International Brotherhood of Teamsters, Airline Division v. Frontier Airlines, Inc. et al
Filing
72
ORDER granting 45 Plaintiff's Motion for Disclosure Order Concerning Commercial Agreement Amendments 1 and 2; granting 46 Plaintiff's Motion to Compel Production of Documents; granting 52 Plaintiff's Motion to Compel Defendant FAPAInvest to Produce Financial Records, by Magistrate Judge Kristen L. Mix on 04/24/2012.(wjcsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 11-cv-02007-MSK-KLM
INTERNATIONAL BROTHERHOOD OF TEAMSTERS, AIRLINE DIVISION,
Plaintiff,
v.
FRONTIER AIRLINES, INC.,
REPUBLIC AIRWAYS HOLDINGS, INC., and
FAPAINVEST, LLC,
Defendants.
FRONTIER AIRLINES PILOTS ASSOCIATION,
Interested Party.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Plaintiff’s Motion for Disclosure Order
Concerning Commercial Agreement Amendments 1 and 2 [Docket No. 45; Filed March
8, 2012]; Plaintiff’s Motion to Compel Production of Documents by Defendants
Frontier Airlines, Inc. and Republic Airways Holdings, Inc. [Docket No. 46; Filed March
8, 2012]; and Plaintiff’s Motion to Compel Defendant FAPAInvest to Produce
Financial Records [Docket No. 52; Filed March 12, 2012] (collectively, the “Motions”).1
The Motions are referred to this Court for resolution. [## 47, 48, 53].
1
The parties initially complied with the undersigned’s discovery dispute procedures by
calling Chambers, and the undersigned gave the parties permission to file appropriate written
discovery motions.
1
Plaintiff International Brotherhood of Teamsters, Airline Division (the “Teamsters
Union”) brings this lawsuit pursuant to the Railway Labor Act (“RLA”), 45 U.S.C. §§ 151 et
seq., which governs labor relations in the airline industry. Compl., [#1] at 1; Ord., [#57] at
1. The case arises from a Letter of Agreement (“LOA 67") entered into by Interested Party
Frontier Airline Pilots Association (“FAPA”) and Defendant Frontier Airlines, Inc. (“Frontier”)
[revised at #1-4], and a related Commercial Agreement between Frontier, Defendant
Republic Airways Holdings, Inc. (“RAH”) and Defendant FAPAInvest, LLC (“FAPAInvest”)
[#1-5]. The Teamsters Union attests that it was certified as the exclusive bargaining
representative for pilots employed by RAH’s subsidiaries, including Frontier, on June 28,
2011. [#1] at 7. Previously, FAPA had been the bargaining representative for Frontier
pilots (Frontier was acquired by RAH in 2009). [#57] at 2. The Teamsters Union asserts
that the LOA 67 (effective June 17, 2011) and related Commercial Agreement (effective
June 24, 2011) unlawfully undermine its position as the exclusive bargaining representative
and violate certain provisions of the RLA. See [#1]. Thus, the Teamsters Union requests
that the Court issue a declaratory judgment declaring the LOA 67 and Commercial
Agreement null and void, as well as an injunction barring RAH, Frontier, and FAPAInvest
from taking action in furtherance of the LOA 67 and Commercial Agreement.2 Id. at 11-12.
Pursuant to the Scheduling Order entered October 26, 2011, the deadline for
completion of discovery is May 14, 2012, and the dispositive motion deadline is June 15,
2012. [#25] at 7. No substantive hearings have been scheduled.
2
The Court incorporates by reference the background of this lawsuit as set forth in the
Opinion and Order Granting in Part and Denying in Part Motion to Dismiss. Ord., [#57] at 1-5. The
remaining third, fifth, and sixth claims concern the validity of the LOA 67 and Commercial
Agreement pursuant to certain provisions of the RLA. See [#57], [#1].
2
At their core, the three motions concern a single issue: the effect and mechanics of
the Stipulation and Protective Order governing the exchange of discovery designated as
confidential by any of the parties (including Interested Party FAPA). See [#41] (Stipulation
and Protective Order), [#43] (extended to FAPA). The Teamsters Union filed its Motion for
Disclosure Order Concerning Commercial Agreement Amendments 1 and 2 (“Motion for
Disclosure Order”), and included the two Amendments, which were designated as
confidential by FAPAInvest, as exhibits to the Motion for Disclosure Order. See [#45]. The
Teamsters Union thus entered the documents designated as confidential into the public
record. Defendants then filed a Motion to Seal, asking the Court to restrict public access
to the two Amendments pending the adjudication of the Motion for Disclosure Order. See
[#49]. Because Defendants’ argument in the Motion to Seal rested exclusively on the
governing Stipulation and Protective Order, the District Judge denied the Motion to Seal
without prejudice. [#51]. Defendants did not renew their Motion to Seal.
The merits of the Motion to Seal and the confidential designation of the two
Amendments aside, Defendants now raise the specter of the Teamsters Union’s unfettered
disclosure of confidential materials as a basis for Defendants’ refusal to produce
documents responsive to the Teamsters Union’s written discovery requests. The Court
finds Defendants’ concern justified.
The Stipulation and Protective Order was entered as an Order of the Court. [## 41,
43]. Paragraph Five of the Stipulation and Protective Order prescribes that “Individuals
authorized to review Confidential Information pursuant to the Protective Order shall hold
Confidential Information in confidence and shall not divulge the Confidential Information,
either verbally or in writing, to any other person, entity or government agency unless
authorized to do so by court order.” [#41] at 3. The Teamsters Union violated this directive
3
by lodging the Amendments designated as confidential on the docket, without permission
from Defendants and in the absence of a court order.
Paragraph Nine of the Stipulation and Protective Order sets forth a method for
objecting to the designation of documents as confidential. After a good faith attempt at
resolving a dispute regarding a challenged confidential designation, “any Party may move
for a disclosure order or a protective order consistent with this order. . . . [T]he information
shall continue to have Confidential Information status from the time it is produced until the
ruling by the Court on the motion.” Id. at 4. Nothing in this instruction requires the filing of
the challenged confidential documents with the Court; in fact, the provision explicitly
extends the protections stated therein to challenged discovery, pending order by the Court.
The Teamsters Union’s conduct clearly violated the plain language, as well as the spirit and
purpose, of the Stipulation and Protective Order. This violation is sanctionable conduct.
“[S]tipulated ‘blanket’ protective orders are becoming standard practice in complex
cases.” United Nuclear Corp. v. Cranford Ins. Co., 905 F.2d 1424, 1427 (10th Cir. 1990).
They allow the parties to make full disclosure in discovery without fear of
public access to sensitive information and without the expense and delay of
protracted disputes over every item of sensitive information, thereby
promoting the overriding goal of the Federal Rules of Civil Procedure, “to
secure the just, speedy, and inexpensive determination of every action.”
Id. (citing Fed. R. Civ. P. 1). The Teamsters Union’s single act of filing disputed confidential
documents on the record has indeed multiplied the efforts of this Court in efficiently
handling discovery disputes. All parties, and Interested Party FAPA, are fairly warned that
any party which, in the future, violates the Stipulation and Protective Order shall be subject
to sanctions.
That said, the Court is cognizant that Paragraphs Nine and Ten of the Stipulation
and Protective Order could be construed as inconsistent. Therefore, the Court reforms
4
Paragraphs Nine and Ten of the Stipulation and Protective Order as follows:3
9. If a Party objects to the designation by another Party of certain
information as Confidential Information, the Party shall promptly inform the
disclosing Party in writing of the specific grounds of objection to the
designation. The Parties shall then, in good faith and on an informal basis,
attempt to resolve such dispute. If after such good faith attempt, the Parties
are unable to resolve their dispute, any Party may move for a disclosure
order or a protective order consistent with this order. Any such motion shall
be made pursuant to Magistrate Judge Mix’s discovery procedures within 14
days of the Parties’ inability to resolve their dispute. If Magistrate Judge Mix
permits the challenging Party to file a written motion for disclosure order on
the docket, the challenging party must 1) file the disputed information as an
exhibit to such motion, and 2) file the disputed information under restriction
until such time as the Court rules on the motion. The disputed information
shall continue to have Confidential Information status from the time it is
produced until the ruling by the Court on the motion for disclosure order,
regardless of whether such motion is oral or written.
10. Use of Confidential Information in Court Proceedings: In the event
Confidential Information is used in any court filing or proceeding in this action,
including but not limited to its use at trial, it shall not lose its confidential
status as between the Parties through such use. Confidential Information
3
“As long as a protective order remains in effect, the court that entered the order retains
the power to modify it . . . .” United Nuclear Corp., 905 F.2d at 1427 (citations omitted). The district
court retains discretion as to the modification of a protective order. Id.
5
and pleadings or briefs quoting or discussing Confidential Information will not
be accepted for filing under restriction or otherwise kept out of the public
record in this action, however, except by court order issued upon the motion
to file the documents under restriction, or upon any motion for disclosure
order. Any motion requesting leave to file documents under restriction shall
comply with the requirements of D.C.COLO.LCivR 7.2 and demonstrate that
the Confidential Information at issue is entitled to protection under the
standards articulated in Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 598602 (1978) (applied in United States v. Hickey, 767 F.3d 705, 708 (10th Cir.
1985) and Crystal Grower’s Corp. v. Dobbins, 616 F.2d 458, 461 (10th Cir.
1980)).
The Court turns now to the merits of the three discovery motions at issue.
I.
Motion for Disclosure Order [#45]
The Teamsters Union asks the Court to issue an order removing the “confidential”
designations of Amendment Nos. 1 and 2 to the June 24, 2011 Commercial Agreement.
[#45] at 1. The Teamsters Union contends that FAPAInvest improperly designated these
two Amendments as confidential. Id. The Teamsters Union asserts that, because the
Commercial Agreement is an exhibit to the Complaint in this matter and was an exhibit to
RAH’s SEC Form 8-K filing submitted July 6, 2011, the Amendments to the Commercial
Agreement should likewise be publicly available. See [#45].
Although the Teamsters Union certified that counsel attempted to resolve this
dispute but was unable to do so, no Defendant filed a response in opposition to this Motion.
The Court therefore construes the requested relief as unopposed, and in any event, finds
that, in the absence of a response, Defendants fail to carry their burden of supporting the
6
designation of the Amendments as confidential. See Gillard v. Boulder Valley Sch. Dist.
RE-2, 196 F.R.D. 382, 386 (D. Colo. 2000) (“the party seeking the protection shoulders the
burden of proof in justifying retaining the confidentiality designation”). Accordingly,
IT IS HEREBY ORDERED that Plaintiff’s Motion for Disclosure Order Concerning
Commercial Agreement Amendments 1 and 2 [#45] is GRANTED. The designation of
Amendment Nos. 1 and 2 to the Commercial Agreement as confidential is hereby
REMOVED.
II.
Motion to Compel Production of Documents [#46]
In this Motion, the Teamsters Union asks the Court to issue an order compelling
Frontier and RAH to complete production of non-privileged documents responsive to its
discovery requests served on December 5, 2011 [#46]. Frontier and RAH (“Frontier/RAH”)
filed a Response in opposition to the Motion on March 29, 2012 [#56], and the Teamsters
Union submitted a Reply on April 12, 2012 [#64]. Frontier/RAH raises several objections
to the Motion, including an objection to the conferral by the Teamsters Union’s counsel who
is allegedly not admitted to practice law in this District, and an objection to production on
the basis that the Teamsters Union inappropriately disclosed documents designated as
confidential.
As explained above, the Court has resolved the issue of the proper method for
challenging a designation of discovery information as confidential pursuant to the
Stipulation and Protective Order. Regarding Frontier/RAH’s objection to counsel for the
Teamsters Union who has not entered an appearance in this matter, the Court’s preference
is that the duty to confer be undertaken by attorneys who have entered an appearance in
the lawsuit at issue. However, Frontier/RAH does not provide authority for their contention
7
on this point, and their attempt to negate the conferral process by pointing fingers is
juvenile and counterproductive.4
The Court thus rejects Frontier/RAH’s arguments.
Accordingly,
IT IS FURTHER ORDERED that Plaintiff’s Motion to Compel [#46] is GRANTED as
follows. Defendants Frontier and RAH shall complete production of all non-privileged
documents responsive to the Teamsters Union’s December 5, 2011 Rule 34 Requests on
or before May 1, 2012.
In consideration of the Teamsters Union’s violation of the
Stipulation and Protective Order, the Court declines to order the payment of expenses as
contemplated by Fed. R. Civ. P. 37(a)(5).
III.
Motion to Compel Production of Financial Records [#52]
The Teamsters Union asks the Court to issue an order compelling production of
documents responsive to its Request for Production No. 12, served on FAPAInvest on
December 5, 2011. Request for Production No. 12 seeks:
12. The financial records of FAPAInvest including, but not limited to, bank
statements and internal accounting records which reflect member
contributions, assets, liabilities, income and/or expenses.
[#52] at 1. In its response to this Request made on January 23, 2012, FAPAInvest stated
that “after conducting a reasonably diligent search, it will produce all such responsive,
non-privileged documents, if any, in its possession, custody or control.” Id. at 1-2. On
March 1, 2012, FAPAInvest informed the Teamsters Union that it objects to production of
“[t]he only responsive documents that exist [which] are bank statements for FAPAinvest’s
bank account,” on the basis of irrelevance. Id. at 2. On March 9, 2012, FAPAInvest served
an amended response on the Teamsters Union, objecting to Request No. 12 as
4
In any event, the attorney at issue, Mr. Feinberg, entered his appearance on behalf of the
Teamsters Union on April 17, 2012 [#69].
8
“overbroad, unduly burdensome, seek[ing] information that is not relevant to the claims or
defenses of any party, and . . . not reasonably calculated to lead to the discovery of
admissible evidence.” Id. at 3. FAPAInvest further averred that the Teamsters Union “has
not established a compelling need to obtain copies of FAPAInvest’s confidential, proprietary
financial information, nor has it demonstrated that it cannot obtain the information it seeks
from less sensitive and intrusive sources.” Id.
The Teamsters Union claims that the requested financial information is relevant to
its position that FAPAInvest is the alter ego of FAPA. Id. at 3. As referred to above, FAPA
is the entity the Teamsters Union replaced to become the certified exclusive bargaining
representative of all of RAH’s airline subsidiaries. Id. The Teamsters Union argues that
it needs the requested financial information to demonstrate “the degree to which
[FAPAInvest’s and FAPA’s] assets and affairs have been commingled.” Id. at 4 (citation
omitted).
FAPAInvest filed a Response in opposition to the Motion on April 2, 2012 [#58].
FAPAInvest asserts that its financial information is irrelevant to the Teamsters Union’s
requests for declaratory and injunctive relief, because whether FAPAInvest is an alter ego
of FAPA is irrelevant to the validity of the LOA 67 and Commercial Agreement. Id. at 5, 7.
FAPAInvest characterizes the Teamsters Union’s request for its financial records as a
“highly invasive fishing expedition” looking for “evidence of wrongdoing.” Id. at 8.
Additionally, FAPAInvest claims that public policy dictates restraint in disclosure of
financial information. Id. at 9. FAPAInvest avers that the Teamsters Union has information
refuting its concerns that FAPAInvest is FAPA’s alter ego, namely, FAPAInvest’s Articles
of Organization and Operating Agreement. Id. at 8-9. FAPAInvest attests that it “is willing
to stipulate that it has opened a bank account in its own name, that FAPA has no interest
9
in that bank account, and that it received $100,000 from RAH pursuant to Amendment 2
to the Commercial Agreement which it deposited into that account.” Id. at 9. FAPAInvest
further suggests that, in lieu of its financial documents, the Teamsters Union may depose
two identified individuals (Jeff Thomas and Scott Gould) regarding the factors of the alter
ego test. Id. FAPAInvest additionally raises the objection that the Teamsters Union has
previously failed to comply with the Stipulation and Protective Order. Id. at 10.
In Reply, the Teamsters Union explains that the President of FAPA, Jeffrey Thomas,
is also the sole member of FAPAInvest. [#68] at 4. As part of the Teamsters Union’s third
claim for relief (which remains at issue), the Teamsters Union alleges that “RAH and
Frontier know that FAPAInvest is controlled by and is an alter ego of FAPA.”5 [#1] at 9.
Thus, the Teamsters Union contends that the issue of an alter ego relationship between
FAPA and FAPAInvest is outstanding and disputed, and directly relevant to its allegations
that the LOA 67 and Commercial Agreement violate various provisions of the RLA (e.g.,
the Teamsters Union suggests that FAPA’s Secretary-Treasurer was unlawfully promoted
by Frontier in exchange for collective bargaining concessions). Id. at 7, 9-10.
The scope of discovery is broad and “is not limited to issues raised by the pleadings,
for discovery itself is designed to help define and clarify the issues.” Gomez v. Martin
Marietta Corp., 50 F.3d 1511, 1519 (10th Cir. 1995) (citation omitted). Pursuant to Fed. R.
Civ. P. 26(b)(1), “[p]arties may obtain discovery regarding any nonprivileged matter that is
relevant to any party's claim or defense--including the existence, description, nature,
5
Additionally, in the Commercial Agreement, FAPAInvest is described as the entity “acting
on behalf of those persons employed as pilots by [Frontier] as of the date of Letter of Agreement
67," which in turn refers to the Frontier pilots represented by FAPA. [#1-5] at 1. Further, pursuant
to the Commercial Agreement, FAPAInvest has “the sole authority to represent the interest of the
Participating Pilots in any matter related to this agreement.” Id. at 4.
10
custody, condition, and location of any documents or other tangible things and the identity
and location of persons who know of any discoverable matter . . . subject to the limitations
imposed by Rule 26(b)(2)(C).” See also Williams v. Bd. of County Comm'rs, 192 F.R.D.
698, 702 (D. Kan. 2000) (citations omitted) (noting that “request for discovery should be
considered relevant if there is ‘any possibility’ the information sought may be relevant to the
subject matter of the action”). Considering that “[l]imitations on the discovery process
necessarily conflict with the ‘fundamental principle that the public . . . has a right to every
man's evidence,’ ” the Federal Rules broadly define the scope of discovery. Simpson v.
Univ. of Colorado, 220 F.R.D. 354, 356 (D. Colo. 2004) (citing Trammel v. United States,
445 U.S. 40, 50 (1980)).
“When the discovery sought appears relevant, the party resisting the discovery has
the burden to establish the lack of relevancy by demonstrating that the requested discovery
(1) does not come within the scope of relevance as defined under Fed. R. Civ. P. 26(b)(1),
or (2) is of such marginal relevance that the potential harm occasioned by discovery would
outweigh the ordinary presumption in favor of broad disclosure.” Simpson, 220 F.R.D. at
359 (citations omitted); see also Cont'l Ill. Nat'l Bank & Trust Co. of Chicago v. Caton, 136
F.R.D. 682, 685 (D. Kan. 1991) (stating that a party resisting discovery based on relevancy
grounds bears the burden of explaining how “each discovery request is irrelevant, not
reasonably calculated to lead to the discovery of admissible evidence, or burdensome”).
However, when a request for discovery is overly broad on its face or when relevancy is not
readily apparent, the party seeking the discovery has the burden to show the relevancy of
the request. See Paradigm Alliance, Inc. v. Celeritas Tech., LLC, No. 07-1121-MLB, 2008
WL 678700, at *2 (D. Kan. March 7, 2008) (citation omitted); Williams, 192 F.R.D. at 705
(noting that when relevancy of propounded request not apparent, proponent has burden
11
of establishing it).
Here, the Court finds the Teamsters Union’s position more persuasive.
The
discovery sought by the Teamsters Union appears relevant to its claims (namely its third
claim, which alleges the existence of an alter ego relationship, and survived the motion to
dismiss), and FAPAInvest does not meet its burden of demonstrating otherwise. In
essence, FAPAInvest’s objection to producing its financial information is that it is irrelevant
(which, as stated herein, the Court rejects), and that the Teamsters Union has not abided
by the terms of the Stipulation and Protective Order (which, also as stated herein, the Court
resolves). The Court thus finds no compelling argument presented by FAPAInvest against
the production of its financial records. Of course, any such record may be designated in
good faith as confidential pursuant to the Stipulation and Protective Order, and if any record
is, in good faith, designated as privileged, such record must be identified in a privilege log
produced contemporaneously with documents responsive to Plaintiff’s Request for
Production No. 12 pursuant to Fed. R. Civ. P. 26(b)(5). Accordingly,
IT IS FURTHER ORDERED that Plaintiff’s Motion to Compel Defendant FAPAInvest
to Produce Financial Records [#52] is GRANTED. Defendant FAPAInvest shall produce
documents responsive to Plaintiff’s Request for Production No. 12, consistent with this
Order, on or before May 1, 2012. In consideration of the Teamsters Union’s violation of the
Stipulation and Protective Order, the Court declines to order the payment of expenses as
contemplated by Fed. R. Civ. P. 37(a)(5).
Dated: April 24, 2012
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?