New England Teamsters and Trucking Industry Pension Fund v. The New York Times Company, No. 1:2014mc00059 - Document 19 (S.D.N.Y. 2014)
Court Description: AMENDED OPINION. 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 in Part I on 4/18/2014) (rjm)
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CT COURT UNITED STATES DI SOUTHERN DISTRICT OF NEW YORK ------ ------------------- ---x NEW ENGLAND TEAMSTERS & TRUCKING INDUSTRIES PENSION FUND, intiff, 14 Misc. 59 AMENDED OPINION instTHE NEW YORK TIMES COMPANY, Defendant. ---------------x KARSTEN SCHUH, Civil Action No. Plaintiff, 3:11-cv-1033 instM.D. Tenn. HCA HOLDINGS, INC., De ndant. -----x A P PEA RAN C E S: ROBBINS GELLER RUDMAN & DOWD LLP 58 South Service Road Melville, NY 11747 By: Samuel H. Rudman, Esq. Scott H. Saham, E , ; t . ¢ t 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. Plaintiff New England Teamsters & Trucking Industry Pension Fund ("Plaintiff") has moved this Court, sitting in Part One, to compel named defendant The New York Times Company (" Times") to produce documents responsive to Plaintiff's subpoena issued on September II, 2013 (the "Subpoena") in the matter of Karsten Schuh v. HCA Holdings, Inc., Civil Action No. 3:11-cv 01033 (M. D. Tenn.) Plaintiff is Lead Tennessee Action. (the "Tennessee Action" or "Action"). intiff and The Times is not a party in the Upon the conclusions set rth low, aintiff's motion is denied. Prior Proceedings The Action is a federal securities litigation pending against HCA Holdings, Inc. ("HCA"), several of its officers and directors and the underwriters who underwrote and so March 9, 2011 Initial Public Of ring (the "IPO") the "Tennessee Action Defendants"). The Cons HCA's (collectively, idated Complaint in the Action was filed in the Middle District of Tennessee on July 13, 2012 (the "Consolidated Complaint" or "CC") . seeks certain documents described and quoted Times August 6, 2012 arti intiff The New York e entitled "Hospital Chain Inqui 2 Cited Unnecessary Cardiac Work" (the "Article").l Plaintiff alleges that these documents are crucial evidence necessa the prosecution of the Tennessee Action: for The Article details the performance of improper cardiac procedures at HCA hospitals s information. 2 as the hospital officials' reaction to as we Art is based upon the review of "memos, e-mail correspondence among execut s, transcripts from hearings and reports from outside consultants."3 According to the Arti "raJ review of those communications reveals that rather than asking whether patients had been harmed or whether regulators needed to be contacted, hospital officials asked on how the physic line."4 ns' act ties affected information hospitals' bottom Plaintiff contends that a central issue in the Tennessee Action is the impact of the cessation of unnecessa 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 ermined to have been done on patients without significant heart offi 1 sease" (the "2010 Review"); als" communications and/or analysis of how this conduct Reed Abelson & Julie Creswell, THE NEW YORK TIMES, 3 4 (2) "hospital Id. Id. 3 " could impact HeA's "bottom I (the "Bottom Line Documents"); and (3) a "memo written by a company ethics officer," Stephen Johnson, stating: "The allegations reI procedures ing ed to unnecessary rformed in the cath lab are substantiated" (the "Johnson Memo") .5 Plaintiff previously sought these documents from HCA in the Tennessee litigation. stated HCA does not possess or even know what the 2010 knowledge of hospital 0 rectly it ew is and has no icials analyzing how t cessation of improper procedures would impact HCA's bottom line. Subsequently, Plaintiff served the Subpoena on The Times September 2013, more than a after the Article ran, seeking documents used by the reporters Saham Decl. Ex. F). preparing the Article. The Times has objected to the Subpoena and not produced the documents, citing t reporter's privilege under Gonzales v. National Broadcasting Co., r. (See 194 F.3d 29, 35 (2d 1999), and the undue burden of the Subpoena. (See Saham Decl. Ex. B). Plaintiff fil the instant motion Part One in this district on March 11, 2014. 5 Briefing was submitted, and oral Id. 4 - ... - - - - -.. ~---- .. ---~---------- arguments were held and the matter was marked fully submitted on April 8, 2014. Allegations In The Consolidated Complaint HCA owns, manages and operates hospitals, surgery centers and va ea ous other cilities. freestanding (CC'l1 2). In y 2011, the Tennessee Action Defendants engaged in the IPQ to take HCA public, and sold more than $4.3 billion of HCA stock. . 'l1 3). The Consolidated Complaint alleges the Tennessee Action Defendants failed to disclose that, among other things, HCA was experiencing and would continue to experience a decline in the gh margin cardiology revenue components because it ceased performing certain unnecessary, but highly profitable, cardiac procedures at its hospital. (Id. 'l1'l1 3, 32, 45). aintiff alleges that the Tennessee Action Defendants knew of HCA's pre-IPQ internal investigation of unnecessary cardiac procedures following a whistleblower complaint and ensuing investigation. The Arti reported that HCA's own internal investigation found, by Fall 2010, months before the IPQ, that unnecessary procedures were being performed in HCA's 5 highly profitable logy business. 6 showing that "cardio sts at several of its ho Florida were unable performing. "7 HCA uncovered evidence justify many of s in procedures they were According to the 2010 Review, whi by The Times, " was obtained half the procedures, or 1,200, were determined to be have been done on patients without significant heart disease."8 Plaintiff alleges that as a result of this investigation, as well as HCA's own ernal business reporting, the Tennessee Action Defendants were aware fore the IPO the number of highly profitable cardiac procedures being performed was HCA's fi 45). lining and would continue to negatively impact 1 performance following t The Tennessee Action Defendants information to the investing public IPO. (CC ~~ 3, 32, d not disclose this connection with HCA's IPO. aintiff has sought issue in Subpoena from HCA. (over 170,000 employees), 6 scovery of the documents at ven the sheer size of HCA Tennessee Action De Reed Abelson & Julie Creswell, THE NEW YORK TIMES, Aug. 6 ndants' search has been limited to a finite number of documents custodians. The Honorable Kevin H. Sharp of the Middle Dist ct 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 the time of the lPO. HCA Holdings, Inc., 947 F. Supp. 2d 882, 893 n.4 Schuh v. (M.D. Tenn. 2013) . The Applicable Standard Federal Rules of Ci 1 Procedure 37 permits a party to move for an order compelling disclosure or discovery from a non party to an action. 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. Civ. P. 45 (d) (3) (iii). The Second Circuit has recognized a qualified reporter's privilege, based in the First Amendment and federal common law, which protects journalists from having to produce information obtained during the course of newsgathering. 7 See, e.g., Gonzales, 194 F.3d 29; In re Petroleum Prods. Antitrust Litig. (Petroleum Prods.), 680 F.2d 5, 7 8 (2d Cir. 1982); Baker v. F & F Inv., States v. 470 F.2d 778 Treacy, also Uni ted (2d Cir. 1972). 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 748, 754 tig., (S.D.N.Y. 2013), adopted, No. 03 Civ. 928 F. Supp. 2d 9685 (DAB), 2013 U.S. Dist. LEXIS 31142, at *23 (S.D.N.Y., Mar. 5, 2013); Sokolow v. PLO, No. 04 Civ. 397 127040 (S.D.N.Y. S (GBD) (RLE), 2012 U.S. . 6, 2012). The pr lege protects both confidential and nonconfidential information. F.3d at 35 36. st. LEXIS 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 wholesale production of press fi in performing s duties." that risk impeding the In re McCray, 928 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 perta to confidential information and the second applicable to subpoenas where no confidential material is 8 ss involved. Gonzales test Under information, non-confidential one relevant here, " interest prote nature of the press by the privilege is narrower protection of confidentiality is stake, the pr should be more easily overcome." 194 F.3d at 36. test, a subpoena must be quashed demonstrates (1) "that the mate . . when Under ss the issuing is y als at issue are of Ii relevance to a significant issue in the case," and (2) y t materials at issue "are not reasonably obtainable from other available sources." Id. first prong of Gonzales requires the to compel sclosure to demonstrate that the in is of "likely relevance" and the case. . at 36; In re McCray, cumulat purpose. " (2d eir. 1983). whi 928 F. Supp. 2d at 757-58. Uni t States v. Burke, 700 F.2d 70, 78 While "this standard is applies to confi rmation sought ive or serving a "solely subpoena is merely in ion sought s to a "significant issue" in requirement is not met if the in The re rty seeking ss exacting than ntial materials, a 1 igant seeking nonconfidential materials will not be granted unfettered access." Sikelianos v. of N.Y., No. 05 2465120, at *1 (S.D.N.Y. June 18, 2008). 9 . 7673, 2008 WL issuers of second prong of Gonzales requires t 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 allot rmation is sometimes required. available sources of i 79 F.3d 346, 353 (2d that party seeking journalist's mate See, re National e.g., Krase v. Graco Children Prods. Broadcasting Co.), r r. 1996) (requiring als exhaust alternatives); Shoen v. Shoen,S F.3d 1289, 1297 (9th Cir. 1993) (stating exhaustion of alternate sources is nearly implausible early in the scovery process); Petroleum Prods., 680 F.2d at 9 (hoI ng that even though 100 witnesses had been deposed, that was not suf cient to establish exhaustion); Zerilli v. Smith, 705, 713 (D.C. Cir. 1981) 656 F.2d (requiring subpoenaing party to show "he has exhausted every reasonable alternative source of information"); Carey v. Hume, (60 depos 4 F.2d 631, 638 (D.C. Cir. 1974) ions may be appropriate before compelling reporter to testify); In re McCray, 928 F. Supp. 2d at 758 ("Defendants have failed to establish that the information sought is not obtainable elsewhere"); Application of Behar, 779 F. Supp. 273, 276 (S.D.N.Y. 1991) (stating alternate sources, including depositions, must first be exhausted before any deposition seeking privileged formation would be warranted); Hutira v. Islamic Republic of Iran, 211 F. Supp. 2d 115, 120 n.4 10 (D. D.C. 2002) (failure to exhaust alternat sources weighed "so subpoena" that court heavily in favor of quashing clined to consider the remaining analysis) . Production of the Documents Requested in the Subpoena Cannot Be Compelled From The Times at This Time s: Plaintiff seeks three documents from the T the Johnson Memo; (2) the Bottom (1) ne Documents; and (3) the 2010 Review. The Johnson Memo With regards to the Johnson Memo, the Plaintiff filed a motion to compel HCA to produce, among other things, the Johnson Memo (Schuh v. HeA, the Tennessee Action on October 21, 2013. 11 cv-Ol033, Dkt. No. 161 (M.D. Tenn.)). claimed the Johnson Memo is n. 3) . (See Pl. Mem. at 2, issue remains sub judice in the Tennessee Action. PIa obtain t ivil HCA has iff's attempt to open paral 1 liti ion to Johnson Memo while the motion to compel is pending the Tennessee Action is improper. Furthermore, until the Middle District of Tennessee rules on whether HCA is required to 11 produce the Johnson Memo, P intiff has fai to demonstrate that the Johnson Memo is unavailable from another source. alternative source for the document is pot thus cannot be granted. See Krase, ially avail e in rds to the Johnson Memo aintiff's motion with Tennessee. An 79 F.3d at 353. The Bottom Line Documents Tennessee Action Defendants have indicated that they are currently searching documents. Given such, the motion with respect to the Bottom Line Documents must be den 2 and working to produce these d as moot at this time. 0 Review HCA s stated that it does not possess or even know what the 2010 Review is and has no knowledge of hospital off s analyzing how the cessation of improper procedures would impact HCA's bottom line. Counsel for HCA has stated before the Honorable Juliet E. Griffin, United States Magistrate Judge of the Middle strict of Tennessee, " is describing some other rger what it is, we have no idea. ew. 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 deposit testimony from HCA reco or custodians or Rule 30 (b) (6) wi tnes s errogatory responses from any HCA witnesses. HCA's counsel's statements are unsworn statements by counsel that do not descr or scuss type of search HCA has done to locate the 2010 Review. Times has also provi a declaration detailing two HCA employees who were questioned by the Times about t 2010 Review the Article, three HCA executives involved in creating or reviewing the 2010 Review and cific 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 T s to compel production of t 2010 Review from HCA or depose the three execut Times. s named by The HCA has also not conducted a search of its documents based on the additional Given such, Plainti formation provided by The Times. has not made a sufficient showing that t material is not reasonably obtainable from other available sources. See In re McCray, 928 F. Supp. 2d at 758 privilege where party "fail[edl to demonstrate t (upholding the information they seek is unavailable from another source"). 13 Plaintiff contends that Gonzales "does not require that every theoretical source be exhausted," In re Natural Gas Commodity Litig., 235 F.R.D. 199, 216-17 (S.D.N.Y. 2005), and that requesting the 2010 Review from HCA, moving to compel and subsequently raising HCA's failure to produce the documents with the Tennessee magistrate judge meets the Second Circuit standard. With HCA's professed can ion before t Tennessee Magistrate Judge as to what the 2010 Review is and the additional formation about the 2010 Review provided by The Times, Plaintiff has not shown that at this time HCA is unwilling to provide the document and is willing to defy any court orders to do so. additional Plaintiff also has not shown that the formation 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 quic y null the reporter's privilege when additional identifying information has been provided. The hidden assumption in Plaintiff's argument is that HCA is unwilling to hand over 2010 Review, but this is contradicted by counsel for HCA's confusion on the record about what the 2010 Review is and is unsubstantiated by any sworn depositions or interrogator s. telling the truth, and further It is possible that HCA is scovery by the company can 14 unearth the document. Mere belief that an alternative source is unwilling to provide the information, without more, cannot compel a finding that information is not reasonably obtainable. At a minimum, Plaintiff has not shown that the 2010 Review is See not reasonably obtainable from other available sources. Lebowitz v. 2C13) ty New York, 948 F. Supp. 2d 392, 394 (S.D.N.Y. (finding defendant had not demonstrated the information sought was not reasonably obtainable from other avail sources where three other witnesses identif could be questioned about the information). 15 Ie by the plaintiff Conclusion Based on the conclusions set forth above, motion to compel is deni aintiff's without prejudice. It is so ordered. New York, NY April I~ 2014 ROBERT W. SWEET U.S.D.J. Part 1 16
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