Midwest Feeders, Inc. v. Bank of Franklin
Midwest Feeders, Inc. v. Bank of Franklin
2016 WL 3636132 (S.D. Miss. 2016)
February 26, 2016

Parker, Michael T.,  United States Magistrate Judge

Search Terms
Failure to Produce
Cooperation of counsel
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Summary
The Court granted the motion to compel in part, requiring Midwest to produce all relevant ESI such as audits, financial statements, tax returns, communications with the Bank of Alva, and documents relating to payments issued or received. The Court denied the motion in part, as the request for documents generated by Alva State Bank was overly broad. The Court also denied the motion without prejudice as to documents designed to protect Midwest's interests, as the parties did not provide sufficient information.
Additional Decisions
Midwest Feeders, Inc., Plaintiff,
v.
The Bank of Franklin, Defendant
CIVIL ACTION NO. 5:14cv78-DCB-MTP
United States District Court, S.D. Mississippi, Western Division
Signed February 26, 2016

Counsel

John O'Brien – PHV, Neal McConomy – PHV, Scott C. Sandberg – PHV, Timothy G. O'Neill – PHV, Snell & Wilmer, LLP, Denver, CO, Raymond Spencer Clift, III, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Memphis, TN, James Franklin Noble, III, Noble & Noble, PLLC, Ridgeland, MS, for Plaintiff.
Lawrence M. Quinlivan, Deutsch Kerrigan, LLP, Gulfport, MS, John L. Maxey, II, Kelly H. Stringer, Steven Mark Wann, Maxey Wann, PLLC, Jackson, MS, Judy L. Burnthorn, Deutsch, Kerrigan & Stiles, New Orleans, LA, Lane B. Reed, Mary Kathryn Williamson, McGehee, McGehee & Torrey, Meadville, MS, for Defendant.
Parker, Michael T., United States Magistrate Judge

ORDER

*1 THIS MATTER is before the Court on the Motion to Compel [67] filed by the Defendant the Bank of Franklin (“the Bank”). The Court having carefully considered the motion finds that it should be GRANTED IN PART and DENIED IN PART.
BACKGROUND
The Court has outlined the facts giving rise to this lawsuit on multiple occasions. Plaintiff Midwest Feeders, Inc., (“Midwest”) and an individual named Robert Rawls entered into a business arrangement whereby Midwest financed Rawls's purchases of livestock. Midwest argues that at some point in time, Rawls began to forge checks payable to purported cattle sellers and then deposit the checks in an account at the Defendant Bank of Franklin (“BOF”). See Complaint [1] at 2-4. The combined amount of the fraudulent checks totaled over $85 million. Id. Midwest claims that BOF is liable under various legal theories because it did not take steps to detect or prevent Rawls's fraudulent scheme. See generally Complaint [1]. Specifically, Midwest has alleged claims of: (1) failure to exercise ordinary care under Mississippi Code § 75-3-404(d); (2) negligence; (3) negligent hiring and supervision; and (4) civil conspiracy.[1] See id.; Order [33].
The Bank filed the instant motion on January 13, 2016, requesting an order from this Court directing Midwest to respond to and/or supplement its responses its responses to nineteen (19) of the Bank's interrogatories and nineteen (19) of the Bank's requests for production. The Bank also outlines a dispute with Midwest regarding the definition of “Midwest” throughout the discovery requests. Following Midwest's response [69] to the motion, and the Bank's reply [71], the Court found that an in-person conference between the parties was desirable in order to resolve or narrow the discovery disputes at issue. Accordingly, the Court entered Order [72], which directed the parties to confer and file a joint report “clearly outlining which disputes were resolved in the conference and which disputes, if any, remain for decision. Generalities will not suffice .... If disputes remain, the report shall specify the nature of each dispute.”
The parties filed their joint report [75] on February 19, 2016, in which they state that two (2) interrogatories and twelve (12) requests for production remain in dispute. In addition, the parties report that the definition of “Midwest” continues to be contested.
ANALYSIS
Federal Rule of Civil Procedure 25(b)(1) defines the scope of discovery:
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.
*2 The discovery rules are accorded a broad and liberal treatment to achieve their purpose of adequately informing litigants in civil trials. Herbert v. Lando, 441 U.S. 153, 177 (1979). “It is well established that the scope of discovery is within the sound discretion of the trial court.” Freeman v. United States, 556 F. 3d 326, 341 (5th Cir. 2009).
Definition of “Midwest”
The Bank's discovery requests are prefaced by a “definitions and instructions” section, in which “Midwest” is defined as follows:
“Midwest” shall include Midwest, Inc. [and] all persons acting or purporting to act on behalf of Midwest Feeders, Inc. “Midwest” shall further include any and all agents, officers, directors, and/or shareholders of Midwest Feeders, Inc. Midwest shall also specifically include Jeff Sternberger, Lee Brandt and Colleen Sternberger.
The parties disagree as to whether Lee Brandt and Colleen Sternberger should be included in this definition. The Bank states that Lee Brandt is an officer of Midwest, and that Colleen Sternberger assisted Midwest in its investigation of Rawls and his various businesses after Rawls's fraudulent activities were discovered. The Bank also asserts that Jeff and Colleen Sternberger's other livestock business, “J&C,” was interconnected with Rawls's livestock business. See Joint Report [75] at 2. In response, Midwest states that Colleen Sternberger and Lee Brandt have no day-to-day responsibilities at Midwest, and that “all of the named individuals make personal communications that have nothing to do with Midwest.” See id. at 3.
The Court finds that the Bank's motion to compel should be granted in part and denied in part in this respect. Any individual acting on behalf of Midwest, including Colleen Sternberger and Lee Brandt, should be included in the definition of Midwest. To the extent these individuals were acting in a private capacity and not on behalf of Midwest, they should be excluded from the definition.[2]
Interrogatory No. 21
In this interrogatory, the Bank requests that Midwest provide the following information for each document in its possession or control that is relevant to the instant action: (1) a description of the document; (2) the author of the document; (3) the location of the document; and (4) the name, address and telephone number of the custodian of the document.
Midwest states that it has sufficiently responded to the interrogatory pursuant to Federal Rule of Civil Procedure 33(d).[3] Midwest also states: “Every document produced by Midwest is relevant. And this Interrogatory requests information stated on the fact of every such document.” See Joint Report [75] at 5. The Bank contends that Midwest has not complied with Rule 33.
*3 The Court finds that the motion to compel should be denied as to Interrogatory No. 21. Providing the information requested for the thousands of documents that have been produced is unduly burdensome, especially if, as contended by Midwest, such information is easily discernable on the face of the document itself. If the Bank was unable to discern such information for a particular document, the matter might be different, but such a broad and onerous request will not be granted under the circumstances presented.
Interrogatory No. 23
In this interrogatory, the Bank requests information regarding all of Midwest's accounts, capital contributions, loans, guarantees, distributions, liquidations, withdrawals, salaries, or bonuses to or from Robert Rawls, Rawls Trucking, LLC, Robert Rawls Livestock, Amanda Rawls, Alva State Bank, Lee Brandt, and/or Jeff Sternberger, from January 1, 2006 to present. Midwest objects to the request insofar as it seeks information regarding Lee Brandt and Jeff Sternberger, on the basis that the information is proprietary, sensitive, and irrelevant. See Joint Report [75].
In the joint report, the Bank again refers to the fact that Jeff Sternberger, who is president of Midwest, had personal and financial connections to Robert Rawls by way of another livestock business, “J&C.” The Bank argues that if the personal financial affairs of Midwest's principals were comingled with Rawls or his businesses, such information should be discoverable. The Bank further argues that the compensation of Midwest's principals is relevant to their “motivation and bias.”
The Court finds that the motion to compel should be granted as to Interrogatory No. 23. The question of whether Midwest's employees or officers were personally or financially involved in Rawls's livestock businesses, and possibly Rawls's fraudulent scheme, is directly relevant to this action. Furthermore, Midwest's concerns regarding “sensitive and proprietary business information” may be addressed by the Stipulated Protective Order [50] filed in this matter.
Request for Production No. 1
In this request, the Bank seeks communications between Midwest, Rawls, and various other individuals and entities. The Bank avers that Midwest has failed to produce all relevant communications, as they have only produced those communications that expressly reference Robert Rawls or Pam Watts.[4] Although the Bank's request was initially without limit, the Bank states that it has revised its request to include communications exchanged from January 1, 2006 (four months prior to Midwest entering into the relationship at issue with Rawls) and continuing.
Midwest argues that the request is overly broad, as it has no limit in time or scope. Midwest states that it has produced 14,000 pages of communications by extracting all the e-mails that contained the terms “Rawls” or “Watts.” Midwest further states its production of documents is ongoing and that it anticipates producing an additional 14,000 pages of communications. Midwest does not argue that communications with the dozens of entities and individuals identified are irrelevant, but rather, that BOF has failed to clarify or limit its request to “issues that are relevant to claims or defenses in this lawsuit.” See Joint Report [75] at 10. Midwest also states that the Bank has failed to propose alternative search terms.
The Court finds that the motion to compel should be denied without prejudice as to Request No. 1. It appears that the parties' dispute is centered around whether the search terms used by Midwest to extract communications from its database are adequate. The Court acknowledges that highly relevant communications might exist that do not expressly reference “Rawls” or “Watts,” but producing “any and all” communications sent or received by a dozen individuals and entities[5] over the course of a decade, without restriction, is overly broad. As outlined above, the Court directed the parties to confer in good faith in order to resolve the considerable number of discovery disputes that have been presented. See Order [72]. Such a conference was a prime opportunity to discuss search terms that were amenable to both parties. The Court is not in a position to designate the proper search terms for locating documents on the parties' behalf, especially where the Bank has proposed no alternative terms.
Request for Production No. 2
*4 In this request, the Bank seeks communications sent or received by each individual identified in Midwest's answers to the Bank's interrogatories 3, 4, 6, 9, 12, 16, 17, 20, 26, 27, 29 and/or 31 that are relevant to the series of transactions involved in this matter. The Court does not have the benefit of Midwest's responses to all of these interrogatories. However, the Bank appears to limit its request to seven individuals and entities in the joint report submitted to the Court: (1) Todd Holder of the Alva State Bank; (2) Chuck LeMaster; (3) David MeMaster; (4) Jim Wernli of Bank of the West; (5) Southeast Livestock Exchange; (6) the CPA firm of Lewis, Hooper & Dick; (“LHD”) and (6) the Alva State Bank. See Joint Report [75] at 12. Midwest asserts that they have produced all communications in their possession that include the terms “Rawls” or “Watts.”
Again, the parties dispute solely concerns the propriety of the search terms used by Midwest—“Rawls” and “Watts”—to locate the responsive documents. Accordingly, the motion to compel will be denied without prejudice in regard to Request No. 2 for the same reasons as those set forth above.
Request for Production No. 4
The Bank also seeks “all documents identified or requested to be identified in response to the Interrogatories of Bank of Franklin.” See Motion to Compel [67] at 25. The Bank limits this request in the joint report, where it states that it seeks: (1) complete and unredacted bank records from the Alva State Bank; (2) complete and unredacted records from Bank of the West; (3) complete and unredacted audits, tax returns, financial statements and communications with LHD; (4) complete and unredacted communications regarding the **4167 account at Alva State Bank; and (5) complete and unredacted copies of the Rawls A/R (accounts receivable) that Midwest removed from Rawls's office. The Court will address each of these requests in turn.
The Banks argues that it is entitled to all documents pertaining to all accounts held by Midwest at the Alva State Bank. As gleaned from the complaint, Midwest provided Rawls secured financing through access to a deposit account, Account No. **4167, at the Alva State Bank. Rawls then used this money to write fraudulent checks and deposit them into an account at the Bank of Franklin. See Complaint [1] at 3. The Bank states that at least four other entities had access to the same deposit account at the Alva State Bank. See Joint Report [75] at 8.
Midwest states that it should only be required to produce documents related to the **4167 account. Midwest also states that it has already produced all the documents in its possession that are responsive to the request, except that certain records were redacted insofar as they referenced other entities that has access to same the same **4167 account. Id. at 14.
The Court finds that the motion to compel should be granted in part and denied in part in this respect. Midwest shall produce all the records in its possession regarding the **4167 account in an unredacted form and in full. The Court finds that such records are relevant, as the **4167 account was the same one used by Rawls to fund his scheme. However, the Bank has made no clear showing as to how records pertaining to Midwest's other accounts at the Alva State Bank are relevant to any claim or defense in this matter. Accordingly, in that respect, the motion to compel is denied.
In its responses to the Bank's interrogatories, Midwest identified several accounts it holds at Bank of the West. The Bank argues that it is entitled to all records pertaining to all of Midwest's accounts held there, but fails to articulate how the records are in any way connected to any claim or defense in this action. The Bank references one document reflecting that in February 2014, Midwest assigned a promissory note issued to Rawls in the amount of approximately $24,000 to the Bank of the West. See Joint Report [75] at 19; Exhibit 9 at 3. However, this single document does not establish the relevancy of the requested documents, nor does it justify the substantial production of all records sought by the Bank. Accordingly, the motion to compel is denied in this respect.
*5 The Bank argues that it is entitled to the audits conducted of Midwest by LHD (referring to the CPA firm Lewis, Hooper & Dick) and others, Midwest's financial statements and yearly tax returns, and all communications with LHD.
In regard to the audits, financial statements and tax returns, the Bank argues the records are relevant to the accuracy and extent of damages claimed by Midwest. See Joint Report [75] at 22. Midwest argues that the request is irrelevant, as it claims that its damages are based on the fraudulent checks written by Rawls, which they have already produced. Midwest further states that it has produced all documents relied upon by its damages expert. Id. at 16. Finally, Midwest states that it is not asserting a damages claim for lost income, and so many of its financial records are irrelevant. Id. at 15. However, the Bank counters that Midwest's claimed damages do not properly align with the total amount of fraudulent checks Rawls deposited, and that other financial documents are necessary in order to verify Midwest's expert report Id. at 8.
The Court finds that the Bank's request for audits, financial statements, and tax returns should be granted in part and denied in part, as the requested records are pertinent to Midwest's calculation of damages and the Bank's possible defenses. All of Midwest's audits, financial statements and tax returns from 2006 (the year Rawls's relationship with Midwest began) to present should be produced in an unredacted from and in full. In all other respects, this portion of the request is denied.
In regard to requested communications between Midwest and its accounting firm, LHD, Midwest states that it had produced all communications referencing “Rawls” and “Watts.” Accordingly, because the dispute once again concerns the adequacy of search terms, the Court finds that the motion to compel should be denied without prejudice in this respect.
The Bank seeks complete and unredacted communications in Midwest's possession regarding the **4167 account held at Alva State Bank. Although Midwest makes the argument that it has already produced all communications containing the search terms “Rawls” or “Watts,” this request is much more limited in scope. The Bank seeks all communications regarding the specific account used by Rawls in furtherance of his fraudulent scheme. Accordingly, the Bank's request will be granted in this respect. Midwest shall produce all communications concerning the **4167 account at Alva State Bank beginning in 2006 to present.
The Bank states that accounts receivable reports were taken from Rawls's office by Midwest following its discovery of his scheme. Midwest states that it obtained approximately 100 boxes of Rawls's business records, but the records have not been digitized and so Midwest is unaware of whether they include the documents sought by the Bank. See Joint Report [75] at 16. Midwest states that it has produced all the A/R reports it has discovered so far to the Bank. However, Midwest states that the boxes of records from Rawls's office are available for inspection by the Bank's counsel at their convenience.
Because the records sought by the Bank are available for their inspection, it appears that this portion of the request for production is moot and it will therefore be denied.
Request for Production No. 6
*6 In this request, the Banks seeks documents authored by various individuals and entities. The parties state in their joint report that the documents sought in this request “are encompassed” by Requests Nos. 1 and 2. Because the dispute surrounding this request concerns the adequacy of the search terms used by Midwest, it will be denied without prejudice for the reasons set forth above in the Court's discussion of Request Nos. 1 and 2.
Request for Production No. 7
This request seeks “documents generated, authored or transmitted by Alva State Bank in any way relating to the series of transactions at issue in this matter.” See Motion to Compel [67] at 27. In the joint report [75] submitted by the parties, the dispute as to this request pertains to communications between the Bank of Alva and Midwest and documents regarding Midwest's accounts at the Bank of Alva.
The Court finds that the motion to compel should be granted in part and denied in part as to Request No. 7. Midwest shall produce all communications with the Bank of Alva concerning the **4167 account dating from 2006 to the present, as well as full and unredacted copies of all records pertaining to the **4167 account, for the reasons set forth in the Court's discussion of Request No. 4. In all other respects, the motion to compel regarding Request No. 7 will be denied.
Request for Production No. 14
The Bank seeks Midwest's federal and state tax returns from January 1, 2006 and continuing. For the reasons set forth in the Court's discussion of Request No. 4, the motion to compel is granted in this respect.
Request for Production No. 15
In this request, the Bank seeks “any and all checks or evidence of any payments issued or received by Midwest in any way relating to the series of transactions or occurrences at issue in this matter.” See Motion to Compel [67] at 29. In the joint report, the parties state that the dispute is limited once again to records concerning Midwest's accounts at the Bank of Alva and Bank of the West. See Joint Report [75] at 19. For the same reasons set forth above, Midwest shall produce full and unredacted copies of all records pertaining to the **4167 account at the Alva State Bank. In all other respects, the motion to compel is denied as to Request No. 15.
Request for Production No. 17
This request seeks “any and all documents which Midwest believed were designed to protect its interests and financial investments related to any of the series of transactions or occurrences at issue in this matter.” See Motion to Compel [67] at 31. The parties list this request as “disputed” in their joint report, but do not specify what documents or issues remain in dispute, or their respective arguments. The Court's Order [72] specifically directed the parties to clearly outline the remaining discovery disputes. In regard to Request No. 17, the parties merely state that a dispute remains and list the documents produced to date. This will not suffice. Accordingly, the motion to compel is denied without prejudice as to Request No. 17.
Request for Production No. 20
This request seeks Midwest's financial statements commencing January 1, 2006 and continuing. For the reasons set forth in the Court's discussion of request No. 4, the motion to compel is granted as to Request No. 20.
Request for Production No. 21
The Bank seeks in this request “each and every ticket, invoice, accounting, ledger, spreadsheet and summary involving Robert Rawls and funds advanced by or repaid to Midwest.” See Motion to Compel [67] at 32. The parties description of the discovery dispute as to this request in their joint report is very brief, and directs the Court to the disputes contained in Requests Nos. 4, 7, 10, 15, and 24. See Joint Report [75] at 22. The parties do specifically reference disputes concerning banking statements and checks. However, as the request appears to be limited to Rawls and funds advanced by or paid to Midwest, the documents sought are reasonably relevant to the issues in this case and should be produced. Accordingly, the motion to compel is granted as to Request No. 21.
Request for Production No. 22
*7 In this request, the Bank seeks “all documents relating to the credit relationships, deposit relationships, applications, agreements, secured financing, financial services, policies, procedures, audits, and or/confirmations identified or requests to be identified in Bank of Franklin's Interrogatories 1, 2, 3, 8, 23, 24, 28, and/or 30.” See Motion to Compel [67] at 33. The Court does not have the benefit of Midwest's responses to all of interrogatories specified in this request. However, the entities and individuals referenced in the interrogatories/responses submitted to the Court include, inter alia, the Alva State Bank, Bank of the West, Lincoln Lumber Co., Inc., Southwest Mississippi Farms, LLC, Amanda Rawls, Pete Rawls, and Cortez Byrd.
The Bank argues that all of these documents will reflect on the accuracy of Midwest's expert report regarding damages and the extent of Midwest's claimed loss. The Bank also references a document showing that Rawls wrote Midwest a check for $1.4 million dollars, and argues that this indicates that there were “additional creditor or debtor relationships ... in place beyond the **4167 account at Alva.” See Joint Report [75] at 23; Exhibit 8. However, this document does not necessarily indicate a creditor or debtor relationship, as it appears funds exchanged routinely between Midwest and Rawls. This single document does not establish a sufficient basis for Midwest to produce every document pertaining to each account it held at any financial institution, or each financial agreement with any individual. Such a request is overly broad and disproportionate to the issues.
Accordingly, the motion to compel as to this request will be granted in part and denied in part. Midwest shall produce full and unredacted copies of all records pertaining to the **4167 account at the Alva State Bank. In all other respects, the motion to compel is denied as to Request No. 22.
Request for Production No. 24
In this request, the Bank seeks all documents relating to Midwest's alleged damages. In their joint report, the parties state that remaining disputes concerning this request are encompassed with Request Nos. 14, 15, 20 and 22. However, the documents at issue in Request No. 24 – tax returns, financial statements, and documents related to accounts held by Midwest at Alva State Bank and Bank of the West – are identical to those at issue in Request No. 4. Therefore, the motion to compel as to Request No. 24 is granted in part and denied in part to the same extent and for the same reasons as those set forth in the Court's discussion of Request No. 4.
IT IS, THEREFORE, ORDERED that the Motion to Compel [67] filed by the Bank is GRANTED IN PART and DENIED IN PART, as set forth above.
SO ORDERED this the 26th of February, 2016.

Footnotes

Midwest initially listed claims of conversion of instruments under Mississippi Code § 75-3-420 and common law conversion of funds, but these claims were dismissed by Order [33].
This is not to say that information or documents pertaining to other business affairs of these individuals are or are not discoverable, or that they cannot be sought and obtained by the Bank via other means. The question presented to the Court is whether the personal business matters of these individuals and those of Midwest should be considered one and the same. The Bank has provided insufficient information to the Court to make such a determination.
Rule 33(d) provides as follows:
“Options to Produce Business Records. If the answer to an interrogatory may be determined by examining, auditing, compiling, abstracting, or summarizing a party's business records (including electronically stored information), and if the burden of deriving or ascertaining the answer will be substantially the same for either party, the responding party may answer by:
specifying the records that must be reviewed, in sufficient detail to enable the interrogating party to locate and identify them as readily as the responding party could; and
giving the interrogating party a reasonable opportunity to examine and audit the records and to make copies, abstracts, or summaries.”
The Bank explains that Pam Watts is Rawls's longtime bookkeeper and secretary. See Joint Report [75] at 10.
The Bank requests communications to or from, inter alia, the following: (1) any employee, officer, director, owner, member, or shareholder of the Alva State Bank; (2) Amanda Rawls; (3) Pam Watts; (4) Pete Rawls; (5) Cortez Byrd; (6) any employee, officer, director, owner, member, or shareholder of Bank of Franklin; (7) Robert Rawls; (8) Lincoln County Receiver Hugh Byrd; (9) Manual Aviles; (10) Robert Rawls Livestock; (11) Robert Rawls Trucking, LLC; and/or (12) Marc Brand.