FA ND CHEV, LLC v. Kupper
FA ND CHEV, LLC v. Kupper
2023 WL 3225081 (D.N.D. 2023)
February 10, 2023
Hochhalter, Clare R., United States Magistrate Judge
Summary
The Court granted Plaintiffs' motion to compel Defendant Kupper to produce certain ESI and other documents. Kupper was ordered to inform Plaintiffs when and where he disposed of his old desktop computer, produce redacted and withheld text messages, produce contracts with BMC and/or Mortiz Sport, and supplement his response to Plaintiffs' interrogatory. The Court denied Plaintiffs' request for fees and costs.
Additional Decisions
FA ND CHEV, LLC; and FA ND SUB, LLC, Plaintiffs,
v.
Robert Kupper; Bismarck Motor Company; and BMC Marine LLC d/b/a Moritz Sports & Marine, Defendants
v.
Robert Kupper; Bismarck Motor Company; and BMC Marine LLC d/b/a Moritz Sports & Marine, Defendants
Case No. 1:20-cv-138
United States District Court, D. North Dakota
Filed February 10, 2023
Counsel
Robin Wade Forward, Stinson LLP, Bismarck, ND, Andrew Blake Albaugh, Pro Hac Vice, Beltzer Bangert & Gunnell, LLP, Denver, CO, Anna Sweat Day, Pro Hac Vice, Kensye N. Wood, Pro Hac Vice, Holland & Knight LLP, Denver, CO, Maxwell N. Shaffer, Pro Hac Vice, Leland Shaffer LLP, Denver, CO, for Plaintiffs.Randall J. Bakke, Bradley Neuman Wiederholt, David R. Phillips, Grant Bakke, Shawn A. Grinolds, Bakke Grinolds Wiederholt, Bismarck, ND, for Defendants Robert Kupper.
Paul R. Sanderson, Ryan J. Joyce, William J. Behrmann, Evenson Sanderson, PC, Bismarck, ND, for Defendants Bismarck Motor Company.
Anthony J. Anderson, William P. Harrie, Nilles Law Firm, Fargo, ND, for Defendants BMC Marine LLC.
Hochhalter, Clare R., United States Magistrate Judge
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION TO COMPEL
*1 Before the Court is a motion to compel filed by Plaintiffs FA ND CHEV, LLC and FA ND SUB, LLC (collectively “Plaintiffs”). (Doc. No. 89). For the reasons set forth below, the motion is GRANTED IN PART and DENIED IN PART.
I. BACKGROUND
This action arises following a business transaction involving the sale and purchase of motor vehicle and service businesses (“dealerships”) in June 2019. The transaction consisted of Defendant Robert Kupper (“Kupper”) selling five Chevrolet and Subaru dealerships located in and around Mandan, North Dakota. This transaction also included non-competition and non-solicitation agreements between Kupper and Plaintiffs. The members of FA ND CHEV, LLC are Chuck Kramer, Jr. and Foundation Auto Holdings, LLC. Foundation Auto Holdings, LLC is owned by Foundation Automotive U.S. Corp. (“FA”).
Plaintiffs allege that Kupper violated the agreements “almost immediately” by conspiring “to take back” the business Kupper had sold to Plaintiffs. (Doc. No. 77). Plaintiffs assert Defendants engaged in recruiting multiple employees away from Plaintiffs, and that Kupper publicly defamed Plaintiffs’ business reputation. (Id.). “Plaintiffs are alleging damages in the nature of lost profits, loss of goodwill, loss of valuable employees, loss of clients and customers, the impairment of Plaintiffs’ future earning capacity, and damage to business reputation.” (Doc. No. 69) (quotations omitted). Defendants deny these allegations and Kupper asserts that any employees who have left Plaintiffs’ businesses did so because of Plaintiffs’ mismanagement. (Id.).
The parties met and conferred, in addition to having multiple other written communications, and attended a status conference with the Court. Ultimately, Plaintiffs filed the underlying motion on June 24, 2022. Plaintiffs assert Kupper has failed to adequately respond to their discovery requests, including by failing to produce all responsive email and text message communications, recover deleted communications, produce contracts between Kupper, Bismarck Motor Company (“BMC”), and Moritz Sport & Marine (“Moritz Sport”), and provide the details around agreements between Kupper and BMC. (Doc. No. 89-1). Plaintiffs also originally requested Kupper to produce a privilege log, but later withdrew the request after Kupper provided one. (Doc. Nos. 89-1, 103). The motion has been fully briefed and is ripe for the Court's consideration.
II. LEGAL STANDARD
A. Scope of Discovery
Rule 26(b)(1), Fed. R. Civ. P., defines the scope of discovery 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.
*2 However, the Court, in its discretion, may limit discovery otherwise allowed by the rules if:
(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;
(ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or
(iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).
Fed. R. Civ. P. 26(b)(2)(C). The moving party must establish some level of relevancy for the discovery they are requesting before the Court “open[s] wide the doors of discovery” to information that is irrelevant to the issues of the case. Hofer v. Mack Trucks Inc., 981 F.2d 377, 380 (8th Cir. 1992).
The scope of discovery under Rule 26(b) is extremely broad. Gowan v. Mid Century Ins. Co., 309 F.R.D. 503, 508 (D.S.D. 2015) (citation omitted). “The reason for the broad scope of discovery is that [m]utual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession.” 8 Wright & Miller, Fed. Prac. & Proc. §§ 2007, 3637 (1970) (quoting Hickman v. Taylor, 329 U.S. 495, 507–08 (1947)).
Fischer v. United States Life Ins. Co., No. 1:19-cv-152, 2021 WL 6278458, at *2 (D.N.D. Nov. 16, 2021), on reconsideration, sub nom. Fischer v. United States Life Ins. Co. in the City of New York, No. 1:19-cv-152, 2021 WL 6278461 (D.N.D. Dec. 8, 2021).
B. Requests for Production of Documents or Electronically Stored Information
Rule 34 Fed. R. Civ. P., governs requests for production of documents or ESI:
(a) A party may serve on any other party a request within the scope of Rule 26(b):
(1) to produce and permit the requesting party or its representative to inspect, copy, test, or sample the following items in the responding party's possession, custody, or control:
(A) any designated documents or electronically stored information—including wirings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations—stored in any medium from which information can be obtained either directly, or if necessary, after translation by the responding party into a reasonably usable form
Fed. R. Civ. P. (34)(a)(1)(A).
Moreover, Fed. R. Civ. P. 34(b)(2)(E), details the procedures for production of documents or ESI:
(E) Unless otherwise stipulated or ordered by the court, these procedures apply to producing documents or electronically stored information:
(i) A party must produce documents as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request;
(ii) If a request does not specify a form for producing electronically stored information, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms; and
(iii) A party need not produce the same electronically stored information in more than one form.
Fed. R. Civ. P. (34)(b)(2)(E). In other words, “Rule 34 sets forth procedural and substantive requirements; and, it offers some presumptively reasonable options to litigants, with the hope they may find common ground in both their requests and their production of information, whether electronically stored and produced, or not.” See, e.g., Woodmont Co. v. LaSalle Shopping Ctr., LLC, No. 1:17-cv-73, 2020 WL 685705, at *2 (D.N.D. Nov. 12, 2020).
C. Preservation of ESI
*3 “A party is obligated to preserve evidence once the party knows or should know that the evidence is relevant to future or current litigation.” Paisley Park Enters., Inc. v. Boxil, 330 F.R.D. 226, 232 (D. Minn. 2019). “A variety of events may alert a party to the prospect of litigation.” Id. (quoting Fed. R. Civ. P. 37(e), advisory committee's note to 2015 amendment). A court will view the duty to preserve relevant evidence “from the perspective of the party with control of the evidence.” Id. (quoting Alabama Aircraft Indus., Inc. v. Boeing Co., 319 F.R.D. 730, 740 (N.D.Ala. 2017)). Rule 37(e), Fed. R. Civ. P., explains the protocol for when there is an alleged failure to preserve ESI:
(e) Failure to Preserve Electronically Stored Information. If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:
(1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or
(2) only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation may:
(A) presume that the lost information was unfavorable to the party;
(B) instruct the jury that it may or must presume the information was unfavorable to the party; or
(C) dismiss the action or enter a default judgment.
Fed. R. Civ. P. 37(e).
D. Scheduling Order
The Court previously said, “The Court will look back to the scheduling order to resolve discovery disputes.” (Doc. No. 110). The scheduling order, which the parties agreed to, states,
The parties agree that any ESI that exists should be preserved indefinitely by them in relation to communications between plaintiff representatives and defendants’ representatives, and that the parties should confirm that ESI searches have been conducted for any documents and/or information requested in any litigation hold request, and/or any interrogatories and/or requests for production of documents.
(Doc. No. 21). The parties also agreed the language above “also applies to preservation of discoverable information, and/or information that one or more parties may assert is discoverable.” (Id.). This order was signed by the parties on November 17, 2020 and approved and filed by the Court on November 19, 2020. (Id.).
E. Attorneys’ Fees and Costs
Rule 37(a)(5)(A), Fed. R. Civ. P., requires a Court to order an opposing party to pay expenses incurred with a successful motion to compel unless one of three exceptions applies. These exceptions are: (1) “the movant filed the motion before attempting in good faith to obtain the disclosure or discovery without court action;” (2) “the opposing party's nondisclosure, response, or objection was substantially justified;” or (3) “other circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(a)(5)(A)(i)-(iii).
III. DISCUSSION
Plaintiffs raise four primary issues. First, they assert Kupper has not produced all responsive email communications in his possession and has not taken reasonable steps to recover responsive emails that have been deleted. Second, Plaintiffs assert Kupper has not produced all responsive text messages in his possession. Third, Plaintiffs insist Kupper must produce all contracts between himself and BMC or Moritz Sport. Fourth, Plaintiffs request the Court require Kupper to provide details regarding his written and oral agreements with BMC.
A. Requested Emails
*4 Plaintiffs make three separate arguments regarding Kupper's emails. First, they argue he has not adequately produced relevant emails still in his possession. Second, they seem to argue Kupper violated Fed. R. Civ. P. 37(e) when he did not preserve emails “in anticipation of litigation.” Third, they claim Kupper must remedy the situation with respect to his deleted emails and old desktop computer.
1. Emails in Kupper's Possession
The Court will first address Plaintiffs’ assertion that Kupper only had his counsels’ staff review his emails after Plaintiffs filed the underlying motion. Plaintiffs argue, “Such conduct is inconsistent with both the letter and spirit of the rules of discovery and should not be tolerated by the Court.” (Doc. No. 103). Plaintiffs seemingly do not argue for any further review of undeleted emails currently in Kupper's possession or request any penalties be imposed on Kupper for the undeleted emails. Therefore, the Court does not find circumstances warrant additional review of these specific emails. The Court is satisfied with Kupper's assertion that, “He and his legal counsel have conducted searches of Defendant Kupper's computer, cell phones, and emails account [sic] to which he still has access ....” (Doc. No. 95).
2. Preservation of ESI
Plaintiffs allege Kupper did not preserve ESI when he “anticipated litigation.” Kupper's counsel previously stated, “Once the relationship with Plaintiffs started to sour, Mr. Kupper printed copies of all emails relevant to the issues in this case.” The emails Kupper printed and saved allegedly date back to 2019, but no additional information has been submitted to the Court on the exact date Kupper began to print the emails.
It is unclear when Kupper printed these emails and whether he anticipated Plaintiffs would sue him solely based on their relationship “souring.” However, the rule does not require a party to preserve irrelevant information. See Paisley Park, 330 F.R.D. at 232. From Kupper's perspective, he printed the emails he viewed as relevant to the relationship “souring” and the Court views that as a reasonable step to preserve the information under the rule–even if he did not anticipate the litigation when he printed them. Therefore, the Court finds Kupper did not fail to preserve ESI at the undisclosed time he printed the emails.
Additionally, Fed. R. Civ. P. 37(e), requires a party to retain relevant information during the “conduct of litigation.” Additionally, the scheduling order required the parties to preserve an even broader array of information including “communications between plaintiff representatives and defendants’ representative” and “information that one or more parties may assert is discoverable” even if the information is not relevant. (Doc. No. 21). Plaintiffs claim Kupper has the duty to search “available electronic systems for deleted emails and files.” (Doc. No. 89-1).
Here, Kupper asserts he had a regular practice of deleting emails “prior to the commencement of this lawsuit.” (Doc. No. 95). The Court takes Kupper at his word that he only engaged in this practice prior to having notice that the lawsuit was filed. If information exists that Kupper engaged in this practice after he was served notice of this lawsuit, the Court, after reviewing such information, may require further remedial measures to recover any deleted information.
3. Old Desktop Computer
*5 Kupper asserts he replaced his desktop computer he used while working at Kupper Chevrolet that likely had relevant ESI on it. Kupper asserts the old desktop computer is no longer in his possession. (Id.). However, Kupper offers no further information on the location of the computer or when he disposed of it, either before or after the litigation commenced. Instead, he informs the Court his counsel's staff have reviewed his replacement desktop computer for any relevant information. Plaintiffs request the Court require Kupper to disclose when Kupper replaced the old desktop computer. The Court will require Kupper to inform Plaintiffs when and where he disposed of it.
B. Requested Text Messages
Plaintiffs again request the Court order Kupper to have a forensic evaluation completed to try and recover text messages he may have deleted after he determined the relationship had “soured.” For the same reasons articulated above, the Court denies this request, but may, upon submission of additional information, order Kupper to engage in recovery measures if he deleted text messages after the filing of the litigation.
Plaintiffs also request the Court require Kupper to produce non-redacted versions of text messages he previously produced. They argue the redactions occur in between highly relevant text messages. They also argue Kupper has improperly withheld certain text messages.
In response, Kupper argues the redacted and withheld text messages contain irrelevant information. Regardless of their relevancy, some of the messages occur between communications that are relevant. The Court will require Kupper to produce the redacted and withheld text messages so Plaintiffs can acquire a complete picture of the communications. To the extent Kupper is concerned about the disclosure of personal information, the protective order will adequately address any issues and allow for the disclosure of the messages.
C. Contracts Between Kupper and BMC or Moritz Sport
Plaintiffs request the Court require Kupper to provide them with “all contracts with BMC and Moritz Sport regarding employment, membership, consulting, an independent contractor relationship, or indemnity, from May 1, 2019 to the present.” (Doc. No. 89-1). Kupper asserts the documents Plaintiffs are requesting are not relevant to this lawsuit and they “are contracts between private parties that Defendant Kupper and presumably all defendants deem confidential and valuable to competitors.” (Doc. No. 95). Kupper claims, based on his own review of the documents, that the issues in this litigation do not come up in these other agreements.
The Court finds Plaintiffs have met their burden to show the information in the agreements Kupper has with BMC and/or Moritz Sport is relevant. They are relevant because they show the business practices Kupper was engaged in at the time of and following his agreement with Plaintiffs. This information may inform the ultimate issue of whether Kupper violated the agreement between Plaintiffs and himself. See Fed. R. Civ. P. 26(b)(1) (“importance of the discovery in resolving the issues” is one factor for a court to consider). It also appears the parties disagree on the extent of the non-compete and non-solicitation agreements at issue. At this time, the Court finds the information relevant and will err on the side of inclusion because it may ultimately prove determinative to resolution of this case. Kupper shall provide Plaintiffs with the contracts with BMC and/or Mortiz Sport from May 1, 2019, to present.
Kupper raises concerns that the information in these agreements is private and confidential. However, once again, the protective order will adequately address any issues and allow for the disclosure of the information.
D. Written and Oral Agreements with BMC
*6 Plaintiffs also request the Court require Kupper to disclose information ‘regarding any written or oral agreements Kupper has with BMC from the closing date until the present.” (Doc. No. 89-1). The Court has addressed any written agreements with BMC above, it will now turn to alleged oral agreements.
In his first supplemental answer to Plaintiffs’ Interrogatory No. 19, which requested Kupper to identify and describe any oral agreements with BMC, Kupper said,
Kupper advises that he had no oral agreement with Bismarck Motor to provide any services or perform any work for Bismarck Motor after the date Bismarck Motor purchased the dealership from Kupper. Kupper verifies that he has no oral agreement with Bismarck Motor to provide any services for them or to perform any work for Bismarck Motor.
(Doc. No. 89-14). In his response to Plaintiffs’ motion Kupper states, “Further, while Defendant Kupper did purchase some vehicles for Bismarck Motor Company until late 2019 or early 2020, Defendant Kupper did not ‘engage in used motor vehicle sales or service operations’ for Bismarck Motor Company or Moritz Sport.” (Doc. No. 95).
“Sale” is defined as “[t]he transfer of property or title for a price.” Sale, Black's Law Dictionary (11th ed. 2019). “Purchase” is defined as “The acquisition of an interest in real or personal property by sale, discount, negotiation, mortgage, pledge, lien, issue, reissue, gift, or any other voluntary transaction.” Purchase, Black's Law Dictionary, (11th ed. 2019). Here, it appears Kupper had an agreement to purchase vehicles for BMC based on his own admission. Kupper tries to differentiate his admission of purchasing vehicles for BMC from engaging in motor vehicle “sales,” seemingly to avoid having to disclose this information. However, it is clear the act of purchasing a vehicle qualifies as a sale because it is the transfer of property for a price. Therefore, the information regarding any oral agreement to purchase vehicles is relevant to the issues in this action. For this reason and those articulated for any written agreements, the Court will require Kupper to supplement his answers to Plaintiffs’ interrogatory. Kupper must disclose the existence of and any details of oral agreements he made with BMC.
E. Fees and Costs
Plaintiffs request the Court require Kupper to pay their fees and costs incurred with bringing the underlying motion. The Court does not believe costs are justified in this circumstance. Kupper presented an argument in good faith as to why he believed he should not have to disclose some of the information requested by Plaintiffs. The Court also is not requiring Kupper to comply with all of the requests of Plaintiffs. Therefore, the Court finds Kupper's “nondisclosure, response, or objection was substantially justified” and these “circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(a)(5)(A)(i)-(iii).
IV. CONCLUSION
For the reasons articulated above, Plaintiffs’ motion (Doc. No. 89) is GRANTED IN PART and DENIED IN PART. Kupper shall inform Plaintiffs when and where he disposed of his old desktop computer, produce redacted and withheld text messages, produce contracts with BMC and/or Mortiz Sport, and supplement his response to Plaintiffs’ interrogatory requesting information on oral agreements with BMC.
*7 IT IS SO ORDERED.
Dated this 10th day of February, 2023.