Gilkerson v. Nebraska Colocation Centers, L.L.C.

Filing 110

MEMORANDUM AND ORDER that Plaintiff's Motion to Compel, (Filing No. 103 ), is granted. Defendant's Objection to Plaintiffs Motion, (Filing No. 105 ), is overruled. Plaintiff is granted leave to serve his proposed subpoena duces tecum , (Filing No. 94-1) on Leo Khayet. The progression order is amended as follows. The jury trial in this case is set to commence before John M. Gerrard, United States District Judge, in the Special Proceedings Courtroom, Roman L. Hruska Federal Cou rthouse, 111 South 18th Plaza, Omaha, Nebraska, at 9:00 a.m. on February 20, 2018, or as soon thereafter as the case may be called, for a duration of four (4) trial days. This case is subject to the prior criminal cases and such other civil cases as may be scheduled, if any, as may be scheduled for trial before this one. Jury selection will be held at the commencement of trial. The pretrial conference is scheduled to be held before the undersigned magistrate judge on February 6, 2018 at 1 :00 p.m., and will be conducted by WebEx conferencing. A separate order will be entered with instructions and codes for participating in the pretrial conference by WebEx. The patties' proposed Pretrial Conference Order and Exhibit List(s) must be emailed to [e-mail], in either Word Perfect or Word format, by 5:00 p.m. on February 5, 2018. Ordered by Magistrate Judge Cheryl R. Zwart. (LAC)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
TIMOTHY A. GILKERSON,
Plaintiff,

8:15CV37

vs.
MEMORANDUM AND ORDER
NEBRASKA COLOCATION CENTERS,
L.L.C., AMERICAN NEBRASKA
LIMITED PARTNERSHIP, and RALPH
EDWARDS PRODUCTIONS, INC.,
Defendants.
This matter is before the court on Plaintiff Gilkerson’s Motion to Amend the
Progression Order and to Compel the Issuance of a Subpoena Duces Tecum,
(Filing No. 103), and on Defendant Nebraska Colocation Centers, L.C.C.’s
(“NCC”) Objection to Plaintiff’s Motion. (Filing No. 105).

BACKGROUND

Plaintiff Timothy Gilkerson filed his complaint in the District Court of
Douglas County, Nebraska on April 8, 2014. (Filing No. 1-1). Defendant NCC
removed the case to this court on January 27, 2015. (Filing No. 1). Plaintiff’s
complaint alleges his employment for Defendant was terminated without cause in
violation of a valid employment agreement. (Filing No. 1-1). One provision of the
Employment Agreement (the “Agreement”) at issue states that if Defendant NCC
terminated Gilkerson’s employment without cause, Plaintiff would potentially be
entitled to a retirement bonus equal to a fixed percentage of NCC’s value, but
only if NCC’s earnings before interest, taxes, depreciation, and amortization

(“EBITDA”) was a certain amount on the date of the Agreement’s termination.
(Filing No. 1-1 at CM/ECF p. 8).

Discovery was completed in this case in late 2015 and the pretrial
conference and trial were set for mid-2016. In May 2016, this court granted a
Motion for Summary Judgment filed by NCC and entered Judgment in the case.
(Filing Nos. 65 & 66). The Eighth Circuit Court of Appeals reversed and
remanded the decision of the District Court on June 21, 2017. (Filing No. 77).

The undersigned held a scheduling conference with the parties on August
22, 2017, and set the pretrial and trial date for February of 2018. (Filing No. 83).
In September, the undersigned was advised of a discovery dispute concerning
the computation of NCC’s EBITDA and on October 3, 2017, after conferring with
the parties, the undersigned set a briefing schedule for the Plaintiff to file any
motion to compel supplemental discovery regarding the calculation of NCC’s
EBITDA. (Filing No. 90). No motion to compel was filed.

On October 5, 2017, Defendant NCC filed a separate lawsuit against an
individual, Leo Khayet in the District of Nebraska. See Nebraska Data Centers,
LLC v. Khayet, 8:17cv00369LSCCRZ. NCC’s lawsuit against Khayet involves an
alleged breach of a consulting agreement contract between the two parties. On
November 7, 2017, Gilkerson filed a notice of his intent to serve a subpoena
duces tecum on Khayet. (Filing No. 94). Defendant NCC objected to the notice.
Plaintiff now moves for an order amending the progression order and compelling
the third-party subpoena.

2

ANALYSIS

Pursuant to Rule 16(b)(4), a case management order setting progression
deadlines “may be modified only for good cause and with the judge’s consent.”
Fed. R. Civ. P. 16(b)(4). “The primary measure of Rule 16's ‘good cause’
standard

is the moving party’s diligence in attempting to meet the case

management order's requirements. . . . , [but the] ‘existence or degree of
prejudice to the party opposing the modification’ and other factors may also affect
the decision.” Bradford v. DANA Corp., 249 F.3d 807, 809 (8th Cir. 2001). The
movant’s level of diligence and the degree of prejudice to the parties are both
factors to consider when assessing if good cause warrants extending a case
management deadline, with the movant’s diligence being the first consideration
and the extent of prejudice to either party considered only following a requisite
threshold finding of due diligence. Sherman v. Winco Fireworks, Inc., 532 F.3d
709, 716-17 (8th Cir. 2008); Marmo v. Tyson Fresh Meats, Inc., 457 F.3d 748,
759 (8th Cir. 2006).

While discovery in this case closed in late 2015, this case has been
subject to several lengthy suspensions since that time, including the resolution of
the summary judgment motion and a subsequent reversal by the Eighth Circuit
Court of Appeals. After both of these matters were resolved, the Plaintiff acted
diligently in pursuing discovery on the remaining issues, including the EBITDA
value and retirement bonus: A telephone conference to discuss this issue was
set less than a month after the mandate from the Eighth Circuit was entered.
(See Filing Nos. 80 & 87). Additionally, the court believes the prejudice to the
defendants in extending the case management deadlines is minimal, especially
as the Plaintiff does not propose extending the pretrial conference and trial dates.

3

(See Filing No. 103-1 at CM/ECF pp. 1–2). The undersigned finds that good
cause exists to modify the case’s current progression order.

In addition to reopening discovery and amending the progression order,
the Plaintiff seeks a court order compelling Defendants to permit the issuance of
a subpoena duces tecum on Leo Khayet. The subpoena seeks
1.

The Consulting Agreement entered into on August 8, 2017 between
Kayet and NCC.

2.

Any and all agreements entered into between Khayet and NCC
including but not limited to, any confidentiality or non-disclosure
agreements.

3.

Any and all documents provided to Khayet by NCC or its employees,
agents, affiliates, representatives, assignees, successors, or other
person or party acting on behalf thereof which relate to Defendant’s
actual or potential: sale value, market value, EBITDA value, liquidity,
and/or ownership.

(Filing No. 94-1 at CM/ECF pp. 2–3).

Rule 26(b)(1) of the Federal Rules of Civil Procedure was amended on
December 1, 2015. The scope of permissible discovery under Rule 26 is broad
and parties may obtain
discovery regarding any nonprivileged matter that is relevant to any
party's claim or defense and proportional to the needs of the case,
considering the importance of the issues at stake in the action, the
amount in controversy, the parties’ relative access to relevant
information, the parties’ resources, the importance of the discovery
in resolving the issues, and whether the burden or expense of the
proposed discovery outweighs its likely benefit. Information within
this scope of discovery need not be admissible in evidence to be
discoverable.

4

Fed. R. Civ. P. 26(b)(1). Courts should examine each case individually to
determine the weight and importance of the proportionality factors.

Plaintiff argues that the documents sought through the subpoena are
relevant to the determination and calculation of the Plaintiff’s damages.
Specifically, Plaintiff contends the documents would assist in determining the
value of the Defendant company should Plaintiff be entitled to the retirement
bonus under the Agreement. Plaintiff additionally argues that the documents
could be relevant to the issue of Defendant’s credibility if the documents differ
from previous financial information received in discovery.

Defendant NCC primarily argues that the subpoena is overly broad
because Plaintiff is not entitled to the retirement bonus. That is, Defendant NCC
argues that the termination of the Agreement occurred when Gilkerson’s
employment with NCC ended in 2014, and NCC’s EBITDA value on that date did
not entitle Gilkerson to the retirement bonus. Thus, defendant argues the
documents requested by subpoena relating to NCC’s actual or potential sale
value, market value, liquidity, etc. are irrelevant to the damages in this case.

The parties appear to disagree regarding when the Agreement
“terminated” for purposes of calculating the EBITDA value. Defendant argues the
Agreement terminated on the date Plaintiff was fired in 2014: Plaintiff appears to
argue the Agreement terminated at the end of its natural ten-year term which
would have occurred in 2021.

The Defendant concedes that the EBITDA value is relevant in determining
whether Plaintiff was entitled to a retirement bonus. The question regarding when
the Agreement terminated—the date for calculating the EBITDA—cannot be

5

decided on the record now before the court or by the undersigned magistrate
judge. As such, the ongoing value of NCC may be relevant to determining
Plaintiff’s retirement bonus—the damages for an alleged breach of the
Agreement.

The court finds the subpoena duces tecum is likely to elicit potentially
relevant information, is of minimal burden to the Defendant (especially
considering the protective order in place), and permitting the issuance of a
subpoena duces tecum on Leo Khayet will only minimally impact the court’s
progression order.

IT IS ORDERED
1.

Plaintiff’s Motion to Compel, (Filing No. 103), is granted.

2.

Defendant’s Objection to Plaintiff’s Motion, (Filing No. 105), is
overruled.

3.

Plaintiff is granted leave to serve his proposed subpoena duces
tecum, (Filing No. 94-1) on Leo Khayet.

4.

The progression order is amended as follows:
a.

The deadline for serving discovery on third parties is
December 14, 2017.

b.

Plaintiffs supplemental or amended report of Brad Larsen shall
be provided to Defendant's attorneys no later than December
22, 2017.

c.

Defendant's supplemental or amended report of Bernard Goss
shall be provided to Plaintiff’s attorneys no later than
December 29, 2017.

d.

All motions in limine and motions to limit or exclude testimony,
including on Daubert-related grounds, shall be filed by
January 19, 2018.
6

e.

The jury trial in this case is set to commence before John M.
Gerrard, United States District Judge, in the Special
Proceedings Courtroom, Roman L. Hruska Federal
Courthouse, 111 South 18th Plaza, Omaha, Nebraska, at 9:00
a.m. on February 20, 2018, or as soon thereafter as the case
may be called, for a duration of four (4) trial days. This case is
subject to the prior criminal cases and such other civil cases
as may be scheduled, if any, as may be scheduled for trial
before this one. Jury selection will be held at the
commencement of trial.

f.

The pretrial conference is scheduled to be held before the
undersigned magistrate judge on February 6, 2018 at 1 :00
p.m., and will be conducted by WebEx conferencing. A
separate order will be entered with instructions and codes for
participating in the pretrial conference by WebEx. The patties'
proposed Pretrial Conference Order and Exhibit List(s) must
be emailed to [e-mail], in either Word Perfect
or Word format, by 5:00 p.m. on February 5, 2018.

Dated this 5th day of December, 2017.
BY THE COURT:
s/ Cheryl R. Zwart
United States Magistrate Judge

7