United States District Court, D. Kansas
ACCOUNTABLE HEALTH SOLUTIONS, LLC, and HOOPER HOLMES, INC., Plaintiffs,
WELLNESS CORPORATE SOLUTIONS, LLC, Defendant.
MEMORANDUM AND ORDER
J. James U.S. Magistrate Judge
matter is before the Court on Plaintiffs' Motion to
Compel Disclosure of Defendant's Financial Information
(ECF No. 102). Plaintiffs request an order compelling
Defendant to produce its financial documents responsive to
Plaintiffs' Second Request for Production of Documents
Nos. 5-9, all of which Plaintiffs argue seek information
about Defendant's financial condition and are relevant to
Plaintiffs' claim for punitive damages. Defendant opposes
the motion, arguing that Plaintiffs' claim for punitive
damages is spurious, the confidential financial documents
requested are not relevant, and production of its financial
information at this point in the litigation would be
premature. For the reasons discussed below, the motion is
granted in part and denied in part.
2014, Defendant Wellness Corporate Solutions, LLC and
Accountable Health Solutions, Inc. (“AHS”)
entered into a Master Services Agreement
(“Agreement”) whereby Defendant would provide
preventive health wellness screening and immunization
services to AHS's customers and employees. In 2015,
Hooper Holmes, Inc. acquired the assets of AHS and
transferred the assets to its subsidiary, Accountable Health
Solutions, LLC. Hooper Holmes, Inc. and Accountable Health
Solutions, LLC are the Plaintiffs in this case.
allege that Defendant breached the competition provisions of
the Agreement by soliciting and marketing its services to one
of Plaintiffs' longtime customers, Building Materials
Corporation of America d/b/a GAF (“GAF”).
Plaintiffs also allege Defendant tortiously interfered with
Plaintiffs' contract with GAF, as well as their
prospective business expectancies or relationships with GAF.
In their First Amended Complaint, Plaintiffs assert claims
for breach of contract (Count I), breach of implied covenant
of good faith and fair dealing (Count II), tortious
interference with a contract (Count III), and tortious
interference with prospective business expectancies or
relationships (Count IV). Plaintiffs seek punitive damages in
Counts III and IV. Defendant has asserted a breach of
contract counterclaim for unpaid services allegedly provided
and due under the Agreement.
served their Second Request for Production of Documents on
Defendant on May 2, 2017. These requests sought the following
financial documents relating to Defendant:
Request No. 5: all monthly, quarterly, annual and year-end
financial statements of WCS for 2015, 2016 and 2017 to date,
including but not limited to, balance sheets, statements of
profits and loss, general ledgers, accounts receivable and
Request No. 6: all monthly, quarterly, or annual statements
or reports from financial institutions pertaining to
WCS's financial assets of any type whatsoever (including
bank accounts, savings accounts, checking accounts,
investment accounts) for the years 2015, 2016, and 2017 to
Request No. 7: all tax returns including all schedules,
attachments, and worksheets filed by WCS in years 2015, 2016,
and 2017 to date.
Request No. 8: all documents relating to any debts of WCS for
the past three years, including but not limited to all notes,
loan agreements, lease agreements, deeds of trust, mortgages,
loan guarantees, bond agreements and trust indentures.
Request No. 9: all documents prepared or submitted by WCS to
obtain a loan, lease or mortgage from a financial institution
in the years 2015, 2016, and 2017 to date.
Defendant asserted the following objection to each of the
[Defendant] WCS objects to this request as seeking
confidential and proprietary competitive information that
would only be discoverable - if ever - in the event of an
award of punitive damages in this case. The mere allegation
of punitive damages does not entitle Plaintiffs to this
information. WCS intends to move for the dismissal of the
punitive damages claim in this case as having no basis in law
conferring with Defendant, as required by Fed.R.Civ.P.
37(a)(1) and D. Kan. 37.2, Plaintiffs filed the instant
motion to compel on June 30, 2017.
Objections to the Requested Discovery
response to Plaintiffs' motion to compel, Defendant
argues that it should not be required to produce the
requested financial information because Plaintiffs' claim
for punitive damages is spurious. It also argues the Requests
seek information that is not relevant to a punitive damages
award. According to Defendant, Plaintiffs' mere
allegation of punitive damages does not warrant the broad
discovery requests seeking its confidential and proprietary
financial documents and information. Finally, Defendant
argues it would be premature to produce the requested
financial information at this point in the case.
Plaintiffs' Claim for Punitive Damages is Not
information about a party's current net worth or
financial condition is relevant to the issue of punitive
damages. “When a punitive damages claim has
been asserted by the plaintiff, a majority of federal courts
permit pretrial discovery of financial information of the
defendant without requiring plaintiff to establish a
prima facie case on the issue of punitive
damages.” But a plaintiff seeking discovery of the
defendant's financial condition in support of a claim for
punitive damages must show the claim is ...