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[[COURTLISTENER_SUBOPINION {"id":"10260725","type":"100trialcourt","part":"other","author":null,"source_field":"html_with_citations"}]]
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, )
) MEMORANDUM AND
) RECOMMENDATION
v. )
)
TANNERGAP, INC. and )
TANNER PHARMA UK LIMITED, )
)
Defendants. )
_____________________________________ )
This matter is before the Court on Plaintiff’s Motion to Consolidate (the
“Motion to Consolidate,” Doc. 127) by which Plaintiff moves to consolidate this
action (“Tanner I”) with 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”). It is also before the undersigned
for the issuance of recommendations regarding various pretrial scheduling and
discovery matters.
I. Background
A. Tanner I, No. 3:21-cv-00501-RJC-WCM.
On September 23, 2021, FS Medical Supplies, LLC (“FSMS”) filed its
original complaint in the instant matter naming TannerGAP, Inc. (“GAP”) and
Tanner Pharma UK, Limited (“TPUK”) (collectively, “Tanner”) as defendants.
Doc. 1. Generally, FSMS asserts claims based on Tanner’s alleged breaches of
a Non-Circumvention Agreement and a Distribution Agreement related to the
sale of COVID-19 rapid tests.
On September 16, 2022, FSMS filed an Amended Complaint that added
Raymond Fairbanks Bourne (“Bourne”) and Stephen John Scalia (“Scalia”) as
defendants. See Doc. 58.1
On September 30, 2023, motions to dismiss filed by Tanner were granted
in part and motions to dismiss filed by Bourne and Scalia were granted. The
claims remaining in Tanner I are breach of the Distribution Agreement and
breach of the Non-Circumvention Agreement against Tanner. See Doc. 117 at
3, 16.
On October 31, 2023, the parties filed a Joint Certification of Initial
Attorneys’ Conference and Discovery Plan. Doc. 123.
On December 19, 2023, FSMS filed the Motion for Consolidation. Tanner
responded, and FSMS replied. Docs. 129, 136.
1 Bourne is the sole officer of GAP, the sole director of TPUK, and the owner of 75%
of the shares of TPUK. Tanner I, Doc. 58 at 3. Scalia is described as being the
“President of ‘Tanner Pharma Group’…” Id. FSMS alleges that Bourne and Scalia
“direct, control, and coordinate the activities of [Tanner] ….” Id. at 4.
B. Tanner II, No. 3:23-cv-00598-RJC-WCM
On September 20, 2023, FSMS filed its original complaint against
Bourne and Mary Everett Whitehurst Bourne a/k/a Molly Bourne (the “Bourne
Defendants”) and TPUK. Tanner II, Doc. 1.
On October 5, 2023, FSMS filed an Amended Complaint against these
same defendants. Doc. 33. Generally, FSMS alleges that Bourne fraudulently
conveyed TPUK’s assets to the Bourne Defendants thereby “stripping the
company of sufficient assets to pay FSMS.” Doc. 33 ¶ 1. More specifically,
FSMS contends that it learned, on March 31, 2023, that TPUK disbursed a
total of $96,700,000.00 to the Bourne Defendants beginning in January 2021,
and that it learned on September 29, 2023, that FSMS had disbursed another
$100,000,000.00 in dividends to the Bourne Defendants on March 8, 2022. See
Doc. 39 at 3.
FSMS also filed a Motion for Temporary Restraining Order and
Preliminary Injunction, which sought to stop the issuance of any future
dividends and to freeze dividends previously disbursed to the Bourne
Defendants. Doc. 5.
On October 16, 2023, FSMS’s request for injunctive relief was denied.
Doc. 39.
On November 15, 2023, the parties filed a Joint Certification of Initial
Attorneys’ Conference and Discovery Plan. Doc. 44. Therein, the parties again
outlined their positions for and against the consolidation of Tanner I and
Tanner II.
C. January 17, 2024 Proceedings
On January 17, 2024, the undersigned conducted a hearing on multiple
motions, as well as a combined initial pretrial conference in both Tanner I and
Tanner II.2
II. The Motion to Consolidate
As noted, by the Motion to Consolidate, FSMS asks that Tanner I and
Tanner II be consolidated. During the hearing on January 17, FSMS
acknowledged that some of the evidence in each case would be different, but it
nonetheless contends that trying both matters separately would result in the
duplication of testimony. Further, FSMS asserts that the question of how trial
will ultimately be conducted (including whether the issues in Tanner II are
bifurcated) is separate from whether these matters should be “generally”
consolidated at this time.
Tanner responds that while Tanner I is a breach of contract case, Tanner
II would involve different testimony regarding different timeframes;
specifically, evidence regarding the distributions from TPUK to the Bourne
Defendants. Tanner further asserts that consolidated discovery would be
2 Besides the Motion to Consolidate, the undersigned heard Motions to Compel filed
in Tanner I and Tanner II, as well as other motions related to sealing and page limits.
difficult to manage because of the different relevant time periods and claims.
Finally, Tanner agrees that coordination of discovery across both cases is
appropriate, but it contends that the trial in Tanner II should be set for a date
following the trial in Tanner I.3 The Bourne Defendants generally agree with
Tanner’s positions regarding consolidation.
Rule 42 of the Federal Rules of Civil Procedure provides that, “[i]f actions
before the court involve a common question of law or fact, the court may: (1)
join for hearing or trial any or all matters at issue in the actions; (2) consolidate
the actions; or (3) issue any other orders to avoid unnecessary cost or delay.”
Fed. R. Civ. P. 42(a). “The consolidation of actions is ordinarily within the
discretion of the trial court.” Pickens v. Hendricks, No. 1:21-cv-00030-MR,
2023
WL 316134
, at *3 (W.D.N.C. Jan. 19, 2023) (citing Mut. Life Ins. Co. v. Hillmon,
145 U.S. 285, 292
(1892)). “[P]roper application of Rule 42(a) requires the
district court to determine ‘whether the specific risks of prejudice and possible
confusion’ from consolidation [are] ‘overborne by the risk of inconsistent
adjudications ..., the burden on parties, witnesses, and available judicial
resources posed by multiple lawsuits, the length of time required to conclude
multiple suits as against a single one, and the relative expense to all concerned
of the single-trial, multiple-trial alternatives.’” Campbell v. Boston Scientific
3 The parties appear to be in agreement that a finding of no liability in Tanner I would
obviate the need for a trial in Tanner II.
Corp.,
882 F.3d 70, 74
(4th Cir. 2018) (quoting Arnold v. Eastern Air Lines,
Inc.,
681 F.2d 186, 193
(4th Cir. 1982), ,
712 F.2d 899
(4th Cir. 1983) (en banc)).
Here, the specific legal claims asserted in each case are not identical;
Tanner I involves contract claims against Tanner while Tanner II involves
claims relative to the alleged wrongful distribution of corporate dividends.
Nonetheless, there are many facts that will overlap; indeed, a copy of the
Amended Complaint in Tanner I is attached to the Amended Complaint in
Tanner II and is incorporated by reference in the Amended Complaint in
Tanner II. Doc. 33 at ¶ 15.
Further, in opposition to FSMS’s previous request for a temporary
restraining order, TPUK asserted that “FSMS’s claims in [Tanner II] arise out
of and depend on its claims in [Tanner I]”). Doc. 27 at 13.
Similarly, the Bourne Defendants asserted that:
There can be little doubt that the claim in [Tanner II]
involves the same parties, as TPUK and Mr. Bourne
were both named as defendants in [Tanner I] and in
[Tanner II]. There can also be little doubt that the
lawsuits arise out of the same series of transactions
when the complaint in [Tanner II] incorporates the
entire Amended Complaint in [Tanner I]. Indeed, all
of the acts complained of in [Tanner II] happened
before the First Amended Complaint in [Tanner I] was
filed.
Doc. 29 at 12 (internal citation omitted)
Additionally, consolidation may reduce the burdens on the parties, third
parties, and the Court of engaging in overseeing discovery. TPUK is a
defendant in both matters and, although Bourne is no longer a defendant in
Tanner I, he will likely be a witness in that case. See Tanner I, Doc. 137
(Bourne Defendants’ Rule 26(a)(1)(A) initial disclosures listing Bourne as an
individual who is believed to have discoverable information regarding, among
other things, “the breach of contract claim upon which this claim is
contingent”).
Finally, the undersigned is not persuaded that there would be a
significant risk of prejudice to any defendant if these two matters were
consolidated for discovery purposes.
Therefore, having reviewed the parties’ filings and considered the
arguments of counsel and applicable authorities, the undersigned will
recommend that these matters be consolidated for discovery purposes, and that
the Motion to Consolidate be granted in part accordingly.
The undersigned does not, however, recommend that Tanner I and
Tanner II be consolidated for trial at this time, as such a determination can be
made at a later date and upon a more complete record, including, for example,
information as to what claims, if any, have survived dispositive motions in each
case and are proceeding to trial.
III. Other Case Management Issues
The parties’ Certifications and Reports of Fed. R. Civ. P. 26(f)
Conferences and Discovery Plans (the “Reports”) raise additional issues that
were discussed during the January 17, 2024 initial pretrial conference. See
Tanner I, Doc. 123; Tanner II, Doc. 44.
A. Early Discovery
FSMS asserted in its portion of the Report filed in Tanner II that early
discovery regarding its fraudulent conveyance claim is appropriate. See
Tanner II, Doc. 44 at 3.
However, no motion for early discovery is currently pending in either
Tanner I or Tanner II and, during the January 17, 2024 conference, FSMS
agreed that this request was moot.
B. Procedure for Discovery Disputes
Relatedly, FSMS asks the Court to put into place an expedited procedure
to manage potential discovery disputes, including a procedure by which the
parties may submit short memoranda regarding disputes using a compressed
briefing schedule. See Tanner I, Doc. 123 at 20-21.
As discussed during the January 17 conference, the undersigned is
confident that the parties will endeavor to resolve any discovery disputes that
may arise without the need for court intervention, and that, if following those
efforts, a disputed discovery issue remains, such a dispute may be resolved
through motions practice in the ordinary course.4 At this juncture, though, it
is not apparent that an expedited procedure should be created for the purpose
of addressing discovery disputes that have not yet arisen (and might not arise).
C. Protective Orders and ESI Protocol
In Tanner I, a Stipulated Protective Order was entered on April 14, 2022.
The parties subsequently filed a Joint Stipulation on Electronically Stored
Information. Docs. 25, 125. Although that Joint Stipulation indicates that it is
“subject to the approval of the Court,” see Tanner I, Doc. 125 at 1, the parties
confirmed during the January 17 conference that they are not asking the Court
to take any action relative to this filing.
In Tanner II, the parties have filed a Joint Motion for Entry of a
Protective Order. Tanner II, Doc. 46. The undersigned will grant that Motion
by separate Order and will endorse the parties’ proposed procedures for
handling information that may be confidential, though with some limited
modifications. During the January 17 conference, the parties stated that,
following the entry of a protective order in Tanner II, they would file a joint
stipulation regarding electronically stored information similar to the Joint
Stipulation filed in Tanner I.
4 The Court, of course, remains free to shorten the briefing schedule or page limits or
otherwise address any individual discovery dispute on an expedited basis, if
necessary.
D. Discovery Limits and Timeframes
1. Initial Disclosures
During the initial pretrial conference, counsel in both Tanner I and
Tanner II confirmed that all parties have exchanged initial disclosures.
2. Discovery Deadline
Next, although the Reports reference a bifurcated discovery schedule, no
party objected to the use of a unified deadline for the completion of court-
enforceable discovery, which would apply to both fact and expert discovery, and
the undersigned recommends setting a single deadline for the completion of all
discovery.
3. Depositions of Fact Witnesses
FSMS indicated during the conference that it anticipated deposing
approximately 20 witnesses (cumulatively for both Tanner I and Tanner II).
Tanner indicated that it also anticipated deposing approximately 20 fact
witnesses cumulatively. The Bourne Defendants advised that the depositions
conducted by Tanner would be sufficient for the Bourne Defendants.
4. Written Discovery
With respect to the scope of written discovery, FSMS requested that
requests for admission and interrogatories be allocated on a “per side” basis.
While Tanner asserts that allocation of written discovery “per side” would be
appropriate in Tanner I, it contends that the allocation of written discovery in
Tanner II should be “per party.”
Considering the undersigned’s recommendation regarding consolidation
of Tanner I and Tanner II for discovery purposes, the undersigned recommends
(1) that each side (FSMS on one side, and Tanner and the Bourne Defendants
on the other) be allowed to depose up to 20 fact witnesses, and (2) that each
party group ((a) FSMS; (b) Tanner; and (c) the Bourne Defendants) be allowed to
propound 20 interrogatories and 20 requests for admission to any other party
group.
E. Pretrial Deadlines
The undersigned recommends that Tanner I and Tanner II be set
preliminarily for the same trial term, with the following pretrial deadlines:
Rule 26 Disclosures completed
Expert Designations-Plaintiff(s) 6 months from entry of PTO
Expert Designations-Defendant(s) 7 months from entry of PTO
Discovery 5 months prior to trial
Mediation 4½ months prior to trial
Motions Deadline 4 months prior to trial
Trial 14 months from entry of PTO
Finally, the undersigned recommends allocating a total of 8 trial days
cumulatively between Tanner I and Tanner II.
F. Miscellaneous Issues
During the conference, FSMS requested that the Court set a deadline of
60 days before trial for the parties’ pretrial submissions (exhibit lists, etc.).
Tanner asserted that a deadline for pretrial submissions between 30-45 days
prior to trial could be appropriate. The undersigned recommends that these
deadlines be set in conformity with the Court’s usual practice.
The parties also represented that they had agreed to an extended
briefing schedule for responding and replying to motions for summary
judgment. The undersigned will not recommend such a schedule be put in place
preemptively, and instead suggests that any requests for extensions (of
briefing deadlines or otherwise) be made in the ordinary course.
IV. Recommendations
For the reasons set out above, the undersigned respectfully
RECOMMENDS that Plaintiff's Motion to Consolidate (Doc. 127) be
GRANTED IN PART, and that this matter (No. 3:21-ev-00501-RJC-WCM) and
Tanner IT (No. 3:23-cv-00598-RJC-WCM) be CONSOLIDATED for discovery
purposes.
The undersigned FURTHER RECOMMENDS that a Pretrial Order and
Case Management Plan be entered as outlined above.
Signed: 2/12/2024
W. Carleton Metcalf / 7
United States Magistrate Judge eA
12
Time for Objections
The parties are hereby advised that, pursuant to Title
28, United States
Code, Section 636
, and Federal Rule of Civil Procedure 72(b)(2), written
objections to the findings of fact, conclusions of law, and recommendation
contained herein must be filed within fourteen (14) days of service of same.
Responses to the objections must be filed within fourteen (14) days of service
of the objections. Failure to file objections to this Memorandum and
Recommendation with the presiding District Judge will preclude the parties
from raising such objections on appeal. See Thomas v. Arn,
474 U.S. 140, 140
(1985); United States v. Schronce,
727 F.2d 91, 94
(4th Cir. 1984).Case Information
- Court
- W.D.N.C.
- Decision Date
- February 13, 2024
- Status
- Precedential