The opinion
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE OUTPATIENT MEDICAL )
CENTER EMPLOYEE ANTITRUST ) No. 21 CV 305
LITIGATION, )
) Magistrate Judge Young B. Kim
)
) September 13, 2024
)
MEMORANDUM OPINION and ORDER
Plaintiffs Scott Keech and Allen Spradling, former senior employees of
Defendants Surgical Care Affiliates, LLC and SCAI Holdings, LLC (together,
“SCA”), bring this antitrust action alleging violation of Section 1 of the Sherman
Act, 15 U.S. § 1. The Second Consolidated Amended Class Action Complaint
(“Complaint”) alleges that SCA, along with Defendants DaVita Inc. (“DaVita”),
United Surgical Partners International, Inc. and United Surgical Partners Holding
Company, Inc. (together, “USPI”), and other ambulatory surgery centers and
outpatient medical centers, conspired to reduce and limit compensation and mobility
of their employees.1 Before the court is Plaintiffs’ motion to compel SCA to perform
supplemental searches for ESI, particularly for documents relating to exchanges of
wage information between SCA and USPI. For the following reasons, Plaintiffs’
motion is granted in part and denied in part:
1 This court adopts the case description included in the court’s opinion entered on
June 26, 2023. (See R. 292, June 26, 2023 Mem. Op. and Order at 1.)
Background
Plaintiffs filed a previous motion to compel on March 24, 2023, relating to
their second set of requests for production of documents (“Requests”) to SCA.
(R. 218, Pls.’ Mot. to Compel.) Those Requests sought eight categories of
documents, including documents pertaining to “(1) wage-fixing; [and] (2) the
exchange of employment-related business information between SCA and other
Defendants.” (R. 292, June 26, 2023 Mem. Op. and Order at 2.) SCA argued that
the requested documents are not relevant because Plaintiffs’ claims relate to alleged
market allocation agreements, not wage-fixing. (Id. at 3.) But the court disagreed,
finding that the Complaint “explicitly alleges that ‘Defendants directly and through
their agents, engaged in activities to limit competition and fix, raise, maintain,
and/or stabilize the competition and terms of employment of their employees,” and
that this “conspiracy included concerted action and undertakings with the purpose
and effect of . . . fixing Plaintiffs’ and the Class’s compensation at artificially low
levels.”2 (Id. at 4 (emphasis in Mem. Op. and Order).) Accordingly, the court
granted Plaintiffs’ motion to compel and ordered SCA to produce the requested
documents in response to Request Nos. 4-8, 10, 13, and 54. (Id. at 3-6 & n.1.) The
court found that the appropriate start date for this discovery, including ESI
searches, is May 1, 2008. (Id. at 12.)
2 Although the opinion referred to the prior version of the complaint, the court’s
reasoning stands because the Complaint, which was filed shortly before that opinion
issued, includes the same pertinent allegations. (Compare R. 57, Consol. Amended
Class Action Compl. ¶¶ 9, 16, 115 with R. 280, 2d Consol. Amended Class Action
Compl. ¶¶ 9, 16, 115.)
SCA thereafter performed a series of searches relating to wage information-
sharing practices, including using the search term “Wage w/5 (increase* OR
budget).” (R. 433, SCA’s Opp. Br. at 5; see also R. 419-1, William Castillo Guardado
Decl. ¶ 4 (declaring that SCA was ordered “to run the search term ‘Wage w/5
(increase* OR budget)’”).) SCA represents that this search generated 2,706 hits.
(R. 433, SCA’s Opp. Br. at 5.) But Plaintiffs say SCA failed to produce responsive
documents or companion records that should have been captured in that search,
including two email threads USPI produced discussing the sharing of wage-increase
information with SCA (“USPI Wage-Exchange Documents”).3 (R. 418, Pls.’ Mot. at
5-8.)
The first USPI Wage-Exchange Document is an August 9, 2013 email thread
between SCA’s then-Vice President of Strategy, Brian Mathis, and USPI’s then-
CFO, Jason Cagle, discussing the following:
Mathis: Jason, [o]ne of the things we have shared in the past is plans
for the following year wage increases. Have you all . . . set a number
yet that you’re planning to budget? Thanks, Brian
Cagle: Hey, Brian. Not yet, but probably will nail down the second
half of August. We’ll remember to share with you when we do.
3 USPI initially designated the USPI Wage-Exchange Documents as “confidential”
in this matter and, as such, Plaintiffs and SCA filed this information in the motion,
response, and exhibits pertaining to those Documents under seal. (See R. 419, Pls.’
Mot. (sealed version); R. 419-1, William Castillo Guardado Decl.; R. 419-2 & R. 419-
3 (sealed exhibits containing the USPI Wage-Exchange Documents); R. 434, SCA’s
Opp. Br. (sealed version); R. 434-1 (sealed exhibit referring to the USPI
Wage-Exchange Documents) (collectively, “Sealed Materials”).) After the court
ordered the parties to explain the confidentiality designation for the Sealed
Materials, (R. 462), USPI and SCA agreed to de-designate them, (R. 482). The court
has since unsealed the materials.
(R. 419-2, USPI Wage-Exchange Document (USPI_CIV_000016100).) Mathis copied
Peter Clemens, SCA’s then-CFO, and Lynn Howard, SCA’s then-Vice President of
Human Resources, on his email. (Id.) Cagle also added James Walker and Tony
Martin (presumably both USPI employees) as recipients on his response. (Id.)
The second USPI Wage-Exchange Document involves the following discussion
between Mathis and Cagle on August 19 and August 20, 2014:
Mathis: Jason, [a]re you all willing to swap wage increase budgets as
we have in the past? Best, Brian
Cagle: Sure. We’re just heading into budgets. When were you hoping
to see it? I may be a few weeks out.
Mathis: That works, whenever you’re ready. Thanks, Brian
(R. 419-3, USPI Wage-Exchange Document (USPI_CIV_000021155).) The court
finds these exchanges to be significant and incriminating, at least on the surface.
SCA responds that in addition to producing 890,233 documents in this case, it
“performed a reasonable search” for wage-fixing and exchange-of-business
information but the search did not hit on the USPI Wage-Exchange Documents,
likely because those documents pre-date SCA’s “preservation obligation in this
matter and . . . are no longer within SCA’s possession, custody, or control.” (R. 433,
SCA’s Opp. Br. at 4.) For support SCA cited to its “ordinary course retention
policies,” which it described as providing a “short retention period for email not
otherwise archived by the user,” but did not attach any policies to its response. (Id.
at 4, 6-7 (indicating SCA “long ago” produced its retention policies to Plaintiffs and
“the details” of those policies “are not in dispute”); see also id. at 6-7 (referring to
SCA’s “normal course” and “normal operation of its” retention policies).)
Plaintiffs now move to compel SCA to supplement its ESI searches, using
three new search terms across two new and three previously designated custodians.
(R. 418, Pls.’ Mot. at 12-16.) They also ask the court to compel SCA to perform
targeted queries and search its backup files for the USPI Wage-Exchange
Documents and companion records. (Id. at 17.)
Analysis
Plaintiffs argue that the USPI Wage-Exchange Documents relate to “some of
the most highly relevant evidence that can be found in antitrust conspiracy cases:
evidence of wage-fixing, including [D]efendants’ exchanges of non-public
information with one another, and the communications between [them] discussing
or exchanging such information.” (R. 418, Pls.’ Mot. at 5.) USPI produced the USPI
Wage-Exchange Documents in this matter, but SCA did not—even though SCA
employees in part authored and received the same documents. (Id.) As a result,
Plaintiffs ask the court to compel SCA to search for and produce such documents.
Specifically, Plaintiffs seek an order compelling SCA to: (1) use a “limited set” of
three additional search terms, which Plaintiffs contend are “narrowly tailored” to
discover the USPI Wage-Exchange Documents in SCA’s possession, custody, or
control, along with companion records; (2) run the new search terms for two new
custodians and three previously designated custodians; (3) perform targeted
searches for the USPI Wage-Exchange Documents; and (4) search SCA’s backup
files for the same. (Id. at 12-18.)
SCA responds that it completed the search it was required to perform under
the court’s previous discovery ruling, (see R. 292, June 26, 2023 Mem. Op. and
Order), and produced nearly 900,000 documents to Plaintiffs, (R. 433, SCA’s Opp.
Br. at 4). SCA claims that the documents Plaintiffs seek “were not produced by
SCA for the simple reason that they are not in SCA’s possession, custody, or control,
likely due to the normal application of SCA’s retention policies.” (Id.) In any event,
SCA argues that Plaintiffs’ supplemental requests are “unreasonably cumulative,
duplicative, and burdensome.” (Id. at 12.)
“The purpose of discovery is to refine the case and to prepare it for trial based
on a full understanding of the relevant facts.” Life Plans, Inc. v. Sec. Life of Denver
Ins. Co., 800 F.3d 343, 358 (7th Cir. 2015). Federal Rule of Civil Procedure 26(b)
governs the scope of discovery and provides that the “[p]arties 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.” Discovery is designed to help “define and
clarify the issues,” and as such, “relevance is to be construed broadly.” Doe v.
Loyola Univ. Chi., No. 18 CV 7335, 2020 WL 406771, at *2 (N.D. Ill. Jan. 24, 2020)
(internal quotations omitted). When assessing proportionality, the court may
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. 26(b)(1); see also Sols. Team v. Oak St. Health, MSO, LLC, No. 17 CV 1879,
2021 WL 3022324, at *2 (N.D. Ill. July 16, 2021). Once the moving party has
demonstrated that the requested discovery is relevant, “the party resisting
production has the burden of showing why the request is improper.” Hum. Rts. Def.
Ctr. v. Jeffreys, No. 18 CV 1136, 2022 WL 4386666, at *2 (N.D. Ill. Sept. 22, 2022).
A court has “inherent authority” with respect to discovery and otherwise “to manage
judicial proceedings and to regulate the conduct of those appearing before it.”
Ramirez v. T&H Lemont, Inc., 845 F.3d 772, 776 (7th Cir. 2016).
Here, SCA does not dispute that the USPI Wage-Exchange Documents and
companion records are relevant to Plaintiffs’ claims in this case. (R. 418, Pls.’ Mot.
at 8.) Nor could it, as the court previously determined that such information is
relevant to Plaintiffs’ claims as discussed. (See R. 292, June 26, 2023 Mem. Op. and
Order at 4.) The key inquiry thus turns on whether SCA, as the opposing party, has
satisfied its burden of showing that the supplemental searches Plaintiffs seek are
improper. See Hum. Rts. Def. Ctr., 2022 WL 4386666, at *2.
A. New Search Terms
The motion is granted. Plaintiffs assert that the three new search terms they
propose are “narrowly tailored” to discover “exchanges of wage information between
SCA and USPI” and related documents. (R. 418, Pls.’ Mot. to Compel at 12-13.)
The court agrees. Although SCA has already run searches using the term “Wage
w/5 (increase* OR budget),” as ordered by the court, (see R. 433, SCA’s Opp. Br. at
5; R. 419-1, William Castillo Guardado Decl. ¶ 4), that search term combination did
not yield hits from SCA relating to the USPI Wage-Exchange Documents. As a
result and with the aim to discover similar documents from SCA relating to wage-
sharing communications with USPI, Plaintiffs propose broadening the terms as
follows: (1) “Wage* /20 (increas* OR budget*)”; (2) “(Wage* or info* or data) /20
(shar* OR swap* OR exchang*)”; and (3) “Wage* AND (USPI OR ‘United Surgical
Partners International’).” (R. 418, Pls.’ Mot. at 13.)
SCA says it has already “produced thousands of documents that hit on”
search terms relating to the exchange of compensation data, wage increases or
budgets, base pay or compensation, and the like—and does not have the documents
Plaintiffs seek. (R. 433, SCA’s Opp. Br. at 5-6.) Nonetheless, SCA provided hit
counts for the newly proposed terms for the three previously designated custodians.
(Id. at 13.) Searches of these custodians’ files for Term One yielded 648 hits, Term
Two yielded 22,458 hits, and Term Three yielded 0 hits for the three custodians.
(Id.) Based on the “experience” of its counsel, SCA estimates it will take 462 hours
of attorney time to review those documents, at a significant cost to SCA.4 (Id.) SCA
further complains that the additional search terms themselves are unnecessarily
“expansive” given that the original term used—“Wage w/5 (increase* OR budget)”—
would have hit on the USPI Wage-Exchange Documents. (Id. at 13-14.) As such,
SCA contends that Plaintiffs’ request fails the proportionality requirement in
Rule 26(b)(1) because “[a]ny potential benefit of running these new search terms is
minimal and far outweighed by the expense and burden of performing these
reviews.” (Id. at 14-15.)
4 This estimate does not include attorney time to review the files of the two new
custodians identified, although SCA represents that it no longer “possesses” the
files for one of those custodians. (R. 433, SCA’s Opp. Br. at 4.)
Applying the Rule 26(b)(1) factors, the court finds that Plaintiffs’ newly
proposed search terms seek relevant information and satisfy the proportionality
requirement. As the court has already ruled, the documents Plaintiffs seek relate to
evidence of wage-fixing, which is relevant and important to the resolution of
Plaintiffs’ claims. (See generally R. 292, June 26, 2023 Mem. Op. and Order.) That
Plaintiffs did not discover the USPI Wage-Exchange Documents in SCA’s
production highlights the need for supplemental discovery. Rule 26(b)(1) factors
such as “the importance of the issues at stake in the action, the amount in
controversy, [and] the importance of the discovery in resolving the issues” thus
weigh in favor of compelling the supplemental searches.
At the same time, the court appreciates SCA’s argument as to undue burden.
The parties have already proceeded with an ESI protocol, (see R. 307 (noting that
the court entered an ESI protocol in 2021)), and tweaking search terms now will
increase SCA’s discovery expenses, (see R 433, SCA’s Opp. Br. at 13). Nevertheless,
the supplemental discovery Plaintiffs seek here is appropriate given the discovery of
the USPI Wage-Exchange Documents, their significance to the claims in this case,
and SCA can minimize its burden of reviewing newly identified documents by
relying on technology assisted review and Federal Rule of Evidence 502(d). Indeed,
the parties stipulated to, and the court entered, an Order stating that the disclosure
of “Identified Materials” does not constitute “a waiver of the privilege in any other
federal or state proceeding.” (R. 52-2, Stipulated Order Regarding Production of
ESI and Hard Copy Documents); see also Carmody v. Bd. of Tr. of Univ. of Ill., 893
F.3d 397, 404 (7th Cir. 2018) (explaining that Fed. R. Evid. 502(b) “governs
inadvertent disclosures of privileged communications or information in federal
proceedings” and “provides that disclosure does not waive the privilege” if it was
inadvertent and reasonable measures were taken to prevent disclosure and to
rectify the error). Given this Stipulated Order and the search for a specific type of
email exchanges, SCA does not explain why an “attorney” must review each
document. Accordingly, the court finds that SCA has not satisfied its burden of
showing that Plaintiffs’ requested searches are improper. See Cnty. of Cook v. Bank
of Am. Corp., No. 14 CV 2280, 2019 WL 6309925, at *1 (N. D. Ill. Nov. 25, 2019) (“At
the same time, a ‘party claiming undue burden or expense ordinarily has far better
information—perhaps the only information—with respect to that part of the
determination.’” quoting Fed. R. Civ. P. 26(b)(1) Advisory Committee Notes (2015
Amendment)).
B. Custodians
The motion is granted, except as noted below with respect to Howard’s
custodial files. Plaintiffs ask the court to compel SCA to run the new search terms
on the files of five SCA custodians: (1) Mathis; (2) Clemens; (3) Howard; (4) Tom
deWeerdt, SCA’s Executive Vice President and CFO from 2015 to 2017; and
(5) Leslie Wachsman, SCA’s Vice President of Finance and Investor Relations from
2012 to 2018 and current CFO. (R. 418, Pls.’ Mot. at 14-15.) Mathis, Clemens, and
Wachsman’s files have already been searched under the ESI protocol previously
entered. (Id. at 15.) Although SCA objects to the new searches of these files as
“unreasonably cumulative and duplicative”—and to Wachman’s files as
“unreasonably tardy,” (R. 433, SCA’s Opp. Br. at 15), the court overrules these
objections. Mathis’s and Clemens’s names appear in the USPI Wage-Exchange
Documents, (R. 419-2; R. 419-3), and Wachsman reported to Clemens and was
copied on “exchanges of confidential business information with USPI in 2013 and
2014.” (R. 418, Pls.’ Mot. at 15.) Plaintiffs’ discovery of this information shows the
need for supplemental searches of these three custodians’ files.
The court also overrules SCA’s objections to deWeerdt and Howard being
designated custodians. Howard’s name appears in one of the USPI Wage-Exchange
Documents, (R. 419-2), demonstrating a reasonable likelihood that her files may
contain additional relevant information. And deWeerdt replaced Clemens as SCA’s
CFO in 2015, before Wachsman became CFO in 2017. (R. 418, Pls.’ Mot. at 15.)
Because both Clemens and Wachsman were recipients of the USPI Wage-Exchange
Documents, (id. at 14-15), and deWeerdt served in the same position at SCA,
Plaintiffs have demonstrated a need to collect documents from him as well. That
said, SCA represents that it “no longer possesses [Howard’s] custodial files.”
(R. 433, SCA’s Opp. Br. at 4.) Pending confirmation from SCA that it does not have
possession, custody, or control of Howard’s custodial files, the court cannot order
SCA to search for and produce documents it does not have. As such, SCA may
formally respond to Plaintiffs that it no longer has Howard’s files if that indeed is
the case.
C. Targeted Searches
The motion is denied. Plaintiffs request “additional targeted searches” for
specific documents, without explaining what those documents are or the topics to
which they relate. (R. 418, Pls. Mot. at 17.) SCA says it has already performed
targeted searches for documents Plaintiffs identified, and the motion therefore
should be denied as to this request. The court agrees. Simply put, the court cannot
order SCA to search for and produce documents that have not been identified with
any level of specificity. However, SCA is precluded from offering documents as
evidence if it does not timely supplement its discovery as required under Rule 26(e).
D. Backup Files
The motion is denied. The court cannot compel SCA to run a search it cannot
perform. Plaintiffs contend that SCA has never searched its backup files for the
USPI Wage-Exchange Documents and companion records. (R. 418, Pls.’ Mot. at 16-
18.) SCA says that it does not have possession, custody, or control of backup files
because backup files for emails do not exist. (R. 433, SCA’s Opp. Br. at 16.) As
such, SCA may formally respond to Plaintiffs that SCA does not have backup files
for emails.
Conclusion
For the foregoing reasons, the motion is granted in part and denied in part.
ENTER:
te rw 4 b ssonsmt
foy ng B. cj im.
hited States Magistrate Judge
12