Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_13-cv-01920/USCOURTS-cand-5_13-cv-01920-13/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

IN RE INTUITIVE SURGICAL 

SECURITIES LITIGATION Case No. 5:13-cv-01920 EJD (HRL)

ORDER RE DISCOVERY DISPUTE 

JOINT REPORT NO. 4

Re: Dkt. 170

In this putative class action, plaintiffs sue Intuitive Surgical, Inc. (Intuitive) and several 

individual defendants for alleged securities fraud. Plaintiffs claim that defendants concealed 

safety defects in Intuitive’s da Vinci Surgical System and lied about the company’s business 

metrics and financial prospects.

In Discovery Dispute Joint Report (DDJR) No. 4, plaintiffs seek an order compelling the 

production of two categories of documents: (1) exhibits to deposition transcripts from litigation 

between Intuitive and its insurance carriers; and (2) “Quality Audit” documents. The matter is 

deemed suitable for determination without oral argument. Civ. L.R. 7-1(b). Upon consideration 

of the parties’ respective arguments, this court grants plaintiffs’ request for discovery in part and 

denies it in part.

A. Deposition Exhibits

The request at issue seeks “[t]ranscripts of all depositions of Intuitive Employees taken in 

Case 5:13-cv-01920-EJD Document 178 Filed 10/12/16 Page 1 of 4
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United States District Court

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the Insurance Actions since the date each such action was initiated.” (Dkt. 170-2, DDJR No. 4, 

Ex. B at ECF p. 10). The term “Insurance Actions” refers to two insurance coverage lawsuits filed

in this district by Intuitive’s carriers against Intuitive.

1

 This court is told that in those actions, the 

insurers claimed that Intuitive’s failure to report product liability claims during its application for 

insurance coverage provided a basis for rescission of certain insurance policies. Plaintiffs point 

out that, in the present case, they allege that Intuitive’s failure to disclose specific information 

about the number and nature of product liability suits the company faced rendered defendants’ 

statements about safety false or misleading.

Although defendants contend that the Insurance Actions have little or no bearing on this 

lawsuit, they agreed to produce non-privileged portions of the requested transcripts that have some 

connection to plaintiffs’ claims. Transcripts were produced in redacted form. The specific dispute 

now presented to this court is whether or not plaintiffs’ request for deposition “transcripts” 

includes the deposition exhibits.

Defendants argue that exhibits are not included because plaintiffs’ request only asks for 

“transcripts” (a term which plaintiffs did not define) and does not expressly say “exhibits.” 

Plaintiffs contend that exhibits are impliedly included in “transcripts.” In any event, plaintiffs 

claim that the requested exhibits fall within the scope of a prior request, which sought 

“[d]ocuments concerning disputes or reservations of rights as to coverage for any and all claims 

arising out of the use of or concerning da Vinci including but not limited to Intuitive’s litigation 

with its product liability insurance carriers, Illinois Union Insurance Co. and Navigator Specialty 

Insurance Company.” (Dkt. 170-1, DDJR No. 4, Ex. A at ECF p. 50). As to this earlier request, 

plaintiffs say that they offered to narrow it to documents Intuitive produced in the Insurance 

Actions, and that defendants initially agreed, but later reneged, citing relevance, burden, and 

patient privacy (HIPPA) concerns.

There seems to be no dispute that the transcripts contain at least some information that is 

relevant under Fed. R. Civ. P. 26(b), defendants having produced portions that they apparently 

 1 See Case No. 3:13-cv-04863-JST Illinois Union Ins. Co. v. Intuitive Surgical, Inc. and Case No. 

3:13-cv-05801-JST Navigators Ins. Co. v. Intuitive Surgical, Inc.

Case 5:13-cv-01920-EJD Document 178 Filed 10/12/16 Page 2 of 4
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determined have some connection to plaintiffs’ claims. Accordingly, plaintiffs’ request for 

documents is granted as follows: Defendants shall forthwith produce exhibits referenced in the 

portions of the transcripts they produced to plaintiffs. However, to the extent any of the exhibits 

contain patient-specific information protected under HIPPA, defendants may redact that 

information. Plaintiffs have not shown why discovery of such information is relevant or necessary 

to this lawsuit.

B. “Quality Audits”

Plaintiffs propounded discovery requests seeking “Annual Third-Party Audits” and 

“Internal Audit Records” identified by Intuitive’s corporate designees during Fed. R. Civ. P. 

30(b)(6) depositions. (Dkt. 170-2, DDJR No. 4, Ex. B at ECF pp. 18, 21). Plaintiffs subsequently 

narrowed these requests to “Quality Audits” as defined in 21 C.F.R. § 820.22. Briefly stated, that

regulation provides that medical device manufacturers “shall establish procedures for quality 

audits and conduct such audits to assure that the quality system is in compliance with the 

established quality system requirements and to determine the effectiveness of the quality system.”2 

Plaintiffs say that in July 2013, the Food and Drug Administration (FDA) sent Intuitive a warning 

letter, concluding that Intuitive’s devices were adulterated because Intuitive failed to fully 

implement quality system design controls required under 21 C.F.R. § 820.30. Inasmuch as reports 

of quality audits must be reviewed by management, see 21 C.F.R. § 820.22, plaintiffs say that the 

requested documents are relevant to management’s knowledge of violations identified in the 

FDA’s letter. They claim that they have found no quality audit documents in defendants’ 

 2 The full text of 21 C.F.R. § 820.22 is as follows:

Each manufacturer shall establish procedures for quality audits and conduct 

such audits to assure that the quality system is in compliance with the 

established quality system requirements and to determine the effectiveness 

of the quality system. Quality audits shall be conducted by individuals who 

do not have direct responsibility for the matters being audited. Corrective 

action(s), including a reaudit of deficient matters, shall be taken when 

necessary. A report of the results of each quality audit, and reaudit(s) where 

taken, shall be made and such reports shall be reviewed by management 

having responsibility for the matters audited. The dates and results of 

quality audits and reaudits shall be documented.

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production.

Defendants, on the other hand, claim that they have already produced quality audit 

documents. According to them, Intuitive’s Fed. R. Civ. P. 30(b)(6) witnesses testified that the 

company performs a host of internal and third-party audits. The problem, say defendants, is that 

plaintiffs refused to narrow their request to audits pertaining to relevant systems or activities, and 

instead sought records of all quality audits Intuitive has performed. Nevertheless, defendants say 

that they have searched for and produced documents pertaining to quality audits, including any 

documents that were circulated to the individual defendants (or to any of the agreed-upon 

custodians of electronically stored information) and which contained agreed-upon search terms. 

Additionally, defendants confirm that keyword searches of their production database identifies 

some 200 documents relating to quality audits, including Quality Audit Observation Tracking and 

Report spreadsheets, Internal Audit Observations, External Audit Observations, Audit Notes, 

Audit Reports, Audit Plans, Mock FDA Audit Observations, and others.

This court finds no basis on this record to doubt the veracity of defendants’ 

characterization of their production. Moreover, plaintiffs have not sufficiently explained why they 

believe defendants’ document production is deficient. Their request for an order compelling 

further discovery therefore is denied.

SO ORDERED.

Dated: October 12, 2016

______________________________________

HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

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