Gibbens v. Quality Rental Tools, Inc.

Filing 155

ORDER AND REASONS AFFIRMING IN PART AND REVERSING IN PART re 93 MOTION for APPEAL OF MAGISTRATE JUDGE DECISION to District Court. QRT shall respond to Gibbens's discovery as set forth herein within twenty days of this Order. To the extent any documents are deemed confidential, they shall be produced under a protective order agreed to by all parties. Signed by Judge Susie Morgan. (Reference: 13-6401 and 14-288)(bwn)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ROBERT GIBBENS,
Plaintiff

CIVIL ACTION

VERSUS

NO. 13-6401

QUALITY RENTAL TOOLS, INC., ET AL.,
Defendants

SECTION: "E" (3)

ORDER AND REASONS
This is a civil action originally filed in state court by Robert Gibbens against
Quality Rental Tools, Inc. ("QRT"). QRT removed the case and asserted a counterclaim
against Gibbens, Basin Holdings US, LLC ("Basin"), and Black Diamond Oilfield
Rentals, LLC ("Black Diamond"). 1
Gibbens has appealed an Order from the magistrate judge denying his motion to
compel. 2 The question presented is whether the ruling is clearly erroneous or contrary
to law. For the following reasons, the Order is AFFIRMED IN PART and REVERSED IN
PART.
BACKGROUND 3
Gibbens previously propounded interrogatories and requests for production
("RFP") on QRT. QRT objected. Gibbens filed a motion to compel regarding RFPs 2, 16,

Gibbens added Basin and Black Diamond as counterclaim defendants under Federal Rule of Civil
Procedure 13(h).
2 R. Doc. 93.
3 The facts are summarized more fully in a previous order. See R. Doc. 154. Familiarity is assumed.
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17, 20, 21, and 24, and interrogatory 5. The magistrate judge denied the motion in its
entirety. 4 Gibbens appeals.
LEGAL STANDARD
With the consent of the presiding district judge, a magistrate judge may
adjudicate non-dispositive pre-trial motions. 5 The magistrate judge is afforded broad
discretion in resolving such motions. 6 The district judge may reverse only if the ruling is
"clearly erroneous or contrary to law." 7 In order to meet this high standard, the district
judge must be "left with a definite and firm conviction that a mistake has been
committed." 8
DISCUSSION
The discovery sought relates to QRT's business relationship with NAMCO.
Gibbens contends the information is relevant to his claim under the Louisiana Unfair
Trade Practices and Consumer Protection ("LUPTA"). 9

Gibbens alleges Clements

intentionally misled Corcoran to believe QRT's future revenues from NAMCO would
decrease significantly.

In order to prevail on his LUPTA claim, Gibbens must

demonstrate "the alleged conduct offends established public policy and . . . is immoral,
unethical, oppressive, unscrupulous, or substantially injurious." 10
RFP 2 seeks "any and all documents which corroborate [QRT's] assertion that the
corporate arrangement of NAMCO changed in 2013."

Gibbens does not offer any

R. Doc. 86.
28 U.S.C. § 636(b)(1)(A).
6 McCallon v. BP Am. Prod. Co., Nos. 05–0597, C/W 05–0700, 2006 WL 3246886, at *2 (E.D. La. Nov.8,
2006).
7 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a).
8 Yelton v. PHI, Inc., 284 F.R.D. 374, 376 (E.D. La. 2012) (internal quotation marks omitted).
9 La. Rev .Stat. § 51:1401 et seq. The LUPTA provides a private right of action to any person injured by
"unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or
commerce." La. Rev. Stat. §§ 51:1409A, 51:1405A.
10 Cheramie Servs., Inc. v. Shell Deepwater Prod., 35 So. 3d 1053, 1059 (La. 2010) (alteration in original)
(internal quotation marks omitted).
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specific argument regarding these documents. The denial of RFP 2 was not clearly
erroneous.
RFP 16 seeks NAMCO's Operating Agreements.

QRT has produced the

agreement in effect at the time of Gibbens's employment but argues the agreement as
amended is irrelevant to the LUPTA claim. The Court disagrees. The discovery rules
"are to be accorded a broad and liberal treatment to effect their purpose of adequately
informing the litigants in civil trials." 11 The discovery sought need not be admissible
itself provided it "appears reasonably calculated to lead to the discovery of admissible
evidence." 12 The Court finds that NAMCO's amended operating agreement—even if
inadmissible—appears reasonably calculated to lead to the discovery of evidence that
may support Gibbens's LUPTA claim. The denial of RFP 16 was clearly erroneous.
RFP 17 seeks "all documents evidencing payments/transfers/remissions from
NAMCO's bank account to QRT from 2008 until the present." As set forth above,
Gibbens claims Clements falsely represented in 2012 that QRT's future revenues from
NAMCO would decrease significantly. If QRT's revenues from NAMCO remained steady
after 2012, Gibbens could use this information to argue Clements intentionally misled
Corcoran. The denial of RPF 17 was clearly erroneous.
RFP 21 requests "any and all documentation related to the annual bids/master
service agreement made by NAMCO to Chevron from 2010 until 2014 as discussed on p.
172 of the transcript." QRT derives revenues from NAMCO, which NAMCO in turn
derives from its business with Chevron. Thus, understanding the business relationship
between NAMCO and Chevron is relevant to understanding whether QRT would

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12

Herbert v. Lando, 441 U.S. 153, 177 (1979).
Fed. R. Civ. P. 26(b)(1).

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continue to benefit from that relationship.

The discovery sought could reveal

information that Clements knew or should have known at the time of his
representations to Corcoran. Again, in light of the liberal treatment of the discovery
rules, the denial of RFP 21 was clearly erroneous.
RFP 20 seeks QRT's "Profit and Loss sheets and its inventory rentals from 2012
and 2013." This information helps complete the picture regarding QRT's financial
status after Gibbens's departure. This information is relevant both for purposes of
valuing QRT as a going concern and for purposes of Gibbens's LUPTA claim. The denial
of RFP 20 was clearly erroneous.
In the event RFP 14 is denied, RFP 24 seeks "each and every 'financial statement,'
'summary financial statement,' or its functional equivalent which were created in 2011 to
project [QRT's] financial future without the Chevron revenue received through
NAMCO." As QRT notes in its opposition memorandum, RFP 14 was not denied. Thus,
by its own terms, RFP 24 is moot. Gibbens makes no argument to the contrary. The
denial of RFP 24 was not clearly erroneous.
Interrogatory 5 asks for sales revenue from 2010 through 2013 for the following
companies: "NAMCO (Chevron), McMoran, Apache, Sampson, and Century 21."
Gibbens makes no attempt to explain the relationship of McMoran, Apache, Sampson,
and Century 21 to QRT and, more importantly, how their sales revenues are probative of
whether Clements intentionally misled Corcoran. The Court finds, however, that the
sales revenues of NAMCO are relevant for substantially the same reasons the documents
sought in RFP 21 are relevant.

The denial of Interrogatory 5 in full was clearly

erroneous.

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CONCLUSION
QRT shall respond to Gibbens's discovery as set forth above within twenty days of
this Order.

To the extent any documents are deemed confidential, they shall be

produced under a protective order agreed to by all parties.
New Orleans, Louisiana, this 13th day of March, 2015.

________________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

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