CenturyLink Commc'ns LLC v. Peerless Network, Inc.
CenturyLink Commc'ns LLC v. Peerless Network, Inc.
2020 WL 11647732 (N.D. Ill. 2020)
September 18, 2020
Fuentes, Gabriel A., United States Magistrate Judge
Summary
The Court granted Defendants' motion to compel and denied Plaintiffs' motion to compel. Electronically stored information was important as it was necessary to provide the supplemental discovery compelled under the order, which included call detail records (CDRs) and a privilege log identifying any documents withheld on the ground of privilege. The Court granted CenturyLink until October 16, 2020 to provide the supplemental discovery.
Additional Decisions
CENTURYLINK COMMUNICATIONS LLC, ET AL. Plaintiffs/Counter-Defendants,
v.
PEERLESS NETWORK, INC., ET AL., Defendants/Counter-Plaintiffs
v.
PEERLESS NETWORK, INC., ET AL., Defendants/Counter-Plaintiffs
Case No. 18 C 3114
United States District Court, N.D. Illinois, Eastern Division
Signed September 18, 2020
Counsel
Charles Walter Steese, Pro Hac Vice, Douglas Nelson Marsh, Pro Hac Vice, Armstrong Teasdale LLP, Denver, CO, Bradley J. Axel, Robert James Slobig, Torshen, Slobig, Genden, Dragutinovich & Axel, Ltd., Chicago, IL, for Plaintiff/Counter-Defendant CenturyLink Communications, LLC.Bradley J. Axel, Robert James Slobig, Torshen, Slobig, Genden, Dragutinovich & Axel, Ltd., Chicago, IL, Charles Walter Steese, Pro Hac Vice, Armstrong Teasdale LLP, Denver, CO, for Plaintiffs/Counter-Defendants Level 3 Communications, L.L.C., Global Crossing Telecommunications, Inc.
Bradley J. Axel, Torshen, Slobig & Axel, Ltd., Chicago, IL, Charles Walter Steese, Pro Hac Vice, Armstrong Teasdale LLP, Denver, CO, for Plaintiff/Counter-Defendant WilTel Communications, LLC.
Fuentes, Gabriel A., United States Magistrate Judge
ORDER
*1 The parties in this case are telecommunications companies that operate networks to provide telephone services to customers. As part of their businesses, both Plaintiffs and Defendants have provided wholesale telecommunications services to each other, which has resulted in disputes over whether the parties are properly billing their charges and paying their bills. Now, Defendants/Counter-Plaintiffs Peerless Network, Inc., et al., (“Peerless” or “Defendants”) have moved to compel Plaintiffs/Counter-Defendants CenturyLink Communications, LLC et al., (“CenturyLink” or “Plaintiffs”) to: (1) comply with the Court's November 15, 2019 Order; (2) present a witness who can fully respond to Peerless's 30(b)(6) topic No. 10; and (3) respond to Peerless's Interrogatory Request No. 14 (D.E. 158). Additionally, Plaintiffs have moved to compel Defendants to respond to requests 24, 25, and 26 from Plaintiff's Third Request for Production of Documents (D.E. 169). Both motions are fully briefed.
In ruling on a motion to compel, the discovery standard set forth in Rule 26(b) applies. Rule 26(b)(1) allows “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). The party requesting discovery bears the initial burden of establishing its relevancy. See, e.g., Rennie v. Dalton, 3 F.3d 1100, 1110 (7th Cir. 1993) “If the discovery appears relevant, the party objecting to the discovery request bears the burden of showing why that request is improper.” Trading Technologies Int'l., Inc. v. eSpeed, Inc., No. 04 C 5312, 2005 WL 1300778, at *1 (N.D. Ill. Apr. 28, 2005) (citing Rubin v. Islamic Republic of Iran, 349 F. Supp. 2d 1108, 1111 (N.D. Ill. 2004)).
The Court has reviewed the parties’ briefs and attached exhibits, keeping in mind the relevance and proportionality standards of Fed. R. Civ. P. 26.
I. Peerless's Motion to Compel
A. Double Tandem Dispute Damages Calculation
Peerless's request for compliance with the Court's November 15, 2019 order, and its request that CenturyLink present a 30(b)(6) witness prepared to speak to Interrogatory No. 10, both relate to CenturyLink's claim for damages from the so-called “double tandem” dispute in which CenturyLink contends that it has been double billed (and thus that it has double paid) for some tandem service, once as provided by Peerless and once by an alternative carrier. In its Rule 26(a) initial disclosures, CenturyLink explained that it used two different methods to calculate damages which resulted in a range of damages from $2.808 million to $3.247 million. (Pl. Resp. to Mot. to Compel at 8.) The Court's November 15, 2019 order on Peerless's motion to compel required CenturyLink to provide the basis for each of its calculation methods. Specifically, it ordered CenturyLink to provide Peerless with:
• the basis for CenturyLink's new $2.8 million to $3.2 million “double-tandem” damages estimate, based on a calculation or estimate starting with the identification of the number (or ranges) of disputed MOUs, multiplied by an average call origination rate plus any disputed “port charges,” as CenturyLink at oral argument essentially agreed it would do. CenturyLink must also disclose its basis for using any particular average call origination rate or range of such rates, including any information CenturyLink relies upon and possesses, even if CenturyLink obtained such information from a third-party consultant or database; and
*2 • the basis for CenturyLink's new $2.8 million to $3.2 million “double-tandem” damages estimate, based on any other calculation or methodology it as employed, including any analysis of CDRs [call detail records]. (D.E. 97.)
CenturyLink has calculated that 900 million minutes of calls were wrongly billed and/or paid for, and CenturyLink has used that number in both of its damage calculations. Peerless does not contend that CenturyLink has not explained its use of that number of minutes. Additionally, Peerless agrees that CenturyLink has provided the basis for the calculation which resulted in the $2.8 million number. (Def. Mot. to Compel at 3.) However, it argues that CenturyLink still has not explained the second calculation, which resulted in the $3.2 million number. Moreover, Peerless states that CenturyLink's 30(b)(6) witness was also unable to explain how the company determined the higher number.
The disputed calculation concerns charges that CenturyLink says it was billed (and allegedly paid) for some of its double tandem calls which Peerless wrongly routed through alternative tandem providers. Peerless argues that CenturyLink has failed to provide the numbers it used to come up with its higher damages estimate. At CenturyLink's 30(b)(6) deposition, its representative deponent Mr. Waldron testified that he estimated the percentages of calls that were routed through three third-party tandem providers – Onvoy, Inteliquent, and Hypercube. (Def. Mot. to Compel at 6.) He further explained that he could not provide the exact percentage of calls that were attributable to each of the third party providers without looking at his work data and that moreover, “the CDR analysis is really going to drive this to determine exactly where the calls went to.” (Id.) Peerless's motion seeks the actual numbers Mr. Waldron used in his calculations that resulted in the $3.2 million damage calculation as well as a more complete explanation of that calculation.[1]
Both at the November 2019 hearing on Peerless's earlier motion to compel as well as now, CenturyLink stated that it was unable to provide a final number, as opposed to an estimate, for the higher damages calculation because doing so required its experts to conduct a CDR analysis. (Pl. Resp. to Def. Mot. to Compel at 13.) CenturyLink states that it has given Peerless every document it has to show how it developed its estimate, but that coming up with a final calculation cannot occur before CenturyLink's experts analyze the call detail report data and submit their report.
As an initial matter, we note that at the deposition of Mr. Waldron, CenturyLink indicated that it was withholding some of his work papers on the ground that they are privileged. (Def. Mot. to Compel at 6.) In its response to the motion to compel, CenturyLink contends that it has provided Peerless with all of Mr. Waldron's work papers. (Resp. to Def. Mot. to Compel at 8 and Exh. 9.) It is not clear when or why CenturyLink's response about Mr. Waldron's work papers changed, and Peerless says that CenturyLink has not explained the discrepancy to it. If CenturyLink is currently withholding any documents on the ground that they are privileged, it is obligated to provide to Peerless a privilege log identifying these documents and must also produce any other documents or work papers Mr. Waldron used to calculate damages.
*3 We agree with Peerless that it is entitled to know how CenturyLink arrived at its $3.2 million damages estimate. The number did not arrive out of thin air – it must have been the result of some series of calculations, even if those calculations used a range of numbers and even if the final number is expected to change with input from expert witnesses. CenturyLink has stated that it will be able to provide a “final” damages calculation after its experts conduct an analysis of the CDR. To that end, we recognize that the parties’ initial expert reports were due to be exchanged on September 4, 2020. At this point, there is no reason CenturyLink should not be able to respond to Peerless's request for an explanation of the numbers and methodology it used to develop its entire range of damage estimates, a request we first ordered CenturyLink to comply with in November 2019.
Peerless’ motion to compel CenturyLink's compliance with the Court's November 15, 2019 order is granted. We also grant its motion to compel a deposition of a 30(b)(6) witness who is prepared and able to explain how CenturyLink calculated the damages estimate of $3.2 million.
B. Interrogatory No. 14
This interrogatory asks CenturyLink to: “[d]escribe Plaintiffs’ Bona Fide Request (“BFR”) and Individual Case Basis (“ICB”) processes, including what those processes are, when and how Plaintiffs utilize them, and whether Plaintiffs uniformly post individual based contracts, rates, terms, and conditions in any particular location for other customers to review and consider.” As Peerless explains in its motion, CenturyLink has argued that Peerless failed to comply with certain BFR and ICB requirements. Given that CenturyLink must also comply with these requirements (and that Peerless has already responded to the same discovery request from CenturyLink), Peerless seeks information about CenturyLink's own compliance in order to possibly impeach CenturyLink's allegations about Peerless.
We agree that CenturyLink must answer Interrogatory No. 14. We are not persuaded by CenturyLink's argument that the requested information is irrelevant because of differences between Plaintiffs’ and Defendants’ tariff language. Peerless points out that tariff rates are irrelevant to this motion because as common carriers, both parties must charge their customers non-discriminatory rates, regardless of tariff amount. The discovery requested by Interrogatory No. 14 is relevant and proportional under Rule 26(b)(1). Peerless fairly has limited its request so that CenturyLink need respond only with respect to the four named entities in this case and with the added limitation that it describe its processes with respect to BFR and ICB in good faith; it does not need to spend thousands of hours culling through each individual contract to confirm compliance.
II. CenturyLink's Motion to Compel
CenturyLink's motion to compel asks that Peerless be ordered to produce documents that concern an affirmative defense that CenturyLink wishes to assert in response to Peerless's counterclaim for service charges Peerless claims it is owed. As relevant to this motion, Peerless's counterclaim contends that CenturyLink refused to pay it for certain telecommunications services Peerless provided for customers in Illinois and Georgia. (D.E. 28: Answer to Counterclaim.) In its answer to the counterclaim, CenturyLink raised as its Second and Seventh Affirmative Defenses, respectively, and that “ ‘Peerless's Counterclaims are barred in whole or in part by ... FCC rules [and] controlling case law,’ ” and “ ‘because the charges it seeks to recover were unjust, unreasonable, and/or illegal.’ ” (Id., Pl. Mot. to Compel at 2.) According to CenturyLink's motion, its Second Affirmative Defense concerns the fact that FCC regulations require carriers like Peerless to “benchmark” their rates to those of the local exchange carrier, and that to the extent Peerless is a “competing local exchange carrier,” CenturyLink alleges that Peerless has violated FCC rules that bar Peerless from raising its rates above the benchmark. CenturyLink's seeks to compel discovery it contends will support this affirmative defense, including documents that identify the local exchange carriers to which it contends Peerless should have benchmarked its rates and documents related to various rates and tariffs (and increases in those tariffs) Peerless charged for services Peerless provided in Georgia and/or Illinois. (Pl. Mot. to Compel, Exh. A.)
*4 In October 2019, the District Court denied CenturyLink's motion to amend its complaint to add a claim that Peerless's rates exceed the FCC's “benchmark” on the ground that it was untimely, as Plaintiffs filed their motion three months after the deadline for amending the pleadings and nearly eleven months after the event Plaintiffs contended gave rise to the need to amend. (D.E. 74: Order.) After that denial, CenturyLink did not seek discovery on the benchmark issue until July 7, 2020, when it filed its Third Request for Production of documents. Peerless timely filed its response on August 6, 2020, declining to produce additional documents on the grounds that the requests were overly broad, burdensome, and irrelevant. CenturyLink did not explicitly indicate that the benchmark issue was part of its affirmative defenses until August 14, 2020 – the day discovery closed – when it amended its initial disclosures to say so.[2]
As an initial matter, we reject Peerless's argument that CenturyLink's motion to compel should be denied on the ground that it is untimely. CenturyLink filed its motion the day after Peerless informed it that it objected to producing the requested documents. Therefore, the Court will exercise its discretion to manage discovery and consider the merits of CenturyLink's motion to compel.
Peerless argues that the document requests are irrelevant, overbroad, and unduly burdensome. (D.E. 180: Def. Resp. to Pl. Mot. to Compel at 5.) It says that CenturyLink never put Peerless “on notice that Plaintiffs were challenging Peerless's rates in Georgia and Illinois as an affirmative or general defense” and that “[i]n Plaintiffs’ November 1, 2018 Initial Disclosures and October 17, 2019 supplemental Initial Disclosures, Plaintiffs make no mention of any dispute over Peerless's rates in Georgia or Illinois.” (Id.)
CenturyLink contends that the documents are relevant because Peerless confirmed at the parties’ Rule 37 meet and confer that it intends to seek damages as alleged in its counterclaims, including those for the rates it was paid in Illinois and Georgia – the two states to which CenturyLink contends Peerless was required to “benchmark” its rates. Therefore, CenturyLink argues, Peerless has put its rates “at issue” and Plaintiffs are entitled to discovery into the legality of those rates so that they can defend against CenturyLink's counterclaims. We disagree, and thus deny Plaintiffs’ motion to compel.
Beyond the fact that it did not pursue discovery of the benchmark issue until July 2020, CenturyLink did not formally indicate that it intended to raise the matter as an affirmative defense until the day discovery closed. Plaintiffs do not explain why they waited until then to amend their initial disclosures; its own arguments to the District Court indicate that CenturyLink has been aware of possible damages it incurred because of the tariffs Peerless charged it since August or September 2018. (Order at 2.)
CenturyLink says that ongoing communications it has had with Peerless put Peerless on notice that CenturyLink contended that Peerless’ rates were unlawful. Although this may be true as a general matter, nothing that CenturyLink said or did indicated to Peerless that CenturyLink's affirmative defense specifically referred to the benchmark matter or that it intended to conduct in-depth discovery into that issue as part of its defense against Peerless’ counterclaim. And while CenturyLink argues the discovery it seeks is relevant to its defense of Peerless's claims, it did not plead any specific facts relating to its affirmative defenses until the final day of discovery, and the burden of analyzing its eleventh-hour requests is disproportionate to the needs of the case. We will not allow CenturyLink to bootstrap its defense by filing a last-minute amendment to its initial disclosures and then arguing that it needs discovery to support those disclosures.
*5 While we recognize that Peerless has not described in detail the burden required to respond to Plaintiffs’ requests, it does characterize the benchmark claim as involving “complicated legal and factual issues,” because the FCC benchmark rates CenturyLink accuses Peerless of exceeding are not listed in the FCC regulations but are instead questions of fact that are not easily determined. (Def. Resp. to Pl. Mot. to Compel at 6.) At this late date, we decline to expand the scope of this case to conduct discovery into a matter about which CenturyLink has been aware for at least two years.
CONCLUSION
For the reasons stated above, the Court grants Defendants’ motion to compel (D.E. 158) and denies Plaintiffs’ motion to compel. (D.E. 169.) It is so ordered. Fact discovery closed in this case on August 14, 2020, while the foregoing two motions were pending. Century Link is granted until October 16, 2020 to provide the supplemental discovery compelled under this order.
SO ORDERED.
Footnotes
In its response to Peerless’ motion to compel, CenturyLink characterizes the Court's November 15, 2019 Order as only requiring it to provide “a very basic disclosure of computations that closely resemble the ‘double-tandem’ damages computation that CenturyLink gave Peerless before it even filed suit.” (Resp. to Def. Mot. to Compel at 8.) However, as is apparent from reading this sentence in context – it appears in the Conclusion section of the Court's order – the Court was not describing the minimal level of detail it was requiring CenturyLink to provide, but was characterizing the discovery being ordered as something very basic.
The sufficiency of CenturyLink's pleading of its Second and Seventh Affirmative Defenses is not before the Court, but CenturyLink's assertions that the “benchmarking” issue are within those defenses, made long after pleading them, and at the end of the discovery period, demonstrate the wisdom of courts in this district requiring that affirmative defenses be pleaded with sufficient facts to render them plausible, and not in a “boilerplate” manner. “While the Seventh Circuit has not addressed whether the Twombly-Iqbal standard applies to affirmative defenses, judges in this district have generally found these requirements to apply,” and affirmative defenses must be pleaded with a short and plain statement with sufficient factual matter to be plausible on its face. Edwards v. Mack Trucks, Inc., 310 F.R.D. 382, 386 (N.D. Ill. 2015) (citing cases).