United States District Court, W.D. Pennsylvania
UPMC d/b/a UNIVERSITY OF PITTSBURGH MEDICAL CENTER, and UPMC ALTOONA f/k/a ALTOONA REGIONAL HEALTH SYSTEM, Plaintiffs,
CBIZ, INC., CBIZ BENEFITS & INSURANCES SERVICES, INC., and JON S. KETZNER, Defendants.
GIBSON, UNITED STATES DISTRICT JUDGE
before the Court is the Motion to Compel (ECF No. 75) filed
by Defendants CBIZ, Inc., CBIZ Benefits & Insurance
Services, Inc., and Jon S. Ketzner (collectively
"CBIZ"). CBIZ's Motion has been fully briefed
(see ECF Nos. 75-1, 83, 86, 89, 92, 93, 100) and is
ripe for disposition.
case arises from Plaintiff UPMC's acquisition of
Plaintiff Altoona Regional Health System
("Altoona")-an acquisition which allegedly came
with a multimillion dollar negligent understatement of
Altoona's pension plan liabilities. In the instant Motion
to Compel, CBIZ asks this Court to order Plaintiffs to
produce certain documents relating to Plaintiffs'
communications with the Internal Revenue Service
("IRS") and other agencies. Plaintiffs respond by
arguing that they have produced all relevant, responsive, and
non-privileged communications requested by CBIZ. However,
CBIZ disagrees that the communications in question are
protected by either the attorney-client privilege or the
reasons that follow, CBIZ's Motion to Compel (ECF No. 75)
will be GRANTED.
Jurisdiction and Venue
a Pennsylvania nonprofit corporation with its principal place
of business in Pittsburgh, Pennsylvania. (ECF No. 81 ¶
1.) Altoona is likewise a Pennsylvania nonprofit corporation,
with its principal place of business in Altoona,
Pennsylvania. (Id. ¶ 2.) Plaintiffs allege that
CBIZ, Inc. is a Delaware corporation with its principal place
of business in Cleveland, Ohio, that CBIZ B&I is a
Missouri corporation, and that Ketzner resides in Maryland.
(Id. ¶¶ 4-7.) Plaintiffs seek damages
"well over" $100 million. (Id. at 10.)
Thus, this case is between citizens of different states and
the amount in controversy exceeds $75, 000. This Court,
therefore, has subject-matter jurisdiction over
plaintiffs' claims under 28 U.S.C. § 1332(a)(1).
a substantial part of the alleged events giving rise to
Plaintiffs' claims occurred within the Western District
of Pennsylvania, venue is proper in this district under 28
U.S.C. § 1391(b)(2).
Court previously detailed the procedural and factual
background of the instant case in its Memorandum Opinion
denying Defendants' Motion to Dismiss. See UPMC v.
CBIZ, No. 3:16-cv-204, 2017 WL 4357984, at *l-*3 (W.D.
Pa. Sept. 29, 2017) (Gibson, J.). Thus, the Court primarily
relies on this prior coverage of this case's background
and will not repeat those details herein. However, the Court
will provide some additional background particularly
pertinent to the present Motion to Compel.
their original Complaint, Plaintiffs alleged that the IRS and
the Pension Benefit Guaranty Corporation ("PBGC")
"may" impose significant penalties on Plaintiffs
due to CBIZ's alleged negligence. (ECF No. 1 ¶¶
57-59.) In deciding CBIZ's Motion to Dismiss, the Court
was persuaded that, under the federal standard applicable to
motions to dismiss, Plaintiffs' allegations of penalty
damages were sufficiently definite to state a claim upon
which relief could be granted because only the
amount-not the existence -of the penalties remained
unliquidated. See UPMC, 2017 WL 4357984, at *8.
However, Plaintiffs now concede that no such penalty damages
exist and have, accordingly, filed an Amended Complaint that
omits a request for these penalty damages. (See ECF
Nos. 81, 89.)
crux of the instant Motion to Compel-filed on January 1,
2018-has evolved throughout the briefing of this issue and
centers around documents and communications regarding these
previously alleged IRS and PBGC penalties. Specifically, CBIZ
seeks to compel responses to document request numbers 106,
107, and 109-112. (See ECF Nos. 75-1 at 2-4, 75-3 at
the resolution of this Motion to Compel revolved around
whether these communications remained relevant subsequent to
Plaintiffs' filing of their Amended Complaint without
penalty-specific damages. (See ECF Nos. 75, 76, 86,
89.) However, in an only two-page response filed on February
1, 2018, Plaintiffs contended that CBIZ's Motion to
Compel is now moot because "[o]n January 31, 2018, UPMC
produced to CBIZ the sole responsive, non-privileged
communication with the IRS that UPMC had yet to produce in
response to CBIZ's requests" and that "UPMC
does not possess any communications with the PBGC." (ECF
No. 83 at 1.)
February 8, 2018, CBIZ responded by stating that Plaintiffs
had, up until its February 1, 2018 response, never offered
any basis for its non-production other than lack of
relevancy. (ECF No. 86 at 2.) CBIZ further argued that the
only documents that Plaintiffs have produced are the initial
request to the IRS and the IRS's final ruling.
(Id.) CBIZ also suggested that Plaintiffs'
cursory and vague allusions to attorney-client privilege and
the work-product doctrine are insufficient to meet
Plaintiffs' burden to establish the applicability of
those protections. (Id.) Shortly thereafter, on
February 9, 2018, the Court ordered Plaintiffs to "file
a brief and/or any other appropriate support for their
assertion of privilege on or before February 23, 2018"
and granted CBIZ leave to respond to any such filings on or
before March 9, 2018. (ECF No. 87.)
February 23, 2018, Plaintiffs filed what amounts to a less
than three-page brief, providing perfunctory argument as to
the applicability of attorney-client privilege and the
work-product doctrine to the IRS communications in question.
(ECF No. 89.) Disputing Plaintiffs' arguments, CBIZ filed
a thirteen-page Supplemental Brief and 145 pages of exhibits
on March 9, 2018. (ECF No. 92.) Lastly, after seeking leave
of Court, Plaintiffs filed a five-page Supplemental Brief
responding to CBIZ's Supplemental Brief on March 26,
2018. (ECF No. 100.)
stated supra, CBIZ asks this Court to order
Plaintiffs to produce documents in response to discovery
request numbers 106, 107, and 109-112. (See ECF Nos.
75-1 at 2-4, 75-3 at 1.) The primary content of the discovery
sought by CBIZ is communications involving UPMC,
Plaintiffs' attorneys, Ernst & Young, and the IRS in
connection with the resolution of potential fines, penalties,
and taxes resulting from CBIZ's allegedly misstated
actuarial valuations of Altoona's pension liabilities.
(See ECF No. 89.) The Court notes that, hereinafter,
the discovery sought by CBIZ in the instant Motion to Compel
-i.e., that discovery sought by discovery request numbers
106, 107, and 109-112-will be referred to as "the
penalty information." The Court will first address the
preliminary issue of the continuing relevancy of this
discovery after Plaintiffs amended their Complaint to exclude
damages claims in relation to these fines, penalties, and
taxes. The Court will then analyze the applicability of the
attorney-client privilege and the work-product doctrine to
the discovery sought by CBIZ.
Plaintiff's Relevancy Arguments Appear to Have Been
Withdrawn and, Regardless, are Ineffectual
Rule of Civil Procedure 26 provides the general framework for
discovery in federal civil litigation. See Fed. R.
Civ. P. 26. Rule 26(b)(1) defines the scope of discovery as
"any nonprivileged matter that is relevant to any
party's claim or defense and proportional to the needs of
the case." Fed.R.Civ.P. 26(b)(1). A matter is relevant
if "it has any tendency to make a fact more or less
probable than it would be without the evidence; and ... the
fact is of consequence in determining the action."
See Fed. R. Evid. 401. In determining whether
discovery is proportional to the needs of the case, courts
must consider "the importance of the issues at stake in
the action, the amount in controversy, the parties'
relative access to relevant information, the parties'
resources, the importance of the discovery in resolving the
issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit." Fed.R.Civ.P.
provides the mechanism to compel discovery from a person or
party who refuses to provide discovery. See Fed. R.
Civ. P. 37. The party moving to compel discovery under Rule
37 bears the initial burden of proving the relevance of the
material requested. See UPMC v. CBIZ, Inc., No.
3:16-cv-204, 2017 WL 4129654, at *2 (W.D. Pa. Sept. 15, 2017)
(Gibson, J.) (citing Morrison v. Phila. Hous. Auth.,
203 F.R.D. 195, 196 (E.D. Pa. 2001)). If the movant meets
this initial burden, then the burden shifts to the person
resisting discovery to establish that discovery of the
material requested is inappropriate. Id. (citing
Momah v. Albert Einstein Med. Ctr., 164 F.R.D. 412,
417 (E.D. Pa. 1996)). The person resisting discovery must
explain with specificity why discovery is inappropriate; the
boilerplate litany that the discovery sought is overly broad,
burdensome, oppressive, vague, or irrelevant is insufficient.
See id (citing Josephs v. Harris Corp., 677
F.2d 985, 991-92 (3d Cir. 1982)).