Wal-Mart Stores, Inc. et al v. Texas Alcoholic Beverage Commission et al

Filing 245

ORDER DENYING 179 Motion to Compel Production. Signed by Judge Andrew W. Austin. (ml)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
WAL-MART STORES, INC., et al.
v.
TEXAS ALCOHOLIC BEVERAGE
COMMISSION, et al.

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A-15-CV-134-RP

ORDER
Before the Court are The Texas Package Stores Association’s Challenge to Objections and
Motion to Compel Production (Dkt. No. 179); Wal-Mart’s Response (Dkt. No. 184) and TPSA’s
Reply (Dkt. No. 190). The District Court referred the above-motions to the undersigned Magistrate
Judge for resolution pursuant to 28 U.S.C. §636(b)(1)(A), FED. R. CIV. P. 72, and Rule 1(c) of
Appendix C of the Local Rules. The Court held a hearing on the motions on February 7, 2017.
I. GENERAL BACKGROUND
In this suit Wal-Mart and three of its subsidiaries are challenging the constitutionality Texas
statutes regulating the retail sale of liquor, contending that the statutes violate the Equal Protection
and Dormant Commerce Clauses of the U.S. Constitution. The statutes regulate grants of permits
to make retail sales of distilled spirits by limiting the number of permits a person may own and the
types of companies which may own them. Plaintiffs argue that the ban on public corporations, as
well as the consanguinity consolidation provision of the statutes unconstitutionally discriminate
against out-of-state companies in both effect and purpose.
The Texas Package Stores Association (TPSA), an intervenor in this case, brings this motion
to challenge objections made by Wal-Mart to TPSA’s requests for production, and to compel WalMart to produce responsive documents. There are five categories of requests in TPSA’s motion: (1)

Requests for Production (RFP’s) 1-13, which ask for communications to Texas governmental
entities, including the Texas Legislature, TABC, and the Governor; (2) RFP’s 14-15, which request
communications with other public corporations regarding this litigation; (3) RFP’s 16-33, which
request documents “relating to” select statements made by Wal-Mart’s expert; (4) RFP’s 34-36,
which request documents relating to Wal-Mart’s proposed business plans in Texas; and (5) RFP’s
41-43, which request documents relating to Wal-Mart’s claims about the statutes at issue. For each
of these requests, TPSA asks the Court to overrule Wal-Mart’s objections.
II. ANALYSIS
There was quite a bit of confusion at the hearing about precisely what relief TPSA is
requesting in this motion. TPSA states that it is merely requesting the Court to overrule objections
made by Wal-Mart to each of the requests for production. In fact, TPSA noted that this motion is
solely about objections. It explained that after the Court overrules Wal-Mart’s objections to the
requests, Wal-Mart will be under “compulsion” to produce responsive documents, and any
disagreements about the actual production could be addressed at that time. In TPSA’s words, it is
concerned that Wal-Mart is “holding a bombshell” because of one or more of the objections, and
requested that the Court simply overrule all of the objections en masse.
The cause of the confusion is not one-sided, however. Much of the confusion comes from
Wal-Mart’s overabundance of caution in responding under the new discovery rules, which now
require that when a party makes an objection, it also state whether it is withholding any documents
subject to that objection. In every one of its responses to TPSA’s requests, Wal-Mart has leveled
one or more objection, and in each instance it states that it is withholding documents pursuant to that
objection. TPSA was therefore concerned that there are identified, responsive documents sitting on

Wal-Mart’s counsel’s desk that have not been produced, any of which may be a “bombshell.” The
Court attempted to get clarity on this point in an exchange with Wal-Mart’s counsel, Mr. Kelso:
THE COURT: With regard to the statements in your responses, Mr. Kelso,
that—uh—documents are being withheld based on the objections, are there identified
documents, like you were describing theoretically of the stack A and stack B, or is it simply
a theoretical—there’s probably documents out there that could theoretically be responsive
to a request for anything related to predatory pricing, we are not looking for them,
and—there’s probably documents out there that are responsive—so that is what’s being
withheld?
MR. KELSO: My understanding is that it is purely theoretical. It’s a requirement of the new
versions of the rules to say—to include a statement if you are withholding documents based
on an objection.
THE COURT: But there is not an identified document that you are withholding?
MR. KELSO: That is my understanding. Not based on the objections.
THE COURT: Okay.
MR. KELSO: And Judge, I’ll say on this point, we will stand in front of Judge Pitman or you
or whoever if there is some critical document that’s responsive to these requests that hit upon
our search terms, if we propose that we decide to withhold, I’m sure the Court is able to deal
with us.
* * *
THE COURT: On all the other requests, or most of them, you have done some form of
search, you’ve produced some documents?
MR. KELSO: Correct.
THE COURT: And to the extent there is still an objection that you’re lodging, it’s basically
that if there’s anything else here that you think is responsive to your request than what we’ve
identified and produced, we think it’s too broad, or too vague, and we haven’t produced that.
This is what we’ve done.
MR. KELSO: Yes—that—I think I understand you, Judge. That’s correct.
Digital recording of February 7, 2017 hearing at 1:28:03 to 1:30:10. According to the above
discussion, the objection that Wal-Mart was withholding documents—except with regard to the few
requests discussed below—was the result of Wal-Mart’s understanding that it was required to make

that statement even if it had not actually identified any responsive documents. While such a
statement is perhaps literally compliant with the new rule, it is likely not truly what the rule is aiming
for.
This is best understood with an example. In RFP 16, TPSA requests Wal-Mart to produce
documents “relating to any allegation that [Wal-Mart] ha[s] engaged in predatory pricing.” Dkt. No.
179-1 at 9. Wal-Mart’s response to this request states:
Wal-Mart objects to this request as overbroad, unduly burdensome, vague and
ambiguous as to “any allegation that you have engaged in predatory pricing,” not
relevant to any party’s claim or defense, disproportional to the needs of the case, and
privileged under the attorney client and work product doctrines. Wal-Mart further
objects to TPSA’s definition of “document” because that definition includes some
electronically stored information (“ESI”) that is not reasonably accessible and would
be unduly burdensome to retrieve and produce. Wal-Mart is withholding documents
based on these objections.
Wal-Mart will not produce any additional documents in response to this
request for production
Id. at 21 (emphasis added). As became apparent from the argument at the hearing, it is Wal-Mart’s
view that the request is too broad and of such marginal relevance to even merit a search by Wal-Mart
to find responsive documents. Having said that, it is also its view that there are likely to be
responsive documents somewhere in its many offices and on its computer network, and that some
of these documents would likely be privileged attorney client communications or work product.
Thus, it stated that it was “withholding documents based on these objections.” While that may
technically be accurate, it is not what the new rules were after in adding the requirement in Rule
34(b)(2)(C) that “an objection must state whether any responsive materials are being withheld on the
basis of the objection.” A more helpful response would have been something along the lines of
“Based on these objections, Wal-Mart has not conducted a search for responsive documents, and

while it is likely that some responsive documents may exist, Wal-Mart has not identified any such
document, and is not withholding any identified document as a result of these objections.”
Because TPSA was focused almost entirely on Wal-Mart’s statement that it was withholding
documents, on the vast majority of Wal-Mart’s objections TPSA does not join issue with Wal-Mart.
For most of the RFPs, Wal-Mart responded that it had already collected and produced documents
in response to similar requests from the TABC, based on agreed upon search parameters, and would
produce the same documents to TPSA. Further, Wal-Mart stated that it would conduct an additional
limited search of additional document sources, but would otherwise not search further. TPSA failed
to state in its briefs, or at the hearing, what it believed was deficient with this response. In fact, when
asked at the hearing, TPSA was unable to point to a single additional document that would be
responsive to its requests it believed had not already been produced. Despite this, TPSA continued
to maintain that overruling Plaintiffs’ objections would solve this discovery dispute.
Based on the above, the Court concludes that, for RFPs for which Plaintiffs have produced
documents consistent with identified search terms (RFP’s 1-4, 10-13, 17-36, and 41-43) TPSA’s
motion to compel will be DENIED.1 This leaves the requests on which Wal-Mart has not performed
any searches (RFP’s 5-9, 14-16), which the Court discusses in more detail below.
A.

RFP’s 5-9
First, RFP’s 5-8 seek all communications between Wal-Mart and the TABC relating to the

challenged statutes. Wal-Mart has refused to produce any responsive documents for each of these
requests, based on the fact that in this Court’s October 11, 2016 order, it found communications with
the TPSA and the TABC—aside from those relating to the consolidation provision—were irrelevant

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In doing so, the Court makes no determinations on the validity of Plaintiffs’ objections to
these requests; the Court only denies TPSA’s motion to overrule the objections en masse.

to the litigation. Dkt. No. 153 at 17. The Court sustains this objection, and in accordance with its
previous order, the Court DENIES the TPSA’s motion as to RFP’s 5-8.2
RFP 9 requests evidence of all of Plaintiffs’ campaign donations. As the Court held in the
previous order, this request would be relevant. However, the Court also limited production “to the
extent that the [party] kept such records in a centralized manner” and that it has a “database or
something similar, reflecting its historical contributions from which it can easily create or print a list
of the contributions for production.” Dkt. No. 153 at 19. Plaintiffs note that they have done a search
for a responsive database, but have been unable to find one. The Court therefore SUSTAINS this
objection.
B.

RFP’s 14-15
RFP’s 14-15 seek communications between Wal-Mart and any other public corporations

regarding this lawsuit or its claims in this lawsuit. Wal-Mart argues that the requests are irrelevant,
and notes in its responses that it has not done a search for responsive documents. TPSA, at the
hearing, attempted to illustrate why these documents were relevant—it noted that communications
between Wal-Mart and other public corporations that undermine Wal-Mart’s claims “may be out
there,” such as a declaration by Wal-Mart that the Texas liquor laws have a rational basis. TPSA
also contended that there may be another corporation that called the lawsuit a “loser”—or something
similar—in communications to Wal-Mart. These arguments are unpersuasive. First, a request for
such documents smacks of the very sort of “fishing expedition” the Federal Rules long ago
prohibited. Further, even if such statements existed, they would be irrelevant to a facial challenge
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To the extent that the objections in RFP’s 10-13 (which also include requests for
communications to the TABC, among other governmental organizations) rely on this Court’s prior
order, this objection is also SUSTAINED.
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to the statutes at issue here. At best, they would amount to impeachment material for any Wal-Mart
representative testifying as to the merits of Wal-Mart’s claims. Moreover, the likelihood any such
communications exist—regardless of whether the statements are relevant—is so minuscule as to
vastly outweigh the burden on Wal-Mart to search for and produce such documents. The Court
therefore DENIES the TPSA’s motion as to RFP’s 14-15.
C.

RFP 16
RFP 16 requests all documents and communications “relating to any allegation that

[Plaintiffs] have engaged in predatory pricing.” TPSA notes that in his expert report, Wal-Mart
expert Kenneth Elzinga stated that “Wal-Mart’s business model, in the sale of alcohol as well as
across the company’s entire product line, is not one characterized by excessive discounting or
predatory pricing.” Dkt. No. 179-1 at 65. TPSA contends that these statements make relevant the
documents sought by RFP 16, as they are needed to test Elzinga’s statement. Wal-Mart argues that
the request is overbroad and irrelevant, and as such has not performed any searches or produced any
responsive documents. The Court agrees that this request, even if relevant, is vastly overbroad. As
noted at the hearing, the expert has already provided all of the documents he relied on in making his
determinations. TPSA has therefore had more than an adequate opportunity to discover the basis
of his assertions. Requiring Plaintiffs to search for potentially responsive documents not relied on
by the expert—which is the alleged basis for the request—is not sufficiently tailored. As noted by
the Court at the hearing, this request would have been better framed as an interrogatory; as a request
for production, it is overbroad to what is necessary in this case. The Court therefore DENIES
TPSA’s motion as to RFP 16.

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In sum, the Court DENIES TPSA’s Challenge to Objections and Motion to Compel
Production (Dkt. No. 179) in its entirety.
SIGNED this 10th day of April, 2017.

_____________________________________
ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE

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