United States District Court, W.D. Pennsylvania
Nos. 393 and 402
MAUREEN P. KELLY MAGISTRATE JUDGE.
before the Court is the Motion for Sanctions Pursuant to
Federal Rule of Civil Procedure 37(b)(2) (the "Motion
for Sanctions") filed by Defendant Tiversa Holding Corp.
("Tiversa"). ECF No. 393. In the Motion for
Sanctions, Tiversa requests that Plaintiff LabMD, Inc.
("LabMD") be sanctioned for failure to abide by the
Order of this Court dated June 21, 2019 (the "Deposition
Protective Order") expressly directing the limited scope
of depositions. Defendant Robert J. Boback
("Boback") joins in the Motion for Sanctions. ECF
No. 402. LabMD filed a Brief in Opposition. ECF No. 409.
Tiversa filed a Reply in Support of its Motion for Sanctions.
ECF No. 411.
RELEVANT PROCEDURAL HISTORY
order to consider the Motion for Sanctions, it is essential
to review it in the context of the relevant procedural
history of this case, including the conduct of LabMD and its
commenced this litigation on January 21, 2015. ECF No. 1.
Following the disposition of two Motions to Dismiss that were
granted in part and denied in part, ECF No. 115, on February
12, 2016, LabMD filed a First Amended Complaint. ECF No. 125.
Another Motion to Dismiss was filed. ECF No. 137. On October
7, 2016, this Court issued a Report and Recommendation
recommending that the Motion to Dismiss be granted as to
Count II (as to Defamatory Statements Nos. 1-12, 14-15 and
17-20), Count III, Count IV, Count V and Count VI. ECF No.
166. It was further recommended that the Motion to Dismiss be
denied as to Count II (as to Defamatory Statements Nos. 13
and 16). Id. The Report and Recommendation was
adopted by District Judge Mark Hornak. ECF No. 185.
disposition of the Motions to Dismiss, only a portion of
LabMD's defamation per se claim remains as to two
133. The following statements published by Tiversa and Boback
in their February 10, 2015 statement to "The Pathology
Blawg" are false and defamatory, were known by Boback
and Tiversa to be false and defamatory, were understood by
recipients of the statements to apply to LabMD, were intended
to harm LabMD and did, in fact, cause special harm [to]
• LabMD lawsuit - The claims are baseless and completely
unsubstantiated .... even in the complaint itself. This
appears to be another attempt by Daugherty to distract people
from the INDISPUTABLE FACT that LabMD and Michael Daugherty
leaked customer information on nearly 10, 000 patients.
(Defamatory Statement No. 13).
ECF No. 125 ¶ 133 (internal citations omitted).
135. The following statements made by Boback and Tiversa in a
letter to the editor of the Wall Street Journal, published in
the December 9, 2015 edition of the Journal, are false and
defamatory, were known by Boback and Tiversa to be false and
defamatory, were understood by recipients of the statements
to apply to LabMD, were intended to harm LabMD and did, in
fact, cause special harm [to] LabMD:...
• LabMD's CEO Michael Daugherty admits that a LabMD
employee improperly installed LimeWire file-sharing software
on a company computer. Doing so made confidential patient
information publicly available over the Internet. (Defamatory
Statement No. 16).
Id. ¶ 135.
August 29, 2017, the Court conducted the initial case
management conference in this case. During the conference,
the Court gave the parties 5 months to conduct discovery in
light of the fact that all that remained of the 205 paragraph
10 count First Amended Complaint was a portion of the
defamation per se claim as to the two statements, identified
above. The Court set a fact discovery period of August 29,
2017 to January 29, 2018. ECF Nos. 246 and 247.
October 12, 2017, the Court conducted a telephone status
conference with counsel and addressed discovery, ESI
custodians/search terms and an upcoming mediation. ECF No.
days later, on October 20, 2017, LabMD and its CEO, Michael
Daugherty ("Daugherty"), filed a new lawsuit with
this Court against Tiversa and Boback, and the individual
attorneys and law firms representing them in the instant case
in LabMD, Inc. and Michael J. Daugherty v. Tiversa
Holding Corp., et al., No. 17-1365. In the new lawsuit,
LabMD and Daugherty alleged that Defendants engaged in abuse
of process, conspiracy to abuse process, and violations of
Pennsylvania's Dragonetti Act. These claims arose out of
purported misconduct by Tiversa and Boback in pursuing
defamation claims against several parties, including LabMD
and Daugherty, in two Pennsylvania state and federal court
actions. LabMD and Daugherty alleged that these
defamation actions were procured, initiated, and continued in
a grossly negligent manner and without probable cause, and
that defendants had filed certain motions for purposes of
concealing their own misconduct and harming LabMD.
October 24, 2017, Defendants filed a joint Motion to Stay the
instant case so that they could have the opportunity to
review the new lawsuit and decide the impact that it had on
the ability of defense counsel and their law firms to
continue to represent Tiversa and Boback. ECF No. 292. The
stay was granted until a status conference with the Court on
December 4, 2017. ECF No. 295.
December 4, 2017, the Court conducted a status conference.
ECF No. 296. Discovery conducted to date was discussed.
Attorney James Hawkins for LabMD acknowledged during the
status conference his understanding that discovery in the
instant case was limited to Statement Nos. 13 and 16. ECF No.
311-2 at 10:9-16. Following the conference, the Court stayed
this case pending rulings on the Motions to Dismiss in No.
17-1365. ECF No. 300.
Motions to Dismiss were granted in No. 17-1365 and the case
was dismissed on November 6, 2018.
February 7, 2019, this Court conducted a status conference to
address the completion of discovery, including: search terms
and custodians, the names of the individuals to be deposed,
setting deposition dates as soon as possible, and nonparty
subpoena issues. ECF No. 324.
this conference, Tiversa's counsel expressed concern that
LabMD's discovery requests were not directly related to
the two defamation claims but were attempts to use discovery
in this case for other cases or in other forums. ECF No. 370
particular note to the instant Motion for Sanctions,
throughout the February 7, 2019 status conference, the Court
addressed the requirements of proportionality and that
discovery is to be limited to the remaining portions of the
defamation per se claim as to Statement Nos. 13 and 16.
Id. at 8, 13 and 17. The Court also stated:
And again, I want to be clear, as you think about that after
the ESI and the depositions, is I am going to be enforcing
the amendments to the Federal Rules of Civil Procedure in
terms of proportionality. This case has now been dramatically
narrowed to just the two claims as to the two statements, and
those are the only things that I'm going to allow
discovery on, that which is related to it for purposes of
preparing this case for trial.
Id. at 24.
conclusion of the February 7, 2019 status conference, this
But let's all communicate with each other and keep it
constructive so that we keep it focused on the narrow issues
in this case. This case is not about what's going on in
all the other different forums. We have a limited issue
that's left here, and let's deal with it accordingly.
Id. at 29.
conclusion of the February 7, 2019 status conference, the
Court scheduled fact discovery to close on June 1, 2019. ECF
Nos. 324, 325 and 370 at 28.
21, 2019, LabMD filed a Motion to Modify Case Management
Order seeking an extension of time to complete fact
discovery. ECF No. 337. In the motion and accompanying brief,
LabMD sought to extend discovery by another 10 months until
March 30, 2020. LabMD also attached 1, 549 pages of exhibits
in support of its motion. ECF No. 338-1 to 338-32. Tiversa
opposed the motion on the grounds that: the case was 4 years
old and limited to one defamation claim related to the two
alleged defamatory statements made in 2015. Tiversa argued
that it was apparent that the request for an additional 10
months of discovery sought by LabMD was an attempt by LabMD
to conduct discovery that would be heavily focused on
LabMD's claims and defenses in the state court defamation
action and the qui tarn action. ECF No. 345 at 2.
However, as a practical matter, Tiversa was agreeable to a 30
day extension to facilitate the completion of certain
depositions. Id. at 1. Given the myriad of
irrelevant matters raised in LabMD's brief and exhibits,
this Court issued an Order granting in part and denying in
part the motion for extension of time to complete discovery.
The Court ruled, in pertinent part:
In the instant motion, Plaintiff seeks to extend discovery by
ten months. Defendants oppose this request. Defendant Tiversa
is agreeable to a thirty day extension of discovery in order
to complete the limited number of necessary depositions. As
the parties are well aware, and as this Court has repeatedly
addressed, this case is now four years old and the remaining
claims relate solely to remaining portion of one defamation
claim as to two alleged defamatory statements. The Court has
also repeatedly addressed the requirements of the applicable
Federal Rules of Civil Procedure that discovery must be
proportionate to the limited remaining claims as to the two
alleged defamatory statements. As such, Plaintiffs request
for a ten month extension of discovery is DENIED. The Court
will allow a brief thirty day extension of discovery until
July 1, 2019. NO FURTHER EXTENSIONS OF DISCOVERY WILL BE
ECF No. 349.
18, 2019, Tiversa filed a Motion for Protective Order
Limiting the Scope of Depositions. ECF No. 372. In the
Motion, Tiversa sought a protective order limiting the scope
of upcoming depositions in this case to the remaining
defamation per se claims as to Statement Nos. 13 and 16 and
referenced the Court's prior and recent admonishments of
counsel for LabMD regarding the requirement of
proportionality for discovery. Id.
Motion for Protective Order, Tiversa cited the Court to
counsel for LabMD's deposition questioning of non-party
Joel Adams ("Adams") on Monday, June 17, 2019 (the
day before the Motion for Protective Order was filed).
Tiversa advised the Court that LabMD's counsel did not
ask one question about the two defamatory statements
remaining at issue -Statements Nos. 13 and 16. Tiversa
pointed out many questions that were asked of Adams had
nothing to do with the remaining claims in this case.
Id. at 3-5. These irrelevant questions included, but
were not limited to: if there was something secretive about
his children, strengths and weaknesses of a certain employee,
the workplace culture at Tiversa, leadership styles, guns in
the workplace, an AIDS clinic in Chicago, Edward Snowden, an
Iranian IP address and whether the witness had "ever met
Judge Maureen P. Kelly." Id. Tiversa correctly
argued that these questions had nothing to do with the
remaining claim in the instant case.
Motion for Protective Order, Tiversa argued that these
deposition questions by LabMD's counsel clearly
demonstrated the type of "fishing expedition" that
this Court expressly forbid during the status conference on
June 11, 2019. Tiversa cited to this Court's clear
statement on the record at the then most recent status
As I've said, we had a status conference in this case on
February 7, 2019. And this Court, as I have been
throughout, was crystal clear that the only remaining claim
in this case is the two statements that remained as to the
defamation per se claim. It was clear that discovery to be
completed was to relate to these remaining claims only. This
was not to be used as a fishing expedition for the qui tarn
action or the state court action. It was to be
limited to the remaining claims in this case.
ECF No. 367 at 25 (emphasis added).
opposed the Motion for Protective Order and pointed to ten
broad topic areas that were covered in the Adams deposition
which it claimed "related to the two defamatory
statements and the intimidation of witnesses by Tiversa and
Mr. Boback." ECF No. 376.
Court granted the Motion for Protective Order Limiting the
Scope of Depositions and issued the Deposition Protective
Order on June 21, 2019. The Court held as follows:
Having considered the arguments of the parties relative to
the instant Motion, the Court finds that Tiversa has
demonstrated good cause under Rule 26(c) to warrant the
issuance of the requested protective order. In the context of
the applicable provisions of Rule 26, this Court, as
addressed during the June 11, 2019, Status Conference,
referenced herein, has repeatedly advised counsel that
discovery in this case must be limited to the portion of the
sole remaining in this case - the defamation per se claim as
to Statement #13 and #16. This Court has also repeatedly
discussed with counsel the corresponding requirements of
proportionality. Nonetheless, LabMD has repeatedly
attempted to push or has gone beyond the boundaries of the
requirements of Rule 26 and disregarded the orders of this
Court: by consistently attempting to engage in "fishing
expeditions"; by seeking information that is not
relevant to the remaining claim in this case; by seeking
information to be used in the qui tam action, state court
action or other litigation in other forums; and by attempting
to relitigate previously disposed of legal matters. Clearly,
such discovery conduct by LabMD seeks information that is not
for the requisite legitimate and proper purpose.
Due to LabMD's ongoing discovery tactics, disregard of
this Court's prior admonishments and orders and the
limited nature of the remaining defamation per se claim in
this case, this Court is compelled to grant Tiversa's
Motion for Protective Order. An appropriate order follows.
AND NOW, this 21st day of June, 2019, it is hereby
ORDERED that Defendant Tiversa Holding Corp.'s Motion for
Protective Order Limiting the Scope of Depositions is
GRANTED. The scope of the depositions in this action must be
limited to the remaining portion of the defamation per se
claim, specifically Statements #13 and #16, LabMD's
alleged damages and defenses thereto.
NOTICE is hereby given to LabMD and its counsel that
if this Order is disregarded that this Court may impose
sanctions, up to and including the dismissal of this action,
as provided for by Federal Rule of Civil Procedure
ECF No. 379 at 5-6 (emphasis added).
an emergency telephone conference with counsel on June 27,
2019, relative to another matter of LabMD's conduct,
Tiversa's counsel notified the Court that LabMD had
violated the Deposition Protective Order. ECF No. 403 at
11-12. The Court responded:
[T]his court has been very clear with all of you since you
were before the court for the lengthy status conference on
February 7th of this year and on June 11th, and in multiple
rulings on discovery motions, again . . . repeatedly advising
counsel that the remaining discovery in this case, because
all that is left is what remains of the defamation per se
claim is to statements 13 and 16 only. And I have repeatedly,
and I think I've used the phrase crystal clear in some of
my orders, indicated that that is the scope of discovery.
This is not a fishing expedition, and I have repeatedly
Id. at 12.
pending Motion for Sanctions, Tiversa and Boback assert that
LabMD and its counsel have willfully violated the express
ruling set forth in the Order of Court dated June 21, 2019.
ECF Nos. 393 and 402.
the status conference on April 23, 2019, the Court has been
required to deal with numerous discovery motions and
discovery issues, including this Motion for Sanctions. ECF
Nos. 329, 331, 332, 336, 337, 339, 341, 347, 349, 350, 351,
352, 353, 356, 361, 363, 364, 366, 371, 372, 374, 375, 377,
379, 381, 382, 388, 391, and 393. Almost all of the discovery
motions and issues in the final two-and-one-half months of
discovery resulted from the conduct of LabMD and its counsel.
TIVERSA'S MOTION FOR SANCTIONS
instant Motion for Sanctions, ECF No. 393, Tiversa argues
that LabMD and its counsel willfully violated the express
ruling of this Court in the Deposition Protective Order
limiting the scope of deposition questions in the remaining
depositions in this case.
argues that LabMD and its counsel repeatedly violated the
Deposition Protective Order dated June 21, 2019 through
continued improper questioning of six deponents. Tiversa
correctly recognizes that this Court clearly limited the
scope of depositions to "the remaining portion of the
defamation per se claim, specifically Statements #13
and #16, LabMD's alleged damages and defenses
thereto." Id. at 6. Tiversa also recognizes
that this Court provided clear notice "to LabMD and its
counsel that if this Order is disregarded that this Court may
impose sanctions, up to and including the dismissal of this
action, as provided for by Federal Rule of Civil Procedure
37(b)." Id. Tiversa argues that,
notwithstanding the clear language of the Deposition
Protective Order, LabMD and its counsel continued to proceed
with discovery without regard for the Federal Rules of Civil
Procedure or the Orders of this Court. Tiversa cites as
"one of the most glaring examples" of this utter
disregard the continued questioning by LabMD's counsel of
witnesses about the "gun culture" at Tiversa.
Id. at 2. Tiversa notes that this Court directly
addressed the improper nature of this type of questioning
(among others); yet LabMD's counsel proceeded unabated
and without regard for the Deposition Protective Order.
Tiversa also argues that, despite repeated admonitions and
warnings by the Court and the Deposition Protective Order,
LabMD has continued with its fishing expedition, seeking to
obtain discovery in this case for other pending litigation,
not for the "requisite legitimate and proper
purpose." ECF No. 379 at 5. As such, Tiversa asserts
that the imposition of sanctions against LabMD and its
counsel is warranted.
support of this Motion for Sanctions, Tiversa has provided to
the Court excerpts, as examples, from each of the six
depositions conducted by counsel for LabMD in the days
immediately after the issuance of the Deposition Protective
Order dated June 21, 2019, during which LabMD's counsel
spent a substantial portion of each deposition asking a
multitude of questions not related to the remaining
defamation per se claim as to Statement Nos. 13 and 16 and
that were violative of the Deposition Protective
Deposition of Robert Boback-6/24/19
is a named defendant in this case.
argues that during the deposition of Boback, counsel for
LabMD asked countless questions relating to issues that were
not related in any way to the remaining portion of the
defamation claims, limited to Statements Nos. 13 and 16.
Tiversa further argues that the questions were blatant
attempts to get discovery to support LabMD's claims
against Boback in other lawsuits and/or other forums,
including state and federal court in Pennsylvania, state and
federal court in New York, and federal court in Virginia.
Tiversa provides the following examples of LabMD's
questioning in violation of the Deposition Protective Order
and prior rulings of this Court.
• LabMD's counsel spent a significant portion of the
deposition asking questions about the alleged spread of the
1718 file, which is not at issue in either Statement No. 13
or 16, but is at issue in many of the other cases
LabMD has filed against Tiversa and Mr. Boback. (ECF No.
393-2 at 38:16) ("What does file spread mean to
you?"); (id. at 53:20-24) ("Do you have
any recollection of testifying that the file was found by
Tiversa at locations in Costa Rica, London, England, San
Diego, California, and Apache Junction, Arizona?").
• LabMD's counsel asked questions regarding the FTC
investigation which, as this Court has previously ruled, ECF
No. 408, is not relevant to this case. (Id. at
42:5-7) ("Do you have a recollection of Tiversa
preparing a list of 84 companies to turn over to the
FTC?"); (id. at 126:11-12) ("Did Tiversa
make misrepresentations to the FTC?"); (id at 126:14-15)
("Did Tiversa make misrepresentations to
Congress?"); (id. at 129:22-25) ("Do you
believe that Tiversa benefitted commercially from the fact
that the FTC was investigating companies that Tiversa had
referred to the FTC?"); (id at 33:9-11) ("When you
read your June 2014 deposition, did anything strike you as
being false?"); (id at 115:8-10) ("You did not
admit to Congress or the FTC that there was a mistake in your
• LabMD's counsel asked Boback if he believed
anything Daugherty said in his book The Devil Inside the
Beltway was not true. (Id. at 83:1 -2).
• LabMD's counsel blatantly ignored the Court's
prior ruling denying LabMD's Motion for Witness
Protection with respect to its allegations that Boback
engaged in witness intimidation of non-party Richard Wallace.
ECF No. 371. Such questions included:
o "[I]n January or February of 2014, did you visit Mr.
Wallace in the hospital at the treatment facility where he
was?" (ECF No. 393-2 at 187:11-14);
o "Did you have any conversations with anybody at the
treatment facility?" (Id. at 187:19-20);
o "Did you get a release of medical records?"
(Id. at 188:22-23);
o "Was Mr. Wallace, in fact, fired on February the
28th?" (Id. at 140:22-23); and
o Why was [Mr. Wallace] fired?" (Id. at 141:4).
Deposition of Keith Tagliaferri - 6/25/19
Tagliaferri ("Tagliaferri") is a former employee of
Tiversa and not a party to this case. Tagliaferri is a
defendant in another federal case, Daugherty v.
Adams, 17-368 (W.D. Pa.).
support of its Motion for Sanctions, Tiversa points out that
most, if not all, the deposition questions asked of
Tagliaferri by LabMD's counsel sought discovery related
to the allegations against Tagliaferri in the other federal
action, not the claims in the instant case. Tiversa argues
that at no point during Tagliaferri's nearly three-hour
deposition did counsel for LabMD ask any questions about
Statement Nos. 13 and 16; nor did counsel ask any questions
regarding "publicly available" or the word
"leak." Tiversa provides the following examples of
LabMD's questioning in violation of the Deposition
Protective Order and prior rulings of this Court.
• LabMD's counsel spent the majority of the
deposition questioning Tagliaferri about reports he had
prepared while employed at Tiversa that are totally unrelated
to the defamatory statements. (ECF No. 393-1 at 11:20-23).
• Questions by LabMD's counsel focused entirely on
the "Fourth Forensic Report" as it is defined in
the Complaint in the other federal action, and referring to
said report as "evidence fabricated by
• Counsel for LabMD made over thirty references to the
"Fourth Forensic Report" during Tagliaferri's
deposition, which is not relevant to this limited defamation
• Counsel for LabMD also asked about another report that
was prepared for a former Tiversa client, Cigna, which
appears in the Complaint in the other federal action.
(Id. at 38:13-17). That report was prepared years
prior to the defamatory statements at issue in this case.
• None of the questions asked of Tagliaferri had any
relation to or bearing on the two allegedly defamatory
statements in this case.
Deposition of Richard Wallace - 6/26/19
Wallace ("Wallace") was formerly employed by
Tiversa as a director of operations. LabMD has repeatedly
tried to align ...