FS Medical Supplies, LLC v. TannerGAP, Inc.

W.D.N.C.2/13/2024
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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