Trident Atlanta, LLC et al v. Charlie Graingers Franchising, LLC et al

Filing 196

ORDER - Motions DE 143, 146,150, 151, 153, 155, 160, 162, 164, 170, 173, 174, 188, and 192 are DENIED. Nista's motion to compel [DE 165] is GRANTED as to the discovery requests identified above. The IF Plaintiffs' motion [DE 178] for the C ourt to vacate its order compelling arbitration is GRANTED ONLY AS TO DEFENDANT NORTH. The parties have until April 3, 2020 to complete all discovery. Dispositive motions are due by May 15. Signed by Chief Judge Terrence W. Boyle on 1/17/2020. (Stouch, L.)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NORTH CAROLI A
SOUTHERN DIVISION
No. 7:18-cv-10-BO
TRIDENT ATLA TA, LLC, DUAL ENERGY,
LLC, CYNERGETIC AR, LLC, MS. MARCIE
BINDES d/b/a KS ENTERPRISES, LLC, MR.
DALE ATKINSON & MRS. ROSE ATKINSON
d/b/a ROSEDALE THREE, LLC, and MR.
TRE T MOORE d/b/a LINDSTAN, INC. ,
Plaintiffs,
V.

CHARLIE GRAINGERS FRANCHISING, LLC,
CHARLIE GRAINGERS FRANCHISING, INC. ,
LOUIS CRAIG NORTH, GREGORY BRUCE
GEORGE, and JASON MATTHEW NIST A,
Defendants.

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ORDER

This case is before the Court on numerous discovery and case management motions. This
order dispenses with all pending motions and sets a discovery deadline of April 3. Dispositive
motions are due by May 15.
BACKGROUND
The plaintiffs in this conso lidated action are three limited liability companies and four
individuals that entered into franchise agreements with the restaurant franchise Charlie Graingers .
The defendants are the Charlie Graingers corporate entities and three former corporate officersJason Nista, Gregory George, and Louis North. Initial ly, the corporate plaintiffs- known as Area
Representatives (hereinafter "AR Plaintiffs") because of their regional franchise agreements- and
the individual franchise plaintiffs (hereinafter "IF Plaintiffs") brought separate lawsuits. The Comi
consolidated the actions in August 2018 and plaintiffs filed an amended complaint.

Plaintiffs allege they were fraudu lently induced into entering into franchising agreements
with Charlie Graingers. They claim that the franchise disclosure documents ("FDD") were riddled
with misrepresentations about all aspects of the franchise, that defendants completely failed to
provide any of the promised franchise support, and that they lost all the investments they made in
the business.
In February 2019 , the Court denied defendants ' motions to dismiss with respect to
plaintiffs'

claims for fraud, intentional misrepresentation, and concealment; negligent

misrepresentation; breach of fiduciary duty ; and violation of North Carolina's UDTP A. The Court
dismissed plaintiffs ' civil RICO claims. In April , the Court granted motions to compel arbitration
fi led by Nista and George with respect to the four IF Plaintiffs. The order also compelled the IF
Plaintiffs to arbitrate their claims with

orth.

Since then, the case has been plagued by conflict between the parties and an inability to
resolve issues of discovery and case management. Discovery was scheduled to conclude at the end
of August 2019, but the deadline has been repeatedly extended. The parties have fi led numerous
motions and the case currently stands as follows.
The AR Plaintiffs have filed: ( l) three motions to compel proper discovery responses [DE
160, 164, 173] ; (2) two motions for protective orders [DE 174, 192] ; (3) a motion for partial
summary judgment [DE 146] ; (4) a motion for the Court to vacate its previous order compelling
arbitration [DE 178] ; (5) a motion to extend the discovery period [DE 170]; and (6) a motion for
a status conference [DE 188].
All three defendants moved for extensions to respond to the summary judgment motion.
[DE 151 , 153 , 155]. Nista appealed a Magistrate Judge ' s discovery order [DE 143] and moved to
compel proper discovery responses from the AR Plaintiffs [DE 165]. George moved to amend the

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scheduling order [DE 162]. Finally, defendant North, who has been prose since March 2019 , filed
a motion seeking pro bono representation [DE 150].
The Court held a status conference on January 24, 2020.
DISCUSSION
Motion for Summary Judgment
The AR Pl ai nti ffs filed a motion for summary judgment as to the liability of defendants
North, George, and Nista on August 8, 201 9, a little over a week after the Court granted the parties '
joint motion to extend the di scovery period by 90 days. [DE 146]. A ll three defendants responded
promptly, stating that they needed more time to complete discovery and rejecting plaintiffs'
characteri zation of the fac ts .
A di strict court must not grant summary judgment where the nonrnoving party has not had
the opportunity to di scovery information essential to its case. Nader v. Blair, 549 F.3d 953 , 961
(4th Cir. 2008). Plainti ffs ' motion was premature and summary judgment is inappropriate at this
point. The motion [DE 146] is denied without prejudice. The AR Plaintiffs may refi le by the
dead line for dispositive motions set by this order. Defendants ' motions for extension of time [DE
151 , 153 , 155] to respond are consequentl y den ied as moo t.
Motions to Compel Di scovery

Plaintiffs' Motions to Compel Discovery
The AR Plainti ffs served their requests for production of documents ("RFP") on North,
N ista, and George in April 20 19. The AR Pl aintiffs were not satisfied with the format and
organization of defendants ' responses, and on July 22 , email ed all the defendants and raised
obj ections to the production. Most relevant here is the AR Plaintiffs' contention- which forms the
basis of their moti ons to compel- that defendants' responses do not comply with Federal Rule of

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Civi l Procedure 34(b)'s " usual co urse of business" standard. Upon receiving the July 22 emai l,
each of the defendants reproduced the documents . North appears to have consulted a computer
expert to ensure the fi les were presented exactly as they were in the usual course of business. Nista
made an exact copy of his Google Drive/Fi le Stream that was maintained by the business . George
suppli ed the documents through Dropbox.
Still unsatisfied with the organization of the production, the AR Plaintiffs filed three
motions to compel N ista, George, and North to comply wi th Rule 34. The first motion is directed
at all three defendants while the second and third are directed only at George. The AR Plaintiffs
contend that defendants ' document pro duction amounts to a dump of thousands of documents with
no coherent organization.
Rule 34 requires that a party produce do cuments "as they are kept in the usual course of
business or must organi ze and label them to correspond to the categories in the request[.]" Fed. R.
Civ. P. 34(b)(2)(E). The party choosi ng to provide documents as kept in the usual course of
business- as opposed to labeling them to correspond to the categories in the request- bears the
burden of showing that the documents were properly produced . See, e.g. , SE. C. v. Collins &

Aikman Corp., 256 F. R .D . 403 (S .D . N .Y. 2009).
The Court has reviewed the submissions of the parties and finds that defendants have met
their burden of providing documents as kept in the usual course of business. A ll three defendants
have explained the manner of their document production to the satisfaction of the Court. Moreover,
the AR Plaintiffs ' argument that the production responses were disorganized document dumps is
undermined by their own summary judgment motion. It stands to reason that if defendants'
document productions were chaotic messes, the AR Plaintiffs wou ld have been unable to assemble
a factua l record suffic iently comp lete to support a summary judgment motion.

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Accordingly , the AR Plaintiffs ' motions to compel [DE 160, 164, 173] are denied.
Nista 's motion to compel
Nista moves to compel discovery responses to interrogatories and requests for production
of documents from the AR Plaintiffs. [DE 165]. Nista argues that the AR Plaintiffs' objections to
written discovery are not stated with any specificity and that they have not provided a privilege
log. Nista asks the Court to compel responses to interrogatories 4, 5, 7-12, 13, and 15 and
responses to requests for production 1- 11 , 13, 14, and 15.
"Parties may obtain discovery regarding any nonprivileged matter that is relevant to any
party's claim or defense and proportional to the needs of the case ... ." Fed. R. Civ. P. 26(b)(l).
Production requests and interrogatories may relate to matters within the scope of Rule 26(b ). See
Fed. R. Civ. P. 33(a), 34.
Here, the AR Plaintiffs were completely nonresponsive to Nista ' s interrogatories. All three
recycled the same generalized objections without providing any supporting detail as to the basis
of the objection.
Interrogatories 4 and 5 are requests for the AR Plaintiffs to identify communications made
by Nista and the other defendants. Interrogatory 5 additionally asks plaintiffs to identify which
statements they contend were false. Plaintiffs respond to this simple interrogatory with ten
boilerplate objections and then refer Nista to the allegations in the complaint. The objections are
not stated with any specificity and are therefore meritless.
Interrogatories 7 through 12 ask the AR Plaintiffs to identify and describe any
communications between themselves. Plaintiffs object on five different generalized grounds,
including a generalized attorney-client privi lege claim . The objections are not stated with any
specificity or supporting detail and are therefore meritless.

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Interrogatory 13 asks the AR Plaintiffs to identify communications with defendants on
social media. Plaintiffs object to this as being overbroad, unduly burdensome, and vague . The
request is neither of those and the objections are meritless.
Interrogatory 15 asks the AR Plaintiffs to identify any attorney who represented them in
the formation of the franchise agreements and to identify communications sent or received by the
attorney. Plaintiffs object to this on attorney-client privi lege grounds and that it is unduly
burdensome. Again, plaintiffs ' objections fail. The attorney-client privi lege protects the attorneyclient communications themselves. Here, Nista asks plaintiffs to identify the communications, not
disclose their contents.
The Court now turns to N ista' s requests for production of documents. RFPs l , 2, and 3 are
blanket requests for the AR Plaintiffs to produce all relevant documents or documents they intend
to rel y on. The requests are so broad as to render them meaningless and plaintiffs need not respond.
The remaini ng RFPs are slipshod and should have been drafted with more thought and
precision, but hardly warrant the AR Plaintiffs ' complete non-response. All three AR Plaintiffs
parrot the same ten objections without any specificity or supporting detail. With the exception of
RFP 15, the remaining RFPs are requests for the AR Plaintiffs to produce documents and records
of all commun ications between the parties in this lawsuit as well as with third parties. The RFPs
are admittedly drafted broadly (ex. "produce any written correspondence in your possession
between any plaintiff and any defendant relating to any fact, claim, or defense"), but the most
salient facts for plaintiffs ' claims lie in the contents of the parties ' communications.
Although the AR Plaintiffs raise ten boilerplate objections to each RFP, the principal
objection is that they ask plaintiffs to provide records of communi cations that are "relevant to any

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fact, claim , or defense." Plaintiffs argue this language renders the discovery requests facially
improper as seeking work product, opinions, and conclusions of counsel.
Plaintiffs ' arg ument is wide of the mark. The requests are not asking for ordinary or
opinion work product. They are not aski ng for plaintiffs ' counsel to arrange each piece of evi dence
by claim or defense, thus shedd ing li ght on hi s litigation strategy. In this instance, the use of
phrases like "relevant to any fact, claim, or defense" are limiting phrases that confine the requests
to communications germane to the case (e.g., not personal conversations).
The cases cited by plaintiffs undercut their own objections. The court in In re MGM Mirage

Sec. Litig. granted defendant' s motion to compel, specifically affirming a party's "broad right" to
information in the opposing party's control and that Rul e 26 places no limit "on a party's right to
request information that is relevant to a claim or defense. " 201 4 WL 6675732, at *3 (D. Nev.

ov.

25 , 2014). The court also held that the plaintiffs waived their work-product objections by faili ng
to object with specificity, as is the case here. Id. at 4- 5. Another case cited by the AR Plaintiffs,

US E.E.O. C. v. Pioneer Hotel, Inc. , restates the rule that the work-product doctrine appli es to
information and documents prepared in anticipation of litigation. 20 14 WL 4987418, at *3 (D.
Nev. Oct. 6, 2014). That is not what is bei ng requested here.
The purpose of the document production process is to make relevant, non-privileged
information available to the other party to protect against unfair surprise and to help the parties
resolve the case. Instead of delaying discovery by failing to make any good faith effort to respond,
the AR Plaintiffs ' proper course of action was to produce records of the communications to the
best of their abi lities and make specific, qualifying objections as needed . The AR Plaintiffs did not
make a good faith effort to respond to N ista' s RFPs and the Court compels them to do so. Plaintiffs

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must prepare a privilege log to support proper assertions of the attorney-client privi lege and the
attorney work-product doctrine .
ista ' s motion [DE 165] is granted with respect to the identified interrogatories and RFPs
4- 15.
Motions for Protective Orders
The AR Plaintiffs filed two motions for protective orders.
First, plaintiffs move for a protective order to prohibit what their counsel views as improper
direct contact by

ista. They claim vio lations of the

orth Carolina Rules of Professional Conduct

and the judicial process because they believe Nista attempted to prejudice plaintiffs and undermine
the relationship with their counsel.
Comment Four to North Carolina Rule of Professional Conduct 4.2 states that the parties
are not prohibited from communicating directly with each other. The Court has reviewed the emai l
at issue and disagrees with plaintiffs' characterization of it as untoward. The Court denies
plaintiffs ' motion. [DE 174].
The AR Plaintiffs have also moved for a protective order and to quash George ' s Rule
30(b )( 1) notices of deposition. [DE 192]. Plaintiffs argue that the deposition requests are
disproportional and redundant. Three of the intended deponents- Osman, Robertson, and
Zheng- have already been deposed as representatives of the LLCs. The other intended
deponents- Blythe, Johnson, and Etheridge- are either members or empl oyees of the LLCs who
were listed on plaintiffs ' Rule 26 disclosures as individuals known to likely have discoverable
information.
In determining whether a discovery request is proportional, courts look to six factors:
importance of issues at stake in the litigation, amount in controversy, the parties ' access to

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information, the parties' resources, the importance of discovery resolving the issues, and whether
the burden will outweigh the likely benefit. Oxbow Carbon & Minerals LLC v. Union Pac. R.R.

Co., 322 F.R.D . 1, 6 (D .D.C. 2017).
The Court finds that the discovery request is neither redundant nor disproportionate.
Plaintiffs stated at the hearing that they are seeking between $3 and $5 million in damages. This
case involves issues of fraudulent misrepresentation, and so establishing a factual basis as to what
plaintiffs knew and re lied on is critical to the outcome of the case. Furthermore, when broken down
by the number of plaintiffs, the number of depositions amounts to three per plaintiff-the LLC
itself and either two LLC members or a member and an employee. Given the complexity of the
claims at issue, this is not disproportionate or redundant.
Plaintiffs ' motion [DE 192] is denied.
Motion to Vacate Arbitration Order
The IF P laintiffs move for the Court to vacate its previous order compelling arbitration of
the IF Plaintiffs ' claims, stating that the defendants have failed to perform their arbitration
obligations by failing to pay the arbitration fees. On November 13 , 2019 , the AAA terminated the
arbitration proceedings for non-payment.
There is no dispute that the fu ll arbitration costs have not been paid, but plaintiffs ' brief
mischaracterizes the reason for the termination, omitting critical facts.
Plaintiffs on multiple occasions state that the defendants have fai led to pay the arbitration
costs. In reality, only defendant North has not paid the arbitration costs. North has represented to
the Court on multiple occasions that he is unable to afford an attorney in this case and that he is
unable to pay the arbitration fees. Additionall y, plaintiffs' brief fails to mention that the AAA
mistakenly allocated the arbitration costs amongst only four parties- the three defendants and one

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of the IF Plaintiffs-when the costs should have been di vided evenly among all seven parties. This
resulted in overpayments by George and Nista. Defendants notified the AAA of the improper
division of the costs on October 22, 2019, but the AAA merely responded that the matter was
suspended until all arbitration costs were paid. The AAA then terminated the matter for
nonpayment on November 13 , 2019.
Given that North cannot pay his share of the arbitration costs, the Court sees no other option
but to vacate its previous order with respect to him. Accordingly, plaintiffs' motion [DE 178] is
granted, but on ly as to North. The IF Plaintiffs remain compelled to arbitrate their claims against
George and Nista.
Remaining Motions
Nista appealed a Magistrate Judge ' s discovery decision. [DE 143]. Nista did not raise the
issue of the appeal at the January 24 hearing. The Court has reviewed this submission and believes
it to be moot at this point. Accordi ngly, the appeal [DE 143] is dismissed as moot.
North has moved for pro bono legal representation . " [I]t is well settled that in civi l actions
the appo intment of counsel should be allowed only in exceptional cases .... " Cook v. Bounds,
518 F.2d 779, 780 (4th Cir. 1975). The Court does not believe that this is an exceptional case and
therefore denies

orth's motion . However, the Court wi ll refer his case to the Court's pro bono

panel. North is advised that he has the responsibi lity of contacting any attorney expressing interest
in taking hi s case.
CONCLUSION
Forthereasonsdiscussedabove, motionsDE 143 , 146,150, 151 , 153 , 155 , 160, 162, 164,
170 , 173 , 174, 188 , and 192 are DENIED. Nista's motion to compel [DE 165] is GRANTED as to

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the discovery requests identified above. The IF Plaintiffs' motion [DE 178] for the Court to vacate
its order compelling arbitration is GRA TED ONLY AS TO DEFENDANT NORTH.
The parties have until Apri l 3, 2020 to complete all discovery . Dispositive motions are due
by May 15.

SO ORDERED, this

/

'J day of February, 2020.
~W./}~
TERRENCE W. BOYLE
CHIEF UNITED STA TES DISTRICT JUDGE

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