Sprint Communications Company L.P. v. Maule et al

Filing 106

ORDER denying 89 Motion for Protective Order; granting in part and denying in part 92 Motion to Compel. NAT is to submit documents to court by 5/2/2011. Parties have until 4/26/2011, to depose Thomas Reiman. Signed by Chief Judge Karen E. Schreier on 4/19/2011. (KC)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
SPRINT COMMUNICATIONS
COMPANY, L.P.,
Plaintiff,
vs.
NATIVE AMERICAN TELECOM, LLC,
and CROW CREEK SIOUX TRIBAL
COURT,
Defendants.

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CIV. 10-4110-KES

ORDER

On January 12, 2011, defendant Native American Telecom (NAT)
moved for a preliminary injunction to enjoin plaintiff, Sprint
Communications Company, from withholding interstate switched access
charges that NAT has already billed or will bill to Sprint in the future.
Shortly before the preliminary injunction hearing on March 3, 2011, NAT
moved for a protective order for discovery and Sprint moved to compel
discovery from NAT. The parties had not completed briefing on these
discovery motions before the March 3 hearing and, upon argument by the
parties that this discovery was crucial to resolving the preliminary
injunction motion, the court agreed to resolve the discovery disputes before
addressing the preliminary injunction motion. The parties have now briefed

the two discovery motions.1 NAT’s motion for a protective order is denied.
Sprint’s motion to compel is denied in part and granted in part.
DISCUSSION
I.

NAT’s Motion for a Protective Order
A.

Thomas Reiman’s Deposition

NAT seeks a protective order to quash Sprint’s notice of deposition of
Thomas Reiman and seeks its reasonable attorneys’ fees and expenses
incurred in bringing this motion.
A motion for protective order is governed by Rule 26: “The court may,
for good cause, issue an order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense, including . . .
forbidding the disclosure or discovery . . . .” Fed. R. Civ. P. 26(c)(1)(A). Rule
26 allows the court to craft relief besides prohibiting the requested discovery
outright. Fed. R. Civ. P. 26(c)(1)(B) (“The court may, for good cause, . . .
specify[] terms, including time and place, for the disclosure or discovery
. . . .”).
The party seeking a protective order has “the burden to demonstrate
good cause for issuance of the order and that his claim of harm must be
based on more than stereotypical and conclusory statements.”

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While both parties filed memorandums in opposition to the opposing
party’s motion, neither Sprint nor NAT filed a reply brief for its discovery
motion.
2

Miscellaneous Docket Matter #1 v. Miscellaneous Docket Matter #2, 197 F.3d
922, 926 (8th Cir. 1999) (citing Gen. Dynamics Corp. v. Selb Mfg. Co., 481
F.2d 1204, 1212 (8th Cir. 1973)). The court must consider “the relative
hardship to the non-moving party should the protective order be granted.”
Gen. Dynamics, 481 F.2d at 1212 (citing United States v. Kordel, 397 U.S. 1,
4-5 (1970)). “[B]ecause discovery rules should ‘be construed to secure the
just, speedy, and inexpensive determination of every action . . . judges
should not hesitate to exercise appropriate control over the discovery
process.’ ” Miscellaneous Docket Matter #1, 197 F.3d at 927 (citing Herbert v.
Lando, 441 U.S. 153, 177 (1979)). The appellate court only reviews a district
court’s discovery order for an abuse of discretion. Id.
NAT argues that Sprint’s notice is improper because it does not
specify the areas of inquiry for Reiman’s deposition. NAT also contends that
Sprint did not designate Reiman as one of its two preliminary injunction
hearing witnesses and Sprint’s attempt to depose Reiman violates the
parties’ Interim Joint Rule 26(f) Report.
NAT reads a heightened notice requirement into Rule 30(b)(1) by
arguing that the notice was insufficient because “a few day’s [sic] notice to
prepare Reiman for what could be a wide-ranging deposition (into
unspecified areas of inquiry) does not constitute ‘reasonable notice’ and
negatively impacts NAT’s ability to adequately defend this case and prepare

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the actual witnesses NAT has designated for the preliminary injunction
hearing.” Docket 90 at 5 (emphasis in original). Sprint responds that
Reiman has relevant information to NAT’s claim that it faces imminent
bankruptcy if the preliminary injunction is not granted because Reiman
assists in managing NAT’s finances. Sprint further argues that the parties
had already informally agreed to Reiman’s deposition: “In all previous
discussions . . . NAT had always indicated that Reiman would be one of its
witnesses. . . . Furthermore, as Reiman is intimately familiar with the
business of NAT and has previously testified as a witness before the Court, a
deposition is not outside the bounds of Reiman’s capabilities.” Docket 93 at
4-5.
Even though NAT argues that Sprint’s notice was insufficient, it does
not dispute that Reiman is a proper deponent: “NAT will not object to Sprint
taking Reiman’s deposition after reasonable notice and with adequate
specificity as to Sprint’s desired areas of inquiry.” Docker 90 at 4. Reiman
has testified in this case in a prior hearing on Sprint’s preliminary
injunction motion and should be intimately acquainted with NAT’s
business. Now that Sprint has clarified that Reiman will be deposed about
NAT’s finances and because Reiman will be deposed after the March 3
hearing, NAT has no remaining objections to Sprint deposing Reiman.
Accordingly, NAT’s motion for a protective order is denied.

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B.

Attorneys’ Fees

NAT moves for “reasonable attorneys’ fees and expenses incurred in
bringing this motion.” Docket 89 at 1. Rule 37(a)(5) applies to fees and
expenses for bringing a Rule 26(c) motion. Fed. R. Civ. P. 26(c)(3). Because
NAT’s motion was denied, it is not entitled to expenses. Fed. R. Civ. P.
37(a)(5)(B). Further, Sprint did not move for expenses in the event that the
court denied NAT’s motion, a possibility under Rule 37(a)(5)(B), so an award
of expenses is inappropriate regarding this discovery dispute.
II.

Motion to Compel Discovery
Sprint moves to compel NAT’s answer to Sprint’s interrogatory

Number 7: “Identify all interexchange carriers whom NAT has invoiced
under any of its tariffs, including the name of the interexchange carrier, the
amounts invoiced, and the payments received, if any.” Docket 92 at 2. NAT
refused to answer:
This Interrogatory is objected to as seeking information that is
protected by the attorney-client privilege and the work product
doctrine. This Interrogatory is further objected to as being
overly broad and unduly burdensome. This Interrogatory is
further objected to as seeking information that is beyond the
permissible scope of discovery and that is not reasonably
calculated to lead to the discovery of admissible evidence.
Docket 92 at 2.
NAT first argues that Sprint’s relief should be denied because Sprint
failed to abide by the local and federal rules. Before seeking judicial relief in

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discovery, both the federal and local rules require the moving party to certify
that the movant conferred in good faith to resolve the dispute before filing a
motion to compel. See Fed. R. Civ. P. 37(a)(1); D.S.D. Civ. L.R. 37.1. Sprint
failed to comply with this rule because it did not certify to the court that it
had attempted, in good faith, to resolve this discovery dispute with NAT
before submitting its motion to compel. While the court prefers that parties
comply with the local and federal rules, because Sprint’s motion to compel
concerns a preliminary injunction, the court will decide Sprint’s motion on
the merits.
NAT claims that the attorney-client privilege protects the information
Sprint seeks. “The attorney-client privilege extends only to confidential
communications made for the purpose of facilitating the rendition of legal
services to the client.” United States v. Horvath, 731 F.2d 557, 562 (8th Cir.
1984) (citing In re Malone, 655 F.2d 882, 886 (8th Cir. 1981)). “[T]he party
who claims the benefit of the attorney-client privilege has the burden of
establishing the right to invoke its protection.” Hollins v. Powell, 773 F.2d
191, 197 (8th Cir. 1985) (citing Diversified Indus., Inc. v. Meredith, 572 F.2d
596, 609 (8th Cir. 1977) (en banc)).
Even though NAT generally asserted the attorney-client privilege in
refusing to answer Interrogatory Number 7, it makes no argument on how
the privilege exists. The information sought is not a communication between

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NAT and its attorney, but rather bills between NAT and other interexchange
carriers (IXCs). Bills are not generated to render legal advice. Thus, NAT has
not met its burden to establish that the attorney-client privilege protects the
information.
NAT also contends that the work product doctrine protects the
information. The federal rules provide that “[o]rdinarily, a party may not
discover documents and tangible things that are prepared in anticipation of
litigation or for trial by or for another party or its representative (including
the other party’s attorney, consultant, surety, indemnitor, insurer, or
agent).” Fed. R. Civ. P. 26(b)(3)(A). The party resisting discovery bears the
burden in proving that the material sought is protected by the work product
doctrine. Rabushka ex rel United States v. Crane Co., 122 F.3d 559, 566 (8th
Cir. 1997).
NAT has made no argument as to how the requested information was
prepared in anticipation of litigation. Instead, the information appears to be
bills that one would expect to find in a telecommunications company’s usual
business records. Thus, NAT has not met its burden to prove the
information sought is protected by the work product doctrine.
NAT further refused to answer Interrogatory Number 7 on the ground
that the information sought was overly broad and disclosure would be
unduly burdensome. In its brief opposing Sprint’s motion to compel, NAT

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makes no further argument regarding how the information sought is unduly
burdensome. NAT should have billing records in its corporate files and was
able to produce some financial information at the March 3 hearing. The
information sought is neither unduly burdensome nor overly broad.
NAT claims that the information sought is irrelevant because “this
preliminary injunction hearing is limited to a dispute between Sprint and
NAT for the payment of interstate switched access fees.” Docket 100 at 4.
NAT’s alleged irreparable harm is that it will become bankrupt if Sprint does
not pay NAT’s bills. Because NAT has directly put its financial viability at
issue, evidence of NAT’s other revenue sources is relevant. Furthermore, if
the court were to grant NAT’s preliminary injunction, the court would need
to fashion a fair per-minute rate that NAT could charge Sprint. Information
showing what rates NAT charges other IXCs would be relevant to this
inquiry.
NAT further contends that the information sought is confidential
financial information and urges the court to conduct an in camera review if
Sprint’s motion is granted. Docket 100 at 7 n.4 (“[T]his Court may (and
perhaps should, given the highly charged relationship that has developed
between the parties) examine the documents in camera in deciding this

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threshold question [whether the documents are confidential financial
records].”).2
Rule 26 allows a court to fashion how commercial information is
revealed in discovery. Fed. R. Civ. P. 26(c)(1)(G). Courts employ a three-part
test for discovery information that allegedly falls under Rule 26(c)(1)(G). In re
Remington Arms Co., 952 F.2d 1029, 1032 (8th Cir. 1991). “First, the party
opposing discovery must show that the information is a trade secret or other
confidential research, development, or commercial information . . . and that
its disclosure would be harmful to the party’s interest in the property.” Id.
(quotation omitted). “The burden then shifts to the party seeking discovery
to show that the information is relevant to the subject matter of the lawsuit
and is necessary to prepare the case for trial.” Id. (citations omitted). Third,
“[i]f the party seeking discovery shows both relevance and need, the court
must weigh the injury that disclosure might cause to the property against
the moving party’s need for the information.” Id. (citing Coca-Cola Bottling
Co. of Shreveport, Inc. v. Coca-Cola Co., 107 F.R.D. 288, 293 (D. Del. 1985)).
If a district court does not afford the party resisting discovery the

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Without attributing the source, NAT quotes the reasoning in In re
Remington Arms Co., 952 F.2d 1029 (8th Cir. 1991) for this proposition: “On
remand, the district court should afford Remington the opportunity to make a
showing that the disputed documents contain trade secrets. It may (and
probably should, given the highly charged relationship that has developed
between the parties) examine the documents in camera in deciding this
threshold question.” Id. at 1032.
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opportunity to show that the information is protected by Rule 26(c)(1)(G),
the appellate court may find that the district court abused its discretion.
See id. (“We conclude that in failing to provide Remington with the
procedural protections afforded by Rule 26(c), the district court clearly
abused its discretion.”).
NAT asserts that the information sought in Interrogatory Number 7 is
confidential financial information because Sprint seeks individual carrier
minutes and individual carrier receivables. This information, according to
NAT, “would (1) give Sprint a distinct competitive advantage in the
telecommunications marketplace; (2) provide Sprint with information that
would allow it to ‘take’ traffic away from other carriers and endow Sprint
with a competitive advantage; and (3) provide Sprint with the ‘sales receipts’
of competitors who vie for an identical customer base.” Docket 100 at 6.
NAT has made a threshold showing that the documents sought in
Interrogatory Number 7 could be confidential financial information
protected by Rule 26(c)(1)(G). Given the complex nature of this case, the
court will conduct an in camera review of all documents NAT would produce
to Sprint in response to Interrogatory Number 7, and determine if the
documents should be produced to Sprint in their original form, if some
information should be redacted, or if a protective order is necessary.
Accordingly, it is

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ORDERED that defendant NAT’s motion for a protective order (Docket
89) is denied and plaintiff’s motion to compel (Docket 92) is denied in part
and granted in part. NAT is to submit all documents that would be disclosed
in response to Interrogatory Number 7 and a privilege log briefly explaining
why each document contains confidential financial information to the court
by May 2, 2011. Furthermore, the parties have until April 26, 2011, to
depose Thomas Reiman. The transcript of his deposition is to be submitted
to the court as soon as possible after the deposition.
Dated April 19, 2011.
BY THE COURT:

/s/ Karen E. Schreier
KAREN E. SCHREIER
CHIEF JUDGE

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