BHC Development, LC et al v. Bally Gaming, Inc

Filing 61

MEMORANDUM AND ORDER granting 38 Motion to Compel Discovery. Excluding work product and attorney-client privileged documents, Plaintiffs shall, within twenty-eight days of the date of this order, produce all documents showing or discussing the sear ch conducted by them for the selection of replacement software. This production shall be undertaken consistent with the agreement set out in 54 Agreed Motion to Stay. An award of expenses or fees is inappropriate under the circumstances. Each pa rty shall bear its own attorney fees and expenses incurred in connection with the motion to compel. It is further ordered that, consistent with 56 Order of April 11, 2013, the stay on the briefing on 49 Konami Gaming, Inc.s Motion for Leave to I ntervene and Motion to Stay Ruling on Motion to Compel is hereby lifted. Briefing on that motion will re-commence fourteen days after the production ordered herein. If no response to that motion is filed within that time-period, the Court may find the motion moot without further notice. Signed by Magistrate Judge Gerald L. Rushfelt on 5/9/2013. (bw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
BHC DEVELOPMENT, LC,
et al.,
Plaintiffs,
v.

Case No. 12-2393-KHV-GLR

BALLY GAMING, INC.,
Defendant.
MEMORANDUM AND ORDER
Before the Court is a Motion to Compel Discovery (ECF No. 38), filed by Defendant on March
4, 2013. For the reasons set out below, the Court grants the motion.
I.

Nature of the Matter Before the Court
This action arises from a contract between Plaintiffs, landlord and management company for

a state-owned gaming facility located in Dodge City, Kansas (Boot Hill Casino & Resort), and
Defendant, a provider of computer software for collecting and disseminating gambling information
of the operation. Plaintiffs sue for breach of contract, negligent misrepresentation, fraud, breach of
express warranty, and breach of implied warranty of merchantability based on their purchase of
Defendant’s software for slot accounting and for casino marketing and player tracking. They allege
generally that the software failed to operate in conformity with promises and representations made by
Defendant prior to the purchase. Defendant has filed counterclaims alleging that Plaintiffs failed to
make payments due under the purchase agreement and continued to use the software after their license
expired.
Defendant has requested Plaintiffs to produce various documents. An inability to resolve a
relevancy objection to Request 10 prompted the instant motion to compel. The motion is fully briefed
and ready for ruling.

II.

Discussion
Through Request 10, served pursuant to Fed. R. Civ. P. 34, Defendant requested Plaintiffs to

produce “All documents concerning the selection and installation of plaintiffs’ new software.” In its
motion Defendant states it does not seek documents protected by attorney-client privilege or as work
product. Its reply brief clarifies that Request 10 is limited to the search conducted by Plaintiffs for the
selection of replacement software. Plaintiffs have withheld production. A party seeking discovery
under Fed. R. Civ. P. 34 may move to compel production or inspection when the other party “fails to
respond that inspection will be permitted – or fails to permit inspection – as requested under Rule 34.”1
Plaintiffs objected to Request 10 on grounds of irrelevancy, work product, and attorney-client
privilege. Given the statement that Defendant does not seek work product or documents protected by
attorney-client privilege, the Court need only consider the objection of irrelevancy.
Rule 26(b)(1) of the Federal Rules of Civil Procedure defines the general scope of discovery.2
Since amendments in 2000, the rule provides “a two-tiered discovery process; the first tier being
attorney-managed discovery of information relevant to any claim or defense of a party, and the second

1

Fed. R. Civ. P. 37(a)(3)(B)(iv). Rule 37(a)(1) requires motions to compel to “include a
certification that the movant has in good faith conferred or attempted to confer with the person or party
failing to make disclosure or discovery in an effort to obtain it without court action.” Although the
motion briefly addresses the duty to confer, it does not include the required certification. Nor does
it show adequate efforts to confer. Defendant merely attaches a “golden rule” letter to exhibit
compliance with the duty. But a single letter does not satisfy the duty. See D. Kan. Rule 37.2.
Plaintiffs, however, do not rely on any failure to confer in opposing the motion. See, generally, Resp.
Accordingly, the Court decides the motion on its merits. See Pulsecard, Inc. v. Discover Card Servs.,
Inc., 168 F.R.D. 295, 302 (D. Kan. 1996) (recognizing that even when a party fails to comply with the
conference requirements, “it remains within the discretion of the court to consider the motion on its
merits”).
2

Rule 26(b)(1) provides: “Parties may obtain discovery regarding any nonprivileged matter
that is relevant to any party’s claim or defense. . . . For good cause, the court may order discovery of
any matter relevant to the subject matter involved in the action.”
2

being court-managed discovery that can include information relevant to the subject matter of the
action.”3 Under this two-tiered process, objections on grounds of relevancy require the courts to first
“determine whether the discovery is relevant to the claims or defenses and, if not, whether good cause
exists for authorizing it so long as it is relevant to the subject matter of the action.”4
At the discovery stage of litigation, relevancy is broadly construed and courts should consider
requests for discovery relevant “if there is ‘any possibility’ that the information sought may be relevant
to the claim or defense of any party”5 or “to the subject matter of the action.”6 When the relevancy
of requested discovery is not apparent, the party seeking the discovery has the burden to show its
relevance.7 On the other hand, when requested discovery appears relevant, the party objecting to the
discovery has the burden to show that the discovery does not fall within the broad scope of relevance
set out in Rule 26(b)(1) or “is of such marginal relevance that the potential harm occasioned by
discovery would outweigh the ordinary presumption in favor of broad disclosure.”8
In this case, Defendant contends that documents responsive to Request 10 are relevant to
Plaintiffs’ claim that it provided faulty software and its position that the software worked as intended
and that Plaintiffs are thus wrongfully refusing to pay. It also contends that responsive documents may

3

In re Cooper Tire & Rubber Co., 568 F.3d 1180, 1188 (10th Cir. 2009).

4

Id. (quoting Fed. R. Civ. P. 26(b)(1) (2000 amend.)).

5

Design Basics, L.L.C. v. Strawn, 271 F.R.D. 513, 523 (D. Kan. 2010).

6

Etienne v. Wolverine Tube, Inc., 185 F.R.D. 653, 656 (D. Kan. 1999) (quoting Smith v. MCI
Telecomms. Corp., 137 F.R.D. 25, 27 (D. Kan. 1991)). Despite the changes to Rule 26(b)(1) in 2000,
the standard enunciated in “Etienne remains good law.” Sheldon v. Vermonty, 204 F.R.D. 679, 690
n.7 (D. Kan. 2001).
7

Mackey v. IBP, Inc., 167 F.R.D. 186, 193 (D. Kan. 1996).

8

Id. (citation omitted).
3

show Plaintiffs’ complaints regarding its software and what problems are corrected by the new
software.
Request 10 appears to seek documents relevant to claims and defenses asserted in this action.
Plaintiffs have asserted that Defendant provided faulty software. Documents revealing the search
conducted by Plaintiffs for the selection of replacement software may show their stated reasons for
seeking replacement software, including their complaints about Defendant’s software. Responsive
documents may also show differences between Defendant’s software and potential replacement
software. Although Plaintiffs contend that the software it purchased to replace Defendant’s software
is simply not at issue in this case, the new software and the reasons for obtaining it directly goes to
claims and defenses in this action. Defendant affirmatively disputes that its software was unable to
perform as promised. It has asserted a counterclaim for damages for unlawful termination of the
contract by Plaintiffs. It alleges that its software met all contractual specifications and that Plaintiffs
terminated the contract for other reasons. Given the facial relevancy of Request 10, Plaintiffs have
the burden to show that it is irrelevant. They have not carried that burden.
Plaintiffs also urge the Court to find any marginal relevance of documents relating to the
installation of its new software outweighed by the proprietary and confidential nature of the responsive
communications with direct competitors of Defendant. Plaintiffs assert that an existing confidentiality
agreement with third-party vendor Konami Gaming, Inc. does not adequately protect the vendor’s
confidentiality interests if they produce documents involving the vendor. Defendant states that it does
not seek confidential or privileged information from Konami – it wants Plaintiffs’ communications
to Konami and other potential replacement vendors to discover Plaintiffs’ thoughts about its software.
The Court does not find documents responsive to Request 10 to be of such marginal relevance that the
potential harm occasioned by their production outweighs the ordinary presumption in favor of broad
4

disclosure.
The parties and Konami, furthermore, have worked together in obtaining a stay of briefing on
a related motion by Konami to intervene.9 And in an effort to avoid wasting time and to alleviate the
confidentiality concerns of Konami, the parties and Konami have agreed that, if the Court grants this
motion to compel, Plaintiffs will initially “produce only BHC-authored documents relating to the
Konami purchase created prior to July 17, 2012,” which have been redacted to protect “any Konami
responses to BHC-authored communications that contain confidential or proprietary Konami
information.”10 This agreement appears adequate to address any confidentiality concerns of Konami.
For the foregoing reasons, the Court overrules the irrelevancy objection to Request 10.
Defendant has limited the scope of that request to the search conducted by Plaintiffs for the selection
of replacement software. It has also excluded work product and attorney-client privileged documents
from its scope. Accordingly, the Court grants the motion to compel with those limitations on Request
10.
When the Court grants a motion to compel, the moving party is generally entitled to recover
its reasonable fees and expenses.11 Rule 37(a)(5)(A) precludes such recovery, however, when “the
movant filed the motion before attempting in good faith to obtain the disclosure or discovery without

9

See Agreed Mot. Stay (ECF No. 54).

10

See id. ¶ 5. According to that agreement, “Konami’s counsel will have an opportunity to
review the initial production set prior to its production.” See id. If after that initial production,
Defendant “feels it needs additional Konami documents responsive to the request, it will file a
response to the Konami motion,” thereby notifying the Court, Plaintiffs, and Konami that it is
necessary to resolve issues raised in that motion. See id.
11

See Fed. R. Civ. P. 37(a)(5)(A).
5

court action” or “other circumstances make an award of expenses unjust.”12 In this case, Defendant
filed the instant motion without the requisite certification showing good faith efforts to confer; thus
depriving the Court of information pertinent to the issue of expenses. Regardless of good faith efforts
to confer, the Court finds that the circumstances in general make an award of expenses or fees unjust.
IT IS HEREBY ORDERED THAT the Motion to Compel Discovery (ECF No. 38), filed
by Defendant on March 4, 2013, is GRANTED. Excluding work product and attorney-client
privileged documents, Plaintiffs shall, within twenty-eight days of the date of this order, produce all
documents showing or discussing the search conducted by them for the selection of replacement
software. This production shall be undertaken consistent with the agreement set out in the Agreed
Motion to Stay (ECF No. 54). An award of expenses or fees is inappropriate under the circumstances.
Each party shall bear its own attorney fees and expenses incurred in connection with the motion to
compel.
IT IS FURTHER ORDERED THAT consistent with the Order of April 11, 2013, (ECF No.
56), the stay on the briefing on Konami Gaming, Inc.’s Motion for Leave to Intervene and Motion to
Stay Ruling on Motion to Compel (ECF No. 49) is hereby lifted. Briefing on that motion will recommence fourteen days after the production ordered herein. If no response to that motion is filed
within that time-period, the Court may find the motion moot without further notice.
Dated in Kansas City, Kansas on this 9th day of May, 2013.

S/Gerald L. Rushfelt
Gerald L. Rushfelt
U.S. Magistrate Judge

12

Fed. R. Civ. P. 37(a)(5)(A)(i) and (iii).
6