Prodigious Ventures, Inc. v. YBE Hospitality Group, LLC et al

Filing 55

ORDER granting 42 Motion to Compel. Signed by Magistrate Judge Robert B. Jones, Jr. on 11/10/2015. (Grady, B.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:14-CV-433-F
PRODIGIOUS VENTURES, INC.,

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Plaintiff,

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YBE HOSPITALITY GROUP, LLC, YBE )
ENTERPRISE, LLC, YBE OXFORD, LLC )
and YBE MILLEDGEVILLE, LLC,
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Defendants,
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v.
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ORDER

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TRAVIS E. KELLEY,
Counterclaim Defendant.

v.
JAMES BUTLER and TONY HILL,
Counterclaim-Plaintiffs.

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This matter is before the court on the motion of Defendants YBE Hospitality Group, LLC,
YBE Enterprise, LLC, YBE Oxford, LLC, and YBE Milledgeville, LLC ("Defendanr) to compel
production of subpoenaed documents from nonparty The Providence Group Sports and
Entertainment, LLC ("Providence Group"). [DE-42]. For the reasons that follow, the motion is
allowed.

I. BACKGROUND
On June 23,2014, PlaintiffProdigious Ventures, Inc. ("Prodigious") filed suilt in state court
against the Defendants, alleging claims for breach of contract and unfair and d ceptive trade

practices. [D E-1-1]. Plaintiff is in the business of developing and managing franchis~d restaurants
and providing other business services to restaurant owners. Compl. [DE-1-1] ~ 9. runterclaim
Defendant Travis E. Kelley ("Kelley") is the principal and president of Prodigious. Dlefs.' Answer
& Countercls. [DE-15] at 12 ~ 2. Defendants own and/or operate Golden Corral fr~nchises, and

Counterclaim Plaintiffs James Butler ("Butler") and Tony Hill ("Hill"), former players in the
National Football League, are the principals of Defendants. Com pl. [DE-1-1] ~ I 0; ~efs.' Answer
& Countercls. [DE-15] at 13 ~~5-6. Kelley is also the principal and president ofProviOence Group,

through which he provided financial planning services as a financial advisor to Burer and Hill.
Defs.' Mem. [DE-43] at 2; Aff. ofTravis Kelley ("Kelley Aff.") [DE-49] ~~ 2-6. Defe dants timely
removed the action from state court to this court [D E-1] and, thereafter, added Kelley a a Defendant,
asserting counterclaims for breach of contract, conversion, breach of fiduciary duty, constructive
fraud, and unfair and deceptive trade practices against Prodigious and/or Kelley. [D' -15]. Butler
and Hill also moved to intervene, which the court allowed. [DE-25, -46].
Defendants subpoenaed documents from Providence Group, which they conteiare relevant
and necessary to their counterclaims and defenses related to fiduciary duties Kelley o ed to Butler
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and Hill as their financial advisor. Defs.' Mem. [DE-43] at 1-2. Providence Group objected to the
production ofcertain documents as unrelated to the litigation, but produced some docfents directly
related to Defendants or the Golden Corral franchises. Providence Group's Resp. [DE-48] at 2-3.
After counsel for Defendants and counsel for Providence Group, who also represents P[lodigious and
Kelley, failed to resolve the dispute regarding the objected-to documents, Defendants fi ed the instant
motion to compel [DE-42], to which Providence Group responded in opposition [Dt48].

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II. DISCUSSION
Subpoenas issued to nonparties are governed by Rule 45 of the Federal jules of Civil

Procedure. See Fed. R. Civ. P. 34(c) ("As provided in Rule 45, a nonparty may be compelled to
produce documents and tangible things or to permit an inspection."). "In respo se to such a

Civ. P. 45[(d)](3)(A), move for a protective order pursuant to Fed. R. Civ. P. 26(c), or oppose a
motion to compel production of the subpoenaed documents pursuant to Fed R. Civ. P.
45[(d)](2)(B)." Schaafv. Smithkline Beecham Corp., 233 F.R.D. 451,453 (E.D.N.C. 2005) (citing
United States v. Star Scientific, Inc., 205 F. Supp. 2d 482, 484 (D. Md. 2002)).
Rule 45 adopts the standard codified in Rule 26, which allows for the disc0very of "any
nonprivileged matter that is relevant to any party's claim or defense" when the

disc~very request

"appears reasonably calculated to lead to the discovery of admissible evidence."

F~d. R.

Civ. P.

26(b)( 1). However, simply because "requested information is discoverable under Rull 26 [(b)] does
not mean that discovery must be had." Nicholas v. Wyndham Int'l/nc., 373 F.3d 537 543 (4th Cir.
2004). Rule 26(b)(2) provides a district court may limit "the frequency or extent of use of the
discovery methods otherwise permitted" under the Federal Rules of Civil ProcedureJ'fit concludes
that "(i) the discovery sought is unreasonably cumulative or duplicative, or is obtaina ,le from some
other source that is more convenient, less burdensome, or less expensive; (ii) the rarty seeking

discovery has had ample opportunity by discovery in the action to obtain the informat on sought; or
(iii) the burden or expense ofthe proposed discovery outweighs its likely benefit." /d. (quoting Fed.
R. Civ. P. 26(b)(2)); see also McDougal-Wilson v. Goodyear Tire & Rubber Co., 23 F.R.D. 246,
249 (E.D.N.C. 2005) ("Discovery is not limitless," and "[t]he court has the discreti n to protect a
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party from 'oppression' or 'undue burden or expense."') (quoting Fed. R. Civ. P.,(c)). When
considering the propriety of enforcing a subpoena, a trial court should consider "the rel[evance of the
discovery sought, the requesting party's need, and the potential hardship to the party kubject to the
subpoena." Schaaf, 233 F.R.D. at 453 (quoting Heat & Control, Inc. v. Hester In+·· 785 F.2d
17,
1o 1024 (Fed. Cir. 1986)). "In the context of evaluating subpoenas issued to third pres, a court
'will give extra consideration to the objections of a non-party, non-fact witness~-~ weighing
burdensomeness versus relevance.'" !d. (quoting Indem. Ins. Co. ofN Am. v. Am. Eurocopter LLC,
227 F.R.D. 421, 426 (M.D.N.C. 2005)).
Here, Defendants seek to compel production of the following categories of documents:
5. All documents that constitute, reflect, or refer to any communications betwjn The
Providence Group and Mr. Butler or between The Providence Group and Mr Hill.

8. All documents that constitute, reflect, or refer to any communications betwe9n The
Providence Group and Mr. Kelley concerning Mr. Butler, Mr. Hill, any ofth YBE
Entities, or any of the YBE Entities' respective Golden Corral franchises.

9. All financial records and accounting records concerning Mr. Butler, includi g but
not limited to any records concerning his personal finances or investments.
10. All financial records and accounting records concerning Mr. Hill, includi[g but
not limited to any records concerning his personal finances or investments.
11. All documents that describe, reflect, or relate to any services provided ~ The
Providence Group or Mr. Kelley to Mr. Butler.
12. All documents that describe, reflect, or relate to any services provided lJy The
Providence Group or Mr. Kelley to Mr. Hill.

14. All financial records showing any revenue The Providence Group receive ' from
Mr. Butler.
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15. All financial records showing any revenue The Providence Group received from
Mr. Hill.

18. All documents that show, reflect, or describe any formal or informal relationship
or business dealings Mr. Kelley had with the National Football League Pl~yers
Association ("NFLP A").

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Defs.' Mem. [DE-43] at 5-6.

Defendants contend these documents are rele ant to their

counterclaims against Kelley for breach of fiduciary duty and constructive fraud and against
Prodigious and Kelley for unfair and deceptive trade practices, because they relate to the fiduciary
duties that Kelley owed to Defendants Butler and Hill as their financial advisor. !d. at 7-8 (citing
Countercls.

~~ 7-20, 36-43, 48-53). Specifically, Defendants contend the documents Jquested from

Providence Group include communications related to the relationship between Kelley td his clients

Butler and Hill (Requests 5 and 8), financial records related to that relationship (Requests 9-10 and
14-15), services performed in connection with that relationship (Requests 11 and 12), and Kelley's
admitted status as a registered financial advisor with the NFL Players Association ("NFLP A") and
the additional duties he consequently owed Butler and Hill (Request 18). Id. at 8.
In response to these document requests, Providence Group asserted sev ral "General
Objections," including, among other things, that its "business is wholly umelated to the issues
pending in this litigation," Butler and Hill are not parties to the matter, they see , confidential
business information, they seek documents from Kelley and Prodigious, and they

ar~ overly broad

and unduly burdensome. Defs.' Mem., Ex. E [DE-43-6] at 1-2 ~~ 1, 4, 5, 7, 10. In the section of
responses titled "Specific Objections," Providence Group listed each request and in resJonse referred
to its "General Objections," making no specific objections to the requested documenL. !d. at 3-6.

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In response to the motion to compel, Providence Group asserted the following speci c objections:
In response to Request number 5, Providence produced all documents which h~d any
relationship with the YBE Entities or the Golden Corral franchises. As writte~, this
request puts no restrictions whatsoever on the scope of the documents fo be
produced. The documents requested seek everything from personal communicftions
concerning Mr. Butler and Mr. Hill's football careers to documents concerning their
personal spending.

Request number 8 seeks documents not only from Providence but from Mr. · elley
in his individual capacity. Such requests should be served upon Mr. Kelle as a
party. The requests puts no limitations on the subject matter of the communications.
Mr. Kelley had a long standing relationship with Mr. Butler and Mr. Hill {vhich
involved extensive communications about a broad variety of subjects unrelated to
this dispute.

Requests number 9 and 10 again seek, without any limitation, everything from
cancelled checks to the monthly bills for things such as rent and utilities. It is
inconceivable that these documents could lead to the discovery of adm" ssible
evidence and the burden of assimilating them would be great.

Requests numbers 11 and 12 again seek documents from Mr. Kelley who is f\ party
from whom discovery should be sought pursuant to Rule 26. Further, therd is no
nexus between the request and the litigation. All documents related to the sekrices
provided in any way related to the YBE Entities or the Golden Corral franchise~ were
produced.

Requests numbers 14 and 15 are overly broad and unrelated to the current liti ation.
Providence was paid a fee for its services in providing financial services which are
not at issue in this litigation. "[A]ll financial records" calls for productfon of
Providence's internal financial statements and/or bank records. As such, the re~uests
are overbroad and unduly burdensome.

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Request number 18 seeks documents which are unlikely to lead to the discov ry of
admissible evidence. Mr. Kelley's relationship with the NFLPA has abso utely
nothing to do with this dispute. Prodigious was not acting as a NFLP A representative
in performing services for the YBE entities or Mr. Butler and Mr. Hill. The request
is not limited to dealings involving the YBE entities or Mr. Butler and Mr. H~ll but
rather dealings of any nature which would include Mr. Kelley's entire application and
all documents related to Mr. Kelley approval by the NFLPA.

Id at 4-6.
As an initial matter, Providence Group improperly relied on general, boilerpl te objections
in responding to Defendants' document requests. See Silicon Knights, Inc. v. Epic Gaies, Inc., 917
F. Supp. 2d 503, 533 (E.D.N.C. 2012) (allowing motion to compel where, among otHer things, the
responding party relied on boilerplate objections and "failed to articulate any specifil objection to
any particular interrogatory or request for production, and therefore has waived

II

y legitimate

objection it otherwise could have raised.") (citing McLeod, Alexander, Powel & Arpffel, P.C. v.

Quarles, 894 F .2d 1482, 1484-85 (5th Cir. 1990); Panola Land Buyers Ass 'n v. Sh,an, 762 F.2d
1550, 1558-59 (11th Cir. 1985); Josephs v. Harris Corp., 677 F.2d 985, 991-92 (3d Cir. 1982);

Mainstreet Collection, Inc. v. Kirkland's, Inc., 270 F.R.D. 238, 240 (E.D.N.C. 2 10); Kinetic
Concepts, Inc. v. ConvaTec Inc., 268 F.R.D. 226, 247 (M.D.N.C. 2010) (collecting ases); Hy-Ko
Prods. Co. v. Hillman Grp., Inc., No. 5:09-MC-00032, 2009 WL 3258603, at *12 ( .D.N.C. Oct.
8, 2009) (unpublished)), aff'd, 551 F. App'x 646 (4th Cir. 2014). Belatedly assertin , in response
to a motion to compel, specific objections that should have been raised in responsl to discovery
requests is insufficient. See Quarles, 894 F .2d at 1485 (affirming denial of a motion for protective
order where only general, boilerplate objections were asserted in response to discovery requests and
reasoning that "even if some ofthe law firm's requests for production were irrelevant, Quarles must
have a valid objection to each one in order to escape the production requirement.") ( 'ting Josephs,

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677 F.2d at 991-92).
Alternatively, these objections are largely unmeritorious in light of the 1efenses and
counterclaims raised by Defendants and the fact that Hill and Butler are now parties tb this action.

As the court observed in its order on the motion to intervene, "Prodigious's origrn:u C I
mplaint tells
a simple story of breach of contract. ... YBE' s Answer and Counterclaims [DE-15] tel s a markedly
different story." Aug. 21, 2015 Order [DE-46] at 2. Given the breach of fiduciary duty, constructive
fraud, and unfair and deceptive trade practices claims asserted, Kelley's role as a finlcial advisor

and his business dealings with Hill and Butler, including both through the NFLP A anf Providence
Group, are relevant to this litigation. Finally, Providence Group's concerns regarding tr production
of confidential or proprietary information are allayed by the consent protective order eltered by the
court in this case. [DE-45]. Accordingly, the motion to compel is allowed, and Prod gious Group
shall produce the requested documents by no later than November 24,2015.

III. CONCLUSION
For the reasons stated above, Defendants' motion to compel [DE-42] is ALL WED.
SO ORDERED, the/Oday ofNovember, 2015.

·;i.u~
lt()b;rt B. Jone¥,JT:'
United States Magistrate Judge

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