Blue Sky Endeavors, LLC et al v. Henderson County Hospital Corporation et al

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:23-cv-00097-MR
BLUE SKY ENDEAVORS, LLC, )
and LAMOND FAMILY MEDICINE, )
P.L.L.C., )
)
Plaintiffs, )
)
vs. ) O R D E R
)
HENDERSON COUNTY HOSPITAL )
CORPORATION and BLUE RIDGE )
COMMUNITY HEALTH SERVICES, )
INC., )
)
Defendants. )
________________________________ )
THIS MATTER is before the Court on the Plaintiffs’ Motion to Compel
[Doc. 41].
I. BACKGROUND
On April 6, 2023, the Plaintiff Blue Sky Endeavors, LLC (“Blue Sky”)
initiated this action against the Defendants Henderson County Hospital
Corporation (“Pardee Hospital”) and Blue Ridge Community Health Services,
Inc. (“Blue Ridge”) (collectively, “the Defendants”) by filing a complaint in the
Superior Court of Henderson County, North Carolina, asserting inter alia
claims for federal and common law trademark infringement of its Blue
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SkyMD® mark by and through the Defendants’ use of the mark “Pardee
BlueMD.” [Doc. 1-1: Complaint]. The Defendants removed the action to this
Court on April 10, 2023 [Doc. 1] and filed an Answer and Counterclaim
thereafter [Doc. 12].
On November 6, 2023, the Court entered a Pretrial Order and Case
Management Plan, setting a discovery deadline of July 15, 2024, and setting
this matter for trial during the January 13, 2025 trial term. [Doc. 18].
Blue Sky served both Defendants with identical discovery requests on
November 1, 2023. [Docs. 41-3, 41-4]. With extensions consented to by the
Plaintiffs, the Defendants timely responded to these requests by producing
an initial set of documents on January 12, 2024. [Docs. 54-2, 54-3]. On
January 29, 2024, Blue Sky sent the Defendants a deficiency letter regarding
their responses and production of documents. The parties conferred on the
issues raised in that letter multiple times in February 2024. Subsequently,
the Defendants supplemented specific discovery responses, made
supplemental productions of documents, and clarified that documents were
not being withheld based on objections to others. [Doc. 54-4].
On February 28, 2024, with the consent of the Defendants, Blue Sky
filed an Amended Complaint adding LaMond Family Medicine, P.L.L.C.
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(“LaMond Family Medicine”) as a party plaintiff. [Doc. 26]. Blue Sky and
LaMond hereafter will be referred to collectively as “the Plaintiffs.”
After LaMond Family Medicine was added as a party plaintiff, it too
served discovery requests on the Defendants. [Docs. 41-6, 46-1]. After
receiving extensions of time, the Defendants responded to these requests
on July 9, 2024. [Doc. 54-6]. Then, on July 15, 2024, Pardee Hospital
supplemented its response to Blue Sky’s first set of interrogatories indicating,
for the first time, that it was planning to offer new services using the Pardee
BlueMD primary care network. [Doc. 54-5].
On August 19, 2024, the Plaintiffs filed the present Motion to Compel,
moving the Court to compel the Defendants to provide full and complete
responses to the Plaintiffs’ interrogatories and requests for production of
documents. [Doc. 41].
II. STANDARD OF REVIEW
Rule 26 of the Federal Rules of Civil Procedure provides, in pertinent
part, as follows:
Parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party's
claim or defense and proportional to the needs of the
case, considering 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
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resolving the issues, and whether the burden or
expense of the proposed discovery outweighs its
likely benefit. Information within this scope of
discovery need not be admissible in evidence to be
discoverable.
Fed. R. Civ. P. 26(b)(1).
Under Rule 37 of the Federal Rules of Civil Procedure, “a party may
move for an order compelling disclosure or discovery.” Fed. R. Civ. P.
37(a)(1). “[T]he party or person resisting discovery, not the party moving to
compel discovery, bears the burden of persuasion.” Kinetic Concepts, Inc.
v. ConvaTec Inc., 268 F.R.D. 226, 243 (M.D.N.C. 2010). The decision to
grant or deny a motion to compel is generally an issue within the broad
discretion of the trial court. See Lone Star Steakhouse & Saloon, Inc. v.
Alpha of Va., Inc., 43 F.3d 922, 929 (4th Cir. 1995).
III. DISCUSSION
A. Withholding of “Known Documents”
The Plaintiffs first argue that the Defendants are deliberately
withholding two broad categories of documents: (1) advertising materials and
correspondence with advertising and digital marketers; and (2) governmental
documentation and other documents as required in the contract between the
Defendants. [Doc. 41-1 at 10-12]. The Court will address each of these
categories in turn.
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1. Advertising Materials and Correspondence with Third
Party Marketers
The Plaintiffs argue that in response to Blue Sky’s Interrogatory Nos.
3, 10, 11, 12, and 13; Blue Sky’s Request for Production (RFP) Nos. 4 and
5; and LaMond’s RFP Nos. 11, 12, and 14, the following documents should
have been produced: “(1) All documents concerning correspondence with
third party service[s] about web pages and search terms; (2) All invoices and
receipts for such activities to third parties; and (3) All contracts and terms
with the parties’ advertising third party for SEO [search engine optimization].”
[Doc. 41-1 at 11].
The Plaintiffs contend that the Defendants have deliberately withheld
these documents. For grounds, the Plaintiffs state that Alexander MacMillan,
the Digital Marketing Strategist for Pardee Hospital, stated in his deposition
that “all keyword and SEO advertising strategies are done through an outside
party.” [Doc. 41-1 at 11]. In making this argument, however, the Plaintiffs do
not offer a specific cite for this purported testimony. [See Doc. 41-1 at 11
n.18]. The Plaintiffs further argue that “[i]t appears that [Pardee Hospital]
partners with a third party to change the search terms and key words.” [Id.
at 11].
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In response to the Plaintiffs’ discovery requests, Pardee Hospital has
identified the persons involved in the creation and/or implementation of the
advertising of the accused mark; it has explained that it does not use
keyword campaigns or purchase online ads for Pardee BlueMD; and it has
identified the geographic areas where the Defendants have used or intend
to use the mark. [See, e.g., Doc. 54-3 at 3, 7, 8-9, 10; Doc. 54-4 at 2-3].
Additionally, the Defendants have produced a number of documents,
including the entirety of Pardee Hospital’s marketing file and other business
records documenting their advertising activities. [See, e.g., Doc. 54-3 at 8-
9]. Other than their speculation that Pardee Hospital has worked with some
third party with respect to its marketing and advertising activities, the
Plaintiffs do not offer any explanation why the Defendants’ discovery
responses are in any way deficient. The Court will not require further
supplementation to discovery requests.
2. Requests for Production
Next, the Plaintiffs argue that the Defendants have withheld certain
“governmental documentation and other documents as required in the
Contract between the parties” in responding to Blue Sky’s Interrogatories No.
5 and 9, Blue Sky’s RFP No. 4, and LaMond Family Medicine’s RFP No. 9.
[Doc. 41-1- at 11-12].
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As an initial matter, the Court notes that Blue Sky’s Interrogatory No. 5
seeks a description of the good and services offered under the Pardee
BlueMD brand, and that Blue Sky’s Interrogatory No. 9 asks for sales
information. [Doc. 41-3 at 6]. Neither of these interrogatories specifically
asks for government documents or “other documents as required in the
Contract between the parties.” As such, the Plaintiffs’ Motion to Compel is
denied with respect to these interrogatories.
Regarding the remaining requests for production, the Plaintiffs contend
that the Defendants have produced contracts “which have documentation
removed from them” and that they are entitled to the production of all the
related documentation. [Doc. 41-1 at 12]. The Plaintiffs argue that these
documents are relevant to assessing how much the Defendants have
profited from the Plaintiffs’ good will and reputation and would show the
issues that would result from the changing of the alleged infringing marks.
[Id.].
It appears that the “contracts” to which the Plaintiffs are referring are
versions of the subrecipient agreement between the Defendants, which
allows Pardee Hospital to benefit from Blue Ridge’s status as an FQHC.
While the Defendants objected to the production of this agreement on
relevancy grounds, they nevertheless produced to the Plaintiffs versions of
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the agreement—along with all the documents associated with that
agreement that were in their possession, custody, and control—in an effort
to avoid a discovery dispute.
The Court finds that, to the extent that the subrecipient agreement is
even relevant to this action, the Defendants have provided the Plaintiffs with
documents responsive to their requests and that further supplementation of
these responses are not warranted.
B. Improper Objections
Next, the Plaintiffs argue that the Defendants’ objections that the
Plaintiffs’ requests were “overly broad, unduly burdensome, vague, and
confusing” are themselves overly broad and fail to explain why any of the
requests are objectionable. [Doc. 41-1 at 12-14]. As such, the Plaintiffs
argue, the Defendants’ objections should be invalidated and full responses
to the requests should be compelled. [Id.].
Having reviewed the discovery responses, the Court finds that the
Defendants have specifically explained how and why each objection was
applicable to the request at issue. Moreover, the Defendants represent that
they have not withheld any documents based on these objections. As such,
the Court finds the Plaintiffs’ argument in this regard to be without merit.
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C. Work Product Objections
Next, the Plaintiffs object to the Defendants’ assertion of the work
product doctrine in response to RFP Nos. 5 and 6. [Doc. 41-1 at 14-15].
RFP No. 5 seeks “All Documents and Communications referring or
relating to the consideration, selection, and adoption of [Pardee BlueMD].”
[Doc. 41-5 at 7]. Here, the Defendants’ counsel has discussed the
consideration, selection and adoption of Pardee BlueMD with its clients and
has created documents based on these discussions and therefore objected
to the production of these documents on the grounds of the work product
doctrine.1 In addition, Pardee Hospital produced a number of documents
responsive to the Plaintiffs’ request that were not deemed to be work product.
[Doc. 54-7 at 3-4]. The Plaintiffs have failed to demonstrate how the
assertion of the work product doctrine was improper. The motion to compel
is therefore denied with respect to this request.
RFP No. 6 seeks “All Documents and Communications from all
Persons with knowledge of [BLUE SKY MD].” [Doc. 41-5 at 8]. As defense
counsel has “knowledge of” BLUE SKY MD and has communicated with the
1 In making this objection, the Defendants did not produce a privilege log; however, the
parties previously had agreed that privilege logs for work product or attorney-client
privileged documents created after the lawsuit was filed would not be required. [See Doc.
54 at 21].
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Defendants regarding this issue, defense counsel properly objected to the
extent this request seeks documents or communications protected by the
attorney-client privilege or work-product doctrine. In any event, this request
is overly broad. The Plaintiffs’ request to compel further supplementation of
the Defendants’ response to this request is denied.
D. Speculation Objection
The Plaintiffs argue that the Defendants’ objection that Interrogatory 5
calls for speculation was improper. [Doc. 41-1 at 16].
Interrogatory No. 5 asks the Defendants to “[i]Identify and fully describe
each of the goods and/or services on or in connection with which Defendant
[Pardee Hospital] currently uses, intends to use, or has used the Accused
Mark.” [Doc. 41-3 at 6]. This interrogatory contains no temporal limitation.
The Defendants’ speculation objection was proper because the interrogatory
is asking about an indefinite period and requires Pardee Hospital to
speculate about things of which it does not currently have personal
knowledge. Subject to their proper objections, the Defendants identified the
services provided under Pardee BlueMD currently and as actually planned
in the future. [Doc. 54-3 at 4]. No further supplementation is required.
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E. Withholding of Confidential Information
Next, the Plaintiffs argue that the Defendants’ objections to the
production of “confidential information” in response to Interrogatories 7-13
should be deemed improper and that the Defendants should be compelled
to answer. [Doc. 41-1 at 16-17].
While the Defendants objected that certain interrogatories sought
confidential information, the Defendants nevertheless produced responsive
documents subject to the Protective Order previously entered in this case.
[See Doc. 54-3 at 6]. The Defendants represent that they have not withheld
information based on this objection. The Plaintiffs have presented no
evidence to the contrary. Thus, the Plaintiffs’ Motion to Compel is without
merit.
F. Misuse of Rule 33(d)
Finally, the Plaintiffs contend that the Defendants should be required
to answer Interrogatory Nos. 5, 7, 9, 11, 12, 13, and 14 fully in writing in lieu
of producing business records because “the documents provided are lacking
and do not provide an adequate answer that can be derived or ascertained
nor is it easily discernable for Plaintiffs to determine the answer readily.”
[Doc. 41-1 at 17].
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Under Rule 33(d), a party can identify documents that are responsive
to an interrogatory if “the answer to an interrogatory may be determined by
examining, auditing, compiling, abstracting, or summarizing a party’s
business records..., and if the burden of deriving or ascertaining the answer
will be substantially the same for either party.” Fed. R. Civ. P. 33(d).
Here, the Defendants represent that Pardee Hospital has provided the
Plaintiffs with documents containing all the financial records for its
Pardee BlueMD primary care physician network. Pardee Hospital also
has produced charts that summarize the data contained in the financial
records, including categories of information such as Gross Revenue,
Net Patient Services Revenue, Net Operating Revenue, Operating
Expenses, and Operating Margin. While the Plaintiffs complain that
these documents are “lacking,” they do not explain or argue why they
cannot identify or derive the relevant information within the referenced
documents that have been produced as responsive to the request.
Should the Plaintiffs require further explanation of these documents,
they have been free to depose Pardee Hospital’s corporate
representative about such matters. The Plaintiffs, however, have failed
to articulate why the produced records are not sufficient.
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IV. CONCLUSION
In sum, the Plaintiffs’ Motion to Compel is denied. As all pretrial
deadlines have been stayed pending the resolution of this motion, the Court
will lift that stay and reset the relevant deadlines accordingly.
O R D E R
IT IS, THEREFORE, ORDERED that the Plaintiffs’ Motion to Compel
[Doc. 41] is DENIED.
IT IS FURTHER ORDERED that the deadlines set forth in the Pretrial
Order and Case Management Plan [Doc. 18, as amended by Docs. 25 and
34] previously entered in this matter are hereby extended as follows:
Discovery: January 3, 2025
Mediation: January 17, 2025
Motions Deadline: January 31, 2025
Trial Date: 1st Mixed Term on or after May 12, 2025
IT IS SO ORDERED.
Signed: November 11, 2024
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