FS Medical Supplies, LLC v. TannerGAP, Inc. et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:21-cv-00501-RJC-WCM
FS MEDICAL SUPPLIES, LLC, )
)
Plaintiff, )
) 	ORDER
)
v. 	)
)
TANNERGAP, INC. and )
TANNER PHARMA UK LIMITED, )
)
Defendants. )
_____________________________________ )
This matter is before the Court on Motions to Compel that have been
filed in this action (“Tanner I”) and in FS Medical Supplies, LLC v. Tanner
Pharma UK Limited, Raymond Fairbanks Bourne, and Mary Everett
Whitehurst Bourne, No. 3:23-cv-00598-RJC-WCM (“Tanner II”). Tanner I, Doc.
134; Tanner II, Doc. 56.1
I. Background2
On January 3, 2024, FSMS filed the Motions to Compel. Tanner I, Doc.
134; Tanner II, Doc. 56. TannerGAP, Inc. and Tanner Pharma UK Limited
(collectively, “Tanner”) and Raymond Fairbanks Bourne (“Bourne”) and Mary
1 The Motions appear to be identical.
2 Additional background regarding Tanner I and Tanner II can be found in a separate
Memorandum and Recommendation that is being issued contemporaneously in
Tanner I.
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Everett Whitehurst Bourne a/k/a Molly Bourne (the “Bourne Defendants”)
have filed responses, and FSMS has replied. Tanner I, Docs. 138, 140; Tanner
II, 58, 61.
A hearing on the Motions to Compel was conducted on January 17, 2024,
following which the undersigned ruled orally on certain aspects of the Motions,
and took other issues under advisement. This Order now follows.
II. Discussion
A. Asset Tracing
FSMS seeks to obtain “more granular disclosures concerning the
whereabouts of the $200 million taken from TPUK,” Doc. 135 at 5, and
contends that a declaration submitted by Bourne indicates that the dividends
the Bourne Defendants received from TPUK are no longer separately
identifiable such that it is reasonable for FSMS to conduct asset tracing
discovery. See Tanner II, Doc. 30 (Bourne Declaration), ¶¶ 11, 13.
The undersigned is not persuaded that FSMS has made a sufficient
showing to support asset tracing discovery of the scope and to the extent FSMS
seeks at this stage of the case. The undersigned will, however, allow FSMS to
conduct some limited discovery regarding the initial transfers of the Dividend
Payments. Specifically, the Motions to Compel are GRANTED IN PART and
DENIED IN PART as follows: to the extent Tanner and the Bourne Defendants
have not already done so, they are DIRECTED to produce information and
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documents showing the receipt by the Bourne Defendants of the Dividend
Payments. The Bourne Defendants are also directed to provide information
and documents showing any subsequent transfers by the Bourne Defendants
of any portion of the Dividend Payments in an amount over $100,000.00.3
B. Business Prospects
FSMS requests that the Court “order Defendants to search for and
produce all documents concerning TPUK’s business prospects relating to any
year in the period 2020 through the present (i.e., 2024), including budgets,
business plans, projections, forecasts, models, and prospect lists, as well as
documents concerning the representations to the Court in Mr. Bracey’s
declaration.” Tanner I, Doc. 135 at 16.
As discussed during the January 17 hearing, and in light of Tanner’s
representation that its document production is underway, to the extent the
Motion to Compel seeks to compel Tanner to produce documents and
information regarding Tanner’s business prospects, the Motions are DENIED
WITHOUT PREJUDICE.
3 The Bourne Defendants are not, however, required to provide any further tracing of
the funds from the Dividend Payments at this time. That is, besides information
showing their receipt of the Dividend Payments, the Bourne Defendants are to
disclose any further initial transfers of $100,000.00 or more of the Dividend
Payments, but are not required to disclose any subsequent transfers of those funds.
This ruling is without prejudice to FSMS’s right to seek such documents and
information at a later time, if necessary.
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To the extent the Bourne Defendants have additional responsive
information and documents regarding Tanner’s Business prospects (that is,
responsive information and documents that are not being produced by Tanner),
the Motions are GRANTED, and the Bourne Defendants are DIRECTED to
produce such information and documents.
C. Risk of Liability Information
FSMS seeks to compel the production of documents reflecting
“Defendants’ understanding of TPUK’s risk of liability to FSMS…,” Bourne’s
decision to issue each dividend, the timing of TPUK’s 2021 financial statement,
and communications between persons involved in deciding to declare and pay
each dividend. Tanner I, Doc. 135 at 17.
The Motions to Compel are DENIED WITHOUT PREJUDICE with
respect to these documents.
D. ESI Collection
The parties’ submissions, as well as the arguments of counsel during the
January 17 hearing, indicate that many of the parties’ threshold discovery
disputes stem from disagreements regarding the timeframe for which
electronically stored information (“ESI”) should be collected from Tanner, and
the custodians from whom ESI should be gathered. Generally, FSMS advocates
for longer time frames and more custodians, while Defendants contend that
shorter time frames and a smaller group of custodians is appropriate.
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In order to provide guidance for the parties as they move forward with
discovery, and to ensure that the parties’ discovery efforts are proportional to
the needs of this case, the undersigned will impose certain limitations on the
initial gathering of ESI from Tanner. However, the undersigned expresses no
opinion regarding the relevance of materials that are beyond the limitations
agreed to by the parties or imposed by this Order, and this Order does not
constitute a finding that documents that are not captured during the initial
collection of ESI are not discoverable. The parties should work together
cooperatively as much as possible to revise collection timeframes, custodians,
and search terms (in addition to any other matters related to ESI protocols), if
necessary, as the case proceeds.
1. Timeframe
With respect to the initial collection of ESI, the undersigned finds that
one, consolidated timeframe is appropriate. Accordingly, the Motions to
Compel are GRANTED IN PART, and Defendants are instructed to collect ESI
from the period beginning May 1, 2020 (one month prior to the beginning of
the parties’ interactions) and ending on October 5, 2023 (the date of the filing
of FSMS’s Amended Complaint in Tanner II).
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2. Custodians
With respect to FSMS’s request that Chin Okeke, Kerry Tustain,
Catherine Williams, and Lorena Mora be added as additional custodians, the
Motions to Compel are DENIED WITHOUT PREJUDICE.
With respect to FSMS’s request that William Taylor and William Boddy
be added as additional custodians, the Motions to Compel are DENIED.
It is so ordered.
Signed: February 12, 2024
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