Coleman et al v. Weyerhaeuser Company

Filing 9

OPINION and ORDER granting 1 Motion to Compel. Signed by Magistrate Judge Chelsey M. Vascura on 7/27/2018. (daf)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

JAMAL COLEMAN, et al.,
Movants,
Civil Action 2:18-mc-31
Judge George C. Smith
Magistrate Judge Chelsey M. Vascura

v.

WESTPORT HOMES, INC.,
Respondent.

OPINION AND ORDER
In this miscellaneous action, Movants, Jamal Coleman and Sheena Coleman
(“Movants”), seek an Order compelling Respondent, Westport Homes, Inc. (“Westport”), to
produce documents in response to a November 29, 2017 subpoena (ECF No. 1-3) (the
“Subpoena”) issued in the underlying action, Jamal Coleman, et al. v. Weyerhaeuser Company,
Case No. 1:17-cv-01093-VAC-SRF, pending in the United States District Court for the District
of Delaware (the “Underlying Action”). As the Court for the district where compliance with the
Subpoena is required, this Court has jurisdiction over the dispute pursuant to Fed. R. Civ. P.
45(d)(2)(B)(i). This matter is before the Court for consideration of Movants’ Motion to Compel
Production of Documents (ECF No. 1), Westport’s Opposition thereto (ECF No. 5), and
Movants’ Reply (ECF No. 7). For the reasons that follow, Movants’ Motion is GRANTED, as
set forth herein.

I.
On August 4, 2017, Movants initiated the Underlying Action by filing a class action
complaint against Weyerhaeuser Company (“Weyerhaeuser”). Weyerhaeuser produces and sells
joists for installation in homes and other structures. Movants allege that Weyerhaeuser produced
and sold TJI Joists with Flak Jacket Protection (the “Joists”), a proprietary, factory-applied
coating designed to enhance the Joists’ fire resistance. Movants further allege that that the Joists
are defective because the Flak Jacket Protection emits toxic formaldehyde fumes to extents that
render the homes uninhabitable. According to Movants, the defective Joists affected thousands
of homes around the country. Movants assert claims against Weyerhaeuser in the Underlying
Action for breach of express warranty, breach of implied warranty, violations of the MagnusonMoss Warranty Act (15 U.S.C. § 2301, et seq.), negligence, failure to warn, violations of the
Delaware Consumer Fraud Act (Del. Code Ann. Tit. 6, § 2511, et seq.), and unjust enrichment,
and they further seek relief under the Declaratory Judgment Act (28 U.S.C. § 2201, et seq.).
Movants contend that they have identified at least thirty-five (35) builders who were
involved in the construction of new homes affected by the defective Joists, including Westport.
According to Movants, Westport built and sold approximately 100 new homes containing the
defective Joists. As such, Movants contend that Westport uniquely possesses relevant and
discoverable information concerning the impact the Joists had on home value and marketability,
as well as identifying information regarding class members.
Movants served Westport with the Subpoena on November 29, 2017, requesting
production of 18 categories of documents. (ECF No. 1-3.) Following Westport’s objections and
various meet-and-confer efforts, the parties were able to reach agreement with respect to 10 out
of the 18 categories of documents, whether through Westport’s production of documents or
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Movants’ agreement to forego certain requests. In briefing related to the instant dispute,
Movants agreed to forego their request for an additional four categories of documents (see
Movant’s Reply 5 n.2, ECF No. 7, wherein Movants abandon their request to compel categories
5 through 8 set forth in their Motion), leaving this Court to resolve the parties’ dispute over
whether Westport must produce the following remaining four categories of documents:
1. All documents related to diminution in value of homes due to the
defective Joists;
2. Purchase and sale agreements for all homes in the same development
as affected homes, along with document sufficient to determine which
homes have similar layouts or features and which homes did or did not
have the Joists;
3. Documents sufficient to show how long homes with defective Joist
remained on the market in comparison with homes that did not have
defective Joists; and
4. All disclosures to buyers and realtors regarding the defective Joists,
formaldehyde, or remediation, as well as all related communications.
Movants maintain that the foregoing documents are relevant to the Underlying Action to
determine how the Joists affected the value and marketability of homes containing the Joists.
Westport counters that as a custom home builder it does not possess many of the
documents Movants request, and insists that the remaining documents are irrelevant to the
Underlying Action. Specifically, Westport contends that of the homes it built using the Joists
(the “Affected Homes”), the sale on only five fell through because of the defective Joists (the
“Five Failed Closing Homes”). Westport maintains that the Joists had no effect on the value or
marketability of the remaining Affected Homes, as those homes either were already occupied at
the time the defect in the Joists was discovered or sales closed on the homes despite the defect.
Thus, Westport maintains, the only documents it possesses that could be relevant to the
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Underlying Action are purchase and sales documents related to the Five Failed Closing Homes,
and it has already produced those documents, albeit in redacted form.
In addition, Westport argues that as a custom home builder, the majority of the homes it
constructs are built for a specific buyer, not as inventory homes to place on the market, such that
it has no relevant information concerning how long Affected Homes remained on the market.
Westport acknowledges that it constructs a small number of inventory homes (the “Select
Inventory Homes”), but maintains that only four of its Select Inventory Homes contained
defective Joists, and the Joists had no effect on the price or marketability of those homes. Thus,
documents related to its Select Inventory Homes are irrelevant, according to Westport. The
Court considers the parties’ arguments in the context of each category of documents below.
II.
Rule 45 of the Federal Rules of Civil Procedure governs third-party subpoenas. Fed. R.
Civ. P. 45. Rule 45 permits parties in legal proceedings to command a non-party to attend a
deposition, produce documents, and/or permit inspection of premises. Fed. R. Civ. P. 45(a)(1).
The Rule provides that the person commanded to produce documents may serve an objection on
the party or attorney designated in the subpoena within the earlier of fourteen days after the
subpoena is served or the time specified for compliance. Fed. R. Civ. P. 45(d)(2)(B). If the
commanded person objects, as Westport does here, “the serving party may move the court for the
district where compliance is required for an order compelling production.” Fed. R. Civ. P.
45(d)(2)(B)(i).
Determining the scope of discovery is within the Court’s discretion. Bush v. Dictaphone
Corp., 161 F.3d 363, 367 (6th Cir. 1998). As the United States Court of Appeals for the Sixth
Circuit has recognized, “[t]he scope of discovery under the Federal Rules of Civil Procedure is
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traditionally quite broad.” Lewis v. ACB Bus. Serv., Inc., 135 F.3d 389, 402 (6th Cir.
1998). Federal Rule of Civil Procedure 26(b)(1), which sets forth the permissible scope of
discovery, provides as follows:
(1) Scope in General. Unless otherwise limited by court order, the scope of
discovery is as follows: Parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party’s claim or defense and
proportional to the needs of the case, considering the importance of the issues
at stake in the action, the amount in controversy, the parties’ relative access to
relevant information, the parties’ resources, the importance of the discovery in
resolving the issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit. Information within this scope of
discovery need not be admissible in evidence to be discoverable.
Fed. R. Civ. P. 26(b)(1).
“[T]he proponent of a motion to compel discovery bears the initial burden of proving that
the information sought is relevant.” Guinn v. Mount Carmel Health Sys., No. 2:09-cv-226, 2010
WL 2927254, at *5 (S.D. Ohio July 23, 2010) (Kemp, J.) (quoting Clumm v. Manes, No. 2:08–
cv–567, 2010 WL 2161890 (S.D. Ohio May 27, 2010) (King, J.)); see also Berryman v.
Supervalu Holdings, Inc., No. 3:05-cv-169, 2008 WL 4934007, at *9 (S.D. Ohio Nov. 18, 2008)
(“At least when the relevance of a discovery request has been challenged the burden is on the
requester to show the relevance of the requested information.” (internal citation omitted)).
Rule 45 further provides that “the court for the district where compliance is required must
quash or modify a subpoena that . . . requires disclosure of privileged or other protected matter . .
. or subjects a person to undue burden.” Taylor v. Universal Auto Grp. I, Inc., No. 14-MC-50,
2015 WL 1810316, at *4 (S.D. Ohio April 17, 2015) (citing Fed. R. Civ. P. 45(d)(3)(A)(iii),(iv)).
“In determining whether a subpoena imposes an undue burden, a court considers ‘such factors as
relevance, the need of the [requesting] party for the documents, the breadth of the document
request, the time period covered by it, the particularity with which the documents are described
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and the burden imposed.’” Kacmarik v. Mitchell, No. 1:15CV2062, 2017 WL 131582, at *4
(N.D. Ohio Jan. 13, 2017) (quoting Hogan v. Cleveland Ave. Rest., Inc., No. 2:15-cv-2883, 2016
WL 7467968 at *2 (S.D. Ohio Dec. 28, 2016) (citing Am. Elec. Power Co. v. United States, 191
F.R.D. 132, 136 (S.D. Ohio 1999)). Ultimately, “[c]ourts must balance the need for discovery
against the burden imposed on the person ordered to produce documents, and the status of that
person as a non-party is a factor.” In re: Modern Plastics Corp., No. 17-2256, 2018 WL
1959536, at *4 (6th Cir. Apr. 26, 2018) (citations and quotations omitted).
III.
Applying the foregoing standards here, the Court finds Movant’s Motion to be well
taken. The Court considers each of the four categories of requested documents below.
A. Diminution in Home Value
In the first category, Movants seek to compel all documents related to diminution in
value of homes due to the defective Joists, pursuant to Request No. 17 of the Subpoena.
Movants maintain that the requested documents are relevant to ascertaining damages. Although
Movants acknowledge that Westport has produced redacted versions of the original and final
purchase agreements for the Five Failed Closing Homes, they contend that the redactions conceal
relevant information, including whether various components of the sales price or the inclusion of
custom options changed after the defect in the Joists was disclosed. Westport has produced no
documents related to the remaining Affected Homes, including the Select Inventory Homes. The
final purchase contracts for the remaining Affected Homes contain the arbitration clause that
applies to each class member, which Movants contend is relevant to determining whether each
class member must arbitrate their claims, as Weyerhaeuser has apparently alleged in the
Underlying Action.
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Westport responds that purchase and sales documents for Affected Homes beyond just
the Five Failed Closing Homes lack relevance. Specifically, according to Westport, only the
Five Failed Closing Homes could have suffered diminution in value due to the defective Joists
given that the remaining Affected Homes were either already occupied when the defect was
discovered or the sales went through despite the defect. In support of its redaction of
information relating to custom options, Westport submits that (1) the redaction was necessary to
prevent its competitors from acquiring proprietary information about what it charges for custom
options and (2) that the redacted information is irrelevant to diminution in value. With respect to
its concerns about its proprietary information, Westport acknowledges the existence of a
stipulated protective order in the Underlying Action, but nevertheless questions Movants’ “intent
of the use” of its proprietary information, pointing out that Movants have subpoenaed thirty-four
(34) of Westport’s competitors and “could potentially further involve them in the litigation.”
(Westport Op. 8, ECF No. 5.) Finally, Westport contends that because the arbitration clause
contained in the documents related to the Five Failed Closing Homes is the same clause found in
purchase contracts for the remaining Affected Homes, the purchase documents for the remaining
Affected Homes are not relevant to a determination of whether each class member may be
compelled to arbitration.
The Court concludes that the requested documents are relevant and discoverable. First,
the information that Westport redacted from the small handful of documents it has produced is
relevant to determining whether prices for or the inclusion of custom options changed after the
defect in the Joists was disclosed to the homebuyer, which could reflect changes in home value
and affect Movants’ damages analysis. The early and final drafts of purchase contracts related to
the remaining Affected Homes are equally relevant, particularly with respect to sales that closed
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after the defect in the Joists was disclosed, as Westport could have modified the price for or
inclusion of custom options to offset any diminution in value caused by the defect. In addition,
purchase data for homes already occupied when the defect was disclosed could be compared
with data for Affected Homes that sold after disclosure to help determine any effect on home
value. The purchase contracts for all Affected Homes are also relevant to Weyerhaeuser’s
defense that some or all class members must arbitrate their claims. Although Westport may use
the same arbitration provision in its form purchase agreements, the buyer could have modified
the language before signing. Movants are entitled to the precise arbitration provision that
governs each class member’s claim; that is, they are not required to accept Westport’s
representation that the provision remained unchanged.
The Court is unpersuaded by Westport’s argument that the Stipulated Protective Order in
the Underlying Action is insufficient to protect against the improper use or disclosure of its
proprietary information and trade secrets. Westport fails to articulate how the Stipulated
Protective Order is purportedly inadequate. See, e.g., McNaughton-McKay, Elec. Co. v. Linamar
Corp., No. 09-CV-11165, 2010 WL 2560047, at *10 (E.D. Mich. June 14, 2010) (declining to
quash Rule 45 subpoena despite argument that “the documents may reveal trade secret or other
confidential information” because “the allegation of harm is speculative and lacks specificity and
there is already a stipulated protective order in place which contemplates the designation of
‘confidential’ to documents produced by a non-party”). Moreover, the Court’s review of the
Stipulated Protective Order reveals that it includes a provision under which non-parties like
Westport can designate documents as “Confidential Information” or “Highly Confidential –
Attorney Eyes Only.” (See United States District Court for the District of Delaware Case No.
1:17-cv-1093, ECF No. 17 at 4-5.) Further, Movants have indicated a willingness to work with
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Westport to ensure Westport’s documents are designated appropriately such that they are
adequately protected. (Movants’ Reply 3, ECF No. 7.)
Accordingly, the parties are DIRECTED to meet and confer to reach agreement as to the
protection of Westport’s proprietary and trade secret information, consistent with the terms of the
Stipulated Protective Order in the Underlying Action. The Court expects that the parties will be
able to reach agreement using the confidentiality designations provided in the Stipulated
Protective Order. Once agreement is reached, Westport is ORDERED to produce all documents
related to the diminution in value of homes due to the defective Joists, including unredacted
versions of the documents it has already produced relating to the Five Failed Closing Homes, as
well as unredacted early and final purchase and sales documents related to all remaining
Affected Homes.
B. Homes in the Same Developments as Affected Homes
Movants next seek to compel purchase contracts for homes in the same developments as
any affected home, along with documents sufficient to determine which of these unaffected
homes have layouts or features similar to the Affected Homes and which homes have have
defective Joists, pursuant to Request No. 16 of the Subpoena. According to Movants, these
documents are relevant and necessary for their experts to assess damages related to diminution in
value and decreased marketability of the Affected Homes, as well as to identify putative class
members.
Westport maintains that this category is overly broad because it includes documents
related not just to homes that contained defective Joists, but homes that did not contain defective
Joists that are located in a development with an Affected Home. Westport further maintains that
the requested documents are irrelevant, pointing out that purchase agreements for unaffected
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homes will not identify putative class members. Moreover, Westport insists that the documents
“would not provide any information related to diminution or decreased marketability” because
these custom homes were designed especially for each owner and thus “did not sit on the
market.” (Westport Op. 9, ECF No. 5.) Rather, the only homes that are relevant to a purported
diminution in value, according to Westport, are the five Failed Closing Homes for which
Westport has already produced documents.
The Court concludes that the requested documents are relevant and discoverable. First,
purchase data for unaffected homes in the same development as Affected Homes, including final
purchase price and prices for and the inclusion of custom options, can be compared with similar
data for Affected Homes to ascertain any impact the Joists had on home value and therefore
damages. Accordingly, Westport is ORDERED to produce purchase contracts for all homes
located in a development with an Affected Home, along with documents sufficient to determine
which homes have similar layouts or features and which homes have defective Joists, from one
year prior to the date the defect in the Joists was first disclosed to Westport through one year
after the date Westport closed on the sale of the last Affected Home.
C. Length of Time on Market
Movants next seek to compel documents sufficient to determine how long Affected
Homes remained on the market in comparison to unaffected homes, pursuant to Request No. 17
of the Subpoena. Movants contend that such documents are relevant to its damages analysis.
Westport insists that as a custom home builder, it has no “documents whatsoever
concerning how long homes remain on the market.” (Westport Reply 7, ECF No. 5.) Although
Westport acknowledges that it installed Joists in four Select Inventory Homes, it contends that
“the Joist had no impact whatsoever” on the price of these homes or the time they spent on the
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market, and therefore documents for the affected Select Inventory Homes are irrelevant. (Id.)
The Court disagrees.
Information related to the time the affected Select Inventory Homes remained on the
market in comparison to unaffected Select Inventory Homes is relevant to damages. If affected
Select Inventory Homes remained on the market longer than unaffected Select Inventory Homes,
that would suggest the defective Joists caused a decrease in marketability. Movants are not
required to take Westport at its word that the Joists had no impact on the marketability of
affected Select Inventory Homes, particularly in the absence of any evidence of undue burden or
expense associated with producing the requested documents. Accordingly, Westport is
ORDERED to produce documents sufficient to show how long homes with defective Joists
remained on the market as compared to homes without defective Joists, including documents
sufficient to determine how long affected Select Inventory Homes remained on the market in
comparison with similar unaffected Select Inventory Homes.
D. Communications with Buyers and Realtors
Lastly, Movants seek to compel copies of the disclosures Westport provided to actual and
prospective buyers and realtors regarding the defective Joists, formaldehyde, or remediation, as
well as any related communications, pursuant to Request No. 6 of the Subpoena. Movants
contend that these documents are relevant to determining how the Joists manifested the defect, as
well as damages related to decreased marketability or diminution in value. Movants explain that
knowledge of whether Westport disclosed the defect to prospective homebuyers will permit them
to evaluate whether a link can be established between the defect and resale value or increased
time on the market. By way of example, Movants submit that Westport’s failure to disclose the

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defect (or only partial disclosure) could explain any absence of a change in price or an effect on
marketability.
Westport counters that it produced the form letter it sent to home buyers and realtors and
contends, without meaningful explanation, that responsive documents beyond this form letter
lack relevance. Westport fails to address Movants’ argument that the fact, nature, and extent of
the disclosures and related communications could establish a relationship between what actual or
potential buyers knew about the defective Joists and any effect on home value or marketability.
The Court finds that copies of the disclosures, not just the form letters, that Westport
provided to actual and prospective buyers and realtors, as well as any related communications,
are relevant and discoverable for the reasons Movants articulate. Further, as Movants point out,
one would expect that the disclosures would have generated follow up communications,
particularly with respect to at least the Five Failed Closing Homes, and potentially with respect
to other Affected Homes. As such, Westport is ORDERED to produce copies of all disclosures
it provided to actual and prospective buyers and realtors regarding the defective Joists, as well as
all related communications.
IV.
In sum, Movants’ Motion to Compel (ECF No. 1) is GRANTED. The parties are
DIRECTED to meet and confer in an effort to reach agreement on appropriate confidentiality
designations to protect against the improper use or disclosure of Westport’s proprietary and trade
secret information. The Court expects that the parties will be able to reach agreement using the
confidentiality designations provided in the Stipulated Protective Order in the Underlying
Action. Once such agreement is reached, Westport is ORDERED to produce unredacted
versions of the documents falling within the four categories set forth above.
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IT IS SO ORDERED.

/s/ Chelsey M. Vascura
CHELSEY M. VASCURA
UNITED STATES MAGISTRATE JUDGE

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