BARTON et al v. RCI, LLC
Filing
61
MEMORANDUM OPINION AND ORDER granting in part and denying in part Plaintiff's 49 Motion for Discovery; granting in part and denying in part 50 Defendants Motion to Compel; In-Person Status Conference scheduled for 5/14/2013 at 3:30 PM in Courtroom 6W. Signed by Magistrate Judge Douglas E. Arpert on 3/28/2013. (eaj) Modified on 4/1/2013 (eaj, ).
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
KENNETH A. BARTON, et al.,
:
:
Plaintiffs,
:
:
v.
:
:
RCI, LLC,
:
:
Defendant.
:
___________________________________ :
Civil Action No.: 10-3657 (PGS)
MEMORANDUM OPINION
AND ORDER
ARPERT, U.S.M.J.
I.
INTRODUCTION
On July 20, 2010, Plaintiffs filed a Complaint against RCI, LLC (“Defendant” or “RCI”)
alleging “violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq. (“NJCFA”)”,
“breach of [the] implied covenant of good faith and fair dealing”, “breach of contract” and
“violation of the Plain Language Act”, and seeking declaratory and injunctive relief in addition
to compensatory and punitive damages related to Defendant’s “Points Program”. See Pl.’s
Compl., dkt. entry no. 1 at 1-33. Plaintiffs maintain that Defendant’s core business is “vacation
exchanges” that “offers its members both week-for-week vacation exchange opportunities and
customized vacation experiences through its...exchange networks”. Id. at 3. Plaintiffs claim that
“[Defendant] boasts of a large affiliate network of resorts world-wide” which includes “the Blue
Bay family of resorts (“Blue Bay”)” and that “[Defendant]...provide[s]...services and support in
helping resorts develop business plans to attract new owners and to sell more vacation ownership
by marketing the exchange programs...[that] [Defendant] offers”. Id. at 3-4. Thus, “[i]nstead of
exchanging one fixed week for another fixed week”, members of Defendant’s “Points Program”
can “choose where to stay, how many days to stay, rent a car during the stay, and obtain airline
tickets to get to the destination of choice...all by using points”. Id.
In sum, Plaintiffs maintain that “[t]hrough marketing presentations, printed materials, and
written contracts that were uniform in all material respects, [Defendant] sold memberships into
[its] Points Program to each Plaintiff and putative class member in conjunction with each
putative class member’s purchase of an interval of vacation time at a Blue Bay resort” and that
“[a]t all relevant times, Blue Bay acted for [Defendant] with actual authority and apparent
authority”.
Id. at 4-5.
“[Defendant’s] vacation exchange pitch, communicated by on-site
affiliate staff and supported by RCI-generated point-of-sale printed materials, was...that...[a]
person could purchase as many one night stays at a Blue Bay resort as desired for a low, one
time cost and use the collective point value of those one night stays to customize future vacations
through [Defendant’s] Points Program, including accessing [Defendant’s] Points Partners
Inventory (airline tickets, rental cars, and the like)”. Id. at 5. Plaintiffs claim that “[Defendant’s]
printed materials highlighted the ability to exchange points for worldwide destinations and listed
international and domestic airlines...as readily accessible means for traveling to the desired
destinations through exchanging points” and, further, that “[t]he ability to exchange points for
international and domestic airfare was a particularly attractive aspect of the pitch because the
upfront and total cost of acquiring plenty of points to acquire airfare over many years was less
than the out-of-pocket costs one would have to pay on the open market for such airline tickets”.
Id. at 5-6. Collectively, the nine named Plaintiffs claim to have purchased 65,700,934 RCI
points. Id. at 15.
At first, Defendant’s “Points Program generally lived up to the expectations set by
2
[Defendant’s] sales pitch” as “Plaintiffs were able to exchange points for otherwise expensive
international and domestic air travel and design their desired vacations by using RCI Points
Partner Inventory”. Id. at 15-16. However, in June, July and August 2008, “[Defendant] began
denying Plaintiffs’ point exchanges for Partner Inventory”.
Id.
“In September 2008,
[Defendant] mailed to each Points Program member who joined through...Blue Bay...prior to
February 29, 2008 a letter notifying them that [Defendant] was unilaterally imposing a 60,000
annual point limit cap on Points Partner Inventory redemptions” in order to “preserve the
integrity of the RCI network”. Id. at 17. Plaintiffs maintain that “[t]he cap equates to essentially
one domestic – one way – airline flight”, that it is “grossly insufficient to ever obtain the type of
international and domestic airfare [Defendant] promoted in its written materials and by its
affiliated sales associates”, and that it was actually imposed “to economically benefit
[Defendant] to the detriment of those Points Program members who joined through Blue Bay”.
Id. Plaintiffs contend that if the “printed materials and the sales pitch...indicated a 60,000 annual
cap on redemptions for Points Inventory, a reasonable person either would not have joined the
RCI Points Program...or would not have purchased as many points as were often purchased”. Id.
Based in part on the assertion that “[n]othing in the [t]erms and [c]onditions of RCI[’s] Points
Network Membership...states, implies or reflects the possibility of a cap on the amount of points
redeemed in any given year”, Plaintiffs maintain that “[Defendant’s] unilateral restructuring of
the bargain did and does harm...[them] and putative class members”. Id. at 20-21.
This matter now comes before the Court on two (2) discovery motions. Specifically,
Plaintiffs filed a motion to compel Defendant to provide supplemental answers to certain
Interrogatories and to produce supplemental documents and information in response to certain
3
Requests for Production (“RFP”) [dkt. entry no. 49]. Defendant has opposed Plaintiffs’ motion.
See dkt. entry no. 55. Separately, Defendant filed a motion to compel Plaintiffs to produce
certain documents that they have withheld [dkt. entry no. 50].
Plaintiffs have opposed
Defendant’s motion. See dkt. entry no. 56. For the reasons stated on the record and herein, the
Parties’ Motions are GRANTED, in part, and DENIED, in part, as set forth below.
II.
LEGAL STANDARDS
(A)
Discovery
Pursuant to FED. R. CIV. P. 26(b)(1), “parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party’s claim or defense” and “the court may order
discovery of any matter relevant to the subject matter involved in the action”, although “relevant
information need not be admissible at trial if the discovery appears reasonably calculated to lead
to the discovery of admissible evidence”. See also Pearson v. Miller, 211 F.3d 57, 65 (3d Cir.
2000). Importantly, pursuant to FED. R. CIV. P. 26(b)(2)(C), “the court must limit the frequency
or extent of discovery otherwise allowed by these rules or by local rule if it determines that:
(i)
the discovery sought is unreasonably cumulative or
duplicative, or can be obtained from some other source that
is more convenient, less burdensome, or less expensive;
(ii)
the party seeking discovery has had ample opportunity to
obtain the information by discovery in the action; or
(iii)
the burden or expense of the proposed discovery outweighs
its likely benefit, considering the needs of the case, the
amount in controversy, the parties’ resources, the
importance of the issues at stake in the action, and the
importance of the discovery in resolving the issues.
Further, “the Court has a responsibility to protect privacy and confidentiality interests” and “has
authority to fashion a set of limitations that allow as much relevant material to be discovered as
4
possible...while preventing unnecessary intrusions into legitimate interests that may be harmed
by the discovery of material sought”. Schmulovich v. 1161 Rt. 9 LLC, 2007 U.S. Dist. LEXIS
59705, at *3-4 (D.N.J. 2007); see also Pearson, 211 F.3d at 65; FED. R. CIV. P. 26(c).
The precise boundaries of the Rule 26 relevance standard depend upon the context of
each particular action, and the determination of relevance is within the discretion of the District
Court. See Barnes Found. v. Twp. of Lower Merion, 1996 WL 653114, at *1 (E.D. Pa. 1996).
Certainly, “[c]ourts have construed this rule liberally, creating a broad vista for discovery”.
Takacs v. Union County, 2009 WL 3048471, at *1 (D.N.J. 2009)(citing Tele-Radio Sys. Ltd. v.
DeForest Elecs., Inc., 92 F.R.D. 371, 375 (D.N.J. 1981)). “Review of all relevant evidence
provides each party with a fair opportunity to present an effective case at trial”. Jones, 238
F.R.D. at 163; see also Caver, 192 F.R.D. at 159; Nestle Foods Corp. v. Aetna Cas. & Sur. Co.,
135 F.R.D. 101, 104 (D.N.J. 1990). “Mutual knowledge of all the relevant facts gathered by
both parties is essential to proper litigation...[and] either party may compel the other to disgorge
whatever facts he has in his possession”. Hickman v. Taylor, 329 U.S. 495, 507 (1947). Indeed,
“all parties will benefit from broad discovery, as the court, when ruling on class certification,
‘will have the necessary data before it to determine if the requirements of FED. R. CIV. P. 23(a)
are met’”. Bell v. Lockheed Martin Corp., 270 F.R.D. 186, 192 (D.N.J. 2010) (citing report of
special master).
“Whether certain documents are relevant is viewed in light of the allegations of the
complaint, not as to evidentiary admissibility”. Hickman, 329 U.S. at 507; see also Scouler v.
Craig, 116 F.R.D. 494, 496 (D.N.J. 1987). “The party seeking discovery has the burden of
showing that the information sought is relevant to the subject matter of the action and may lead
5
to admissible evidence”. Caver, 192 F.R.D. at 159; see also Nestle Foods, 135 F.R.D. at 105.
Oppositely, “the party resisting discovery has the burden of clarifying and explaining its
objections to provide support therefor”. Tele-Radio, 92 F.R.D. at 375; see also Gulf Oil Corp. v.
Schlesinger, 465 F. Supp. 913, 916-17 (E.D. Pa. 1979); Robinson v. Magovern, 83 F.R.D. 79, 85
(E.D. Pa. 1979); Nestle Foods, 135 F.R.D. at 104-105. More specifically, “[t]he party resisting
production of discovery bears the burden of establishing lack of relevancy or undue burden”,
“must demonstrate to the Court that the requested documents either do not come within the broad
scope of relevance as defined in FED. R. CIV. P. 26(b)(1) or else that they are of such marginal
relevance that the potential harm occasioned by discovery would outweigh the ordinary
presumption in favor of broad disclosure”, and “must do more than argue that to compile and
produce [documents] would be burdensome”. Guiterrez v. Johnson & Johnson, Inc., 2002 U.S.
Dist. LEXIS 15418, at *22-23 (D.N.J. 2002); see also Flora v. Hamilton, 81 F.R.D. 576
(M.D.N.C 1978); Burke v. New York City Police Dep’t, 115 F.R.D. 220, 224 (S.D.N.Y. 1987).
“[A] discovery request may be denied if, after assessing the needs of the case, the amount
in controversy, the parties’ resources, the importance of the issues at stake in the action, and the
importance of the discovery in resolving the issues, the District Court finds that there exists a
likelihood that the resulting benefits would be outweighed by the burden or expenses imposed as
a consequence of the proposed discovery”. Takacs, 2009 WL 3048471, at *1; see also Bayer AG
v. Betachem, Inc., 173 F.3d 188, 191 (3d Cir. 1999). “The purpose of this rule of proportionality
is to guard against redundant or disproportionate discovery by giving the court authority to
reduce the amount of discovery that may be directed to matters that are otherwise proper subjects
of inquiry”. Takacs, 2009 WL 3048471, at *1(citing Bowers v. National Collegiate Athletic
6
Assoc., 2008 WL 1757929, at *4 (D.N.J. 2008)); see also Leksi, Inc. v. Federal Ins. Co., 129
F.R.D. 99, 105 (D.N.J. 1989); Public Service Group, Inc. v. Philadelphia Elec. Co., 130 F.R.D.
543, 551 (D.N.J. 1990). “Requiring a responding party to perform extensive research or to
compile substantial amounts of data and information does not automatically constitute undue
burden” and “[i]mposing such a burden is particularly proper where...the information is crucial
to the ultimate determination of a crucial issue and where the location of the documents is best
known by the responding party”. Capacchione v. Charlotte-Mecklenburg Sch., 182 F.R.D. 486,
491 (W.D.N.C. 1998).
(B)
Interrogatories to Parties
FED. R. CIV. P. 33 provides:
(a) In General.
...
(2) Scope. An interrogatory may relate to any matter that
may be inquired into under Rule 26(b). An interrogatory is
not objectionable merely because it asks for an opinion or
contention that relates to fact or the application of law to
fact, but the court may order that the interrogatory need not
be answered until designated discovery is complete, or
until a pretrial conference or some other time.
...
(b) Answers and Objections.
...
(3) Answering Each Interrogatory. Each interrogatory
must, to the extent it is not objected to, be answered
separately and fully in writing under oath.
(4) Objections.
The grounds for objecting to an
interrogatory must be stated with specificity. Any ground
not stated in a timely objection is waived unless the court,
for good cause, excuses the failure.
“The more progressive approach to interrogatories dealing with legal matters is to view them in
the factual context within which they arise”. Microtron Corp. v. Minnesota Mining & Mfg. Co.,
7
269 F. Supp. 22, 25 (D.N.J. 1967); see also Singer Manufacturing Co. v. Brother International
Co., 191 F. Supp. 322 (S.D.N.Y. 1960). “If the answer might serve some legitimate purpose,
either in leading to evidence or in narrowing the issues, and to require it would not unduly
burden or prejudice the interrogated party, the court should require answer”. Id.; see also 4
MOORE’S FEDERAL PRACTICE, 2d Ed. 2534; Gagen v. Northam Warren Corp., 15 F.R.D. 44
(S.D.N.Y. 1953).
The Court notes that “all grounds for objections to interrogatories must be stated with
specificity and...any ground not so stated in a timely objection is waived unless excused by the
Court for good cause”. Hall v. Sullivan, 231 F.R.D. 468, 473 (D. Md. 2005). Although “[t]here
is no similar provision in Rule 34, ...[i]f one looks at the commentary to Rule 34...it is clear that
the procedures under Rule 34 were intended to be governed by the same procedures applied
under Rule 33”. Id.
(C)
Requests for Production of Documents
Pursuant to FED. R. CIV. P. 34,
(a) In General. A party may serve on any other party a request
within the scope of Rule 26(b):
(1) to produce and permit the requesting party or its
representative to inspect, copy, test, or sample the
following items in the responding party’s possession,
custody, or control:
(A) any designated documents or electronically
stored information ... or
(B) any designated tangible things; ...
(b) Procedure.
...
(2) Responses and Objections
8
...
(B) Responding to Each Item. For each item or
category, the response must either state that
inspection and related activities will be permitted as
requested or state an objection to the request,
including the reasons.
(C) Objections. An objection to part of a request
must specify the part and permit inspection of the
rest.
(D) Responding to a Request for Production of
Electronically Stored Information. The response
may state an objection to a requested form for
producing electronically stored information. If the
responding party objects to a requested form – or if
no form was specified in the request – the party
must state the form or forms it intends to use.
(E) Producing the Documents or Electronically
Stored Information. Unless otherwise stipulated or
ordered by the court, these procedures apply to
producing documents or electronically stored
information:
(i) A party must produce documents as they
are kept in the usual course of business or
must organize and label them to correspond
to the categories in the request;
(ii) If a request does not specify a form for
producing electronically stored information,
a party must produce it in a form or forms in
which it is ordinarily maintained or in a
reasonably usable form or forms; and
(iii) A party need not produce the same
electronically stored information in more
than one form.
Pursuant to Armor Screen Corp. v. Storm Catcher, Inc., 2009 WL 291160, at *5, 2009 U.S. Dist.
LEXIS 63538, *7-9 (S.D. Fla. 2009), a case cited by both parties, the Court notes
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the need to balance Rule 34(b)(2)(E)(i)’s legitimate purpose of
alleviating a responding party’s burden of production while
reasonably assuring a requesting party’s ability to obtain
discoverable documents under Rule 26(b)(1). Rule 34 is generally
designed to facilitate discovery of relevant information by
preventing attempts to hide a needle in a haystack by mingling
responsive documents with large numbers of nonresponsive
documents. A producing party fails to meet its Rule 34 obligations
by producing a mass of undifferentiated documents for the
responding party to inspect. While Rule 34 does not obligate a
producing party to per se organize and label usable documents for
the requesting party’s convenience, a party exercising Rule 34's
option to produce records as they are kept in the usual course of
business should organize the documents in such a manner that the
requesting party may obtain, with reasonable effort, the documents
responsive to their requests. ...The standard this Court will use in
determining what is required will be whether the production allows
the requesting party to reasonably determine what documents are
responsive to its requests. If it does, the production complies with
Rule 34(b)(2)(E)(I). If it does not, then the production does not
comply.
See also Williams v. Taser Int’l, Inc., 2006 WL 1835437, at *7 (N.D. Ga. 2006).
(D)
Possession, Custody or Control and/or Agency in Rule 34 Context
“Rule 34(a) provides that a party may serve a request for production of documents that
are ‘in the possession, custody or control of the party upon whom the request is served’”.
Camden Iron & Metal, Inc. v. Marubeni America Corp., 138 F.R.D. 438, 441 (D.N.J. 1991); see
also FED. R. CIV. P. 34. “In the context of FED. R. CIV. P. 34(a), so long as the party has the
legal right or ability to obtain the documents from another source upon demand, that party is
deemed to have control”. Mercy Catholic Med. Ctr. v. Thompson, 380 F.3d 142, 160 (3d Cir.
2004). “If the producing party has the legal right or the practical ability to obtain the documents,
then it is deemed to have ‘control’...even if the documents are actually in the possession of a
non-party”. Sedona Corp. v. Open Solutions, Inc., 249 F.R.D. 19, 22 (D. Conn. 2008); see also
10
In re Flag Telecomm Holdings, Ltd. Sec. Litig., 236 F.R.D. 177, 180 (S.D.N.Y. 2006); Rosie D.
v. Romney, 256 F. Supp. 2d 115, 119 (D. Mass. 2003).
“An agency relationship may be established by: (1) express authority; (2) implied
authority...to do all that is proper, usual and necessary for the authority actually granted; (3)
apparent authority, as where the principal holds one out as agent by words or conduct; and (4)
agency by estoppel”. Id. at 161. “It is well settled that apparent authority (1) results from a
manifestation by a person that another is his agent and (2) exists only to the extent that it is
reasonable for the third person dealing with the agent to believe that the agent is authorized”.
Id.; see also Taylor v. Peoples Natural Gas Co., 49 F.3d 982, 989 (3d Cir. 1995); RESTATEMENT
(SECOND) OF AGENCY § 8, Comment A & C (1958). “There need not be an agreement between
parties specifying an agency relationship; rather, the law will look at their conduct and not to
their intent or their words as between themselves but to their factual relation”. Sears Mortgage
Corp. v. Rose, 134 N.J. 326, 337-38 (N.J. 1993). “Moreover, direct control of principal over
agent is not absolutely necessary; a court must examine the totality of the circumstances to
determine whether an agency relationship existed even though the principal did not have direct
control over the agent”. Id. at 338.
“[A] party seeking production of documents bears the burden of establishing the
opposing party’s control over those documents,” where “[c]ontrol is defined as the legal right,
authority or ability to obtain documents upon demand”. Camden Iron, 138 F.R.D. at 441; see
also United States v. International Union of Petroleum & Industrial Workers, 870 F.2d 1450,
1452 (9th Cir. 1989); Searock v. Stripling, 736 F.2d 650, 653 (11th Cir. 1984). The Court notes
that “federal courts construe ‘control’ very broadly under Rule 34” and “have held that a
11
litigating parent corporation has control over documents in the physical possession of its
subsidiary corporation where the subsidiary is wholly owned or controlled by the parent”. Id.;
see also Scott v. Arex, Inc., 124 F.R.D. 39, 41 (D. Conn. 1989); Gerling Int’l Ins. Co. v.
Commissioner, 839 F.2d 131, 140 (3d Cir. 1988). “Conversely, where the litigating corporation
is the subsidiary and the parent possesses the records, courts have found control to exist on the
following alternate grounds:
(1) the alter ego doctrine which warranted ‘piercing the corporate
veil’;
(2) the subsidiary was an agent of the parent in the transaction
giving rise to the lawsuit;
(3) the relationship is such that the agent-subsidiary can secure
documents of the principal-parent to meet its own business needs
and documents helpful for use in litigation;
(4) there is access to documents when the need arises in the
ordinary course of business; and
(5) subsidiary was marketer and servicer of parent’s product
(aircraft) in the United States.
Id. at 441-42; see also Gerling, 839 F.2d at 140-141. “Hence, in parent/subsidiary situations, the
determination of control turns upon whether the intracorporate relationship establishes some
legal right, authority or ability to obtain the requested documents on demand” and “[e]vidence
considered by the courts includes the degree of ownership and control exercised by the parent
over the subsidiary, a showing that the two entities operated as one, demonstrated access to
documents in the ordinary course of business, and an agency relationship”. Id. at 442; see also
Gerling, 839 F.2d at 140-141.
“Moving past the alter ego argument, the inquiry becomes whether control can be
established on any of the other grounds for litigating subsidiary/parent situations as outlined in
the Gerling decision”. Id. at 443. The Court notes that “[t]he most applicable cases are those
12
holding that a company’s ability to demand and have access to documents in the normal course
of business gives rise to the presumption that such documents are in the litigating corporation’s
control”. Id.; see also Cooper Industries, Inc. v. British Aerospace, 102 F.R.D. 918, 919-20
(S.D.N.Y. 1984). “One factor courts have used in making that determination is whether the
agent-principal relationship is connected to the issue being litigated”. Hitachi, Ltd. v. AmTRAN
Technology Co. Ltd., 2006 WL 2038248, at *2 (N.D. Cal. 2006); see also 8A Charles Alan
Wright, Arthur R. Miller, Richard L. Marcus, FEDERAL PRACTICE AND PROCEDURE, § 2210 (2d
ed. 1987). In fact, a “third party’s financial interest in...litigation might further require its
cooperation in the discovery process”. Id.; see also Golden Trade, S.r.L. v. Lee Apparel Co., 143
F.R.D. 514, 525 (S.D.N.Y. 1992).
(E)
Class Certification and the NJCFA
“Class certification is proper only if the trial court is satisfied, after a rigorous analysis,
that the prerequisites of Rule 23 are met”. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d
305, 309 (3d Cir. 2008).
As such, “[a] class certification decision requires a thorough
examination of the factual and legal allegations”. Id.; see also Newton v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 259 F.3d 154, 166 (3d Cir. 2001). “The trial court, well-positioned to
decide which facts and legal arguments are most important to each Rule 23 requirement,
possesses broad discretion to control proceedings and frame issues for consideration under Rule
23”. Id. at 310. However, “proper discretion does not soften the rule...[that] a class may not be
certified without a finding that each Rule 23 requirement is met.” Id.; see also Newton, 259 F.3d
at 162.
The Court notes that “[t]he following principles guide a district court’s class certification
13
analysis”. Id. at 316. “First, the requirements set out in Rule 23 are not mere pleading rules”
and “[t]he court may delve beyond the pleadings to determine whether the requirements for class
certification are satisfied”. Id. “A party’s assurance to the court that it intends or plans to meet
the requirements is insufficient” and “[f]actual determinations necessary to make Rule 23
findings must be made by a preponderance of the evidence”. Id. at 318-20. The trial court must
“consider carefully all relevant evidence and make a definitive determination that the
requirements of Rule 23 have been met before certifying a class”. Id. at 230.
Further, “[a]n overlap between a class certification requirement and the merits of a claim
is no reason to decline to resolve relevant disputes when necessary to determine whether a class
certification requirement is met” and “[b]ecause the decision whether to certify a class requires a
thorough examination of the factual and legal allegations..., the court’s rigorous analysis may
include a preliminary inquiry into the merits” such that “the court may consider the substantive
elements of the plaintiffs’ case in order to envision the form that a trial on those issues would
take”. Id. at 316-18; see also Newton, 259 F.3d at 166-69. Indeed, “a district court errs as a
matter of law when it fails to resolve a genuine legal or factual dispute relevant to determining
the requirements”. Id. at 320.
With respect to the NJCFA, the Court notes that in order to state a NJCFA claim, “a
plaintiff must allege...(1) unlawful conduct[,] (2) an ascertainable loss[,] and (3) a causal
relationship between the defendants’ unlawful conduct and the plaintiffs’ ascertainable loss”.
International Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., 192
N.J. 372, 389 (N.J. 2007); see also Indian Brand Farms, Inc. v. Novartis Crop Prot., Inc., 617
F.3d 207, 219 (3d Cir. 2010). With respect to the ascertainable loss prong, the Court notes that
14
“[i]n cases involving breach of contract or misrepresentation, either out-of-pocket loss or a
demonstration of loss in value will suffice to meet the ascertainable loss hurdle and will set the
stage for establishing the measure of damages”. Thiedemann v. Mercedes-Benz USA, LLC, 183
N.J. 234, 248 (N.J. 2005). “At the class certification stage, plaintiffs are not required to prove
damages by calculating specific damages figures for each member of the class” but, instead,
“they need only show that a ‘viable method’ is available to prove damages on a class-wide
basis”. In re Neurontin Antitrust Litig., 2011 WL 286118, at *9 (D.N.J. 2011); see also In re
Vitamins Antitrust Litig., 209 F.R.D. 251, 268 (D.D.C. 2002).
The Court also notes that
“evidence of [a] plaintiff’s conduct relevant to the causation issue cannot be ignored without
comment in a predominance analysis” because “the Supreme Court of New Jersey has held that
individual issues regarding [a] plaintiff’s behavior may, in certain cases, defeat predominance in
a NJCFA class action...despite the uniformity of a defendant’s misrepresentations or omissions”.
Nafar v. Hollywood Tanning Sys., 339 Fed. Appx. 216, 222-23 (3d Cir. 2009).
III.
PLAINTIFFS’ MOTION
(A)
Marketing Materials and Related Correspondence [RFP Nos. 11, 19, 20, 22,
34]
Plaintiffs allege that Defendant violated the NJCFA by omitting and misrepresenting
material information about its “Points Program”. See Pl.’s Br., dkt. entry no. 49-1 at 6-7. As
such, pursuant to Indian Brand Farms, Inc. v. Novartis Crop Protection Inc., 617 F.3d 207, 219
(3d Cir. 2010), Plaintiffs maintain that they must prove that Defendant (1) engaged in unlawful
conduct, (2) that Plaintiffs suffered an ascertainable loss, and (3) that there is a causal connection
between Defendant’s unlawful conduct and Plaintiffs’ ascertainable loss.
Id.
Pursuant to
Varacallo v. Mass. Mutual Life Ins. Co., 332 N.J. Super. 31, 49 (N.J. Super. Ct. App. Div. 2000)
15
and Marcus v. BMW of North Am., 2010 WL 4853308, at *11-12 (D.N.J. 2010)), Plaintiffs
maintain that, for purposes of class certification, they must demonstrate that Defendant’s
misrepresentations and omissions were sufficiently uniform such that liability may be
adjudicated with common proof. Id. at 6-7. Plaintiffs argue that the marketing materials (RFP
No. 19) and related correspondence with Blue Bay regarding use of those marketing materials
and the sale of Points Program memberships (RFP Nos. 11, 20, 22, and 34) that they requested
are highly relevant to an evaluation of the suitability of class treatment of their NJCFA claim.
Id. at 7. More specifically, if Defendant used the same marketing materials throughout the
relevant period, Plaintiffs maintain that class treatment may be appropriate; oppositely, if
Defendant used a variety of marketing materials throughout the relevant period, class treatment
may not be appropriate. Id.
In opposition, Defendant contends that Plaintiffs’ argument with respect to these RFPs
demonstrates a fundamental problem with the proposed class. See Def.’s Opp’n Br., dkt. entry
no. 55 at 4.
That is to say, Blue Bay – not RCI – sold vacation nights to each of the
approximately 4,400 members at four (4) different resorts over a period of more than six (6)
years. Id. Defendant has advised Plaintiffs that any marketing materials related to the Points
Exchange Program that Defendant provided to Blue Bay have been produced to the extent they
are in Defendant’s possession, custody, or control. Id. Defendant contends that it made (and
continues to make) diligent inquiries for documents maintained by RCI in the United States, as
well as documents maintained by its corporate affiliate in Mexico, and has produced more than
6,000 pages of marketing materials. Id.
1.
RFP Nos. 11, 20, 22, 34
16
Plaintiffs maintain that in response to its RFP Nos. 11, 20, 22, and 34, requesting
communications between “[Defendant] and Blue Bay concerning training for and sales of Points
memberships, and/or the purpose and use of [Defendant’] marketing materials”, Defendant has
only produced one (1) document and one (1) DVD. See Pl.’s Br. at 8-9. Defendant failed to
produce any “letters discussing how particular [marketing and/or training] materials...[were] to
be used”, any “[P]ower [P]oint presentations about marketing and sales of the Points Program”,
or any “memos discussing sales presentations at Blue Bay”.
Id. at 9.
Further, despite
Defendant’s answer to Interrogatory No. 11, “indicating that Blue Bay consistently purchased
materials...including $2,132 for a luxury market symposium in 2007”, Defendant has not
produced any “materials relating to this symposium or transmittals enclosing purchased point of
sale materials”.
Id.
Nonetheless, Plaintiffs argue, “[t]here can be no doubt that
communications...[occurred] between [Defendant] and Blue Bay...[related to] sales and
marketing”. Id. By way of example, Plaintiffs note, Defendant “amended its contract with Blue
Bay to create an additional fee...[in order] to offset the possible excessive use of points partners
by putative class members” in October 2003.
Id.
Plaintiffs believe that Defendant was
concerned because Blue Bay’s sales team “was presenting the Points Program...[as a way to]
‘use some of your room nights to go back to your club and...the rest...to purchase flight tickets’”.
Id. As a result, Defendant wanted to minimize the fiscal impact of having to purchase airfare for
its members and sought to impose an offsetting fee. Id. Plaintiffs argue that Defendant “came to
know about [Blue Bay’s] sales approach in some manner” and, although it is “possible that
nothing about the sales approach discussed in [the] May 1, 2008 Memo ever materialized in
written form, Plaintiffs find it unlikely that Defendant’s knowledge of the content of the sales
17
presentation was gained solely through verbal means”. Id. Plaintiffs maintain that any “such
written communications would be relevant to Court’s analysis of whether Plaintiffs’ [NJ]CFA
claim is suitable for class treatment because they could indicate uniformity in the approach to
sales...from which the Court could infer uniformity in the alleged misrepresentations and
omissions”, thereby “making class certification proper”. Id. at 9-10.
Plaintiffs contend that Defendant’s objections to RFP Nos. 11, 20, 22, and 34, as being
beyond the permissible scope of class certification discovery, are without merit. Id. at 10.
Although Defendant claims that “producing correspondence between it and Blue Bay...and
communications concerning the purpose and use of [Defendant’s] marketing materials is overly
burdensome”, Plaintiffs note that Defendant has never justified this assertion. Id. Citing Nestle
Foods Corp. v. Aetna Cas. & Sur. Co., 135 F.R.D. 101, 104 (D.N.J. 1990) and Tele-Radio
Systems Ltd. v. De Forest Electronics, 92 F.R.D. 371, 375 (D.N.J. 1981), Plaintiffs assert that
Defendant has failed to demonstrate “how [the] requested information is maintained, a
description of the activities which would be necessary to retrieve it, the resources necessary to
compile it, the full-time equivalent person hours implicated, or any other concrete information to
substantiate its burden”. Id. Further, citing ACLU v. Gonzales, 237 F.R.D. 120, 128 (E.D. Pa.
2006), Plaintiffs maintain that even if these RFPs were vague and ambiguous – a point which
Plaintiffs do not concede – “so long as the...[RFPs] are not so vague as to ‘defy
comprehension’...[Defendant] must respond to them...[because] objections based on vagueness
and ambiguity will not stand”. Id. at 11. Ultimately, Plaintiffs assert that based on the Parties’
meet and confer efforts, “[Defendant] understands...exactly what information Plaintiffs seek”.
Id.
18
In opposition, Defendant objects to RFP No. 11 on grounds that it exceeds the scope of
permissible class certification discovery, is overly broad/unduly burdensome, and is neither
relevant nor reasonably calculated to lead to discovery of admissible evidence. See Def.’s Opp’n
Br. at 5. Defendant notes that it agreed to make its correspondence with resorts operating under
the name Blue Bay concerning the named Plaintiffs available for inspection and copying. Id.
However, Defendant maintains that Plaintiffs have failed to articulate why they need or are
entitled to “all correspondence that may have been exchanged with Blue Bay...for purposes of
class certification”.
Id.
Defendant argues that “such a request, without any limitations
whatsoever, would be overly broad and unduly burdensome at any stage of litigation”. Id.
Further, Defendant contends that even if “communications between [Defendant] and Blue Bay
about sales and marketing occurred, such documents have no bearing on what, if any, marketing
documents Blue Bay actually shared with particular purchasers”. Id. During oral argument,
Plaintiffs’ counsel agreed to narrow RFP No. 11 to include only “correspondence relating to
marketing materials” and, in return, Defendant’s counsel agreed to produce all responsive
documents. See Joint Letter from Counsel dated July 11, 2012 at 2. Accordingly, based upon
the agreement and representations of counsel, Plaintiffs’ motion with respect to RFP No. 11 is
DENIED without prejudice.
With respect to RFP No. 20, Defendant objects on grounds that it exceeds the scope of
permissible class certification discovery, is overly broad/unduly burdensome, is neither relevant
nor reasonably calculated to lead to discovery of admissible evidence, and is vague and
ambiguous insofar as “the terms ‘Marketing Materials’, ‘Materials’, and ‘benefits’ are undefined
and susceptible to various interpretations”. See Def.’s Opp’n Br. at 6. Defendant notes that it
19
produced its “Points Procedures Manual” in response to this RFP and RFP No. 34. Id.
With respect to RFP No. 22, Defendant objects on grounds that it exceeds the scope of
permissible class certification discovery and is vague and ambiguous insofar as “the term
‘exemplar’ in the context of ‘RCI’s training and/or instruction materials’ is undefined and
susceptible to various interpretations...because the terms ‘Blue Bay Employees’, ‘sales agents’,
‘materials’, and ‘training sessions’ are undefined and susceptible to various interpretations”. Id.
at 7.
Defendant notes that it agreed “to produce training materials relating to the Points
Exchange Program that were provided to Blue Bay during the relevant period of time” in an
effort to resolve the dispute concerning this request. Id.
With respect to RFP No. 34, Defendant objects on grounds that it exceeds the scope of
permissible class certification discovery, is neither relevant nor reasonably calculated to lead to
discovery of admissible evidence, and is vague and ambiguous “insofar as the term ‘marketing
materials’ is undefined and susceptible to various interpretations”. Id. Defendant notes that it
produced its Points Procedure Manual and refers Plaintiffs to same in response to this RFP. Id.
Further, Defendant claims that RFP No. 34 is duplicative of Plaintiffs’ RFP No. 20. Id.
The Court, having considered the substance of Plaintiffs’ RFP Nos. 20, 22 and 34,
concludes that the materials sought are relevant to issues pertaining to class certification,
including “uniformity.” The Court recognizes that although these Requests are, in some
instances, duplicative, they are not so vague or ambiguous as to be incomprehensible to
Defendant. Accordingly, Plaintiffs’ motion is GRANTED with respect to RFP Nos 20, 22 and
34 and Defendant is directed to produce the materials requested within twenty-one (21) days.
2.
RFP No. 19
20
With respect to RFP No. 19, Plaintiffs contend that Defendant “agreed to produce copies
of all marketing materials...as that term is used in [Defendant’s] Affiliate Agreement with Blue
Bay”. See Pl.’s Br. at 7. Although Defendant produced various directories, Plaintiffs contend
this production only included one (1) or two (2) documents that appear to be “appraisal tables”.
Id. at 7-8. Because these “appraisal tables” are dated 2006 and 2008, Plaintiffs believe “similar
tables should exist” for 2002-2005 and 2007. Id. at 8. In addition, Plaintiffs note that Defendant
produced various “Welcome Kits” but has not produced any exemplars of other point of sales
materials such as posters, brochures, banners, or “Benefits Brochure[s]”. Id. Thus, while
Defendant promotes to its affiliates that “there are ‘many point of sales materials’ available,
hardly any have been produced to Plaintiffs”. Id.
Defendant objects to this RFP on grounds that it exceeds the scope of permissible class
certification discovery, is overly broad/unduly burdensome, is neither relevant nor reasonably
calculated to lead to discovery of admissible evidence, and is vague and ambiguous insofar as
“the term ‘Marketing Materials’ is undefined and susceptible to various interpretations and
insofar as the term ‘exemplar’ in the context of ‘Marketing Materials’ is undefined and
susceptible to various interpretations”. See Def.’s Opp’n Br. at 5. Notwithstanding these
objections, Defendant agreed to make marketing materials (as that term is used in affiliation
agreements and exhibits thereto) available to Plaintiffs for inspection and copying.
Id.
Defendant maintains that it has produced 6,000 pages of documents relating to the Points
Exchange Program, including “appraisal tables” for 2001-2004 and 2006-2008, and continues to
search for additional responsive documents. Id. at 6. However, Defendant has not produced
Spanish versions of Points Rules and benefits brochures for certain years because it does not
21
have English versions and because it contends that Spanish versions would not have been
provided to U.S. customers/class members. Id.
During oral argument and in the Joint Letter from Counsel dated July 11, 2012,
Defendant’s counsel represented “that responsive marketing materials within [Defendant’s]
possession have been produced” and that Defendant “will supplement its response in the event
additional responsive documents are found”. See Joint Letter from Counsel dated July 11, 2012
at 2. However, Plaintiffs’ counsel has indicated that to date, Defendant has failed to update its
response to RFP No. 19. Id. Therefore, to the extent Defendant has not updated its response to
RFP No. 19 to indicate that it has currently produced all responsive materials within its
possession, custody or control, this aspect of Plaintiffs’ motion is GRANTED and Defendant is
directed to update its response to this RFP within twenty-one (21) days.
(B)
Damages Materials [RFP Nos. 7, 8, 12, 32, 33, 39, 40; Interrogatory Nos. 1, 6,
8]
Initially, Plaintiffs note that pursuant to In re Neurontin Antitrust Litig., 2011 WL 286118
(D.N.J. 2011), part of their “class certification burden includes demonstrating one or more
methodologies exist for proving damages on a class-wide basis”. See Pl.’s Br. at 11. Although
this requirement “is not a strenuous one”, Plaintiffs maintain, “it still must be met” and assert
that “some of the information bearing on [their] expert’s submission is solely within
[Defendant’s] possession”. Id.
In opposition, Defendant asserts that in addition to “acknowledg[ing] their burden of
demonstrating that a ‘viable method’ is available to prove damages on an class wide basis”,
Plaintiffs have “concede[d] that they cannot meet this burden because their experts lack
sufficient information...[to] determine which, if any, of several methodologies may be
22
appropriate”. See Def.’s Opp’n Br. at 8. Ultimately, Defendant maintains that “[n]one of
[P]laintiffs’ requests is relevant...[for purposes of] class certification”. Id.
1.
Interrogatory Nos. 1 and 6
With respect to Interrogatory Nos. 1 and 6, Plaintiffs asked Defendant to state “the total
number of nights putative class members purchased and the total equivalent point value of those
nights, and to set forth those totals by year”. See Pl.’s Br. at 11. Plaintiffs maintain that their
“expert could use this information to subtract the total points redeemed prior to imposition of the
cap from the total points purchased to obtain the total number of outstanding points”. Id. at 1112. Citing Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 248 (N.J. 2005), Plaintiffs
assert that “[m]ultiplying the outstanding points by the monetary value assigned a point is one
means of measuring the aggregate loss in value sustained by the class” and is, therefore,
“relevant to meeting their class certification burden”. Id. at 12. Plaintiffs note that despite its
failure to originally raise such objections, after counsel engaged in a meet and confer session
Defendant “claimed that the information...[requested] was not within its possession, custody or
control” and, therefore, that it “had no obligation to respond”. Id. at 16. Notwithstanding this
representation, Plaintiffs contend that they “have reason to question [Defendant’s] unverified
assertion” based upon a “May 1, 2008 Memo...[in which] [Defendant] projected a liability of
$3.5 million if the ‘380 million points already in member’s account [sic]’ were ‘all used towards
points partners’...and a potential liability of $9 million if members traded ‘their remaining nights
towards points’”. Id. Plaintiffs argue that “[t]he only way [Defendant] could project liability for
nights not yet exchanged into its system is if it knew how many outstanding nights existed”. Id.
Further, “[e]ven if [Defendant] does not itself know the total number of nights putative class
23
members purchased and the collective equivalent point value of those nights”, Plantiffs argue
that Defendant “still must provide the information because it is in ‘control’ of the information for
purposes of Rule 34”. Id. at 16-17.
Defendant objects to Interrogatory No. 1 on grounds that it exceeds the scope of
permissible class certification discovery, is unduly burdensome, is vague and ambiguous insofar
as “the phrase ‘purchasing nights at a Blue Bay Resort’ and the terms ‘nights
purchased’...and...‘equivalent RCI points’ are undefined and susceptible to various
interpretations”, and insofar as this interrogatory “incorrectly assumes that an individual
becomes a member of the RCI Points program by ‘purchasing nights at a Blue Bay Resort’”. See
Def.’s Opp’n at 8. Notwithstanding these objections, Defendant answered this interrogatory by
referring Plaintiffs to “Participation Agreements and transaction histories of the named
[P]laintiffs” which were previously produced. Id. Defendant also stated that “there are 4,416
RCI Points Members who own or owned” at one or more of several resorts listed “during the
period of 2002 through 2008”. Id.
Similarly, Defendant objects to Interrogatory No. 6 on grounds that it exceeds the scope
of permissible class certification discovery. Id. at 9. Notwithstanding this objection, Defendant
answered this interrogatory by stating that “consistent with section 4 of the Terms and
Conditions of RCI Points Subscribing Membership, the number of points assigned to a ‘Blue
Bay night’ ranges from 2,340 to 10,500 points per night depending on the particular unit at
issue”. Id. With respect to both Interrogatory Nos. 1 and 6, Defendant claims that it “has
provided the information available” and that “it does not have and therefore cannot provide
information relating to the total number of nights [P]laintiffs may have purchased from Blue
24
Bay”. Id. Finally, Defendant notes that “inasmuch as [P]laintiffs purchased their nights from
Blue Bay, ...[P]laintiffs failed to explain why the requested information is not already in their
possession or why they cannot obtain that information directly from Blue Bay”. Id.
Having considered the Plaintiffs’ Interrogatories Nos. 1 and 6 as well as Defendant’s
answers thereto, the Court concludes the information sought is relevant to the issues that
Plaintiffs must address at the class certification stage and, therefore, Plaintiffs’ motion to compel
more specific responses to these interrogatories is GRANTED and Defendants shall provide
such responses within twenty-one (21) days.
2.
Interrogatory No. 8
With respect to Interrogatory No. 8, Plaintiffs asked Defendant to state “whether it had
ever equated one or more points with a monetary value, and if so, to state each monetary value
and to explain the context in which it was utilized”. See Pl.’s Br. at 12. Despite the fact that
Defendant “acknowleged that it has given points the character of currency...by...allowing
members to ‘rent’ points for a fee”, Plaintiffs argue that Defendant “declined to tell Plaintiffs
what exchange ratio it adopted in this rental example and failed to identify any other
circumstance where points and dollars were equated in some fashion”. Id. For example,
Plaintiffs note that “RCI’s Points Procedures Manual advises...[that customers should]
‘[c]onsult...[their] Account Executive to find out the corresponding prices” and, separately,
maintain that Defendant “failed to identify that it permits Blue Bay to purchase ‘bonus points’ to
be used as purchase incentives in the sale of nights and Points Program memberships”. Id.
Plaintiffs argue that the fact that “there is no static equation of an RCI Point with a specific
dollar amount...makes a thorough response...even more essential”.
25
Id. at 12-13.
Citing
Capacchione v. Charlotte-Mecklenburg Schools, 182 F.R.D. 486, 491 (W.D.N.C. 1988),
Plaintiffs maintain that “[t]he mere fact that [Defendant] may have to review seven years of
information...is insufficient to establish an undue burden because [Defendant] has
not...demonstrated that the rates it charged putative class members to ‘rent’ points or the amount
it charged Blue Bay to purchase ‘bonus points’ changed so frequently over the course of seven
years that it would be too taxing to compile that information in response to Plaintiffs’
interrogatory”. Id. at 17-18.
Defendant objects to Interrogatory No. 8 on grounds that it exceeds the scope of
permissible class certification discovery, is unduly burdensome, is vague and ambiguous insofar
as “the term ‘equated’ is undefined and susceptible to various interpretations”. See Def.’s Opp’n
at 9. Notwithstanding these objections, Defendant answered this interrogatory by stating that
“although it permits Members to ‘rent’ RCI Points in accordance with its Terms and Conditions,
there is no static equation of an RCI Point with a specific dollar amount”. Id. Defendant notes
that Plaintiffs are not satisfied with its response and “have demanded every instance in which
[Defendant] has placed a monetary value on an RCI Point...[based on the contention that] such
information must be considered in crafting a damage model”. Id. at 10. However, Defendant
argues that Plaintiffs have failed “to explain why they need such information to craft a
model...and...fail to provide any guidance on what specific information would satisfy their
expert”. Id. Further, Defendant maintains that despite admitting that their expert “will explore
his own evaluation of the monetary value of a point” with or without the additional information
they seek, Plaintiffs “do not explain what their expert might do with...[additional information]”
and concede that same “may be of only tangential assistance to their expert”. Id.
26
Having considered the Plaintiffs’ Interrogatory No. 8, as well as Defendant’s answers
thereto, the Court concludes the information sought is relevant to the issues that Plaintiffs must
address at the class certification stage and, therefore, Plaintiffs’ motion to compel more specific
responses to these interrogatories is GRANTED and Defendants shall provide such responses
within twenty-one (21) days.
3.
RFP No. 7
With respect to RFP No. 7, Plaintiffs asked Defendant to produce “all documents that
[Defendant] relied upon in its decision to impose an annual 60,000 point limitation [on]
redemptions for Partner Inventory”. See Pl.’s Br. at 15. Defendant objects to this RFP on
grounds that it exceeds the scope of permissible class certification discovery, is neither relevant
nor reasonably calculated to lead to discovery of admissible evidence, seeks documents
protected from disclosure by the attorney-client privilege and/or work product doctrine, and is
vague and ambiguous insofar as “the terms ‘relied’ and ‘interests’ are undefined and susceptible
to various interpretations”. See Def.’s Opp’n at 12-13. Although Defendant “does not dispute
that it imposed a cap or that the cap applied to the putative class”, Defendant maintains that
Plaintiffs have failed to “explain why documents relating to [Defendant’s] decision to impose the
cap, as opposed to the implementation of the cap, will impact any damages methodology”. Id.
4.
RFP No. 8
With respect to RFP No. 8, Plaintiffs asked Defendant to produce “all documents that
reflect why [Defendant] decided to impose an annual 60,000 point limit on redemptions for
Partner Inventory”. See Pl.’s Br. at 13. Defendant objects to this RFP for the same reasons set
27
forth with respect to RFP No. 7. See Def.’s Opp’n at 12-13. Again, although Defendant “does
not dispute that it imposed a cap or that the cap applied to the putative class”, Defendant
maintains that Plaintiffs have failed to “explain why documents relating to [Defendant’s]
decision to impose the cap, as opposed to the implementation of the cap, will impact any
damages methodology”. Id.
5.
RFP Nos. 12 and 32
With respect to RFP Nos. 12 and 32, Plaintiffs asked Defendant to produce “any notes,
emails, memoranda, reports, meeting minutes and the like concerning the decision to impose the
cap”. See Pl.’s Br. at 13. Despite acknowledging that some materials encompassed in these
RFPs may be of only tangential assistance to their expert’s evaluation of the monetary value of a
point while others may be crucial, Plaintiffs cite Bell v. Lockheed Martin Corp., 270 F.R.D. 186,
191 (D.N.J. 2010), aff’d, 2010 WL 3724271 (D.N.J. 2010) for the proposition that “broader
rather than narrower discovery better serves the parties and ultimately...the Court...in resolving
the class certification decision”. Id. Although Defendant “admits that ‘it has entered into
agreements with third-party vendors concerning the provision of airline tickets to Points
members’”, Plaintiffs note that Defendant “has only produced one such agreement...[in which] it
redacted all of the pricing information related to those travel services”. Id. Plaintiffs maintain
that because this information is relevant to their presentation of damages at the class certification
stage, “it should be produced in full and without redactions”. Id. Further, citing Roesberg v.
Johns-Manville Corp., 85 F.R.D. 292, 300-302 (E.D. Pa. 1980), Plaintiffs contend that they
“used common words in their ordinary meaning”, that “their requests are clear on their
face...and...in the context of this case”, and that “it is difficult to fathom how [they] could have
28
used different words that would have been clearer”. Id. at 15-16.
Defendant objects to RFP No. 12 on grounds that it exceeds the scope of permissible
class certification discovery, is neither relevant nor reasonably calculated to lead to discovery of
admissible evidence, seeks documents protected from disclosure by the attorney-client privilege
and/or work product doctrine, and is vague and ambiguous insofar as “the terms ‘internal RCI
notes’, ‘meeting agenda’, ‘documentation’, and ‘annual cap’ are undefined and susceptible to
various interpretations”.
See Def.’s Opp’n at 12.
Defendant objects to RFP No. 32 on
substantially similar grounds. Id. at 13. Again, although Defendant “does not dispute that it
imposed a cap or that the cap applied to the putative class”, Defendant maintains that Plaintiffs
have failed to “explain why documents relating to [Defendant’s] decision to impose the cap, as
opposed to the implementation of the cap, will impact any damages methodology”.
Id.
Notwithstanding these objections, Defendant agreed to “produce documents reflecting [its]
implementation of a 60,000 Points limit on Points Partner transactions”. Id.
The Court, having considered the substance of Plaintiffs’ RFP Nos. 7, 8, 12 and 32 agrees
with Defendant that, inasmuch as Defendant does not dispute that the 60,000 point limit was
implemented, the information requested is not relevant to the issues related to class certification.
Accordingly, Plaintiffs’ Motion is DENIED.
6.
RFP No. 39
With respect to RFP No. 39, Plaintiffs asked Defendant to produce “all itemized records
of all costs and expenses that [Defendant] attributes to the Blue Bay Resorts’ affiliation with
[Defendant] with respect to its Points Program”. See Pl.’s Br. at 14. Plaintiffs contend that they
29
“could use data in [Defendant’s] possession to model...lost cost savings attributable to
[Defendant’s] conduct”. Id. Further, Plaintiffs assert that “it would be helpful for...[their] expert
to know information about the out-of-pocket expenses [Defendant] incurred to purchase airfare
prior to the cap because that amount could be a proxy for the amounts class members must now
shoulder”. Id.
Defendant objects to this RFP on grounds that it exceeds the scope of permissible class
certification discovery, is neither relevant nor reasonably calculated to lead to discovery of
admissible evidence, and is vague and ambiguous insofar as “the phrase ‘the Blue Bay Resorts’
affiliation with [Defendant]’ is undefined and susceptible to various interpretations”. See Def.’s
Opp’n at 10-11. Defendant maintains that “the burden of identifying and collecting each record
that may reflect costs or expenses relating to Blue Bay is obvious” and Plaintiffs “have not
identified any basis for why such information is necessary for class certification”. Id. at 11.
7.
RFP No. 40
With respect to RFP No. 40, Plaintiffs asked Defendant to produce “profit and loss
statements to the extent those statements relate to [Defendant’s] affiliation with Blue Bay”. See
Pl.’s Br. at 17.
Despite Defendant’s contention that “it did not maintain profit and loss
statements at such a finite level”, Plaintiffs maintain that “[t]his unverified assertion is difficult
to square with a comment made by [Defendant’s] Senior Vice President and Chief Operating
Officer...during efforts to negotiate a change in the memberships Blue Bay was selling and to
impose the 60,000 point cap”, “suggest[ing] that [Defendant’s] affiliation with Blue Bay,
particularly with respect to the Points program, is traceable in its profit and loss statements”. Id.
Again, Plaintiffs contend that they “could use data in [Defendant’s] possession to model...lost
30
cost savings attributable to [Defendant’s] conduct”. Id. Further, Plaintiffs assert that “it would
be helpful for...[their] expert to know information about the out-of-pocket expenses [Defendant]
incurred to purchase airfare prior to the cap because that amount could be a proxy for the
amounts class members must now shoulder”. Id.
Defendant objects to this RFP on grounds that it exceeds the scope of permissible class
certification discovery, is neither relevant nor reasonably calculated to lead to discovery of
admissible evidence, and is vague and ambiguous insofar as “the phrase ‘the Blue Bay Resorts’
affiliation with [Defendant]’ is undefined and susceptible to various interpretations”. See Def.’s
Opp’n at 10-11. Again, Defendant maintains that “the burden of identifying and collecting each
record that may reflect costs or expenses relating to Blue Bay is obvious” and Plaintiffs “have
not identified any basis for why such information is necessary for class certification”. Id. at 11.
Nonetheless, Defendant has advised Plaintiffs that “it does not maintain profit and loss
statements specific to Blue Bay...and [Defendant] has no obligation to create them”. Id.
8.
RFP No. 33
With respect to RFP No. 33, Plaintiffs asked Defendant to produce “one copy of each
agreement concerning airlines miles and/or airline tickets in any way related to the RCI Points
Program”. See Pl.’s Br. at 15. Plaintiffs maintain that “[t]o the extent that [Defendant] paid for
airfare is a factor in Plaintiffs’ expert’s damages analysis, it is essential to know if those
payments were controlled by contractual...rather than market...rates”. Id. Although Defendant
“admits that ‘it has entered into agreements with third-party vendors concerning the provision of
airline tickets to Points members’”, Plaintiffs note that Defendant “has only produced one such
agreement...[in which] it redacted all of the pricing information related to those travel services”.
31
Id. Plaintiffs maintains that because this information is relevant to their presentation of damages
at the class certification stage, “it should be produced in full and without redactions”. Id.
Defendant objects to this RFP on grounds that it exceeds the scope of permissible class
certification discovery, is neither relevant nor reasonably calculated to lead to discovery of
admissible evidence, and is vague and ambiguous insofar as “the terms ‘airline miles’ and
‘airline tickets’ are undefined and susceptible to various interpretations”. See Def.’s Opp’n at
11. Defendant states that it “has entered into agreements with third-party vendors concerning the
provision of airline tickets to Points Members” and agreed to “produce copies of agreements
with Trilegiant Corporation that were in place from October 2005 to June 2011”. Id. Despite
the fact that Defendant “has produced the relevant agreement”, Defendant maintains that
Plaintiffs “complain that confidential pricing information is necessary to devise a damages
methodology” while ignoring “the distinction between a methodology and a calculation” and
failing “to explain why specific pricing information is relevant to [P]laintiffs’ ability to
demonstrate a viable damages methodology”. Id.
The Court, having considered the substance of Plaintiffs’ RFP Nos. and 39, 40 and 33,
concludes that the informatoin and material sought are not relevant to the issues pertaining to
class certification, including Plaintiffs’ damages methodology. Accordingly, Plaintiffs’ Motion is
DENIED.
(C)
Blue Bay Materials [Interrogatory Nos. 1 & 6]
Initially, Plaintiffs note that Defendant did not originally object to any request based on
lack of possession, custody or control. See Pl.’s Br. at 18. Rather, with respect to RCI Mexico,
Defendant represented that it was obtaining responsive information and that delays were
32
attributable to these efforts in addition to translating documents.
Id.
However, to date,
Defendant has not produced any document that has been translated as a result of this litigation.
Id. Pursuant to Hall v. Sullivan, 231 F.R.D. 468, 473-74 (D. Md. 2005), Plaintiffs argue that
Defendant’s failure to timely assert an objection based on lack of possession, custody or control
in its initial or supplemental responses to Interrogatory Nos. 1 and 6 constitutes a waiver. Id.
Even if Defendant has not waived this objection, Plaintiffs cite Camden Iron and Metal, Inc. v.
Marubeni Am. Corp., 138 F.R.D. 438, 441 (D.N.J. 1991) for the proposition that Defendant
should be compelled to obtain the requested information from Blue Bay because Defendant has
control over same. Id. at 19. Noting that they seek very specific information related to the
number of nights that class members bought annually and the aggregate point value of those
nights, Plaintiffs cite Mercy Catholic Med. Ctr. v. Thompson, 380 F.3d 142, 160 (3d Cir. 2004),
Sedona Corp. v. Open Solutions, Inc., 249 F.R.D. 19, 22 (D. Conn. 2008), and Rosie D. v.
Romney, 256 F. Supp. 2d 115, 119 (D. Mass. 2003) and argue that the Affiliate Agreement
between Defendant and Blue Bay grants Defendant a contractual right to obtain precisely this
information and puts Defendant in control of the information for purposes of responding to
discovery requests. Id.
Plaintiffs also contend that pursuant to Rosie D., 256 F. Supp. 2d at 119, Defendant may
be compelled to obtain the requested information because Blue Bay is Defendant’s agent. Id. at
20. Citing Sears Mort. Corp. v. Rose, 134 N.J. 326, 337 (N.J. 1993), Plaintiffs maintain that the
Court should consider the circumstances related to the relationship between Defendant and Blue
Bay, arguing that an agency relationship exists when one party consents to have another party act
on its behalf with the principal directing and controlling the acts of the agent and that it is the
33
conduct of the principal and agent that cements the relationship, not their intent or the words
they might set forth in a contract. Id. Here, Defendant contractually authorized Blue Bay to act
on its behalf in selling Points Program memberships and carefully controlled the manner in
which Blue Bay could sell those memberships.
Id.
The Affiliation Agreements between
Defendant and Blue Bay require Blue Bay to provide prospective members with specific
materials furnished by Defendant, authorize Blue Bay to sign Participation Agreements on
Defendant’s behalf, and authorize Blue Bay to collect new member enrollment fees on
Defendant’s behalf. Id. Citing Hitachi, Ltd. v. AmTRAN Tech. Co. Ltd., 2006 WL 2038248, at
*2-3 (N.D. Cal. 2006), Plaintiffs contend that Defendant’s Procedures Manual demonstrates how
Defendant authorized Blue Bay to act on its behalf, controlled how it did so, and was deeply
involved in nearly every aspect of Blue Bay’s sales (not just Points Program sales). Id. at 21.
For example, Plaintiffs note that the Procedures Manual dictates specifics for what Blue Bay
must include in presentations, requires Blue Bay to undertake extensive reporting with respect to
sales, directs that Points Participation Agreements must be completed properly, directs the steps
that Blue Bay must undertake if class members want to purchase additional points, and sets forth
how Blue Bay could acquire bonus points to offer in the sales process. Id. Alternatively, citing
In re Glenz v. Sharp Elec. Corp., 2010 WL 2758729, at *4 (D.N.J. 2010), Plaintiffs request the
opportunity to conduct specific discovery on the issue of control if the Court remains
unpersuaded that Defendant is in possession, custody or control of the requested information. Id.
at 21-22.
In opposition, Defendant argues that Plaintiffs ignore the fact that the transactions at
issue did not involve Defendant and that Plaintiffs entered into separate “Membership
34
Subscription Contracts” directly with Blue Bay. See Def.’s Opp’n Br. at 13. Thus, it is Plaintiffs
– rather than Defendant – who have access to the requested information. Id. Plaintiffs offer no
reason why they cannot obtain the requested information from class members or directly from
Blue Bay. Id. at 14. Notwithstanding these facts, Defendant maintains that Plaintiffs’ position
that it can be compelled to obtain the requested information lacks legal and logical support given
that a party cannot be obligated to produce that which it does not have simply because it fails to
articulate an objection that the requested materials are not in its “possession, custody or control”
pursuant to FED. R. CIV. P. 34. Id. at 13-14.
Defendant further maintains that the cases cited by Plaintiffs do not support their position
that a court can compel a party to produce documents or information within the possession of a
non-party entity simply because the party has a contractual right to inspect certain records. Id. at
14-15. Specifically, Defendant argues, Mercy Catholic was premised on a finding that the
entities at issue were interchangeable under applicable Medicare and Medicaid rules and
principles of agency whereas here, Plaintiffs cannot establish that Blue Bay was Defendant’s
agent. Id. at 15. Further, Defendant argues, Sedona Corp. was based on a finding that the
defendant had an exclusive right to materials created by its contract partner during or as a result
of the development of the product at issue and had the ability to obtain these materials upon
request whereas here, Defendant is not a party to any contract with Blue Bay. Id. Likewise,
according to Defendant, Rosie D. was based on a finding of a contractual right to control and
obtain the documents at issue whereas here, even RCI Mexico does not have control over the
documents at issue. Id. Rather, the information requested is contained within contracts between
Plaintiffs and Blue Bay and Plaintiffs have failed to explain why they cannot access this
35
information or why it is remotely relevant to issues of class certification. Id.
Finally, Defendant asserts, Plaintiffs cannot establish that Blue Bay is Defendant’s agent
as any determination of agency would require a factual record that does not exist and likely
would be based on the laws of Mexico, rather than New Jersey. Id. Even if the Court were to
conclude that it has a basis to compel Defendant to instruct RCI Mexico to make a contractual
request for information from Blue Bay, Defendant maintains that the Court would have no ability
to compel production of that information because it does not have jurisdiction over Blue Bay or
RCI Mexico. Id. at 15-16
Here, the Court believes Plaintiffs have articulated a sufficient showing to support an
agency relationship between Defendant and Blue Bay. Therefore, having considered the
Plaintiffs’ Interrogatories Nos. 1 and 6 as well as Defendant’s answers thereto, the Court
concludes the information sought is relevant to the issues that Plaintiffs must address at the class
certification stage and, therefore, Plaintiffs’ motion to compel with respect to these
interrogatories is GRANTED and Defendants shall provide such responses within twenty-one
(21) days.
(D)
Other Materials [RFP Nos. 5, 29, 30, 31, 37; Interrogatory Nos. 2, 7, 9, 10]
1.
RFP No. 29
With respect to RFP No. 29, Plaintiffs contend that Defendant must produce information
related to document retention policies because same may assist Plaintiffs in narrowing and
specifying future discovery requests in addition to assisting in disputes over what information is
in Defendant’s possession, custody or control. See Pl.’s Br. at 25. In opposition, Defendant
maintains that its document retention policies have no bearing on Plaintiffs’ motion for class
36
certification and, further, argues that Plaintiffs’ assertion that production of this information may
assist in narrowing and specifying future discovery requests is insufficient. See Def.’s Opp’n Br.
at 17.
Having reviewed Plaintiffs’ RFP No. 29 and Defendant’s response thereto, and noting
that FED. R. CIV. P. 26(b)(1) has been construed liberally to create a “broad vista for discovery”
(Takacs, 2009 WL 3048471, at *1), the Court finds the information requested in RFP 29 relevant
and reasonably calculated to lead to the discovery of admissible evidence (FED. R. CIV. P.
26(b)(1); see also Pearson, 211 F.3d at 65). For the reasons previously set forth on the record
and above, this aspect of Plaintiffs’ motion is GRANTED and Defendant is directed to produce
its document retention policy within twenty-one (21) days.
2.
RFP No. 30
With respect to RFP No. 30, Plaintiffs contend that Defendant must produce a copy of
each “organizational chart reflecting employees of [Defendant] for the years 2006 through
2010”. See Pl.’s Br. at 24. Plaintiffs maintain that this information is relevant and will assist in
their “understanding...[of] which persons...[at] what level...[and] at which entities...[were]
corresponding with one another in the documents [Defendant] has produced” and will aid
Plaintiffs “in identifying who might need to be deposed in connection with Plaintiffs’ motion for
class certification and/or who might have additional discoverable files containing information
pertaining to Plaintiffs’ class certification motion”. Id. Plaintiffs have agreed to limit their
request to organizational charts for RCI Mexico and RCI NA. Id. Despite the fact that Plaintiffs
have “conceded that an organization chart for RCI Mexico is not relevant to class certification”,
to the extent that they exist, Defendant has agreed to provide organizational charts for RCI
37
Mexico for the years 2006 through 2010. See Def.’s Opp’n Br. at 16. To date, however,
Defendant represents that “no such charts have been identified”. Id. With respect to RCI NA,
during oral argument Defendant’s counsel acknowledged Plaintiffs’ position and agreed to
engage in a meet and confer session with Plaintiffs’ counsel in order to narrow Plaintiffs’ request
to a departmental focus, and, thereafter, agreed to produce departmentally-focused
organizational charts for the years 2006 through 2008.
Based upon these representations and as set forth on the record, this aspect of Plaintiffs’
motion was GRANTED and Defendant was directed to produce the organizational charts.
Subsequently, Plaintiffs’ counsel advised the Court that Defendant has “provided lists of
management and executive leadership employees for the years 2006 through 2008” and
represented that this “resolv[es]” outstanding issues related to RFP No. 30. See Joint Letter from
Counsel dated July 11, 2012 at 1.
3.
RFP Nos. 5, 31, and 37
With respect to RFP Nos. 5, 31, and 37, Plaintiffs contend that Defendant must produce
transaction history data – including contact information for all putative class members, the
effective date of each putative class member’s RCI membership, and the cancellation date for
each putative class member – in native format or an agreed alternative rather than in PDF format
because, pursuant to FED. R. CIV. P. 34(b)(2)(E)(ii) and Ford Motor Co. v. Edgewood Prop. Inc.,
257 F.R.D. 418, 425 (D.N.J. 2009), the PDF format is unusable. See Pl.’s Br. at 22-24; see also
Joint Letter from Counsel dated May 14, 2012 at 2. Although Defendant previously indicated
that it would produce an “electronic spreadsheet”, Plaintiffs contend that PDF format is not a
spreadsheet and causes a substantial burden and expense for Plaintiffs given that it will require
38
retyping more than 16,000 lines of data. Id. Plaintiffs argue that Defendant must be compelled
to produce this information in a tab-delimited format such as Excel and that Defendant’s
contention that it did not prepare or maintain the requested information in such a manner in the
ordinary course of its business is legally irrelevant because, pursuant to Ford Motor, 257 F.R.D.
at 425, Aguilar v. Immigration and Customs Enforc. Div. of US Dep’t Homeland Sec., 255
F.R.D. 350 (S.D.N.Y. 2008), and FED. R. CIV. P. 34 (b)(2)(E)(ii), the appropriate inquiry is
whether the production is in a reasonably usable form rather than whether it had taken that form
in the ordinary course of business. Id. In addition, Plaintiffs argue that Defendant should be
required to add a field to its new production – “company”. Id.
In opposition, Defendant initially stated that “the requested data does not exist in the
ordinary course of business and was created, at [P]laintiffs’ request, as a courtesy to facilitate
discovery”. See Def.’s Opp’n Br. at 16. However, Defendant subsequently agreed to produce a
“spreadsheet reflecting transaction histories in an electronic format upon [P]laintiffs’ agreement
that the production shall not constitute an admission that such information is relevant or a waiver
of any privilege that may relate to [Defendant’s] preparation of the spreadsheet”. Id. at 16; see
also Joint Letter from Counsel dated May 14, 2012 at 2.
During oral argument, Defendant’s counsel acknowledged Plaintiffs’ position and agreed
to provide the requested data “in a usable format”. In response, Plaintiffs’ counsel agreed to
WITHDRAW this aspect of its motion without prejudice. Plaintiffs’ counsel has indicated that
Defendant has “provided...putative class member data in a usable electronic format” and has
represented that this “resolv[es]” outstanding issues related to RFP Nos. 5, 31, and 37. See Joint
Letter from Counsel dated July 11, 2012 at 1, 3. Accordingly, based on these representations of
39
counsel, this aspect of Plaintiffs’ motion is deemed MOOT.
4.
Interrogatory Nos. 2 and 7
With respect to Interrogatory Nos. 2 and 7, Plaintiffs maintain that, in both instances,
Defendant refused to provide summary data about putative class members’ transactions beyond
2008, the year Defendant imposed the annual cap. See Pl.’s Br. at 26. Plaintiffs argue that what,
if anything, putative class members did with their points after the cap was imposed remains a
relevant inquiry. Id. Specifically, Plaintiffs contend that this information is relevant to their
“expert’s damages analysis to the extent he needs to factor in any value received for points after
the cap (such as using points for a traditional timeshare exchange)”.
Id.
In opposition,
Defendant simply argues that its answers are sufficient and that Plaintiffs have “failed to offer
any explanation as to why additional information...is relevant to class certification”. See Def.’s
Opp’n Br. at 17.
Having reviewed Plaintiffs’ Interrogatory Nos. 2 and 7 and Defendant’s answers thereto,
and noting that FED. R. CIV. P. 26(b)(1) has been construed liberally to create a “broad vista for
discovery” (Takacs, 2009 WL 3048471, at *1), the Court finds the information requested in
Interrogatory Nos. 2 and 7 is relevant and/or reasonably calculated to lead to the discovery of
admissible evidence (FED. R. CIV. P. 26(b)(1); see also Pearson, 211 F.3d at 65), and finds
Defendant’s answers insufficient.
Accordingly, this aspect of Plaintiffs’ motion was
GRANTED. Defendant’s counsel has indicated that “data for 2002 through 2008...has [already]
been provided” and “has agreed to provide data for the years 2009 and 2010”. See Joint Letter
from Counsel dated July 11, 2012 at 2. Based upon this representation, and for the reasons
previously set forth on the record and above, Defendant is directed to provide supplemental
40
answers that include the summary data requested about putative class members’ transactions for
the period 2009 through 2010 within twenty-one (21) days.
5.
Interrogatory No. 9
With respect to Interrogatory No. 9, although Defendant “generically” identified three (3)
individuals, Plaintiffs contend that Defendant’s answer is insufficient given that they asked for
the identity of each person “who was involved in the decision to impose a 60,000 cap, ...who
provided analytical support for the decision, ...who was in charge of any communications to
putative class members concerning the decision, and...who provided any financial analyses”.
See Pl.’s Br. at 25. Plaintiffs maintain that without a more fulsome response, they have no way
to determine who was actually involved in the decision-making process with respect to the
imposition of the cap. Id. Further, Plaintiffs argue that pursuant to Capacchione v. CharlotteMecklenburg Schools, 182 F.R.D. 486, 490-91 (W.D.N.C. 1988), Defendant “may not simply
point to a pile of documents in response to an interrogatory”. Id. In opposition, Defendant
maintains that it has “already...identified the individuals who were directly included in the
process of initiating the cap...at issue in this case”. See Def.’s Opp’n Br. at 16. Defendant notes
that it will not “identify every person who may have had any involvement in that decision”
because this information “is not relevant to class certification and would impose an undue
burden on [Defendant]”. Id. However, Defendant “has agreed to supplement its response to
specifically identify ‘members of the Deal Pricing Council’ (or at least to specifically identify a
document listing the same)” although it “will not...identify all persons who provided any
analytical support for the decision”. See Joint Letter from Counsel dated May 14, 2012 at 3.
During oral argument, Defendant’s counsel acknowledged Plaintiffs’ position and
41
“agreed to supplement its response...to identify the individuals who made the decision to impose
the cap and individuals who performed a substantive analytical function in assisting those who
made the decision”. See Joint Letter from Counsel dated July 11, 2012 at 2. Based upon this
representation, and for the reasons previously set forth on the record and above, this aspect of
Plaintiffs’ motion is DENIED without prejudice. However, Defendant is directed to provide the
supplemental information set forth above within twenty-one (21) days.
6.
Interrogatory No. 10
With respect to Interrogatory No. 10, Plaintiffs note that they requested a specific
description of the information considered in connection with Defendant’s decision to impose the
60,000 point redemption annual cap and to identify the location and/or source of the information.
See Pl.’s Br. at 25-26. Plaintiffs maintain that Defendant did not provide an adequate answer,
failing to state with particularity both the location and/or source of the information provided. Id.
In opposition, Defendant contends that its answer is proper and that Plaintiffs have failed to
identify any reason or basis why Defendant should be compelled to provide the location and/or
source of the information beyond what Defendant has already provided. See Def.’s Opp’n Br. at
17.
Having reviewed Plaintiffs’ Interrogatory No. 10 and Defendant’s answer thereto, and
noting that FED. R. CIV. P. 26(b)(1) permits parties to obtain discovery “including the existence,
description, nature, custody, condition, and location of...documents” and has been construed
liberally to create a “broad vista for discovery” (Takacs, 2009 WL 3048471, at *1), the Court
finds the information requested in Interrogatory No. 10 is relevant and/or reasonably calculated
to lead to the discovery of admissible evidence (FED. R. CIV. P. 26(b)(1); see also Pearson, 211
42
F.3d at 65), and finds Defendant’s answer insufficient. For the reasons previously set forth on
the record and above, this aspect of Plaintiffs’ motion is GRANTED and Defendant is directed
to provide a supplemental answer specifically identifying the data and documents that were
considered and/or relied upon in Defendant’s decision to impose the annual cap within twentyone (21) days.
IV.
DEFENDANT’S MOTION
The Court notes that in response to Defendant’s motion to compel, “[P]laintiffs produced
amended privilege logs for Plaintiffs Michael Siembida and Angeline Davis and withdrew any
assertion of privilege that had been asserted on behalf of Kenneth Marek”. See Joint Letter from
Counsel dated May 14, 2012 at 1. “Plaintiffs also produced documents corresponding to entries
on their initial privilege logs that had been removed...with the exception of counsel’s
engagement letters with [P]laintiffs, which [P]laintiffs...are [now] withholding based on their
contention that engagement letters are not relevant”. Id. As such, what remains of Defendant’s
motion are two (2) issues: “(1) the adequacy of [P]laintiffs’ amended privilege logs” and “(2)
[P]laintiffs’ failure to produce engagement letters”. Id.
(A)
Amended Privilege Logs
Defendant concedes that Plaintiffs’ amended privilege logs address several of the
deficiencies that Defendant identified in Plaintiffs’ original logs. Id. at 2. However, Defendant
maintains that two (2) primary deficiencies remain. Id.
First, Defendant argues that entries referring to “handwritten notices to attorney
redacted” are insufficient because they fail to identify the author or recipient of the notes and fail
to identify the date of the notes as opposed to the date of the underlying document. Id. Plaintiffs
43
agreed to address this deficiency and produced “revised privilege logs on June 15, 2012”. See
Joint Letter from Counsel dated July 11, 2012 at 1. Based upon this production, Defendant’s
counsel has represented that “all remaining issues...have been resolved” and that this aspect of its
motion to compel has been WITHDRAWN. Id. at 2.
Second, Defendant argues that entries “regarding communications between Ryan
Johnson, Esq. (“Johnson”) and Clayton Voegtle, Esq. (“Voegtle”) on one hand, and third parties
or individual [P]laintiffs on the other hand, are insufficient because [P]laintiffs have not
demonstrated [that] the underlying communications...[are] attorney-client communication[s] or
work-product, that [P]laintiffs have standing to assert a privilege, or that any privilege has not
been waived”. See Joint Letter from Counsel dated May 14, 2012 at 2.
During oral argument, Plaintiffs’ counsel acknowledged Defendant’s position, agreed to
contact Mssrs. Johnson and Voegtle to determine whether they had in fact asserted any privilege
related to the subject communications, and agreed to produce Certifications from Mssrs. Johnson
and Voegtle regarding their assertion of any privilege. Plaintiffs’ counsel also conceded that the
subject communications would be produced if Mssrs. Johnson and Voegtle could not be located
or had not asserted any privilege. Plaintiffs agreed to address this deficiency and, subsequently,
produced “a declaration from...[Mr.] Voegtle concerning work product and/or privilege
protections”.
See Joint Letter from Counsel dated July 11, 2012 at 1.
Based upon this
production and the representations of Plaintiffs’ counsel, Defendant’s counsel has advised that
“all remaining issues...have been resolved” and that this aspect of its motion to compel has been
WITHDRAWN. Id. at 2.
(B)
Engagement Letters
44
As stated above, Plaintiffs have withdrawn their assertion of privilege as to engagement
letters between counsel and the proposed class representatives. See Joint Letter from Counsel
dated May 14, 2012 at 2. However, Plaintiffs have not produced these engagement letters and
have refused to testify about them because they maintain that the engagement letters are not
relevant for purposes of class certification. Id.; see also Def.’s Br., dkt. entry no. 50-1 at 4-5.
Defendant argues that Plaintiffs waived any relevance objection when they included the
engagement letters on their original privilege logs. Id.; see also Def.’s Br. at 6. Further,
Defendant contends that the engagement letters are relevant to the issue(s) of whether Plaintiffs
are adequate class representatives and whether Plaintiffs’ counsel is adequate class counsel. Id.;
see also Def.’s Br. at 5. Defendant notes that certain Plaintiffs “signed an agreement when they
joined the RCI Points Exchange Program...which requires those Plaintiffs to pay RCI’s attorney
fees incurred in defending an action brought by such plaintiff if RCI prevails in the lawsuit” and,
in fact, “Plaintiff Kenneth Marek testified about an understanding with his attorneys with regard
to indemnification for this potential liability”. See Def.’s Br. at 5. Citing Ferraro v. General
Motors Corp., 105 F.R.D. 429, 433 n.3 (D.N.J. 1984), In re Semel, 411 F.2d 195, 197 (3d Cir.
1969), and Montgomery County v. Microvote Corp., 175 F.3d 296, 304 (3d Cir. 1999), and
maintaining that “fee agreements...are generally not privileged”, Defendant argues that it is
“entitled to review [P]laintiffs’ engagement letters to determine the specific terms of the
arrangement” and assess the adequacy concerns set forth above. Id. Notwithstanding their
withdrawal of the assertion of privilege, Plaintiffs disagree with Defendant’s position regarding
the relevance of the engagement letters and continue to object to their production. See Joint
Letter from Counsel dated May 14, 2012 at 2.
45
Here, the Court notes that Plaintiffs no longer assert any privilege with respect to the
engagement letters. Given the fact that FED. R. CIV. P. 26(b)(1) has been construed liberally to
create a “broad vista for discovery” (Takacs, 2009 WL 3048471, at *1), the Court finds that
Defendant has articulated a sufficient factual basis to support the relevance of the requested
engagement letters given that “relevant information need not be admissible at trial if the
discovery appears reasonably calculated to lead to the discovery of admissible evidence” (FED.
R. CIV. P. 26(b)(1); see also Pearson, 211 F.3d at 65). For the reasons previously set forth on
the record and above, this aspect of Defendant’s motion was GRANTED and Plaintiffs were
directed to produce the engagement letters. Plaintiffs’ counsel has indicated that it “produced
retainer agreements...as directed” and Defendant’s counsel has represented that “all remaining
issues...have been resolved”.
See Joint Letter from Counsel dated July 11, 2012 at 1-2.
Accordingly, this issue is MOOT.
V.
CONCLUSION & ORDER
For the reasons previously set forth on the record as well as those set forth above,
IT IS on this 28th day of March, 2013,
ORDERED that Plaintiffs’ Motion to Compel is GRANTED, in part, and DENIED, in
part, as set forth above; and it is further
ORDERED that Defendant’s Motion to Compel is GRANTED, in part, and DENIED,
in part, as set forth above; and it is further
ORDERED that Counsel are directed to meet and confer, as required by L. Civ. R.
26.1(d)(3), concerning the current status of discovery and to submit a joint status report to the
Court no later than April 30, 2013.
46
A live status conference will be conducted on May 14, 2013 at 3:30 PM in Courtroom
6W.
s/ Douglas E. Arpert
DOUGLAS E. ARPERT
UNITED STATES MAGISTRATE JUDGE
DATED: March 28, 2013
47
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