Pipeline Productions, Inc. v. The Madison Companies, LLC, et al
Filing
314
MEMORANDUM AND ORDER granting in part and denying in part 246 Motion for Protective Order; denying 267 Motion for Leave to Sur-Reply. See order for details. Signed by Magistrate Judge K. Gary Sebelius on 10/31/2018. (wh)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
PIPELINE PRODUCTIONS, INC.,
BACKWOOD ENTERPRISES, LLC,
OK PRODUCTIONS, INC., and
BRETT MOSIMAN,
Plaintiffs,
v.
THE MADISON COMPANIES, LLC,
and HORSEPOWER ENTERTAINMENT,
LLC,
Defendants.
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Case No. 15-4890-KHV
MEMORANDUM AND ORDER
This matter comes before the court upon defendants’ Motion for Protective Order for
Plaintiffs’ Second Amended Rule 30(b)(6) Notice of Deposition (ECF No. 246).1 For the
following reasons, this motion is granted in part and denied in part.
I.
This action arises from a failed country music concert in Arkansas, the Thunder on the
Mountain music festival. Plaintiffs allege that they entered into a joint venture with the defendants
to own and produce the music festival.
Plaintiffs contend that defendants reneged on the
agreement, and the festival had to be cancelled. Defendants have filed counterclaims against
plaintiffs.
1
Plaintiffs filed a Motion for Leave to File Sur-Reply (ECF No. 267). District of Kansas Rule 7.1 allows
parties to file a motion, response, and reply, but makes no mention of a surreply. Typically, surreplies are not allowed.
Jones v. BNSF Ry. Co., No. 14-2616-JAR-KGG, 2016 WL 3671233, at *1 (D. Kan. July 11, 2016). In rare cases,
though, the court may permit a party to file a surreply. Taylor v. Sebelius, 350 F. Supp. 2d 888, 900 (D. Kan. 2004).
The court is not persuaded that a surreply is necessary here. The court does not find that defendants raised new
arguments in its reply as suggested by plaintiffs. Accordingly, plaintiffs’ motion is denied.
II.
Defendants request that the court strike Topic 30 because it requests information that was
previously stricken by the court as irrelevant. Defendants also request that the court quash Topics
2-8, 15, 22, 26-30 and 33 to the extent that they purport to require defendants’ representatives to
provide testimony concerning the KAABOO entities. Finally, they contend the court should strike
the phrase “related entities” from Topics 5-6, 15, 22, 26-30 and 33, and quash in their entirety
Topics 2-4, 7-8 and 30.
III.
On April 30, 2018, plaintiffs served defendants with a Rule 30(b)(6) Notice of Deposition,
containing 30 topics.2
Defendants eventually responded with a motion for protective order.3
While the motion for protective order was pending, plaintiffs re-noticed the Rule 30(b)(6)
deposition.4 Most of the topics were identical to the original notice. Defendants again objected
to many of the categories, and subsequently filed a second motion for protective order.5
On July 13, 2018, the court granted in part defendants’ motion for protective order.6 In the
order, the court held that Topics 2, 3, 10, 15, 19-22 and 28 should be limited on the basis that the
phrase “related entities” rendered the topics “vague, overbroad, and unlimited in scope.” 7 The
court therefore struck from these topics the phrase “related entities.”8
In addition, the court quashed all topics that sought information about defendants’
investors, including Topic 24, which sought testimony about “Defendants’ communications with
Notice by Pls’ of Taking Dep. of Corp. Rep(s), ECF No. 127.
Defs’ Mot. for Protective Order, ECF No. 130.
4
Am. Notice by Pls’ of Taking Dep. of Corp. Rep(s), ECF No. 137.
5
Defs’ Mot. for Protective Order, ECF No. 141.
6
Order, ECF No. 203.
7
Id., at 4.
8
Id.
2
3
2
investors regarding Thunder and/or this lawsuit.”9 The court reasoned that “the relevance of these
topics is not plain on their face.”10 In so doing, the court referenced its prior ruling denying a
motion to compel discovery concerning defendants’ investors, which stated that “the court is at a
loss on the relevance of investors’ knowledge and complaints about similar transactions.”11
After the court’s order of July 13th, the parties selected August 28, 29, and 31, 2018, as
dates for the Rule 30(b)(6) deposition. On August 8, 2018, plaintiffs filed a Second Amended
30(b)(6) Notice of Deposition.12 This notice altered the prior topics in several respects.
The Second Amended Notice led to the filing of the instant motion, after the parties had
met and conferred about these topics. Defendants contend that the new notice “added eight new
topics and modified nine other topics that were allowed only subject to the Court’s express
limitation on the scope of those topics.”13 Defendants further contend that the additions and
modifications “directly contravened the Court’s limitation on the areas on which Plaintiffs could
seek testimony.”14 Defendants noted that plaintiffs had included a topic (Topic 30) that sought
information concerning defendants’ investors even though the court had quashed three topics in
the July 13th order seeking information concerning defendants’ investors.15 Defendants also note
that, while the July 13th order had struck the language “related entities” from nine topics, plaintiffs
had reinserted the same phrase into Topics 5-8, 15, 22, 26-30 and 33.16 Defendants argue that
“[w]hile the topics purport to limit the phrase ‘related entities’ to ‘companies Defendants have
control over as described in the Court’s Order dated June 20, 2018,’ the definition still does not
9
Id., at 5.
Id.
11
Id.
12
Am. Notice by Pls’ of Taking Dep. of Corp. Rep(s), ECF No. 220.
13
Defs’ Mot. for Protective Order, at 10, ECF No. 246.
14
Id.
15
Id., at 12-13.
16
Id., at 11.
10
3
actually identify the entities ‘related’ to Defendants about which Plaintiffs seek testimony.”17
Defendants further contend that plaintiffs’ efforts to obtain information about the KAABOO
entities should be quashed.18 They assert that plaintiffs have failed to show that they control the
KAABOO entities, or even if they do, that information concerning the KAABOO entities is
relevant or proportional.19 Finally, defendants suggest that Topics 2-4, 7-8 and 30 should be
quashed in their entirety.20
A. Related Entities/KAABOO Entities
The court shall begin with the topics that refer to the phrase “related entities.” In the prior
order, the court limited certain topics because the phrase “related entities” rendered the topics
“vague, overbroad, and unlimited in scope.” In the new notice, plaintiffs again used the “related
entities” phrase on eleven topics, but sought to limit the phrase to “companies Defendants have
control over.”
The court again finds plaintiffs’ use of the phrase “related entities” in these topics is
improper. In the prior order, the court determined that this phrase was vague and overbroad
because plaintiffs had failed to identify any specific entities. Except for the KAABOO entities,
plaintiffs have again failed to identify any “related entities.” Plaintiffs’ efforts to limit the
information to companies that defendants control does not remedy the problem. Without any
specification of any particular entity, the court finds that the phrase “related entities” should be
eliminated from Topics 5-8, 15, 22, 26-30 and 33.
The court now turns to plaintiffs’ request for information concerning the KAABOO
entities.
Plaintiffs raise several arguments concerning the KAABOO entities.
17
Id.
Id., at 13-17.
19
Id., at 17-23.
20
Id., at 12.
18
4
They have
suggested they are entitled to information from the KAABOO entities because defendants exercise
control over them.21 Plaintiffs point to the following matters in the record in support of their
contention of control: (1) defendants share common ownership with KAABOO; (2) defendants
share the same executives with KAABOO; (3) defendants share an office with KAABOO; (4)
defendants’ employees became KAABOO employees; (5) defendant Madison transitioned its
musical festival business from defendant Horsepower to KAABOO; (6) defendants changed their
structure because of this litigation; (7) KAABOO Del Mar music festival was presented by
defendant Horsepower; (8) defendants mailed an investment opportunity packet for KAABOO;
(9) defendants’ counsel represent KAABOO in other litigation; and (10) defendants were recently
sued, along with KAABOO, in a music festival case alleging breach of contract.22
Defendants, however, suggest that plaintiffs have failed to show that they manage or
control the KAABOO entities.23 They assert that the KAABOO entities are separate and distinct
legal entities and each was created for a different business purpose. 24 Defendants also argue that
the KAABOO entities are irrelevant to this action.25 Defendants note that the KAABOO entities
never invested in, participated in, negotiated about, or were otherwise involved with Thunder on
the Mountain music festival.26 They note that plaintiffs have never alleged that the KAABOO
entities entered into or breached any agreements concerning the music festival.27 They contend
that an examination of the assertions put forth by plaintiffs on the relevance of the KAABOO
entities show that the KAABOO entities had nothing to do with this lawsuit.28 Finally, they argue
Pls’ Rep. to Defs’ Mot. for Protective Order, at 7, ECF No. 261.
Id., at 7-9.
23
Defs’ Reply in Supp. of Mot. for Protective Order, at 4-6, ECF No. 265.
24
Id., at 9-14.
25
Id., at 14-18.
26
Id., at 14-15.
27
Id., at 15.
28
Id., at 15-18.
21
22
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that the discovery sought by plaintiffs, even if somehow relevant, is not proportional to the needs
of the case.29
Rule 26(a) of the Federal Rules of Civil Procedure allows for the discovery of “documents,
electronically stored information, and tangible things” in the responding party's “possession,
custody, or control.”30 Similarly, Rule 34(a) and Rule 45(a) obligate a party responding to a
document request or subpoena to produce “documents, electronically stored information, and
tangible things” in that party's “possession, custody, or control.”31 Yet, the Rules are silent on what
the phrase “possession, custody, or control” means.
In Kansas, documents are within a party's “possession, custody, or control,” for the
purposes of Rule 34, if the party has actual possession, custody, or control, or has the legal right
to obtain the documents on demand.32
Control under Rule 34 is interpreted to warrant production
where the parties' history, association, and assignments and transactions together show sufficient
mutuality, and where the non-party agrees to produce documents at the request of a party.33 Other
factors to consider when determining whether a party has control of documents are (1) the use or
purpose to which the materials were employed (2) whether the materials were acquired, or
maintained with the party's assets (3) whether the party determined the material's use, location,
possession, or access (4) who actually had access to and use of the materials (5) the extent to which
the materials serve the party's interest and (6) any formal or informal evidence of a transfer or
ownership or title.34
29
Id., at 18-19.
Fed. R. Civ. P. 26(a).
31
Fed. R. Civ. P. 34(a) and 45(a).
32
Ice Corp. v. Hamilton Sundstrand Corp., 245 F.R.D. 513, 516-518 (D.Kan. 2007).
33
Id.
34
Id.
30
6
The party seeking discovery bears the burden of proving that the opposing party has control
over those documents.35 The mere fact that the documents are in the possession of a parent or
sister corporation does not automatically establish “control.”36 In the absence of control by a
litigating corporation over documents in the physical possession of another corporation, the
litigating corporation has no duty to produce.
The record shows there is some overlap in ownership and management between the
defendants and the KAABOO entities. These factors alone provide some support for a finding of
control by the defendants over the KAABOO entities. But, an examination of the other factors
does not provide support for such a finding.
The KAABOO entities are separate entities with separate operations that manage separate
products. The KAABOO entities are involved in music festivals of other genres in locations much
different than the Thunder on the Mountain festival.
Moreover, there is no evidence that the
KAABOO entities were involved in the Thunder on the Mountain festival. KAABOO was created
prior to this dispute. There is no indication that the KAABOO entities were ever held out as an
agent or representative of the defendants concerning the proposed investment in the Thunder on
the Mountain festival.
Some of the factors noted by plaintiffs as support for control by the
defendants lack adequate evidentiary support, e.g., that defendant Madison transitioned its musical
festival business from defendant Horsepower to KAABOO and defendants changed their structure
because of this litigation. Other factors lack legal support to demonstrate control, e.g., that
KAABOO and defendants have previously shared counsel.37 In sum, the court finds that plaintiffs
35
Id., at 516.
Id.
37
Kendall State Bk. V. W. Point Underwriters, LLC, No. 10-23190JTM-KGG, 2011 WL 5506278, at *2-3
(D.Kan. Nov. 9, 2011).
36
7
have failed to demonstrate the necessary control obligating the defendants to produce the evidence
from the KAABOO entities.
Even if the record showed some control of the KAABOO entities by the defendants, the
court is not persuaded that plaintiffs have shown that KAABOO activities are relevant here. Fed.
R. Civ. P. 26(b)(1) allows parties to “obtain discovery regarding any non-privileged matter that is
relevant to any party’s claim or defense and proportional to the needs of the case.”38 Relevance, at
the discovery stage, is broadly construed.39 “‘[A]ny matter that bears on, or that reasonably could
lead to other matter that could bear on’ any party’s claim or defense” will be deemed relevant.40
Plaintiffs have made no allegations that the KAABOO entities made any promises or
representations concerning the Thunder on the Mountain music festival. Plaintiffs do not allege
that KAABOO breached any agreement, interfered with any of its relationships, or acted as an
agent on behalf of the defendants. Plaintiffs have suggested that the proposed discovery of
KAABOO is relevant to their claims because it will show (1) the background of the defendants
and KAABOO; (2) the defendants’ experience in the music festival business; (3) evidence of
plaintiffs’ tortious interference claim; (4) plaintiffs’ damages; (5) defendants’ pattern and practice
of fraud; and (6) defendants sought investors for the Thunder on the Mountain festival behind
plaintiffs’ back.41
38
Fed. R. Civ. P. 26(b)(1).
See Erickson, Kernell, Deruseau, & Kleypas v. Sprint Sols., Inc., No. 16-mc-212-JWL-GEB, 2016 WL
3685224, at *4 (D. Kan. July 12, 2016).
40
Rowan v. Sunflower Elec. Power Corp., No. 15-9227-JWL-TJJ, 2016 WL 3745680, at *2 (D. Kan. July
13, 2016) (quoting Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978) and ruling the Oppenheimer standard
still relevant after the 2015 amendment to Rule 26(b)(1)). See also Waters v. Union Pac. R.R. Co., No. 15-1287-EFMKGG, 2016 WL 3405173, at *1 (D. Kan. June 21, 2016) (“Relevance is broadly construed at the discovery stage of
the litigation and a 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.” (internal quotations and citation omitted)).
41
Pls’ Reply, at 14-18.
39
8
The court has examined each of the matters noted by plaintiffs as support for their
contention that discovery concerning the KAABOO entities is relevant to their claims. The court
is not persuaded that any of them are sufficient to show relevance. Plaintiffs have failed to
adequately explain how these matters are relevant to their claims.
Finally, the court agrees with defendants that, even if the requested discovery is
tangentially relevant, it is not proportional. Proportionality is to be determined by considering, to
the extent applicable, the following six factors: (1) the importance of the issues at stake in the
action, (2) the amount in controversy, (3) the parties' relative access to relevant information, (4)
the parties' resources, (5) the importance of the discovery in resolving the issues, and (6) whether
the burden or expense of the proposed discovery outweighs its likely benefit.42 An application of
these factors suggests that this discovery is not proportional. There is little question that discovery
concerning the KAABOO entities would expand discovery significantly, and the court is not
persuaded that the benefit of this discovery would outweigh the burden or expense of it.
B. Topic 30
The court next turns to Topic 30, where plaintiffs seek defendants’ communications with
investors regarding the Thunder on the Mountain music festival and/or this lawsuit. Defendants
contend that the court has previously quashed this topic, and the court should quash it again.
Plaintiffs point out that, since the court’s last order, they have received information that
defendants prepared investment packets to send to potential investors as early as November 2014
concerning the Thunder on the Mountain music festival. The court recognizes that the parties
dispute the nature of these “investment packets.” Nevertheless, the court is now persuaded that
plaintiffs have demonstrated that defendants’ communications with its investors regarding the
42
Fed. R. Civ. P. 26(b)(1).
9
music festival could be relevant. Accordingly, the court will not quash Topic 30. The court will
allow plaintiffs to seek information from defendants on communications they had with investors
on the Thunder on the Mountain music festival and/or this lawsuit.
C. Topics 7 and 8
With the deletion of the references to the KAABOO entities and related entities, plaintiffs
seek in Topic 7 the financial projections and budgets for any other music festival owned, operated
and/or managed by defendants. With the same deletions, plaintiffs seek in Topic 8 the ticket sales,
profits, revenues and expenses for any other music festival owned, operated and/or managed by
the defendants. Defendants have not offered any basis for a protective order on these matters.
Accordingly, defendants’ request to quash these topics in their entirety are denied.
D. Topics 2 and 4
Finally, the court turns to Topics 2 and 4. Plaintiffs ask that defendants be required to
produce information on the “Madison-family companies” referenced by Bryan Gordon in his July
11, 2018 deposition that were in existence any time from January 2014 to the present. Plaintiffs
also seek information concerning the control of these companies by the defendants. Defendants
contend that these topics should be quashed because they should not be required to provide
testimony concerning the activities of entities that are not parties to this lawsuit.
For the reasons noted previously, the court is not persuaded that this discovery is relevant
to this case. Plaintiffs have failed to show that any of companies related to the defendants were
involved in the Thunder on the Mountain music festival. Without such a showing, the court cannot
find that the requested discovery is relevant here. Accordingly, defendants’ motion to quash these
topics is granted.
10
IV.
With these rulings, the court grants defendants’ motion in part and denies it in part. The
court finds that the phrase “related entities” should be eliminated from Topics 5-8, 15, 22, 25-30
and 33. The court also finds that plaintiffs are not entitled to obtain discovery on the KAABOO
entities as requested in Topics 2-8, 15, 22, 25-30 and 33. The court further finds that Topics 2 and
4 should be quashed. With the deletion of “related entities” from Topics 7 and 8, plaintiffs are
entitled to obtain the discovery sought in those topics from the defendants. Plaintiffs may also
obtain the discovery from defendants on communications they had with investors on the Thunder
on the Mountain music festival and/or this lawsuit as requested in Topic 30.
IT IS THEREFORE ORDERED that defendants’ Motion for Protective Order for
Plaintiffs’ Second Amended Rule 30(b)(6) Notice of Deposition is granted in part and denied in
part.
IT IS FURTHER ORDERED that plaintiffs’ Motion for Leave to File Surreply (ECF No.
267) is denied.
IT IS SO ORDERED.
Dated this 31st day of October, 2018, at Topeka, Kansas.
s/ K. Gary Sebelius
K. Gary Sebelius
United States Magistrate Judge
11
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