Bauer v. Wyndham Vacation Resorts, Inc.
Bauer v. Wyndham Vacation Resorts, Inc.
2021 WL 2472899 (E.D. Tenn. 2021)
March 18, 2021
Poplin, Debra C., United States Magistrate Judge
Summary
The court did not address any specific type of ESI, but did encourage the parties to discuss taking the Rule 30(b)(6) deposition by remote means, which could involve the use of ESI.
Additional Decisions
LINDA BAUER and TRACY HOOPINGARNER, Plaintiffs,
v.
WYNDHAM VACATION RESORTS, INC., et al., Defendants
v.
WYNDHAM VACATION RESORTS, INC., et al., Defendants
No. 3:18-CV-262-TAV-DCP
United States District Court, E.D. Tennessee, Northern Division
Filed March 18, 2021
Counsel
Aubrey T. Givens, Kristin Fecteau Mosher, Aubrey Givens & Associates, Madison, TN, for Plaintiffs.Eugene J. Podesta, Jr., Pro Hac Vice, Baker, Donelson, Bearman Caldwell and Berkowitz, PC, Memphis, TN, Jamie Ballinger Holden, Ashley M. Strittmatter, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Knoxville, TN, Jamie L. Morton, Baker, Donelson, Bearman, Caldwell & Berkowitz, Chattanooga, TN, Joy Boyd Longnecker, Sye Thomas Hickey, Baker, Donelson, Bearman, Caldwell & Berkowitz, Nashville, TN, for Defendants Wyndham Vacation Resorts, Inc., Wyndham Vacation Ownership, Inc.
Poplin, Debra C., United States Magistrate Judge
MEMORANDUM AND ORDER
*1 This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court, and Standing Order 13-02.
Now before the Court is Plaintiffs' Motion to Compel and Motion for Sanctions [Doc. 72].[1] In response, Defendants filed a Combined Motion for Protective Order and Response in Opposition to the Motion to Compel and Motion for Sanctions [Doc. 86]. Plaintiffs filed a Response to Defendants' Motion for Protective Order and Reply to Defendants' Response in Opposition to Plaintiffs' Motion to Compel [Doc. 89]. The Motions are ripe for adjudication. Accordingly, for the reasons further explained below, the Court GRANTS IN PART AND DENIES IN PART Plaintiffs' Motion [Doc. 72] and DENIES Defendants' Motion [Doc. 86].
I. BACKGROUND
The following procedural background is relevant to the instant dispute. Specifically, Plaintiffs noticed several Rule 30(b)(6) witnesses for depositions in March 2020. Defendants objected [Doc. 61] to several topics that were noticed in the depositions, arguing that many topics were broad, vague, or irrelevant to the facts alleged in this case. After reviewing Defendants' objections, the Court inquired as to whether the parties needed a hearing on the objections prior to the depositions occurring. The parties agreed to proceed with the depositions and to address the remaining disputes, if any, with the Court afterwards.
The Court addressed the remaining disputes via telephone on April 2, 2020, pursuant to the discovery dispute procedure outlined in the Scheduling Order. [Doc. 69]. During the telephonic hearing, the Court ordered Defendants to supplement several of their discovery responses but also found that Defendants were not required to supplement other responses. Relevant to the instant Motions, the Court addressed Plaintiffs' discovery requests seeking Defendants' net worth, general financial circumstances, and information as to punitive damages awarded against Defendants in other matters. The Court granted Plaintiffs leave to file a motion to compel but ordered the parties to meet and confer regarding Defendants' proposal to stipulate that their net worth is equal to the punitive damages cap (i.e., $500,000 or two times compensatory damages) pursuant to Tennessee Code Annotated § 29-39-104, in lieu of producing discovery regarding their financial condition.
Plaintiffs filed their Motion [Doc. 72] on April 29, 2020. The following day, on April 30, 2020, the District Judge stayed the case so that the parties could participate in meditation. Mediation was unsuccessful, and the stay was lifted on January 8, 2021. [Doc. 74]. Defendants' Motion [Doc. 86] followed on January 22, 2021.
II. POSITIONS OF THE PARTIES
Plaintiffs move the Court, pursuant to Federal Rules of Civil Procedure 26, 30, and 37, to compel Defendants to produce a designee to testify about Defendants' financial condition and other punitive damages awarded against them or to strike Defendants' pleadings and enter a default judgment. In addition, Plaintiffs request their reasonable expenses, including attorney's fees, caused by Defendants' discovery violations.
*2 Specifically, Plaintiffs state that the following topics are still in dispute: (1) WVO and WVR's net worth and general financial circumstances (“Topic No. 87”), and (2) other awards of punitive damages against WVO and WVR in other matters (“Topic No. 90”). Plaintiffs agree to limit these requests to the timeframe of the timeshare purchase at issue through the current. Plaintiffs argue that it is clear that Defendants did not meet their duty to provide a person to testify pursuant to Rule 30(b)(6) because in response to Topic Nos. 87 and 90, Defendants stated, “Irrelevant.” Plaintiffs argue that information regarding a defendant's net worth and financial condition is relevant for discovery purposes when a plaintiff seeks punitive damages. Plaintiffs further state that pursuant to the Tennessee Civil Pattern Jury Instructions, in determining whether a punitive damage award is appropriate, the jury must consider a defendant's net worth and financial condition and the number and amount of previous punitive damage awards based on the same wrongful act. Plaintiffs argue that although they are not required to make a prima facie showing that they are entitled to punitive damages prior to receiving such discovery, they can do so in this case.
Defendants respond in opposition to the Motion and move for a protective order. Specifically, Defendants seek a protective order relieving them of the obligation to produce a Rule 30(b)(6) witness to testify as to Topic Nos. 87 and 90, arguing that such discovery constitutes an undue burden and results in an unnecessary expense to Defendants. Defendants state that they received the Notice of Depositions pursuant to Rule 30(b)(6) seven (7) business days before the depositions and that Defendants filed written objections to several topics, including to Topic Nos. 87 and 90. Defendants submit that the Court inquired as to whether the parties needed a hearing to resolve the objections, but the parties agreed that they would move forward with the depositions with the understanding that many of the issues would likely be resolved. Defendants state that only a few issues remained after the depositions.
Defendants explain that the Court held a hearing on April 2, 2020, to resolve the remaining disputes and that during the hearing, Plaintiffs represented to the Court that they did not need additional Rule 30(b)(6) depositions if Plaintiffs received documentation. Defendants argue that their obligation to produce a corporate representative has been satisfied. Further, Defendants state that Plaintiffs have failed to make a baseline showing of potential punitive conduct to warrant discovery as to Topic Nos. 87 and 90.
Defendants state that the circumstances, including the attorneys' agreements regarding the Rule 30(b)(6) depositions, obviated Defendants' need to seek a protective order. Further, Defendants argue that Rule 37(d) allows sanctions if the deponent fails to appear for his/her deposition and that Defendants are not in violation of Rule 37 because they produced three (3) corporate representatives, who participated in depositions. Further, Defendants submit that Plaintiffs did not preemptively seek relief from the Court prior to the Rule 30(b)(6) depositions and specifically declined any such relief.
Defendants request a protective order out of an abundance of caution, relieving them of any obligation to produce a Rule 30(b)(6) witness on Topic Nos. 87 and 90. Defendants maintain that Plaintiffs cannot establish that they are entitled to discover Defendants' financial condition at this stage of the litigation. Defendants argue that only after liability has been established will their financial affairs and financial condition be relevant to assess punitive damages. Defendants urge the Court to adopt the approach in Wells v. Epes Transp. Sys., Inc., No. 3:05-CV-149, 2006 WL 1050670 (E.D. Tenn. Apr. 20, 2006), arguing that no factual basis for punitive damages discovery exists in this matter. Defendants further state that to the extent financial discovery is warranted, Rule 30(b)(6) testimony is an improper avenue to discover such information and that requiring a Rule 30(b)(6) deposition is unduly burdensome to Defendants. Defendants explain that Wyndham Destination, Inc., (not a named Defendant) is a publicly traded company, and therefore, information about its financial condition is a matter of public record. Defendants state that they are subsidiaries of Wyndham Destination, Inc., and that Plaintiffs already have access to information regarding Defendants' financial condition. Defendants maintain that they are willing to stipulate that their financial condition exceeds the limits pursuant to Tennessee Code Annotated § 29-39-104(a)(5). Defendants argue that their corporate representatives are located in Orlando, Florida, and that it is unnecessary for them to testify when such information can be derived from documentation. Defendants maintain that their financial condition could only be relevant at the bifurcated punitive damages phase of this case. Defendants request that, if they are ordered to produce this information, they be allowed to file the information under seal with the Court as opposed to producing it to Plaintiffs.
*3 Plaintiffs respond that Defendants' request for a protective order is untimely because it was made following Plaintiffs' Motion to Compel. In addition, Plaintiffs state that Defendants have never provided a representative to testify on Topic Nos. 87 and 90, and they have refused any alternative means of production. Further, Plaintiffs state that discovery has established that punitive damages are foreseeable in this case. In addition, Plaintiffs state that while Defendants offered to produce documents in lieu of a Rule 30(b)(6) deposition, Defendants have yet to produce any documents, and therefore, the Court should disregard Defendants' proposal. Plaintiffs also state that Defendants' argument that their financial condition is public is inconsistent with the need for a protective order.
III. ANALYSIS
The Court has considered the parties' positions as summarized above, and the Court hereby GRANTS IN PART Plaintiffs' Motion to Compel [Doc. 72] and DENIES Defendants' Motion for a Protective Order [Doc. 86].
The Court will first begin with a general overview of the Rules that the parties have cited and then turn to the specific issues the parties have raised.
A. Overview
The Court will begin with Federal Rule of Civil Procedure 26, which governs discovery. Federal Rule of Civil Procedure 26(b)(1) provides as follows:
Unless otherwise limited by court order, the scope of discovery is as follows: 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.
Courts have explained that the “scope of discovery under the Federal Rules of Civil Procedure is traditionally quite broad.” Meredith v. United Collection Bureau, Inc., 319 F.R.D. 240, 242 (N.D. Ohio 2017) (quoting Lewis v. ACB Bus. Serv., Inc., 135 F.3d 389, 402 (6th Cir. 1998)). Courts have cautioned, however, that “[d]iscovery requests are not limitless, and parties must be prohibited from taking ‘fishing expeditions’ in hopes of developing meritorious claims.” Bentley v. Paul B. Hall Reg'l Med. Ctr., No. 7:15-CV-97-ART-EBA, 2016 WL 7976040, at *1 (E.D. Ky. Apr. 14, 2016). “[T]he [C]ourt retains the final discretion to determine whether a discovery request is broad or oppressive.” Id. (citing Surles v. Greyhound Lines, Inc., 474 F.3d 288, 305 (6th Cir. 2007)). Finally, Rule 26(b)(2)(C) provides as follows:
On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that: (i) the discovery sought is 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).
Rule 30(b)(6) governs a corporate representative's deposition and provides that the corporation must designate someone who consents to testify on the corporation's behalf. Fed. R. Civ. P. 30(b)(6). “A Rule 30(b)(6) witness is obligated to become educated to the extent possible about the identified topics, although perfection is not expected.” Edwards v. Scripps Media, Inc., 331 F.R.D. 116, 121 (E.D. Mich. 2019). “Producing an unprepared Rule 30(b)(6) witness is tantamount to a failure to appear, which may warrant sanctions under [Rule 37(d)].” Wicker v. Lawless, 278 F. Supp. 3d 989, 1000 (S.D. Ohio 2017). “The party seeking sanctions must make at least an initial showing—with record citations—suggesting that the designee's preparation was inadequate.” Id.
*4 Finally, Rule 26(c) governs protective orders. Specifically, the moving party must show “good cause” for protection from one or more of the harms identified in Rule 26(c)(1)(A). Fed. R. Civ. P. 26(c)(1)(A). Specifically, the Rule authorizes a court to enter an order “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed. R. Civ. P. 26(c)(1). “This Rule confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required.” Eagle v. Hurley Med. Ctr., 292 F.R.D. 466, 478 (E.D. Mich. 2013) (citing Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984)).
With the above guidance in mind, the Court will now turn to the present issues. As mentioned above, Plaintiffs move the Court to compel Defendants to produce a Rule 30(b)(6) witness on Defendants' net worth and general financial circumstances (Topic No. 87) and other awards of punitive damages against Defendants in other matters (Topic No. 90). Defendants request that the Court deny Plaintiffs' request for such discovery or enter a protective order to preclude a Rule 30(b)(6) deposition. In their filings, the parties have raised several issues. The Court will first address whether such discovery is relevant and permissible at this stage of the proceedings. Next, the Court will consider Defendants' request for a protective order. Finally, the Court will address Plaintiffs' request for sanctions.
B. Relevancy
Plaintiffs request that Defendants be compelled to produce a Rule 30(b)(6) witness to testify as to Topic Nos. 87 and 90. Plaintiffs argue that such evidence is relevant, citing to the Tennessee Civil Pattern Jury Instructions. Plaintiffs further explain that with respect to other punitive damage awards, such evidence is relevant to prove notice that a common scheme exists in the corporation and that the activities were intentional rather than negligent. While Defendants generally object to the relevancy of Topic Nos. 87 and 90, Defendants' primary objections are to the timing and method of such discovery, which the Court will address later.
As mentioned above, Topic No. 87 specifically requests Defendants' “net worth and general financial circumstances,” and Topic No. 90 requests, “Other awards of punitive damages against WVO and WVR in other matters.” In Hodges v. S.C. Toof & Co., the Tennessee Supreme Court articulated the factors that the factfinder should consider in determining the amount of punitive damages. 833 S.W.2d 896, 901 (Tenn. 1992). The Court found that a defendant's financial affairs, financial condition, and net worth and whether, and the extent to which, a defendant had been subjected to previous punitive damages awards based upon the same wrongful act were relevant in determining the amount of punitive damages. Id.; see also B&L Mgmt. Grp., LLC v. Adair, No. 17-2197, 2019 WL 3459244, at *16 (W.D. Tenn. July 31, 2019) (discussing defendant's financial condition and whether defendant has been subjected to previous punitive damages in determining the amount of punitive damages); T.P.I.—CIVIL14.56 Punitive Damages—Amount, 8 Tenn. Prac. Pattern Jury Instr. T.P.I.-Civil 14.56 (2020 ed.) (explaining that the jury must consider defendant's net worth and financial condition and the number and amount of previous punitive damage awards against the defendant based upon the same wrongful act in determining the amount of punitive damages).
Based on the authority above, the Court finds Defendants' financial condition and whether they have been subjected to previous punitive damage awards for the same wrongful conduct relevant in the instant matter. The Court notes, however, that Topic No. 90 requests, “Other awards of punitive damages against WVO and WVR in other matters.” (Emphasis added). Whether Defendants were subjected to punitive damages for different conduct as alleged in the Third Amended Complaint is not relevant. Thus, the Court will limit Topic No. 90 to include other awards of punitive damages against Defendants for the same wrongful conduct as alleged in the Third Amended Complaint.
C. Prima Facie Case of Punitive Damages
*5 Defendants assert that Plaintiffs have not met their burden of establishing any factual or common law basis upon which to pursue punitive damages. Defendants rely on Wells v. Epes. Transp. System, Inc., No. 3:05-CV-149, 2006 WL 1050670, at*2 (E.D. Tenn. Apr. 20, 2006) for the proposition that if it appears from discovery on the merits that a factual basis for punitive damages exists, then the plaintiff is permitted to discover the defendant's financial condition. Defendants argue that the discovery that has been conducted in this case establishes that there is no basis to award punitive damages. Plaintiffs respond that Defendants' position is an attempt to re-argue previous motions filed in this case and that Plaintiffs have presented facts to support their request for punitive damages.
Given Defendants' reliance on Wells, the Court will begin with this case. In Wells, the plaintiff alleged gross negligence against a driver of a tractor trailer, who attempted to make a U-turn, which blocked traffic and caused plaintiff to rear-end the driver's tractor trailer. Wells, No. 3:05-cv-149 (E.D. Tenn. Mar. 18, 2005) [Doc. 1]. The plaintiff filed suit against the driver and the driver's employer for gross negligence and requested punitive damages. [Id.]. During discovery, the plaintiff sought the employer's financial information, arguing such evidence was relevant to his claim for punitive damages because the driver was grossly negligent in operating his vehicle. 2006 WL 1050670, at *1. The defendant argued that the request was premature because plaintiff had not stated a sufficient factual basis for an award of punitive damages. Id.
The court explained that in Tennessee, “punitive damages are recoverable in ‘only the most egregious of cases’ and only where the plaintiff proves by clear and convincing evidence that the defendant engaged in intentional, fraudulent, malicious, or reckless conduct.” Id. (quoting Hodges, 833 S.W.2d at 901). The court continued that “punitive damages are assessed only after liability has been established.” Id. (citing Hodges, 833 S.W.2d at 901). The court relied on a procedure that had been adopted in a case before the Tennessee Court of Appeals as follows:
[The court] proposed that a plaintiff first take discovery on the underlying merits of the case. If it appears from the discovery on the merits that a factual basis for punitive damages exists, then the plaintiff is permitted to discover the defendant's financial condition. The court pointed out that the plaintiff need not prove the case for punitive damages during discovery. The plaintiff is not even required to show that there is a substantial likelihood of recovery. The plaintiff must only show that some factual basis for punitive damages exists.
Id. at *2 (citing Breault v. Friedli, 610 S.W.2d 134 (Tenn. Ct. App. 1980)) (internal quotations omitted). Relying on Breault, the court concluded that plaintiff was not entitled to such discovery, reasoning:
The plaintiff seeks financial information only with respect to defendant EPES. The plaintiff has asserted only a claim of vicarious liability against EPES, and seeks to rely upon the allegations of gross negligence on the part of [the driver] to show a factual basis for a punitive damages claim against EPES, [the driver's] employer. The plaintiff has not cited any case, however, which supports [his] argument that punitive damages may be recovered against an employer solely on the theory of respondeat superior. Moreover, the Court finds that the plaintiff has not yet shown a sufficient factual basis for punitive damages against defendant EPES in this case.
Wells, 2006 WL 1050670, at *2.[2] The court further concluded that if plaintiff could “set forth a sufficient factual and legal basis for [his] punitive damages claim against EPES, the plaintiff [could] renew [his] request for EPES' financial information.” Id.; see also Smith v. First Century Bank, No. 3:04-CV-591, 2006 WL 8442307, at *3 (E.D. Tenn. Jan. 30, 2006) (“Once the parties have taken more discovery on the underlying merits of the action, and the plaintiffs can set forth some factual basis for their punitive damages claim, the plaintiffs may renew their request for the defendants' financial information.”).
*6 The Court notes, however, that many courts “have held that a plaintiff in seeking punitive damages is entitled to discover information relating to the defendant's financial condition in advance of trial and without making a prima facie showing that he is entitled to recover such damages.” Zielke v. Vision Hosp. Grp., Inc., No. 1:14-CV-362-SKL, 2015 WL 9876950, at *3 (E.D. Tenn. Nov. 3, 2015) (internal quotations omitted). In Zielke, however, the court also recognized that a growing number of courts require a prima facie showing. Id. at *2 (explaining that “a growing number of courts require a prima facie showing of entitlement to, or an evidentiary basis for the recovery of, punitive damages prior to allowing discovery of a defendant's financial status while other courts delay discovery altogether on punitive damages until after dispositive motions have been decided”). The court in Zielke ultimately found “no compelling reason” for delaying or limiting discovery of defendant's “financial information until after [p]laintiff establishes a right to punitive damages by surviving summary judgment or until two months prior to the trial, which would be long after the date for concluding discovery (and resolving any discovery disputes) ha[d] expired under the Court's scheduling order.” Id. The court also reasoned that the parties had not suggested in their discovery plan that discovery be conducted in phases. [Id.].[3]
In the instant matter, the Court finds it unnecessary to resolve this split in authority at this juncture for two reasons. First, the Court finds that Plaintiffs have shown that some factual basis for punitive damages exists. Specifically, Plaintiffs have identified a number of misrepresentations, see [Doc. 72-1] and have alleged that Defendants fraudulently induced them to purchase more timeshare points. While Defendants vigorously dispute Plaintiffs' facts and have presented evidence to the contrary, the undersigned is not the factfinder in this case. Further, the Court is not ruling that Plaintiffs have established a substantial likelihood of recovery of such damages, let alone proof to the requisite clear and convincing standard. Rather, the Court merely finds that some factual basis for punitive damages exists sufficient to permit discovery. Thus, the instant facts are wholly different from the circumstances in Wells, which involved a vehicle accident where the allegations in the complaint provided no factual basis, or legal basis, for punitive damages.
Second, the Court has reviewed the parties' Rule 26(f) report, wherein the parties “agreed that there is no need to conduct discovery in phases at this time.” The original Complaint in this case made a demand for punitive damages. [Doc. 1-1 at 47]. Thus, the parties should have been aware of this issue in 2018, and the parties should have discussed conducting discovery in phases during their discovery planning meeting to avoid these issues arising a few months prior to trial. Zielke, 2015 WL 9876950, at *3 (compelling the production of defendant's financial information, noting that the parties did not indicate that discovery should be conducted in phases in their discovery planning meeting).[4] Accordingly, the Court finds Defendants' arguments not well taken.
D. Protective Order
Having found Topic Nos. 87 and 90 relevant and that Plaintiffs are entitled to such discovery, the Court now turns to Defendants' request for a protective order. Defendants seek a protective order relieving them of any obligation to produce a Rule 30(b)(6) witness as to Topic Nos. 87 and 90. While Defendants maintain that such discovery is irrelevant, they submit that it is also unnecessary because Plaintiffs already have access to Defendants' financial information and Defendants are willing to stipulate that their financial condition exceeds the punitive damages cap. In addition, Defendants state that it is unreasonable for any of their corporate representatives to testify as to their financial status when such information can be derived by documentation. Further, Defendants propose that if the Court orders document production, then Defendants be allowed to file the information under seal with the Court as opposed to producing it to Plaintiffs, citing Ling v. Wyndham Worldwide Operations, Inc., No. 2018-CH-1342 (Tenn. Ct. Chancery Nov. 16, 2020), attached as [Doc. 78-8].
*7 Plaintiffs maintain that they are entitled to take a Rule 30(b)(6) deposition with respect to Topic Nos. 87 and 90, arguing that Defendants have not articulated a specific reason for a protective order. Plaintiffs state that their earlier offer to accept documents in lieu of a Rule 30(b)(6) deposition is not binding given that it was offered as a compromise, which Defendants refused. Further, Plaintiffs state that a protective order is not necessary if Defendants' financial information is public. Finally, Plaintiffs submit that they are entitled to a Rule 30(b)(6) deposition in order to determine the accuracy of Defendants' financial information.
As mentioned above, a request for a protective order is governed under Rule 26(c), which provides, “The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed. R. Civ. P. 26(c)(1). In granting a protective order, the Court may issue an order, which includes one or more of the following:
(A) forbidding the disclosure or discovery;
(B) specifying terms, including time and place or the allocation of expenses, for the disclosure or discovery;
(C) prescribing a discovery method other than the one selected by the party seeking discovery;
(D) forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters;
(E) designating the persons who may be present while the discovery is conducted;
(F) requiring that a deposition be sealed and opened only on court order;
(G) requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way; and
(H) requiring that the parties simultaneously file specified documents or information in sealed envelopes, to be opened as the court directs.
Fed. R. Civ. P. 26(c)(1)(A)-(H). “Good cause exists if “specific prejudice or harm will result” from the absence of a protective order.” In re Ohio Execution Protocol Litig., 845 F.3d 231, 236 (6th Cir. 2016).
As an initial matter, Defendants' resistance in producing their financial information when such information is public is perplexing. Specifically, Defendants state, “Wyndham Destinations, Inc. is a publicly traded company, and information about its financial condition is a matter of public record. Defendants are subsidiaries of Wyndham Destinations, Inc. Although Defendants maintain such information is wholly irrelevant and inadmissible, Plaintiffs' counsel already has access to information regarding their financial condition.” [Doc. 78 at 12]. In a similar vein, the Court finds that there is no need to file such documents under seal in CM/ECF as opposed to producing it to Plaintiffs given that “Plaintiffs' counsel already has access to [such] information.” [Id.].[5]
Further, Defendants state that they are willing to stipulate that their financial condition exceeds subsections (A) or (B) of Tennessee Code Annotated § 29-39-104(a)(5).[6] The Court finds, however, that Defendants have not sufficiently explained how their stipulation will be helpful to the District Judge, who will ultimately determine if punitive damages are warranted, and if so, in what amount after considering the relevant factors in Hodges, including Defendants' financial affairs, financial condition, and net worth.
*8 Defendants also assert that during the hearing with the Court on April 2, 2020, Plaintiffs agreed to accept documents in lieu of re-taking a Rule 30(b)(6) witness. The Court does not find Plaintiffs' offer to compromise binding at this juncture, especially given that Defendants have refused to accept Plaintiffs' offer. While the Court generally agrees document production may suffice, and certainly encourages the parties to engage in discussions regarding document production in lieu of a deposition, the Court declines to bar Plaintiffs from proceeding with a Rule 30(b)(6) deposition.
After reviewing Defendants' arguments, the Court does not find that Defendants have established any undue burden by producing a Rule 30(b)(6) witness on Topic Nos. 87 and 90. Further, given the limited scope of Topic Nos. 87 and 90, the Court presumes that the Rule 30(b)(6) deposition will be relatively short. The Court also encourages the parties, in light of the COVID-19 pandemic, to discuss taking the Rule 30(b)(6) deposition by remote means, which is similar to how the parties conducted mediation in this case. See [Doc. 72].
E. Sanctions
Plaintiffs' Motion includes a request for sanctions. Specifically, Plaintiffs request that the Court order “Defendants to produce a witness, or strike Defendants' pleadings and enter a default judgment against them.” [Doc. 72 at 4]. Given that the Court has ordered Defendants to produce a witness, the Court declines to strike pleadings or enter a default judgment against Defendants.
Plaintiffs also request that Defendants pay the reasonable expenses, including attorney's fees, caused by Defendants' violation and the expenses incurred in preparing Plaintiffs' Motion. Plaintiffs argue that Defendants failed to meet their duty to provide a knowledgeable witness and that the proper course was for Defendants to seek a protective order as opposed to filing objections with the Court. Plaintiffs submit that the failure to produce a knowledgeable witness is akin to a failure to produce a witness.
Rule 37 governs Plaintiffs' request for sanctions. Specifically, Rule 37(d) provides as follows:
(d) Party's Failure to Attend Its Own Deposition, Serve Answers to Interrogatories, or Respond to a Request for Inspection.
(1) In General.
(A) Motion; Grounds for Sanctions. The court where the action is pending may, on motion, order sanctions if:
(i) a party or a party's officer, director, or managing agent--or a person designated under Rule 30(b)(6) or 31(a)(4)--fails, after being served with proper notice, to appear for that person's deposition; or
(ii) a party, after being properly served with interrogatories under Rule 33 or a request for inspection under Rule 34, fails to serve its answers, objections, or written response.
Fed. R. Civ. P. 37(d). Rule 37(d)(2) states that any failure described above “is not excused on the ground that the discovery sought was objectionable, unless the party failing to act has a pending motion for a protective order under Rule 26(c).” The Court may sanction a party as prescribed in Rule 37(b)(2)(A)(i)-(iv) and/or may award attorney's fees, “unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(d)(A)(3).
The Court does not find sanctions appropriate in the instant matter because Defendants' objection was substantially justified and other circumstances exist making an award of expenses unjust. First, as the Court has explained above, there is authority supporting Defendants' legal position that Topic Nos. 87 and 90 do not seek relevant information at this juncture. In addition, Defendants designated and produced three (3) corporate witnesses—the parties simply disagreed as to the scope of the noticed topics. As Defendants have explained, when the parties mutually agreed to setting the Rule 30(b)(6) depositions, Plaintiffs' counsel represented that he would propound the same list of deposition topics that were used in a state case. Plaintiffs did not serve the Notices of Deposition until seven (7) business days before the agreed depositions and the topics noticed were not the same topics as noticed in the state case as Plaintiffs' counsel represented. Defendants filed objections, and the Court inquired as to whether the parties would like a hearing prior to the Rule 30(b)(6) depositions occurring. The parties declined a hearing with the mutual understanding that many of the issues and objections would likely be resolved by the depositions. After the depositions, there were only a few remaining issues, which the Court addressed with the parties. As mentioned above, the Court ruled in Defendants' favor on some issues, ruled in favor of Plaintiffs on other issues, and ordered additional briefing on the instant issues. Given this background, the Court finds sanctions not warranted.
IV. CONCLUSION
*9 Accordingly, for the reasons explained above, the GRANTS IN PART AND DENIES IN PART Plaintiffs' Motion to Compel and Motion for Sanctions [Doc. 72] and DENIES Defendants' Motion for Protective Order [Doc. 86].
IT IS SO ORDERED.
ENTER:
Footnotes
The Court notes that a similar motion was filed in Allen v. Wyndham Vacation Resorts, Inc., No. 3:18-CV-259 [Doc. 69].
The undersigned notes that in Breault, the Tennessee Court of Appeals explained that requiring a plaintiff to show that a factual basis exists for punitive damages would prevent a plaintiff with a frivolous or meritless claim from using discovery for an ulterior purpose, such as a plaintiff using discovery to compel the finances of a competitor. 610 S.W.2d at 139-40.
The Court notes that in Zielke, the plaintiff sought damages from defendant under the anti-retaliation provisions of the Fair Labor Standards Act, as opposed to a claim under Tennessee law.
The Court also notes that no party has requested that the bench trial be bifurcated.
While Defendants have attached the Chancery Court's order in Ling v. Wyndham Worldwide Operations, Inc., No. 2018-CH-1342 (Tenn. Ct. Chancery Nov. 16, 2020), see [Doc. 78-8], in support of their request to file their financial information under seal, the Court finds the order unhelpful because it does not explain the specific issues adjudicated or what exactly was ordered.
The Sixth Circuit Court of Appeals recently found that the cap on punitive damages is unconstitutional under the right to a jury trial in the Tennessee Constitution. See Lindenberg v. Jackson Nat'l Life Ins. Co., 912 F.3d 348, 366 (6th Cir. 2018), cert. denied sub nom. Jackson Nat'l Life Ins. Co. v. Lindenburg, 140 S. Ct. 624 (2019), and cert. denied sub nom. Tennessee v. Lindenburg, 140 S. Ct. 635 (2019). Subsequently, the Tennessee Supreme Court ruled the statutory cap on non-economic damages under Tennessee Code Annotated § 29-39-102 is constitutional. McClay v. Airport Mgmt. Servs., LLC, 596 S.W.3d 686, 688 (Tenn. 2020). The McClay Court acknowledged the Sixth Circuit's ruling but found it unpersuasive and declined to express an opinion on the constitutionality of the statutory cap on punitive damages. 596 S.W.3d at 693 n.6.