Johnson City Energy Auth. v. United Tel. Se. LLC
Johnson City Energy Auth. v. United Tel. Se. LLC
2021 WL 11481557 (E.D. Tenn. 2021)
May 13, 2021

Wyrick, Cynthia R.,  United States Magistrate Judge

Failure to Produce
Proportionality
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Summary
The court found that Century Link's agreements with all attachers, both regulated and unregulated, within the service area at issue were discoverable and relevant to the issue of damages raised by Century Link in its counterclaim. The court ordered Century Link's counsel to produce the agreements, as the production of the agreements was proportional to the needs of the case.
JOHNSON CITY ENERGY AUTHORITY d/b/a BrightRidge, Plaintiff,
v.
UNITED TELEPHONE SOUTHEAST LLC d/b/a CenturyLink, Defendant
No. 2:20-CV-30
United States District Court, E.D. Tennessee, Greeneville
Filed May 13, 2021

Counsel

Joseph Bernard Harvey, William C. Bovender, Hunter, Smith & Davis, Kingsport, TN, Stephen M. Darden, Hunter, Smith & Davis, Johnson City, TN, for Plaintiff.
Misty S. Kelley, Baker, Donelson, Bearman, Caldwell & Berkowitz, Chattanooga, TN, Gary L. Edwards, II, Baker Donelson, Johnson City, TN, for Defendant.
Wyrick, Cynthia R., United States Magistrate Judge

ORDER

I. FACTUAL BACKGROUND[1]
*1 Plaintiff/Counter Defendant Johnson City Energy Authority d/b/a BrightRidge (“BrightRidge”) brought the instant action against Defendant/Counter Plaintiff United Telephone Southeast, LLC d/b/a Century Link (“Century Link”), averring that it has the right to reserve space on Century Link's poles for any attachments requiring such space that was not specifically reserved to Century Link at the time the contract at issue was entered into by the parties. BrightRidge further contends that it is obligated to pay Century Link per pole rather than per attachment for use of the poles. The focus of the dispute is on whether BrightRidge has the contractual right to continue to deploy its fiber-optic network and broadband internet system on poles owned by Century Link where BrightRidge had previously attached electric lines.[2] BrightRidge alleges that Century Link is improperly demanding that Bright Ridge enter into a new agreement addressing these fiber-optic network and broadband internet system connections which would include new terms and conditions and also increase the cost to BrightRidge. In its Answer and Counterclaim, Century Link takes the position that BrightRidge does not have the contractual right to use these poles to attach its fiber-optic network and broadband internet system, asserting that where BrightRidge has already made such attachments, it is a trespasser on the Century Link poles entitling Century Link to compensation at “market attachment rates for all attachments (past, present and future), that BrightRidge has made, or is going to make,” as well as punitive damages, attorney fees and costs. [Doc. 7, p. 25-26].
It is also of note that in the territory where the Century Link poles at issue are located, BrightRidge owns poles as well. In fact, BrightRidge owns about 83% of the poles in the territory while Century Link owns the other 17%. There is an agreement between the parties whereby Century Link is permitted to attach to the poles owned by BrightRidge. In other words, each party serves as both a supplier and consumer of pole space to the other party. Both parties also supply pole space to other parties not before the Court.
After filing its Complaint, BrightRidge issued Interrogatories and a Request for Production of Documents to Century Link wherein it requested that Century Link provide the names of and complete copies of its agreements with all other entities, both regulated and unregulated, that have cable, broadband and/or voice/telephone attachments to poles owned by Century Link to which BrightRidge also attaches within the territory at issue. Century Link takes the position that these agreements are not relevant to the case and even if relevant, requiring them to produce the agreements is not proportionate to the needs of the case[3]. Century Link further contends that if forced to provide these agreements, BrightRidge will gain an unfair competitive advantage in future negotiations between the parties and asserts that this unfair competitive advantage is the true purpose behind the discovery requests at issue.
II. LEGAL ANALYSIS
*2 Parties may generally obtain discovery on “any non-privileged matter that is relevant to any party claim or defense and proportional to the needs of the case ...” Fed. R. Civ. P. 26(b)(1). “The United States Supreme Court has construed the term ‘relevant’ to include ‘any matter that bears on, or that reasonably could lead to other matters that could bear on, any issue that is or may be in the case.’ ” United States v. Life Care Centers of Am., Inc., No. 1:08-CV-251, 2015 WL 10987073, at *4 (E.D. Tenn., Aug. 31, 2015), report and recommendation adopted, No. 1:08-CV-251, 2015 WL 10987032 (E.D. Tenn. Sept. 22, 2015) (quoting Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)). In addition to being relevant, discovery must be “proportional to the needs of the case.” Fed. R. Civ. P. 26(b). The parties and the courts are collectively responsible for considering the proportionality of discovery in resolving discovery disputes. Helena Agri-Enterprises, LLC v. Great Lakes Grain, LLC, 988 F.3d 260, 273 (6th Cir. 2021). Pursuant to Fed. R. Civ. P. 26(b)(1), when considering whether the discovery sought is proportional to the needs of the case, the Court is to consider the importance of the issues at stake, the amount in controversy, the relative access of the parties to the information, the resources of each party, the importance of the requested discovery to the resolution of pending issues, and is to weigh the benefits against the burdens of ordering the requested discovery to be produced. Ultimately, the Court enjoys broad discretion in determining the scope of discovery. Robertson v. Lucas, 753 F.3d 606, 623 (6th Cir. 2014).
BrightRidge asserts that the requested discovery is relevant in multiple ways based upon Century Link's counterclaim. As an initial matter, BrightRidge states discovery of Century Link's other contracts for attachment in the service area is essential because because Century Link is seeking “market rate” damages and Century Link's contracts with other attachers will help it understand what that “market rate” might be. Additionally, BrightRidge claims that it is entitled to production of this discovery because of Century Link's claim that the contract presently governing the parties does not govern BrightRidge's attachment of its fiber-optic network and broadband internet system to Century Link's poles or in the alternative, that the attachment has breached the parties’ contract. BrightRidge notes that Century Link claims this lack of contractual agreement or breach of contract entitles Century Link to charge BrightRidge any rate it sees fit for the attachments at issue; however, BrightRidge notes that Century Link is a regulated utility prohibited by law from charging a discriminatory rate. BrightRidge claims that it can only assess whether Century Link is proposing to charge a discriminatory rate if it knows what rate Century Link is charging to its other attachers. BrightRidge further alleges that Century Link must be required to produce the entire agreement and not just provide the rate paid by other attachers because the attachment rate alone is only “one piece of an overall agreement” and “does not tell the entire story.”
In opposing discovery of the third party attacher agreements, Century Link initially notes that the agreement at issue between the parties was executed in 1980, and that BrightRidge's broadband division did not come into existence until 2017. For that reason, Century Link claims that BrightRidge's broadband division could not have been a party to the contract. Century Link further asserts that no third party attachers are a party to that contract, which should prevent the 1980 agreement from serving as a basis for BrightRidge to request the third party attacher agreements. Moreover, Century Link avers that BrightRidge's broadband division must enter into a new contract with Century Link for its broadband attachments but has not done so and for that reason, there is no ripe or justiciable issue regarding the rate issue, making it improper for the Court to compel production of the discovery requested.
In response to BrightRidge's assertion that it is entitled to discovery of the third party attacher agreements, in part, because Century Link is a regulated entity, Century Link asserts it is BrightRidge's responsibility to demonstrate that it is an operator protected by the regulations found in 47 C.F.R. § 1.1401 before invoking these regulations in support of its discovery request. Century Link states that BrightRidge has failed to make such a showing.
*3 Ultimately, Century Link's primary assertion is that the privately negotiated rates between it and other parties is a matter of freedom of contract and has no bearing on the issues before the Court. Additionally, in drilling down further, Century Link alleges more specifically that because BrightRidge has not demonstrated that it is a regulated attacher, any contracts entered into between Century Link and regulated attachers would have “no bearing on what BrightRidge would have to pay to Century Link for BrightRidge's own non-electric attachments.” Century Link contends that if BrightRidge is provided with the contractual information sought, the company will use it to try to unfairly restrain trade and to gain an advantage in what it asserts are required negotiations for a new contract between the entities as to BrightRidge's broadband attachments.
Century Link further suggests that BrightRidge has misrepresented the nature of Century Link's request for damages against BrightRidge. While Century Link has requested an award from the Court of the “market attachment rate” for all non-electric attachments that BrightRidge has made or will have made at the time the matter is tried, Century Link states this rate simply means a “privately negotiated” rate versus one regulated by the FCC. On the other hand, BrightRidge contends that the term “market attachment rate” should be given its ordinary and customary meaning, i.e. the prevailing market rate for such attachments.
As noted above, BrightRidge takes a far different position regarding the attachments at issue, claiming that the parties’ 1980 agreement did in fact provide them with the right to make the attachments at issue and to do so without additional cost. In response to Century Link's claim that it should be only be required to produce its agreements with unregulated parties if it is required to produce any agreements at all, BrightRidge avers that Century Link has not demonstrated why the rates in both types of agreement should not be considered in determining a “market rate.” Additionally, BrightRidge notes that Century Link has alleged that Bright Ridge's use of its poles has reduced the space available for use by Century Link itself and any other third parties to whom it may wish to lease space. BrightRidge avers that the space could be leased to both regulated and unregulated attachers which makes all contracts relevant to BrightRidge's defense against Century Link's counterclaim.
While the Court has provided the above recitation of the parties’ full position as to the discovery dispute for context, from the Court's perspective the crux of the issue at this juncture is whether Century Link's request for an award of damages at “the market attachment rate” entitles BrightRidge to discovery of the agreements that other third party attachers have to the poles in the territory at issue between the parties, which for the purposes of this discovery dispute the Court finds to be the territory covered by the 1980 agreement and the attachments therein.
In its supplemental position statement addressed to the Court, Century Link urges the Court not to require production claiming that the issue of damages may never even arise because the parties may reach an agreement as to these issues. It further asserts that to determine the “market attachment rate” by using only the relevant agreements that Century Link has with other third party would be the same as establishing the market rate for apartments in Nashville based on what one landlord charges his tenants. However, given the unique nature of the interests at issue and the limited number of providers in the field this is not a particularly analogous example.
The Court simply cannot find Century Link's arguments to carry the day. If this matter is tried, there is no reason to believe that the District Court would try it piecemeal as opposed to trying all issues at once. For that reason, BrightRidge would be severely prejudiced if the Court refused them discovery as to damages because Century Link believes the parties might ultimately negotiate an agreed upon resolution, especially given that all the while important deadlines would be passing. To take the argument to its logical conclusion, given that the overwhelming percentage of lawsuits filed today do in fact resolve by agreement, the Court would be delaying discovery in every case where particularly sensitive documents are at issue to see if the matter might resolve.
*4 Additionally, the Court cannot overlook the fact that Century Link has specifically requested an award from the Court of a “market attachment rate” to compensate it for damages it contends it has sustained as a result of BrightRidge's conduct. While on the one hand Century Link contends that the 1980 contract does not include a provision for the attachments in dispute and does not serve as a basis for permitting the requested discovery, on the other it argues that the Court should award it the amount paid by Century Link to BrightRidge for such attachments under the 1980 agreement. Century Link argues that a traditional market rate analysis is not well suited to the unique interests at issue here. Century Link further asserts that BrightRidge has contracts with the same third party attachers as Century Link and should not need Century Link's contracts with these third parties to defend on the damages issue.
The burden is on the party seeking damages to prove those damages. See Jones v. Consolidated Rail Corp., 800 F.2d 590, 593 (6th Cir. 1986) (recognizing the general principle that a plaintiff has the burden of proving damages). In its response, Century Link provided the Court with the method it believes should be used to calculate damages using the broadband attachment rate under the 1980 agreement and asserts that the rates paid by other third party attachers are irrelevant to the calculation of damages using this method. Although the Court may ultimately be persuaded to use this suggested formula, it is ultimately the Court that must determine both the proper measure and the amount of any damages to be awarded to Century Link. While without having the attacher agreements before it, the Court has no way to fully assess the impact they may have on the issue of damages should the District Court find it appropriate to award damages to Century Link, the agreements sufficiently bear on the issue as to be relevant under Fed. R. Civ. P. 26(b)(1). Having found the agreements to be relevant, the Court next must determine whether requiring disclosure is proportional to the needs of the case.
In assessing proportionality, the Court finds that the issue of calculating damages is central to the case if the Court finds it appropriate to award them, and the third party attacher agreements are relevant to that issue; the amount in controversy is significant; BrightRidge has no way to access the information sought without it being produced in discovery; both parties have significant resources at their disposal such that resources should not be a determinative factor; the requested discovery is likely important to the resolution of the damages issues; and while there is a significant “burden” to Century Link in producing the information because it is highly confidential, the Court finds that the burden is outweighed by BrightRidge's need to defend against claims brought against it by Century Link.
The Court further notes that Century Link is being required to produce the requested discovery solely because of Century Link's pending counterclaim and the damages request made therein. In absence of that counterclaim, it is far less likely BrightRidge could demonstrate that the third party attacher agreements are relevant, or even if they were relevant that they should be produced when proportionality is considered.
III. CONCLUSION
For the reasons set forth above, the Court finds that Century Link's agreements with all attachers, both regulated and unregulated, within the service area at issue in this litigation are discoverable because at a minimum, they are relevant the issue of damages raised by Century Link in its counterclaim and the production of the agreements is proportional to the needs of the case. Counsel for Century Link shall produce full copies of these agreements to counsel for BrightRidge within 10 days from the date of this Order and these agreements shall be subject to the protective order previously entered in this cause.
*5 SO ORDERED.

Footnotes

Significant information contained in this Order addressing the facts at issue in this matter and the parties’ respective arguments are taken directly from their correspondence with the Court (which they copied to opposing counsel) and with each other; therefore, the Court will only provide citations to information taken directly from the record.
The parties do not dispute that BrightRidge permissibly attached its electric lines to Century Link's poles pursuant to the parties’ contractual agreement.
Century Link originally raised a confidentiality issue but that was addressed by the parties via a protective order.