Raymond James & Associates, Inc. v. 50 North Front St. TN, LLC
Filing
318
ORDER denying in part 189 Motion to Compel; denying in part 197 Motion to Compel; denying in part 237 Motion to Compel. Signed by Magistrate Judge Tu M. Pham on 3/30/2020. (nph)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
RAYMOND JAMES & ASSOCIATES,
INC.,
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
50 NORTH FRONT ST. TN, LLC,
Defendant.
18-cv-2104-JTF-tmp
ORDER DENYING MOTIONS TO COMPEL
Before the court by order of reference are Raymond James &
Associates, Inc.’s (“Raymond James”) Motion to Compel and for
Discovery Sanctions, Raymond James’s Second Motion to Compel and
for Discovery Sanctions, and Raymond James’s Supplemental Motion
to Compel. (ECF Nos. 189; 191; 197; 198; 237; 239.) This order
addresses only the aspects of those motions seeking to compel the
production of documents. The remainder of the motions will be dealt
with by separate order. After court ordered meet-and-confers, the
parties
limited
their
dispute
regarding
the
production
of
documents to a set of issues identified in their Amended Joint
Report on Outstanding Discovery and Motions to Compel. (ECF No.
267.) For the following reasons, the motions to compel are DENIED.
I.
BACKGROUND
This is a contract and tort dispute about elevators in an
office building in Memphis. Under Raymond James’s theory of the
case, it needs to show 50 North was grossly negligent in not
modernizing the building’s elevators to prevail. 1 One part of
Raymond James’s argument about gross negligence is its contention
that 50 North had the funds to modernize the building’s elevators
but chose not to do so. To obtain information to support this
argument,
Raymond
James
served
the
following
requests
for
production on 50 North:
[Request for Production 1:] Please produce all Documents
that reflect the financial condition of 50 North Front
from 1/1/2014 to present, including: a) All Federal
income tax returns, including all schedules, attachments
and supporting documents; b) All monthly and annual
financial statements, including balance sheets, profit
and loss statements, income statements and cash flow
statements; c) All financial analyses, including
profitability analyses (actual and projected); d) All
budgets (including capital improvement budgets), as well
as all budget variance reports; e) All loans and lines
of credit; and f) All Accounting records, including
monthly and annual reports of all general ledger
accounts, including accounts relating to income,
operating
expenses
and
capital
expenses.
[Request for Production 2:] Please produce Documents
sufficient
to
completely
describe
Jacob
Sofer’s
financial condition and/or net worth from 1/1/2014 to
present, including: . . . c) All Documents relating to
any financial statements or, absent that, other
documents that alone or in combination accurately
reflect his assets, liabilities, and net worth; d) All
Documents relating to any loan applications; and e) All
1Pending
before the presiding district judge is a report and
recommendation recommending dismissal of the complaint. However,
for purposes of resolving this motion, the undersigned has not
taken into account this report and recommendation.
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Documents relating to any non-public business entities
in which he has a majority or otherwise controlling
interest.
50 North disputed the relevance of these requests. The court ruled
that the requests were relevant and ordered 50 North to respond.
(ECF No. 107.) The parties now dispute whether 50 North has
adequately responded. The specific issues under dispute, per the
parties’ joint report, are as follows:
Whether 50 North must provide a complete copy of its
electronic accounting records (including monthly and
annual Balance Sheets, Cash Flow Statements, Profit &
Loss Statements, Budgets, General Ledgers etc.) to
present. This includes the accounting software that 50
North employs (e.g., .QBW files for QuickBooks), in
native file format, along with whatever information is
necessary to permit access to the underlying data. It
is50 North’s Position that it has produced all
responsive accounting records that exist, and should not
have to permit computer access which was not originally
requested.
Whether 50 North must produce all documents reflecting
all loans and lines of credit to and from 50 North. It
is 50 North’s position that there are no loan
applications or promissory notes responsive to this
Request and all loans to and/or from 50 North are
reflected on the general ledger records that 50 North
already has produced in discovery.
Whether 50 North must provide the tax returns and
search/tabulatable copies of the monthly and annual
financial statements for the following entities: a)
Madison Holding Trust; b) Regal Holding Group, LLC; and
c) MSM Management, Inc.
Whether 50 North must provide all financial statements
that reflect the assets, liabilities and/or net worth of
Mr. Sofer, for the period from January 2014 to present,
as previously ordered by the Court. In lieu of further
discovery on this matter, beyond the documents that have
already been produced, 50 North offers the attached
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stipulation which Raymond James has rejected. 50 North
therefore seeks an order from the Court adopting the
stipulation as a means of resolving any further
discovery requirements in connection with Raymond James’
Request No. 2.
The stipulation 50 North proposes reads “the parties stipulate
that at all relevant times to this proceeding, Jacob Sofer and
Madison
Holding
Trust
had
sufficient
funds
to
modernize
the
elevator system at the Raymond James Tower.” (ECF No. 264-1.)
II.
ANALYSIS
The scope of discovery is governed by Federal Rule of Civil
Procedure 26(b)(1), which provides that “[p]arties may obtain
discovery regarding any nonprivileged matter that is relevant to
any party's claim or defense and proportional to the needs of the
case[.]” Fed. R. Civ. P. 26(b)(1). The party seeking discovery is
obligated to demonstrate relevance. Johnson v. CoreCivic, Inc.,
No. 18-CV-1051-STA-tmp, 2019 WL 5089086, at *2 (W.D. Tenn. Oct.
10, 2019). Upon a showing of relevance, the burden shifts to the
party
opposing
discovery
to
show,
with
specificity,
why
the
requested discovery is not proportional to the needs of the case.
Allgood v. Baptist Mem'l Med. Grp., Inc., No. 19-2323-SHM-tmp,
2020 WL 86455, at *1 (W.D. Tenn. Jan. 7, 2020), aff'd, 2020 WL
821381 (W.D. Tenn. Feb. 19, 2020). Six factors are relevant to
proportionality: (1) “the importance of the issues at stake in the
action;”
(2)
“the
relative
access
to
amount
in
controversy;”
(3)
“the
parties'
relevant
information;”
(4)
“the
parties'
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resources;” (5) “the importance of the discovery in resolving the
issues;” and (6) “whether the burden or expense of the proposed
discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1).
“[D]eterminations as to proportionality are subject to change
with the circumstances of the case.” Nat.-Immunogenics Corp. v.
Newport Trial Grp., No. SACV152034JVSJCGX, 2019 WL 3110021, at *7
(C.D.
Cal.
Mar.
19,
2019).
This
is
in
part
because
“[c]onsiderations of proportionality can include reviewing whether
discovery production has reached a point of diminishing returns.”
Abbott v. Wyoming Cty. Sheriff's Office, No. 15-CV-531W, 2017 WL
2115381, at *2 (W.D.N.Y. May 16, 2017). When the “marginal utility”
of further document production is low, Rule 26’s proportionality
principle
commands
that
courts
should
take
steps
to
limit
discovery. Alaska Elec. Pension Fund v. Bank of Am. Corp., No. 14CV-7126 (JMF), 2016 WL 6779901, at *3 (S.D.N.Y. Nov. 16, 2016).
“[A]t some point, discovery yields only diminishing returns and
increasing expenses.” Updike v. Clackamas Cty., No. 3:15-CV-00723SI, 2016 WL 111424, at *1 (D. Or. Jan. 11, 2016)
Raymond James has received extensive document production on
50 North’s finances. 50 North produced its tax returns for 2015,
2016, and 2017,2 general ledgers for 2015, 2016, and 2017, a
composite general ledger which covers the period from 2015 through
250
North represents in its brief that, as of the time of briefing,
50 North had not yet filed its 2018 tax return. (ECF No. 242.)
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April 30, 2019, profit and loss statements for 2015, 2016, and
2017, a composite profit and loss statement covering the period
from 2015 through April 30, 2019, and a composite balance sheet
covering the period from 2015 through April 30, 2019. (ECF No.
242.) That production should give Raymond James the information it
needs to argue its case. Additional document discovery on this
point — especially discovery as invasive as providing 50 North’s
accounting software and underlying accounting data — has little to
no marginal utility and would simply impose unneeded costs on 50
North.
The same is true of further document discovery into 50 North’s
owners’ finances. Documents Raymond James has already received
show that 50 North’s owners have a net worth in the hundreds of
millions of dollars. Based on the various submissions of the
parties
on
the
subject,
the
court’s
understanding
is
that
modernizing the building elevators would have a cost of a few
million dollars. Furthermore, 50 North has offered to stipulate
that at all relevant points in time 50 North’s owners had the money
to modernize the elevators. Given this, further document discovery
on this subject is not proportional to the needs of the case.
Raymond James argues that the court has already ruled on the
disputed issues in this motion when it ruled that 50 North was
required to respond to Requests for Production 1 and 2. But it is
not at all clear that the remaining documents and data Raymond
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James is demanding fall within the scope of its prior requests for
production. Even if they do, the court still has an ongoing
obligation to curb disproportionate and burdensome discovery. See
Nat.-Immunogenics, 2019 WL 3110021, at *7. The motions to compel
are DENIED.
IT IS SO ORDERED.
s/ Tu M. Pham
TU M. PHAM
United States Magistrate Judge
March 30, 2020
Date
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