Defendants argue the information is relevant because Plaintiffs claim the business “will never regain the revenue from those customers lost and as such will always have lower revenues than they otherwise would have” but that business data from after the sale will show that “the business gained and lost clients in a natural cyclical pattern.” (Doc. 53 at 3). Defendants further argue that they “asserted affirmative defenses including the Plaintiffs’ failure to mitigate their damages for a number of reasons including their failure to manage and properly operate the business” and that “[f]or Defendants to be able to show that it was reasonably feasible for Plaintiffs to mitigate their alleged damages but that they did not attempt to do so, Defendants need access to post-closing financial and business information.” (Doc. 53 at 3-4). Finally, Defendants argue that Plaintiffs “attribute their claimed lower value to Defendants’ alleged misrepresentations or negligence in not informing the Plaintiffs, during their due diligence period, of certain closings of fitness store locations pre-and-post closing,” so the “alleged damages turn on activity that occurred post-closing.” (Doc. 53 at 4) (emphasis in original).

Plaintiffs argue the information is not relevant because, under Arizona law, the measure of damages for fraud is “the difference between the contract price and the actual value at the time of the sale and at no other time.” (Doc. 53 at 2) (citing Packard Phoenix Motor Co. v. McRuer, 41 Ariz. 450, 456 (1933)). Plaintiffs argue that, because they purchased the business in 2018 and Plaintiffs only use limited data from 2019 to account for mitigation, its business financials in 2020 and onward are irrelevant. (Doc. 53 at 2-3) (“Since Plaintiffs damages calculations rely on data from no later than 2019, any mitigation defense by Defendants’ [sic] must rely on the same data.”). Plaintiffs therefore argue that the sought discovery does not meet the requirements of Federal Rule of Civil Procedure 26(b)(1). (Doc. 53 at 2).

Under Rule 26(b)(1), “[p]arties 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.” Fed. R. Civ. P. 26(b)(1). “[T]he party seeking to compel discovery has the initial burden of establishing that its request satisfies the relevancy requirements of Rule 26(b).” Doe v. Swift Transp. Co., 2015 WL 4307800, *1 (D. Ariz. 2015). This “is a relatively low bar.” Continental Circuits LLC v. Intel Corp., 435 F. Supp. 3d 1014, 1018 (D. Ariz. 2020). If the movant meets its burden of establishing relevancy, “the party opposing discovery has the burden to demonstrate that discovery should not be allowed due to burden or cost and must explain and support its objections with competent evidence.” Doe, 2015 WL 4307800 at *1.

*2 Here, Defendants have met their burden of establishing that the requested documents are relevant to at least some of its defenses. Defendants allege that the requested information includes “business tax-returns, revenue by consumer, and documents related to the loss and gain of clients.” (Doc. 53 at 4). If Defendants intend to defend Plaintiffs’ claimed damages based on a theory that loss of clients is cyclical, then business data regarding the loss of clients in the years after the sale would be relevant to that defense. While this information may not necessarily be admissible, it is at least discoverable at this juncture. See generally 1 Gensler, Federal Rules of Civil Procedure, Rules and Commentary, Rule 26, at 801-02 (2021) (“For discovery purposes, courts define relevance broadly, stating that information is relevant if it bears on or might reasonably lead to information that bears on any material fact or issue in the action.... [C]ourts are quick to point out that discovery is concerned with relevant information—not relevant evidence—and that as a result the scope of relevance for discovery purposes is necessarily broader than trial relevance.”) (footnotes and internal quotation marks omitted). Accordingly,

IT IS THEREFORE ORDERED that the Joint Statement of Discovery Dispute (Doc. 53) is granted to the extent stated in this Order.

Dated this 17th day of May, 2021.