New England Teamsters and Trucking Industry Pension Fund v. The New York Times Company, No. 1:2014mc00059 - Document 18 (S.D.N.Y. 2014)
Court Description: OPINION re: 1 MOTION to Compel Third Party The New York Times Company to Produce Other Court Name: USDC-MDT. Other Court Case Number: 11-CV-01033. (Filing Fee $ 46.00, Receipt Number 465401089713) MOTION to Compel Third Party The New York Tim es Company to Produce Other Court Name: USDC-MDT. Other Court Case Number: 11-CV-01033. (Filing Fee $ 46.00, Receipt Number 465401089713) filed by New England Teamsters and Trucking Industry Pension Fund. Based on the conclusions set forth above, Plaintiff's motion to compel is denied without prejudice. It is so ordered. (Signed by Judge Robert W. Sweet, Part One, on 4/17/2014) (ajs)
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f\~~S~---- UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK \ ElECTRON {CALLY FILED ------------------------------------x NEW ENGLAND TEAMSTERS & TRUCKING INDUSTRIES PENSION FUND, #;,._.~ __ ~:::=rl-~\~~~!~.~~-~;~;.~.~~~~ . \\ OO,C ,4-,-I 14 Misc. 59 Plaintiff, OPINION -againstTHE NEW YORK TIMES COMPANY, Defendant. ----x KARSTEN SCHUH, Ci 1 Action No. aintiff, 3:11-cv-1033 -againstM.D. Tenn. HCA HOLDINGS, INC., Defendant. --- --- --- --- -x A P PEA RAN C E S: Attorne for the Plaintiff ROBBINS GELLER RUDMAN & DOWD LLP 58 South Service Road Melville, NY 11747 By: Samuel H. Rudman, Esq. Scott H. Saham, Esq. Attorneys for the Named Defendant THE NEW YORK TIMES COMPANY Legal Department 620 Eighth Ave. New York, NY 10018 By: David E. McCraw, Esq. D. Victoria Baranetsky, Esq. 1 Sweet, D.J. aintiff New England Teamsters & True ng Industry Pension Fund ("Plaintiff") has moved this Court, sitting in Part New York Times Company (" One, to compel named defendant Times") to produce documents responsive to Plaintiff's subpoena issued on S ember 11, 2013 (the "Subpoena") in the matter of Karsten Schuh v. HCA Holdin 01033 (M. D. Tenn.) F Inc., Civil Act No. 3:11-cv (the "Tennessee Action" or "Action"). Plaintiff is Lead Plaintiff and The Times is not a party in the Tennessee Action. Upon the conclusions set forth aintiff's motion is de low, ed. Prior Proceedings The Action is a federal securit against HCA Holdings, Inc. s litigation pending ("HCA"), several of its officers and directors and the underwriters who underwrote and sold HCA's Ma 9, 2011 Initial Public Of ring (the "IPO") the "Tennessee Action Defendants"). in the Action was fil July 13, 2012 (collect The Consolidated Complaint in the Middle District of Tennessee on (the "Consolidated Complaint" or "CC"). seeks certain documents Times August 6, 2012 art ly, aintiff scribed and quoted in The New York e entitled "Hospital Chain Inqui 2 Cited Unnecessary rdiac Work" (the "Article").l alleges that these documents are crucial e prosecution of the Tennessee Action: Plaintiff dence necessary for The Article details the performance of improper cardiac procedures at HCA hospitals as well as the hospital of Article is bas cials' reaction to this in upon t rmation. 2 review of "memos, e-mail correspondence among executives, transcripts from hearings and reports from outside consultants."3 "[a] review of those commun According to the Artic ions reveals that rather than asking whether patients had been harmed or whether regulators needed to contacted, hospital offi on how the physic line."4 als asked information , activities affected the hospitals' bottom Plaintiff contends that a central issue in t Tennessee Action is the impact of the cessation of unnecessary cardiac procedures on HCA's bottom line. The Subpoena seeks the llowing documents: (1) a 2010 review demonstrating that "about half the procedures, or 1,200, were determined to have been done on patients without significant heart disease" (the "2010 Review"); of cials" communications and/or analysis of how this conduct Reed Abelson & Julie Creswell, THE NEW YORK TIMES, Aug. 3 4 (2) "hospital Id. Id. 3 could impact HCA's "bottom line" ( "Bottom Line Documents"); and (3) a "memo written by a company ethics officer," Stephen Johnson, stating: "The allegations relat to unnecessary procedures being performed in the cath lab are substantiated" (the "Johnson Memo") .5 Plaintiff previously sought these documents directly from HCA in the Tennessee litigation. HCA has stated that it does not possess or even know what the 2010 Review is and has no tal of knowledge of ho cials analyzing how the cessation of improper procedures would impact HCA's bottom line. Subsequently, Plaintiff served the Subpoena on The Times in September 2013, more than a year after the Article ran, seeking documents us Saham by . Ex. F) ¢ reporters in preparing Arti e. (See The Times has objected to the Subpoena and not produced the documents, citing the reporter's privilege under Gonzales v. National Broadcasting Co., 194 F.3d 29, 35 (2d r. 1999), and the undue burden of the Subpoena. (See Saham Decl. Ex. B). Plaintiff fil the district on March 11, 2014. stant motion Part One in this Briefing was submitted, and oral rd. 4 arguments were held and the matter was marked fully submitt on April 8, 2014. Allegations In The Consolidated Complaint HCA owns, manages and operates hospitals, freestanding surgery centers and various other f lities. (CC <]I 2). In early 2011, the Tennessee Action Defendants engaged in t IPO to take HCA public, and sold more than $4.3 billion of HCA stock. (Id. <]I 3). The Consolidated Complaint all Tennessee Action Defendants s the iled to disclose that, among other things, HCA was experiencing and would continue to experience a decline the high rna in cardiology revenue components because it ceased performing certain unnecessa cardiac procedures at s hospital. Plaintiff alleges t t t , but highly profitable, (Id. <]I<]I 3, 32, 45). Tennessee Action Defendants knew of HCA's pre-IPO internal investigation of unnecessary cardiac procedures ensuing investigation. lowing a whistl ower compla and The Article reported that HCA's own internal investigation found, by Fall 2010, months before the IPO, that unnecessary procedures were being performed in HCA's 5 highly pro table ology business. 6 HCA un cove evidence showing that "cardiologists at several of its hospitals in Florida were unable to justify many of the procedures they were performing. "7 According to the 2010 ew, which was obtained by The Times, "about half the procedures, or 1,200, were determined to be have been done on patients without signi cant heart disease.,,8 Plaintiff alleges that as a result of this investigation, as well as HCA's own internal business reporting, the Tennessee Action Defendants were aware before the IPa that the number of highly profit e cardiac procedures ing rformed was declining and would continue to negat HCA's financial pe 45). rmance following the IPa. The Tennessee Action De information to t (CC ly impact <[f'J[ 3, 32, ndants did not disclose this investing public in connection with HCA's IPa. Plaintiff has sought Subpoena from HCA. issue in t (over 170,000 6 scovery of the documents at G the sheer size of HCA loyees), the Tennessee Action Defendants' Reed Abelson & Julie Creswell! THE NEW YORK TIMES! Aug. 6 search has been limited to a finite number of documents custodians. Honorable Kevin H. Sharp of the Middle District of Tennessee is presiding over the Tennessee Action and has recognized that HCA's internal investigations are important to aintiff's claims as to the Tennessee Action Defendants' knowledge of material trends at t time of IPO. Schuh v. HCA Holdings, Inc., 947 F. Supp. 2d 882, 893 n.4 (M.J. Tenn. 2013) . The Applicable Standard Federal Rules of Civil Procedure 37 permits a party to move for an order compelling party to an action. sclosure or discovery from a non- See Fed. R. Civ. P. 37 (a) (2). A court must quash or modify a subpoena that "requires disclosure of privileged or other protected matter, if no exception or waiver applies." See Fed. R. C . P. 45 (d) (3) (iii). Second Circuit has recognized a qualified reporter's pr common law, whi lege, ba in the First Amendment and federal protects journalists from having to produce formation obtained during t course of news hering. See, 7 - - - - - - - - - - - - _.._--_._... " re Petroleum Prods. Antitrust e.g., Gonzales, 194 F.3d 29; tig. (Petroleum Prods.), 680 F.2d 5, 7-8 (2d Cir. 1982); Baker v. F & F Inv., 470 F.2d 778 (2d Cir. 1972). See also United States v. Treacy, 639 F.3d 32, 42 (2d Cir. 2011); Chevron Corp. v. Berlinger, 629 F.3d 297, 306 (2d Cir. 2011); In re McCray, Richardson, Santana, Wise, and Salaam Litig., 928 F. Supp. 2d (S.D.N.Y. 2013), adopt 748, 754 U.S. Dist. LEXIS 31142, at *23 v. PLO, No. 04 Civ. 397 (GBD) No. 03 Civ. (RLE) , 2012 u.s. st. LEXIS The privilege protects both 1 and nonconfidential information. F.3d at 35-36. (DAB), 2013 (S.D.N.Y., Mar. 5, 2013); Sokolow 127040 (S.D.N.Y. Sept. 6, 2012). confident 9685 Gonzales, 194 It seeks to prevent the unnecessary enmeshing of the press in litigation that arises from events they cover. at 35. Id. "The privilege, which exists to support the press's important public service function to seek and reveal truthful information, protects newsgathering efforts from the burdensome who sale production of press files that risk impeding the press in per rming its duties." In re McCray, 8 F. Supp. 2d at 753 (internal citations omitted). Gonzales sets out two tests for invocation of the privilege, one applicable to instances where the sought-after evidence pertains to confidential information and the second applicable to subpoenas where no confidential material is 8 involved. non-confidential Under the Gonzales test re, "t information, the one relevant is narrower interest protected by the privile when confidentiality is not at stake, the pr protection should nature of the press more easily overcome. H 194 F. at 36. lege Under this test, a subpoena must be quashed unless the issuing party demonstrates (1) "that the materials at issue are of likely relevance to a significant issue in the case,H and (2) the materials at issue "are not reasonably obtainable from other avail e sources. H Id. The first prong of Gonzales requires the party seeking to compel dis osure to demonstrate t is of "likely relevance H the case. goes to a "significant issue H in Id. at 36; In re McCray, The relevancy cumulative purpose. H access. H rmation sought or serving a "solely United States v. Burke, 700 F.2d 70, 78 While "this standard is less exacting than that which applies to confidenti nonconfidenti 928 F. Supp. 2d at 757 58. irement is not met if the in the subpoena is merely duplicat (2d Cir. 1983). the information sought mate materials, a litigant seeking als will not be granted unfettered Sikelianos v. ty of N.Y., No. 05 Civ. 7673, 2008 WL 2465120, at *1 (S.D.N.Y. June 18, 2008). 9 The second prong of Gonzales requires the issuers of subpoenas to make reasonable efforts through discovery to obtain the information from alternative sources to defeat t privilege. Gonzales, 194 F.3d at 36. Exhaustion of all other available sources of information is somet e.g., Krase v. Graco Chil Prods. Broadcasting Co.), 79 F.3d 346, 353 ( required. See, (In re National Cir. 1996) (requiring rty seeking journalist's materials exhaust alternat that Shoen v. Shoen,S F.3d 1289, 1297 ( Cir. 1993) (stating exhaustion of alternate sources is nearly implausible ea the scovery process); Petroleum Prods., that even though 100 witnesses had ficient to establi exhaustion) ; 705, 713 (D.C. Cir. 1981) (requir s) ; y in 680 F.2d at 9 (holding depo , that was not lli v. Smith, 656 F.2d subpoenaing party to show "he has exhausted every reasonable alternative source of rmation"); Carey v. Hume, in 492 F.2d 631, (60 depositions may be appropriate testify); In re McCray, fail to es obtainable elsewhere"); (D.C. Cir. 1974) fore compelling reporter to 928 F. Supp. 2d at 758 ish that the 276 (S.D.N.Y. 1991) 638 ("Defendants have rmation sought is not ication Behar, 779 F. Supp. 273, (stating alternate sources, including depositions, must first be exhausted before any deposition seeking vileged information would be warranted); Hu amic Republic of Iran, 211 F. Supp. 2d 115, 120 n.4 10 ra v. (D. D.C. 2002) (failure to exhaust alternative sources weighed "so r of quashing the heavily in to consider " that court de i remaining analysis) . Production of the Documents Requested in the Subpoena Cannot Be Compelled From The Times at This Time Plaintiff seeks three documents from the T the Johnson Memo; (2) the Bottom s: (1) ne Documents; and (3) the 2010 Review. The Johnson Memo With regards to son Memo, the Plaintiff filed a motion to compel HCA to p , among other things, the Johnson Memo in the Tennessee Action on October 21, 2013. v. cIa No. 161 (M.D. Tenn.)). 11-cv-01033, the Johnson Memo is n. 3) ¢ issue remains leged. (See HCA has . Mem. at 2, judice in the Tennessee Action. Plaintiff's attempt to open parallel litigation to in the Johnson Memo while the motion to compel is pending the Tennessee Action is improper. Furthermore, until the strict of Tennessee rules on whether HCA is required to 11 Johnson Memo, P produce intiff has failed to demonstrate that the Johnson Memo is unavailable from another source. alternative source for t Tennessee. document is pot Plaintiff's mot thus cannot be granted. with See Krase, ially available in rds to the Johnson Memo 79 F.3d at 353. ne Documents The Bottom The Tennessee Action Defendants they are currently searching documents. indicated that and working to produce these Given such, the motion with respect to the Bottom Line Documents must be deni 2010 An as moot at this time. ew that it does not possess or even know HCA has stat ew is and has no knowledge of hospital what the 2010 officials analyzing how the cessation of improper procedures would impact HCA's bottom line. before t Judge of t Hono Counsel for HCA has st Ie Juliet E. Griffin, Middle strict of Tennessee, " is describing some other larger review. what it is, we ted States Magistrate no i New York Times . we have no clue (Saham Decl. Ex. H at 59:11-16). Consequently, Plaintiff contends that HCA is unable to produce 12 the 2010 Review, and the document cannot be obtained except from The Times. However, Plaintiff has not provided any deposition testimony from HCA records custodians or Rule 30(b) (6) witness or interrogatory responses from any HCA witnesses. HCA's counsel's statements are unsworn statements by counsel that do not describe or discuss the type of search HCA has done to locate the 2010 Review. The Times has also provided a declaration detailing two HCA employees who were questioned by the Times about the 2010 Review r the Article, three HCA executives involved in creating or reviewing the 2010 Review and specific details of the document, such as the document's final date and dates the analysis covered. 13). (See Creswell Decl. ~~ 11 Plaintiff, by its own admission, has not used the information provided by The Times to compel production of the 2010 Review from HCA or depose the Times. executives named by The HCA has also not conducted a search of its documents based on the additional information provided by The Times. Given such, Plaintiff has not made a "clear and spe fic showing" that the material is not obtainable from other available sources. 754 See, e.g., In re McCray, (citing In re Petroleum Prod. Antitrust 7 (2d Cir. 1982)). 13 928 F. Supp. 2d at tig., 680 F.2d 5, Plaintiff contends that Gonzales udoes not require that every theoretical source be exhaus Commodity tig., 235 F.R.D. 199, 21 , II In re Natural Gas 17 (S.D.N.Y. 2005), and that requesting the 2010 Review from HCA, moving to compel and subsequently raising HCA's ilure to produce t documents with the Tennessee magistrate judge meets the Second Circuit standard. With HCA's professed confusion before the Tennessee Magistrate Judge as to what the 2010 Review is and the additional information about Times, 2010 Review provided by The aintiff has not shown that at this t HCA is unwilling to provide the document and is willing to de court orders to do so. any Plaintiff also has not shown that the additional information provided by The Times will not result in the discovery of the report by HCA. Basing the availability of a document from an alternative source on that source's inability to identify the document would quickly null the reporter's privilege when additional identifying information has been provided. hidden assumption in Plaintiff's argument is that HCA is unwilling to hand over the 2010 Review, but this is contradicted by counsel for HCA's con what 2010 Review is and is unsubstantiat depositions or interrogatories. tell sion on the record about by any sworn It is possible that HCA is the truth, and further discovery by the company can 14 unearth document. Mere belief unwilling to provide t compel a finding that in At a minimum, 2013) source is information, without more, cannot rmation is not reasonably obtainable. aintiff has not shown that the 2010 Review is not reasonably obtainab Lebowitz v. Ci t an alternat from other available sources. of New York, 948 F. Supp. 2d 392, 394 See (S.D.N.Y. (finding defendant had not demonstrated the information sought was not reasonably obtainable from other available sources where three other witnesses identified by the pIa could be stioned about the information). 15 iff Conclusion Bas on the conclusions set forth above, Pla motion to compel is denied thout judice. It is so ordered. New York, NY April ( 1' 2014 ROBERT W. SWEET U.S.D.J. Part 1 16 iff's
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