United States of America v. Arbour

Filing 198

RULING denying 93 Sealed Motion To Compel Defendant PL Midstream, LLC, to Produce Information Regarding the Equity Sale of PL Midstream, LLC, and Current or Past Leases and 95 Sealed Motion to Compel Defendant A. Wilbert's Sons, LLC to Prod uce Documents Regarding Current or Past Leases. The 103 Sealed Motion for Protective Order is granted. The order granting Defendant Boardwalk Louisiana Midstream, LLC's f/k/a PL Midstream, LLC, Amended Motion for Leave to File Sur-reply to Docket No. 118 is vacated and the motion is now denied. Signed by Magistrate Judge Stephen C. Riedlinger on 09/30/2013. (NLT)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

UNITED STATES OF AMERICA
CIVIL ACTION
VERSUS
NUMBER 11-803-JJB-SCR
9.345 ACRES OF LAND, MORE OR
LESS, SITUATED IN IBERVILLE
PARISH, STATE OF LOUISIANA, ET
AL
RULING ON MOTIONS TO COMPEL DISCOVERY
and
RULING ON MOTION FOR PROTECTIVE ORDER
and
ORDER VACATING ORDER GRANTING LEAVE TO FILE SUR-REPLY
AND DENYING MOTION FOR LEAVE TO FILE SUR-REPLY
Before the court is The United States’ Motion to Compel
Defendant PL Midstream, LLC, to Produce Information Regarding the
Equity Sale of PL Midstream, LLC, and Current or Past Leases.
Record document number 93.

The motion is opposed.1

In response to

the plaintiff’s motion defendant PL Midstream, LLC also filed a
Motion for a Protective Order.
motion is opposed.2

Record document number 103.

This

Also before the court is The United States’

Motion to Compel Defendant A. Wilbert’s Sons, LLC to Produce
Documents Regarding Current or Past Leases. Record document number

1

Record document number 101. The United States also filed a
reply memorandum. Record document number 118.
2

Record document number 118.

95.

This motion is opposed.3

For the reasons which follow the motions to compel are denied
and the Motion for a Protective Order is granted.
The Parties’ Arguments
This case involves the taking of a certain property, Tract
101, which includes an underground salt cavern (Cavern 102) in the
Bayou Choctaw Salt Dome in Iberville Parish, Louisiana.

At issue

in this case is the determination of the fair market value of the
property taken.
Tract 101 is owned in part by defendant A. Wilbert’s Sons, LLC
(“AWS”).

At the time the complaint was filed, PL Midstream, LLC

(“PLM”) was the lessee of AWS’s interest in Tract 101.

PLM was

sold at an auction sale to Boardwalk Pipeline Partners after this
complaint was filed.

Through this sale, Boardwalk acquired PLM’s

lease interest in the subject property, along with additional
assets at another salt dome storage facility.

PLM believes that

consideration of the sale price may assist in determining the fair
market value of Tract 101.
Plaintiff moved to compel defendant PLM to produce documents
and information regarding (1) the equity sale of PLM and (2) past

3

Record document number 102. The United States also filed a
reply memorandum. Record document number 117.
2

and current leases involving the subject and surrounding property.4
In a separate motion, the plaintiff also moved to compel AWS to
produce similar information and documents concerning its interest
leased to PLM.

Plaintiff asserted that the stipulated protective

order already in effect prevents the release of confidential
information to third parties.
With respect to the requested equity sale discovery, PLM
produced all documents initially provided to prospective purchasers
that were part of the Sales Data Room, supplemental documents
requested by buyers in the auction and due diligence process which
were

added

to

the

Sales

Data

Room,

and

the

Equity

Purchase

Agreement between PLM and Boardwalk which contains the details of
the final sales transaction.

The contested discovery involves

other documents generated during the negotiations process with
prospective buyers, including Boardwalk.

PLM objected to this

production, arguing that evidence of unaccepted offers to purchase
land is irrelevant to the determination of just compensation and
that the harm production would cause outweighs the possible benefit
to the plaintiff.
PLM argued that its responsive production was sufficient and
disclosure confidential documents concerning (1) the negotiations
and specific bids from third-parties whose offers were not accepted
and (2) the details of the negotiations that led to the final

4

Record document number 61-2, Exhibit A.
3

agreement would be harmful to both PLM and the prospective buyers,
and would undermine the secrecy necessary for success of a private
corporate auctions.

PLM asserted that unaccepted offers made to

purchase land are irrelevant to prove value or just compensation,
thus negotiations leading to those offers are equally irrelevant.
PLM also noted that the previously entered protective order does
not protect the confidential negotiation documents from public
record requests or prevent the plaintiff’s consultants and experts,
who may be associated with PLM’s competitors, from accessing this
information.
With respect to outstanding discovery concerning the leased
interest, the plaintiff argued that PLM and AWS should be compelled
to produce the documents related to the amendment or replacement of
the 1990 lease, including any new lease for the subject property
and Cavern 102, as well as any audits or other documents related to
the calculation of rental payments under any lease concerning the
subject property.

Plaintiff argued that documents evidencing the

course of conduct of the parties to the prior lease in executing
their obligations under that lease are necessary to understand the
background and market considerations that influenced the rent
and/or royalty determinations.
Both PLM and AWS argued that information concerning the lease
negotiations are irrelevant to any issue in this condemnation
action.

Defendants asserted that the negotiation information is

4

contained

in

over

10,000-20,000

documents,

making

production

unreasonable and overly burdensome, especially given the little, if
any, substantive value these would have to the fair market value
determination.

Defendants also argued that the lease negotiation

involved the resolution of a different legal matter concerning AWS
and PLM and an attempted resolution of issues raised by the current
condemnation action.

Thus, many of these requested documents

reference information that is protected by the attorney-client
privilege and are protected work-product.
Analysis
A review of the record and the parties arguments shows that
the plaintiff has failed to establish that the benefit of producing
the requested information and documents would outweigh the burden
of production and the prejudice that would be suffered by AWS, PLM,
Boardwalk and the other bidders involved in the auction sale of
PLM. The extensive documentation that has been produced provides
the plaintiff with the same facts that bidders used to determine a
fair market value for the property.

Any additional information

that may have been exchanged during the negotiation process was
specific to a particular bidder’s interests and was not included in
the Sales Data Room to be publicized to the other participants of
the sale.

Thus, this additional information do not likely reflect

the fair market value for the purpose of this case.
Plaintiff’s argument that specific bidders’ motivations and
5

bids would assist in the appraisal process is unpersuasive.

As

discussed by PLM, unaccepted offers are not reliable evidence of
market value.

Although an appraisal requires a review of the

typical motivations of buyers and sellers, this information can be
determined

without

production

of

the

specific

motivations

bidders involved in the private auction process.

of

Through this

request, the plaintiff is seeking a shortcut to this determination
which would lead to skewed result since the information is limited
to the participants in this one auction.

PLM’s discussion of the

private auction process showed that any minimal benefit this
information could provide to the plaintiff is heavily outweighed by
the need to protect the interests of the auction participants as
discussed by PLM.
Plaintiff also argued that Boardwalk’s motivation in acquiring
the subject property is relevant because it will show how the
property

at

issue

in

the

condemnation

proceeding

was

valued

compared to the rest of the property that was part of the sale.
Boardwalk’s

valuation

of

the

various

assets

gained

from

its

purchase of PLM can be more directly obtained, if at all, through
other

discovery

methods,

e.g.

a

Rule

30(b)(6),

Fed.R.Civ.P.,

deposition. Thus, the benefit of disclosure of protected documents
is not outweighed by the prejudice that would be incurred.
Plaintiff

has

also

failed

to

demonstrate

that

discovery

concerning the lease negotiations are relevant to the fair market

6

value issue.

AWS and PLM have asserted that the negotiations were

based, in part, on other pending legal matters as well as the
current condemnation proceeding.

Thus, the lease negotiations are

not indicative of the fair market value of the property in light of
these unique factors.

Defendants have shown that the burden of

this extensive production coupled with the interwoven privileged
information outweighs any benefit to the plaintiff.
As to PLM’s Motion for Protective Order, consideration of the
parties’ arguments supports finding that there is good cause to
grant

the

motion.

Therefore,

the

withheld

sales

negotiation

information and documents shall not be discoverable in this case.
Accordingly, The United States’ Motion to Compel Defendant PL
Midstream, LLC, to Produce Information Regarding the Equity Sale of
PL Midstream, LLC, and Current or Past Leases is denied.

The

United States’ Motion to Compel Defendant A. Wilbert’s Sons, LLC to
Produce Documents Regarding Current or Past Leases is also denied.
Defendant PL Midstream, LLC’s Motion for a Protective Order is
granted.

The

substantially

motions

justified.

to

compel,
Pursuant

although
to

Rule

denied,

were

37(a)(5)(B),

Fed.R.Civ.P., the parties shall bear their respective costs
Furthermore, since the court has determined that the motion to
compel as to PLM can be decided without additional briefing;

7

IT IS ORDERED that the ORDER5 granting Defendant Boardwalk
Louisiana Midstream, LLC's f/k/a PL Midstream, LLC, Amended Motion
for Leave to File Sur-reply to Docket No. 118 is vacated and the
motion6 is now denied.
Baton Rouge, Louisiana, September 30, 2013.

STEPHEN C. RIEDLINGER
UNITED STATES MAGISTRATE JUDGE

5

Record document number 180.

6

Record document number 121.
8