Rectangle Medical Dental Payments LLC v. Retriever Medical/Dental Payments, LLC

Background

The plaintiffs objected under Federal Rule of Civil Procedure 72(a) to Magistrate Judge Paul E. Davison’s April 14, 2023 oral order denying their motion to compel discovery. The requested documents concerned two subjects: the defendant’s internal valuation of third-party endorsements and preferred relationships, and an alleged dedicated account-representative group for clients of consulting-services partners.

Court’s Analysis

Rule 72(a) permits a district court to modify or set aside a magistrate judge’s order on a nondispositive matter only when the order is clearly erroneous or contrary to law. Discovery orders are generally nondispositive, and the reviewing court gives substantial deference to the magistrate judge’s decision.

The court held that the plaintiffs had not shown that Judge Davison abused his discretion. First, the plaintiffs did not explain how the defendant’s internal valuation of endorsements and relationships would show whether the defendant breached an obligation to share them. They also did not show that the valuations were relevant to their damages theory, which was based on projected sales. The court noted that the internal valuation was not an input in the plaintiffs’ damages calculation and that Judge Davison had already ordered production of several categories of documents related to that calculation.

Second, the plaintiffs argued that the defendant breached an obligation to provide the “full use” of third-party endorsements and relationships because their clients allegedly were not given access to the specialized, dedicated account-representative group described on the defendant’s website. Assuming that consulting-services partners were included within the relevant endorsements and relationships, the court agreed that Judge Davison reasonably found discovery about the generalized website statement insufficiently useful to justify the burden of production. The defendant represented that no specific group for consulting-services partners existed. The court stated that the plaintiffs could revisit the issue if that representation later proved untrue.

Disposition

Judge Seibel overruled the plaintiffs’ objections and affirmed the challenged April 14, 2023 decisions of Magistrate Judge Davison. The order resolved a discovery dispute and did not decide the parties’ underlying claims.