged an adequate basis for jurisdiction when it issued the Order Granting Leave to 9 File the Fourth Amended Complaint. Doc. No. 230 at 8. As ordered by the District Court, 10 CCG must now “continue to participate in and litigate this case” exactly like any other 11 party. See id. at 7. This Court delivered the same admonishment to CCG on June 29, 12 2022—months before CCG served the objections to the discovery at issue here. Doc. No. 13 255 at 21-22. The record in this case supports only one reasonable conclusion: the 14 “jurisdictional” limitation to discovery ended with Judge Curiel’s Order granting plaintiffs 15 Motion to Amend on June 8, 2022, which allowed the filing of the Fourth Amended 16 Complaint. This Fourth Amended Complaint is now the operative pleading in this matter, 17 and it thus defines the scope of discovery. The District Court and this Court have 18 unequivocally informed CCG it is a party to this action, and it will produce discovery unless 19 and until the District Court dismisses it from this case. Rather than supporting the issuance 20 of a protective order, the District Court’s Orders compel denial of CCG’s Motion. 21 IV. Conclusion and Order 22 The Court will not mince words here: CCG’s reliance on the District Court’s 23 December 2021 Order [Doc. No. 178] is unreasonable and by all appearances is made for 24 the sole purpose of delaying plaintiffs’ right to obtain discovery from CCG in this action. 25 The Court expects and trusts that CCG—indeed all parties—will take this as a fair warning 26 27 28 motion. Even with the continuance, and even absent a stay, plaintiffs remain under relatively tight time constraints such that equity favors compelling discovery here. 7 20-cv-1198-RSH-KSC Case 3:20-cv-01198-RSH-KSC Document 273 Filed 10/27/22 PageID.4258 Page 8 of 8 1 that all discovery gamesmanship must cease immediately. IT IS HEREBY ORDERED 2 the Motion for a Protective Order is DENIED. CCG must produce substantive responses— 3 without objections—to plaintiffs’ written discovery on or before November 10, 2022. 4 5 Dated: October 27, 2022 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 20-cv-1198-RSH-KSC
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