Seven Z Enter., Inc. v. Giant Eagle, Inc.
Seven Z Enter., Inc. v. Giant Eagle, Inc.
2020 WL 7240365 (W.D. Pa. 2020)
March 6, 2020
Conner, Christopher C., United States District Judge
Summary
The court granted in part and denied in part motions to quash subpoenas for ESI issued by plaintiffs to nonparty entities involved in defendant Giant Eagle's gasoline distribution and third-party gift card management. The court found that the requested ESI was not relevant to the plaintiffs' claims and imposed an undue burden on the nonparty entities, and that much of the information sought was already in the possession of Giant Eagle.
SEVEN Z ENTERPRISES, INC., et al., Plaintiffs
v.
GIANT EAGLE, INC., Defendant
v.
GIANT EAGLE, INC., Defendant
CIVIL ACTION NO. 2:17-CV-740
United States District Court, W.D. Pennsylvania
Filed March 06, 2020
Counsel
Kathleen A. Gallagher, Carolyn Batz McGee, Daniel P. Wolfe, Russell D. Giancola, Thomas S. Jones, David I. Kelch, Kevin C. Meacham, Devin A. Winklosky, Matthew C. Gill, Porter Wright Morris & Arthur LLP, Thomas W. Corbett, Jr., Julian E. Neiser, Spilman Thomas & Battle, PLLC, Pittsburgh, PA, James D. Curphey, Pro Hac Vice, Porter Wright Morris & Arthur LLP, Columbus, OH, James M. Sack, Pro Hac Vice, The Sack Law Firm P.C., McLean, VA, for Plaintiffs.Bernard D. Marcus, Erin G. Allen, Moira E. Cain-Mannix, Scott D. Livingston, Joshua Kobrin, Brian C. Hill, Daniel J. Stuart, Jonathan D. Marcus, Matthew R. Mazgaj, Marcus & Shapira LLP, Pittsburgh, PA, for Defendant.
Conner, Christopher C., United States District Judge
MEMORANDUM
*1 This litigation has been proceeding through, and is nearing the end of, fact discovery. As part of that process, plaintiffs have issued subpoenas requesting documents from certain nonparty entities. Defendant Giant Eagle, Inc. (“Giant Eagle”) and several nonparties move to quash plaintiffs’ subpoenas, or, in the alternative, for protective orders. We will grant in part and deny in part the motions challenging plaintiffs’ subpoenas.
I. Factual Background & Procedural History
A thorough recitation of the background and numerous claims in this case appears in our November 6, 2018 memorandum addressing Giant Eagle's motions to dismiss, familiarity with which is presumed. (See Doc. 118 at 1-5). Because of extensive motion practice and numerous discovery disputes in this litigation, we write primarily for the parties.
During discovery, plaintiffs issued subpoenas duces tecum to three entities involved with Giant Eagle's gasoline distribution and third-party gift card management: Guttman Energy, Inc. (“Guttman”), Source One Transportation, LLC (“Source One”), and Blackhawk Network Holdings, Inc. (“Blackhawk”), (collectively, “nonparty suppliers”). (See Docs. 206-1, 206-2, 206-3). Guttman and Source One are involved with supplying and distributing fuel to Giant Eagle's GetGo stores; Blackhawk facilitates and manages third-party gift card sales within Giant Eagle supermarkets. (See Doc. 206 at 4-5; Doc. 206-4 ¶¶ 4, 8). Plaintiffs subsequently served subpoenas duces tecum on 15 nonparty, independent Giant Eagle supermarket retailers, (collectively, “nonparty retailers”). (See Doc. 316-1). Giant Eagle moves to quash all nonparty subpoenas, or, in the alternative, for protective orders. (Docs. 205, 315). The nonparty retailers also move to quash plaintiffs’ subpoenas or for a protective order. (Doc. 317). The motions are fully briefed and ripe for disposition.
II. Legal Standard
Federal Rule of Civil Procedure 45 governs subpoenas, including those issued during discovery to nonparty litigants. See Fed. R. Civ. P. 34(c); see generally Fed. R. Civ. P. 45. Rule 45(d)(3) sets forth reasons for quashing or modifying a subpoena, requiring district courts to take such action when subpoenas, inter alia, seek disclosure of privileged or protected material or subject a party to undue burden. See Fed. R. Civ. P. 45(d)(3)(A)(iii), (iv).
Rule 45 subpoenas duces tecum are necessarily constrained by the general scope of discovery provided in Federal Rule of Civil Procedure 26(b)(1). See First Sealord Sur. v. Durkin & Devries Ins. Agency, 918 F. Supp. 2d 362, 382 (E.D. Pa. 2013). In other words, the records or documents sought must be relevant to the parties’ claims or defenses and “proportional to the needs of the case[.]” Fed. R. Civ. P. 26(b)(1); Cole's Wexford Hotel, Inc. v. Highmark Inc., 209 F. Supp. 3d 810, 822, 823 (W.D. Pa. 2016) (citations omitted). Importantly, Rule 26 was amended in 2015. This amendment abrogated the prior overly broad standard that deemed a discovery request permissible “if there is any possibility that the information [requested] may be ‘relevant to the subject matter involved in the action.’ ” Cole's Wexford Hotel, 209 F. Supp. 3d at 821-23 (quoting Kegerise v. Susquehanna Twp. Sch. Dist., No. 1:CV-14-0747, 2016 WL 2736048, *1 (M.D. Pa. May 11, 2016); Fed. R. Civ. P. 26(b)(1) (2000)); see Fed. R. Civ. P. 26(b)(1) advisory committee's note to 2015 amendment. Following this 2015 amendment, “the scope of all discovery is limited to matter that is relevant to the claims or defenses in the case and proportional to what is at stake” in that case. Cole's Wexford Hotel, 209 F. Supp. 3d at 823.
III. Discussion
*2 Giant Eagle contends that plaintiffs’ document requests served on Guttman, Source One, and Blackhawk are irrelevant and disproportionate to the needs of the case.[1] Giant Eagle also notes that much of the information sought from these nonparties is in its possession and has already been requested pursuant to Rule 34 discovery, making plaintiffs’ subpoenas duplicative and vexatious. The nonparty retailers, along with Giant Eagle, claim that plaintiffs’ subpoenas fail Rule 26(b)(1) requirements and impose an undue burden on the retailers. We address plaintiffs’ nonparty subpoena sets in turn.
A. Nonparty Supplier Subpoenas
Plaintiffs’ subpoenas duces tecum for the nonparty suppliers are sweeping. As to Guttman and Source one, plaintiffs seek production of nearly every document remotely related to the companies’ business relationship with Giant Eagle. (See Doc. 206-1 at 7-8; Doc. 206-2 at 7-8). Plaintiffs request, among other things, documents related to contractual agreements, negotiations, accounting, marketing, advertising, pricing, board membership, and corporate structure. (Doc. 206-1 at 7-8; Doc. 206-2 at 7-8). As to Blackhawk, plaintiffs seek all documents related to contractual agreements, operational changes, gift card costs and fees, accounting, profitability assessments, marketing, gift card policies and procedures, and meetings where Giant Eagle representatives were present. (Doc. 206-3 at 8-9).
Plaintiffs rely on their state-law claims of unjust enrichment and unfair competition as the basis for the relevancy of these requests. However, plaintiffs’ opposition to Giant Eagle's motion to quash was filed before this court's August 2, 2019 order concerning a separate discovery dispute. In that order, we expressly circumscribed the unjust enrichment claim “to the parameters set forth in plaintiffs’ first supplemental complaint at paragraphs 424 through 432. Specifically, discovery on the unjust enrichment claim, as pled in the alternative to the related breach of contract claim, shall relate to alleged ‘overcharges’ for ‘the fuelperks! promotion.’ ” (Doc. 266 at 1 (quoting Doc. 79 ¶ 425)).
With unjust enrichment off the table (as the nonparty suppliers have nothing to do with alleged fuelperks! overcharges), plaintiffs are left with only their claim for unfair competition. This is a slender reed on which to base the instant nonparty supplier subpoenas. Plaintiffs argue that they need the requested information to “better understand the inner-workings of the GetGo enterprise and to determine the complete picture of GetGo's profit structure.” (Doc. 226 at 7). They further contend that they “are entitled to discovery on the nature and details” of the relationships between the nonparty suppliers and Giant Eagle “to understand the precise mechanics by which Giant Eagle has used the fuelperks! program as a sham promotion to enrich GetGo at [p]laintiffs’ expense.” (Id. at 5).
We are unpersuaded by this reasoning. First, we have difficulty even loosely connecting the requested information to plaintiffs’ unfair competition claim. From the inception of this litigation, the contours of plaintiffs’ cause of action for unfair competition have been nebulous at best. In our most recent discovery-dispute order, we mentioned that plaintiffs’ allegations that Giant Eagle was using funds collected from plaintiffs through “fuelperks! charges and contractually based advertising and marketing fees” to exclusively benefit direct competitors “may fall within the ambit of ‘unfair competition’ under Pennsylvania law.” (Doc. 303 at 2 n.1 (citing Doc. 118 at 24)). But plaintiffs have continually attempted to shoehorn every grievance they have with Giant Eagle into their claim for unfair competition. We reject this tactic. Plaintiffs fail to establish how their extensive document requests from Guttman, Source One, and Blackhawk are relevant to the first supplemental complaint's allegations that could plausibly relate to unfair competition. (See Doc. 79 ¶¶ 388-98).
*3 Even if plaintiffs’ document requests were relevant, they run afoul of other aspects of Rule 26(b). Specifically, they are disproportionate to the needs of the case, Fed. R. Civ. P. 26(b)(1), and are either unreasonably cumulative or duplicative or “can be obtained from some other source that is more convenient, less burdensome, or less expensive,” Fed. R. Civ. P. 26(b)(2)(C)(i). The sheer scope of the subpoenas speaks to their disproportionality. Plaintiffs’ requests are neither targeted nor precise, instead seeking vast amounts of information related to all facets of the nonparty suppliers’ relationship with Giant Eagle.
More importantly, plaintiffs do not explain why most of the requested information is not duplicative or could not be more easily and conveniently obtained from Giant Eagle. (See Doc. 206-5 (charting overlap between nonparty supplier subpoenas and document requests made to Giant Eagle)). Certainly, no rule compels a litigant to seek relevant discovery from a party before requesting that information from a nonparty, see Software Rights Archive, LLC v. Google Inc., No. 2:07-CV-511, 2009 WL 1438249, at *2 (D. Del. May 21, 2009), but that does not render null the requirements of Rule 26(b)(2)(C). To the extent that plaintiffs have a genuine need for information regarding their fuelperks! charges and advertising funds being used to benefit competitors, that information is available, and has likely been requested, from Giant Eagle. Those records, moreover, are not the type of “non-well-defined set whose completeness is not readily verifiable.” Software Rights, 2009 WL 1438249, at *2 (internal quotation marks and citation omitted). Per contra, insofar as any information in the supplier subpoenas is relevant, it is most likely “in the hands of the opposing party” and thus “there is far less need to burden the non-party, if at all.” Id. (citation omitted). Accordingly, we will grant Giant Eagle's motion to quash the nonparty supplier subpoenas.[2]
B. Nonparty Retailer Subpoenas
Giant Eagle and the nonparty retailers both move to quash plaintiffs’ subpoenas duces tecum directed at the retailers. These subpoenas, when compared to the nonparty supplier subpoenas, reflect a more targeted and reasonable set of requests. For each retailer, plaintiffs seek: (1) all documents related to a March 6, 2018 email from Gene Tommasi sent to independent store owners regarding a specific subsidy program and related agreement and release; (2) all documents related to a March 15, 2018 email from Gene Tommasi sent to independent store owners regarding similar matters; (3) all communications between the nonparty retailer and Giant Eagle related to the aforementioned emails; and (4) all documents and communications regarding participation in the fuelperks+ program and related costs. (See Doc. 316-1 at 8, 15, 22, 29, 36, 43, 50, 57, 64, 71, 78, 85, 92, 99, 106).
Movants initially argue that plaintiffs’ requests are irrelevant. We disagree. It is plausible that the subsidy program at issue was offered to independent retailers to offset the allegedly significant costs of the fuelperks+ program and to protect against legal claims based on the program's projected financial effects. (See, e.g., Doc. 348 ¶¶ 667-69). The subsidy program's relevance is likewise evidenced by the deposition excerpts plaintiffs provided, wherein plaintiffs’ witnesses were directly questioned about the program and its participation requirements. (See Doc. 333 at 5-6). Furthermore, the fuelperks+ program is directly at issue in this litigation, as it constitutes the basis for much of the second supplemental complaint. (See generally Doc. 348). The Rule 26 relevance threshold is clearly satisfied.
*4 The nonparty retailers next assert that compliance with the subpoenas would be unduly burdensome. Again, we cannot agree. When determining whether responding to a subpoena duces tecum would impose an “undue burden” under Federal Rule of Civil Procedure 45(d)(3)(A)(iv), courts consider (1) the relevance of the subpoenaed material; (2) the issuing party's need for the requested information; (3) the scope and particularity of the request; and (4) the burden imposed on the respondent. United States v. Massimino, 368 F. Supp. 3d 852, 855 (E.D. Pa. 2019) (discussing “undue burden” in civil-subpoena context); Miller v. Allstate Fire & Cas. Ins. Co., No. 07-260, 2009 WL 700142, at *2 (W.D. Pa. Mar. 17, 2009).
Most of these factors militate in plaintiffs’ favor. As already discussed, the subpoenaed records are plainly relevant. Plaintiffs also have a distinct need for the information from the nonparty retailers: a significant portion of the information sought would likely be in the exclusive possession of the retailers rather than with Giant Eagle. And, contrary to plaintiffs’ nonparty supplier subpoenas, the retailer subpoenas are limited in both time and scope. The first four requests concern specific emails sent in March 2018. The request for fuelperks+ documents, while broader, is likewise limited to recent events, as the fuelperks+ program was only “rolled out” in March 2019. (See Doc. 318 at 4; Doc. 333 at 8).
The only factor that may cut in the nonparty retailers’ favor is the burden imposed. Responding to the subpoenas will necessarily require time and expense on the part of businesses which are uninvolved in this litigation. We note, however, that any potential undue burden can be mitigated by cost shifting permitted under Rule 45(d)(2)(B)(ii), which requires nonparties to be protected from significant expense resulting from compliance with a subpoena. See Fed. R. Civ. P. 45(d)(2)(B)(ii); E.E.O.C. v. Kronos, Inc., 694 F.3d 351, 371-72 (3d Cir. 2012).[3] We conclude that, on balance, the relevant factors do not support quashing or modifying the instant nonparty retailer subpoenas based on “undue burden” under Rule 45(d)(3)(A)(iv).
We likewise will deny movants’ alternative requests for a protective order under Rule 26(c) for all the foregoing reasons. We note that any concerns regarding disclosure of confidential information are alleviated by the existing stipulated protective order in this case, which explicitly extends to information exchanged by third parties as part of the instant litigation. (See Doc. 15-1 at 1; Doc. 21 (granting proposed stipulated protective order)).
IV. Conclusion
We will grant Giant Eagle's motion (Doc. 205) to quash the nonparty supplier subpoenas and deny the motions (Docs. 315, 317) to quash the nonparty retailer subpoenas. An appropriate order shall issue.
Footnotes
The parties agree that Giant Eagle has standing to challenge the instant subpoenas, at least to the extent that Giant Eagle claims a “personal right or privilege” in the subject matter of the requested materials. (See Doc. 226 at 3-4); First Sealord, 918 F. Supp. 2d at 382 (citation omitted).
To the extent Giant Eagle lacks standing to challenge any requests in the nonparty supplier subpoenas, (see, e.g., Doc. 206-1 at 8, request no. 3; Doc. 206-2 at 8, request no. 3), those requests are irrelevant to plaintiffs’ unfair competition claim.
The Third Circuit has indicated that the “primary consideration in fairly allocating” subpoena-compliance costs is whether the costs “exceed[ed] that which the respondent may reasonably be expected to bear as a cost of doing business.” Kronos, Inc., 694 F.3d at 371-72 (alteration in original) (quoting United States v. Friedman, 532 F.2d 928, 938 (3d Cir. 1976)). Should the nonparty retailers incur unreasonable or undue expense in complying with plaintiffs’ subpoenas, they are free to seek appropriate reimbursement. We admonish the parties that any subpoena-related expense issues that may arise should be amicably resolved without court involvement, and that judicial intervention should be sought only as a last resort.