United States District Court, E.D. North Carolina, Northern Division
WILLIAM C. STILLWAGON, Plaintiff,
INNSBROOK GOLF & MARINA, LLC, also known as Innsbrook Golf& Boat, LLC, a North Carolina Limited Liability Corporation, RIAL CORPORATION, a North Carolina Corporation, ALOIS RIEDER, an adult individual, and RICHARD RIEDER, an adult individual, Defendants.
ROBERT B. JORES, Jr., Magistrate Judge.
This matter is before the court on Plaintiff's and Defendants' Motions to Compel, [DE-115, -121],  to which the parties have filed supportive and responsive briefing,  [DE-116, -117, -118, -119, -122, -124, -125, -126, -127, -128, -131]. The motions were referred to the undersigned for review and decision pursuant to 28 U.S.C. § 636(b)(1)(A). [DE-130]. For the reasons set forth below, Defendants' motion to compel is granted in part and denied in part and Plaintiff's motion to compel is denied.
In 1980, Plaintiff William Stillwagon ("Plaintiff' or "Stillwagon"), a Pennsylvania resident, began assisting Alois Rieder and Richard Rieder ("Rieders" or "individual Defendants"), two Austrian businessmen, and their companies with multiple real estate transactions, which included the purchase, development, and resale of numerous properties in North Carolina. One property in which Plaintiff assisted in the purchase and development is the Innsbrook Golf & Marina located in Bertie County, North Carolina. Plaintiff and the Rieders terminated their business relationship via a Severance and Release Agreement ("Agreement") on November 9, 2009. [DE-47-1]. On May 5, 2012, Plaintiff filed a Second Amended Complaint in the Western District of Pennsylvania asserting, inter alia, breach of contract regarding terms of the Agreement. [DE-47]. Plaintiff seeks $900, 000.00 in damages related to this cause of action. Plaintiff alleges a second cause of action, in the alternative, for breach of oral contract concerning Plaintiff's "work and management of the 900-acre land development [at Innsbrook]." [DE-47] ¶ 57. On June 1, 2012, Defendants Rial Corporation ("Rial") and Innsbrook Golf & Marina, LLC ("Innsbrook") (collectively "Corporate Defendants") filed an answer to the Second Amended Complaint which asserted, inter alia, defenses and numerous counterclaims arising from Plaintiff's alleged mishandling of their real estate development projects, several of which sought recision of the Agreement. [DE-51]. On June 21, 2012, Plaintiff filed a Motion to Dismiss the Corporate Defendants' counterclaims. [DE-54]. On July 27, 2012, the Rieders filed a Motion to Transfer Case, [DE-59], and the Corporate Defendants moved to join the Rieder's motion, [DE-63]. The United States District Court for the Western District of Pennsylvania granted the motion to join and the motion to transfer and dismissed certain counterclaims asserted by Corporate Defendants. [DE-74]. On March 25, 2013, the matter was transferred to the Eastern District of North Carolina. [DE-72]. On June 20, 2013, this court entered a scheduling order regarding discovery and other deadlines in the matter. [DE-95]. Thereafter, on June 20, 2013, Defendants collectively filed an amended answer to the Second Amended Complaint and reasserted various counterclaims. [DE-96]. Plaintiff filed an answer to Defendants' counterclaims. [DE-97].
Defendants individually served their first set of interrogatories on June 24, 2013, and collectively served their first requests for documents on June 28, 2013. [DE-115] Exs. 3-7. Plaintiff served his Rule 26(a)(1) disclosures on July 16, 2013, [DE-115] Ex. 1, and responded to Defendants' first written discovery requests on August 6, 2013, [DE-115] Ex. 9. On August 9, 2013, Plaintiff served his first requests for documents, [DE-122] Ex. 1, and Defendants responded on September 12, 2013, [DE-122] Ex. 2. Plaintiff and Defendants' cross motions to compel followed. Since the filing of the motions, Plaintiff was deposed on January 28, 2014. Subsequently, at the court's direction, Defendants filed a status report on outstanding discovery requests, [DE-134], and the court held a telephonic hearing on April 14, 2014, regarding the parties' cross motions to compel, [D139].
II. LEGAL STANDARD
Whether to grant or deny a motion to compel is generally left within the district court's broad discretion. Lone Star Steakhouse & Saloon, Inc. v. Alpha Va., Inc., 43 F.3d 922, 929 (4th Cir. 1995). The Federal Rules of Civil Procedure enable parties to obtain information by serving requests for discovery on each other, including interrogatories and requests for production of documents. See generally Fed.R.Civ.P. 26-37. Rule 26 provides for a broad scope of discovery:
Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense.... For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.
Fed. R. Civ. P. 26(b)(1). The rules of discovery, including Rule 26, are to be given broad and liberal construction. Herbert v. Lando, 441 U.S. 153, 177 (1979); Nemecek v. Bd. of Governors, No. 2:98-CV-62-BO, 2000 WL 33672978, at *4 (E.D. N.C. Sept. 27, 2000); Spell v. McDaniel, 591 F.Supp. 1090, 1114 (E.D. N.C. 1984) ("Rules 26 through 37 of the Federal Rules have been interpreted liberally to allow maximum discovery.").
While Rule 26 does not define what is deemed relevant for purposes of the rule, relevance has been "broadly construed to encompass any possibility' that the information sought may be relevant to the claim or defense of any party." Equal Emp't Opportunity Comm'n v. Sheffield Fin. LLC, No. 1:06-CV-889, 2007 WL 1726560, at *3 (M.D. N.C. June 13, 2007) (quoting Merrill v. Waffle House, Inc., 227 F.R.D. 467, 473 (N.D. Tex. 2005)); see also Mainstreet Collection, Inc. v. Kirkland's, Inc., 270 F.R.D. 238, 240 (E.D. N.C. 2010) ("During discovery, relevance is broadly construed to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.") (quoting Oppenheimer Fund., Inc., v. Sanders, 437 U.S. 340, 351 (1978)). The district court has broad discretion in determining relevance for discovery purposes. Watson v. Lowcountry Red Cross, 974 F.2d 482, 489 (4th Cir. 1992). However, "[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... (A) forbidding the disclosure or discovery;... or (D) forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters...." Fed.R.Civ.P. 26(c)(1). Furthermore, it is wellsettled that the party resisting discovery, not the party moving to compel discovery, bears the burden of persuasion. See Mainstreet, 270 F.R.D. at 241.
Parties must respond truthfully, fully, and completely to discovery or explain truthfully, fully, and completely why they cannot respond. See id. (citing Hansel v. Shell Oil Corp., 169 F.R.D. 303, 305 (E.D. Pa. 1996)). Gamesmanship to evade answering as required is not allowed. Id .; see also Outley v. City of New York, 837 F.2d 587, 590 (2d Cir. 1988) ("The rules of discovery were not designed to encourage procedural gamesmanship, with lawyers seizing upon mistakes made by their counterparts in order to gain some advantage.").
Motions to compel responses to interrogatories and requests for production are governed by Federal Rule of Civil Procedure 37(a)(3)(B), which provides that if a party declines to answer an interrogatory or request for production, the serving party "may move for an order compelling an answer, designation, production, or inspection." The party resisting discovery bears the burden of showing why it should not be granted. Mainstreet, 270 F.R.D. at 241 (citing Roesberg v. Johns-Manville Corp., 85 F.R.D. 292, 296-97 (E.D. Pa. 1980) & Rogers v. Tri-State Materials Corp., 51 F.R.D. 234, 247 (N.D. W.Va. 1970)). Specifically, the movant must make a particularized showing of why discovery should be denied. and conclusory or generalized statements fail to satisfy this burden as a matter of law. See Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 402-03 (4th Cir. 2003); see also Jones v. Circle K Stores, Inc., 185 F.R.D. 223, 224 (M.D. N.C. 1999). "At the same time, discovery, like all matters of procedure, has ultimate and necessary boundaries.'" Oppenheimer Fund, Inc., 437 U.S. at 351 (quoting Hickman v. Taylor, 329 U.S. 495, 507 (1978)). Thus, "[d]iscovery of matter not reasonably calculated to lead to the discovery of admissible evidence' is not within the scope of Rule 26(b)(1)." Id. at 351-52 (quoting Fed.R.Civ.P. 26(b)(1)).
Federal Rule of Civil Procedure 33 governs interrogatories. It states that "[e]ach interrogatory must, to the extent it is not objected to, be answered separately and fully in writing under oath." Fed.R.Civ.P. 33(b)(4). All objections must be stated with specificity, and any objection not raised is waived. Id. "If the objection has been properly articulated, it rests with the party seeking discovery to show that a discovery request lies within the bounds of Rule 26." Id. Rule 33(d) allows a party to produce business records which contain answers to the interrogatories and require the interrogating party to examine the records to obtain the answers. To comply with Rule 33(d) though, a party is required to meet certain requirements.
The producing party must satisfy a number of factors in order to meet its justification burden. First, it must show that a review of the documents will actually reveal answers to the interrogatories. 8B Wright, supra, § 2178, at 330. In other words, the producing party must show that the named documents contain all of the information requested by the interrogatories. Oleson v. Kmart Corp., 175 F.R.D. 560, 564 (D. Kan. 1997). Crucial to this inquiry is that the producing party have adequately and precisely specified for each interrogatory, the actual documents where information will be found. 8B Wright, supra, § 2178, at 336. Document dumps or vague references to documents do not suffice. Capacchione v. Charlotte-Mecklenburg Schools, 182 F.R.D. 486 (W.D. N.C. 1998) (220 boxes); In re Bilzerian, 190 B.R. 964 (Bankr. M.D. Fla. 1995) (28 boxes). Depending on the number of documents and the number of interrogatories, indices may be required. O'Connor v. Boeing North Am., Inc., 185 F.R.D. 272, 278 (C.D. Cal. 1999). United States Sec. & Exch. Comm'n v. Elfindepan, S.A., 206 F.R.D. 574, 576-77 (M.D. N.C. 2002); see also Hillyard Enter., Inc. v. Warren Oil Co., Inc., No. 5:02-CV-329, 2003 WL 25904133, at *2 (E.D. N.C. Jan. 31, 2003) ("However, [Rule 33(d)] is subject to the following important limitation: A specification shall be in sufficient detail to permit the interrogating party to locate and to identify, as readily as can the party served, the records from which the answer may be ascertained."). "This provision of Rule 33(d) is meant to make it clear that a responding party has the duty to specify, by category and location, the records from which answers to interrogatories can be derived." Hillyard, 2003 WL 25904133, at *2 (quoting Am. Rockwool v. Owens-Corning Fiberglas Corp., 109 F.R.D. 263, 266 (E.D. N.C. 1985) (citation omitted)).
Federal Rule of Civil Procedure 34 governs document production requests. Pursuant to Rule 34, a party may request that the opposing party "produce and permit the requesting party... to inspect, copy, test, or sample" relevant documents, electronically stored information, and tangible things that are within the party's "possession, custody, or control." Fed.R.Civ.P. 34(a)(1). The party served with a document production request may object to the request if a legitimate basis for doing so exists. See Fed.R.Civ.P. 34(b)(2)(B) & (C). Thus, a party may object that a document production request exceeds the scope of discovery permitted by Rule 26(b)(1); that the request should be denied on the grounds stated in Rule 26(b)(2)(C); that the request impermissibly seeks privileged or work product material, see Fed.R.Civ.P. 26(b)(3); or that documents should not be produced without implementation of a protective order, see Fed.R.Civ.P. 26(c). All objections to document production requests must be stated with particularity and specificity; objections may not be "boilerplate." See Hall v. Sullivan, 231 F.R.D. 468, 470 (D. Md. 2005); Thompson. v. Dep't of HUD, 199 F.R.D. 168, 173 (D. Md. 2001); Marens v. Carrabba's Italian Grill, 196 F.R.D. 35, 38-39 (D. Md. 2000).
Rule 34 requires a party to produce only those documents that are within the party's "possession, custody, or control." Fed.R.Civ.P. 34(a)(1). "Rule 34 control' does not require a party to have legal ownership or actual physical possession of any [of the] documents at issue." Goodman v. Praxair Servs., Inc., 632 F.Supp.2d 494, 515 (D. Md. 2009) (citation omitted). Instead, "documents are considered to be under a party's control when that party has the right, authority, or practical ability to obtain the documents from a non-party." Id. (citation and internal quotation marks omitted); Steele Software Sys., Corp. v. DataQuick Info. Sys., Inc., 237 F.R.D. 561, 563-65 (D. Md. 2006). However, Rule 26(b)(2)(C) instructs the court to "limit the frequency or extent of discovery otherwise allowed" if, inter alia, "the discovery sought... can be obtained from some other source that is more convenient, less burdensome, or less expensive." Additionally, "[a] party must produce documents as they are kept in the usual course of business or must organize and label them to correspond to the categories in the requests...." Fed.R.Civ.P. 34(b)(2)(E)(I); see also E.E.O.C. v. Altec Indus., Inc., No. 1:10-CV-216, 2012 WL 2295621, at *2 (W.D. N.C. June 18, 2012); T.N. Taube Corp. v. Marine Midland Mortg. Corp., 136 F.R.D. 449, 456 (W.D. ...