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New Jersey Physicians United Reciprocal Exchange v. Boynton & Boynton, Inc.

United States District Court, D. New Jersey

August 23, 2017

NEW JERSEY PHYSICIANS UNITED RECIPROCAL EXCHANGE Plaintiff,
v.
BOYNTON & BOYNTON, INC., Defendants.

          MEMORANDUM OPINION

          HONORABLE TONIANNE J. BONGIOVANNI UNITED STATES MAGISTRATE JUDGE

         This matter comes before the Court upon Boynton & Boynton, Inc. (“Boynton”) and Kevin Byrne's (“Byrne”) (collectively, the “Boynton Defendants”) motion to strike New Jersey Physicians United Reciprocal Exchange's (“NJPURE”) economic expert reports. [Docket Entry No. 124]. NJPURE opposes the Boynton Defendants' motion. The Court has reviewed all arguments raised in support of and in opposition to the Boynton Defendants' motion and considers same without oral argument pursuant to L.Civ.R. 78.1(b). For the reasons set forth more fully below, Princeton's motion to strike is GRANTED in part.

         I. Background and Procedural History

         NJPURE is a not-for-profit reciprocal interinsurance exchange which provides medical malpractice insurance to physicians and other potential policyholders. (Second Amended Complaint (“SAC”) ¶1; Docket Entry No. 26). Boynton is an insurance agency in the business of selling medical malpractice insurance. (Id. ¶ 2; Answer to SAC ¶ 2, Docket Entry No. 44). Byrne is a licensed agent of Boynton. (Id. ¶ 3; Answer to SAC ¶ 3).

         NJPURE filed suit against the Boynton Defendants on September 7, 2012. Since then, it has twice amended its Complaint. Through its Second Amended Complaint, NJPURE claims that the Boynton Defendants have and continue to make false or misleading written and oral statements to the public about NJPURE's business operations and insurance services. As examples of the Boynton Defendants' false or misleading statements, NJPURE relies on email exchanges between Byrne and two specifically identified prospective clients of NJPURE, as well as on “Marketplace Updates” issued by the Boynton Defendants to NJPURE's prospective clients. NJPURE alleges that the “Marketplace Updates” offer misleading or false comparisons between its financials and those of its for-profit competitors served by the Boynton Defendants. (Id. ¶ 24). Given the Boynton Defendants' alleged scheme to disseminate libelous and slanderous information about NJPURE to the public via email and other media, NJPURE has asserted claims against Boynton and Byrne for violations of the Lanham Act, Section 43, 15 U.S.C. § 1125(a) (Unfair Competition), as well as New Jersey common law claims for libel, libel per se, slander, slander per se, trade libel and tortious interference with prospective contractual relationships. (Id. ¶¶ 5-7; 92-139).[1]

         Shortly before NJPURE filed its SAC in this matter, on April 10, 2013, it filed suit against The Medical Protective Company, Inc. d/b/a Princeton Insurance Company's (“Princeton”). (See Civil Action No. 13-2286). In that case, NJPURE claims that Princeton has and continues to make false or misleading written and oral statements to the public about NJPURE's business operations and insurance services.[2] The only false or misleading statements referenced in the Complaint are Princeton's annual “Marketplace Updates, ” which NJPURE refers to as the “False Comparative Advertisements.” (Compl. ¶ 28 in Civil Action No. 13-2286). NJPURE alleges that the “Marketplace Updates” offer misleading or false comparisons between its financials and those of its for-profit competitors, such as Princeton. (Id. ¶ 30). Based on Princeton's distribution of the “Marketplace Updates, ” NJPURE has asserted a claim against Princeton for violations of the Lanham Act, Section 43, 15 U.S.C. § 1125(a) (Unfair Competition) as well as New Jersey common law claims for libel, libel per se, trade libel and tortious interference with prospective contractual relationships. (Id. ¶¶ 4-6; 72-108).[3]

         While NJPURE sought to consolidate the matters it separately filed against the Boynton Defendants and Princeton, the District Court determined that it would not be appropriate, at least at that juncture, to consolidate both cases for trial purposes. In reaching this conclusion, the District Court found:

[W]hile both cases involve allegations of the “Market Updates, ” the Boynton Action clearly contains unrelated claims and allegations based on false written and oral statements made by the Boynton Defendants to customers in an effort to s[ell] malpractice insurance policies that are not present in the Princeton Action. These additional factual and legal issues predominate the Boynton Action, and significantly, they are irrelevant to the Princeton Action; as such, it would not be appropriate to try these cases at the same time.

(Letter Order of 3/23/2015 at 2; Docket Entry No. 75).[4] Nevertheless, given the overlap between the two cases, “both actions concern allegations of Princeton's false advertisement campaign and how those false publications affected NJPURE[, ]” the District Court consolidated the matters for discovery purposes. (Id.) Since that time, discovery in the two cases has proceeded along the same schedule and the Court's discovery orders have been simultaneously entered in both cases. Three such orders are primarily relevant to the Boynton Defendants' pending motion to strike.[5]

         First, on October 19, 2015, the Court entered a Letter Order addressing the damages related discovery NJPURE was to produce:

With respect to Princeton's request for discovery concerning NJPURE's damages, the Court agrees that the time has come for NJPURE to identify, with some specificity, what its damages are. Rule 26(a)(1)(A)(iii) requires a party to provide “a computation of each category of damages claimed by the disclosing party - who must also make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based, including materials bearing on the nature and extent of injuries suffered[.]” While the precise amount of damages allegedly suffered by NJPURE may be determined at trial, NJPURE is obligated to produce damages related discovery. As a result, to the extent it has not done so, NJPURE is directed to supplement its Initial Disclosures regarding damages as well as its responses to Princeton's damages related discovery requests, such as RPDs # 31 & 44, and Interrogatory # 13. NJPURE must complete this supplementation no later than October 30, 2015.

(Letter Order of 10/19/2015 at 2; Docket Entry No. 93).

         Second on December 10, 2015, in response to a dispute raised by Princeton regarding the sufficiency of the damages related discovery produced by NJPURE, the Court entered a Letter Order finding:

The Court is underwhelmed by NJPURE's response / production regarding damages. It is clear that at this juncture that its claim of damages is speculative. While the Court appreciates that precision with respect to damages may come via expert discovery and that a damages calculation may evolve over time and become fine-tuned by the time of trial, at this instant, to speak colloquially, N.J. Pure appears to have nothing. Indeed, NJPURE's supplementation of its Initial Disclosures with respect to damages stated in total:
Plaintiff has asserted in Counts Four and six of the Second Amended Complaint claims of Libel per se and Slander per se for which damages are presumed as a matter of law. See d.g, MacKay v. CSK Publ. Co., Inc., 300 N.J.Super. 599 (App. Div. 1997). Plaintiff seeks all such presumed damages against defendants in this matter.
In addition to the foregoing, plaintiff seeks all damages pursuant to the Lanham Act, 15 U.S.C. § 1051, et seq., including but not limited to plaintiff's lost profits, the profits of defendants attributable to the actionable conduct, and corrective advertising expenses. Plaintiff's investigation into the full scope of damages is ongoing and continuing. To date, plaintiff has identified the following insureds/potential insureds whose business was lost in substantial part due to defendants' wrongful conduct as described in the complaint and discovery exchanged: Dr. Mary Anne Fury; Dr. Babak Behin; Dr. Ghassan Khani; Dr. Marc Levine; Dr. Joshua Wolpert; Dr. Mark Ditmar; Dr. Pavlinka Dundeva-Baleva; Dr. Aravinda Reddy; Dr. Sandra Ann Mead; Dr. Babatunji Omotoso; Dr. Mansoora Chaudry; Dr. Mainish Saini; Dr. Julie Lorber; Dr. Fauzia Hameed; Dr. Patricia Graham; Dr. James Schlesinger; Dr. Eugene Jerome Lind; Dr. Phillip Paparone; Dr. Lisa Simone Vernon, Pulmonary & Allergy Associates, P.A. and University Radiology Group.
Plaintiff believes that the amount of monetary damages caused by the defendants' wrongful conduct as described in the complaint and discovery to be in excess of $2, 000, 000. Plaintiff has not yet retained expert witnesses with regard to the exact quantum of damages.
Plaintiff reserves the right to amend and/or supplement the foregoing responses as discovery continues in this matter.

(Letter from Manuel J. Almeida, Jr. to James M. Nardelli of 10/30/2015).

NJPURE's cases have been collectively pending for over 2½ years. They need to move. Any information NJPURE seeks to rely upon either directly or through an expert for the purposes of establishing damages that is in NJPURE's possession, custody or control needs to be produced NOW. If it is not, and the Court determines that it should have been, then NJPURE shall be precluded from later relying on it to establish its damages claim. In other words, if nothing else is produced/identified, the Court shall presume that NJPURE's current production of facts/documents/information is complete and NJPURE shall be limited to same. While the Court appreciates that depositions can be used to elucidate the parties' positions, they are not a substitute for adequate paper discovery.
Under these circumstances, the Court finds that the March 1, 2016 end date for fact discovery remains sufficient. The parties should be able to take the 7 depositions they previously anticipated and had scheduled as well as any additional depositions in that time period. NJPURE shall produce its expert report(s) by April 15, 2015. NJPURE is reminded that all facts or data considered by its expert in forming his opinions must be disclosed with its expert report(s). See Fed.R.Civ.P. 26(a)(2)(B)(ii). If, after reviewing NJPURE's expert report(s), Princeton believes that information considered by the expert was not timely produced, Princeton may seek to preclude the District Court's consideration of all or a portion of the report(s).

(Letter order of 12/10/2015 at 2-4; Docket Entry No. 104).

         Third, on May 4, 2016, in response to a dispute raised by the Boynton Defendants regarding damages related discovery served by NJPURE on February 8, 2016, the Court entered a Letter Order holding:

[T]hese requests were made out of time. It should come as no surprise to any party that for the past six months, the Court has been vigorously pushing the parties to complete fact discovery. In this regard, the Court issued two Letter Orders regarding the need for damages related discovery to be produced immediately. (See Letter Orders of 10/19/2015 and 12/10/2015; Docket Entry Nos. 97 & 102 in Civil Action No. 12-5610). While both Letter Orders were directed to NJPURE's production of information, the tenor of said Orders made it clear that the time had come for all fact discovery, including damages discovery, to be completed. Indeed, in the Court's Letter Order entered on December 10, 2015, the Court specifically held that the March 1, 2016 end date for fact discovery remained sufficient, refusing to extend same. (Docket Entry No. 102 at 3).
The importance of completing all fact discovery, including damages related discovery, by March 1, 2016 was to give the parties, particularly NJPURE and its expert, sufficient time to digest the materials produced and serve their expert reports in a timely fashion. NJPURE's expert report was due on April 29, 2016. The Court was not anticipating information being produced after March 1, 2016 because such a production would likely interfere with the expert discovery schedule set in this case.
NJPURE's discovery requests served on February 8, 2016 do not comply with the Court's December 10, 2015 Letter Order. Parties have 30 days to respond to discovery demands. See Fed.R.Civ.P. (“Rule”) 33(b)(2); 34(a)(2)(A). No shorter time was set by the Court. To have been timely, NJPURE's requests should have been made by the end of January at the latest. While under other circumstances, the Court may have excused the delay, the Court is unpersuaded that under the circumstances of this case, where since the Fall of 2015 the Court had been hounding NJPURE to identify the information it intended to rely upon to establish its damages, there is good cause to adjust the deadline and require the Boynton Defendants to respond to NJPURE's discovery demands.[]There is simply no conceivable reason why NJPURE waited until February 8, 2016 to request this additional information from the Boynton Defendants. If NJPURE believed further discovery was necessary, it should have requested same sooner.

(Letter Order of 5/4/2017 at 2-3; Docket Entry No. 107).

         On April 29, 2015, NJPURE served the Boynton Defendants with Mr. Michael Soudry's preliminary analysis report, which addressed NJPURE's alleged damages. On May 20, 2016, NJPURE served the Boynton Defendants with a supplemental report on damages. Upon receipt and review of same, the Boynton Defendants wrote the Court asking that both Mr. Soudry's preliminary analysis report and supplemental report (collectively, the “Soudry Reports”) be stricken because in same, in contravention of the Court's Orders, Mr. Soudry relied on documents and information never produced by NJPURE during discovery and because the information Mr. Soudry relied on to perform his Lanham Act damages calculation is vague, speculative, confusing and unsupported. (Letter from Jason T. LaRocco to Hon. Tonianne J. Bongiovanni of 6/13/2016). After receiving additional informal letter briefing on the Boynton Defendants' request to strike the Soudry Reports, the Court determined that in light of the significance of the issues raised, “not only in terms of the numbers of issues raised, but also based on the impact a decision regarding those issues could have on NJPURE[, ]” the question of whether the Soudry Reports should be stricken “should be the subject of formal motion practice.” (Letter Order of 7/11/2016 at 9; Docket Entry No. 123). As a result, the Boynton Defendants filed the instant motion to strike in accordance with the briefing scheduled outlined in the Court's July 11, 2016 Letter Order. (Id. at 10).

         II. The Parties Arguments

         A. The Boynton Defendants' Arguments

         The Boynton Defendants argue that the Soudry Reports should be stricken under Fed.R.Civ.P. (“Rule”) 37(b)(2)(A)(ii) because they rely on documents and information never produced in discovery, despite this Court's Orders requiring all damages related discovery to be produced. In addition, the Boynton Defendants argue that the portion of the Soudry Reports dedicated to NJPURE's Lanham Act damages must also be stricken as speculative because it estimates the commissions earned by Boynton.

         With respect to the documents and information NJPURE failed to produce, the Boynton Defendants focus on the following pieces of information: (1) an email from NJPURE to a physician group known as University Radiology Group (“URG”) that disclosed a May 18, 2012 rate indication; (2) a document titled “View Activity Report” for Dr. Edred Shen; and (3) NJPURE's “policy retention rates” and “group retention rates” for 2004-2014. The Boynton Defendants argue that NJPURE failed to produce any of this information during open fact discovery and relies on all of it to calculate its damages.

         With respect to the Lanham Act damages calculations included in the Soudry Reports, the Boynton Defendants argue that the damages set forth are entirely speculative because NJPURE is unable to identify a single document from the Boynton Defendants that details the actual commissions earned. On this point, the Boynton Defendants note that NJPURE's inability to do so stems from the fact that NJPURE failed to timely request any such information from the Boynton Defendants in discovery. Instead, NJPURE waited until February 8, 2016 to request damages related discovery from the Boynton Defendants despite the fact that fact discovery was set to close on March 1, 2016 and the Court had been pressing the parties to complete damages related discovery since October 2015. (See Boynton Def. Br. at 2). The Boynton Defendants note that the Court precluded the damages related ...


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