*1 Before the undersigned Magistrate Judge, on reference from the District Court, is a motion to compel discovery responses, and associated request for sanctions [doc. # 79] filed by plaintiff/defendant-in-counterclaim, Ocean Sky International, Inc. (“Ocean Sky”). The motion is opposed. For reasons assigned below, the motion is GRANTED.[1]

Ocean Sky was an independent distributor of the Limu Company, L.L.C. (“LIMU”)[2] for over fourteen (14) years until December 11, 2017, when LIMU suspended Ocean Sky and “confiscated” its income. At least one of the reasons asserted for the suspension was because Ocean Sky allegedly permitted improper health claims to be published by persons within its downline and failed to police that conduct. (Decl. of Chris Wellman, pg. 2; M/Sanctions, Exh. 1). According to LIMU, this constituted a violation of its Policies & Procedures that warranted suspension of Ocean Sky's position.

On March 12, 2018, LIMU formally terminated Ocean Sky's distributorship. The instant suit followed on April 19, 2018. Ocean Sky argues that the termination was both unjustified and fraudulent because, inter alia, LIMU terminated Ocean Sky for conduct that the company itself encouraged and adopted. See Second Amended Complaint [doc. # 56]. Following initial motion practice, the filing of amended complaints, answers, and counterclaims, the court issued a scheduling order that set this matter for trial on June 8, 2020. (Jan. 10, 2019, Sched. Order [doc. # 53]). Discovery commenced.

On July 23, 2019, Ocean Sky served LIMU with its Second Set of Requests for Production of Documents, comprised of 95 requests for production of documents, including the following two requests that form the basis for the parties' present dispute:

(Pl. 2nd Set of Demand for Prod. of Docs.; M/Compel, Exh. A).

On August 26, 2019, LIMU served Ocean Sky with its responses to the Second Set of Requests for Production of Documents, and interposed the following objections:

(LIMU's Answers to Pl. 2nd Reqs. for Prod. of Docs; M/Compel, Exh. B).

According to counsel for Ocean Sky, the parties met and conferred on these matters around August 30, 2019, but were unable to reach an agreement regarding the Reese communications documents. With respect to the testimonials, however, the parties agreed to limit the scope of the request so that production would not prove so burdensome. (Decl. of Chris Wellman, ¶¶ 8-9; M/Compel, Exh. A). Specifically, on September 16, 2019, Ocean Sky sent an email to LIMU agreeing to limit the scope of the testimonials to seven corporate events, which it identified. Id.

After some discussions between counsel regarding the format employed by individuals to submit the testimonials (e.g., via facsimile, mail, or electronic submission), and whether LIMU had retained these testimonials, LIMU eventually acknowledged that it possessed the testimonials, but nonetheless declined to produce them for reasons stated in its original objection. (Decl. of Chris Wellman, ¶¶ 10-14). In response, Ocean Sky offered to extract the responsive testimonials itself to relieve LIMU of its burden of compliance. Id. LIMU demurred, however. Id.

Having exhausted attempts at conciliation, Ocean Sky filed the instant motion to compel, and associated request for sanctions, on October 10, 2019. LIMU filed its opposition on November 1, 2019. [doc. # 88]. Ocean Sky filed its reply brief on November 5, 2019. [doc. # 90]. Accordingly, the matter is ripe.

I. Requests for Production

a) Law

Rule 34 of the Federal Rules of Civil Procedure provides that “a party may serve on any other party a request within the scope of Rule 26(b) ... to produce ... any designated documents or electronically stored information ... or any designated tangible things” that are within the “party's possession, custody, or control ...” Fed.R.Civ.P. 34(a)(1)(A) & (B).[4] A written response to a request for production, not served under Rule 26(d)(2), is due within 30 days after service, unless the court orders, or the parties stipulate to a different period. Fed.R.Civ.P. 26(b)(2)(A).

*3 Rule 34's definition of “possession, custody, or control,” includes more than actual possession or control of the materials; it also contemplates a party's “legal right or practical ability to obtain the materials from a nonparty to the action.” White v. State Farm Mut. Auto. Ins. Co., 2011 WL 3423388 (M.D. La. Aug. 4, 2011 (citations omitted). A party must “make a reasonable search of all sources reasonably likely to contain responsive documents.” Id. A party also is “charged with knowledge of what its agents know or what is in records available to it.” Autery v. SmithKline Beecham Corp., 2010 WL 1489968 (W.D. La. Aug. 4, 2011) (citation omitted).

A party objecting to discovery “must state with specificity the objection and how it relates to the particular request being opposed ...” Reyes v. Red Gold, Inc. 2006 WL 2729412 (S.D. Tex. Sept. 25, 2006) (citations omitted). In other words, to escape the production requirement, a responding party must interpose a valid objection to each contested discovery request. McLeod, Alexander, Powel & Apffel, P.C. v. Quarles, 894 F.2d 1482, 1485 (5th Cir. 1990) (citation omitted). Conclusory objections that the requested discovery is “overly broad,” “burdensome,” “oppressive,” and “irrelevant,” do not suffice. Id. Furthermore, in the absence of good cause, when a party fails to object timely to interrogatories, production requests, or other discovery efforts, then any objections thereto are waived. In re: United States of America, 864 F.2d 1153, 1156 (5th Cir.1989); see also Fed.R.Civ.P. 33(b)4).

In addition, “[t]he attorney-client privilege limits the normally broad disclosure requirements of Federal Rule of Civil Procedure 26 ...” Equal Employment Opportunity Comm'n v. BDO USA, L.L.P., 876 F.3d 690, 695 (5th Cir.2017) (citation omitted). The attorney-client privilege protects confidential communications “by a client to his attorney for the purpose of obtaining legal advice.” King v. University Healthcare System, L.C. 645 F.3d 713, 720 (5th Cir. 2011). When a party refuses to produce documents otherwise discoverable by claiming that information contained in the documents is privileged, the party must: “(i) expressly make the claim; and (ii) describe the nature of the documents, communications, or tangible things not produced or disclosed — and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.” Fed. R. Civ. P. 26(b)(5)(A). At minimum, a privilege log should include for each withheld document or entry: the date of the document or entry, the name of its author and recipient, the names of all people given or forwarded copies of the document or entry, the subject(s) of the document or entry, and the specific privilege or privileges asserted. See Haensel v. Chrysler Corp., 1997 WL 537687, *4 (E.D. La. 8/22/1997). The mere assertion by an attorney that responsive materials are attorney-client privileged or protected by the work product doctrine does not constitute evidence establishing that the information is privileged. Estate of Manship v. U.S., 232 F.R.D. 552, 561 (M.D. La. 2005).

In a diversity suit such as this where state law supplies the rule of decision, the federal courts are obliged to apply the law of the forum state to resolve claims of attorney-client privilege. See Fed.R.Evid. 501; Dunn v. State Farm Fire & Cas. Co., 927 F.2d 869, 875 (5th Cir.1991); LeBlanc v. Texas Brine Co., LLC, No. 12-2059, 2019 WL 5265063, at *3 (E.D. La. Oct. 17, 2019). Under Louisiana law,[3] the party invoking attorney-client privilege must establish that:

Cubellis, Inc. v. LIFT (Louisiana Inst. of Film Tech.), No. 07-7959, 2009 WL 10680190, at *4 (E.D. La. Jan. 15, 2009) (citation omitted).[4]

Moreover, “[a] party asserting a privilege exemption from discovery bears the burden of demonstrating its applicability.” In re Santa Fe Intern. Corp., 272 F.3d 705, 710 (5th Cir. 2001). A general allegation of privilege is insufficient to meet this burden. See Nutmeg Insurance Co. v. Atwell, Vogel & Sterling, 120 F.R.D. 504, 510 (W.D. La. 1988); Saxholm AS v. Dynal, Inc., 164 F.R.D. 331, 333 (E.D. N.Y. 1996).

Louisiana recognizes that the attorney-client privilege can be waived by the client, not only expressly, but also when the privilege-holder has taken an affirmative act that renders preservation of the privilege unfair. Smith v. Kavanaugh, Pierson & Talley, 513 So.2d 1138, 1143-44 (La.1987). Such abuse of the privilege arises in at least three types of situations:

Id. (citations omitted) (emphasis added).

Therefore, “a privilege-holder who testifies or permits his confidant to testify at trial about his privileged communications with his attorney ... waives his right to invoke the privilege as to cross-examination or testimony of others with regard to communications on the same subject.” Id. (citations omitted). Similarly, the “introduction into evidence of documents disclosing privileged communications also waives the privilege against testimony or production of further documents disclosing communications on the same subject.” Id. (citations omitted).

The third type of waiver, i.e., the placing-at-issue waiver, “occurs when a privilege-holder pleads a claim or a defense in such a way that he will be forced inevitably to draw upon a privileged communication at trial in order to prevail.” Id. The rationale behind this anticipatory waiver is tied to the unfairness that the opposing side would suffer as a result of its impaired ability to accurately evaluate settlement and to prepare for trial. Id. (citations omitted). The Louisiana Supreme Court has cautioned, however, that “[a] litigant's pleading of a claim or defense to which his attorney-client communications are relevant does not by such pleading alone waive his attorney-client privilege.” Smith, 513 So.2d at 1141. Rather, “[a] pleading must inevitably require the introduction of a privileged communication at trial to constitute a waiver.” Id.

*5 Finally, it is manifest that a party seeking discovery may move for an order compelling an answer, production, or inspection if a party, inter alia, fails to answer an interrogatory or fails to produce requested documents. Fed.R.Civ.P. 37(a)(3)(B)(iii-iv). An evasive or incomplete answer or response is treated as a failure to answer or respond. Fed.R.Civ.P. 37(a)(4).

b) Discussion

LIMU holds corporate events that include “high-impact trainings” for promoters/distributors to “connect with like-minded entrepreneurs from all across LIMU nation.” See The LIMU Company, Events, available at https://thelimucompany.com/events.php (last visited November 1, 2019). One aspect of these events is a contest (that is referred to as the LIMU Experience Story).

At each event, LIMU recognizes certain promoters and their respective “stor[ies]” with prizes. See The LIMU Company, LIMU Experience Blog, available at https://www.thelimucompany.com/blog/limu-submit-your-story (last visited November 1, 2019). Individuals are able to submit their “LIMU story” to “explain what your life was like before your LIMU Experience[,]” “what you wanted to achieve or improve[,]” and “how LIMU has changed your life for the better[.]” Id. According to LIMU, anyone can visit its website and submit a LIMU story. As such, LIMU may receive submissions from individuals that do not have any contractual relationship with LIMU and are not bound by LIMU's Policies & Procedures. For an individual event, LIMU's counsel stated that it may receive between 200-400 submissions.

In reviewing the submissions, LIMU performs an initial review to determine whether a submission is generally of a quality to warrant further review (with many submissions not meeting this standard). If LIMU determines the submission warrants further review, it will print the submission and determine whether the individual is eligible for a prize. If the individual is eligible, some members of LIMU's executive team will review hard copies of the selected submissions and select the winners. LIMU does not maintain copies of these paper documents. The winners are announced for the first time at the event and, therefore, there are no communications with the individuals prior to the event. LIMU will post a copy of the winning LIMU Experience Stories on its blog after the event.

According to LIMU, it has agreed to produce the testimonials that it selected as the winners for the seven corporate events. LIMU contends that these testimonials are the only ones relevant to Ocean Sky's case because these are the only testimonials that LIMU endorsed.

Ocean Sky seeks all of the testimonials submitted for the seven specified corporate events because it argues that they are relevant to show that LIMU had a culture of encouraging improper health and income claims through testimonials and allowing its distributors to submit such testimonials, without reprimanding them, despite the fact that LIMU cited similar practices by Ocean Sky as grounds for its termination. Alternatively, the testimonials are relevant to show selective enforcement by LIMU against Ocean Sky, and that LIMU's reason for terminating Ocean Sky was without justification. The documents also would help to undermine LIMU's credibility. See Decl. of Chris Wellman.

Ocean Sky contends that their request is narrowly-tailored because the testimonials were sent to a specific Gmail account that would permit LIMU to select a date-range and forward those emails to Ocean Sky. LIMU disagrees. It asserts that it would have to review all of the submissions to determine whether the submitted story was from an active LIMU promoter, as opposed to a customer, some other third-party, or an inactive promoter. In addition, LIMU contests Ocean Sky's assertion that it merely has to select a date range to obtain responsive documents. Rather, according to LIMU, its portal for submissions is open and a submission remains valid for 120 days.

*6 LIMU further argues that the requested documents are not relevant to show that it failed to police the claims of other promoters because, by selecting only one winner for publication, LIMU effectively rejected all of the other testimonials, including ones that might have included an improper health claim. Finally, to the extent that the document request may be relevant, LIMU maintains that the documents request is disproportionate to Ocean Sky's breach of contract claim because it would result in the production of thousands of documents.

Upon consideration, the court finds that the requested testimonials are relevant and proportional to Ocean Sky's claims. The requested information is potentially relevant to Ocean Sky's argument that LIMU treated it differently from other promoters who engaged in similar practices. LIMU contends that by not selecting any improper testimonials for publication, it took action by ensuring that the offending claims did not see the light of day. Of course, Ocean Sky argues that LIMU should have taken affirmative steps against any promoter who made such improper claims (e.g., send them warning letters), as LIMU did with Ocean Sky.

LIMU's argument that it would have to sift through the hundreds or thousands of testimonials to weed out the ones submitted by “customers” and other third-parties is belied by the website portal itself which requires the party submitting a testimonial to include their member ID, the individual's rank (i.e., whether he or she is a “customer” or “member”), and the qualifying event. See M/Compel, Exh. F and https://www.thelimucompany.com/blog/limu-submit-your-story (last visited on December 3, 2019). In any event, Ocean Sky seeks all of the testimonials submitted by promoters and customers alike so LIMU will not have to bear the burden of reviewing them to differentiate between promoters and customers.

Finally, LIMU has not adduced any evidence to show that production of these documents would prove unduly burdensome in either time or resources. There is no evidence establishing how many testimonials are at issue for each of the specified corporate events. In short, LIMU's objections are not well-taken, and are overruled.

2) Communications with Spencer Reese

Spencer Reese is a lawyer with Reese, Poyfair, Richards, PLLC in Utah. See e.g., Dec. 11, 2017, Letter from S. Reese to Pardues; Opp. Brief, Exh. Ex. K. According to LIMU, it engaged Mr. Reese on a variety of occasions to provide legal advice, and, at all pertinent times, he was one of the attorneys retained by LIMU in connection with certain matters related to the MLM industry and LIMU's business. Moreover, on more than one occasion, Mr. Reese met with Ocean Sky to address certain issues.

As it relates to Ocean Sky's suspension and termination, LIMU stated that it engaged Mr. Reese to provide legal advice. Furthermore, Mr. Reese corresponded with, and communicated to, Ocean Sky that it was suspended pending LIMU's investigation. See Exhs. K, W, X, & Y. Rec. Doc. 69-9. As Mr. Reese noted in the suspension letter, “LIMU's investigation into [Ocean Sky's] conduct is ongoing as [LIMU] is considering what corrective measure are appropriate.” Id. at 3. On October 15, 2017 Ocean Sky responded to Mr. Reese by letter. See Ex. W.

According to LIMU, it has produced all non-privileged communications pertinent to this litigation. It further represented that any privileged communications were listed on its privilege log which is 36 pages long and includes 261 items. See M/Compel, Exh. J.

Ocean Sky asserts that it recently learned that LIMU will contend that it acted in “good faith” when terminating plaintiffs' distributorship positions because it relied on communications between itself and Mr. Reese. (Decl. of Chris Wellman Pg. 2; ¶4). It argues that LIMU “mostly likely” will call Mr. Reese as a witness to justify its “good faith” defense. Moreover, LIMU listed Spencer Reese as a potential witness on its initial disclosures list as someone with knowledge of “[e]nforcement of LIMU's Policies & Procedures; Government regulation of multi-level marketing companies; Termination of Ocean Sky International, Inc. and Suni Enterprises, Inc.” (Suppl. Decl. of Chris Wellman, Exh. B; Ocean Sky Reply Brief). Ocean sky argues that letters sent by Reese to Ocean Sky include several findings and conclusions that could not have been rendered but for information communicated by LIMU to Reese. Because LIMU inevitably will have to rely on the findings and conclusions set forth in these letters, Ocean Sky asserts that it should have the opportunity to challenge the foundation for these conclusions which LIMU must have provided to Reese.

*7 For its part, LIMU insists that the reasonableness of its actions will be established via objective facts, unrelated to its privileged discussions with counsel.

Although not argued by Ocean Sky, the court notes that LIMU already waived its privilege as to certain communications with counsel. For example, it previously provided Ocean Sky with a copy of a June 6, 2013, letter from Spencer Reese to Gary Raser that addressed the LIMU Dream Team website. See Decl. of Gary Raser, Exh. D [doc. # 69]. Therefore, this letter should not have been included on the privilege log. Similarly, LIMU produced a July 26, 2013, email which revealed that Spencer Reese apparently had recommended that Ocean Sky be suspended because of certain videos it had produced. (Decl. of Gary Raser, Exh. D [doc. # 69]). As a result, LIMU has waived all other communications related to the same subject matter, i.e., the LIMU Dream Team website and videos produced by Ocean Sky in 2013.

The court also takes issue with the sufficiency of LIMU's showing regarding attorney-client privilege. LIMU did not adduce any evidence to establish who the recipients of these communications were, whether these withheld documents remained confidential, or details regarding the nature of the communications sufficient for the court to determine whether the privilege is applicable. Cacamo v. Liberty Mut. Fire Ins. Co., 798 So.2d 1210, 1216 (La. App. 4th Cir. 2001) (a mere statement that the privilege applies does not satisfy the burden of proof). Equal Employment Opportunity Comm'n v. BDO USA, L.L.P., 876 F.3d 690, 696 (5th Cir.2017) (simply describing a lawyer's advice as “legal,” without more, is conclusory and insufficient to carry out the proponent's burden of establishing attorney-client privilege).

In addition, Ocean Sky offered to forego seeking the privileged communications “on the condition that [LIMU] stipulate[s] that [it] will not mention, reference, or allude to any communications or opinions it received from Mr. Reese when deciding to terminate [Ocean Sky].” (LIMU Opp. Memo., pg. 13 n.5). LIMU would not agree to this stipulation because Mr. Reese communicated with Ocean Sky regarding its suspension. Id. Indeed, Mr. Reese personally participated in the exchange of correspondence with Ocean Sky regarding the suspension of its business, including a detailed recitation of the reasons why that action was taken. See LIMU Opp. Memo., Exhs. K & W. He also likely helped draft the termination letter that was signed by Gary Raser. Id., Exh. L.

As evidenced by LIMU's professed inability to enter into a stipulation with Ocean Sky regarding Mr. Reese's communications, the court is persuaded that it will prove extremely difficult, if not impossible, for LIMU to defend itself without relying on the bases for suspension, and ultimate termination, that are detailed in Mr. Reese's correspondence, which, in turn, are derived from information supplied to Mr. Reese by LIMU. As such, and in the absence of a stipulation by LIMU that it will not rely on advice of counsel or its communications with Mr. Reese in its defense of this matter,[5] then it will be obliged to produce the items listed on its privilege log.[6] To do otherwise would prove unfair to Ocean Sky, as it would not be permitted to review and challenge the factual underpinnings that purportedly supported LIMU's decision to suspend and terminate its distributorship.

II. Fees, Costs, Expenses, and/or Sanctions

a) Law

*8 Rule 37 provides that if a motion to compel is granted –

Fed.R.Civ.P. 37(a)(5)(A).

b) Discussion

The court finds that LIMU's objection to Ocean Sky's request for testimonials was not substantially justified. Moreover, LIMU's invocation of the attorney-client privilege was not well-supported. The court stresses that

Bd. of Regents of Univ. of Nebraska v. BASF Corp., 2007 WL 3342423, at *5 (D. Neb. Nov. 5, 2007) (internal citations omitted).

LIMU's discovery responses violate the foregoing principles.

Accordingly, the court will order LIMU, and its counsel, to pay Ocean Sky the total sum of $3,300 as reasonable attorney's fees to ameliorate the expenses, fees, and costs incurred by movant for having to file the instant motion. See Decl. of Chris Wellman, ¶ 15; M/Compel, Exh. A; Fed.R.Civ.P. 37(a)(5)(A).

For the above-assigned reasons,

IT IS ORDERED that plaintiff/defendant-in-counterclaim, Ocean Sky International, Inc.'s motion to compel discovery responses [doc. # 79] is GRANTED and that within the next fourteen (14) days from the date of this order, defendant/counter-claimant, The LIMU Company, L.L.C.:

*9 IT IS FURTHER ORDERED that Ocean Sky International, Inc.'s request for fees and/or costs (styled as a request for sanctions) [doc. # 79] is GRANTED, and that, within the next seven (7) days from the date of this order, defendant/counter-claimant, The LIMU Company, L.L.C., and/or its counsel, shall remit the single sum of $3,300 to Ocean Sky International, Inc., via their counsel, and file proof of payment in the record of these proceedings within seven (7) days thereafter.

In Chambers, at Monroe, Louisiana, this 9th day of December 2019.

As this motion is not excepted in 28 U.S.C. § 636(b)(1)(A), nor dispositive of any claim on the merits within the meaning of Rule 72 of the Federal Rules of Civil Procedure, this ruling is issued under the authority thereof, and in accordance with the standing order of this court. Any appeal must be made to the district judge in accordance with Rule 72(a) and L.R. 74.1(W).

LIMU is a multi-level marketing company – otherwise known as an “MLM” company – that manufactures and distributes dietary supplements worldwide.

Under Rule 26(b),

Both sides analyzed the privilege issue under Louisiana law.

The Louisiana Code of Evidence provides that,

A privilege-holder has the option of avoiding compelled discovery of the communications by stipulating that it will not introduce that or any communication on the same subject into evidence at trial. Smith, 513 So.2d at1146–47.

Some items on the log are listed as attorney work product. The instant motion did not address work product, and therefore, those documents are outside the scope of this motion. However, to the extent that the same rationale that required disclosure of the documents subject to the attorney-client privilege also compels disclosure of the work product documents, then LIMU should produce them.