DILLON v. BMO HARRIS BANK, N.A. et al
Filing
170
MEMORANDUM OPINION AND ORDER. Signed by MAG/JUDGE L. PATRICK AULD on 10/30/2015, that Dillon's Bay Cities Motion (Docket Entry 163 ) and Generations Motion (Docket Entry 161 ) are GRANTED IN PART and DENIED IN PART as follows: on or b efore November 6, 2015, with the sole exception of materials withheld on the basis of privilege as identified on the privilege logs detailed below (i) Bay Cities must produce all materials responsive to BCRFP 10; (ii) Generations mus t produce all materials responsive to GRFPs 1, 2, 5, 6, 9, 12, 13, 16, 17, 18; (iii) Generations must produce all materials on which it relies for its "third-party beneficiary" and "servicer" arguments, as specified in GRF Ps 3 and 4; and (iv) Generations must produce all materials related to arbitration responsive to GRFP 11. FURTHER that, on or before November 6, 2015, Bay Cities and Generations must each serve on Dillon a privilege log specifying any docume nts withheld on the basis of privilege, including the common interest privilege. Defendants must explicitly identify any documents withheld under the common interest privilege. Dillon may renew his challenge to Defendants' common interest privilege assertions if he has a good-faith basis for doing so after reviewing the privilege logs. (Daniel, J)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
JAMES DILLON, on behalf of
himself and all others
similarly situated,
Plaintiff,
v.
BMO HARRIS BANK, N.A., et al.,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
1:13cv897
MEMORANDUM OPINION AND ORDER
This case comes before the Court on “Plaintiff’s Motion to
Compel
Bay
Cities
Bank
to
Produce
Documents
in
Response
to
Plaintiff’s Requests for Arbitration-Related Discovery” (Docket
Entry 163) (the “Bay Cities Motion”) and “Plaintiff’s Motion to
Compel Generations Federal Credit Union to Produce Documents in
Response to Plaintiff’s Requests for Arbitration-Related Discovery”
(Docket Entry 161) (the “Generations Motion”).
For the reasons
that follow, the Court will grant in part and deny in part the Bay
Cities
Motion
and
the
Generations
Motion
(collectively,
the
“Motions to Compel”).
BACKGROUND
On October 8, 2013, Plaintiff James Dillon (“Dillon”) filed
a class action complaint (the “Complaint”) against Generations
Federal
Credit
Union
(“Generations”),
Bay
Cities
Bank
(“Bay
Cities”), and two other banks for their alleged participation in a
scheme to collect unlawful debts through the Automated Clearing
House network, in violation of the Racketeer Influenced and Corrupt
Organizations
Act
(“RICO”)
(Docket Entry 1 at 1-2.)1
and
various
North
Carolina
laws.
The Complaint alleges that Generations
and Bay Cities (the “Defendants”) enabled certain out-of-state
lenders to make and collect payments on payday loans that are
illegal under North Carolina law (and the laws of various other
states and the District of Columbia).
31, 33-34.)
(Id. at 2-4, 12-13, 15, 30-
According to the Complaint, Generations debited
Dillon’s North Carolina bank account for payday loan fees and
payments on behalf of CashCall, Inc. (“CashCall”) and Western Sky
Financial, LLC (“Western Sky”) and Bay Cities did likewise on
behalf of MNE Services, Inc. d/b/a USFastCash (“MNE Services”) and
Vin Capital LLC.
(Id. at 5, 7-9, 30-31, 33-34.)
Western Sky and
MNE Services each “purportedly operat[ed] as a tribal online payday
lender.”
(Id. at 7-8.)
On July 15, 2015, Generations renewed its motion to dismiss
the Complaint, seeking to enforce an arbitration provision in the
Western Sky loan agreement underlying Dillon’s claims against
Generations.
to
compel
Arbitration
(Docket Entry 152 at 2.)
arbitration
Act
(the
and
stay
“FAA”)
on
Bay Cities similarly moved
litigation
the
basis
under
of
the
the
Federal
arbitration
1
Citations herein to Docket Entry pages utilize the
document’s internal pagination if unified internal pagination
exists. In the absence of such pagination, the Docket Entry page
citations utilize the CM/ECF footer’s pagination.
2
provisions in the agreements underlying Dillon’s claims against Bay
Cities. (Docket Entry 154.) Thereafter, the parties filed a joint
motion to permit arbitration-related discovery (Docket Entry 157),
which Dillon believed “would allow him to challenge the formation
and enforceability of the arbitration agreements at issue and
Defendants’ right to invoke those agreements” (id. at 2).
On
August 3, 2015, United States District Judge Catherine C. Eagles
authorized
the
requested
discovery
(the
“Discovery
Order”).
(Docket Entry 158.)
In accordance with the Discovery Order, Dillon served Requests
for
Production
specifically,
responded.
The
parties
of
the
Documents
“GRFP”
(generally,
and
“BCRFP”),
the
to
“Requests,”
which
and
Defendants
(See Docket Entry 162 at 3; Docket Entry 164 at 3.)2
conferred
regarding
the
Requests
and
objections
thereto, leading to Dillon’s withdrawal and narrowing of certain
Requests and Defendants’ Amended Responses.
(See Docket Entry 162
at 3-4; Docket Entry 164 at 3; Docket Entry 166 at 5.)
As part of
this conferral process, the parties negotiated over privilege log
parameters, but had not reached agreement on that subject before
Dillon filed the Motions to Compel.
(See Docket Entry 164-4 at 2-
3; Docket Entry 165 at 9-10; Docket Entry 165-3 at 1.)
Motions
to
Compel,
Dillon
seeks
to
compel
production
2 Defendants also served discovery on Dillon.
Entries 165-1, 165-2; Docket Entry 166-1 at 10-48.)
3
Through the
from
(See Docket
Generations and Bay Cities, which Defendants oppose (see Docket
Entries 165, 166).3
DISCUSSION
I.
Legal Framework
A.
Discovery Standards
“The purpose of discovery is to provide a mechanism for making
relevant information available to the litigants.”
26
advisory
therefore,
committee’s
“[p]arties
notes,
may
1983
obtain
Fed. R. Civ. P.
Amendment.
discovery
Generally,
regarding
any
nonprivileged matter that is relevant to any party’s claim or
defense.”
Fed. R. Civ. P. 26(b).
Relevancy “essentially involves
a determination of how substantively the information requested
bears on the issues to be tried.”
Mills v. East Gulf Coal
Preparation Co., LLC, 259 F.R.D. 118, 131 (S.D. W. Va. 2009)
(internal quotation marks omitted); see also Cook v. Howard, 484 F.
App’x 805, 812 (4th Cir. 2012) (“Relevance is thus the foundation
for any request for production, regardless of the individual to
whom a request is made.”).
Parties must engage in discovery in good faith, without
gamesmanship.
See Mills, 259 F.R.D. at 130 (“The civil discovery
process is to be engaged in cooperatively.”); Wagner v. St. Paul
3 To the extent the Motions to Compel challenge objections
and responses from Defendants’ initial responses that do not appear
in Defendants’ Amended Responses, the Motions to Compel are moot.
The Court will only evaluate live issues in resolving the Motions
to Compel.
4
Fire & Marine Ins. Co., 238 F.R.D. 418, 422 (N.D. W. Va. 2006)
(observing that “[g]amesmanship” in discovery “is not allowed”);
M.D.N.C. LR 26.1(b)(1) (“The Court expects counsel to conduct
discovery in good faith and to cooperate and be courteous with each
other in all phases of the discovery process.”).
parties
must
respond
with
specificity
to
discovery
including by making particularized objections.
231 F.R.D. 468, 474 (D. Md. 2005).
objections
to
discovery
requests
are
Accordingly,
requests,
Hall v. Sullivan,
General or “boilerplate”
invalid.
See
Kinetic
Concepts, Inc. v. ConvaTec Inc., 268 F.R.D. 226, 241 (M.D.N.C.
2010) (collecting cases).
Similarly, promising to provide (i)
documents “subject to” objections or (ii) only “relevant” documents
is improper.
Id. at 248-49 (observing that each such response
“confuses more than it clarifies” and “hides the ball” (internal
quotation marks omitted)).
The party opposing discovery generally
bears the burden on a motion to compel.
Id. at 243-44 (collecting
cases).
B.
Common Interest Privilege
Entities with a similar interest in the prosecution or defense
of a legal matter can qualify for the common interest privilege,
which protects otherwise-privileged communications when shared
among the common interest group.
See In re Grand Jury Subpoenas,
89-3 & 89-4, John Doe 89-129, 902 F.2d 244, 248-49 (4th Cir. 1990).
To qualify for this protection, entities do not have to be parties
5
in the same litigation.
Id. at 249.
Moreover, they do not need a
written common interest agreement; a meeting of the minds suffices.
American Mgmt. Servs., LLC v. Department of the Army, 703 F.3d 724,
733 (4th Cir.), cert. denied, 134 S. Ct. 62 (2013).
Where the
common interest protection applies, it cannot be waived unless all
holders of the protection agree to the waiver.
In re Grand Jury
Subpoenas, 89-3 & 89-4, 902 F.2d at 248.
C.
Arbitration Principles
Written arbitration agreements are “valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract.”
9 U.S.C. § 2.
A party may
move to compel arbitration in accordance with a written arbitration
agreement.
9 U.S.C. § 4.
When a party petitions to compel
arbitration, “[t]he court shall hear the parties, and upon being
satisfied that the making of the agreement for arbitration . . . is
not in issue, the court shall make an order directing the parties
to proceed to arbitration in accordance with the terms of the
agreement.”
Id.
Conversely, “[i]f the making of the arbitration
agreement . . . be in issue, the court shall proceed summarily to
the trial thereof.”
Id.
In ruling on a petition to compel arbitration or to stay
litigation, a “court may consider only issues relating to the
making and performance of the agreement to arbitrate.” Prima Paint
Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967).
6
Therefore,
when
evaluating
the
enforceability
of
arbitration
provisions, courts should consider “generally applicable contract
defenses, such as fraud, duress, or unconscionability.”
Mobility LLC v. Concepcion, 563 U.S. 333,
AT&T
, 131 S. Ct. 1740, 1746
(2011) (internal quotation marks omitted); see also Rent-A-Ctr.,
W., Inc. v. Jackson, 561 U.S. 63, 78 (2010) (“‘[Q]uestion[s] of
arbitrability’ thus include questions regarding the existence of a
legally
binding
and
valid
arbitration
agreement,
as
well
as
questions regarding the scope of a concededly binding arbitration
agreement.” (alterations in original)); Raglani v. Ripken Prof’l
Baseball, 939 F. Supp. 2d 517, 521 (D. Md. 2013) (“Thus, although
the judicial inquiry is ‘highly circumscribed,’ it is focused both
on
ensuring
there
was
adequate
contractual
formation
in
the
agreement, including valid consideration, and that the agreement
itself is not unfair, unconscionable, or otherwise defective in
ensuring the claimant can ‘effectively . . . vindicate his or her
statutory cause of action in the arbitral forum.’” (alteration in
original) (quoting Murray v. United Food & Commercial Workers Int’l
Union, 289 F.3d 297, 302 (4th Cir. 2002))).4
Courts must also
4
Even if the arbitration provision purports to delegate
considerations
of
its
validity
to
the
arbitrator,
this
arbitrability principle applies as long as the resisting party
directly challenges such delegation. See Rent-A-Ctr., 561 U.S. at
73-75. A party can simultaneously challenge both the delegation
provision and the overall arbitration agreement. See id. at 74-75
(explaining that “[i]t may be that had Jackson challenged the
delegation provision by arguing that these common procedures as
(continued...)
7
consider whether, under state law, a nonsignatory to the agreement
may enforce the arbitration provision.
Carlisle,
556
U.S.
624,
630-31
See Arthur Andersen LLP v.
(2009)
(explaining
that
nonsignatories may be eligible to enforce arbitration agreements).5
Accordingly, if a party challenges the enforceability of an
arbitration agreement, courts generally permit discovery regarding
the
formation
and
performance
of
the
arbitration
provision.
Blankenship v. Seventeenth St. Assocs., LLC, Civil Action No.
3:11-0627, 2012 WL 10008266, at *1 (S.D. W. Va. Feb. 1, 2012);
Livingston v. Associates Fin., Inc., Civil Action No. 01 C 1659,
4(...continued)
applied to the delegation provision rendered that provision
unconscionable, the challenge should have been considered by the
court,” but concluding that “his unconscionability arguments made
no mention of [the delegation provision]” (emphasis in original));
see also Parnell v. Western Sky Fin., LLC, No. 4:14-cv-24, Docket
Entry 25, at 32 n.2, 73-75 (N.D. Ga. Apr. 28, 2014) (explaining
that “[t]he [c]ourt interpret’s [the p]laintiff’s challenge as an
attack on the forum selection clause itself, not merely an attack
on the Parnell Loan Agreement as a whole,” and upholding the
plaintiff’s unconscionability challenge because the nonexistence of
the
arbitral
forum
rendered
the
arbitration
provision
unenforceable).
5
State law also governs any contract formation issues.
American Gen. Life & Acc. Ins. Co. v. Wood, 429 F.3d 83, 87 (4th
Cir. 2005) (“Although federal law governs the arbitrability of
disputes, ordinary state-law principles resolve issues regarding
the formation of contracts. Specifically, courts should remain
attuned to well-supported claims that the agreement to arbitrate
resulted from the sort of fraud or overwhelming economic power that
would provide grounds for the revocation of any contract.
For
instance, generally applicable contract defenses, such as fraud,
duress, or unconscionability, may be applied to invalidate
arbitration agreements without contravening § 2.” (internal
quotation marks and citations omitted)).
8
2001 WL 709465, at *1-2 (N.D. Ill. June 25, 2001), report and
recommendation adopted, 2002 WL 424352 (N.D. Ill. Mar. 6, 2002);
see also Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 90-91
& n.6 (2000) (refusing to invalidate arbitration provision where
party failed to provide factual support for invalidity contention).
Only discovery tailored to matters pertinent to the disposition of
the petition to compel arbitration and/or stay litigation may
occur.
See
THI
of
S.C.
at
Charleston,
LLC
v.
Vance,
No.
2:13-CV-01483, 2014 WL 896717, at *1-2 (D.S.C. Feb. 26, 2014)
(noting
authorization
of
arbitration
discovery,
but
quashing
subpoenas as seeking information irrelevant to party’s anticipated
defenses to motion to compel arbitration).
D.
Tribal Jurisdiction Issues
1.
Indian Tribe Jurisdiction
Bay
Cities
and
Generations
seek
to
enforce
arbitration
agreements that purport to be governed by the laws – and to subject
Dillon
to
the
jurisdiction
–
of
certain
Indian
tribes
(respectively, the Miami Indian Tribe and Cheyenne River Sioux
Tribe).
(Docket Entry 106-1 at 4; Docket Entry 123-1 at 21.)6
6 The Western Sky agreement that Generations seeks to enforce
states, “This Loan Agreement is subject solely to the exclusive
laws and jurisdiction of the Cheyenne River Sioux Tribe, Cheyenne
River Indian Reservation. By executing this Loan Agreement, you,
the borrower, hereby acknowledge and consent to be bound to the
terms of this Loan Agreement, consent to the sole subject matter
and personal jurisdiction of the Cheyenne River Sioux Tribal Court,
and that no other state or federal law or regulation shall apply to
(continued...)
9
Indian tribes have “a unique and limited” sovereignty “center[ed]
on the land held by the tribe and on tribal members within the
reservation.”
Plains Commerce Bank v. Long Family Land & Cattle
Co., 554 U.S. 316, 327 (2008).
Indian “tribes do not, as a general
matter, possess authority over non-Indians who come within their
borders:
‘[T]he inherent sovereign powers of an Indian tribe do
not extend to the activities of nonmembers of the tribe.’”
Id. at
328 (alteration in original) (quoting Montana v. United States, 450
U.S. 544, 565 (1981)).
Only via two “limited” exceptions may tribes exercise “civil
jurisdiction
over
non-Indians
non-Indian fee lands.”
omitted).
on
their
reservations,
even
on
Id. at 329-30 (internal quotation marks
Under the so-called Montana exceptions, id. at 330,
“‘[a] tribe may regulate, through taxation, licensing, or other
means,
the
activities
of
nonmembers
who
enter
consensual
relationships with the tribe or its members, through commercial
dealing, contracts, leases, or other arrangements,’” id. at 329
6(...continued)
this Loan Agreement, its enforcement or interpretation.” (Docket
Entry 106-1 at 4.)
The MNE Services agreement that Bay Cities
seeks to enforce provides “that this Note and Your account shall be
governed by all applicable federal laws and all laws of the Miami
Tribe of Oklahoma, the regulatory authority of MNE Services, Inc.
dba USFastCash, regardless of the state or jurisdiction in which
You may reside, and Your electronic signature below is your consent
to the exclusive exercise of regulatory and adjudicatory authority
of the Miami Tribe of Oklahoma over all matters related to this
Note and Your account, expressly and forever forsaking any other
jurisdiction which either party may claim by virtue of any reason,
including residency.” (Docket Entry 123-1 at 21.)
10
(quoting Montana, 450 U.S. at 565).
Additionally, a tribe “may
exercise ‘civil authority over the conduct of non-Indians on fee
lands within the reservation when that conduct threatens or has
some
direct
effect
on
the
political
integrity,
security, or the health or welfare of the tribe.’”
(quoting
Montana,
450
U.S.
at
566).7
“By
the
economic
Id. at 329-30
their
terms,
the
exceptions concern regulation of ‘the activities of nonmembers’ or
‘the conduct of non-Indians on fee land.’”
Id. at 330 (emphasis in
original).8
Put simply, tribal “laws and regulations may be fairly imposed
on nonmembers only if the nonmember has consented, either expressly
or by his actions.
Even then, the regulation must stem from the
tribe’s inherent sovereign authority to set conditions on entry,
preserve tribal self-government, or control internal relations.”
Id. at 337.
As the Supreme Court has emphasized, “efforts by a tribe to
regulate
nonmembers,
especially
presumptively invalid.”
on
non-Indian
fee
land,
are
Id. at 330 (internal quotation marks
7 The second Montana exception only applies if the conduct
“‘imperil[s] the subsistence’ of the tribal community.” Plains
Commerce Bank, 554 U.S. at 341 (quoting Montana, 450 U.S. at 566).
In other words, the second Montana exception applies only in
circumstances where “tribal power [is] necessary to avert
catastrophic consequences.” Id. (internal quotation marks omitted).
8 A tribe’s adjudicatory jurisdiction extends no farther than
its legislative jurisdiction. Plains Commerce Bank, 554 U.S. at
330.
11
omitted).
The party advocating tribal jurisdiction has the burden
of establishing that one of the Montana exceptions applies.
id.
See
Notably, these “limited” exceptions “cannot be construed in a
manner that would swallow the rule or severely shrink it.”
(internal quotation marks and citations omitted).
Id.
After all,
it should be remembered[ that tribal sovereignty] is a
sovereignty
outside
the
basic
structure
of
the
Constitution.
The Bill of Rights does not apply to
Indian tribes.
Indian courts differ from traditional
American courts in a number of significant respects. And
nonmembers have no part in tribal government - they have
no say in the laws and regulations that govern tribal
territory.
Id. at 337 (internal quotation marks and citations omitted).
2.
Tribal Exhaustion Doctrine
Where a colorable claim of tribal court jurisdiction arises,
the tribal exhaustion doctrine comes into play.
comity
and
doctrine
related
holds
that
considerations,”
when
a
“[t]he
colorable
“[A] product of
tribal
claim
of
exhaustion
tribal
court
jurisdiction has been asserted, a federal court may (and ordinarily
should) give the tribal court precedence and afford it a full and
fair opportunity to determine the extent of its own jurisdiction
over [particular claims].”
Ninigret Dev. Corp. v. Narragansett
Indian Wetuomuck Hous. Auth., 207 F.3d 21, 31 (1st Cir. 2000).
Three principles animate this doctrine: (i) giving tribal courts an
initial
opportunity
to
evaluate
the
legal
and
factual
bases
underlying the challenge to their jurisdiction promotes tribal
self-determination and self-government; (ii) tribal exhaustion
12
promotes administrative efficiency insofar as “a full record [is]
developed in the Tribal Court” before federal judicial review; and
(iii) exhaustion “will encourage tribal courts to explain to the
parties the precise basis for accepting jurisdiction, and will also
provide other courts with the benefit of their expertise in such
matters in the event of further judicial review.” National Farmers
Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845, 856-57
(1985).
3.
Relevant Jurisdictional and Exhaustion Evaluations
Numerous cases have been brought in state and federal courts
in recent years regarding payday loans made by purported tribal
entities.
See, e.g., Moses v. CashCall, Inc., 781 F.3d 63, 67-68
(4th Cir. 2015) (collecting cases); State ex rel. Cooper v. Western
Sky Fin., LLC, No. 13 CVS 16487, 2015 WL 5091229, at *9-10 (N.C.
Super. Ct. Aug. 27, 2015) (discussing such cases).
These courts
have differed in their treatment of tribal jurisdiction and tribal
exhaustion contentions.
Some courts have flatly rejected such
assertions, emphasizing that the nonmember payday loan recipients
did not engage in any activity on an Indian reservation.
See,
e.g., Jackson v. Payday Fin., LLC, 764 F.3d 765, 782 (7th Cir.
2014),
cert.
denied,
135
S.
Ct.
1894
(2015)
(rejecting
jurisdictional claim because “Plaintiffs have not engaged in any
activities inside the reservation” (emphasis in original)); Parnell
v. Western Sky Fin., LLC, No. 4:14-cv-24, Docket Entry 25 at 36-44,
13
73-74 (N.D. Ga. Apr. 28, 2014) (concluding that “the Cheyenne River
Sioux Tribal Court would not have jurisdiction to entertain this
dispute” because, inter alia, “the events at issue clearly did not
occur on the Cheyenne River Indian Reservation, and Plaintiff did
not engage in activity on the reservation”); Cooper, 2015 WL
5091229, at *8 (concluding that loan agreements were formed in
North
Carolina
when
–
and
where
–
the
borrowers
signed
the
agreements).
Conversely,
some
courts
have
concluded
that
tribal
jurisdiction may exist and, thus, that tribal exhaustion must
occur.
See Brown v. Western Sky Fin., LLC, 84 F. Supp. 3d 467,
479-81 (M.D.N.C. 2015); Heldt v. Payday Fin., LLC, 12 F. Supp. 3d
1170,
1186-87,
1192-93
(D.S.D.
2014).
In
reaching
such
conclusions, these courts have questioned the necessity of a
nonmember’s physical presence on the reservation for the first
Montana exception to apply.
Heldt, 12 F. Supp. 3d at 1186 (“The
borrower certainly does not enter onto a reservation, but in
today’s modern world of business transactions through internet or
telephone, requiring physical entry on the reservation particularly
in a case of a business transaction with a consent to jurisdiction
clause, seems to be requiring too much.”); see also Brown, 84 F.
Supp. 3d at 479 (“Plaintiffs in the current action base a portion
of their argument asserting that North Carolina is implicated
because Defendants’ payday loans were offered in North Carolina.
14
Using the Heldt analysis, however, Plaintiffs’ logic can be used to
assert a colorable claim of tribal jurisdiction, because some of
Defendants’ actions involved alleged tribal entities and/or tribal
members.”). Operating against that backdrop, these courts mandated
tribal exhaustion where the record did not establish (i) the nature
of the payday lenders’ relationship to each other and/or the tribe;
(ii) the unavailability of the specified tribal arbitral forum; and
(iii)
for
purposes
of
the
Western
Sky
agreement,
(A)
who
constitutes an “authorized representative of the Cheyenne River
Sioux
Tribal
Nation”
and
(B)
whether
any
such
authorized
representative “is a JAMS or AAA arbitrator,” Heldt, 12 F. Supp. 3d
at 1193 (internal quotation marks omitted).
See id. at 1184-87,
1190-93; see also Brown, 84 F. Supp. 3d at 480-81 (following
Heldt).
As discussed below, Dillon bases his Requests and Motions to
Compel in significant part on a need to develop a factual record
sufficient to overcome the concerns in the Heldt line of cases.
(See, e.g., Docket Entry 162 at 1-2; Docket Entry 162-2 at 4-6.)
II.
Plaintiff’s Motions to Compel
Dillon
procedures
maintains
do
not
that
exist
assertions are false.
the
and
loan
that
agreements’
their
tribal
arbitration
jurisdiction
(See, e.g., Docket Entry 162 at 1-2, 19;
Docket Entry 162-2 at 2-6.)
As noted in his initial letter to
Defendants regarding discovery, Dillon seeks factual evidence to
15
support his contentions and avoid evidentiary deficiencies that led
to the dismissal of other plaintiffs’ lawsuits against tribal
payday lenders.
(See generally Docket Entry 162-2.)
As Dillon
explained:
All three tribal agreements represent that borrowers are
subject to the exclusive laws and jurisdiction of the
tribes:
* * * * *
It is [Dillon’s] position that the representations that
the tribal agreements and the borrowers themselves (by
execution of the agreements) are subject to tribal
jurisdiction and law is false. Jackson v. Payday Fin.,
LLC, 764 F.3d 765, 783 (7th Cir. 2014) cert. denied sub
nom. W. Sky Fin. v. Jackson, 135 S. Ct. 1894 (2015) (“a
nonmember’s consent to tribal authority is not sufficient
to establish the jurisdiction of a tribal court”).
. . . .
Other courts however have found the question of tribal
jurisdiction to be a closer call. See, e.g., Brown v. W.
Sky Fin., LLC, No. 1:13CV255, 2015 WL 413774, at *10
(M.D.N.C. Jan. 30, 2015) (finding a potential “colorable
claim
of
tribal
jurisdiction,
because
some
of
[d]efendants’ actions involved alleged tribal entities
and/or tribal members.”). Given the possibility, however
slim, of a “colorable” claim of tribal jurisdiction,” Mr.
Dillon has no choice but to take discovery on this issue
unless Defendants are prepared to concede that there is
no jurisdiction by the Indian tribal courts premised on
these transactions. That discovery necessarily entails
examination of these lenders’ operations on the
reservation and their interactions with off-reservation
third-parties.
See Heldt v. Payday Fin., LLC, 12 F.
Supp. 3d 1170, 1185 (D.S.D. 2014) (“Ultimately, to
sustain tribal court jurisdiction, the tribe or tribal
member must show that the activities or conduct sought to
be regulated through adjudication occurred “inside the
reservation.”)
(citations
omitted).
See
also,
Otoe-Missouria Tribe of Indians v. New York State Dep’t
of Fin. Servs., 769 F.3d 105, 115 (2d Cir. 2014) (“In any
event, plaintiffs provided insufficient evidence to
establish that they are likely to succeed in showing that
16
the internet loans should be treated as on-reservation
activity.”).
Accordingly, we will seek leave of the Court to take
discovery on the issue of how and where these lenders
operate, with whom they operate (including their
Third-Party Senders and Originating Depository Financial
Institutions) and the actual financial interest of the
tribes in these lenders.
Additionally, all three tribal agreements represent that
any arbitration will be conducted pursuant to tribal
rules and law:
* * * * *
It is [Dillon’s] position that tribal laws and rules
relating to arbitration and consumer debt disputes do not
exist and that therefore, the arbitral forums provided
for in the tribal agreements are unavailable. See, e.g.,
Jackson (“[p]laintiffs could not have ascertained or
understood the arbitration procedure to which they were
agreeing because it did not exist.” 764 F.3d at 781;
Inetianbor v. CashCall, Inc., 768 F.3d 1346, 1354 (11th
Cir. 2014) cert. denied, 135 S. Ct. 1735 (2015)
(“Finally, the fact that the arbitration clause calls for
the arbitration to be conducted according to consumer
dispute resolution rules that do not exist supports the
conclusion that the Tribe is not involved in private
arbitrations.”).
Nevertheless, at least two district
courts have required an individual showing by the
plaintiff of the tribal laws and rules’ non-existence
even post-Jackson and Inetianbor, see, Chitoff v.
CashCall, Inc., No. 0:14-CV-60292, 2014 WL 6603987, at *1
(S.D. Fla. Nov. 17, 2014) (“Plaintiff has attempted to
rely upon citations to other cases where the forum has
been found to be unavailable in lieu of providing his own
evidence. The Court therefore finds that Plaintiff has
failed to meet his evidentiary burden to prove that the
arbitration forum is unavailable or otherwise invalid”);
Brown, supra, 2015 WL 413774, at *11 (“Plaintiffs in the
present action have not attempted to actually arbitrate
or file any action in a CRST court”). Consequently, Mr.
Dillon has no choice but to seek discovery on this issue.
Again, discovery could be avoided if Defendants were
prepared to stipulate that there is no tribal law or
rules specifically applicable to payday loans or the
conduct of arbitrations.
17
* * * * *
Finally, because all movants are seeking to enforce
arbitration agreements as non-signatories under theories
of equitable estoppel, third-party beneficiary and agency
theories, it is [Dillon’s] position that pre-arbitration
discovery is required as to the circumstances and facts
of the relationships between Defendants and the payday
lenders and/or the payday lenders’ third-party senders.
See, e.g., Pearson v. Gardere Wynne Sewell LLP, 814 F.
Supp. 2d 592, 601 (M.D.N.C. 2011) (for plaintiff to
assert a claim based on the third-party beneficiary of
contract doctrine “[i]t is not enough that the contract,
in fact, benefits the plaintiff, if, when the contract
was made, the contracting parties did not intend it to
benefit the plaintiff directly”); Indem. Ins. Co. of N.
Am. v. Am. Eurocopter LLC, No. 1:03CV949, 2005 WL
1610653, at *8 (M.D.N.C. July 8, 2005) (“[u]nless there
is but one inference that can be drawn from the facts,
whether an agency relationship exists is a question of
fact for the jury.”).
(Docket Entry 162-2 at 2, 4-7.)
The parties’ joint motion to
permit arbitration-related discovery confirms Dillon’s arbitrationdiscovery approach.
(Docket Entry 157 at 2 (“After reviewing
Defendants’ renewed motions, [Dillon] wishes to take discovery from
Defendants
and
certain
third
parties
oppositions to those renewed motions.
in
order
to
prepare
In [Dillon’s] view, the
anticipated discovery would allow him to challenge the formation
and enforceability of the arbitration agreements at issue and
Defendants’ right to invoke those agreements.”).)
As relevant for the Motions to Compel, Bay Cities objects to
certain Requests as seeking (i) information protected by the common
interest privilege (BCRFPs 6, 7, 9-12) and/or improper merits
discovery (BCRFPs 9, 10, 15).
(See, e.g., Docket Entry 165 at 10,
18
17-18.)
Generations likewise objects to the Requests as seeking
protected privileged information and irrelevant materials.
e.g., Docket Entry 166-1 at 57.)
variety of general objections.
(See,
Generations also asserts a
(Id. at 54-55.)
The Court will
begin its analysis of the Motions to Compel with the Bay Cities
Motion
and
will
then
resolve
any
remaining
issues
from
the
Generations Motion.9
A.
Common Interest Privilege
Defendants have withheld certain documents on the basis of
privilege, including the common interest privilege.
165 at 10, 16-20; Docket Entry 166 at 16-17.)
Dillon has countered
that the common interest privilege does not apply.
162 at 12; Docket Entry 164 at 5-10.)
(Docket Entry
(Docket Entry
Bay Cities and Generations
have asserted the common interest privilege in connection with
entities identified in the Complaint as their respective RICO
coconspirators.
(See Docket Entry 165 at 20; Docket Entry 166 at
17.) According to Generations, “the only documents withheld on the
basis of the common interest privilege are communications between
9 The briefing reflects that the parties have entered into a
confidentiality order and that Defendants have ceased withholding
information on the basis of confidentiality. (See, e.g., Docket
Entry 162 at 10 n.4; Docket Entry 166 at 14.) Accordingly, the
Court
will
not
address
the
confidentiality
objections.
Additionally, Generations has withdrawn its harassment objections
(see, e.g., Docket Entry 166-1 at 55; cf. Docket Entry 162 at 9),
and Bay Cities has committed to producing all materials responsive
to Request 17 (Docket Entry 164-1 at 20-21), so the Court will not
address those matters.
19
counsel for Generations and counsel for Western Sky and/or Cash
Call.”
(Docket Entry 166 at 17.)
Bay Cities similarly confirmed
that the only documents it has withheld on this basis are (i) legal
memoranda
agreements
regarding
and
nonsignatory
sovereign
enforcement
immunity;
(ii)
of
drafts
arbitration
of
the
Muir
Declaration; and (iii) associated email communications between Bay
Cities’ counsel and MNE Services’ counsel.
(Docket Entry 165 at
17-18.)
In light of the foregoing considerations, Defendants have made
a prima facie showing that the common interest privilege applies to
the withheld materials.
First, the identified documents appear to
merit work product protection.
495, 510-11 (1947).
entities
involved
See Hickman v. Taylor, 329 U.S.
Second, Dillon’s Complaint names the other
in
these
transmissions
as
Defendants’
coconspirators in a RICO scheme to collect unlawful debts. (Docket
Entry 1 at 30-31, 33-34, 51-65.)
Third, as entities with a shared
interest in compelling the arbitration of these RICO claims,
Defendants and their alleged coconspirators appear to fit within
the common interest rubric.
See In re Grand Jury Subpoenas, 89-3
& 89-4, 902 F.2d at 248-49.
Accordingly, the Court will not grant
Dillon’s request to overrule Defendants’ common interest privilege
assertions at this time.
Nevertheless, Defendants must produce within five business
days a privilege log for all documents withheld on the basis of the
20
common interest protection.10
If, after reviewing those privilege
logs, Dillon believes that specific withheld items do not qualify
for protection, he may present a particularized challenge.
B.
Alleged Merits Discovery
1.
Tribal Sovereignty
Defendants object to the Request seeking tribal sovereign
immunity materials.
(Docket Entry 164-1 at 15-16 (BCRFP 10);
Docket Entry 166-1 at 61 (GRFP 16).)
Bay Cities objects to this
Request primarily on the basis that Bay Cities has not asserted any
tribal immunity defense and neither Dillon nor Bay Cities is
“asserting that this action is subject to the jurisdiction of a
tribal court.”
14-15.)
(Docket Entry 164-1 at 15; see Docket Entry 165 at
Generations’ objection to this Request appears to center
on the idea that only tribal sovereign immunity materials regarding
arbitration are relevant.
(Docket Entry 166 at 26-27.)
Bay Cities’ position is understandable, as a lawsuit against
non-Indian banks based on their withdrawal of money from a nonIndian North Carolinian’s bank account in North Carolina evidently
10 Because the parties have been negotiating regarding the
privilege log specifications, the Court does not find that
Defendants waived their privilege claims by failing to produce a
privilege log to date.
If the parties have not yet agreed on
privilege log parameters, Defendants will need to produce a log in
conformity with Federal Rule of Civil Procedure 26(b)(5)(A) for
withheld materials.
To the extent the Requests’ instructions
purport to require greater detail in the privilege log than Rule
26(b)(5)(A) imposes, Defendants need not comply with those
instructions.
21
cannot create a colorable claim of tribal jurisdiction. See, e.g.,
Jackson, 764 F.3d at 781-82; see also id. at 783 (“[A] tribal
court’s
concerns
authority
its
to
subject
adjudicate
matter
claims
involving
jurisdiction,
nonmembers
not
personal
jurisdiction. Therefore, a nonmember’s consent to tribal authority
is not sufficient to establish the jurisdiction of a tribal court.”
(internal citations omitted)).
This position has even more force
when considered in the context of Plains Commerce Bank, where even
on-reservation
conduct
failed
to
trigger
the
first
Montana
exception. See Plains Commerce Bank, 554 U.S. at 345-46 (Ginsburg,
J., dissenting) (“The discrimination claim here at issue rests on
the allegedly unfair conditions the Bank exacted from the Longs
when they sought loans to sustain the operation of their ranch.
. . . Negotiating sessions for these arrangements were held at the
Tribe’s on-reservation offices and were facilitated by tribal
officers and [Bureau of Indian Affairs] employees.
. . .
Their
claim, all courts prior to this one found, fit within the [first]
Montana exception . . . .”).
Nevertheless,
Generations
raised
the
issue
of
tribal
jurisdiction and the tribal exhaustion doctrine in its renewed
motion to dismiss.
(Docket Entry 153 at 16 & n.8.)
Moreover,
Dillon has challenged the arbitration provisions on the ground that
they purport to confer jurisdiction on tribal courts that lack
jurisdiction over him as a nonmember. (See, e.g., Docket Entry 162
22
at 19; Docket Entry 162-2 at 2, 4.)
District
has
found
such
At least one judge in this
challenges
to
the
subject
matter
jurisdiction of a tribal court sufficient (in the absence of other
countervailing evidence) to trigger the tribal exhaustion doctrine.
See Brown, 84 F. Supp. 3d at 478-81.
As Bay Cities tacitly agrees, tribal sovereign immunity and
tribal jurisdiction are interrelated concepts.
(See Docket Entry
164-1 at 15 (objecting to tribal sovereign immunity Request on
basis “that MNE Services is not a party to this lawsuit, and that
neither Bay Cities nor Plaintiff are asserting that this action is
subject to the jurisdiction of a tribal court”).) Moreover, tribal
sovereign immunity information may bear on the existence of a
colorable
claim
of
tribal
jurisdiction.
For
instance,
such
information could help inform the analysis of whether any of the
purported
tribal
payday
lenders
qualif[y] as a [tribal] member.”
see
also
Cooper,
defendants’
2015
WL
contention
that
or
Defendants
can
“somehow
Heldt, 12 F. Supp. 3d at 1184;
5091229,
at
sovereign
*7
(noting
immunity
nontribal
protects
them
because they “‘stand in the shoes’ of [the tribal payday lender]”).
In light of Brown and Heldt, the Court will permit the
requested discovery to enable the development of a factual record
upon
which
to
evaluate
whether
a
colorable
claim
of
tribal
jurisdiction exists.
See, e.g., Toppings v. Meritech Mortg.
Servs.,
Supp.
Inc.,
140
F.
2d
23
683,
685
(S.D.
W.
Va.
2001)
(permitting factual development on party’s challenges to arbitral
forum so court can “discharge its obligation to assure there is a
valid arbitration agreement”); see also Moses, 781 F.3d at 87
(Gregory, J., concurring) (acknowledging “the 800-pound gorilla
lurking in the litigation, namely, the enforceability of the
arbitration agreement itself,” but rejecting party’s new appellate
contention “that the tribal arbitration provisions specified in the
agreement are illusory” on the basis that, inter alia, the lower
“courts did not make any relevant factual findings about the nature
of
the
loan
agreement
or
its
arbitration
provisions,”
and
“[w]ithout . . . a more developed record, we simply cannot reach
the enforceability of the agreement”); id. at 94 (Davis, J.,
concurring in the judgment in part and dissenting in part) (“[T]his
case does not call upon us to determine whether Moses’s arbitration
agreement is unenforceable on its face. Because Moses never raised
this issue in the proceedings below, we lack any factual record
upon which to make such a ruling.
I note that nothing contained in
this opinion would impair Moses’s ability to raise the issue of
unconscionability . . . upon further proceedings in any action
against CashCall.”).11 Accordingly, the Court overrules Defendants’
11
Under North Carolina law, a party asserting an
unconscionability challenge to a contract must prove procedural and
substantive unsconscionability, which operate on “more of a sliding
scale than a true dichotomy.” U.S. ex rel. TGK Enters., Inc. v.
Clayco, Inc., 978 F. Supp. 2d 540, 544 (E.D.N.C. 2013).
“Procedural unconscionability involves bargaining naughtiness” and
(continued...)
24
relevance objections to the tribal sovereign immunity Requests.
Defendants must produce all responsive, nonprivileged materials for
BCRFP 10 and GRFP 16 within five business days and must provide
within the same period a privilege log for any materials withheld
on the basis of privilege.
2.
Other Litigation
Bay Cities and Generations next object to the class action
lawsuit Requests (i.e., BCRFPs 8, 9; GRFP 7) as seeking merits
discovery irrelevant to the arbitration proceedings at issue. (See
Docket Entry 164-1 at 13-14; Docket Entry 166 at 20; Docket Entry
166-1 at 57-58.)
theory
that
Dillon attempts to justify these Requests on the
this
discovery
might
uncover
other
arbitration
agreements that courts have refused to enforce. (See, e.g., Docket
Entry 164 at 12.)
documents
Dillon has propounded separate Requests for
“relating
to
arbitration
and/or
the
arbitration
procedures in [the relevant] consumer loan agreements.”
(Docket
Entry 164-1 at 11-12 (BCRFPs 6, 7); Docket Entry 166-1 at 56 (GRFP
5).)
Given the arbitration-specific Requests, the Court deems the
class action Requests improper at this stage of the litigation.
Thus, the Court upholds Defendants’ relevance objections to the
class action Requests.
11(...continued)
substantive unconscionability
oppressive contract terms.”
quotation marks omitted).
involves “harsh, one-sided, and
Id. (alterations and internal
25
Finally,
Bay
Cities
objects
to
BCRFP
15,
which
seeks
information regarding “MNE Services’ litigation or settlement with
the Federal Trade Commission as a result of deceptive lending
practices.”
(Docket Entry 164-1 at 18.)
Dillon defends the
relevance of this discovery on the theory that, pursuant to a
stipulated
permanent
injunction,
“MNE
Services
is
no
longer
permitted to collect on existing loans” and thus “can no longer
legally enforce its contract against [Dillon, so] neither can a
non-signatory such as Bay Cities.”
Docket Entry 164-5.)
(Docket Entry 164 at 15; see
In response, Bay Cities disputes the effect
of the order on the arbitration agreements, states that it has no
documents responsive to this Request, and reiterates its objection
that this Request seeks irrelevant merits discovery. (Docket Entry
165
at
13,
16.)
Setting
aside
the
correctness
of
Dillon’s
interpretation of this order, the Court notes that this contention
rests entirely upon the terms of a stipulated protective order
already in Dillon’s possession.
As such, the Court concludes that
the
(the
Federal
Trade
Commission
“FTC”)
litigation
Request
constitutes merits discovery, and upholds Bay Cities’ relevance
objections to this Request.
C.
Generations’ Overarching Objections
Having addressed Bay Cities’ at-issue Requests, the Court
turns to Generations’ remaining objections.
The Court begins this
analysis with Generations’ overarching objections.
26
1.
General Approach
Generations proffers a series of general objections, makes all
productions “[s]ubject to [its] objections,” and qualifies many of
its responses with the caveat that it will produce “reasonably
responsive” materials. (See, e.g., Docket Entry 166-1 at 54-55, 57
(emphasis
added).)
Objections
must
particularized
None
be
stated
facts.
See
of
these
with
actions
is
specificity
Kinetic,
268
acceptable.
and
F.R.D.
at
based
241,
on
247.
Moreover, courts have long rejected responses made “subject to”
objections
and/or
with
unilaterally
determined
responsiveness
qualifiers, as such responses “serve[] only to obscure potentially
discoverable information and provide[] no mechanism for either
[opposing parties] or the Court to review [the responding party’s]
decisions.”
Id. at 248 (internal quotation marks omitted).
Thus,
with the exception of general objection four,12 the Court strikes
all
general
objections,
as
well
as
all
of
the
“subject
to
Generations’ objections” and “reasonably responsive” qualifiers in
Generations’ Amended Responses.
Accordingly, Generations must
produce all nonprivileged responsive materials for each extant
Request for which Generations did not lodge a specific objection;
12
General objection four concerns the privilege log
requirements specified in instruction 11 of the Requests. (See
Docket Entry 166-1 at 54 (“Generations objects to Instruction 11 to
the extent it seeks to impose burdens on Generations beyond those
required by Federal Rule of Civil Procedure 26(b)(5).”); Docket
Entry 166 at 9-11 (discussing instruction 11).)
27
Generations must also produce a privilege log for any materials
withheld on the basis of privilege.13
2.
Time and Person Objections
Generations objects to the majority of Requests as lacking a
limit to Dillon’s arbitration agreement and the time period since
Dillon obtained his Western Sky loan. (See, e.g., Docket Entry 166
at 12-14; Docket Entry 166-1 at 55-56.)
Dillon seeks to oppose
Generations’ dismissal motion on the grounds, inter alia, that the
arbitration procedure specified in the Western Sky agreement does
not exist.
(Docket Entry 162 at 1-2; Docket Entry 162-2 at 6.)
Because Dillon challenges the existence of the arbitral forum,
information predating his loan agreement and information about
arbitration proceedings for individuals other than Dillon may
inform his opposition to the arbitration clause’s enforcement.
Accordingly, the Court overrules these relevancy objections.
D.
Relational Discovery
Generations objects to the first two Requests, which seek
various “Origination Agreements,” on the grounds that they “seek[]
documents unrelated to the arbitration clause at issue before the
Court.”
(Docket Entry 166-1 at 55-56.)14
These Origination
13 Dillon withdrew GRFPs 10 and 14 (Docket Entry 162 at 4),
so Generations does not need to produce any materials in response
to those Requests.
14
Generations makes this relevance objection to most
Requests, but provides only conclusory support in its opposition
(continued...)
28
Agreements are relevant to the relationship between Generations and
other alleged actors in the RICO scheme, including Western Sky and
CashCall.
As such, they are relevant to Generations’ ability to
enforce the Western Sky arbitration clause and to invoke tribal
exhaustion.
The Court overrules these relevance objections to
GRFPs 1 and 2.
Generations also objects to GRFPs 3 and 4, which solicit
documents underlying Generations’ claimed entitlement to enforce
the Western Sky arbitration provision. (Docket Entry 166-1 at 56.)
Primarily, Generations contends that these Requests seek attorney
work product by requesting documents Generations’ attorneys believe
support its “third-party beneficiary” and “servicer” arguments.
(Id.; see also Docket Entry 166 at 14-15.)
Generations represents
to the Court, however, that it relies only on the Complaint and
Dillon’s Western Sky agreement in support of these contentions.
(Docket Entry 166 at 14-15 (“Because Generations bases the argument
solely on the terms of [Dillon’s] Complaint and loan agreement, and
because those documents have been produced, no additional documents
exist.”).)
As such, Generations should have no qualms about
14(...continued)
papers. Generations generally asserts, without elaboration, either
that “Generations is not required to produce documents relating to
[the Requests] outside of how they relate to arbitration between
Generations and [Dillon]” or that “Documents without reference to
the Arbitration Provisions would be irrelevant due to the fact that
the only discovery allowed presently is arbitration-related
discovery.” (Docket Entry 166 at 21, 26.)
29
producing any documents responsive to these Requests.
Therefore,
the Court orders Generations to produce any nonprivileged documents
on which it relies for its “servicer” and “third-party beneficiary”
arguments and to provide a privilege log for any materials it
withholds on the basis of privilege.
E.
Relevancy Objections
Generations objects to all remaining Requests except for GRFP
9 on the basis that they seek information “unrelated to the
arbitration clause at issue before the Court.” These Requests fall
into two categories, which the Court addresses in turn.
1.
Arbitrational and Jurisdictional Discovery
The first category encompasses GRFPs 5, 6, 11, 12, 13, 17, and
18.
For the same reasons that Generations’ time, person, and
tribal
sovereign
objections
for
immunity
these
objections
Requests
fail.
failed,
In
the
its
relevance
absence
of
a
meaningfully developed opposition, the Court will not belabor this
analysis.
Suffice to say, the information sought in GRFPs 5, 6,
11, 12, 13, 17, and 18 is relevant to the existence and contours of
any arbitration under the Western Sky agreement, the existence of
tribal jurisdiction, and/or the propriety of tribal exhaustion.
The Court thus overrules Generations’ relevance objections to GRFPs
5, 6, 11, 12, 13, 17, and 18.
Generations must produce any
nonprivileged materials responsive to GRFPs 5, 6, 12, 13, 17, and
18.
Because Dillon and Generations apparently agree that GRFP 11
30
should be limited to documents relating to arbitration, however,
the Court narrows GRFP 11 accordingly and orders Generations to
produce any nonprivileged materials relating to the Indian Commerce
Clause
in
“the
context
of
[Western Sky] agreement.”
16.)
arbitration
proceedings
under
the
(Docket Entry 162 at 16; see id. at 15-
Generations should also produce a privilege log for any
materials withheld on the basis of privilege for these Requests.
2.
General Dillon, CashCall, and Kohles Materials
By contrast, Generations’ relevance objections to GRFP 8 and
GRFP 15 are well-founded.
GRFP 8 seeks all documents relating to
Dillon or his loan agreement and GRFP 15 seeks all documents
relating to CashCall or Jean Kohles.
Requests
are
effectively
relevant
addressed
to
in
To the extent that these
the
arbitration
other
Requests.
dispute,
they
are
Specifically,
any
relevant materials for GRFP 8 would be responsive to GRFPs 3-6, 9,
11-12, and 17-18, and any relevant materials for GRFP 15 would be
covered by GRFPs 1-2, 9, 11, and 16-18.
Therefore, the Court will
not order Generations to produce materials in response to GRFPs 8
and 15.
Finally, Generations responded to GRFP 9 as follows: “Subject
to Generations’ objections, and without waiver of same, no nonprivileged documents exist.”
(Docket Entry 166-1 at 58.)
The
Court accepts Generations’ implicit privilege objection and orders
31
Generations to produce a privilege log for all materials withheld
on the basis of privilege in response to GRFP 9.
III.
Expense-Shifting
Federal Rule of Civil Procedure 37(a)(5)(C) provides that the
Court may apportion expenses when a motion to compel is granted in
part and denied in part, as happened here.
Neither Dillon nor
Defendants has asked the Court to shift expenses on the Motions to
Compel.
Accordingly, particularly given that the parties had
substantial
justification
for
their
substantive
positions and
diligently attempted to reconcile their discovery differences in a
compressed time period, the Court declines to award expenses on the
Motions to Compel.
CONCLUSION
Defendants have made a prima facie showing in support of their
common interest privilege contentions, but must produce a privilege
log
for
all
materials
withheld
on
the
basis
of
privilege.
Generations’ general objections and its qualified promises of
production are improper.
four,
Generations’
objections”
With the exception of general objection
general
qualifier,
and
objections,
“reasonably”
stricken from its Amended Responses.
“subject
responsive
to
[its]
caveat
are
Moreover, because Dillon has
challenged the existence of the arbitral forum, Generations’ time
and person objections cannot stand.
Because they seek merits
discovery, however, Requests relating to class action lawsuits, FTC
32
litigation,
improper.
and
Dillon,
Kohles,
and
CashCall
generally
are
The remaining disputed Requests are relevant to the
making and performance of the arbitration agreements and/or the
applicability of a federal abstention doctrine.
IT IS THEREFORE ORDERED that Dillon’s Bay Cities Motion
(Docket Entry 163) and Generations Motion (Docket Entry 161) are
GRANTED IN PART and DENIED IN PART as follows:
on or before
November 6, 2015, with the sole exception of materials withheld on
the basis of privilege as identified on the privilege logs detailed
below (i) Bay Cities must produce all materials responsive to BCRFP
10; (ii) Generations must produce all materials responsive to GRFPs
1, 2, 5, 6, 9, 12, 13, 16, 17, 18; (iii) Generations must produce
all materials on which it relies for its “third-party beneficiary”
and “servicer” arguments, as specified in GRFPs 3 and 4; and (iv)
Generations must produce all materials related to arbitration
responsive to GRFP 11.
IT IS FURTHER ORDERED that, on or before November 6, 2015, Bay
Cities and Generations must each serve on Dillon a privilege log
specifying any documents withheld on the basis of privilege,
including
explicitly
the
common
identify
interest privilege.
interest
any
privilege.
documents
withheld
Defendants
under
the
must
common
Dillon may renew his challenge to Defendants’
33
common interest privilege assertions if he has a good-faith basis
for doing so after reviewing the privilege logs.
October 30, 2015
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
34
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