Preview
29.2
COMMONWEALTH OF MASSACHUSETTS
MIDDLESEX, SS. SUPERIOR COURT
MIDDLESEX DIVISION
st ~ niin
ELIZABETH GRADY FACE FIRST INC,
D/B/A THE ELIZABETH GRADY
RECEIVED
COMPANY, 9/8/2021
Plaintiff,
Vv,
C. A. No. 2081CV02967
CYNOSURE, INC. AND KEVIN
THORNAL,
Defendants.
on ~ ewe ee o
PLAINTIFF’S OPPOSITION TO NON-PARTY HOLOGIC, INC.’S AND
DEFENDANT KEVIN THORNAL’S MOTION FOR PROTECTIVE ORDER
AND/OR 'TO QUASH SUBPOENAS
Plaintiff Elizabeth Grady Face First Inc., d/b/a The Elizabeth Grady Company (“Elizabeth
Grady”), hereby opposes the Motion for Protective Order and/or To Quash Subpoenas served by
Non-Party Hologic, Inc. and Defendant Kevin Thornal (the “Motion”). As explained in greater
detail below, the Motion should be denied for the following reasons:
e Hologic, a non-party, lacks standing to quash in their entirety the two subpoenas
duces tecum served on a different non-party. Simply put, the weight of authority
holds that non-parties lack standing to object to or move to quash a subpoena served
on a different non-party. A lone, narrow exception appears to exist for subpoenas
directed at bank account records or where a personal privilege exists, neither of
which are present here.
Defendant Kevin Thornal likewise cannot challenge the subpoenas without making
a showing that he has a personal right or privilege in the subpoenaed materials.
Conspicuously missing from the filing is an Affidavit from Thornal (which he is
required to produce to meet his burden) explaining why the subpoenaed material
~ which are primarily business records - are somehow privileged, or why he has a
personal privacy interest in the records. There is no Affidavit because Thornal is
not able to make such a claim over business records belonging to Goldman.
ME1 37350794v.4
Thornal is merely an employee of Hologic’s and a former Cynosure employee who
lacks any standing to seek protection of business records belonging to other entities.
At best, Thornal and Hologic could seek safeguards on any document production
from Goldman, assuming they first establish a personal right or privilege in the
materials. Yet the purported confidentiality concerns raised by Hologic and Thornal
are already addressed by the Stipulated Protective Order negotiated and executed
by the parties (including present counsel for Thornal and Hologic), and endorsed
by the Court on June 6, 2021. The Protective Order was proposed by Defendants’
counsel specifically to address situations such as this, and to help avoid motion
practice. The scope of the Order covers third party discovery in addition to
discovery between the parties, making it remarkable for Thornal to now argue that
the already-existing Protective Order is somehow inadequate. Moreover, neither
Thornal nor Hologic have met their burden to show how or why the Protective
Order will not provide adequate protections or safeguards with respect to
Goldman’s production (to the extent confidential documents are actually
implicated). Indeed, the Motion makes no express reference to the Protective Order.
The subpoenas are reasonable in scope and are narrowly tailored to seek discovery
related to key facts and claims, making the materials relevant under Rule 26.
Tellingly, neither Hologic nor Thornal argue that the subpoenas are burdensome or
oppressive (not could they since they are not the subpoenaed party). Rather, they
essentially argue the requested materials are not relevant. Yet as explained below,
the materials are relevant under Rule 26, as they would show the troubles that
Cynosure’s business was experiencing at the same time that the representations
were made to Elizabeth Grady, and those records would show that the
representations were untrue when made. It is clear, however, that neither Hologic
nor Thornal want to produce these documents to Elizabeth Grady and the parties
are willing to exhaust all efforts to avoid having to produce responsive materials to
Elizabeth Grady, including instructing Goldman to not produce any records. This
recent Motion is simply further evidence of the parties’ bad-faith, coordinated
efforts to obstruct Elizabeth Grady’s discovery.
' It is absurd for Hologic and Thornal to even suggest that service of the subpoenas was improper, perhaps why the
argument is reduced to a single footnote. Goldman is a national company doing business across many states, including
in Massachusetts, where it has a registered agent and multiple places of business, including at 125 High Street, Boston,
Massachusetts. All of this information is readily available on the internet. Service of the subpoenas on Goldman’s
registered agent was therefore authorized and appropriate under Rule 45. See, e.g, Netezza Corp. v. Intelligent
Integration Systems, Inc., 27 Mass.L.Rptr. 551, *3-4 (Mass. Super. Oct. 26, 2010) (holding that Rule 45 clearly
encompasses service of a subpoena duces tecum upon both non-residents and nonparties, and that entities doing
business in the Commonwealth are subject to service on their registered agent).
2
ME} 37350794v.1
For all these reasons, the Motion should be denied. Elizabeth Grady should also be
awarded its costs under Rule 37 for having to oppose a discovery motion not advanced in good
faith, and where the moving parties have no legal or factual justification for the relief sought.
RELEVANT FACTS
I Brief Case Summary
This is a fraud case. Through its First Amended Complaint (the “FAC”), Elizabeth Grady
asserts claims against Cynosure and its former president, Kevin Thornal, for common law
fraud/misrepresentation, and violation of Chapter 93A. At the heart of this dispute lies a number
of material misrepresentations and half-truths peddled by Cynosure and its representatives
(including Thornal) to Elizabeth Grady during an aggressive offering in the fall of 2018. Cynosure
solicited Elizabeth Grady to reshape its business, to lease certain of its body-countering devices,
and to offer those services throughout Elizabeth Grady’s New England salon locations. Because
of the misrepresentations, Elizabeth Grady agreed to “partner” with Cynosure and the parties
signed a Product Lease Agreement in January of 2019.?
In 2017, well prior to the execution of the Agreement, Hologic (a publicly traded company)
purchased the Cynosure business for nearly $1.7 billion. Two short years later, however, Hologic
sold the business at a steep loss, for a reported $205 million. Cynosure’s aggressive solicitation
of Elizabeth Grady occurred in the fall of 2018, right in the middle of Hologic’s brief period of
ownership of Cynosure. At that time, Cynosure was actively soliciting new business from
Elizabeth Grady, and during the process, presented Elizabeth Grady with what Cynosure claimed
? Elizabeth Grady is a well-known and successful operator and franchisor of skincare salons with locations throughout
Massachusetts and New Hampshire. Through the Product Lease Agreement, Cynosure agreed to lease certain of its
equipment and devices for installation across Elizabeth Grady’s salon locations, The two medical aesthetic devices
to be provided under the agreement - SculpSure and Icon — are non-invasive body contouring devices.
3
MEI 37350794v.1
were established, achievable national sales data for its products. Cynosure and its representatives
(including Thornal) told Elizabeth Grady at a meeting on December 3, 2018, that these sales
numbers would be achieved with the marketing support that Cynosure claimed it provided to its
customers, and would provide to Elizabeth Grady. Cynosure further represented to Elizabeth
Grady that the training period to educate staff on the operation of the machines was a short one,
and that other commercial arrangements between the companies would be available to sweeten the
deal for Elizabeth Grady. Cynosure stated that the parties would work together in a mutually-
beneficial partnership, and that Cynosure was fully supported by its parent, Hologic, in these
efforts. See, e.g., FAC 4 24-30, 32, 36, 45; see also Elizabeth Grady’s Answer to the Defendants’
Interrogatory No. 1 (attached as exhibits to Motions to Compel recently filed by the Defendants).
As it turns out, however, Cynosure misrepresented, among other things, its actual sales, the
ability to train people quickly to use its machines, the backing of Hologic for Cynosures marketing,
and the trend of the Cynosure business that would enable it to perform. To the contrary, at
essentially the same time that Cynosure was approaching Elizabeth Grady, Hologic was filing its
10K for fiscal year 2018.3 Unknown to Elizabeth Grady, that 10-K acknowledged that the
Cynosure business was impaired, causing Hologic to reduce the “short term and long term revenue
and operating income forecasts”. See excerpts from Hologic’s 2018 10-K annexed hereto as
Exhibit B. 4 Hologic was already writing down the value of the business, See Exhibit B, and the
inlining iene nina
3 Hologic is on a September 30" fiscal year. Its 10-K was filed on November 20, 2018 at the same time as Mr,
Thornal approached Elizabeth Grady and just weeks before the critical December 3, 2018 presentation by Cynosure
to Elizabeth Grady. See Ex. A, a page from the SEC’s Edgar webpage showing the dates of Hologic’s 10-K and 10-
Q filings.
4 Because this is a public record required to be filed by federal regulation as part of Hologic’s annual reporting
requirements, it is inherently reliable, as it serves a unique purpose of informing shareholders of certain corporate
developments. For that reason, the Court may take judicial notice of the facts stated therein. See, e.g., Laguer v.
OneWest Bank, FSB, 2013 WL 831055, at *3 (Mass. Super. Feb. 27, 2013) (taking judicial notice of facts related to
IndyMac loans and assignments available through FDIC website); Kramer v. Time Warner Inc., 937 F.2d 767, 774
(2d Cir. 1991) (endorsing district court taking judicial notice of SEC filed documents, in part because the documents
are required by law to be filed with the SEC, and no serious question as to their authenticity can exist); Lovelace v.
4
ME! 37350794v.1
Complaint alleges that Hologic was getting ready to sell the business, and that management knew
that the numbers and services being presented to Elizabeth Grady were not achievable. See FAC
$33, 44. Cynosure, moreover, had no intention of entering into the other financial arrangements
which it had represented were to become part of the business arrangement between the companies.
The proof is apparent in what happened. After failing to support Elizabeth Grady and repeated
delays in the product roll out in Elizabeth Grady salons, Hologic announced the sale of Cynosure
to a private venture capital firm in November 2019. See FAC 945. The transaction was
orchestrated by Goldman, Hologic’s investment banker handling the sale. Despite purchasing the
business for $1.7 billion two years earlier, Hologic was selling the business at a substantially
reduced value (an announced $205 million). Ultimately, the roll-out of Cynosure’s products in
Elizabeth Grady’s salons was an unmitigated disaster; Cynosure failed to provide the promised
support or training, and the Agreement was never supported by Hologic, as Cynosure represented.
As a result, Elizabeth Grady suffered substantial losses due to the Defendants’ fraud and this
lawsuit followed.
i. Elizabeth Grady Seeks Discovery From Cynosure
Immediately upon service of its Complaint, Elizabeth Grady sought discovery from
Cynosure through Rule 34 document requests. The focus of Elizabeth Grady’s early discovery
was on the key misrepresentations, including what Cynosure and Thornal knew in the fall of 2018
about Cynosure’s internal state of affairs and its national sales data and trends. In response,
Cynosure unsuccessfully moved to stay discovery before serving responses and objections to
3
Software Spectrum Inc., 78 F.3d 1015, 1018, n. | (5th Cir, 1996) (adopting rationale given by the Second Circuit in
Kramer), Southmark Prime Plus, L.P. v. Falzone, 776 F. Supp. 888, 893 (D. Del. 1991) (Court may take judicial
notice of SEC filings under Federal Rule of Evidence 201(b)(2)).
5
MEI 37350794v.1
Elizabeth Grady’s requests on February 19, 2021.5 The only documents Cynosure agreed to
produce are public filings and, for the most part, Cynosure refused to produce any records.
Hoping to avoid motion practice and trench warfare, instead of what Cynosure supplied for
the buyer’s due diligence review, Elizabeth Grady asked Cynosure to produce one single document
~— a fairness opinion (or its substantial equivalent) which Elizabeth Grady believed should have
been prepared in connection with the sale of the Cynosure business.° After much delay, Cynosure
finally informed Elizabeth Grady that no fairness opinion existed. To date, Cynosure has
attempted to impose its own stay of discovery by refusing to produce any documents in response
to Elizabeth Grady’s Rule 34 requests.”
iil. Elizabeth Grady Subpoenas Goldman Sachs
With Cynosure refusing to produce documents, Elizabeth Grady went right to the source
and served a Rule 45 subpoena on Goldman on June 21, 2021, shortly after the entry of the
Protective Order. Elizabeth Grady served a second Rule 45 subpoena on Goldman on August 13,
2021. True and accurate copies of the Subpoenas are attached as Exhibits A and B to Hologic’s
Motion.* Through the subpoenas, Elizabeth Grady seeks to discover, among other relevant
information: (1) the date on which Hologic first began discussing a possible sale or restructuring
of the Cynosure business; (2) underlying company data and financials (including sales data) that
amen
> The Court denied Cynosure’s motion to stay on March 10, 2021. See Order by Hon, Patrick Haggan (“Endorsement
on Motion to Stay Discovery pending Resolution of its Motion to Dismiss (#12.0): DENIED. After review of the
pleadings of the parties, the motion to stay Discovery is DENIED. Dated: March 9, 2021 and notices mailed 3/10/21”).
® A fairness opinion would in the ordinary course be prepared by Hologic’s investment banker to justify the sale price
and would entail an analysis of the business being sold. See Affidavit of William A. Zucker, { 5, filed herewith in
support of Elizabeth Grady’s Opposition. The Affidavit is also to be included with a companion Motion to Compel
directed at Goldman Sachs.
7 Blizabeth Grady also requested documents which would show when Thornal knew of Hologic’s consideration of
selling divesting or restructuring the Cynosure business. See Exhibit B to Motion.
8% Elizabeth Grady served a second subpoena on Goldman on August 13, 2021. The second subpoena covered
communications between Goldman and Thornal, to avoid any argument that the scope of the first subpoena did not
cover that category of document. Goldman also objected to the second subpoena.
6
MEI 37350794v.1
would show the reasons for the fire sale and that were used by Goldman and the buyer to value the
Cynosure business; (3) any communications or discussions between the parties concerning
Cynosure’s internal state of affairs and any factors prompting or contributing to Hologic’s decision
to sell the business, and/or affecting the market value of the business and/or the anticipated or
expected sale price of the company. Elizabeth Grady believes this information will show that the
representations made to Elizabeth Grady at the time they were made were fictions rather than facts.
Goldman is in possession of relevant records, as it could not have orchestrated the sale of
Cynosure without undertaking some form of analysis or valuation and/or providing prospective
buyers with detailed financial information, including sales data from the previous years and
gathering documents necessary for a buyer’s due diligence. In its role as Hologic’s investment
banker, Goldman should have possession of supporting documentation that would show why a
business purchased for $1.7 billion in 2017 was sold less than two years later for a reported $205
million. Such a dramatic devaluation does not happen overnight and without serious business
justifications for the sale, particularly as Hologic was a public company. Indeed, as early as 2018,
Hologic was reporting substantial revenue losses related to its Cynosure business, which facts were
not disclosed to Elizabeth Grady. It is likely that Goldman’s analysis considered historical sales
data that pre-dated 2018, and thus Goldman is in possession of critical facts, documents and
materials relevant to core issues in this case.
Goldman ultimately objected to the subpoenas. See Zucker Aff., at Ex. B and C. In
discussions between the parties’ counsel, however, Goldman informed Elizabeth Grady that
responsive materials existed in a project file (or potentially other sources) but that its hands were
tied by Hologic, who was refusing the release of any responsive information. See Zucker Affidavit,
46. To date, no documents have been produced — by Goldman, Cynosure, or anyone else.
MEI 37350794v.1
ARGUMENT
1 HOLOGIC AND THORNAL LACK STANDING
Hologic argues in its Motion that “a non-party may have standing to move to quash a
subpoena directed to another non-party that calls for production of documents to which the moving
non-party has ownership rights or a property interest.” See Hologic Brief, p. 5. But this proposition
runs against the express text of Rules 26 and 45. Under Rule 26, only a “party” or “the person
from whom discovery is sought” may seek a protective order. See Mass. R. Civ. P. 26(c). Hologic
is neither of these and thus lacks standing under Rule 26 to seek a Protective Order. Similarly,
“Any person subject to a subpoena under” Rule 45 can move for a protective order under Rule 26
or “be deemed entitled to any protection set forth in any discovery or procedural order previously
entered in the case,” Mass. R. Civ. P. 45(f)(3). Again, Hologic is not “any person subject to a
subpoena” and has no authority to seek an order to quash under Rule 45. Hologic’s motion seems
to hinge upon Hologic’s citation to the Massachusetts Practice Series (authored by Judge Peter
Lauriat) and the use, by Judge Lauriat, of the word “‘ may” in the statement a non-party “may”
have standing to move to quash. The weight of authority, however, holds that even parties
generally lack standing to quash a subpoena served on a non-party. See, e.g., Wright & Miller, 9A
Fed. Prac. & Proc. Civ, § 2459 (Subpoena for the Production of Documents and Things—Quashing
or Modifying a Subpoena) (3d ed.) (“Ordinarily a party has no standing to seek to quash a subpoena
issued to someone who is not a party to the action, unless the objecting party claims some personal
right or privilege with regard to the documents sought.”). No one has made an argument that any
privilege is implicated. Whatever privilege or confidential information may be contained in
Goldman’s records, the Protective Order in this case provides an adequate means of protection.
MEI 37350794v.1
Thus, Hologic has not established special circumstances to exempt it from the ordinary rule that it
does not have standing to move to quash the subpoenas.
While Thornal is a party, he also lacks standing to challenge the subpoenas. As noted, a
party can challenge a subpoena duces tecum served on a non-party but only in limited situations
where a privilege exists or where a parties’ privacy interests are implicated. See, e.g., Boston
Restoration Resources, Inc. v. Lorenzo Pitts, Inc., 34 Mass.L.Rptr. 646 (Mass. Super. March 16,
2018); Collins v, Does 1-38, 941 F. Supp. 2d 153, 159-60 (D, Mass. 2013) (“As a general rule, a
party lacks standing to quash a subpoena issued to a nonparty unless the party has a claim of
privilege attached to the information sought or unless it implicates a party’s privacy interests.”).
Here, the subpoenas do not implicate personal or any privileged materials of Thornal.
Rather, the subpoenas seek business records relating to sales and operations of the Cynosure
business during a critical time period when the alleged misrepresentations were made to Elizabeth
Grady. Moreover, the business records subject to the subpoena are not personal to Thornal, and
thus he cannot claim any personal privacy interest in the documents, It is Thornal’s burden to
establish his right to object to the subpoena, and he has not done so.
To the extent Hologic and Thornal seek a Rule 26 protective order on grounds that a portion
of the information is confidential or proprietary, there already exists a Protective Order in this case
designed to address these situations. The Protective Order was negotiated by Thornal’s counsel
along with the other parties’ counsel and expressly provides protections for all document
productions, including those made by third parties. Neither Hologic nor Thornal even attempt to
explain why the current Protective Order is inadequate to safeguard any concerns about the
disclosure of potentially confidential or proprietary information. Neither Hologic nor Thornal
should be permitted to quash in their entirety subpoenas which seek information directly relevant
ME} 37350794v.1
to Elizabeth Grady’s claims. To the extent Thornal and Hologic believe safeguards or conditions
should be attached to any productions made by Goldman (to protect sensitive information), a
Protective Order is already in place and provides adequate protections.
il. THE SUBPOENAED RECORDS ARE RELEVANT TO KEY ISSUES AND
REPRESENTATIONS
Hologic’s and Thornal’s relevancy argument misses the mark. In interpreting the scope of
discovery under the Massachusetts Rules of Civil Procedure, the SJC has defined “relevant”
evidence to:
broadly to encompass any matter that bears on, or that reasonably could lead
to other matter that could bear on, any issue that is or may be in the case. ...
Discovery is not limited to issues raised by the pleadings, for discovery
itself is designed to help define and clarify the issues. Nor is discovery
limited to the merits of a case, for a variety of fact-oriented issues may arise
during litigation that are not related to the merits.
Cronin vy, Strayer, 392 Mass. 525, 534 (1984); Meyer y. King, 1995 WL 1312543 (Mass. Super.
Ct. 1995) (“Discovery should ordinarily be allowed under the concept of relevancy unless it is
clear that the information sought can have no possible bearing upon the subject matter of the
action.”).
Here, the materials requested by the subpoenas are directly relevant, as they relate to the
viability of Cynosure (during or near the exact time when Cynosure was actively recruiting
business from Elizabeth Grady) while its parent company was likely already exploring a possible
sale of the business. Goldman could not have acted as the investment banker orchestrating the sale,
preparing an offering brochure and due diligence materials for prospective buyers, and advising
Hologic (or providing any analysis of the Cynosure business) without supporting financial and
sales data. Moreover, the parties likely communicated about that data, including sales trends on a
product-by-product basis. In the aggregate, the information will likely show when Hologic
10
MEI 37350794v.1
recalculated what support it would provide to Cynosure’s busines
s. It will also show Thornal’s
involvement with the sale or divestiture of the business which may have preceded his
representations to Elizabeth Grady. And, even if it did not, given his affirmative representations,
Thornal had an obligation to inform Elizabeth Grady that the
misrepresentations he authored or
approved were incorrect. See, 2.2, Maxwell v. Ratcliffe, 356 Mass. 560, 562-63 (1969)
(broker
had duty to avoid half-truths and make full disclosure of facts
for issues expressly raised between
the parties).
All of that material is relevant to the claim that Cynosure and Thorna
l made knowingly
false, incomplete, and/or misleading statements to Elizabeth Grady
and having made those
statements, failed at any time to correct them as Elizabeth Grady
only found out about the sale of
Cynosure when it was announced in the press. Indeed, Hologi
c stated in its 2018 10-K, filed on
November 20, 2018, two weeks prior to the parties’ December 3,
2018 meeting, that:
During the second quarter of fiscal 2018, in connection
with commencing
our company-wide annual budgeting and strategic planni
ng pro
evaluating the current operating performance of our Medica
l Aesthetics
reporting unit, and abandoning an in-process research and
: development
project, we reduced the short term and long term) revenue
and operating,
income forecasts and determined that indicators of impairment
existed in
our Medical Aesthetics reporting unit. The Medical Aesthetics
reporting
unit is solely comprised of the Cynosure business, which we
acquired on
March 22, 2017. The updated forecast reflected significantly
reduced
volume and market penetration projections resulting in lower
short-term
and long-term profitabil ity than expected at the time of the Cynosure
acquisition
See Exs. A and B hereto (excerpts from Hologic’s 2018 10-K).
Hologic’s filings also show that falling sales of the Sculpsure machin
e, the very machine
at issue here, were a primary cause. See Exhibit, C, excerpts from Hologic’s 10-Q for the second
quarter of 2018, ending June 30, 2018 and filed on July 31, 2018
(“Our Medical Aesthetics
business commenced in fiscal 2017 as a result of the acquisition of
Cynosure effective March 22,
11
MEI 37350794v.1
2017. Product revenue decreased (21.3)% in the current three month
period compared to the
corresponding period in the prior year primarily due to decrease in
Body Contouring products
fevenues on a worldwide basis primarily driven by lower volume
of SculpSure systems, lower
Skin products revenue primarily due to lower PicoSure systems sales
globally partially offset by
sales in the U.S. of our new TempSure product, and lower Women's
Health product sales primaril y
from lower sales volume of our MonaLisa Touch device. We attribu
te the decreases primarily to
the U.S. sales force disruption since acquisition and increased competi
tion.”). Thornal and
Hologic have also argued that the sale in late 2019 and Goldman’s work
are so far removed in time
from the alleged misrepresentations that occurred in 2018
that the documents are not relevant,
This is the worst kind of argument as the due diligence for the
sale would obviously have a look
back period for the data since Hologic acquired the business in
2017 » and would support the
extreme write down in value that cannot simply be based on the
three quarters of operation in 2019,
Denying Elizabeth Grady the opportunity to obtain these highly
relevant documents would
put it at a substantial disadvantage and is inconsistent with the general
rule in the Commonwealth
that each party is entitled to receive relevant discovery concer
ning its claims or defenses, See
Strom vy. American Honda Motor Co., 423 Mass. 330, 336 (1996) (acknowledging that the
discovery rules should be construed to allow “the parties to obtain
the fullest possible knowledge
of the issues and facts before trial” rather than amounting to
a “game of blindman’s bluff’),
Although Goldman is not a party to the case, Elizabeth Grady is
permitted by the Rules to scek
discovery from Goldman, which it has done. The materials are relevant and should be produced
without further delay.°
enna ceeinin
° Hologic and Thornal also have argued that the subpoenaed
records are available from other sources, including the
De! fendants. Yet Cynosure refuses to produce any documen
ts, and the discovery rules permit a party to seek discovery
12
MEI 37350794v.1
U. HOLOGIC’S AND THORNAL’s MOTION IS NOT MADE IN GOOD
FAITH
Both Hologic and Thornal are improperly obstructing Elizabeth Grady’s efforts at
obtaining third party discovery. Neither party has a sufficiently justified legal or factual basis to
advance the Motion, yet they have anyway. During 9C discussions between counsel for Elizabeth
Grady and Goldman, it was admitted by Goldman’s lawyer that ordinarily
Goldman would discuss
narrowed search parameters, but that in this case Goldman had been
instructed by Hologic not to
produce anything. See Zucker Affidavit, [ 6. Goldman even refused to divulge the structur
e of
the relevant project file, which may have assisted identifying key categories
of information more
likely to be on point. Moreover, at no time did Goldman raise an issue with any
inadequacy in the
Protective Order entered in this case. Id.
The bottom line is that Hologic, Cynosure, and Thornal have orchest
rated a coordinated
effort to deny Elizabeth Grady to the discovery which it is entitled
to under the law. Goldman’s
objections were orchestrated by Hologic, who has now filed a meritless Motion
with the Court
without any legal basis to do so. Under Rule 37, a party may seek its expense
s incurred to oppose
a discovery motion brought without substantial justification. That is precisely the situation here,
as neither Hologic nor Thornal have any justification (factual or legal)
to pursue the requested
protective order or order to quash the subpoenas. Elizabeth Grady should
therefore be awarded its
costs under Rule 37.
nner
from third parties, and in many ¢ third party discovery is necessary to confirm or substantiate certain facts or
information that may also be in a party’s possession.
13
MEI 37350794v.1
CONCLUSION
For the reasons set forth herein, Elizabeth Grady respectfully requests that Hologic’s and
Thornal’s Motion be denied in its entirety, and that Elizabeth Grady be awarded its costs and
expenses in opposing a Motion advanced without substantial justification.
ELIZABETH GRADY FACE FIRST INC.,
D/B/A THE ELIZABETH GRADY
COMPANY,
By its attorneys,
one
rename
William Zucker, Esq., BBO No . 541240
Nicholas W. Allen, Esq., BBO No. 663409
McCarter & English, LLP
265 Franklin Street
Boston, MA 02110-3113
617.449.6500
wzucker@mccarter.com
nallen@mecarter.com
August 30, 2021
CERTIFICATE OF SERVICE
Thereby certify that on this 30th day of August, 2021, a true copy of the above document
was served upon counsel of record for Defendants by email pursuant to and in compliance with
the applicable Supreme Judicial Court Order in re: COVID-19 (coronavirus) Pandemic,
concerning email service in cases under Rule 5(b) of Mass. Rules Civil Procedure.
oe
ew
Nicholas W.
14
MEI 37350794y.1
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Exhibit B
ble. of Contents
ss ist re he
a ne -
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
~ se ~
FOR V 1 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: September 29, 2018
or
C) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(¢) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-36214
“ a o ~
Hologic, Inc.
(Exact name of registrant as specified in its charter)
Delaware 04-2902449
(State or Other Jurisdiction of (LR.S. Employer Identification No.)
Incorporation or Organization)
250 Campus Drive, Marlborongh, Massachusetts 01752
(Address of Prineipat Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code (508) 263-2900
Preview
29.2 COMMONWEALTH OF MASSACHUSETTS MIDDLESEX, SS. SUPERIOR COURT MIDDLESEX DIVISION st ~ niin ELIZABETH GRADY FACE FIRST INC, D/B/A THE ELIZABETH GRADY RECEIVED COMPANY, 9/8/2021 Plaintiff, Vv, C. A. No. 2081CV02967 CYNOSURE, INC. AND KEVIN THORNAL, Defendants. on ~ ewe ee o PLAINTIFF’S OPPOSITION TO NON-PARTY HOLOGIC, INC.’S AND DEFENDANT KEVIN THORNAL’S MOTION FOR PROTECTIVE ORDER AND/OR 'TO QUASH SUBPOENAS Plaintiff Elizabeth Grady Face First Inc., d/b/a The Elizabeth Grady Company (“Elizabeth Grady”), hereby opposes the Motion for Protective Order and/or To Quash Subpoenas served by Non-Party Hologic, Inc. and Defendant Kevin Thornal (the “Motion”). As explained in greater detail below, the Motion should be denied for the following reasons: e Hologic, a non-party, lacks standing to quash in their entirety the two subpoenas duces tecum served on a different non-party. Simply put, the weight of authority holds that non-parties lack standing to object to or move to quash a subpoena served on a different non-party. A lone, narrow exception appears to exist for subpoenas directed at bank account records or where a personal privilege exists, neither of which are present here. Defendant Kevin Thornal likewise cannot challenge the subpoenas without making a showing that he has a personal right or privilege in the subpoenaed materials. Conspicuously missing from the filing is an Affidavit from Thornal (which he is required to produce to meet his burden) explaining why the subpoenaed material ~ which are primarily business records - are somehow privileged, or why he has a personal privacy interest in the records. There is no Affidavit because Thornal is not able to make such a claim over business records belonging to Goldman. ME1 37350794v.4 Thornal is merely an employee of Hologic’s and a former Cynosure employee who lacks any standing to seek protection of business records belonging to other entities. At best, Thornal and Hologic could seek safeguards on any document production from Goldman, assuming they first establish a personal right or privilege in the materials. Yet the purported confidentiality concerns raised by Hologic and Thornal are already addressed by the Stipulated Protective Order negotiated and executed by the parties (including present counsel for Thornal and Hologic), and endorsed by the Court on June 6, 2021. The Protective Order was proposed by Defendants’ counsel specifically to address situations such as this, and to help avoid motion practice. The scope of the Order covers third party discovery in addition to discovery between the parties, making it remarkable for Thornal to now argue that the already-existing Protective Order is somehow inadequate. Moreover, neither Thornal nor Hologic have met their burden to show how or why the Protective Order will not provide adequate protections or safeguards with respect to Goldman’s production (to the extent confidential documents are actually implicated). Indeed, the Motion makes no express reference to the Protective Order. The subpoenas are reasonable in scope and are narrowly tailored to seek discovery related to key facts and claims, making the materials relevant under Rule 26. Tellingly, neither Hologic nor Thornal argue that the subpoenas are burdensome or oppressive (not could they since they are not the subpoenaed party). Rather, they essentially argue the requested materials are not relevant. Yet as explained below, the materials are relevant under Rule 26, as they would show the troubles that Cynosure’s business was experiencing at the same time that the representations were made to Elizabeth Grady, and those records would show that the representations were untrue when made. It is clear, however, that neither Hologic nor Thornal want to produce these documents to Elizabeth Grady and the parties are willing to exhaust all efforts to avoid having to produce responsive materials to Elizabeth Grady, including instructing Goldman to not produce any records. This recent Motion is simply further evidence of the parties’ bad-faith, coordinated efforts to obstruct Elizabeth Grady’s discovery. ' It is absurd for Hologic and Thornal to even suggest that service of the subpoenas was improper, perhaps why the argument is reduced to a single footnote. Goldman is a national company doing business across many states, including in Massachusetts, where it has a registered agent and multiple places of business, including at 125 High Street, Boston, Massachusetts. All of this information is readily available on the internet. Service of the subpoenas on Goldman’s registered agent was therefore authorized and appropriate under Rule 45. See, e.g, Netezza Corp. v. Intelligent Integration Systems, Inc., 27 Mass.L.Rptr. 551, *3-4 (Mass. Super. Oct. 26, 2010) (holding that Rule 45 clearly encompasses service of a subpoena duces tecum upon both non-residents and nonparties, and that entities doing business in the Commonwealth are subject to service on their registered agent). 2 ME} 37350794v.1 For all these reasons, the Motion should be denied. Elizabeth Grady should also be awarded its costs under Rule 37 for having to oppose a discovery motion not advanced in good faith, and where the moving parties have no legal or factual justification for the relief sought. RELEVANT FACTS I Brief Case Summary This is a fraud case. Through its First Amended Complaint (the “FAC”), Elizabeth Grady asserts claims against Cynosure and its former president, Kevin Thornal, for common law fraud/misrepresentation, and violation of Chapter 93A. At the heart of this dispute lies a number of material misrepresentations and half-truths peddled by Cynosure and its representatives (including Thornal) to Elizabeth Grady during an aggressive offering in the fall of 2018. Cynosure solicited Elizabeth Grady to reshape its business, to lease certain of its body-countering devices, and to offer those services throughout Elizabeth Grady’s New England salon locations. Because of the misrepresentations, Elizabeth Grady agreed to “partner” with Cynosure and the parties signed a Product Lease Agreement in January of 2019.? In 2017, well prior to the execution of the Agreement, Hologic (a publicly traded company) purchased the Cynosure business for nearly $1.7 billion. Two short years later, however, Hologic sold the business at a steep loss, for a reported $205 million. Cynosure’s aggressive solicitation of Elizabeth Grady occurred in the fall of 2018, right in the middle of Hologic’s brief period of ownership of Cynosure. At that time, Cynosure was actively soliciting new business from Elizabeth Grady, and during the process, presented Elizabeth Grady with what Cynosure claimed ? Elizabeth Grady is a well-known and successful operator and franchisor of skincare salons with locations throughout Massachusetts and New Hampshire. Through the Product Lease Agreement, Cynosure agreed to lease certain of its equipment and devices for installation across Elizabeth Grady’s salon locations, The two medical aesthetic devices to be provided under the agreement - SculpSure and Icon — are non-invasive body contouring devices. 3 MEI 37350794v.1 were established, achievable national sales data for its products. Cynosure and its representatives (including Thornal) told Elizabeth Grady at a meeting on December 3, 2018, that these sales numbers would be achieved with the marketing support that Cynosure claimed it provided to its customers, and would provide to Elizabeth Grady. Cynosure further represented to Elizabeth Grady that the training period to educate staff on the operation of the machines was a short one, and that other commercial arrangements between the companies would be available to sweeten the deal for Elizabeth Grady. Cynosure stated that the parties would work together in a mutually- beneficial partnership, and that Cynosure was fully supported by its parent, Hologic, in these efforts. See, e.g., FAC 4 24-30, 32, 36, 45; see also Elizabeth Grady’s Answer to the Defendants’ Interrogatory No. 1 (attached as exhibits to Motions to Compel recently filed by the Defendants). As it turns out, however, Cynosure misrepresented, among other things, its actual sales, the ability to train people quickly to use its machines, the backing of Hologic for Cynosures marketing, and the trend of the Cynosure business that would enable it to perform. To the contrary, at essentially the same time that Cynosure was approaching Elizabeth Grady, Hologic was filing its 10K for fiscal year 2018.3 Unknown to Elizabeth Grady, that 10-K acknowledged that the Cynosure business was impaired, causing Hologic to reduce the “short term and long term revenue and operating income forecasts”. See excerpts from Hologic’s 2018 10-K annexed hereto as Exhibit B. 4 Hologic was already writing down the value of the business, See Exhibit B, and the inlining iene nina 3 Hologic is on a September 30" fiscal year. Its 10-K was filed on November 20, 2018 at the same time as Mr, Thornal approached Elizabeth Grady and just weeks before the critical December 3, 2018 presentation by Cynosure to Elizabeth Grady. See Ex. A, a page from the SEC’s Edgar webpage showing the dates of Hologic’s 10-K and 10- Q filings. 4 Because this is a public record required to be filed by federal regulation as part of Hologic’s annual reporting requirements, it is inherently reliable, as it serves a unique purpose of informing shareholders of certain corporate developments. For that reason, the Court may take judicial notice of the facts stated therein. See, e.g., Laguer v. OneWest Bank, FSB, 2013 WL 831055, at *3 (Mass. Super. Feb. 27, 2013) (taking judicial notice of facts related to IndyMac loans and assignments available through FDIC website); Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir. 1991) (endorsing district court taking judicial notice of SEC filed documents, in part because the documents are required by law to be filed with the SEC, and no serious question as to their authenticity can exist); Lovelace v. 4 ME! 37350794v.1 Complaint alleges that Hologic was getting ready to sell the business, and that management knew that the numbers and services being presented to Elizabeth Grady were not achievable. See FAC $33, 44. Cynosure, moreover, had no intention of entering into the other financial arrangements which it had represented were to become part of the business arrangement between the companies. The proof is apparent in what happened. After failing to support Elizabeth Grady and repeated delays in the product roll out in Elizabeth Grady salons, Hologic announced the sale of Cynosure to a private venture capital firm in November 2019. See FAC 945. The transaction was orchestrated by Goldman, Hologic’s investment banker handling the sale. Despite purchasing the business for $1.7 billion two years earlier, Hologic was selling the business at a substantially reduced value (an announced $205 million). Ultimately, the roll-out of Cynosure’s products in Elizabeth Grady’s salons was an unmitigated disaster; Cynosure failed to provide the promised support or training, and the Agreement was never supported by Hologic, as Cynosure represented. As a result, Elizabeth Grady suffered substantial losses due to the Defendants’ fraud and this lawsuit followed. i. Elizabeth Grady Seeks Discovery From Cynosure Immediately upon service of its Complaint, Elizabeth Grady sought discovery from Cynosure through Rule 34 document requests. The focus of Elizabeth Grady’s early discovery was on the key misrepresentations, including what Cynosure and Thornal knew in the fall of 2018 about Cynosure’s internal state of affairs and its national sales data and trends. In response, Cynosure unsuccessfully moved to stay discovery before serving responses and objections to 3 Software Spectrum Inc., 78 F.3d 1015, 1018, n. | (5th Cir, 1996) (adopting rationale given by the Second Circuit in Kramer), Southmark Prime Plus, L.P. v. Falzone, 776 F. Supp. 888, 893 (D. Del. 1991) (Court may take judicial notice of SEC filings under Federal Rule of Evidence 201(b)(2)). 5 MEI 37350794v.1 Elizabeth Grady’s requests on February 19, 2021.5 The only documents Cynosure agreed to produce are public filings and, for the most part, Cynosure refused to produce any records. Hoping to avoid motion practice and trench warfare, instead of what Cynosure supplied for the buyer’s due diligence review, Elizabeth Grady asked Cynosure to produce one single document ~— a fairness opinion (or its substantial equivalent) which Elizabeth Grady believed should have been prepared in connection with the sale of the Cynosure business.° After much delay, Cynosure finally informed Elizabeth Grady that no fairness opinion existed. To date, Cynosure has attempted to impose its own stay of discovery by refusing to produce any documents in response to Elizabeth Grady’s Rule 34 requests.” iil. Elizabeth Grady Subpoenas Goldman Sachs With Cynosure refusing to produce documents, Elizabeth Grady went right to the source and served a Rule 45 subpoena on Goldman on June 21, 2021, shortly after the entry of the Protective Order. Elizabeth Grady served a second Rule 45 subpoena on Goldman on August 13, 2021. True and accurate copies of the Subpoenas are attached as Exhibits A and B to Hologic’s Motion.* Through the subpoenas, Elizabeth Grady seeks to discover, among other relevant information: (1) the date on which Hologic first began discussing a possible sale or restructuring of the Cynosure business; (2) underlying company data and financials (including sales data) that amen > The Court denied Cynosure’s motion to stay on March 10, 2021. See Order by Hon, Patrick Haggan (“Endorsement on Motion to Stay Discovery pending Resolution of its Motion to Dismiss (#12.0): DENIED. After review of the pleadings of the parties, the motion to stay Discovery is DENIED. Dated: March 9, 2021 and notices mailed 3/10/21”). ® A fairness opinion would in the ordinary course be prepared by Hologic’s investment banker to justify the sale price and would entail an analysis of the business being sold. See Affidavit of William A. Zucker, { 5, filed herewith in support of Elizabeth Grady’s Opposition. The Affidavit is also to be included with a companion Motion to Compel directed at Goldman Sachs. 7 Blizabeth Grady also requested documents which would show when Thornal knew of Hologic’s consideration of selling divesting or restructuring the Cynosure business. See Exhibit B to Motion. 8% Elizabeth Grady served a second subpoena on Goldman on August 13, 2021. The second subpoena covered communications between Goldman and Thornal, to avoid any argument that the scope of the first subpoena did not cover that category of document. Goldman also objected to the second subpoena. 6 MEI 37350794v.1 would show the reasons for the fire sale and that were used by Goldman and the buyer to value the Cynosure business; (3) any communications or discussions between the parties concerning Cynosure’s internal state of affairs and any factors prompting or contributing to Hologic’s decision to sell the business, and/or affecting the market value of the business and/or the anticipated or expected sale price of the company. Elizabeth Grady believes this information will show that the representations made to Elizabeth Grady at the time they were made were fictions rather than facts. Goldman is in possession of relevant records, as it could not have orchestrated the sale of Cynosure without undertaking some form of analysis or valuation and/or providing prospective buyers with detailed financial information, including sales data from the previous years and gathering documents necessary for a buyer’s due diligence. In its role as Hologic’s investment banker, Goldman should have possession of supporting documentation that would show why a business purchased for $1.7 billion in 2017 was sold less than two years later for a reported $205 million. Such a dramatic devaluation does not happen overnight and without serious business justifications for the sale, particularly as Hologic was a public company. Indeed, as early as 2018, Hologic was reporting substantial revenue losses related to its Cynosure business, which facts were not disclosed to Elizabeth Grady. It is likely that Goldman’s analysis considered historical sales data that pre-dated 2018, and thus Goldman is in possession of critical facts, documents and materials relevant to core issues in this case. Goldman ultimately objected to the subpoenas. See Zucker Aff., at Ex. B and C. In discussions between the parties’ counsel, however, Goldman informed Elizabeth Grady that responsive materials existed in a project file (or potentially other sources) but that its hands were tied by Hologic, who was refusing the release of any responsive information. See Zucker Affidavit, 46. To date, no documents have been produced — by Goldman, Cynosure, or anyone else. MEI 37350794v.1 ARGUMENT 1 HOLOGIC AND THORNAL LACK STANDING Hologic argues in its Motion that “a non-party may have standing to move to quash a subpoena directed to another non-party that calls for production of documents to which the moving non-party has ownership rights or a property interest.” See Hologic Brief, p. 5. But this proposition runs against the express text of Rules 26 and 45. Under Rule 26, only a “party” or “the person from whom discovery is sought” may seek a protective order. See Mass. R. Civ. P. 26(c). Hologic is neither of these and thus lacks standing under Rule 26 to seek a Protective Order. Similarly, “Any person subject to a subpoena under” Rule 45 can move for a protective order under Rule 26 or “be deemed entitled to any protection set forth in any discovery or procedural order previously entered in the case,” Mass. R. Civ. P. 45(f)(3). Again, Hologic is not “any person subject to a subpoena” and has no authority to seek an order to quash under Rule 45. Hologic’s motion seems to hinge upon Hologic’s citation to the Massachusetts Practice Series (authored by Judge Peter Lauriat) and the use, by Judge Lauriat, of the word “‘ may” in the statement a non-party “may” have standing to move to quash. The weight of authority, however, holds that even parties generally lack standing to quash a subpoena served on a non-party. See, e.g., Wright & Miller, 9A Fed. Prac. & Proc. Civ, § 2459 (Subpoena for the Production of Documents and Things—Quashing or Modifying a Subpoena) (3d ed.) (“Ordinarily a party has no standing to seek to quash a subpoena issued to someone who is not a party to the action, unless the objecting party claims some personal right or privilege with regard to the documents sought.”). No one has made an argument that any privilege is implicated. Whatever privilege or confidential information may be contained in Goldman’s records, the Protective Order in this case provides an adequate means of protection. MEI 37350794v.1 Thus, Hologic has not established special circumstances to exempt it from the ordinary rule that it does not have standing to move to quash the subpoenas. While Thornal is a party, he also lacks standing to challenge the subpoenas. As noted, a party can challenge a subpoena duces tecum served on a non-party but only in limited situations where a privilege exists or where a parties’ privacy interests are implicated. See, e.g., Boston Restoration Resources, Inc. v. Lorenzo Pitts, Inc., 34 Mass.L.Rptr. 646 (Mass. Super. March 16, 2018); Collins v, Does 1-38, 941 F. Supp. 2d 153, 159-60 (D, Mass. 2013) (“As a general rule, a party lacks standing to quash a subpoena issued to a nonparty unless the party has a claim of privilege attached to the information sought or unless it implicates a party’s privacy interests.”). Here, the subpoenas do not implicate personal or any privileged materials of Thornal. Rather, the subpoenas seek business records relating to sales and operations of the Cynosure business during a critical time period when the alleged misrepresentations were made to Elizabeth Grady. Moreover, the business records subject to the subpoena are not personal to Thornal, and thus he cannot claim any personal privacy interest in the documents, It is Thornal’s burden to establish his right to object to the subpoena, and he has not done so. To the extent Hologic and Thornal seek a Rule 26 protective order on grounds that a portion of the information is confidential or proprietary, there already exists a Protective Order in this case designed to address these situations. The Protective Order was negotiated by Thornal’s counsel along with the other parties’ counsel and expressly provides protections for all document productions, including those made by third parties. Neither Hologic nor Thornal even attempt to explain why the current Protective Order is inadequate to safeguard any concerns about the disclosure of potentially confidential or proprietary information. Neither Hologic nor Thornal should be permitted to quash in their entirety subpoenas which seek information directly relevant ME} 37350794v.1 to Elizabeth Grady’s claims. To the extent Thornal and Hologic believe safeguards or conditions should be attached to any productions made by Goldman (to protect sensitive information), a Protective Order is already in place and provides adequate protections. il. THE SUBPOENAED RECORDS ARE RELEVANT TO KEY ISSUES AND REPRESENTATIONS Hologic’s and Thornal’s relevancy argument misses the mark. In interpreting the scope of discovery under the Massachusetts Rules of Civil Procedure, the SJC has defined “relevant” evidence to: broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case. ... Discovery is not limited to issues raised by the pleadings, for discovery itself is designed to help define and clarify the issues. Nor is discovery limited to the merits of a case, for a variety of fact-oriented issues may arise during litigation that are not related to the merits. Cronin vy, Strayer, 392 Mass. 525, 534 (1984); Meyer y. King, 1995 WL 1312543 (Mass. Super. Ct. 1995) (“Discovery should ordinarily be allowed under the concept of relevancy unless it is clear that the information sought can have no possible bearing upon the subject matter of the action.”). Here, the materials requested by the subpoenas are directly relevant, as they relate to the viability of Cynosure (during or near the exact time when Cynosure was actively recruiting business from Elizabeth Grady) while its parent company was likely already exploring a possible sale of the business. Goldman could not have acted as the investment banker orchestrating the sale, preparing an offering brochure and due diligence materials for prospective buyers, and advising Hologic (or providing any analysis of the Cynosure business) without supporting financial and sales data. Moreover, the parties likely communicated about that data, including sales trends on a product-by-product basis. In the aggregate, the information will likely show when Hologic 10 MEI 37350794v.1 recalculated what support it would provide to Cynosure’s busines s. It will also show Thornal’s involvement with the sale or divestiture of the business which may have preceded his representations to Elizabeth Grady. And, even if it did not, given his affirmative representations, Thornal had an obligation to inform Elizabeth Grady that the misrepresentations he authored or approved were incorrect. See, 2.2, Maxwell v. Ratcliffe, 356 Mass. 560, 562-63 (1969) (broker had duty to avoid half-truths and make full disclosure of facts for issues expressly raised between the parties). All of that material is relevant to the claim that Cynosure and Thorna l made knowingly false, incomplete, and/or misleading statements to Elizabeth Grady and having made those statements, failed at any time to correct them as Elizabeth Grady only found out about the sale of Cynosure when it was announced in the press. Indeed, Hologi c stated in its 2018 10-K, filed on November 20, 2018, two weeks prior to the parties’ December 3, 2018 meeting, that: During the second quarter of fiscal 2018, in connection with commencing our company-wide annual budgeting and strategic planni ng pro evaluating the current operating performance of our Medica l Aesthetics reporting unit, and abandoning an in-process research and : development project, we reduced the short term and long term) revenue and operating, income forecasts and determined that indicators of impairment existed in our Medical Aesthetics reporting unit. The Medical Aesthetics reporting unit is solely comprised of the Cynosure business, which we acquired on March 22, 2017. The updated forecast reflected significantly reduced volume and market penetration projections resulting in lower short-term and long-term profitabil ity than expected at the time of the Cynosure acquisition See Exs. A and B hereto (excerpts from Hologic’s 2018 10-K). Hologic’s filings also show that falling sales of the Sculpsure machin e, the very machine at issue here, were a primary cause. See Exhibit, C, excerpts from Hologic’s 10-Q for the second quarter of 2018, ending June 30, 2018 and filed on July 31, 2018 (“Our Medical Aesthetics business commenced in fiscal 2017 as a result of the acquisition of Cynosure effective March 22, 11 MEI 37350794v.1 2017. Product revenue decreased (21.3)% in the current three month period compared to the corresponding period in the prior year primarily due to decrease in Body Contouring products fevenues on a worldwide basis primarily driven by lower volume of SculpSure systems, lower Skin products revenue primarily due to lower PicoSure systems sales globally partially offset by sales in the U.S. of our new TempSure product, and lower Women's Health product sales primaril y from lower sales volume of our MonaLisa Touch device. We attribu te the decreases primarily to the U.S. sales force disruption since acquisition and increased competi tion.”). Thornal and Hologic have also argued that the sale in late 2019 and Goldman’s work are so far removed in time from the alleged misrepresentations that occurred in 2018 that the documents are not relevant, This is the worst kind of argument as the due diligence for the sale would obviously have a look back period for the data since Hologic acquired the business in 2017 » and would support the extreme write down in value that cannot simply be based on the three quarters of operation in 2019, Denying Elizabeth Grady the opportunity to obtain these highly relevant documents would put it at a substantial disadvantage and is inconsistent with the general rule in the Commonwealth that each party is entitled to receive relevant discovery concer ning its claims or defenses, See Strom vy. American Honda Motor Co., 423 Mass. 330, 336 (1996) (acknowledging that the discovery rules should be construed to allow “the parties to obtain the fullest possible knowledge of the issues and facts before trial” rather than amounting to a “game of blindman’s bluff’), Although Goldman is not a party to the case, Elizabeth Grady is permitted by the Rules to scek discovery from Goldman, which it has done. The materials are relevant and should be produced without further delay.° enna ceeinin ° Hologic and Thornal also have argued that the subpoenaed records are available from other sources, including the De! fendants. Yet Cynosure refuses to produce any documen ts, and the discovery rules permit a party to seek discovery 12 MEI 37350794v.1 U. HOLOGIC’S AND THORNAL’s MOTION IS NOT MADE IN GOOD FAITH Both Hologic and Thornal are improperly obstructing Elizabeth Grady’s efforts at obtaining third party discovery. Neither party has a sufficiently justified legal or factual basis to advance the Motion, yet they have anyway. During 9C discussions between counsel for Elizabeth Grady and Goldman, it was admitted by Goldman’s lawyer that ordinarily Goldman would discuss narrowed search parameters, but that in this case Goldman had been instructed by Hologic not to produce anything. See Zucker Affidavit, [ 6. Goldman even refused to divulge the structur e of the relevant project file, which may have assisted identifying key categories of information more likely to be on point. Moreover, at no time did Goldman raise an issue with any inadequacy in the Protective Order entered in this case. Id. The bottom line is that Hologic, Cynosure, and Thornal have orchest rated a coordinated effort to deny Elizabeth Grady to the discovery which it is entitled to under the law. Goldman’s objections were orchestrated by Hologic, who has now filed a meritless Motion with the Court without any legal basis to do so. Under Rule 37, a party may seek its expense s incurred to oppose a discovery motion brought without substantial justification. That is precisely the situation here, as neither Hologic nor Thornal have any justification (factual or legal) to pursue the requested protective order or order to quash the subpoenas. Elizabeth Grady should therefore be awarded its costs under Rule 37. nner from third parties, and in many ¢ third party discovery is necessary to confirm or substantiate certain facts or information that may also be in a party’s possession. 13 MEI 37350794v.1 CONCLUSION For the reasons set forth herein, Elizabeth Grady respectfully requests that Hologic’s and Thornal’s Motion be denied in its entirety, and that Elizabeth Grady be awarded its costs and expenses in opposing a Motion advanced without substantial justification. ELIZABETH GRADY FACE FIRST INC., D/B/A THE ELIZABETH GRADY COMPANY, By its attorneys, one rename William Zucker, Esq., BBO No . 541240 Nicholas W. Allen, Esq., BBO No. 663409 McCarter & English, LLP 265 Franklin Street Boston, MA 02110-3113 617.449.6500 wzucker@mccarter.com nallen@mecarter.com August 30, 2021 CERTIFICATE OF SERVICE Thereby certify that on this 30th day of August, 2021, a true copy of the above document was served upon counsel of record for Defendants by email pursuant to and in compliance with the applicable Supreme Judicial Court Order in re: COVID-19 (coronavirus) Pandemic, concerning email service in cases under Rule 5(b) of Mass. Rules Civil Procedure. oe ew Nicholas W. 14 MEI 37350794y.1 Exhibit A Home » Comy ne en HOLOGIC INC roux on nasdag Investor Toolkit: On ~ 1 3 fe 3F Latest f) g Vas tra! ° duly. OQ [+] 8-K (current reports) June 26.2024 [Fe July 28, “4 Cafentieport | “Earnings [+] 10-K (annual reports) and 10-Q (quarterly release** reports) 2.02 - Results of Onerations and Financial Conditioi itts.of 9.04 « Foncia ateislnts. and Exhubits (Finny als 9 Su a Fiting {+] Proxy (annual meeting) and information 8.01- ther Foren es (th aistrant can use this tem to. report ¢. statements 9.01- igancial Stare ad Fi Finsnrial Statements a May. 28, 202 30 f aD 1 Api 28, 26 WC » Quarterly eppostfor 0 her. uw [+] Ownership disclosures M rsh 27,.2021| fi al ad m4 Search table 2014-15 To Date tyyyy-min-ds) oS oe oad Keywords Show columns: ' For type Form description iling date {@ Reporting date Cact (2 Fitrs number 2 File number (2 Accession number size i +4i Wl i Form Foun Filing type description date 10-0 end on x i 0-9 Query reves tsi 2% 10-9 uo 10-K non 18 1 ate is We mnAOS! ay a Tysarkeaty Vs al 20-6 0-27 10-9 nf 10-Q sa oot FS if 10K pl we fh, a ze 16-9 ih 10-8 ut eben IS ithe 129 fl & 0-0 eaaatenls 4 He (08 1G hy fe 10. hates we 2 0k Aopuelsepont Beeson 19 and IS, set S28 Bone t0'9) [hing | 2OVT TAY 2 10-0 ‘Quaitedy.esport sections V3.0, Yards 2077-08-02 ASELU 10-0 RQuatedwrenort Sections 14 or stay ies) 2017-05-10 ARLE DAO i0-€ Quavtony eport Hecions Lar thon Lisa] 2017-02-03 AOR Avyuwol teport (Saxtion Lait tid), go gomaon Se) 2018-11-17 Bh2 10-8 Guptadh. oper Sreess tine en (eed 2016-07-27 PEF 10-9 Ohactosty emo Guctions EA ee sean [iEe} 2016-04-27 TM Sah 10-0 Suuntestesonan.Gectees stor ian Ea) OVE 01-27 2hieks ye 10-K anual mpout Hhction. 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PLAS 10-0 ‘Quaiteata spin Tae ies 1A os 3c [Fe) 20%4-02-05, SMe oad ve Showing 1 to 33 of44 entries Data source: CIKONOUBSO! 37 ison. hye tar Re LCOS How to Use EDGAR Before you Invest, Investorgov Learn how to use EDGAR to research public filings by public Get answers to your investing questions from the SEC's companies, mutual funds, ETFs, some annuities, and more. website dedicated to retail investors Exhibit B ble. of Contents ss ist re he a ne - UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ~ se ~ FOR V 1 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: September 29, 2018 or C) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(¢) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-36214 “ a o ~ Hologic, Inc. (Exact name of registrant as specified in its charter) Delaware 04-2902449 (State or Other Jurisdiction of (LR.S. Employer Identification No.) Incorporation or Organization) 250 Campus Drive, Marlborongh, Massachusetts 01752 (Address of Prineipat Executive Offices) (Zip Code) Registrant’s Telephone Number, Including Area Code (508) 263-2900