In Re: Easysaver Rewards Litigation

Filing 175

ORDER granting in part and denying in part #159 Ex Parte Motion for Reconsideration. Signed by Magistrate Judge William V. Gallo on 09/01/11. (cge) (jrl).

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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In re: EASYSAVER REWARDS
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LITIGATION
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Civil No. 09-CV-2094-AJB(WVG)
ORDER GRANTING IN PART AND
DENYING IN PART EX PARTE MOTION
FOR RECONSIDERATION
[Doc. No. 159]

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On June 30, 2011, the Court ruled on numerous discovery

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disputes between Plaintiffs and both Defendants.

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seek the Court’s reconsideration of the portion of the Order that

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involves Defendant Regent Group, Inc. (“EMI”).

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reevaluate its previous rulings because class certification is a

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major milestone in this case and the interests of many individuals

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may be at stake.

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this process outweighs any technical rule violation, and the Court

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wishes to afford Plaintiffs every opportunity to be heard.

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due consideration, the Court GRANTS IN PART and DENIES IN PART

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Plaintiffs’ motion.

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/ / /

Plaintiffs now

The Court opts to

In the Court’s estimation, the significance of

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After

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I.
A.

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DISCUSSION

Failure to Comply With Local Rules or Legal Standard
EMI points out Plaintiffs’ apparent failure to comply with

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the Local Rules.

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the class certification phase, the Court wishes to leave no doubt

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that it considered every argument made.

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excuses

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However, all

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violation in the future may result in the summary denial of their

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However, because the issues here are important to

Plaintiffs’

transgression

and

As a result, the Court
considers

their

motion.

parties are henceforth on notice that a similar

motion if appropriate.

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Moreover, EMI argues that Plaintiffs have not presented new

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evidence or arguments that could not have been presented in the

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original briefing.

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the parties could use in the original briefing, and that limitation

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partially cabined how in-depth Plaintiffs could flesh out their

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arguments.1/

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However, the Court limited the number of pages

In the end, the Court always has discretion to reconsider its

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own rulings.

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banc), superceded on other grounds as recognized by In re: Alexan-

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der, 197 F.3d 421, 426 (9th Cir. 1999).

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time only because the class certification process is a major step in

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the life of cases such as the case at bar.

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will allow full briefing in the future, as explained in footnote 1,

Rodgers v. Watt, 722 F.2d 456, 460 (9th Cir. 1983) (en

The Court does so at this

Given that the Court

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1/

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The informal discovery dispute resolution procedure in the Court’s Chambers
Rules has worked well in the past in nearly every case the Court has handled to
date. However, based on the Court’s experience with, and observations of, this
case, in the future, the Court will require full briefing of all written discovery
disputes (i.e., disputes over SROGs, RFPs, RFAs, and other similar discovery
tools). The parties shall continue to comply with the Chambers Rules’ requirement
to call chambers regarding disputes. The Court will provide further guidance at
that time.

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the Court will be far less inclined to be so accommodating or

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permissive in the future.

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B.

RFP Nos. 7, 18, 29, 31, and 40

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Plaintiffs argue that the RFPs above are relevant to class

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certification because they bear on Rule 23(b)(3)’s predominance and

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superiority prongs.

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the predominance and superiority standards met in certifying common

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law fraud classes where there was a showing that class representa-

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tives and absent members were victims of a common design or scheme

They note that “[c]ourts have generally found

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that the defendant was liable for.”

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on to discuss four cases that they claim establish that “discovery

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related to EMI’s ‘centrally orchestrated’ scheme to defraud the

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class is directly relevant to Plaintiffs’ class certification motion

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because it would demonstrate that ‘each plaintiff [was] similarly

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situated with respect to it’ therefore justifying class treatment.”

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(Id. at 8 (alteration in original; citation omitted).)

(Doc. No. 159 at 6.)2/

They go

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In response, EMI points out that (1) the only claim in the

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Third Amended Complaint (“TAC”) that involves common law fraud is

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brought against co-defendant Provide Commerce only, not EMI, and (2)

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the four cases Plaintiffs discuss involve either common law fraud or

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federal securities fraud claims.

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conclude: “Plaintiffs’ entire argument for reconsideration is based

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on the faulty premise that the requested discovery is needed to

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certify a claim that they have not even brought against EMI.” (Id.)

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Upon review of the arguments, case law cited, and the Third Amended

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Complaint, the Court agrees with EMI.

(Doc. No. 166 at 6.)

They

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2/

All page references to documents on the Court’s docket are to the CM/ECF page
numbers, not to the document’s original pagination.

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Plaintiffs’ motion states that they will face a “robust

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factual showing” when they seek to certify their common law fraud

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claims.

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multiple such claims, the only instance in the entire 58-page TAC

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where “common law fraud” is mentioned is in Claim Seven, which is

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for “Fraudulent Misrepresentations/Omissions . . . Against Defendant

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Provide-Commerce.”

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the case law cited, this section of Plaintiffs’ motion contends that

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(1) they need the discovery in the disputed RFPs (2) because this

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case, like the cited cases, involves “certifying common law fraud

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classes,” (3) which requires them to show that they were “victims of

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a common design or scheme.”

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moving papers focus exclusively on EMI.

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issue RFPs propounded to EMI bear on certification of common law

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fraud class against EMI because that claim does not involve EMI.

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The only Defendant named in Claim Seven is Provide Commerce.

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RFPs therefore are not relevant for certifying a class against EMI

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because they are directed to, and seek information from, a defendant

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that is not named in that claim.

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(Doc. No. 159 at 11.)

However, while Plaintiffs reference

(Doc. No. 164 at 32, 33 at ¶ 111.)

(Doc. No. 159 at 6.)

Relying on

Plaintiffs’

However, none of the at-

The four cases Plaintiffs cite are inapposite.

These

While the

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Court’s review of the cases revealed that they are distinguishable

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and inapplicable here on various grounds, the Court will forgo an

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at-length discussion because, in the end, EMI is correct that all of

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these cases involve securities fraud and common law fraud, which are

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not claims brought against EMI.

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cient basis to render these cases inapplicable here.

This distinction alone is suffi-

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Moreover, although Plaintiffs’ TAC alleges throughout that

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Provide Commerce and EMI conspired together and ran the EasySaver

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Rewards “scheme” or “scam” together, it is unclear why Plaintiffs

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need evidence of a “common design or scheme,” which only applies to

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the common law fraud claim, to certify the proposed classes and sub-

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classes against each individual defendant for any claim other than

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Claim Seven.

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these RFPs are relevant to any claim other than Claim 7.

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this case cannot be correctly characterized as a common law fraud

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case--and thus bring it within Plaintiffs’ cases--when only 1 of 17

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claims involves common law fraud.

In other words, Plaintiffs have not shown how or why
Moreover,

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Based on the foregoing, the documents in the RFPs at issue

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are not discoverable for class certification purposes and are

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outside the scope of discovery at this stage.

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documents are discoverable during merits discovery is a question for

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another day.

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respect to RFP Nos. 7, 18, 29, 31, and 40.

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C.

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The Court denies the motion for reconsideration with

Rulings on RFPs 4, 11, 12, and 13
RFP

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Whether these

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Produce

Do Not
Produce
x

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Comments
Objections sustained. Plaintiffs cite
no case law whatsoever, but importantly none that supports the bald
assertion that use of the Kroll reports during the confidential ENE for
settlement
discussions
constitutes
waiver of the work-product doctrine.
(See Doc. No. 159 at 12:12-25.)

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See Comments

Subject to Rule 11, EMI states in
detail that it has produced all code
versions that exist. EMI states in no
uncertain terms that it has produced
whatever it has and cannot further
comply because additional responsive
documents do not exist. As a result,
the Court cannot compel EMI to produce
what it does not have. The Court can
only accept at face value what parties
represent to it.
So long as EMI
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states it has complied with the daterelated orders on page 9 of the
Court’s June 30, 2011, Order, the
Court will not order further production.
However, if EMI has not complied with the date-related orders on
page 9 of the June 30, 2011, Order,
EMI shall so comply.

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D.

Request For Reconsideration In Section 4 Is Denied

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The combination of Parts B and C, above, renders moot

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portions of Section 4 of Plaintiffs’ motion, which relies on

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arguments previously made and herein not accepted.

The remaining

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portion, specifically the RFPs at the top of page 14, are simply

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much too broad for the Court to allow.

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Plaintiffs will never realize this or admit as much, but these RFPs

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go far beyond matters that bear on class certification, such that

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they are primarily focused on the merits of the case.

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Plaintiffs’ belief, they are not absolutely entitled to a response

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to every RFP simply because it somehow or may relate(s) to certifi-

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cation.

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discovery, tangentially touches certification, and places a heavy

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burden on EMI, the Court is fully within its authority to limit such

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obtrusive discovery.

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worded RFPs, knowing full well the limits of bifurcated discovery,

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and then protest that they need it all.

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respond to these expansive RFPs, the Court is certain that Plain-

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tiffs will once again object that EMI has not fully responded to the

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RFP as broadly phrased when EMI limits its response to certification

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issues.

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issue Plaintiffs raise.

When

an

RFP

far

oversteps

The Court realizes that

the

bounds

of

Contrary to

bifurcated

Plaintiffs cannot draft such expansively

If the Court compels EMI to

However, the Court will use this opportunity to clarify an

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With regard to Plaintiffs’ statements on page 14, lines 15

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through 25, EMI should be mindful that it should have produced

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whatever code that was the basis for the Easysaver Rewards program,

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regardless of whether such code was exclusive to that program.

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Footnote 5 in EMI’s opposition appears to take the position that

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shared codes infringe on business relationships with third parties.

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However, any shared codes are discoverable if they were the basis

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for the Easysaver program even if those codes were also used to

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develop programs for third party partners. Codes exclusive to third

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parties need not be produced, but codes must be produced if they

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were the basis for the Easysaver program regardless of whether they

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were also the basis for programs created for third parties.

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protective order in place in this case expressly protects third

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party interests.

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The

The foregoing is consistent with the Court’s June 30, 2011,

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Order.

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certainly used in EMI’s “association or partnership with Provide

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Commerce, Inc., only.” If EMI interprets the word “only” at the end

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of the quoted sentence to mean that codes must have been used

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“exclusively” to implement the Easysaver program, this interpreta-

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tion is off base. As the Court understood the previous dispute, EMI

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objected to production of information that was exclusive to third

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parties and not related to Provide Commerce or the Easysaver program

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in any way.

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written exclusively for other EMI partners are not relevant to this

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case. However, insofar as EMI developed code for other partners and

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Provide Commerce, such code certainly is relevant.

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EMI has heretofore withheld any code on this basis, it shall produce

Shared codes used to implement the Easysaver program were

Such information is not discoverable because codes

Therefore, if

the withheld code.
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E.

RFPs That Bear on Usage of Easysaver Benefits
Plaintiffs next seek reconsideration of the Court’s rulings

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on RFP Nos. 24(j), 24(k), 26, and 27.

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information to “test EMI’s thesis” that “the fact that some people

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redeemed EasySaver Rewards benefits is conclusive evidence that they

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intentionally enrolled, which somehow undermines the class.”

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No. 159 at 14-15.)

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that certification may be opposed partly on this basis.

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of whether this argument is sound, Plaintiffs’ may potentially face

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it. Because Plaintiffs had limited space in their original briefing

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to flesh out their need for the above RFPs, this point did not come

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across well at that time.

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bifurcated discovery in mind, the Court now reevaluates each RFP.

They argue they need this

(Doc.

EMI does not deny Plaintiffs’ representation
Regardless

Therefore, with the limitation of

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Plaintiffs’ motion is granted as to RFP Nos. 24(j) and 24(k).

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If EMI’s anticipated argument is that Easysaver enrollees were not

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enrolled

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benefits, then the “number” and “percentage” of enrollees who

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actually used benefits may be relevant.

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potential to rebut the idea that class members used the benefits and

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would have willingly registered for Easysaver as a result.

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against

their

will

because

they

used

the

program’s

This information has the

Plaintiffs’ motion is denied as to RFP 26.

RFP 26 seeks the

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physical copy of each document that shows a putative class member

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made a request for benefits.

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request for the additional reasons that it is duplicative and

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imposes an undue burden on EMI.

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produce in response to RFP 24(j) and 24(k) will be the total number

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of persons who sought benefits, while RFP No. 26 will produce only

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a subset of that number (i.e., registrants who sought benefits

The Court again denies Plaintiffs’

First, the information EMI will

solely through the EMI website as opposed to via the telephone and
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the website).

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each request, the aggregate of which represents only a portion of

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the number or percentage provided for RFP Nos. 24(j) and 24(k),

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places and undue burden on EMI when weighed against the utility of

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the information sought. The entire purpose of bifurcating discovery

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is to minimize unnecessary costs and fees, and RFP 26 accomplishes

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exactly the opposite result.

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Second, searching its records for physical copies of

Plaintiffs’ motion is granted in part as to RFP 27(a)-(c),
but denied in part as to RFP 27(d)-(f).

If the purpose of this

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information is to rebut EMI’s “defense,” that Easysaver enrollees

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were not enrolled against their will because they used Easysaver

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benefits, EMI’s variable cost of the discounts and coupons are

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irrelevant to that analysis.

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F.

EMI Shall Not Redact Complainants’ Contact Information

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In their original briefing, Plaintiffs sought identifying

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information both for all class members in general and for persons

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who complained to EMI.

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information only for those persons who complained to EMI. (Doc. No.

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159 at 15-16.)

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original briefing and their argument was not developed, the Court

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grants Plaintiffs’ motion insofar as it requests that contact

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information for complainants not be redacted.

(Doc. No. 117 at 2-3.)

Now, they seek that

While this distinction was not drawn well in

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Plaintiffs’ cases certainly do not support their request for

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absent class members’ contact information at this stage of the

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proceedings.

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information of Easysaver registrants who complained to EMI, the

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Court

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redacted.

However, insofar as Plaintiffs seek the contact

concludes

that

their

contact

information

should

not

be

Although Plaintiffs did not make the following argument

in original briefing, and superficially fleshed it out in the
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instant motion, the Court is aware that Defendants may argue that

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Easysaver registrants were not enrolled against their will by

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clicking the “X” that closed the registration window.

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this argument, persons who clicked the “X,” who were nonetheless

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registered, and who complained to EMI afterwards certainly are

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percipient witnesses that may be able to provide facts that bear on

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certifying their particular subclass. The Court reiterates that EMI

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shall un-redact the contact information of only those persons who

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complained to EMI. EMI need not produce the contact information for

In light of

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every person who registered for the Easysaver program.

Finally,

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this Order applies to EMI only, not Provide Commerce.

Provide

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Commerce was not a target of the reconsideration motion, and the

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Court will not now accept such an untimely motion as to Provide

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Commerce.

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G.

EMI Has Produced Documents Beyond March 2007

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EMI’s representations on page 12 of its opposition render

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Section 7 of Plaintiffs’ motion moot, and this portion of the motion

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is denied accordingly.

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III.

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CONCLUSION

Where EMI is ordered to produce documents or information, it

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shall do so by September 30, 2011.

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IT IS SO ORDERED.

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DATED:

September 1, 2011

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Hon. William V. Gallo
U.S. Magistrate Judge

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